<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) November 14, 1995
----------------------------------
KMART CORPORATION
(Exact Name of Registrant as Specified in its Charter)
MICHIGAN
(State or Other Jurisdiction of Incorporation)
1-327 38-0729500
(Commission File Number) (I.R.S. Employer Identification No.)
3100 WEST BIG BEAVER ROAD, TROY, MICHIGAN 48084
(Address of Principal Executive Offices) (Zip Code)
(810) 643-1000
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
1
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) The following exhibits are filed herewith:
<TABLE>
<S> <C>
99.1 Note Purchase Agreement dated as of May 29, 1992 with respect to
8.95% Collateralized Promissory Note due 2007 in the principal
amount of $8,135,000 and 9.35% Collateralized Promissory Note
due 2002 in the principal amount of $29,545,000
99.2 Kmart Corporation 8.95% Collateralized Promissory Note Due 2007
in the principal amount of $8,135,000, dated May 29, 1992
99.3 Kmart Corporation 9.35% Collateralized Promissory Note Due 2002
in the principal amount of $29,545,000, dated May 29, 1992
99.4 Kmart Corporation Note Agreement dated as of January 1, 1992
with respect to 9.06% Senior Secured Notes Due February 1, 2012
in the principal amount of $71,417,590
99.5 Trust Indenture dated as of January 1, 1992 with respect to
9.06% Senior Secured Notes Due February 1, 2012 in the principal
amount of $71,417,590
99.6 Form of Kmart Corporation 9.06% Senior Secured Note, Due
February 1, 2012
99.7 Note Purchase and Participation Agreement dated as of May 28,
1993 with respect to 7.05% Series A Senior Secured Notes due
2009 and 7.45% Series B Senior Secured Notes due 2013 in the
aggregate principal amount of $42,000,000
99.8 Kmart Corporation 7.05% Series A-1 Senior Secured Note due 2009
in the principal amount of $2,601,250, dated May 28, 1993
99.9 Kmart Corporation 7.05% Series A-2 Senior Secured Notes due
2009 in the principal amount of $11,398,750, dated May 28, 1993
99.10 Kmart Corporation 7.05% Series A-1 Senior Secured Notes Due
2009 in the principal amount of $2,601,250, dated May 28, 1993
99.11 Kmart Corporation 7.05% Series A-2 Senior Secured Notes Due
2009 in the principal amount of $11,398,750, dated May 28, 1993
</TABLE>
2
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<TABLE>
<S> <C>
99.12 Kmart Corporation 7.45% Series B-1 Senior Secured Notes due
2013 in the principal amount of $1,300,625, dated May 28, 1993
99.13 Kmart Corporation 7.45% Series B-2 Senior Secured Notes due
2013 in the principal amount of $5,699,375 dated May 28, 1993
99.14 Kmart Corporation 7.45% Series B-1 Senior Secured Notes due
2013 in the principal amount of $1,300,625, dated May 28, 1993
99.15 Kmart Corporation 7.45% Series B-2 Senior Secured Notes due
2013 in the principal amount of $5,699,375, dated May 28, 1993
99.16 Trust Indentured dated as of May 28, 1993 with respect to 7.05%
Series A Senior Secured Notes due 2009 and 7.45% Series B
Senior Secured Notes due 2013 in the aggregate principal amount
of $42,000,000
99.17 Note Purchase Agreement dated as of January 21, 1993 with
respect to 8.20% Collateralized Promissory Note due 2018 in the
principal amount of $64,523,000
99.18 Kmart Corporation 8.20% Collateralized Promissory Notes due
2018 in the principal amount of $64,523,000, dated as of
January 21, 1993
99.19 Note Purchase Agreement dated as of December 1, 1992, with
respect to 8.794845% Collateralized Promissory Notes Due June 1,
2013 in the principal amount of $13,060,532
99.20 Form of Kmart Corporation 8.794845 Collateralized Promissory
Note due June 1, 2013 in the principal amount of $13,060,532,
dated as of December 1, 1992
99.21 Note Purchase Agreement dated as of December 1, 1992 with
respect to 8.791612% Collateralized Promissory Notes Due June 1,
2013 in the principal amount of $8,555,278
99.22 Kmart Corporation 8.791612% Collateralized Promissory Note Due
June 1, 2013 in the principal amount of $8,555,278, dated as
of December 1, 1992
99.23 Bond Put Agreement dated as of December 22, 1992 with respect
to Collateralized Lease Revenue Bonds in the principal amount
of $100,505,000
99.24 Bond Purchase Agreement dated as of December 28, 1992 with
respect to Collateralized Lease Revenue Bonds in the principal
amount of $100,505,000
</TABLE>
3
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<TABLE>
<S> <C>
99.25 Indenture dated as of December 28, 1992 with respect to
Collateralized Lease Revenue Bonds (Kmart Corporation Leased
Facilities) Series 1992 A, Series 1992 B, Series 1992 C and
Series 1992 D in the principal amount of $100,505,000
99.26 Trust Agreement dated as of July 1, 1992 with respect to
Mortgage Pass-Through Certificates (Kmart Corporation Power
Center - Utica, Michigan Project) Series 1992 in the principal
amount of $31,900,000
99.27 Collateralized Promissory Note (Utica, Michigan - Power Center)
in the principal amount of $30,555,000, dated July 1, 1992
99.28 Note Put Agreement dated as of July 1, 1992 with respect to
Collateralized Promissory Note (Utica, Michigan - Power Center)
in the principal amount of $30,555,000
99.29 Trust Agreement dated as of June 11, 1993 with respect to
Mortgage Pass-Through Certificates (Borders Books, Utica,
Michigan) Series 1993 in the principal amount of $5,415,300
99.30 First Amendment dated as of April 14, 1994 to Trust Agreement
dated as of June 11, 1993 with respect to Mortgage Pass-
Through Certificates (Borders Books, Utica, Michigan) Series
1993 in the principal amount of $5,415,300
99.31 Promissory Note in the principal amount of $5,187,000, dated
July 1, 1993
99.32 Note Put Agreement dated as of June 11, 1993 with respect to
Promissory Note in the principal amount of $5,187,000
99.33 Trust Agreement dated as of May 14, 1993 with respect to
Mortgage Pass-Through Certificates (The Crossroads at Buckland
Hills, Manchester, Connecticut) Series 1993 in the principal
amount of $16,332,700
99.34 Promissory Note in the principal amount of $15,616,000, dated
May 20, 1993
99.35 Note Put Agreement dated as of May 14, 1993 with respect to
Promissory Note in the principal amount of $15,616,000
99.36 $200,000,000 Loan Agreement dated as of January 21, 1992
99.37 First Amendment dated as of January 21, 1992 to Loan Agreement
dated as of January 21, 1992
</TABLE>
4
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<TABLE>
<S> <C>
99.38 Second Amendment dated as of February 14, 1992 to Loan
Agreement dated as of January 21, 1992
99.39 Third Amendment dated as of December 20, 1994 to Loan Agreement
dated as of January 21, 1992
99.40 Guaranty Agreement dated as of January 21, 1992 by Kmart
Corporation
99.41 $200,000,000 Loan Agreement dated as of August 7, 1992
99.42 First Amendment dated as of December 20, 1994 to Loan Agreement
dated as of August 7, 1992
99.43 Guaranty Agreement dated as of August 7, 1992 by Kmart
Corporation
</TABLE>
5
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KMART CORPORATION
(Registrant)
By: /s/ Marvin P. Rich
-------------------------------
Marvin P. Rich
Executive Vice President,
Strategic Planning, Finance and
Administration
Date: November 14, 1995
6
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
99.1 Note Purchase Agreement dated as of May 29, 1992 with respect to
8.95% Collateralized Promissory Note due 2007 in the principal
amount of $8,135,000 and 9.35% Collateralized Promissory Note due
2002 in the principal amount of $29,545,000
99.2 Kmart Corporation 8.95% Collateralized Promissory Note Due 2007 in
the principal amount of $8,135,000, dated May 29, 1992
99.3 Kmart Corporation 9.35% Collateralized Promissory Note Due 2002 in
the principal amount of $29,545,000, dated May 29, 1992
99.4 Kmart Corporation Note Agreement dated as of January 1, 1992 with
respect to 9.06% Senior Secured Notes Due February 1, 2012 in the
principal amount of $71,417,590
99.5 Trust Indenture dated as of January 1, 1992 with respect to 9.06%
Senior Secured Notes Due February 1, 2012 in the principal amount
of $71,417,590
99.6 Form of Kmart Corporation 9.06% Senior Secured Note, Due February 1,
2012
99.7 Note Purchase and Participation Agreement dated as of May 28, 1993
with respect to 7.05% Series A Senior Secured Notes due 2009 and
7.45% Series B Senior Secured Notes due 2013 in the aggregate
principal amount of $42,000,000
99.8 Kmart Corporation 7.05% Series A-1 Senior Secured Note due 2009 in
the principal amount of $2,601,250, dated May 28, 1993
99.9 Kmart Corporation 7.05% Series A-2 Senior Secured Notes due 2009 in
the principal amount of $11,398,750, dated May 28, 1993
99.10 Kmart Corporation 7.05% Series A-1 Senior Secured Notes Due 2009 in
the principal amount of $2,601,250, dated May 28, 1993
99.11 Kmart Corporation 7.05% Series A-2 Senior Secured Notes Due 2009 in
the principal amount of $11,398,750, dated May 28, 1993
99.12 Kmart Corporation 7.45% Series B-1 Senior Secured Notes due 2013 in
the principal amount of $1,300,625, dated May 28, 1993
</TABLE>
7
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<TABLE>
<S> <C>
99.13 Kmart Corporation 7.45% Series B-2 Senior Secured Notes due 2013 in
the principal amount of $5,699,375 dated May 28, 1993
99.14 Kmart Corporation 7.45% Series B-1 Senior Secured Notes due 2013 in
the principal amount of $1,300,625, dated May 28, 1993
99.15 Kmart Corporation 7.45% Series B-2 Senior Secured Notes due 2013 in
the principal amount of $5,699,375, dated May 28, 1993
99.16 Trust Indenture dated as of May 28, 1993 with respect to 7.05% Series
A Senior Secured Notes due 2009 and 7.45% Series B Senior Secured
Notes due 2013 in the aggregate principal amount of $42,000,000
99.17 Note Purchase Agreement dated as of January 21, 1993 with respect to
8.20% Collateralized Promissory Note due 2018 in the principal amount
of $64,523,000
99.18 Kmart Corporation 8.20% Collateralized Promissory Notes due 2018 in
the principal amount of $64,523,000, dated as of January 21, 1993
99.19 Note Purchase Agreement dated as of December 1, 1992, with respect to
8.794845% Collateralized Promissory Notes Due June 1, 2013 in the
principal amount of $13,060,532
99.20 Form of Kmart Corporation 8.794845 Collateralized Promissory Note due
June 1, 2013 in the principal amount of $13,060,532, dated as of
December 1, 1992
99.21 Note Purchase Agreement dated as of December 1, 1992 with respect to
8.791612% Collateralized Promissory Notes Due June 1, 2013 in the
principal amount of $8,555,278
99.22 Kmart Corporation 8.791612% Collateralized Promissory Note Due June
1, 2013 in the principal amount of $8,555,278, dated as of December
1, 1992
99.23 Bond Put Agreement dated as of December 22, 1992 with respect to
Collateralized Lease Revenue Bonds in the principal amount of
$100,505,000
99.24 Bond Purchase Agreement dated as of December 28, 1992 with respect to
Collateralized Lease Revenue Bonds in the principal amount of
$100,505,000
99.25 Indenture dated as of December 28, 1992 with respect to
Collateralized Lease Revenue Bonds (Kmart Corporation Leased
Facilities) Series 1992 A, Series 1992 B, Series 1992 C and Series
1992 D in the principal amount of $100,505,000
</TABLE>
8
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<TABLE>
<S> <C>
99.26 Trust Agreement dated as of July 1, 1992 with respect to Mortgage
Pass-Through Certificates (Kmart Corporation Power Center - Utica,
Michigan Project) Series 1992 in the principal amount of $31,900,000
99.27 Collateralized Promissory Note (Utica, Michigan - Power Center) in
the principal amount of $30,555,000, dated July 1, 1992
99.28 Note Put Agreement dated as of July 1, 1992 with respect to
Collateralized Promissory Note (Utica, Michigan - Power Center) in the
principal amount of $30,555,000
99.29 Trust Agreement dated as of June 11, 1993 with respect to Mortgage
Pass-Through Certificates (Borders Books, Utica, Michigan) Series
1993 in the principal amount of $5,415,300
99.30 First Amendment dated as of April 14, 1994 to Trust Agreement dated
as of June 11, 1993 with respect to Mortgage Pass-Through
Certificates (Borders Books, Utica, Michigan) Series 1993 in the
principal amount of $5,415,300
99.31 Promissory Note in the principal amount of $5,187,000, dated July 1,
1993
99.32 Note Put Agreement dated as of June 11, 1993 with respect to
Promissory Note in the principal amount of $5,187,000
99.33 Trust Agreement dated as of May 14, 1993 with respect to Mortgage
Pass-Through Certificates (The Crossroads at Buckland Hills,
Manchester, Connecticut) Series 1993 in the principal amount of
$16,332,700
99.34 Promissory Note in the principal amount of $15,616,000, dated May 20,
1993
99.35 Note Put Agreement dated as of May 14, 1993 with respect to
Promissory Note in the principal amount of $15,616,000
99.36 $200,000,000 Loan Agreement dated as of January 21, 1992
99.37 First Amendment dated as of January 21, 1992 to Loan Agreement dated
as of January 21, 1992
99.38 Second Amendment dated as of February 14, 1992 to Loan Agreement
dated as of January 21, 1992
99.39 Third Amendment dated as of December 20, 1994 to Loan Agreement
dated as of January 21, 1992
</TABLE>
9
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<TABLE>
<S> <C>
99.40 Guaranty Agreement dated as of January 21, 1992 by Kmart Corporation
99.41 $200,000,000 Loan Agreement dated as of August 7, 1992
99.42 First Amendment dated as of December 20, 1994 to Loan Agreement dated
as of August 7, 1992
99.43 Guaranty Agreement dated as of August 7, 1992 by Kmart Corporation
</TABLE>
10
<PAGE> 1
EXHIBIT 99.1
======================================================================
NOTE PURCHASE AGREEMENT
BETWEEN
KMART CORPORATION
AND
XXXXXXXXXX
Dated as of May 29, 1992
$8,135,000 8.95% Collateralized
Promissory Note Due 2007
$29,545,000 9.35% Collateralized
Promissory Note Due 2022
======================================================================
<PAGE> 2
TABLE OF CONTENTS
-----------------
(Not A Part of the Agreement)
Page
----
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT . . . . . . . . 1
1.1. Description of Notes . . . . . . . . . . . . . 1
1.2. Commitment; Closing Date . . . . . . . . . . . 2
SECTION 2. PREPAYMENT OF NOTES . . . . . . . . . . . . . . . . 3
2.1. Optional Prepayment . . . . . . . . . . . . . 3
2.2. Notice of Prepayments. . . . . . . . . . . . . 3
2.3. Special Put Option of Holders Following a
Rating Decline . . . . . . . . . . . . . . . . 3
2.5. Allocation of Prepayments. . . . . . . . . . . 7
SECTION 3. REPRESENTATIONS . . . . . . . . . . . . . . . . . . 7
3.1. Representations of the Company . . . . . . . . 7
3.2. Representations and Agreements of the
Purchaser; Legend. . . . . . . . . . . . . . . 11
SECTION 4. CLOSING CONDITIONS. . . . . . . . . . . . . . . . . 12
4.1. Company's Closing Certificate. . . . . . . . . 12
4.2. Legal Opinions . . . . . . . . . . . . . . . . 12
4.3. Related Transactions . . . . . . . . . . . . . 12
4.4. Ratings. . . . . . . . . . . . . . . . . . . . 15
4.5. Private Placement Number Application . . . . . 15
4.6. Legality . . . . . . . . . . . . . . . . . . . 15
4.7. Funding Instructions . . . . . . . . . . . . . 15
4.8. No Default or Event of Default . . . . . . . . 15
4.9. Satisfactory Proceedings . . . . . . . . . . . 15
4.10. Costs and Expenses . . . . . . . . . . . . . . 15
SECTION 5. COMPANY COVENANTS . . . . . . . . . . . . . . . . . 16
5.1. Financial Reports and Books and Records. . . . 16
5.2. Books and Records; Financial Information . . . 18
5.3. Payments . . . . . . . . . . . . . . . . . . . 19
5.4. Paying Agency. . . . . . . . . . . . . . . . . 19
5.5. Corporate Existence, etc . . . . . . . . . . . 19
5.6. Taxes. . . . . . . . . . . . . . . . . . . . . 20
5.7. Insurance. . . . . . . . . . . . . . . . . . . 20
5.8. Limitation on Consolidation or Merger. . . . . 20
5.9. Ratings. . . . . . . . . . . . . . . . . . . . 21
5.10. Direct Payments. . . . . . . . . . . . . . . . 21
i
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Page
----
SECTION 6.EVENTS OF DEFAULT AND REMEDIES THEREFOR . . . . . . . . . . 22
6.1. Events of Default . . . . . . . . . . . . . . . . . . 22
6.2. Notice to Holders . . . . . . . . . . . . . . . . . . 24
6.3. Acceleration of Maturities . . . . . . . . . . . . . 24
6.4. Rescission of Acceleration. . . . . . . . . . . . . . 25
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS . . . . . . . . . . . . . 26
7.1. Consent Required . . . . . . . . . . . . . . . . . . 26
7.2. Solicitation of Holders. . . . . . . . . . . . . . . 26
7.3. Effect of Amendment or Waiver. . . . . . . . . . . . 27
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS . . . . . . . . . 27
8.1. Definitions. . . . . . . . . . . . . . . . . . . . . 27
8.2. Accounting Principles . . . . . . . . . . . . . . . 32
SECTION 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 32
9.1. Registered Notes . . . . . . . . . . . . . . . . . . 32
9.2. Exchange of Notes. . . . . . . . . . . . . . . . . . 33
9.3. Loss, Theft, etc. of Notes . . . . . . . . . . . . . 33
9.4. Expenses, Stamp Tax Indemnity. . . . . . . . . . . . 33
9.5. Powers and Rights Not Waived; Remedies
Cumulative . . . . . . . . . . . . . . . . . . . . . 34
9.6. Notices. . . . . . . . . . . . . . . . . . . . . . . 35
9.7. Successors and Assigns . . . . . . . . . . . . . . . 35
9.8. Survival of Covenants and Representations. . . . . . 36
9.9. Severability . . . . . . . . . . . . . . . . . . . . 36
9.10. Governing Law. . . . . . . . . . . . . . . . . . . 37
9.11. Submission to Jurisdiction . . . . . . . . . . . . 37
9.12. Captions . . . . . . . . . . . . . . . . . . . . . 38
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ii
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ATTACHMENTS TO NOTE PURCHASE AGREEMENT:
Exhibit A - Form of 8.95% Collateralized Promissory Note due
2007
Exhibit B - Form of 9.35% Collateralized Promissory Note due
2022
Exhibit C - Closing Certificate of the Company
Exhibit D - Closing Opinion of Special North Carolina
Counsel to the Company
Exhibit E - Closing Opinion of General Counsel to the
Company
Exhibit F - Closing Opinion of Special New York Counsel to
the Company
Exhibit G - Form of Deed of Trust
Exhibit H - Form of Assignment Agreement
iii
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Kmart Corporation
3100 West Big Beaver Road
Troy, MI 48084-3163
NOTE PURCHASE AGREEMENT
$8,135,000 8.95% Kmart Collateralized
Promissory Note Due 2007
and
$29,545,000 9.35% Kmart Collateralized
Promissory Note Due 2022
May 29, 1992
XXXXXXXXXX
XXX
XXX
Gentlemen:
The undersigned, Kmart Corporation, a Michigan corporation
(the "Company"), hereby agrees with XXXXXXXXXX (" XXXXXXXXXX") as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
1.1. DESCRIPTION OF NOTES. The Company has
authorized the issuance and sale of $8,135,000 aggregate principal amount of
its 8.95% Collateralized Promissory Notes due 2007 (the "8.95% Notes") and
$29,545,000 aggregate principal amount of its 9.35% Collateralized Promissory
Notes due 2022 (the "9.35% Notes" and, together with the 8.95% Notes, the
"Notes"), each to be dated the date of issue, to bear interest from such date
as is set forth therein to but not including the date of repayment of such
principal amount at the rate of 8.95% per annum and 9.35% per annum,
respectively, payable on the lst day of each May and November in each year
(commencing November 1, 1992) and at maturity, and to bear interest on overdue
principal, overdue premium, if any, and any overdue installment of interest at
the Overdue Rate, whether at scheduled maturity, upon acceleration or
otherwise, until paid, to mature on May
1
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1, 2007 and May 1, 2022, respectively, and to be substantially in the form
attached hereto as Exhibits A and B, respectively. Interest on the Notes shall
be computed on the basis of a 360-day year of twelve 30-day months. Principal
on the Notes shall be due and payable in equal annual installments (determined
by dividing the aggregate principal amount then outstanding by the number of
annual installments remaining) commencing on May 1, 1993, in the case of the
8.95% Notes, and May 1, 2008, in the case of the 9.35% Notes, and, thereafter,
on the first day of May in each succeeding year through and including, in the
case of the 8.95% Notes, May 1, 2007, or, in the case of the 9.35% Notes, May
1, 2022. The Notes are not subject to prepayment, purchase or redemption at
the option of the Company prior to their expressed maturity date except on the
terms and conditions and in the amounts and with the premiums, if any, set
forth in the various paragraphs of Section 2 of this Agreement and in the
Notes. The term "Notes" as used herein shall include each Note delivered
pursuant to this Agreement, and each Note issued in exchange or replacement
therefor. XXXXXXXXXX is hereinafter sometimes referred to as the "Purchaser."
Certain capitalized terms used herein shall have the meanings set forth in
Section 8.1, unless the context shall otherwise require.
1.2. COMMITMENT; CLOSING DATE. Subject to the terms and conditions
hereof and on the basis of the representations and warranties hereinafter set
forth, the Company agrees to issue and sell to Purchaser, and Purchaser agrees
to purchase from the Company, $8,135,000 aggregate principal amount of 8.95%
Notes of the Company and $29,545,000 aggregate principal amount of 9.35% Notes
of the Company at a price of 100% and 100% of the principal amount thereof,
respectively, for an aggregate purchase price of $37,680,000.00 (the "Purchase
Price"), on the Closing Date hereinafter mentioned.
Delivery of the Notes will be made at the offices of Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New York
10019 against payment therefor in the amount of the Purchase Price at 10:00
A.M., New York City time, on June 2, 1992 or such later date as shall be
mutually agreed upon by the Company and the Purchaser (the "Closing Date").
Payment for the Notes shall be effected by wire transfer of federal funds to
such bank account of the Company as may be specified by the Company in writing
at least one Business Day before the Closing Date. The Notes delivered to
Purchaser on the Closing Date will be
2
<PAGE> 7
delivered to Purchaser in the form of one or more registered Notes for the full
amount of Purchaser's purchase, registered in Purchaser's name or in the name
of such nominee(s) or assignee(s) as you shall have specified in writing.
SECTION 2. PREPAYMENT OF NOTES.
No prepayment of the Notes may be made except to the extent
and in the manner expressly provided in this Agreement and the Notes.
2.1. OPTIONAL PREPAYMENT. Upon compliance with Section
2.2, the Company shall have the option at any time and from time to time of
prepaying the outstanding Notes, either in whole or in part (but if in part,
then in units of U.S. $1,000,000 or an integral multiple of $100,000 in excess
thereof) by payment of the principal amount of the Notes, or portion thereof to
be prepaid, together with accrued interest thereon to (but not including) the
date of such prepayment and a premium (determined three Business Days prior to
the date of such prepayment) equal to the Make-Whole Premium (the "Redemption
Price").
2.2. NOTICE OF PREPAYMENTS. The Company shall give
written notice of any prepayment of the Notes pursuant to Section 2.1 hereof to
each holder thereof not less than 30 days nor more than 60 days before the date
fixed for such prepayment of the Notes. Notices required by this Section 2.2
shall specify (a) the date of prepayment, (b) the principal amount of the
holder's Notes to be prepaid on such date, and (c) the estimated Make-Whole
Premium and the accrued interest applicable to the prepayment. Notice of
prepayment having been so given, the aggregate principal amount of the Notes
specified in such notice, together with the Make-Whole Premium and accrued
interest thereon shall become due and payable on the prepayment date set forth
in such notice. The Company shall also give written notice to each holder of
the Notes, by telecopy or other same day written communication, setting forth
the computation and amount of the Make-Whole Premium payable in connection with
a prepayment pursuant to Section 2.1 at least three Business Days prior to the
date of such prepayment.
3
<PAGE> 8
2.3. SPECIAL PUT OPTION OF HOLDERS FOLLOWING A RATING
DECLINE.
(a) RATING DECLINE. If a Rating Decline (as
defined in paragraph (d) below) occurs, each holder of a Note will have the
right, at such holder's option, to require the Company to redeem such Note in
whole (but not in part) on the Redemption Date (as defined in paragraph (c)
below) at a price equal to 101.138% of the principal amount thereof in the case
of the 8.95% Notes or 101.097% of the principal amount thereof in the case of
the 9.35% Notes, together with accrued interest thereon to the Redemption Date
(the "Ratings Decline Redemption Price"). The obligations of the Company to
give the notices required pursuant to paragraph (b) of this Section 2.3 shall
remain in effect so long as any Notes remain outstanding. If a Rating Decline
occurs and subsequent to such Rating Decline another Rating Decline occurs,
then each holder of a Note will again have the rights, and the Company again
will have the obligations, as set forth in this Section 2.3.
(b) NOTICE. Within seven days after the first
date on which a Rating Decline has occurred (the "Trigger Date"), the Company
will cause a notice to be mailed to each holder of Notes, which notice shall
(1) state that a Rating Decline has occurred, (2) describe the action taken
with respect to the rating that constituted such Rating Decline, including the
date of the occurrence thereof, (3) set forth the Company's offer to redeem all
of the Notes as provided in paragraph (c) below, and (4) state (i) the Final
Surrender Date (as defined below), (ii) the manner in which the Redemption Date
has been determined, (iii) the estimated Ratings Decline Redemption Price
and (iv) the party to whom the holder of a Note electing redemption shall
surrender such Note on or before the Final Surrender Date.
(c) ELECTION OF REDEMPTION. In connection with
the redemption of any Note pursuant to this Section 2.3, the holder thereof
will be required to surrender, on or before the Final Surrender Date, at the
principal office of the Paying Agent (as defined in Section 5.4 hereof) or, in
the event no Paying Agent is then retained by the Company, the offices of any
other entity meeting the qualifications of Paying Agent set forth in Section
5.4 designated by the Company in any notice delivered pursuant to paragraph (b)
above, such Note duly endorsed or assigned to the Company or in blank, together
with written notice of the holder's
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election to have the Company redeem such Notes specified in such notice. The
Paying Agent or such other qualified entity shall hold the Notes in trust for
the benefit of the holders of the Notes electing redemption pursuant to this
Section 2.3 until payment in full of the Ratings Decline Redemption Price to
the holders on the Final Surrender Date and shall then and thereupon surrender
such Notes to the Company. Election of redemption by a holder pursuant to this
Section 2.3 shall (unless otherwise provided by law) be irrevocable. "Final
Surrender Date" means a Business Day selected by the Company that is, subject
to any contrary requirements of applicable law, not less than 30 nor more than
60 days after the Trigger Date, and "Redemption Date" means the Business Day
next succeeding the Final Surrender Date.
(d) CERTAIN DEFINED TERMS. For purposes of this
Section 2.3, the following terms shall have the following meanings:
A "RATING DECLINE" shall exist upon any date that:
(a) the ratings assigned to unsubordinated, senior,
unsecured indebtedness of the Company on such date by either Moody's or S&P:
(1) declines to a rating below the Minimum Investment Grade, or (2) further
declines, in the event then rated below the Minimum Investment Grade; or
(b) (1) unsubordinated, senior, unsecured indebtedness of the
Company ceases to be rated by either Moody's or S&P (other than by reason of
such rating agency ceasing to rate the indebtedness of corporations generally)
at such time as the rating then assigned by the remaining such Rating Agency
shall be below Minimum Investment Grade or (2) unsubordinated, senior,
unsecured indebtedness of the Company ceases to be rated by either Moody's
or S&P at such time as the rating then assigned by the remaining such Rating
Agency shall be at least the Minimum Investment Grade and the Company is unable
to have such debt rated by another Rating Agency within 90 days thereafter
(except that no Rating Decline shall be deemed to have occurred under this
clause (b)(2) if such debt ceases to be rated by Moody's and S&P by reason of
both such Rating Agencies ceasing to rate the indebtedness of corporations
generally); or
(c) unsubordinated, senior, unsecured indebtedness of the
Company ceases to be rated by both Moody's and S&P for any reason (except if,
through no fault of the Company,
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both Moody's and S&P are unable to provide a rating due to a business failure
or interruption affecting both Moody's and S&P).
For purposes of determining whether a Rating Decline shall have occurred under
clause (a) of this definition, the rating initially assigned by any Rating
Agency engaged by the Company pursuant to clause (b) hereof to replace any
rating withdrawn or otherwise terminated by Moody's or S&P shall be compared to
the last rating assigned by Moody's or S&P, as the case may be.
"MOODY'S" means Moody's Investors Service, Inc. or any successor
thereto.
"S&P" means Standard & Poor's Corporation or any successor thereto.
"RATING AGENCY" and "RATING AGENCIES" mean Moody's and S&P and, if
either Moody's or S&P (but not both) ceases to rate the indebtedness of
corporations generally, or unsubordinated, senior, unsecured indebtedness of
the Company in particular, then another comparable rating agency of recognized
national standing in the United States.
"MINIMUM INVESTMENT GRADE" is defined to mean a rating of at least
Baa2, in the case of a rating by Moody's, and a rating of at least BBB, in the
case of a rating by S&P or the then equivalent of such rating by Moody's or S&P
or, to the extent applicable, by another Rating Agency.
2.4. OTHER PREPAYMENT. In the event that either (a) the
Company shall be required to prepay the Notes pursuant to Section or 1.07 or
1.14 of the Deed of Trust, or (b) the Company shall have failed to provide the
Purchaser with a true and correct original copy of a permanent certificate of
occupancy issued by the appropriate governmental authority in Guilford County,
North Carolina, with respect to the Property and Improvements (the
"Certificate of Occupancy") on or prior to the ninetieth day following the
Closing Date (the "Certificate of Occupancy Due Date"); then, within the time
provided in the Deed of Trust with respect to clause (a) above, or not later
than five Business Days following the Certificate of Occupancy Due Date (the
"Certificate of Occupancy Pay-Off Date"), with respect to clause (b) above, (i)
each holder of a Note shall be required to surrender such Note, duly endorsed
or assigned
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to the Company in blank, at the principal office of the Paying Agent or, in the
event no Paying Agent is then retained by the Company, the offices of any other
entity meeting the qualifications of Paying Agent set forth in Section 5.4
designated by the Company in a notice delivered to the holders, and (ii) the
Paying Agent or such other qualified entity shall hold the Notes in trust for
the benefit of the holders of the Notes until payment in full of the Redemption
Price shall have been made to such holders within the time provided in the Deed
of Trust, with respect to clause (a) above, or on the Certificate of Occupancy
Pay-Off Date, with respect to clause (b) above, and shall then and thereupon
surrender such Notes to the Company. If the provisions of clause (a) of the
preceding sentence shall apply, Purchaser shall apply the proceeds of any
condemnation proceeding, insurance or other award relating to all or a portion
of the Mortgaged Estate to the payment of the Redemption Price.
Notwithstanding the foregoing if, on the Certificate of Occupancy Due Date, the
Company is diligently pursuing the issuance of the Certificate of Occupancy but
none has yet been issued due to circumstances beyond the Company's control, and
the Company provides evidence to Purchaser that the Company is reasonably
likely to obtain a Certificate of Occupancy, the Certificate of Occupancy Due
Date shall be extended until the one hundred and eightieth day following the
Closing Date and the Certificate of Occupancy Pay-Off Date shall be extended
until the fifth Business Day following such extended Certificate of Occupancy
Due Date.
2.5. ALLOCATION OF PREPAYMENTS. Except as set forth in
Section 2.3, all partial prepayments shall be applied on all outstanding Notes
ratably in accordance with the unpaid principal amounts thereof.
SECTION 3. REPRESENTATIONS.
3.1. REPRESENTATIONS OF THE COMPANY. The Company hereby
represents and warrants for the benefit of Purchaser that the representations
set forth as follows are true and correct as of the date hereof and shall be
true and correct as of the Closing Date:
(a) The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Michigan.
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(b) The Company is duly qualified to do business as a
foreign corporation in North Carolina and in each other jurisdiction in which
the conduct of its business or the ownership of its properties would require
such qualification, except where the failure to so qualify would not have a
Material Adverse Effect.
(c) The execution, delivery and performance of this
Agreement, the Notes and the other Note Documents are within the corporate
powers of the Company and have been duly authorized by all necessary corporate
action on the part of the Company. On the Closing Date, this Agreement, the
Notes and the other Note Documents will have been duly executed by and will be
the legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
enforcement of creditors' rights generally and by general principles of equity.
(d) The audited consolidated financial statements of the
Company and its Subsidiaries for the Company's fiscal years ended January 31,
1991 and January 29, 1992 (the "Audited Financials") have been prepared in
accordance with generally accepted accounting principles, consistent with the
principles and practices used in the preparation of the Company's audited
consolidated financial statements for the immediately preceding fiscal year
(except as otherwise indicated in the Audited Financials, including the notes
thereto) and present fairly in all material respects the consolidated financial
condition of the Company at the end of each such financial year and the
consolidated results of operations and changes in financial position of the
Company for each of such periods.
(e) No consent, approval or authorization of, or
declaration, registration or filing with, or payment to, any governmental body
or any non-governmental Person is required to be obtained or made on or prior
to the Closing Date in connection with the execution, delivery and performance
by the Company of this Agreement, the Notes and the other Note Documents or
the transactions contemplated hereby or thereby or as a condition to the
legality, validity or enforceability of the Company's obligations under this
Agreement, the Notes or the other Note Documents, or the offer, issue, sale or
delivery of the Notes to the Purchaser or the fulfillment of or compliance with
the terms
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and provisions of the Notes, this Agreement or the other Note Documents, except
for the recording of a mortgage and the filing of forms UCC-1 in the
appropriate offices in Guilford County, North Carolina, the filing of forms
UCC-1 with the Secretary of State of the State of North Carolina and the
payment of nominal filing fees.
(f) The Company and its Subsidiaries have paid all taxes
that they are required to have paid, except for (i) taxes that are presently
payable but not overdue, (ii) other taxes the payment of which is being
contested in good faith and by appropriate proceedings and (iii) other taxes
the non-payment of which would not have a Material Adverse Effect.
(g) Neither the execution and delivery of this Agreement,
the Notes or the other Note Documents by the Company nor the performance of the
terms and provisions hereof and thereof, nor the issuance and sale of the Notes
by the Company will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in any
violation of, any charter instrument, contract, agreement, mortgage, indenture,
lease, instrument or order, or of any statute, law, rule or regulation of the
United States of America or the States of Michigan or North Carolina, to which
the Company is subject.
(h) Neither the Company's annual report on Form 10-K for
the fiscal year ending January 29, 1992 (the "1991 10-K") nor the Company's
quarterly reports on Form 10-Q filed after the 1991 10-K (if any) contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements made therein, in light of the circumstances in
which they were made, not misleading.
(i) Since January 29, 1992, there has not been any material
adverse change in the financial condition or results of operations of the
Company or in the condition of the Mortgaged Estate.
(j) The net proceeds from the issuance and sale of the
Notes will be used for general corporate purposes of the Company. No part of
the proceeds of the sale of the Notes are intended to be used, directly or
indirectly, for the purpose of purchasing or carrying any "margin stock"
within the meaning of Regulations G, T or X of the Board of Governors of the
Federal Reserve System.
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The assets of the Company and its Subsidiaries do not include an amount of
"margin stock" that would cause the provisions of Rule 207.2(f)(2)(i) of
Regulation G to be inapplicable and neither the Company nor any of its
Subsidiaries has any present intention of purchasing such an amount of "margin
stock".
(k) Neither the Company nor, to its knowledge, anyone
acting on its behalf has offered the Notes or any similar securities relating
to the Property to, or solicited any offer to purchase the same from, any
Person other than the Purchaser and not more than 20 other institutional
investors, or has taken any other action which would require the registration
of the Notes under Section 5 of the Act.
(l) The consummation of the transactions contemplated by
this Agreement and compliance by the Company with the provisions hereof and the
Notes issued hereunder and the other Note Documents will not constitute a
prohibited transaction within the meaning of ERISA or Section 4975 of the Code.
Each Plan complies in all material respects with all applicable statutes and
governmental rules and regulations, and (1) no Reportable Event has occurred
and is continuing with respect to any Plan subject to Title IV of ERISA, (2)
neither the Company nor any ERISA Affiliate has withdrawn from any Plan subject
to Title IV of ERISA or any Multiemployer Plan or instituted steps to do so,
and (3) no steps have been instituted to terminate in a distress termination
any Plan subject to Title IV of ERISA. No condition exists or event or
transaction has occurred in connection with any Plan which could result in the
incurrence by the Company or any ERISA Affiliate of any material liability,
fine or penalty. No Plan maintained by the Company or any ERISA Affiliate and
no trust created thereunder have incurred any "accumulated funding deficiency"
as defined in Section 302 of ERISA, and the present value of all benefits
vested under all Plans subject to Title IV of ERISA does not exceed the value
of the assets of such Plans allocable to such vested benefits (such present
value to be determined as of, and based on, the most recent valuation of such
Plan for funding purposes). The Company has no material contingent liability
with respect to any post-retirement "welfare benefit plan" (as such term is
defined in ERISA), other than as required by section 4980B of the Code.
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<PAGE> 15
(m) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, and the Company is
not directly or indirectly controlled by an investment Company. The Company is
not a "holding company" or a "subsidiary" or an "affiliate" of a "holding
company" or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(n) Except as disclosed in the 1991 10-K, there are no
actions, suits or proceedings pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries in any court or
before any governmental authority or arbitration board or tribunal which, if
adversely determined, would have a Material Adverse Effect.
(o) To the knowledge of the Company, the Company is not
in violation of, and is not subject to any liability under, any environmental
laws affecting it or its properties, except for such violations and liabilities
as would not in the aggregate have a Material Adverse Effect.
(p) The Company is not in violation of any federal,
state, local or foreign law, ordinance or regulation or any order, judgment,
injunction, award or decree or any other requirement of any government or
regulatory body, court or arbitrator applicable to the business or properties
of the Company, except for such violations as would not in the aggregate have a
Material Adverse Effect.
(q) Each of the representations and warranties made or to
be made by the Company in the other Note Documents shall be incorporated herein
on the Closing Date as if set forth herein in their entirety and shall be true
and correct as of such date.
3.2. REPRESENTATIONS AND AGREEMENTS OF THE PURCHASER; LEGEND.
(a) Purchaser represents that it is acquiring the Notes
for its own account and not with a view to distribution (as such term is used
under Section 2(11) of the Act) thereof; provided that the disposition of
Purchaser's property shall at all times be and remain within its control.
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<PAGE> 16
(b) Purchaser represents and warrants that no part of
such funds constitutes assets allocated to any separate account maintained by
it in which any employee benefit plan (or its related trust) has any interest.
SECTION 4. CLOSING CONDITIONS.
Purchaser's obligation to purchase the Notes on the Closing
Date shall be subject to the performance by the Company of its agreements
hereunder and under the other Note Documents which by the terms hereof are to
be performed at or prior to the time of delivery of the Notes and to the
following further conditions precedent:
4.1. COMPANY'S CLOSING CERTIFICATE. Concurrently with the
delivery of Notes to Purchaser on the Closing Date, Purchaser shall have
received a certificate of the Company signed by an Executive Officer of the
Company in substantially the form of Exhibit C hereto, to the effect that,
among other things, (a) the representations and warranties contained in Section
3.1 and the other Note Documents are true on and as of the Closing Date and (b)
no Default or Event of Default exists on and as of the Closing Date.
4.2. LEGAL OPINIONS. Concurrently with the delivery of Notes
to Purchaser on the Closing Date, Purchaser shall have received from Womble
Carlyle Sandridge & Rice, North Carolina counsel to the Company, Squire,
Sanders & Dempsey, New York counsel to the Company, and Tony Palizzi, Esq.,
General Counsel to the Company, their respective opinions, dated the Closing
Date, in substantially the form and substance set forth in Exhibits D, E and F
hereto, respectively.
4.3. RELATED TRANSACTIONS. Prior to or concurrently with the
issuance and sale of Notes to you on the Closing Date, the Company (and, in the
case of the Deed of Trust, the Trustee) shall have executed and delivered the
Deed of Trust, in substantially the form of Exhibit G hereto, and all other
Note Documents, including all such Note Documents as shall be requested to
evidence and effect the XXXXXXXXXX Assignment, and:
(i) the Company shall have good and marketable fee simple
title to the Property, free and clear of all liens and encumbrances except
Permitted Encumbrances;
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(ii) the Company shall have (i) caused the Deed of Trust
and all required Uniform Commercial Code financing statements to be duly
recorded or filed in the manner required by the laws of North Carolina and (ii)
paid, or caused to be paid, all filing fees and recording charges incurred in
connection therewith, and such recordings and filings shall be satisfactory to
the Purchaser and their special counsel;
(iii) the Purchaser shall have received an A.L.T.A.
Standard Loan Policy of title insurance (or such other form of loan or
mortgagee policy as may be prescribed by statute in North Carolina) covering
the Property (or a valid, binding unconditional commitment therefor), dated the
Closing Date, in the current 1990 A.L.T.A. form and including mechanics' and
materialmen's lien coverage, issued by a title insurance company acceptable to
the Purchaser and with such reinsurance as may be required by the Purchaser.
Such policy shall (i) insure (a) the Deed of Trust as a first lien on the
Property, subject to no other liens or encumbrances or restrictions except
Permitted Encumbrances,, which shall be fully identified thereon, (b) that any
restrictions or easements affecting the Property have not been violated and
that a future violation thereof will not result in a forfeiture or reversion of
title, and (c) that all streets adjoining the Property have been completed,
dedicated and accepted for public maintenance and use by the appropriate
governmental authorities, (ii) be in the aggregate amount of $38,096,684.95,
and (iii) be satisfactory in all other respects to the Purchaser. The company
will provide the Purchaser with such endorsements to the title insurance policy
as the Purchaser may reasonably request;
(iv) the Purchaser shall have received a copy of a final
A.L.T.A. as-built survey of the Property, certified not more than 20 days
before Closing Date, such survey to be satisfactory in form and substance to
the Purchaser and to include (i) a metes and bounds description (or an
otherwise sufficient legal description) of the Property, (ii) all lot and
street lines, (iii) a statement of whether the Property is located in a flood
plain or zone as designated by any governmental authority and (iv) the location
of improvements, easements and rights of way (identified by reference to the
recorded instrument creating the same, if any) and encroachments, if any,
prepared and duly certified to the title company, the trustee under the
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<PAGE> 18
Deed of Trust and the Purchaser as an accurate survey by a surveyor duly
licensed in the State of North Carolina;
(v) the Purchaser shall have received a certificate of self-
insurance executed by the Company;
(vi) the Purchaser shall have received an appraisal of the
Property satisfactory to the Purchaser by an appraisal company acceptable to
the Purchaser the cost of which shall be paid by XXXXXXXXXX ;
(vii) the Purchaser shall have received a Phase I
environmental audit report on the Property satisfactory to the Purchaser by an
environmental consulting company acceptable to the Purchaser;
(viii) the Purchaser shall have received a soils report on
the Property satisfactory to the Purchaser by an engineering company acceptable
to the Purchaser;
(ix) the Purchaser shall have received a copy of all
certificates, permits and licenses of governmental authorities or inspection
organizations as are required or are customarily procured in connection with
the construction, use, occupancy or operation of the Property, and each such
certificate, permit and license shall be in full force and effect;
(x) the Purchaser shall have received evidence satisfactory
to it that there does not exist any violation of any law, regulation or order
affecting the Property, including, without limitation, laws, regulations and
orders relating to (i) zoning, subdivision and building restrictions and (ii)
hazardous waste, asbestos or other environmental conditions;
(xi) on the Closing Date, the Property shall be (i)
undamaged by fire or other causes and (ii) unaffected by any pending or
threatened condemnation proceeding;
(xii) the Purchaser shall have received a certificate of the
Company's project manager in charge of the construction of the Property
certifying, among other things, that the Improvements have been constructed in
a good and workmanlike manner and in compliance with all applicable laws, that
all roads, easements, utilities and other services necessary for access to the
Improvements and
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<PAGE> 19
the full utilization of the Improvements have been constructed, entered into or
are available; and
(xiii) the Purchaser and XXXXXXXXXX shall
have received evidence satisfactory to it that the description of the tax lot
or lots covering the Property does not include any lands or buildings other
than those described in the Deed of Trust.
4.4. RATINGS. The Notes shall have a National Association
of Insurance Commissioners's rating of "1" and Purchaser shall have received
written evidence thereof.
4.5. PRIVATE PLACEMENT NUMBER APPLICATION. An application
for issuance of a private placement number for the Notes shall have been made to
S&P.
4.6. LEGALITY. The Notes shall qualify as a legal
investment for Purchaser under the laws and regulations of each jurisdiction to
which Purchaser is subject and Purchaser shall have received such information
concerning the Company its Subsidiaries as Purchaser shall reasonably request
to establish such fact.
4.7. FUNDING INSTRUCTIONS. Purchaser shall have received
written instructions executed by an officer of the Company directing transfer
of the payment of funds in the manner required by Section 1.2 hereof setting
forth (a) the name of the transferee bank, (b) such transferee bank's ABA
Number and (c) the account name and number into which the purchase price for
the Notes is to be deposited.
4.8. NO DEFAULT OR EVENT OF DEFAULT. On the Closing Date,
no Default or Event of Default shall exist.
4.9. SATISFACTORY PROCEEDINGS. All proceedings taken in
connection with the transactions contemplated by this Agreement, and all
documents necessary for the consummation thereof, shall be satisfactory in form
and substance to Purchaser and Paul, Weiss, Rifkind, Wharton & Garrison, and
Purchaser shall have received a copy (executed or certified as may be
appropriate) of all legal documents or proceedings taken in connection with the
consummation of such transactions.
4.10. COSTS AND EXPENSES. The Company shall have paid or
provided for the payment of all expenses that the Company is obligated to pay
pursuant to Section 9.4. In
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addition, Purchaser and XXXXXXXXXX shall have received reasonable assurance
in writing that all other fees and expenses incurred by any other Person
in connection with the transactions contemplated hereunder shall have been paid
on or prior to the Closing Date.
If on the Closing Date the Company fails to tender to Purchaser the Notes to be
issued on such date or if the conditions specified in this Section 4 have not
been fulfilled, Purchaser may thereupon elect to be relieved of all further
obligations under this Agreement. Without limiting the foregoing, if the
conditions specified in this Section 4 have not been fulfilled, Purchaser may
waive compliance by the Company with any such condition to such extent as
Purchaser may in its own sole discretion, determine. Nothing herein shall
operate to relieve the Company of any of its obligations hereunder, including
without limitation the payment of any expenses pursuant to Section 9.4 or to
waive any of Purchaser's rights against the Company.
SECTION 5. COMPANY COVENANTS.
Without limiting the obligations of the Company set forth in
the Deed of Trust or any of the other Note Documents, from and after the
Closing Date and continuing so long as any amount remains unpaid on any Note:
5.1. FINANCIAL REPORTS AND BOOKS AND RECORDS.
The Company will furnish to each holder of the Notes:
(a) As soon as available and in any event within 45 days
after the end of each quarterly fiscal period (except the last) of each fiscal
year, copies of:
(i) a consolidated balance sheet of the Company
and its Subsidiaries as of the close of such period, and
(ii) consolidated statements of income,
shareholders' equity and cash flows of the Company and its
Subsidiaries for the portion of the fiscal year ending with
such period;
in each case setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year, all in reasonable detail and
certified as complete and correct, subject to changes resulting from year-end
audit
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adjustments, by the chief accounting officer of the Company; provided that the
Company will have satisfied the requirements of this Section 5.1 by the
delivery within the time period described hereinabove of its quarterly reports
on Form 10-Q as filed with the Securities and Exchange commission so long as
such Form l0-Q contains quarterly statements reflecting the financial position
and results of operations of the Company and its consolidated Subsidiaries for
such quarter:
(b) As soon as available and in any event within 90 days
after the close of each fiscal year of the Company, copies of:
(i) a consolidated balance sheet of the Company
and its Subsidiaries as of the close of such fiscal year, and
(ii) consolidated statements of income,
shareholders' equity and cash flows of the Company and its
Subsidiaries for such fiscal year;
(c) Promptly upon their becoming available, and the
provision of Sections 5.1(a) and (b) notwithstanding, copies of each financial
statement, report, notice or proxy statement sent by the Company to
stockholders or debenture holders generally;
(d) Except at such times as the Company is a reporting
company under Section 13 or 15(d) of the Exchange Act, such financial or other
information as any holder of the Notes or any Person designated by such holder
may reasonably determine is required to permit such holder to comply with the
requirements of Rule 144A promulgated under the Act in connection with the
resale by it of the Notes, in any such case promptly after the same is
requested; and
(e) Within the period provided in paragraphs 5.1(a) and (b)
above, a certificate of an Executive Officer of the Company stating that such
officer has reviewed the provisions of this Agreement and the other Note
Documents and stating whether there existed as of the date of such financial
statements and whether, to the best of such officers' knowledge, there exists
at the time of the certificate or existed at any time during the period
covered by such financial statements any Default or Event of Default and, if
any such condition or event does exist on the date
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of the certificate, specifying the nature and period of existence thereof and
the action the Company is taking and/or proposes to take with respect thereto.
The annual and interim financial statements described in paragraphs
(a) through (d) above shall be prepared in accordance with accounting
principles generally accepted in the United States, consistently applied.
5.2. BOOKS AND RECORDS; FINANCIAL INFORMATION. The Company will,
and will cause each of its material Subsidiaries to, keep proper books of
record and account in accordance with generally accepted United States
accounting practices or in accordance with the generally accepted accounting
practices of the country in which each such corporation is organized.
Purchaser (so long as it holds any Notes) and any Institutional Holder that,
together with any Affiliates, holds at least 10% of the aggregate principal
amount of Notes then outstanding shall, upon the occurrence and during the
continuance of a Default or from and after the occurrence of either any event
that has a Material Adverse Effect or a Rating Decline, at the expense of the
Company, have the right for reasonable purposes, during regular business hours,
subject to reasonable notice and as often as may be reasonably requested, to
visit and inspect the properties of the Company and its Subsidiaries, to
examine the corporate books and records of the Company and its Subsidiaries and
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the appropriate officers of the Company and, in the presence
of a representative of the Company, their independent public accountants.
Notwithstanding the foregoing, neither the Company nor any of its Subsidiaries
shall be obligated to disclose any information pursuant to this Section 5.2
which they are prohibited from disclosing by law or by any contract entered
into with any Person other than an Affiliate.
Each holder of the Notes by its acceptance thereof agrees that any information
obtained by such Person pursuant to this Section 5.2 will be treated as
confidential; provided, however, that nothing herein contained shall limit or
impair the right or obligation of any holder of the Notes to disclose such
information: (1) to its auditors, attorneys, employees or agents, (2) when
required by any law, ordinance or governmental order, regulation, rule, policy,
investigation or any regulatory authority request, (3) as may be required or
appropriate in any report, statement or testi-
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mony submitted to any municipal, state, provincial or Federal regulatory body
having or claiming to have jurisdiction over such holder or to the United
States National Association of Insurance Commissioners or similar organizations
or their successors, (4) in connection with the enforcement of the terms and
conditions of this Agreement, the Notes and any of the other Note Documents,
(5) which is publicly available or readily ascertainable from public sources,
or which is received by any holder of the Notes from a third Person who or
which, to such holder's knowledge, is not bound to keep the same confidential,
(6) as required by legal process in connection with any proceeding, case or
matter pending (or on its face purported to be pending) or threatened before
any court, tribunal, arbitration board or any governmental agency, commission,
authority, board or similar entity, or (7) to the extent necessary in
connection with any contemplated transfer of any Notes by any holder thereof
(it being understood and agreed that any transferee that purchases such Notes
shall itself be bound by the terms and provisions hereof).
5.3. PAYMENTS. The Company will duly and punctually pay
the principal of, premium (if any) and interest on the Notes in accordance with
their terms and this Agreement, without any deduction, withholding or setoff of
any kind.
5.4. PAYING AGENCY. The Company will maintain an office
in the United States of America where notices, presentations and demands to or
upon the Company in respect of this Agreement, the Notes and the other Note
Documents may be given or made. As of the date of this Agreement, such office
is located at the Company's address set forth in Section 9.6 hereof. The
Company will give written notice to the holders of the Notes of any change of
location of such office within five Business Days after the date of any such
change. Notwithstanding the foregoing, in lieu of, or in addition to,
maintaining an office as herein contemplated, the Company may appoint and
maintain an agent for receiving notices, presentations or demands and/or making
payments on the Notes which shall be a state or national bank or trust company
organized under the laws of the United States of America or any State thereof
or the District of Columbia and having capital, surplus and undivided profits
aggregating at least U.S. $250,000,000 (the "Paying Agent") for the Notes in
the Borough of Manhattan in the City of New York.
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5.5. CORPORATE EXISTENCE, ETC. The Company will, and
(except as permitted below) will cause each of its material Subsidiaries to, do
or cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and comply with all applicable laws, statutes,
regulations, rules, orders, and all applicable restrictions imposed by any
governmental or regulatory body except those being contested in good faith by
appropriate proceedings and except where the failure so to comply would not
have a Material Adverse Effect, and maintain all licenses and permits necessary
properly to conduct its business or own its properties, except where the
failure so to do would not have a Material Adverse Effect; provided, however
that the foregoing shall not restrict (x) the Company from causing, permitting
or suffering the sale, merger or liquidation of such of its Subsidiaries (but
not the Company) as its Board of Directors shall determine to be in the best
interests of the Company in the exercise of its reasonable business judgment or
(y) any transaction permitted by Section 5.8.
5.6. TAXES. The Company will, and will cause each of its
Subsidiaries to, pay all applicable taxes except for (i) taxes the payment of
which is being contested by the Company or such Subsidiary in good faith and by
appropriate proceedings and (ii) taxes the non-payment of which would not have
a Material Adverse Effect.
5.7. INSURANCE. The Company will, and will cause its
Subsidiaries to, carry and maintain in full force and effect at all times with
fiscally sound and reputable insurers insurance against such risks as is
reasonable and prudent in the circumstances (which insurance obligation may be
fulfilled by a reasonable and prudent self-insurance program, except as
provided below) and in any event as may be required by applicable laws,
statutes, regulations, rules or orders and, with respect to the Mortgaged
Estate, such insurance as is required by the Deed of Trust.
5.8. LIMITATION ON CONSOLIDATION OR MERGER. The company
will not, directly or indirectly, consolidate or merge with, or sell, lease or
otherwise dispose of all or substantially all of its assets to, any other
Person unless (a) no Default or Event of Default shall have occurred and be
continuing immediately before or immediately after such transaction and (b) the
Company is the survivor of such transaction or, if the Company is not the
survivor, the survivor is a corporation organized under the laws of any
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State of the United States which expressly assumes in writing the Company's
obligations under this Agreement, the Notes and the other Note Documents and
which shall own all or substantially all the assets of the Company. In the
case of any such consolidation, merger or sale or other disposition of assets
in which the Company is not the surviving corporation, the surviving
corporation shall furnish to the holders of the Notes an unqualified opinion of
independent counsel to the effect that the instrument of assumption has been
duly authorized, executed and delivered and constitutes the legal, valid and
binding contract and agreement of the surviving corporation enforceable in
accordance with its terms, except as enforcement of such terms may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and by general equitable principles.
Following a transaction of the kind described above, the successor corporation
shall use its reasonable best efforts to cause such Rating Agencies that,
immediately prior to the relevant transaction, shall have rated the
unsubordinated, unsecured debt of the Company to confirm that such debt
continues to be rated. No merger, consolidation, sale, lease or other
disposition prohibited or permitted hereunder shall in any manner limit or
reduce Purchaser's rights under Section 2.3.
5.9. RATINGS. The Company will use its reasonable best
efforts to enable Moody's and S&P or a comparable rating agency to have in
effect a rating for its unsubordinated, senior, unsecured indebtedness.
5.10. DIRECT PAYMENTS. Notwithstanding anything to the
contrary in this Agreement or the Notes, in the case Purchaser or its nominee
or by any other Institutional Holder of the Notes (or its nominee(s)) has given
written notice to the Company and the Paying Agent requesting that the
provisions of this Section 5.10 shall apply, the Company will cause the Paying
Agent promptly and punctually to pay when due the principal of the Notes and
premium, if any, and interest thereon, without any presentment thereof directly
to Purchaser or such subsequent Institutional Holder at the address of
Purchaser set forth above or at such other address as Purchaser or such
subsequent Institutional Holder may from time to time designate in writing to
the Company and the Paying Agent or, if a bank account is designated for
Purchaser in any written notice to the Company and the Paying Agent from such
Purchaser or any such subsequent Institutional Holder, the Company will cause
the Paying Agent to make such payments in current and immediately
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available funds which at the time of payment shall be legal tender in the
United States of America for the payment of public and private debts to such
bank account, marked for attention as indicated, or in such other manner or to
such other account of Purchaser or such Institutional Holder in any bank in the
United States as the Purchaser or any such Institutional Holder may from time
to time direct in writing. With respect to Notes to which this Section 5.10
applies, the Company and the Paying Agent shall be entitled to presume
conclusively that the original or such subsequent Institutional Holder as shall
have requested the provisions hereof to apply to its Notes remains the holder
of such Notes until such Notes shall have been presented to the Company as
evidence of the transfer.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
6.1. EVENTS OF DEFAULT. Any one or more of the following
shall constitute an "Event of Default" as the term is used herein or in the
other Note Documents:
(a) The Company shall fail to pay when due (i) any
payment of the principal of any Note or of any premium thereon; or (ii) any
payment of interest on any Note and such interest payment default shall
continue for more than 5 days; or
(b) the Company shall fail to observe or perform any
other obligation, covenant, undertaking, condition or provision in respect of
the Notes or contained in this Agreement or the other Note Documents which is
not remedied within 30 days after the earlier of: (i) the furnishing of notice
thereof by the Company to the holders of the Notes, (ii) the Company's willful
failure to provide any notice required under Section 6.2 hereof or (iii)
receipt of written notice thereof from the holder of any Note by the Company
requiring the same to be remedied; provided that a default under Section 6.09
of the Deed of Trust shall constitute an Event of Default hereunder not subject
to cure; or
(c) any representation or warranty made by the Company
herein, or made by the Company in any other Note Document, shall be untrue or
inaccurate in any material respect; or
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(d) any of the Note Documents or any provision thereof
shall cease to be a legal, valid and binding agreement enforceable against the
Company (or, in the case of the Deed of Trust, the Trustee or the Company) in
accordance with the respect of terms thereof or shall in any way be terminated
or become or be declared ineffective or inoperative or shall in any way
whatsoever cease to give or provide the respective liens, security interest,
rights, titles, interest, remedies, powers or privileges intended to be created
thereby; or
(e) a judgment shall be rendered against the Company or
any Principal subsidiary for the payment of money in excess of $250 million
individually or $250 million in the aggregate (as to such foregoing amount, net
of the portion thereof covered by insurance) and such judgment shall not be
discharged or dismissed, or execution thereof stayed pending appeal, within 45
days after entry; or
(f) (i) the Company or any Principal Subsidiary shall
commence or consent to any case, proceeding or other action (1) under
any existing or future law of any jurisdiction 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 as bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (2) seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or any
substantial part of its assets (including the Mortgaged Estate), or
the Company shall make a general assignment for the benefit of
creditors or admit in writing that it is unable to pay its debts as
they become due; or
(ii) there shall be commenced against the Company
or any Principal Subsidiary any such case, proceeding or other action
referred to in subclause (i) of this clause (f) that (1) results in
the entry of an order for relief or any such adjudication or
appointment or (2) is not dismissed, discharged or stayed for a period
of 30 days from the entry thereof; or
(iii) there shall be commenced against the Company
or any Principal Subsidiary any case, proceeding or other action
seeking issuance of a
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warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets (or against the
Mortgaged Estate) that results in the entry of any order for any such
relief which shall not have been vacated, discharged or stayed within
30 days from the entry thereof; or
(iv) the Company shall have been dissolved or
terminated; or
(v) the Company or any Principal Subsidiary shall
take any action authorizing, or in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth
above in this clause (f).
6.2. NOTICE TO HOLDERS. Whenever the Company becomes aware that
any Default or Event of Default has occurred, or if the Company is aware that
the holder of any Note has either given any notice or taken any other action
with respect to a Default or Event of Default, or the Company receives written
notice from a third party concerning an event which constitutes a Default or
Event of Default, the Company will ensure that notice is given (or such third
party notice is forwarded) to all holders of the Notes then outstanding, no
later than the fifth day (or second day in the case of an Event of Default or
Default under Section 6.1(a)) after it becomes aware that such Event of Default
or Default has occurred, or that such notice has been given or such other
action has been taken with respect to such Default or Event of Default, such
notice to be in writing and sent in the manner provided in Section 9.6.
6.3. ACCELERATION OF MATURITIES; OTHER REMEDIES.
(a) Upon the occurrence of an Event of Default under
Section 6.1(a) above, the holder of each Note as to which such Event of Default
occurred may, by written notice to the Company, declare such Note to be due and
payable (without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Company) at the Redemption Price. Upon the
occurrence of an Event of Default under Section 6.1(f) above in respect of the
Company (but not of a Principal Subsidiary), all Notes shall immediately become
due and payable at the Redemption Price. Upon the occurrence of any other
Event of Default, holders of Notes representing at least 51% of the unpaid
principal amount of all Notes then outstanding, excluding
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any Notes held by the Company or any Subsidiary or Affiliate (the "requisite
holders") may, by written notice to the Company, declare all Notes to be due
and payable (without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Company) at the Redemption Price. No
course of dealing on the part of any holder of any Note nor any delay or
failure on the part of any holder of any Note to exercise any right shall
operate as a waiver of such right or otherwise prejudice such holder's rights,
powers and remedies. The Company further agrees to pay to the holder or
holders of the Notes all costs and expenses incurred by them in the collection
of any Note upon any default hereunder or thereon, including the fees,
disbursements and other charges of such holder's or holders' attorneys for all
services rendered in connection therewith.
(b) The rights and remedies expressly provided for in
this agreement are cumulative and not exclusive of any rights or remedies which
the Purchaser or any holder of a Note would otherwise have, including, without
limitation, the rights and remedies provided for in the Deed of Trust.
6.4. RESCISSION OF ACCELERATION. The provisions of Section 6.3 are
subject to the condition that if the principal of and accrued interest on all
or any outstanding Notes have been declared or have become immediately due and
payable by reason of the occurrence of any Event of Default described in
paragraphs (a) through (e), inclusive, of Section 6.1, then (i) for any such
declaration by a holder as the result of an Event of Default described in
paragraph (a) of Section 6.1, such holder or (ii) for any such declaration as
the result of the Event of Default described in paragraphs (b) through (e) of
Section 6.1, the holders of at least 51% of the unpaid principal amount of all
Notes then outstanding (other than any Notes held by the Company or any
Subsidiary or Affiliate), may by written instrument filed with the Company,
rescind and annul such declaration and the consequences thereof, provided that
at the time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the
payment of any monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all
other sums payable under the Notes and under this Agreement (except
any principal, interest or premium on the Notes which has become due
and payable
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solely by reason of such declaration under Section 6.3) shall have
been duly paid; and
(c) each and every other Default and Event of Default shall
have been cured or waived pursuant to Section 7.1 and the Company
shall have paid all of Purchaser's costs and expenses as provided for
in Section 9.4;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS
7.1. CONSENT REQUIRED. Any term, covenant, agreement or
condition of this Agreement or the Notes or the other Note Documents may, with
the consent of the Company (and, if required by applicable law, in the case of
the Deed of Trust, the Trustee), be amended or compliance therewith may be
waived (either generally or in a particular instance and either retroactively
or prospectively), if the Company shall have obtained the consent in writing of
the holders of at least 51% of the unpaid principal amount of outstanding Notes
(other than any Notes held or agreed to be purchased by the Company or any
Subsidiary or Affiliate) provided that no such waiver, modification, alteration
or amendment shall (a) change the time of payment of the principal of or the
interest on any Note or reduce the principal amount thereof or reduce the rate
of interest thereon, (b) change any of the provisions with respect to Section 2
hereof, or (c) change the percentage of holders of the Notes required to
consent to any such amendment, alteration or modification or any of the
provisions of this Section 7 without the consent of each holder of the Notes
affected thereby. Executed or true and correct copies of any waiver,
modification, alteration or amendment to this Agreement shall be delivered by
the Company to each holder of outstanding Notes forthwith following the date on
which the same shall have been executed and delivered by the holder or holders
of the requisite percentage of outstanding Notes.
7.2. SOLICITATION OF HOLDERS. So long as there are any Notes
outstanding, the Company will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes or the other Note Documents unless each holder of Notes
(irrespective of the amount of Notes then owned by it) shall be informed
thereof by the Company and shall be afforded the opportunity of considering the
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same and shall be supplied by the Company with sufficient information to enable
it to make an informed decision with respect thereto. The Company will not,
directly or indirectly, pay or cause to be paid any remuneration, whether by
way of supplemental or additional interest, fee or otherwise, to any holder as
consideration for or as an inducement to entering into by any holder of any
waiver or amendment of any of the terms and provisions of the Agreements or the
Notes or the other Note Documents unless such remuneration is concurrently
offered, on the same terms, ratably to the holders of all Notes then
outstanding.
7.3. EFFECT OF AMENDMENT OR WAIVER. Any such amendment or waiver
shall apply equally to all of the holders of the Notes and shall be binding
upon them, upon each future holder of any Note and upon the Company (and in the
case of the Deed of Trust, the Trustee), whether or not such Note shall have
been marked to indicate such amendment or waiver. No such amendment or waiver
shall extend to or affect any obligation not expressly amended or waived or
impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS
8.1. DEFINITIONS. Unless the context otherwise requires,
the terms hereinafter set forth when used herein shall have the following
meanings and the following definitions shall be equally applicable to both the
singular and plural forms of any of the terms herein defined. Capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the other Note Documents.
"ACT" means the Securities Act of 1933, as amended.
"AFFILIATE" means any Person which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, the Company, as the case may be. The term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting stock, by contract or otherwise.
"AGREEMENT" shall have the meaning assigned thereto in Section
1.4 hereof.
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"BUSINESS DAY" means any day other than a Saturday, Sunday or
other day on which banks in New York are required by law to close or are
customarily closed.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the
principal of such Note that is to be paid or prepaid pursuant to any paragraph
of Section 2 or is declared to be immediately due and payable pursuant to
Section 6.3, as the context requires.
"CLOSING DATE" shall have the meaning assigned thereto in
Section 1.2 hereof.
"CODE" means the Internal Revenue Code of 1986, as amended;
"DEED OF TRUST" means that certain Deed of Trust, Security
Agreement, Assignment of Rents and Fixture Filing, in substantially the form of
Exhibit F, to be entered into on the Closing Date by and among the Company, the
Purchaser and the Trustee.
"DEFAULT" means any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default as defined in Section 6.1.
"DISCOUNTED PREPAYMENT VALUE" shall mean, with respect to the
Called Principal of any Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a discount
factor (applied on a semiannual basis) equal to (i) for any Settlement Date
with respect to the 9.35% Notes on or before the tenth anniversary of the date
of original issuance, the Reinvestment Yield or (ii) with respect to the 8.95%
Notes for any Settlement Date or with respect to the 9.35% Notes for any
Settlement Date after the tenth anniversary of the date of original issuance,
the sum of the Reinvestment Yield plus 50 basis points.
" XXXXXXXXXX" means XXXXXXXXXX.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with
regulations thereunder, in each case as in effect from time to time.
References to
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<PAGE> 33
sections of ERISA shall be construed to also refer to any successor sections;
"ERISA AFFILIATE" means any corporation, trade or business
that is, along with the Company, a member of a controlled group of corporations
or a controlled group of trades or businesses, as described in Section 414(b)
and 414(c), respectively, of the Code or Section 4001 of ERISA;
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXECUTIVE OFFICER" means the President, Vice-President or
Treasurer of the Company.
"INSTITUTIONAL HOLDER" means (i) Purchaser, (ii) any other
holder of Notes which is an insurance company, charitable foundation, fraternal
benefit society, pension, retirement or profit sharing trust or fund within the
meaning of Title I of the Employee Retirement Income Security Act of 1974, as
amended, or for which any bank, trust company, national banking association or
investment advisor registered under the Investment Advisers' Act of 1940, as
amended, is acting as a trustee or agent, any broker or dealer registered under
the Investment Advisers' Act of 1940, as amended, or any government, public
employees' pension retirement system, or any other governmental agency
supervising the investment of public funds and (iii) an affiliate of any
Person described in clause (i) or (ii) which holds any Notes.
"MAKE-WHOLE PREMIUM" means, with respect to any Note, a
premium equal to the sum of (x) the excess, if any, of the Discounted
Prepayment Value of the Called Principal of such Note over the sum of (i) such
Called Principal plus (ii) interest accrued thereon as of the Settlement Date
with respect to such Called Principal and (y) an amount equal to the product of
the Called Principal Amount and 101.146%, in the case of the 8.95% Notes, or
101.105%, in the case of the 9.35% Notes. The Prepayment Make-Whole Premium
shall in no event be less than zero.
"MATERIAL ADVERSE EFFECT" means:
(a) a material adverse effect on the financial condition
of the Company and its Subsidiaries taken as a whole or on the
condition, value or use of the Mortgaged Estate or on the ability of
the Company to perform its obligations under this Agreement, the Notes
or any other Note Document; or
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(b) a material adverse effect on the legality, validity
or enforceability of the Company's obligations under this Agreement or
the Notes or the other Note Documents or a material impairment of the
liens or security interest granted under the Note Documents.
"MOODY'S" shall have the meaning assigned thereto
in Section 2.4(d) hereof.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in
ERISA as to which the Company has any outstanding liability;
"NOTE DOCUMENTS" means this Agreement, the Notes, the Deed of
Trust and any other agreements, documents and writings now or hereafter
executed by, on behalf of or for the benefit of the Company, Purchaser, the
Trustee or other holders of the Notes pursuant to or in connection with this
Agreement or the transactions contemplated hereby, together with all
amendments, modifications (including through the waiver of any provision
thereof), supplements and/or restatements thereto.
"OVERDUE RATE" means the rate of interest then in
effect plus 200 basis points.
"PBGC" means the Pension Benefit Guaranty Corporation;
"PERSON" means an individual, partnership, corporation, trust
or unincorporated organization, and a government or agency or political
subdivision thereof.
"PLAN" means any United States employee benefit plan
established, maintained or contributed to by the Company or any ERISA Affiliate
for the benefit of the Company or such ERISA Affiliate's respective employees
as to which the Company has any outstanding liability; and
"PRINCIPAL SUBSIDIARY" means (i) any Subsidiary of the Company
(a) whose profits (before tax and extraordinary items) for its last financial
year as shown in its latest profit and loss account as prepared for the
purposes of the latest audited profit and loss account of the Company are at
least 10% of the consolidated profits (before tax and extraordinary items) of
the Company for its last fiscal year as shown in the latest audited
consolidated profit and loss account of the Company or (b) whose total assets
(excluding goodwill and other intangible assets and deducting intercompany
indebtedness and minority interests) as shown by its latest balance sheet as
prepared for the purposes of the
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latest audited balance sheet of the Company are at least 10% of the total
assets of the Company as shown by the latest audited consolidated balance sheet
of the Company. A report by the independent auditors of the Company that in
their opinion a Subsidiary is or is not a Principal Subsidiary shall, in the
absence of manifest error, be conclusive and binding on the Company and the
holders of the Notes.
"PURCHASER" AND "PURCHASERS" shall have the meaning assigned
thereto in Section 1.1 hereof.
"RATING AGENCY" and "RATING AGENCIES" shall have the meanings
assigned thereto in Section 2.4(d) hereof.
"REINVESTMENT YIELD" shall mean, with respect to the Called
Principal of any Note, the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the third Business Day
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such other display
as may replace Page 678 on the Telerate Service) for actively traded U.S.
Treasury securities having a maturity equal to the weighted average remaining
life of the Called Principal being paid or prepaid as of such Settlement Date,
or if such yields shall not be reported as of such time or the yields reported
as of such time shall not be ascertainable, (ii) the Treasury Constant Maturity
Series yields reported, for the latest day for which such yields shall have
been so reported as of the third Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical Release
H.15(519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the weighted average
remaining life of the Called Principal being paid or prepaid as of such
Settlement Date. Such implied yield shall be determined, if necessary, by (a)
converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between reported yields.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due on or after the Settlement Date with respect
to such Called Principal if no payment of such Called Principal were made prior
to its expressed maturity date.
"REPORTABLE EVENT" shall have the same meaning as
in ERISA but shall not include any reportable event for
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which the 30-day notice period has been waived under applicable regulations.
"SETTLEMENT DATE" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is to be paid or
prepaid pursuant to any paragraph of Section 2 or is declared to be immediately
due and payable pursuant to Section 6.3, as the context requires.
"SUBSIDIARY" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of
such corporation (assuming exercise or conversion solely of the securities held
by such Person) is at the time beneficially owned by such Person directly or
indirectly through Subsidiaries, and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% equity interest at the time or the power to
elect a majority of the Board of Directors or similar governing body.
"S&P" shall have the meaning assigned thereto in
Section 2.4(d) hereof.
"TRUSTEE" means XXXXXXXXXX.
8.2. ACCOUNTING PRINCIPLES. Where the character or amount
of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in
accordance with United States generally accepted accounting principles.
SECTION 9. MISCELLANEOUS
9.1. REGISTERED NOTES. The Company shall cause to be kept
a register for the registration and transfer of the Notes (hereinafter called
the "Note Register") at the office of the Company or the Paying Agent, and the
Company will cause to be registered or transferred on the Note Register as
hereinafter provided and under such reasonable regulations as it may prescribe,
any Note issued pursuant to this Agreement.
At any time and from time to time the registered holder of any
Note which has been duly registered as hereinabove provided may, subject to
compliance with applicable securities laws and the provisions of Section 3.2,
transfer such Note upon surrender thereof at the Company or the
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principal office of the Paying Agent (if one shall have been appointed) duly
endorsed or accompanied by a written instrument of transfer duly executed by
the registered holder of such Note or its attorney duly authorized in writing;
provided that the Company or the Paying Agent may decline to exchange or
register the transfer of any Note during the period of five Business Days
preceding the due date for any payment of principal or interest on the Notes.
The Person in whose name any registered Note shall be
registered shall be deemed and treated as the owner and holder thereof for all
purposes of this Agreement. Payment of or on account of the principal,
premium, if any, and interest on any registered Note shall be made to or upon
the written order of such registered holder.
9.2. EXCHANGE OF NOTES. At any time and from time to
time, upon not less than three Business Days' notice to that effect given by
the holder of any Note initially delivered or of any Note substituted therefor
pursuant to Section 9.1, this Section 9.2, or Section 9.3 (except in the case
of a lost, stolen, or mutilated certificate sought to be exchanged pursuant to
Section 9.3, as soon as practicable), and, upon surrender of such Note at the
office of the Paying Agent, the Company will cause the Paying Agent to deliver
in exchange therefor, without expense to the holder, except as set forth below,
Notes for the same aggregate principal amount as the then unpaid principal
amount of the Note so surrendered, in the denomination of U.S. $100,000 or any
amount in excess thereof as such holder shall specify, dated as of the date to
which interest has been paid on the Note so surrendered, or, if such surrender
is prior to the payment of any interest thereon, then dated as of the date of
issue, payable to such Person or Persons, or registered assigns, as may be
designated by such holder and otherwise permitted hereunder, and otherwise of
the same form and tenor as the Notes so surrendered for exchange. The Company
may require the payment of a sum sufficient to cover any stamp tax or
governmental charges imposed upon such exchange or transfer.
9.3. LOSS, THEFT, ETC. OF NOTES. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
any Notes, and in the case of any such loss, theft or destruction upon delivery
of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation upon surrender
and cancellation of the Note, the Company will cause the Paying Agent to
deliver without expense to the holder thereof, a new Note, of like tenor, in
lieu of such lost, stolen, destroyed or mutilated Note. If any
33
<PAGE> 38
Institutional Holder is the owner of any such lost, stolen or destroyed Note,
then the affidavit of an authorized officer of such owner, setting forth the
fact of loss, theft or destruction and of its ownership of the Note at the time
of such loss, theft or destruction shall be accepted as satisfactory evidence
thereof and no further indemnity shall be required as a condition to the
execution and delivery of a new Note other than the written agreement of such
owner to indemnify the Company.
9.4. EXPENSES, STAMP TAX INDEMNITY. Whether or not the
transactions herein contemplated (including the XXXXXXXXXX Assignment) shall
be consummated, XXXXXXXXXX agrees to pay directly all of its and XXXXXXXXXX
out-of-pocket expenses in connection with the preparation, execution and
delivery of this Agreement and the transactions contemplated or permitted
hereby, including but not limited to the reasonable fees, disbursements and
other charges of Paul, Weiss, Rifkind, Wharton & Garrison, XXXXXXXXXX special
counsel, and of Kutak Rock, and all duplicating and printing costs and charges
for shipping the Notes, adequately insured to XXXXXXXXXX at XXXXXXXXXX home
office or at such other place as XXXXXXXXXX may designate. The Company agrees
to pay all of its out-of-pocket expenses in connection with the preparation,
execution and delivery of this Agreement and the transactions contemplated or
permitted hereby, including but not limited to the fees and expenses of
Dickenson, Wright, Moon Van Dusen & Freeman and of Womble Carlyle Sandridge &
Rice. The Company also agrees to pay all expenses relating to the performance
of any transactions contemplated or permitted hereby, any title insurance
premiums, filings or recordings any action for the enforcement or collection of
the Notes or this Agreement and any amendment, waivers or consents pursuant to
the provisions hereof (whether or not the same are actually executed and
delivered), including, without limitation, any amendments, waivers or consents
resulting from any workout, restructuring or similar proceedings relating to
the performance by the Company of its obligations under this Agreement, the
Notes and the other Note Documents. The Company also agrees that it will pay
any fees and related expenses incurred or to be incurred in connection with its
cooperation with Moody's and S&P as provided in Section 5.9 and all initial and
ongoing fees and all out-of-pocket expenses of the Paying Agent, if any, and
will pay and save Purchaser harmless against any and all liability with respect
to stamp and other similar taxes, if any, which may be payable or which may be
determined to be payable in connection with the execution, delivery or
enforcement of this Agreement or the Notes or any other Note Documents, whether
or not any Notes are then outstanding. The Company
34
<PAGE> 39
agrees to protect and indemnify Purchaser against any liability for any and all
brokerage fees and commissions payable or claimed to be payable by the Company
to any Person in connection with the transactions contemplated by this
Agreement other than the fees, commissions, costs and expenses of XXXXXXXXXX
and its counsel and financial advisors which are to be paid from the proceeds
of the XXXXXXXXXX Assignment. Without limiting the foregoing, the Company
agrees to pay the cost of obtaining a private placement number for the Notes
and authorizes the submission of such information as may be required by S&P
for the purpose of obtaining such number.
9.5. POWERS AND RIGHTS NOT WAIVED; REMEDIES CUMULATIVE.
No delay or failure on the part of the holder of any Note in the exercise of
any power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to and are not exclusive of any rights or
remedies any such holder would otherwise have, and no waiver or consent, given
or extended pursuant to Section 7 hereof, shall extend to or affect any
obligation or right not expressly waived or consented to.
9.6. NOTICES. All communications provided for hereunder
shall be in writing and, if to XXXXXXXXXX, delivered or mailed by registered
or certified mail or by overnight courier or by facsimile communication
(confirmed in writing by registered or certified mail or by overnight courier),
in each case prepaid and addressed to XXXXXXXXXX at XXXXXXXXXX address
appearing above or such other address as XXXXXXXXXX or the subsequent holder
of any Note initially issued to XXXXXXXXXX may designate to the Company in
writing, and if to the Company delivered or mailed by registered or certified
mail, return receipt requested, or by overnight courier, or by facsimile
communication transmitted on a Business Day (confirmed in writing by
registered or certified mail, return receipt requested, or by overnight
courier), in each case prepaid and addressed to Kmart Corporation, 3100 West
Big Beaver Road, Troy, MI 48084-3163 Attention: Michael Skiles or to such
other address as the Company or the Paying Agent may in writing designate to
Purchaser or to a subsequent holder of the Note initially issued to Purchaser.
Any such communication, if to XXXXXXXXXX, shall be addressed to XXXXXXXXXX.
35
<PAGE> 40
9.7. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the Company and its respective successors and assigns and shall
be binding upon and inure to Purchaser's benefit and to the benefit of
Purchaser's successors and assigns, including each successive holder or
holders of any Notes. Each such successive holder or holders of any Notes,
including XXXXXXXXXX, shall have all rights and privileges of the "Purchaser"
hereunder. The Company hereby acknowledges that, simultaneously with the
Closing, XXXXXXXXXX is assigning all of its right, title and interest
hereunder and under the Notes, the Deed of Trust and the other Note Documents
to XXXXXXXXXX pursuant to an Assignment Agreement in substantially the form
of Exhibit H hereto (the " XXXXXXXXXX Assignment"). The Company further
acknowledges and agrees that XXXXXXXXXX is accepting the XXXXXXXXXX
Assignment in reliance upon the Company's representations, warranties,
covenants, agreements and other obligations hereunder and under the Notes, the
Deed of Trust and the other Note Documents. In order to further induce XXXXX
XXXXX to enter into the XXXXXXXXXX Assignment, the Company hereby makes the
following representations, warranties, covenants and agreements:
(i) To the best of its knowledge, the Company
does not have any right, including any claim, counterclaim, right of
set-off or deduction or other defense of any kind, to withhold payment
or performance of any of its obligations hereunder or under any of the
other Note Documents (" XXXXXXXXXX Defenses");
(ii) In the event the Company becomes aware of any
XXXXXXXXXX Defenses, the Company hereby waives and agrees not to
assert the same against XXXXXXXXXX or any other holder of the Notes;
(iii) The Company hereby acknowledges and agrees
that, upon consummation of the XXXXXXXXXX Assignment, XXXXXXXXXX
will be a bona fide purchaser of the Notes for value and will be a
holder of the Notes in due course and the Company hereby waives any
right to challenge XXXXXXXXXX status as such; and
(iv) The Company acknowledges and agrees that
XXXXXXXXXX is a third party beneficiary of this Agreement and the
other Note Documents entered into between the Company and XXXXXXXXXX.
In addition, XXXXXXXXXX hereby acknowledges and agrees that XXX is a
third party beneficiary of this Agreement and the other Note Documents
entered into between the Company and XXXXXXXXXX.
36
<PAGE> 41
9.8. SURVIVAL OF COVENANTS AND REPRESENTATIONS. All
covenants, representations and warranties made by the Company herein and in any
other Note Documents and in any certificates delivered pursuant hereto or
thereto, whether or not in connection with the Closing Date, shall survive the
closing and the delivery of this Agreement and the Notes.
9.9. SEVERABILITY. Should any provision of this Agreement
or any of the other Note Documents for any reason be declared unenforceable by
a court of competent jurisdiction (sustained on appeal, if any), such
unenforceability shall not affect the enforceability of any other provision
hereof or thereof, all of which shall remain in force and effect as if this
Agreement or such other Note Document had been executed with the unenforceable
provision thereof eliminated and it is hereby declared the intention of the
parties hereto that they would have executed the remaining provision of this
Agreement without including therein any such part, parts, or portion which may,
for any reason, be hereafter declared unenforceable; provided that, if any
provision of this Agreement or any of the other Note Documents shall be
unenforceable by reason of a final judgment of a court of competent
jurisdiction based upon a court's ruling (sustained on appeal, if any) that
such provision is unenforceable because of the excessive degree or magnitude of
the obligation imposed thereby on any company, that unenforceable obligation
shall be reduced in magnitude or degree by the minimum degree or magnitude
necessary in order to permit the provision to be enforceable by the Purchaser.
In the event the provisions of the immediately preceding sentence applies, the
parties shall make appropriate adjustment to the provisions of this Agreement
and the other Note Documents to give effect to the benefits intended to be
conferred upon the parties hereby.
9.10. GOVERNING LAW. This Agreement and the Notes issued and
sold hereunder shall be governed by and construed in accordance with the laws
of the State of New York.
9.11. SUBMISSION TO JURISDICTION. The Company hereby consents
to the jurisdiction of any state or federal court located within the County of
New York, State of New York, and irrevocably agrees that all actions or
proceedings (except actions and proceedings for the enforcement of the Deed of
Trust against property located in North Carolina) relating to this Agreement,
the Notes and other Note Documents shall be litigated in such courts, and the
Company waives any objection which it may have based on improper venue or forum
non conveniens to the conduct of any
<PAGE> 42
proceeding in any such court and waives personal service of any and all process
upon it, and consents that all such service of process be made by
registered or certified mail (return receipt requested) or messenger directed
to it at its address set forth in Section 9.6 above or to its agent referred to
below at such agent's address set forth below and that service so made shall be
deemed to be completed in accordance with Section 9.6 hereof. The Company
hereby irrevocably appoints The Prentice Hall Corporation System, Inc., with an
office on the date hereof at 15 Columbus Circle, New York, New York 10023, as
its agent for the purpose of accepting service of any process within the State
of New York. Nothing contained in this Section shall affect the right of any
holder of Notes to serve legal process in any other manner permitted by law or
to bring any action or proceeding in the courts of any jurisdiction against the
<PAGE> 43
Company or to enforce a judgment obtained in the courts of any other
jurisdiction.
9.12. CAPTIONS. The descriptive headings of the
various Sections or parts of this Agreement are for convenience only and shall
not affect the meaning or construction of any of the provisions hereof.
The execution hereof by you shall constitute a contract
between the Company and Purchaser for the uses and purposes hereinabove set
forth, and this Agreement may be executed in any number of counterparts, each
executed counterpart constituting an original but all together only one
agreement.
KMART CORPORATION
By /s/ M. L. Skiles
----------------------------
Name: M. L. Skiles
Title: Senior Vice President
Accepted as of the date first above written.
XXXXXXXXXX
By /s/ XXX
----------------------------
Name: XXX
Title: Vice President
38
<PAGE> 44
[EXHIBITS INTENTIONALLY OMITTED]
<PAGE> 1
EXHIBIT 99.2
KMART CORPORATION
8.95% COLLATERALIZED PROMISSORY NOTE
DUE 2007
PRIVATE PLACEMENT NO.
NO. A-1 MAY 29, 1992
U.S. $8,135,000.00
KMART CORPORATION, a Michigan corporation (the "Company"),
for value received, hereby unconditionally promises to pay to the order of
XXXXXXXXXX
(the "Purchaser")
or registered assigns,
on the 1st day of May 2007
the principal amount of
EIGHT MILLION ONE HUNDRED THIRTY FIVE THOUSAND DOLLARS (U.S. $8,135,000.00) and
to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at
the rate of 8.95% per annum from and including June 2, 1992 until but not
including the date of repayment of such principal amount, payable on the first
day of each May and November in each year (commencing November 1, 1992), and at
maturity. Principal on this Note shall be due and payable in equal annual
installments (determined by dividing the aggregate principal amount then
outstanding by the number of annual installments remaining) commencing on May
1, 1993 and, thereafter, on the first day of May in each succeeding year
through and including May 1, 2007. The Company agrees to pay interest on
overdue principal (whether by acceleration or otherwise, and including any
overdue optional prepayment of principal) and premium, if any, and on any
overdue installment of interest, at the Overdue Rate (as hereinafter defined)
until paid. "Overdue Rate" means the rate of interest then in effect plus
2.00% per annum.
1. Except as may be otherwise provided pursuant to Section 5.4 or
5.10 of the Note Purchase Agreement (as hereinafter defined), both the
principal hereof, premium, if any, and interest hereon are payable at the
principal office of the Company, in immediately available funds, in coin or
currency of the United States of America which at the time of payment shall be
legal tender for the payment of public and private debts. Such payments shall
be applied first to accrued interest, then to premium, if any, and then to
<PAGE> 2
2
principal. If any amount of principal, premium, if any, or interest on or in
respect of this Note becomes due and payable on any date which is not a
Business Day, such amount shall be payable on the immediately preceding
Business Day.
"Business Day" means any day other than a Saturday, Sunday or other day on
which banks in New York are required by law to close or are customarily
closed.
2. This Note is one of the 8.95% Collateralized Promissory Notes
due 2007 (the "Notes") of the Company in the aggregate principal amount of U.S.
$8,135,000.00 issued pursuant to the terms and provisions of that certain Note
Purchase Agreement, dated as of May 29, 1992 (the "Note Purchase Agreement"),
entered into by the Company and XXXXXXXXXX ("XXXXXXXXXX"), and this Note and
the holder hereof are entitled equally and ratably with the holders of all
other Notes outstanding under the Note Purchase Agreement to all the benefits
and security provided for thereby or referred to therein, to which Note
Purchase Agreement reference is hereby made for the statement thereof. A copy
of the Note Purchase Agreement may be obtained from the Company.
3. This Note and the payment and performance of all of the
Company's obligations hereunder and under the other Note Documents are secured
by that certain Deed of Trust, Security Agreement, Assignment of Rents and
Fixture Filing, dated as of May 29, 1992, among the Company, XXXXXXXXXX, and
XXXXXXXXXX as Trustee thereunder, and this Note and the holders hereof are
entitled equally and ratably with the holders of all other Notes outstanding
under the Note Purchase Agreement to all the benefits and security provided
for under the Deed of Trust or referred to therein, to which Deed of Trust
reference is hereby made for the statement thereof. A copy of the Deed
of Trust may be obtained from the Company.
4. Any one or more of the following shall constitute an "Event of
Default" as the term is used herein or in the other Note Documents (as defined
in the Note Purchase Agreement):
(a) The Company shall fail to pay when due (i) any
payment of the principal of any Note or of any premium thereon; or (ii) any
payment of interest on any Note and such interest payment default shall
continue for more than 5 days; or
<PAGE> 3
3
(b) the Company shall fail to observe or perform any
other obligation, covenant, undertaking, condition or provision in respective
of the Notes or contained in the Note Purchase Agreement or the other Note
Documents which is not remedied within 30 days after the earlier of: (i) the
furnishing of notice thereof to the holders of the Notes, (ii) the Company's
willful failure to provide any notice required under Section 6.2 of the Note
Purchase Agreement or (iii) receipt of written notice thereof from the holder
of any Note by the Company requiring the same to be remedied; provided that a
default under Section 6.09 of the Deed of Trust shall constitute an Event of
Default hereunder not subject to cure; or
(c) any representation or warranty made by the Company in
the Note Purchase Agreement or made by the Company in any other Note Document,
shall be untrue or inaccurate in any material respect; or
(d) any of the Note Documents or any provision thereof
shall cease to be a legal, valid and binding agreement enforceable against the
Company (or, in the case of the Deed of Trust, the Trustee or the Company) in
accordance with the respective terms thereof or shall in any way be terminated
or become or be declared ineffective or inoperative or shall in any way
whatsoever cease to give or provide the respective liens, security interest,
rights, titles, interest, remedies, powers or privileges intended to be created
thereby; or
(e) a judgment shall be rendered against the company or
any Principal Subsidiary for the payment of money in excess of $250 million
individually or $250 million in the aggregate (as to such foregoing amount, net
of the portion thereof covered by insurance) and such judgment shall not be
discharged or dismissed, or execution thereof stayed pending appeal, within 45
days after entry; or
(f) (i) the Company or any Principal Subsidiary (as defined
in the Note Purchase Agreement) shall commence or consent to any case,
proceeding or other action (1) under any existing or future law of any
jurisdiction 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 as bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, liquidation,
dissolution, composition or other relief with respect to it or its
debts, or (2) seeking appointment of a receiver, trustee, custodian or
other similar official
<PAGE> 4
4
for it or for all or any substantial part of its assets (or against
the Mortgaged Estate (as defined in the Deed of Trust)), or the
Company shall make a general assignment for the benefit of creditors
or admit in writing that it is unable to pay its debts as they become
due; or
(ii) there shall be commenced against the Company or any
Principal Subsidiary any such case, proceeding or other action
referred to in subclause (i) of this clause (g) that (1) results in
the entry of an order for relief or any such adjudication or
appointment or (2) is not dismissed, discharged or stayed for a period
of 45 days from the entry thereof; or
(iii) there shall be commenced against the Company or any
Principal Subsidiary 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 its assets (or against
the Mortgaged Estate) that results in the entry of any order for any
such relief which shall not have been vacated, discharged or stayed
within 30 days from the entry thereof; or
(iv) the Company shall have been dissolved or terminated; or
(v) the Company or any Principal Subsidiary shall take
any action authorizing, or in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth
above in this clause (f).
Upon the occurrence of an Event of Default under Section 4(a) above, the holder
of each Note as to which such Event of Default occurred may, by written notice
to the Company, declare such Note to be due and payable (without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Company) at the Redemption Price. As used herein, the "Redemption Price"
shall equal the sum of (i) the principal amount of the Note to be paid, (ii)
accrued interest thereon to (but not including) the date of such payment and
(iii) the Make-Whole Premium (as defined in the Note Purchase Agreement). Upon
the occurrence of an Event of Default under Section 4(f) above in respect of
the Company (but not of a Principal Subsidiary), all Notes shall immediately
become due and payable at the Redemption Price. Upon the occurrence of any
<PAGE> 5
5
other Event of Default, holders of Notes representing at least 51% of the
unpaid principal amount of all Notes then outstanding, excluding any Notes held
by the Company or any Subsidiary or Affiliate (the "requisite holders") may, by
written notice to the Company, declare all Notes to be due and payable (without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company) at the Redemption Price. No course of dealing on
the part of any holder of any Note nor any delay or failure on the part of any
holder of any Note to exercise any right shall operate as a waiver of such
right or otherwise prejudice such holder's rights, powers and remedies. The
Company further agrees to pay to the holder or holders of the Notes all costs
and expenses incurred by them in the collection of any Note upon any default
hereunder or under any of the other Note Documents, including the fees,
disbursements and other charges of such holder's or holders' attorneys for all
services rendered in connection therewith.
The rights and remedies expressly provided for in this Note
are cumulative and not exclusive of any rights or remedies which any holder of
a Note would otherwise have, including, without limitation, the rights and
remedies provided for in the Deed of Trust.
5. The Notes are not subject to prepayment, purchase or
redemption at the option of the Company prior to their expressed maturity dates
except on the terms and conditions and in the amounts and with the Make-Whole
Premium, if any, all as set forth in Section 2 of the Note Purchase Agreement.
6. This Note is registered on the books of the Company and is
transferable only by surrender thereof at the offices of the Company (or of
such Paying Agent as may be appointed by the Company pursuant to Section 5.4 of
the Note Purchase Agreement from time to time), duly endorsed or accompanied by
a written instrument of transfer duly executed by the registered holder of this
Note or its attorney duly authorized in writing. Payment of or on account of
principal, premium, if any, and interest on this Note shall be made only to or
upon the order in writing of the registered holder.
7. The Company and each surety, endorser, guarantor and other
party ever liable for payment of any sums of money payable upon this Note,
jointly and severally waive presentment, demand, protest, notice of protest and
nonpayment or other notice of default, notice of acceleration and intention to
accelerate or other notice of
<PAGE> 6
6
any kind, and agree that their liability under this Note shall not be
affected by any renewal or extension in the time of payment hereof, or
in any indulgences, or by any release or change in any security for
the payment of this Note, and hereby consent to any and all renewals,
extensions, indulgences, releases or changes, regardless of the number
of such renewals, extensions, indulgences, releases or changes.
No waiver by Purchaser of any of its rights or
remedies hereunder or under any other Note Document or otherwise,
shall be considered a waiver of any other subsequent right or remedy
of Purchase; no delay or omission in the exercise or enforcement by
Purchaser of any rights or remedies shall ever be construed as a
waiver of any right or remedy of Purchaser; and no exercise or
enforcement of any such rights or remedies shall ever be held to
exhaust any right or remedy of Purchase.
8. This Note and the Note Purchase Agreement shall be
governed by and shall be construed in accordance with the laws of the
State of New York.
KMART CORPORATION
By /s/ M.L. SKILES
-----------------------------
Name: M.L. SKILES
--------------------------
Title: SENIOR VICE PRESIDENT
------------------------
<PAGE> 1
EXHIBIT 99.3
KMART CORPORATION
9.35% COLLATERALIZED PROMISSORY NOTE
DUE 2022
PRIVATE PLACEMENT NO.
NO. B-1 MAY 29, 1992
U.S. $29,545,000.00
KMART CORPORATION, a Michigan corporation (the "Company"), for
value received, hereby unconditionally promises to pay to the order of
XXXXXXXXXX
(the "Purchaser")
or registered assigns,
on the 1st day of May 2022
the principal amount of
TWENTY NINE MILLION FIVE HUNDRED FORTY FIVE THOUSAND DOLLARS (U.S.
$29,545,000.00) and to pay interest (computed on the basis of a 360-day year of
twelve 30-day months) on the principal amount from time to time remaining
unpaid hereon at the rate of 9.35% per annum from and including June 2, 1992
until but not including the date of repayment of such principal amount, payable
on the first day of each May and November in each year (commencing November 1,
1992), and at maturity. Principal on this Note shall be due and payable in
equal annual installments (determined by dividing the aggregate principal
amount then outstanding by the number of annual installments remaining)
commencing on May 1, 2008 and, thereafter, on the first day of May in each
succeeding year through and including May 1, 2022. The Company agrees to pay
interest on overdue principal (whether by acceleration or otherwise, and
including any overdue optional prepayment of principal) and premium, if any,
and on any overdue installment of interest, at the Overdue Rate (as hereinafter
defined) until paid. "Overdue Rate" means the rate of interest then in effect
plus 2.00% per annum.
1. Except as may be otherwise provided pursuant to
Section 5.4 or 5.10 of the Note Purchase Agreement (as hereinafter defined),
both the principal hereof, premium, if any, and interest hereon are payable at
the principal office of the Company, in immediately available funds, in coin or
currency of the United States of America which at the time of payment shall be
legal tender for the payment of public and private debts. Such payments shall
be applied first to accrued interest then to premium, if any, and then to
principal. If any amount of principal, premium, if any, or
<PAGE> 2
2
interest on or in respect of this Note becomes due and payable on any date
which is not a Business Day, such amount shall be payable on the immediately
preceding Business Day.
"Business Day" means any day other than a Saturday, Sunday or other day on
which banks in New York are required by law to close or are customarily closed.
2. This Note is one of the 9.35% Collateralized
Promissory Notes due 2022 (the "Notes") of the Company in the aggregate
principal amount of U.S. $29,545,000.00 issued pursuant to the terms and
provisions of that certain Note Purchase Agreement, dated as of May 29, 1992
(the "Note Purchase Agreement"), entered into by the Company and XXXXXXXXXX
(" XXXXXXXXXX"), and this Note and the holder hereof are entitled equally and
ratably with the holders of all other Notes outstanding under the Note
Purchase Agreement to all the benefits and security provided for thereby
or referred to therein, to which Note Purchase Agreement reference is hereby
made for the statement thereof. A copy of the Note Purchase Agreement may be
obtained from the Company.
3. This Note and the payment and performance of all of
the Company's obligations hereunder and under the other Note Documents are
secured by that certain Deed of Trust, Security Agreement, Assignment of Rents
and Fixture Filing, dated as of May 29, 1992, among the Company, XXXXXXXXXX,
and XXXXXXXXXX as Trustee thereunder, and this Note and the holders hereof are
entitled equally and ratably with the holders of all other Notes outstanding
under the Note Purchase Agreement to all the benefits and security provided
for under the Deed of Trust or referred to therein, to which Deed of Trust
reference is hereby made for the statement thereof. A copy of the Deed of
Trust may be obtained from the Company.
4. Any one or more of the following shall constitute an
"Event of Default" as the term is used herein or in the other Note Documents
(as defined in the Note Purchase Agreement):
(a) The Company shall fail to pay when due (i) any
payment of the principal of any Note or of any premium thereon; or (ii) any
payment of interest on any Note and such interest payment default shall
continue for more than 5 days; or
<PAGE> 3
3
(b) the Company shall fail to observe or perform
any other obligation, covenant, undertaking, condition or provision in
respective of the Notes or contained in the Note Purchase Agreement or the
other Note Documents which is not remedied within 30 days after the earlier
of: (i) the furnishing of notice thereof to the holders of the Notes, (ii) the
Company's willful failure to provide any notice required under Section 6.2 of
the Note Purchase Agreement or (iii) receipt of written notice thereof from the
holder of any Note by the Company requiring the same to be remedied; provided
that a default under Section 6.09 of the Deed of Trust shall constitute an
Event of Default hereunder not subject to cure; or
(c) any representation or warranty made by the
Company in the Note Purchase Agreement or made by the Company in any other Note
Document, shall be untrue or inaccurate in any material respect; or
(d) any of the Note Documents or any provision
thereof shall cease to be a legal, valid and binding agreement enforceable
against the Company (or, in the case of the Deed of Trust, the Trustee or the
Company) in accordance with the respective terms thereof or shall in any way be
terminated or become or be declared ineffective or inoperative or shall in any
way whatsoever cease to give or provide the respective liens, security
interest, rights, titles, interest, remedies, powers or privileges intended to
be created thereby; or
(e) a judgment shall be rendered against the
company or any Principal Subsidiary for the payment of money in excess of $250
million individually or $250 million in the aggregate (as to such foregoing
amount, net of the portion thereof covered by insurance) and such judgment
shall not be discharged or dismissed, or execution thereof stayed pending
appeal, within 45 days after entry; or
(f) (i) the Company or any Principal Subsidiary
(as defined in the Note Purchase Agreement) shall commence or consent
to any case, proceeding or other action (1) under any existing or
future law of any jurisdiction 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 as
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (2) seeking appointment of a receiver,
trustee, custodian or other similar official
<PAGE> 4
4
for it or for all or any substantial part of its assets (or against the
Mortgaged Estate (as defined in the Deed of Trust)), or the Company
shall make a general assignment for the benefit of creditors or admit
in writing that it is unable to pay its debts as they become due; or
(ii) there shall be commenced against the Company or any
Principal Subsidiary any such case, proceeding or other action referred
to in subclause (i) of this clause (g) that (1) results in the entry
of an order for relief or any such adjudication or appointment or (2)
is not dismissed, discharged or stayed for a period of 30 days from the
entry thereof; or
(iii) there shall be commenced against the Company or any
Principal Subsidiary 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 its assets (or against
the Mortgaged Estate) that results in the entry of any order for any
such relief which shall not have been vacated, discharged or stayed
within 30 days from the entry thereof; or
(iv) the Company shall have been dissolved or terminated;
or
(v) the Company or any Principal Subsidiary shall take
any action authorizing, or in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth above in
this clause (f).
Upon the occurrence of an Event of Default under Section 4(a) above, the holder
of each Note as to which such Event of Default occurred may, by written notice
to the Company, declare such Note to be due and payable (without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Company) at the Redemption Price. As used herein, the "Redemption Price"
shall equal the sum of (i) the principal amount of the Note to be paid, (ii)
accrued interest thereon to (but not including) the date of such payment and
(iii) the Make-Whole Premium (as defined in the Note Purchase Agreement). Upon
the occurrence of an Event of Default under Section 4(f) above in respect of
the Company (but not of a Principal Subsidiary), all Notes shall immediately
become due and payable at the Redemption Price. Upon the occurrence of any
<PAGE> 5
5
other Event of Default, holders of Notes representing at least 51% of the
unpaid principal amount of all Notes then outstanding, excluding any Notes held
by the Company or any Subsidiary or Affiliate (the "requisite holders") may, by
written notice to the Company, declare all Notes to be due and payable (without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company) at the Redemption Price. No course of dealing on
the part of any holder of any Note nor any delay or failure on the part of any
holder of any Note to exercise any right shall operate as a waiver of such
right or otherwise prejudice such holder's rights, powers and remedies. The
Company further agrees to pay to the holder or holders of the Notes all costs
and expenses incurred by them in the collection of any Note upon any default
hereunder or under any of the other Note Documents, including the fees,
disbursements and other charges of such holder's or holders' attorneys for all
services rendered in connection therewith.
The rights and remedies expressly provided for in this Note are
cumulative and not exclusive of any rights or remedies which any holder of a
Note would otherwise have, including, without limitation, the rights and
remedies provided for in the Deed of Trust.
5. The Notes are not subject to prepayment, purchase or
redemption at the option of the Company prior to their expressed maturity dates
except on the terms and conditions and in the amounts and with the Make-Whole
Premium, if any, all as set forth in Section 2 of the Note Purchase Agreement.
6. This Note is registered on the books of the Company and is
transferable only by surrender thereof at the offices of the Company (or of
such Paying Agent as may be appointed by the Company pursuant to Section 5.4 of
the Note Purchase Agreement from time to time), duly endorsed or accompanied by
a written instrument of transfer duly executed by the registered holder of this
Note or its attorney duly authorized in writing. Payment of or on account of
principal, premium, if any, and interest on this Note shall be made only to or
upon the order in writing of the registered holder.
7. The Company and each surety, endorser, guarantor and other
party ever liable for payment of any sums of money payable upon this Note,
jointly and severally waive presentment, demand, protest, notice of protest and
nonpayment or other notice of default, notice of acceleration and intention to
accelerate or other notice of
<PAGE> 6
6
any kind, and agree that their liability under this Note shall not be affected
by any renewal or extension in the time of payment hereof, or in any
indulgences, or by any release or change in any security for the payment of
this Note, and hereby consent to any and all renewals, extensions, indulgences,
releases or changes, regardless of the number of such renewals, extensions,
indulgences, releases or changes.
No waiver by Purchaser of any of its rights or
remedies hereunder or under any other Note Document or otherwise, shall be
considered a waiver of any other subsequent right or remedy of Purchase; no
delay or omission in the exercise or enforcement by Purchaser of any rights or
remedies shall ever be construed as a waiver of any right or remedy of
Purchaser; and no exercise or enforcement of any such rights or remedies shall
ever be held to exhaust any right or remedy of Purchase.
8. This Note and the Note Purchase Agreement shall be
governed by and shall be construed in accordance with the laws of the State of
New York.
KMART CORPORATION
By /s/ M.L. SKILES
----------------------------------
Name: M.L. SKILES
Title: SENIOR VICE PRESIDENT
<PAGE> 1
EXHIBIT 99.4
CONFORMED COPY
KMART CORPORATION
NOTE AGREEMENT
Dated as of January 1, 1992
Re:
U.S. $71,417,590 9.06% Senior Secured
Notes Due February 1, 2012
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C>
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. PROPOSED FINANCING OF COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. SECURITY FOR THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. SALE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 4. REPRESENTATIONS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 5. REPRESENTATIONS OF THE PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 6. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 7. INTERPRETATION OF AGREEMENT; DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 8. IMPROVEMENT NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 9. EXPENSES AND TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 10. PAYMENT OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 11. SUBSTITUTION OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 12. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 13. SURVIVAL OF COVENANTS AND REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 14. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 15. COMMUNICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 16. LAW GOVERNING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
SECTION 17. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 18. HEADINGS AND TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
ATTACHMENTS TO NOTE AGREEMENT:
Schedule I - Names and Addresses of Purchasers
Schedule II - Description of Properties
Exhibit A - Trust Indenture
Exhibit B - Form of Mortgage
Exhibit C - Closing Certificate
Exhibit D - Description of Special Counsel's Closing Opinion
Exhibit E - Description of Closing Opinion of Independent Counsel to the
Company
Exhibit F - Description of Closing Opinion of General Counsel to the Company
-ii-
<PAGE> 4
KMART CORPORATION
International Headquarters
3100 West Big Beaver Road
Troy, Michigan 48084-3163
NOTE AGREEMENT
Re: U.S. $71,417,590 9.06% Senior Secured Notes
Due February 1, 2012
Dated as of
January 1, 1992
To the Purchaser named in Schedule I
attached hereto which is a signatory
to this Agreement
Ladies and Gentlemen:
KMART CORPORATION, a Michigan corporation (the "Company"), agrees with
you as follows:
SECTION 1. PROPOSED FINANCING OF COLLATERAL.
The Company requires funds to finance the Total Cost incurred in the
construction of ten retail discount stores more fully described on Schedule II,
Part A, title to each of which stores is owned in fee by the Company
(individually a "Fee-Owned Mortgaged Property" and collectively the "Fee-Owned
Mortgaged Properties") and to finance the Total Cost incurred in the
construction of one retail discount store more fully described on Schedule II,
Part B, in which the Company holds a leasehold interest (the "Leasehold
Mortgaged Property", said Leasehold Mortgaged Property, together with the
Fee-Owned Mortgaged Properties, being hereinafter referred to collectively as
the "Mortgaged Properties"). In order to finance 100% of the Total Cost
incurred in constructing each of the Mortgaged Properties, the Company will
authorize the issue and sale of its 9.06% Senior Secured Notes Due February 1,
2012 (the "Notes") in an aggregate principal amount not exceeding U.S.
$71,417,590 (subject to adjustment as provided in Section 1(e) hereof). The
term "Notes" as used herein shall include each Note delivered pursuant to this
Agreement and the separate Agreements with the other Purchasers named in
Schedule 1, together with any Improvement Notes which may be issued from time
to time pursuant to the Indenture hereinafter referred to. You and the other
Purchasers named in the Schedule 1 are hereinafter sometimes referred to as the
"Purchasers." Words and phrases not otherwise defined herein shall have the
meanings assigned thereto in Section 7 hereof.
<PAGE> 5
(b) The Notes will be dated the date of issue, will bear interest at
the rate of 9.06% per annum, will bear interest on overdue principal (including
any overdue required or optional prepayment of principal) and premium, if any,
and (to the extent legally enforceable) on overdue installment of interest, in
any such case from and including the due date thereof to but not including the
date of payment thereof, at the Overdue Rate and will be expressed to mature as
follows:
(1) one installment of interest only for the period from and
including the date of issue to but not including February 1, 1992,
payable on February 1, 1992;
(2) two hundred thirty-nine (239) equal installments, including
both principal and interest, each in an amount equal to .903589% of the
original principal amount of the Notes, payable monthly on March 1, 1992
and on the first day of each month thereafter to and including January
1, 2012; and
(3) a final installment on February 1, 2012, in an amount equal
to the entire principal and interest remaining unpaid as of said date.
The Notes will be in the form attached as Exhibit A to the Indenture
hereinafter referred to. Interest on the Notes will be computed on the
basis of a 360-day year of twelve 30-day months.
SECTION 2. SECURITY FOR THE NOTES.
The Notes will be issued under and secured by a Trust Indenture (the
"Indenture") substantially in the form attached hereto as Exhibit A from the
Company to XXX as corporate trustee, and XXXXXXXXXX, as individual trustee
(collectively the "Trustees"). Pursuant to the Indenture, the Company will
execute, acknowledge and deliver deeds of trust, deeds to secure debt and/or
mortgages (the "Mortgages") substantially in the form attached hereto as
Exhibit B (a) with respect to each Fee-Owned Mortgaged Property creating a
first priority mortgage lien on all of the Company's right, title and interest
in and to each such Fee-Owned Mortgaged Property and (b) with respect to the
Leasehold Mortgaged Property creating a first priority mortgage lien on all of
the Company's rights and interests in and to such Leasehold Mortgaged Property.
In the case of the Leasehold Mortgaged Property, the holder of title thereto
and any other Person which has an interest in such Leasehold Mortgaged Property
shall enter in a written agreement in form and substance satisfactory to the
Purchasers and their special counsel (the "Estoppel Agreement") acknowledging,
among other things, the Company's and the Trustee's right of quiet enjoyment of
such Leasehold Mortgaged Property.
SECTION 3. SALE OF NOTES.
(a) Subject to the terms and conditions herein contained and on the
basis of the representations and warranties hereinafter set forth, the Company
agrees to authorize, issue
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<PAGE> 6
and sell to you and you agree to purchase from the Company on the date
hereinafter specified, Notes of the Company at a price equal to 100% of the
principal amount thereof set forth opposite your name in Schedule I.
(b) Delivery of the Notes will be made at the offices of Chapman and
Cutler, 111 West Monroe, Chicago, Illinois 60603, against payment therefor in
Federal or other funds current and immediately available at the office of NBD
Bank, N.A., 611 Woodward Avenue, Detroit, Michigan, at 12:00 noon Detroit,
Michigan time on January 27, 1992 (the "Closing Date").
(c) The Notes will be delivered to you on the Closing Date in the
form of a single Note in the principal amount then to be purchased by you,
registered in your name or in the name of such nominee as specified in Schedule
I attached hereto.
(d) Concurrently with the execution and delivery of this Agreement,
the Company is entering into the Agreements with the other Purchasers under
which such other Purchasers agree to purchase from the Company the principal
amount of Notes set opposite each such Purchaser's name in Schedule I, and your
obligations and the obligations of the Company hereunder are subject to the
execution and delivery of the Agreements by the other Purchasers. Your
obligations and those of the other Purchasers shall be several and not joint
and you shall not be liable or responsible for the acts or defaults of the
other Purchasers.
(e) Schedule II attached hereto represents the Aggregate Total Cost
of the Mortgaged Properties.
SECTION 4. REPRESENTATIONS OF THE COMPANY.
The Company represents and warrants that all representations set forth
in the form of Closing Certificate attached hereto as Exhibit C are true and
correct as of the date hereof and are incorporated herein by reference with the
same force and effect as though herein set forth in full.
SECTION 5. REPRESENTATIONS OF THE PURCHASER.
You represent that you are purchasing the Notes for your own account,
for the purpose of investment and not with a view to distribution thereof, and
that you have no present intention of selling, negotiating, or otherwise
disposing of the Notes, it being understood, however, that the disposition of
your Property shall at all times be and remain within your control. You
further represent that you are acquiring the Notes for your own account and
with your general corporate assets and not with the assets of any separate
account in which any employee benefit plan has any interest.
As used in this Section 5 the terms "separate account" and "employee
benefit plan" shall have the respective meanings assigned to them in ERISA.
-3-
<PAGE> 7
SECTION 6. CLOSING CONDITIONS.
Your obligation to purchase and pay for the Notes on the Closing Date is
subject to the performance by the Company of its agreements hereunder which, by
the terms hereof, are to be performed at or prior to the time of each delivery
of such Notes and to the following conditions precedent:
(a) Execution of Agreements. On or prior to the Closing Date, the
Indenture, the Mortgages, the Ground Lease and Estoppel Agreement relating to
the Leasehold Mortgaged Property shall be in form and substance satisfactory to
you and your special counsel, shall have been duly authorized, executed and
delivered by the parties thereto and shall be in full force and effect.
(b) Recordation of Mortgages, UCC's and Estoppel Agreement. On or
prior to the Closing Date each Mortgage and all necessary financing statements
or similar notices, if and to the extent permitted or required by applicable
law, shall have been delivered to the Title Company (as hereinafter defined) in
a "New York style closing" for recordation in each public office wherein such
recording is deemed necessary or appropriate by you and your special counsel to
perfect the lien thereof as against creditors of or purchasers from the Company
and the Estoppel Agreement shall have been delivered to the Title Company (as
hereinafter defined) in a "New York style closing" for recordation in each
public office wherein such recording is deemed necessary or appropriate by you
and your special counsel to protect the rights of the Company and the Trustees
created thereby.
(c) Survey. Prior to the Closing Date, the Company shall have caused
a physical survey of each parcel of real estate comprising each Mortgaged
Property to be made by a registered civil engineer or surveyor licensed in the
state in which such parcel is located and shall have furnished to the Trustees
and your special counsel a plat of survey duly certified by such engineer or
surveyor not more than 90 days prior to the Closing Date, which shall show (1)
any encroachments upon such real estate parcel by adjoining buildings or
structures, (2) any encroachments on adjoining premises by the building or
improvements erected thereon, (3) all easements, (4) means of ingress and
egress, (5) flood zone designation boundaries, and (6) setback, height and
bulk restrictions, if any. Each survey shall be prepared in accordance with
the standard detail requirements for land surveys adopted by the American Land
Title Association ("ALTA") and the American Congress on Surveying and Mapping,
as revised and in effect on the date of delivery of the survey, and shall be
certified to you, the Trustees and your special counsel. You shall also have
received such evidence as you may require to evidence compliance by the Company
with the requirements of Section 9(i) hereof that the Company shall pay the
fees and disbursements of the civil engineer or surveyor incurred in connection
with the preparation of the surveys herein referred to.
(d) Corporate Existence and Authority of Company. On the Closing
Date you shall have received, in form and substance reasonably satisfactory to
you and your
-4-
<PAGE> 8
special counsel, such documents and evidence with respect to the Company as you
may reasonably request in order to establish the existence and good standing of
the Company and the authorization of the transactions contemplated by this
Agreement, the Indenture and the Mortgages.
(e) Cost Certificate. On or prior to the Closing Date, you shall
have received from the Company a certificate dated such Closing Date, executed
by the President or a Vice President of the Company (1) giving the date of
completion of construction of each Mortgaged Property, which date shall not be
not earlier than the date of completion set forth in Schedule 11 hereto, (2)
stating in detail the actual construction cost of each Mortgaged Property,
exclusive in any such case of the cost of trade fixtures, furniture, equipment
and other personal property, but including the cost of land, buildings, signs,
landscaping, architectural and engineering fees, and (3) demonstrating that the
aggregate principal amount of all Notes to be issued on such date does not
exceed the Aggregate Total Cost of the Mortgaged Properties.
(f) Closing Certificate. On the Closing Date, you shall have
received from the Company a certificate dated such Closing Date, executed by
the President or a Vice President of the Company substantially in the form
attached hereto as Exhibit C, the truth and accuracy of which shall be a
condition to your obligation to accept and pay for the Notes.
(g) Evidence of Title. Prior to the Closing Date, the Company shall
have obtained the commitment of Chicago Title Insurance Company, Lawyers Title
Insurance Corporation or another national title insurance company of good
standing selected by the Company and satisfactory to you (the "Title Company"),
to issue a policy of mortgage title insurance on a standard ALTA Form Mortgage
Title Insurance Policy (Loan Policy-1970 Form with the Comprehensive
Endorsement, a Zoning Endorsement or, in lieu thereof, a "certificate of
occupancy", a Usury Endorsement, a "Tie-In" Endorsement, where available, an
ALTA Form 9 Endorsement or, in lieu thereof, an opinion of local counsel from
the state wherein a Mortgaged Property is located to the effect that no
provision relating to the payment of the Notes is violative of any law of such
state relating to usury, a Contiguity Endorsement, where appropriate, and any
other endorsement deemed necessary or appropriate by you or your special
counsel) in the aggregate amount which will provide for mortgage title
insurance in an amount not less than the aggregate principal amount of Notes
being issued on the Closing Date, covering the Mortgaged Properties, and
showing marketable record title thereto to be vested in the Company, subject
only to:
(1) the liens, if any, permitted by the related Mortgage; and
(2) such other exceptions as shall be satisfactory to you and
your special counsel; and
-5-
<PAGE> 9
agreeing to insure the Trustees and the holders of the Notes upon the proper
execution and recording of each of the Mortgages against loss or damage
sustained by reason of such Mortgages not being first and paramount liens upon
title to the Mortgaged Properties. The Company will, on the Closing Date,
without cost or expense to you, obtain and deliver to you the mortgage title
insurance policies contemplated by the commitments of the Title Company. You
shall also have received such evidence as you may require to evidence
compliance by the Company with requirements of Section 9(i) hereof that the
Company shall pay the fees and disbursements of the Title Company incurred in
connection with the preparation and issuance of the mortgage title insurance
policies herein referred to.
(h) Regulatory Agency Approvals. On or prior to the Closing Date,
you shall be provided with true copies of all licenses, orders, permits and
approvals of all state and local governmental licensing or regulatory agencies,
having jurisdiction over the construction and operation of each Mortgaged
Property, required under applicable laws, regulations and ordinances for the
construction and operation of such Mortgaged Property, including, without
limitation, a "certificate of occupancy" covering each such Mortgaged Property.
(i) Casualty and Liability Insurance. On the Closing Date, you shall
have received a certificate dated such Closing Date executed by an authorized
officer of the Company in form and substance satisfactory to you and your
special counsel, dated the Closing Date, stating that the Company is in
compliance with the requirements of Section 2.6 of each of the Mortgages.
(j) Environmental Audit Reports. Prior to the Closing Date, the
Company shall have caused to be prepared and submitted and addressed to you, a
written Phase I environmental site assessment report in respect of each of the
Mortgaged Properties prepared by Westinghouse Environmental and Geotechnical,
Inc. ("Westinghouse"), dated not earlier than November, 1991, a letter dated
January 17, 1992 from Westinghouse and a written Phase II environmental site
assessment report where recommended in the related Phase I environmental site
assessment report, each of which reports shall disclose no material violation
of any applicable Environmental Legal Requirement and shall be satisfactory in
form and substance to you and your special counsel. You shall also have
received such evidence as you may require to evidence compliance by the Company
with requirements of Section 9(k) hereof that the Company pay the fees and
disbursements of the engineer incurred in connection with the preparation of
the environmental audits or reports herein referred to.
(k) Compliance with Agreements. The Company shall have performed and
complied with all agreements and conditions contained herein, in the Indenture,
in the Mortgages and in the Ground Lease which are required to be performed or
complied with by the Company on or prior to the Closing Date.
(l) Legal Opinions. On the Closing Date, you shall have received
from Chapman and Cutler, who are acting as your special counsel in this
transaction, from
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<PAGE> 10
Dickinson, Wright, Moon, Van Dusen & Freeman, independent counsel to the
Company, and from Anthony N. Palizzi, Esq., General Counsel to the Company,
their respective opinions dated as of the Closing Date, in form and substance
satisfactory to you, covering the matters set forth in Exhibits D, E and F,
respectively, hereto. You shall also have received the opinion of special
local counsel in each jurisdiction in which any of the Mortgaged Properties is
located, in form and substance satisfactory to you.
(m) Consent of Holders of Other Securities. On or prior to the
Closing Date, any consents or approvals required to be obtained from any holder
or holders of any outstanding Security of the Company and any amendments of
agreements pursuant to which any Securities may have been issued which shall be
necessary to permit the consummation of the transactions contemplated hereby
shall have been obtained and all such consents or amendments shall be
satisfactory in form and substance to you and your special counsel.
(n) Legality. The Notes shall qualify as a legal investment for you
under the laws and regulations of each jurisdiction to which you are subject
(without reference to any so-called "basket" provision which permits the making
of an investment without restrictions as to the character of the particular
investment being made) and shall not subject you to any tax, penalty, liability
or onerous conditions under or pursuant to any applicable law or governmental
regulation and you shall have received such information as you shall reasonably
request from the Company to establish such facts.
(o) No Defaults. No Default or Event of Default shall exist (either
on or as of the Closing Date or immediately after giving effect to the
transactions herein contemplated).
(p) Private Placement Number. On or prior to the Closing Date
special counsel to the Purchasers shall have duly made the appropriate filings
with Standard & Poor's CUSIP Service Bureau, as agent for the National
Association of Insurance Commissioners, in order to obtain, and shall have
obtained, a private placement number for the transaction contemplated hereby.
(q) Funding Instructions. At least one Business Day prior to the
Closing Date you shall have received written instructions executed by
authorized officer of the Company directing the manner of the payment of funds
and setting forth (1) the name of the transferee bank, (2) such transferee
bank's ABA number, (3) the account name and number in to which the purchase
price for the Notes is to be deposited, and (4) the name and telephone number
of the account representative responsible for verifying receipt of such funds.
(r) Related Transactions. The Company shall have consummated the
sale of the entire principal amount of the Notes scheduled to be sold on the
Closing Date pursuant to this Agreement and the other Agreements.
-7-
<PAGE> 11
(s) Payment of Certain Fees and Expenses. On the Closing Date, the
Company shall have paid the fees and disbursements of special counsel to the
Purchasers referred to in Section 9(b) hereof.
(t) Satisfactory Proceedings. All proceedings taken in connection
with the transactions contemplated by this Agreement, the Indenture and the
Mortgages and all documents necessary to a consummation thereof, shall be
satisfactory in form and substance to you and your special counsel and you
shall have received a copy (executed or certified as may be appropriate) of all
legal documents or proceedings taken in connection with the consummation of
said transactions.
(u) Waiver of Conditions. If on the Closing Date the Company fails
to tender to you the Notes or if any of the conditions specified in this
Section 6 have not been fulfilled, you may thereupon elect to be relieved of
all further obligations under this Agreement. Without limiting the foregoing,
if the conditions specified in this Section 6 have not been fulfilled, you may
waive compliance by the Company with any such condition to such extent as you
may in your sole discretion determine. Nothing in this Section 6(u) shall
operate to relieve the Company of any of its obligations hereunder or to waive
any of your rights or remedies against the Company.
SECTION 7. INTERPRETATION OF AGREEMENT; DEFINITIONS.
(a) Definitions. Unless the context otherwise requires, the terms
hereinafter set forth when used herein shall have the following meanings and
the following definitions shall be equally applicable to both the singular and
plural forms of any of the terms herein defined:
"Aggregate Total Cost" shall mean an amount equal to the sum of
the Total Cost of all Mortgaged Properties of the Company which were or
are subject to the lien of a Mortgage originally delivered on the
Closing Date to the Trustees for the benefit of the holders of the Notes
under and pursuant to the Agreements.
"Agreement" shall mean this Agreement and "Agreements" shall mean
this Agreement and the similar Agreements dated the date hereof entered
into by the Company with the other Purchasers.
"Business Day" shall mean any day other than a Saturday, Sunday,
statutory holiday or other day on which banks in Detroit, Michigan, New
York, New York, XXXXXXXXXX or XXXXXXXXXX are required by law to close.
"Closing Date" shall have the meaning specified in Section 3(b)
hereof.
"Default" shall mean any event which would constitute an Event of
Default if all requirements in connection therewith for the giving of
notice, the lapse of time, and the happening of any further condition,
event or act, had been satisfied.
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<PAGE> 12
"Environmental Legal Requirement" shall mean any international,
Federal, state or local statute, law, regulation, order, consent decree,
judgment, permit, license, code, covenant, deed restriction, common law,
treaty, convention, ordinance or other requirement relating to public
health, safety or the environment, including, without limitation, those
relating to releases, discharges or emissions to air, water, land or
groundwater, to the withdrawal or use of groundwater, to the use and
handling of polychlorinated biphenyls or asbestos, to the disposal,
treatment, storage or management of hazardous or solid waste, or
Hazardous Substances or crude oil, or any fraction thereof, or to
exposure to toxic or hazardous materials, to the handling,
transportation, discharge or release of gaseous or liquid Hazardous
Substances and any regulation, order, notice or demand issued pursuant
to such law, statute or ordinance, in each case applicable to the
property of the Company and its Subsidiaries or the operation,
construction or modification of any thereof, including without
limitation the following: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, the Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act of 1976
and the Hazardous and Solid Waste Amendments of 1984, the Hazardous
Materials Transportation Act, as amended, the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1976, the Safe
Drinking Water Control Act, the Clean Air Act of 1966, as amended, the
Toxic Substances Control Act of 1976, the Occupational Safety and Health
Act of 1977, as amended, the Emergency Planning and Community
Right-to-Know Act of 1986, the National Environmental Policy Act of
1975, the Oil Pollution Act of 1990 and any similar or implementing
state law, and any state statute and any further amendments to these
laws providing for financial responsibility for cleanup or other actions
with respect to the release or threatened release of Hazardous
Substances or crude oil, or any fraction thereof and all rules,
regulations, guidance documents and publication promulgated thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Estoppel Agreement" shall have the meaning specified in Section
2 hereof.
"Event of Default" shall mean any of the Events of Default
referred to in Section 6.1 of the Indenture.
"Fee-Owned Mortgaged Property" and "Fee-Owned Mortgaged
Properties" shall have the respective meanings specified in Section
1(a) hereof.
"Funding Subsidiary" shall have the meaning specified in Section
11 hereof.
"GAAP" shall mean generally accepted accounting principles.
"Ground Lease" shall mean that certain Ground Lease dated as of
November 2, 1988 from, XXX, a California corporation, as ground lessor,
to the
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<PAGE> 13
Company, as ground lessee, as the same may from time to time be
supplemented or amended.
"Hazardous Substance" shall mean any hazardous or toxic material,
substance or waste pollutant or contaminant which is regulated as such
under any statute, law, ordinance, rule or regulation of any Federal,
regional, state or local authority having jurisdiction over the
Mortgaged Properties or its use, including but not limited to any
material, substance or waste which is: (1) defined as a hazardous
substance under Section 311 of the Federal Water Pollution Control Act
(33 U.S.C. Section 1317), as amended; (2) regulated as a hazardous waste
under Section 1004 of the Federal Resource Conservation and Recovery Act
(42 U.S.C. Section 6901 et seq.) as amended; (3) defined as a hazardous
substance under Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.), as
amended, or (4) defined or regulated as a hazardous substance or
hazardous waste under any rules or regulations promulgated under any of
the foregoing statutes.
"Holder" shall have the meaning specified in Section 8 hereof.
"Improvements" shall have the meaning specified in the Indenture.
"Improvement Notes" shall mean any of the Improvement Notes
issued pursuant to Section 2.2 of the Indenture.
"Initial Notes" shall have the meaning specified in Section 8
hereof.
"Institutional Investor" shall mean any of the following Persons:
(1) any bank, savings and loan association, savings institution, trust
company or national banking association, acting for its own account or
in a fiduciary capacity, (2) any charitable foundation, (3) any
insurance company, (4) any fraternal benefit society, (5) any pension,
retirement or profit sharing trust or fund within the meaning of Title I
of ERISA or for which any bank, trust company, national banking
association or investment adviser registered under the Investment
Advisers Act of 1940, as amended, is acting as trustee or agent, (6) any
investment company or business development company, as defined in the
Investment Company Act of 1940, as amended, (7) any small business
investment company licensed under the Small Business Investment Act of
1958, as amended, (8) any broker or dealer registered under the
Securities Exchange Act of 1934, as amended, or any investment adviser
registered under the Investment Adviser Act of 1940, as amended, (9) any
corporation, partnership, Massachusetts or similar business trust or
common or collective investment vehicle, (10) any government, any public
employees' pension or retirement system, or any other government agency
supervising the investment of public funds, (11) any other entity all of
the equity owners of which are Institutional Investors or (12) any other
Person which may be within the definition of "qualified institutional
buyer" as such term is used in Rule 144A, as from time to time in
effect, promulgated under the Securities Act of 1933, as amended.
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<PAGE> 14
"Leasehold Mortgaged Property" shall have the meaning specified
in Section l(a) hereof.
"Mortgaged Properties" shall have the meaning specified in
Section 1 (a) hereof.
"Notes" shall have the meaning specified in Section 1(a) hereof.
"Overdue Rate" shall mean the lesser of (a) the maximum rate
permitted by applicable law and (b) 11.06% per annum.
"Pension Plan" shall mean any "employee pension benefit plan", as
such term is defined in Section 3(2) of ERISA maintained by the Company
and its Subsidiaries for its employees and covered by Title IV of ERISA
or to which Section 412 of the Internal Revenue Code of 1986, as
amended, applies, as from time to time in effect.
"Person" shall mean an individual, partnership, corporation,
trust, unincorporated association or other organization, or a government
or any department or agency thereof.
"Property" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Purchasers" shall have the meaning specified in Section 1(a)
hereof.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Total Cost" of a Mortgaged Property shall mean the sum of: (a)
the actual construction cost and purchase price, including the cost of
land, buildings, signs, landscaping, architectural and engineering fees
and the cost of any improvements made thereto, whether financed by
Improvement Notes, if any, or otherwise, but excluding the cost of trade
fixtures, furniture and equipment and (b) all fees and expenses referred
to in Section 9 of this Agreement allocated by the Company to such
Mortgaged Property and the physical survey and title charges referred to
in Section 6(c) and 6(g) of this Agreement in respect of such Mortgaged
Property incurred by the Company in connection with the acquisition of
such Mortgaged Property and, the construction of the buildings and
improvements thereon; provided that the aggregate amount of the fees,
expenses, charges and costs described in this clause (b) and included in
the Total Cost of such Mortgaged Property shall not exceed 10% of the
aggregate amount thereof
"U.S. $" or "U.S. Dollars" shall mean lawful currency of the
United States of America in same day immediately available freely
transferrable funds.
Words and phrases not otherwise defined herein shall have the meanings
assigned thereto in the Indenture.
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<PAGE> 15
(b) Accounting Principles. Where the character or amount of any
asset or liability or item of income or expense is required to be deter-mined
or any consolidation or other accounting computation is required to be made
for the purposes of this Agreement, the same shall be done in accordance with
United States GAAP, to the extent applicable.
(c) Directly or Indirectly. Where any provision in this Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether the action in question
is taken directly or indirectly by such Person.
SECTION 8. IMPROVEMENT NOTES.
So long as you or your affiliate or the nominee or transferee of either
thereof (herein, in this Section 8 called the "Holder") shall be the holder of
any of the Notes (herein, in this Section 8 called the "Initial Notes"), the
Company will not issue to anyone Improvement Notes of any series referred to in
Section 2.2 of the Indenture, unless (a) the Company makes a written offer to
sell to you the Improvement Notes of such series or any portion thereof as you
may desire, upon terms and conditions substantially identical to, and
simultaneously with, the offer of such Improvement Notes to the other holders
of the Notes, (b) the Company shall consider all bids solicited from such offer
in good faith, (c) such offer shall not expire or be revoked for a period (to
be specified therein) of not less than 45 days, and (d) you shall reject or not
accept such offer within such period; provided, however, if any Holder declines
or fails to purchase its pro rata share of any such Improvement Notes, each of
the other Holders shall have the right, but not the duty, to purchase a portion
thereof proportionate to its respective percentage of the aggregate principal
amount of Notes then outstanding. Such Improvement Notes may then be offered
to Institutional Investors upon terms substantially identical to those offered
to you. Notwithstanding any other provision of this Section 8, neither the
Company nor any agent on its behalf will sell or offer any Improvement Notes of
such series for sale to, or solicit any offer to buy any thereof from, or
otherwise approach or negotiate in respect thereof with, any other Person so as
thereby to require registration of such Improvement Notes or the Initial Notes
under the provisions of Section 5 of the Securities Act of 1933, as amended, or
so as to require the qualification of the Indenture under the Trust Indenture
Act of 1939, as amended.
SECTION 9. EXPENSES AND TAXES.
Whether or not the Notes are sold, the Company will pay all reasonable
expenses relating to the transactions contemplated by this Agreement, the
Indenture and the Mortgages, including but not limited to:
(a) the cost of reproducing this Agreement, the Indenture, the
Mortgages and the Notes;
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<PAGE> 16
(b) the reasonable fees and disbursements of Chapman and
Cutler, your special counsel;
(c) the reasonable fees and disbursements of each special
local counsel;
(d) the reasonable fees and disbursements of Day, Berry &
Howard, counsel to the Trustees;
(e) the cost of delivering to your home office, insured to
your satisfaction, the Note purchased by you on the Closing Date;
(f) all reasonable fees, costs and other expenses of the
Trustees, as trustees under the Indenture and the Mortgages;
(g) all recording and filing fees and stamp taxes in
connection with the recordation or filing and re-recordation or re-
filing of the Mortgages, the Estoppel Agreement and financing and
continuation statements and other notices of either thereof necessary to
maintain the first perfected lien on the Mortgaged Properties under the
Indenture and the Mortgages;
(h) the cost of conducting all reasonable Uniform Commercial
Code, judgment and tax lien searches;
(i) the reasonable fees and disbursements of the Title Company
referred to in Section 6(g) hereof in connection with the issuance of
the title insurance policies referred to therein and the reasonable fees
and disbursements of the civil engineer or surveyor referred to in
Section 6(c) hereof in connection with the preparation of the survey
referred to herein;
(j) the fees and disbursements of Westinghouse Environmental
and Geotechnical, Inc., in connection with the preparation of the
engineer's environmental audits or reports referred to in Section 6(j)
hereof;
(k) the reasonable fees and disbursements of P.B.E.
Securities, Incorporated, the Company's investment banking firm in
connection with the issuance, sale and delivery of the Notes and the
fees and commissions payable or claimed to be payable by any other
Person in connection with the initial issuance, sale and delivery of the
Notes;
(l) all fees, expenses and disbursements of the Trustees and
the holders of the Notes (including without limitation, reasonable
attorneys' fees and court costs) relating to any supplemental
indentures, amendments, waivers or consents pursuant to the provisions
of this Indenture, any of the Mortgages or the Notes (whether or not
the same is actually executed or delivered), including without
limitation, the fees, expenses and disbursements of the holders of the
Notes following the occurrence and during the continuance of a Default
or an Event of Default or in connection with any
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<PAGE> 17
supplemental indenture, amendment, waiver or consent resulting
from any work-out, restructuring or similar proceeding relating to the
performance or non-performance by the Company of its obligations under
the provisions of this Agreement, the Indenture, any of the Mortgages or
the Notes as the result of any potential Default or Event of Default or
incurred in connection with the enforcement of rights hereunder or under
any of the Mortgages or under the Notes as a result of any potential
Default or Event of Default, whether or not a lawsuit is filed in
connection therewith; and
(m) all costs, charges and expenses in any way relating to or
incurred in connection with the issuance of any series of Improvement
Notes, including reasonable attorneys' fees and expenses of the
Trustees, the holders of the Notes and the Institutional Investors which
will purchase the Improvement Notes, recording fees, premiums covering
title insurance and all applicable taxes which may be incurred or
imposed by reason of the transactions contemplated by the issuance of
Improvement Notes.
The obligations of the Company under this Section 9 shall survive
the payment or prepayment of the Notes and the termination of this Agreement,
the Indenture and the Mortgages.
SECTION 10. PAYMENT OF NOTES.
The undersigned hereby directs that the provisions of Section 2.4 of the
Indenture shall apply with respect to payments on or in respect of the Notes.
SECTION 11. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute one of your wholly-owned
subsidiaries (the "Funding Subsidiary") as the purchaser of the Notes to be
purchased by you by written notice delivered to the Company, which notice shall
be signed by you and the Funding Subsidiary, shall be accompanied by the
Funding Subsidiary's agreement to be bound by this Agreement and by a
confirmation by the Funding Subsidiary of the accuracy with respect to it of
the representations set forth in Section 5 hereof (subject to any exception
necessary to reflect the intention, if any, of such Funding Subsidiary to
transfer to you at a subsequent date all or any portion of the Notes to be
purchased by it). The Company agrees that, upon receipt of such notice,
wherever the words "you" or "Purchaser" are used in this Agreement, such words
shall be deemed to refer to the Funding Subsidiary in lieu of you. The Company
understands that in the event the Funding Subsidiary shall purchase the Notes,
shortly after the purchase of the Notes and pursuant to a registration
statement filed under the Securities Act of 1933, as amended, or in a
transaction exempt from the registration requirements of such Act, the Funding
Subsidiary may transfer the Notes to you or one of your affiliates whereupon
wherever the word "you" is used in this Agreement (other than this Section 11)
such words shall be deemed to refer to you or such affiliate, as the case may
be, in lieu of the Funding Subsidiary.
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<PAGE> 18
SECTION 12. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the Company and its successors and
assigns and shall inure to your benefit and to the benefit of your successors
and assigns, including each successive holder or holders of any Notes.
SECTION 13. SURVIVAL OF COVENANTS AND REPRESENTATIONS.
All covenants, representations and warranties made by the Company herein
and in any certificates delivered pursuant hereto, shall survive the issuance
of the Notes and the delivery of this Ageement and the Notes and shall survive
until all of the Notes are paid in full.
SECTION 14. SEVERABILITY
Should any part of this Agreement for any reason be declared invalid,
such decision shall not affect the validity of any remaining portion, which
remaining portion shall remain in force and effect as if this Agreement had
been executed with the invalid portion thereof eliminated and it is hereby
declared the intention of the parties hereto that they would have executed the
remaining portion of this Agreement without including therein any such part,
parts or portion which may, for any reason, be hereafter declared invalid.
SECTION 15. COMMUNICATIONS.
All communications provided for hereunder shall be in writing, and if to
you, delivered or telexed, telegraphed, telecopied or sent by other means of
recorded electronic communication (with a copy of any such communication
promptly mailed by registered or certified mail or prepaid nationally
recognized overnight air courier service) or by prepaid nationally recognized
overnight air courier service, in any such case addressed to you at your
address appearing on Schedule I to this Agreement or to such other address as
you may designate to the Company in writing, and, if to the Company, delivered
or telexed, telegraphed, telecopied or sent by other means of recorded
electronic communication (with a copy of any such communication promptly mailed
by registered or certified mail or prepaid nationally recognized overnight air
courier service) or by prepaid nationally recognized overnight air courier
service, in any such case addressed to the Company at International
Headquarters, 3100 West Big Beaver Road, Troy, Michigan 48084-3163, Attention:
Treasurer, or to such other address as the Company may designate to you in
writing.
SECTION 16. LAW GOVERNING.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (NOT THE CONFLICTS LAW) OF THE STATE OF
MICHIGAN.
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<PAGE> 19
SECTION 17. COUNTERPARTS.
This Agreement may be simultaneously executed in any number of
counterparts, each of which when so executed and delivered shall be an
original, but such counterparts together shall constitute but one and the same
instrument.
SECTION 18. HEADINGS AND TABLE OF CONTENTS.
The headings of the sections of this Agreement and the Table of Contents
are inserted for purposes of convenience only and shall not be construed to
affect the meaning or construction of any of the provisions hereof.
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<PAGE> 20
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed copy of this Agreement,
whereupon it shall become a binding agreement between us.
KMART CORPORATION
By_____________________________
Its
[VARIATION]
By_____________________________
Its
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NAMES AND ADDRESSES OF PURCHASERS
[INTENTIONALLY OMITTED]
<PAGE> 1
EXHIBIT 99.5
CONFORMED COPY
================================================================================
TRUST INDENTURE
Dated as of January 1, 1992
Between
KMART CORPORATION
And
XXX
And
XXXXXXXXXX,
AS TRUSTEES
================================================================================
<PAGE> 2
TABLE OF CONTENTS
SECTION HEADING PAGE
Parties................................................................... 1
Recitals.................................................................. 1
SECTION 1. INTERPRETATION OF AGREEMENT; DEFINITIONS.................... 2
Section 1.1. Definitions......................................... 2
Section 1.2. Accounting Principles............................... 10
Section 1.3. Directly or Indirectly.............................. 10
SECTION 2. THE NOTES................................................... 11
Section 2.1. Description of Notes................................ 11
Section 2.2. Improvement Notes................................... 11
Section 2.3. Denominations; Execution of Notes; Certificate of
Authentication...................................... 16
Section 2.4. Payment of the Notes................................ 16
Section 2.5. The Register........................................ 17
Section 2.6. Transfers and Exchanges............................. 17
Section 2.7. The New Notes....................................... 18
Section 2.8. Cancellation of Notes............................... 18
Section 2.9. Corporate Trustee as Agent.......................... 19
Section 2.10. Ownership........................................... 19
SECTION 3. PARTICULAR COVENANTS OF THE COMPANY......................... 19
Section 3.1. Warranty of Title................................... 19
Section 3.2. Payment of Principal, Premium and Interest.......... 19
Section 3.3. Office for Notices.................................. 19
Section 3.4. Note Agreement and Mortgage Covenants............... 20
Section 3.5. Maintenance of Corporate Existence, Rights.......... 20
Section 3.6. Maintenance of Lien; Recording...................... 20
Section 3.7. Further Assurances; Right of Trustees to Perform....
its Covenants....................................... 21
Section 3.8. Maintenance of Property............................. 21
Section 3.9. Insurance........................................... 22
Section 3.10. Payment of Taxes and Other Charges.................. 22
Section 3.11. Compliance with Laws................................ 22
Section 3.12 Mergers and Consolidations.......................... 23
Section 3.13. Consolidated Tangible Net Worth..................... 23
Section 3.14. Maintenance of Rating............................... 23
Section 3.15. Termination of Pension Plans........................ 23
Section 3.16 Transactions with Affiliates........................ 23
Section 3.17. Repurchase of Notes................................. 24
Section 3.18. Financial Information and Reports................... 24
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<PAGE> 3
Section 3.19. Notice of Default..................................... 26
SECTION 4. POSSESSION, USE, SUBSTITUTION AND RELEASE OF
PROPERTY....................................................... 27
Section 4.1. Company's Right of Possession.......................... 27
Section 4.2. Release of Mortgaged Property - Consent of
Noteholders............................................ 27
SECTION 5. PREPAYMENT OF NOTES............................................ 27
Section 5.1. Prepayments and Manner Thereof......................... 27
Section 5.2. Optional Prepayment in the Event of Casualty or
Condemnation........................................... 27
Section 5.3. Optional Prepayment upon Election to Withdraw.......... 27
Section 5.4. Optional Prepayment with Premium....................... 28
Section 5.5. Prepayment of Notes upon a Designated Event............ 28
Section 5.6. Optional Prepayment of Notes upon Determination to
Remain Dark............................................ 30
Section 5.7. Notice of Prepayments.................................. 30
Section 5.8. Allocation of Prepayments.............................. 31
SECTION 6. REMEDIES OF THE TRUSTEES AND THE NOTEHOLDERS................... 31
Section 6.1. Definition of Event of Default......................... 31
Section 6.2. Suits for Endorsement; Power of Sale................... 33
Section 6.3. Foreclosure and Sale of Mortgaged Property............. 34
Section 6.4. Adjournment of Sale.................................... 34
Section 6.5. Trustees May Execute Conveyances and Deliver
Possession; Sale a Bar................................. 34
Section 6.6. Receipt Sufficient Discharge for Purchaser............. 35
Section 6.7. Sale to Accelerate Notes............................... 35
Section 6.8. Application of Proceeds of Sale........................ 35
Section 6.9. Purchase of Mortgaged Properties....................... 36
Section 6.10. Trustees Entitled to Appointment of Receiver........... 36
Section 6.11. Trustees May Enforce Rights without Notes.............. 36
Section 6.12. Notice of Event of Default; Waiver..................... 37
Section 6.13. Limitation on Noteholders' Right to Sue................ 37
Section 6.14. Remedies Cumulative.................................... 38
Section 6.15. Delay or Omission Not a Waiver......................... 38
Section 6.16. Waiver of Extension, Appraisement, Stay, Laws.......... 38
Section 6.17. Restoration of Positions............................... 39
Section 6.18. Control of Remedies by Noteholders..................... 39
Section 6.19 Trustees May File Proofs of Claims..................... 39
Section 6.20. Remedies Subject to Provisions of Law.................. 40
SECTION 7. CONCERNING THE TRUSTEES........................................ 40
Section 7.1. Duties of Trustees..................................... 40
Section 7.2. Trustees' Liability.................................... 40
Section 7.3. No Responsibility of Trustees for Recitals............. 42
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Section 7.4. Compensation and Expenses of Trustees;
Indemnification; Lien Therefore........................ 42
Section 7.5. Moneys Received by Trustees; Trust Funds ..............
- Segregation.......................................... 43
Section 7.6. Action by Individual Trustee........................... 43
Section 7.7. Resignation of Corporate Trustee....................... 43
Section 7.8. Removal of Corporate Trustee........................... 43
Section 7.9. Appointment of Successor Corporate Trustee............. 43
Section 7.10. Succession of Successor Trustee........................ 44
Section 7.11. Eligibility of Corporate Trustee....................... 44
Section 7.12. Successor Trustee by Merger............................ 44
Section 7.13. Resignation of Individual Trustee...................... 45
Section 7.14. Removal of Individual Trustee.......................... 45
Section 7.15. Appointment of Successor to Individual Trustee......... 45
Section 7.16. Succession of Successor to Individual Trustee.......... 45
Section 7.17. Co-Corporate Trustees.................................. 46
SECTION 8. SUPPLEMENTAL INDENTURES, AMENDMENTS, WAIVERS AND
CONSENTS........................................................ 47
Section 8.1. Supplemental Indentures, Amendments, Waivers and
Consents by Noteholders................................. 47
Section 8.2. Solicitation of Noteholders............................. 48
Section 8.3. Notice of Supplemental Indentures Amendments,
Waivers and Consents.................................... 48
Section 8.4. Opinion of Counsel Conclusive as to Supplemental
Indenture, Amendment, Waiver and Consent................ 48
Section 8.5. Expenses of Supplemental Indentures; Amendments,
Waivers and Consents.................................... 49
SECTION 9. ACTION BY NOTEHOLDERS .......................................... 49
Section 9.1. Evidence of Action by Noteholders....................... 49
Section 9.2. Noteholders' Execution of Instruments; Proof
of Holdings............................................. 49
SECTION 10. DISCHARGE....................................................... 49
Section 10.1 Discharge............................................... 49
Section 10.2. Corporate Trustee's Retention of Moneys
Deposited for Payment of Notes......................... 50
SECTION 11. MISCELLANEOUS PROVISIONS....................................... 50
Section 11.1. Recapture.............................................. 50
Section 11.2. Indenture for Benefit of Parties Hereto................ 51
Section 11.3. Severability........................................... 51
Section 11.4. Basis of Opinions of Counsel and Certificates.......... 51
Section 11.5. Addresses for Notices and Demands...................... 51
Section 11.6. Environmental Indemnity and Covenant Not to Sue........ 52
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Section 11.7.Successors and Assigns........................... 53
Section 11.8.Counterparts; Descriptive Headings............... 53
Section 11.9.Governing Law.................................... 53
Signatures............................................................ 54
ATTACHMENT TO TRUST INDENTURE:
Exhibit A - Form of 9.06% Senior Secured Note due February 1, 2012
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<PAGE> 6
TRUST INDENTURE
TRUST INDENTURE dated as of January 1, 1992 (herein, as the same may be
amended or supplemented from time to time, called the "Indenture") between
KMART CORPORATION, a Michigan corporation (the "Company"), whose post office
address is International Headquarters, 3100 West Big Beaver Road, Troy,
Michigan 48084-3163, and XXX, a national banking association (the
"Corporate Trustee"), whose post office address is, XXX Attention: Corporate
Trust Department, and XXXXXXXXXX (the "Individual Trustee"), whose post
office address is XXX, Attention: Corporate Trust Department, as trustees (the
Individual Trustee and the Corporate Trustee being herein collectively
referred to as the "Trustees").
WHEREAS, the defined terms used in this Indenture shall have the respective
meanings indicated in Section 1.1 unless elsewhere defined or the context shall
otherwise require; and
WHEREAS, the Company has the power and proposes to issue its 9.06% Senior
Secured Notes due February 1, 2012 (the "Initial Notes", such Initial Notes,
together with the Improvement Notes which may be issued from time to time
pursuant to this Indenture, being hereinafter collectively referred to as the
"Notes") which Notes are to be issued under and secured by this Indenture; and
WHEREAS, all things necessary to make the Notes, when executed by the
Company, the valid obligations of the Company, and to constitute this
Indenture, together with the Mortgages, a valid Pledge for the security of the
Notes in accordance with the terms of this Indenture have been done or
authorized;
NOW, THEREFORE, in consideration of the premises, the acceptance by the
Trustees of the trust created hereby, the purchase and acceptance of the Notes
by the purchasers thereof and the sum of Seventy-One Million Four Hundred
Seventeen Thousand Five Hundred Ninety and 00/100 (U.S. $71,417,590.00)
Dollars and other good and valuable consideration, receipt whereof upon the
delivery of this Indenture the Company hereby acknowledges, and in order to
secure the equal and pro rata payment of both the principal of and interest and
premium, if any, on the Notes at any time outstanding hereunder according to
their tenor and the provisions hereof and to secure all other indebtedness
secured by this Indenture or any of the Mortgages, and to secure the faithful
performance and observance of all the covenants and provisions in the Notes,
the Note Agreements, the Mortgages and in this Indenture contained, and to
declare the terms and conditions upon which the Notes will be secured,
authenticated, issued, transferred and exchanged, the Company has executed and
delivered this Indenture and certain other agreements referred to herein to
which it is a party, and has Pledged and by these presents does Pledge unto the
Trustees and to their successors in the trust hereby created all of the
Company's estate, right, title and interest in, to and under any and all of
the Mortgaged Properties (as hereinafter defined, and including all such
additional Mortgaged Properties as may hereafter be Pledged to the Trustees
hereunder and any substitute or substitutes therefor or replacement or
replacements thereof
<PAGE> 7
as and to the extent required under this Indenture or any of the Mortgages and
any and all moneys and other property delivered to the Trustees and all income
and proceeds from any of the foregoing), which together with all the benefits
and rights of the Trustees and the holders of the Notes arising by, through,
under or on account of this Indenture, the Notes or any of the Mortgages are
hereinafter collectively called the "Trust Estate".
TO HAVE AND TO HOLD all and singular the Trust Estate whether now owned or
held, or hereafter acquired, unto the Trustees, their successors in trust and
assigns forever;
IN TRUST, NEVERTHELESS, for the equal and ratable benefit and security of the
Notes from time to time outstanding hereunder, without preference, priority or
distinction of any thereof over any other by reason of difference in time of
issuance, sale, authentication, delivery or otherwise, and for the enforcement
of the payment of the principal of, premium, if any, and interest on the Notes
in accordance with their terms, and all other sums payable under this
Indenture, the Note Agreements or the Mortgages or on the Notes, and the
observance and performance of the provisions of, the Note Agreements, the
Mortgages and this Indenture, all as herein provided.
IT IS HEREBY COVENANTED, DECLARED AND AGREED, that the Notes are to be
issued, authenticated, delivered and secured, and that the Trust Estate is to
be held, dealt with and disposed of by the Trustees, upon and subject to the
provisions of this Indenture.
IT IS HEREBY FURTHER COVENANTED, DECLARED AND AGREED, that all of the Notes
are to be authenticated and delivered and the Trust Estate is to be held and
applied by the Trustees subject to the further covenants, conditions and trusts
hereinafter set forth, and the Company does hereby covenant and agree to and
with the Trustees, for the equal and proportionate benefit of all holders of
the Notes as follows:
SECTION 1. INTERPRETATION OF AGREEMENT; DEFINITIONS.
Section 1.1. Definitions. Unless the context otherwise requires, the terms
hereinafter set forth when used herein shall have the following meanings and
the following definitions shall be equally applicable to both the singular and
plural forms of any of the terms herein defined:
"Affiliate" shall mean any Person, other than a Subsidiary (a) which,
directly or indirectly, through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (b) which
beneficially owns or holds 5% or more of any class of the Voting Stock of the
Company, or (c) 5% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 5% or more of the Securities of such Person shall
confer any rights or interests similar to the Voting Stock of a corporation)
of which is beneficially owned or held by the Company or Subsidiary. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of Voting Stock, by contract or otherwise.
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"ALTA" shall have the meaning assigned thereto in Section 6(c) of the Note
Agreements.
"Aggregate Total Cost" shall mean an amount equal to the sum of the Total
Cost of all Mortgaged Properties of the Company which were or are subject to
the lien of a Mortgage originally delivered on the Closing Date to the
Trustees for the benefit of the holders of the Notes under and pursuant to
the Note Agreements.
"Business Day" shall mean any day other than a Saturday, Sunday, statutory
holiday or other day on which banks in Detroit, Michigan, New York, New York,
XXX or XXX are required by law to close.
"California Deed of Trust" shall mean any Mortgage the subject of which
is a Mortgaged Property located in the State of California.
"Closing Date" shall have the meaning assigned thereto in the Note
Agreements.
"Company" shall mean Kmart Corporation, a Michigan corporation, and any
corporation succeeding to all or substantially all of the Properties and
business of Kmart Corporation and each substitution and replacement thereof.
"Company Notice" shall have the meaning set forth in Section 5.5(a).
"Consolidated Net Worth" shall mean, as of the date of any determination
thereof, the amount of the capital stock accounts (net of treasury stock, at
cost) plus (or minus in the case of a deficit) the surplus and retained
earnings of the Company and its Subsidiaries.
"Consolidated Tangible Net Worth" shall mean, as of the date of any
determination thereof, the algebraic sum of:
(a) Consolidated Net Worth,
MINUS
(b) the net book value, after deducting any reserves applicable thereto,
of all items of the following character which are included in the assets of
the Company and its Subsidiaries, to wit:
(1) the incremental increases in an asset resulting from any
reappraisal, revaluation or write-up of assets;
(2) goodwill, organization or experimental expenses, patents, patent
applications, permits, trademarks, trade names, copyrights, licenses,
research and development expenses, franchises and other like intangibles and
unamortized debt discount and expense;
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MINUS
(c) the net book value of all shares of preferred stock of the Company
which are subject to sinking fund or other like mandatory prepayment
provisions;
MINUS
(d) deferred income taxes and deferred investment tax credits of the
Company and its Subsidiaries;
all determined in accordance with GAAP.
"Default" shall mean any event which would constitute an Event of Default
if all requirements in connection therewith for the giving of notice, the
lapse of time, and the happening of any further condition, event or act, had
been satisfied.
"Designated Event" shall have the meaning set forth in Section 5.5(c).
"Designated Event Delayed Prepayment Date" shall have the meaning set
forth in Section 5.5(b).
"Designated Event Prepayment Date" shall have the meaning set forth in
Section 5.5(a).
"Environmental Legal Requirement" shall mean any international, Federal,
state or local statute, law, regulation, order, consent decree, judgment,
permit, license, code, covenant, deed restriction, common law, treaty,
convention, ordinance or other requirement relating to public health, safety
or the environment, including, without limitation, those relating to
releases, discharges or emissions to air, water, land or groundwater, to the
withdrawal or use of groundwater, to the use and handling of polychlorinated
biphenyls or asbestos, to the disposal, treatment, storage or management of
hazardous or solid waste, or Hazardous Substances or crude oil, or any
fraction thereof, or to exposure to toxic or hazardous materials, to the
handling, transportation, discharge or release of gaseous or liquid Hazardous
Substances and any regulation, order, notice or demand issued pursuant to
such law, statute or ordinance, in each case applicable to the property of
the Company and its Subsidiaries or the operation, construction or
modification of any thereof, including without limitation the following: the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986, the
Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984,
the Hazardous Materials Transportation Act, as amended, the Federal Water
Pollution Control Act, as amended by the Clean Water Act of 1976, the Safe
Drinking Water Control Act, the Clean Air Act of 1966, as amended, the Toxic
Substances Control Act of 1976, the Occupational Safety and Health Act of
1977, as amended, the
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Emergency Planning and Community Right-to-Know Act of 1986, the National
Environmental Policy Act of 1975, the Oil Pollution Act of 1990 and any
similar or implementing state law, and any state statute and any further
amendments to these laws providing for financial responsibility for cleanup
or other actions with respect to the release or threatened release of
Hazardous Substances or crude oil, or any fraction thereof and all rules,
regulations, guidance documents and publication promulgated thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" shall mean any of the Events of Default referred to in
Section 6.1 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as the same
shall be amended from time to time.
"Fee-Owned Mortgaged Property" shall mean individually each of the 10
retail discount stores more fully described on Schedule II, Part A, attached
to the Note Agreement, title to each of which stores is owned in fee simple
by the Company, and each and every substitution and replacement thereof in
accordance with the terms and provisions of this Indenture and the related
Mortgage, provided that any such substitution or replacement of any thereof
shall be a Fee-Owned Mortgaged Property. "Fee-Owned Mortgaged Properties"
shall mean collectively all of the Fee-Owned Mortgaged Properties.
"GAAP" shall mean generally accepted accounting principles.
"Hazardous Substance" shall mean any hazardous or toxic material,
substance or waste pollutant or contaminant which is regulated as such under
any statute, law, ordinance, rule or regulation of any Federal, regional,
state or local authority having jurisdiction over any of the Mortgaged
Properties or its use, including but not limited to any material, substance
or waste which is: (a) defined as a hazardous substance under Section 311 of
the Federal Water Pollution Control Act (33 U.S.C. Section 1317), as
amended; (b) regulated as a hazardous waste under Section 1004 of the
Federal Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), as amended; (c) defined as a hazardous substance under Section 101 of
the Comprehensive Environmental Response, Compensation and Liability Act
as amended, or (d) defined or regulated as a hazardous substance or
hazardous waste under any rules or regulations promulgated under any of the
foregoing statutes.
"Improvements" shall mean any capital replacements, additions or
improvements to any of the Mortgaged Properties which the Company is not
otherwise required to make by the terms of the Mortgage relating to such
Mortgaged Property.
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"Improvement Notes" shall mean any of the Improvement Notes issued pursuant
to Section 2.2 hereof.
"Initial Purchasers" shall mean XXX, XXXXXXXXXX, XXX, XXXXXXXXXX, XXX
XXXXXXXXXX and XXX, as purchasers under the Note Agreements, and any
Person affiliated therewith, so long as the Initial Purchasers or any such
Person or the respective nominees of any thereof are holders of any of the
Notes.
"Institutional Investor" shall mean any of the following Persons: (a) any
bank, savings and loan association, savings institution, trust company or
national banking association, acting for its own account or in a fiduciary
capacity, (b) any charitable foundation, (c) any insurance company, (d) any
fraternal benefit society, (e) any pension, retirement or profit sharing
trust or fund within the meaning of Title I of ERISA or for which any bank,
trust company, national banking association or investment adviser registered
under the Investment Advisers Act of 1940, as amended, is acting as trustee
or agent, (f) any investment company or business development company, as
defined in the Investment Company Act of 1940, as amended, (g) any small
business investment company licensed under the Small Business Investment Act
of 1958, as amended, (h) any broker or dealer registered under the Securities
Exchange Act of 1934, as amended, or any investment adviser registered under
the Investment Adviser Act of 1940, as amended, (i) any corporation,
partnership, Massachusetts or similar business trust or common or collective
investment vehicle, (j) any government, any public employees' pension or
retirement system, or any other government agency supervising the investment
of public funds, (k) any other entity all of the equity owners of which are
Institutional Investors or (1) any other Person which may be within the
definition of "qualified institutional buyer" as such term is used in Rule
144A, as from time to time in effect, promulgated under the Securities Act of
1933, as amended.
"Investment Grade" shall mean a rating of at least "Baa3" in the case of a
rating by Moody's and a rating of at least "BBB-" in the case of a rating by
S&P or the then equivalent of such rating by Moody's or S&P, as the case may
be.
"Leasehold Mortgaged Property" shall mean the retail discount store more
fully described on Schedule 11, Part B, attached to the Note Agreement in
which the Company holds a leasehold interest, and each and every substitution
and replacement thereof in accordance with the terms and provisions of this
Indenture and the related Mortgage, provided that if any such substitution or
replacement is a Leasehold Mortgaged Property, the ground lease relating
thereto shall be in form and substance satisfactory to the holders of at
least 66-2/3% of the outstanding principal amount of the Notes.
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"Make Whole Amount" shall mean at any time with respect to any prepayment
or payment (whether on account of acceleration or otherwise) of the Notes, to
the extent that the Adjusted Reinvestment Yield at such time is lower than
9.06%, the excess of (a) the present value of the remaining principal and
interest payments to become due on that portion of the Notes to be prepaid or
paid, as the case may be, that would otherwise become due and payable
(without giving effect to such prepayment or payment, as the case may be)
discounted at a rate which is equal to the Adjusted Reinvestment Yield
applicable to such Notes over (b) 100% of the principal amount of such Notes
then to be prepaid or paid, as the case may be, plus accrued interest thereon
to the date of prepayment. To the extent that the Adjusted Reinvestment
Yield at the time of such prepayment or payment, as the case may be, is equal
to or higher than 9.06% the Make Whole Amount is zero.
"Adjusted Reinvestment Yield" shall mean the Reinvestment Yield
plus .50%.
"Reinvestment Yield" shall be the arithmetic mean of the rates
published in the Statistical Release under the caption "U.S. Government
Securities Treasury Constant Maturities" for the maturity corresponding
to the remaining Weighted Average Life to Maturity of such Notes to be
prepaid or paid, as the case may be, as of the date of such payment or
prepayment, as the case may be, rounded to the nearest month. If no
maturity exactly corresponds to the rounded Weighted Average Life to
Maturity of such Notes to be prepaid or paid, as the case may be, yields
for the two most closely corresponding published maturities next above
and below the rounded Weighted Average Life to Maturity of such Notes to
be prepaid or paid, as the case may be, shall be calculated pursuant to
the immediately preceding sentence and the Reinvestment Yield shall be
interpolated for such yields on a straight-line basis, rounding in each
of such relevant periods to the nearest month. For purposes of
calculating the Reinvestment Yield, the most recent Statistical Release
published prior to the date of payment or prepayment, as the case may be,
hereunder shall be used.
"Statistical Release" shall mean the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded
U.S. Government Securities adjusted to constant maturities or, if
such statistical release is not published at the time of any
determination hereunder, then such other reasonably comparable index
which shall be designated by the holders of 51% in aggregate principal
amount of the outstanding Notes being prepaid.
"Weighted Average Life to Maturity" in respect to the Notes shall
mean, as at the time of determination, the number of years obtained by
dividing the then Remaining Dollar-years of the Notes, by the outstanding
principal amount of such Notes. The term "Remaining Dollar-years" of
the Notes means the amount obtained by (a) multiplying (1) the amount of
each then remaining required principal payment (including repayment at
final maturity), by (2) the
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number of years (calculated to the nearest one-twelfth) which will elapse
between the time of determination and the date such required repayment is
due, and (b) totaling all the products obtained in (a).
"Moody's" shall mean Moody's Investors Service, Inc. or any
successor thereto.
"Mortgaged Property" shall mean individually each of the Fee-Owned
Mortgaged Properties or the Leasehold Mortgaged Property. "Mortgaged
Properties" shall mean collectively all of the Mortgaged Properties.
"Mortgage" shall mean individually (a) each mortgage, deed of trust, deed
to secure debt or similar instrument executed and delivered by the Company on
the Closing Date under the Note Agreements and (b) each mortgage, deed of
trust, deed to secure debt or similar security instrument executed in
connection with the substitution or replacement of any Mortgaged Property, as
any thereof may from time to time be supplemented or amended. "Mortgages"
shall mean collectively all of the Mortgages.
"Multiemployer Plan" shall have the meaning assigned thereto in ERISA.
"Note Agreements" shall mean the separate and several Note Agreements,
each dated as of January 1, 1992 between the Company and the Initial
Purchasers, respectively.
"Noteholder Notice" shall have the meaning set forth in Section 5.5(a).
"Notes" shall have the meaning specified in the Recitals.
"Officers' Certificate" shall mean a certificate signed by any two of the
President, any Vice President, the Treasurer or the Secretary of the Company.
"Opinion of Counsel" shall mean an opinion in writing signed by
independent legal counsel who shall be satisfactory to the Corporate
Trustee, and who may be independent counsel to the Company.
"Outstanding" when used with reference to Notes shall mean, as of any
particular time, all Notes authenticated and delivered by the Corporate
Trustee under this Indenture, except:
(a) Notes cancelled by the Corporate Trustee or delivered to the
Corporate Trustee for cancellation;
(b) Notes purchased or otherwise acquired by the Company or any of
its Subsidiaries or Affiliates;
(c) Notes in lieu of or in substitution for which other Notes
shall have been authenticated and delivered pursuant to the terms of
Section 2.6.
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"Overdue Rate" shall mean the lesser of (a) the maximum rate permitted by
applicable law and (b) 11.06% per annum.
"Pension Plan" shall mean any "employee pension benefit plan", as such
term is defined in Section 3(2) of ERISA maintained by the Company and its
Subsidiaries for its employees and covered by Title IV of ERISA or to which
Section 412 of the Internal Revenue Code of 1986, as amended, applies, as
from time to time in effect.
"Person" shall mean an individual, partnership, corporation, trust,
unincorporated association or other organization, or a government or any
department or agency thereof.
"Pledge" shall mean to grant a security interest in, mortgage, warrant,
bargain, sell, release, convey, assign, transfer, pledge and/or hypothecate,
all or any as may be necessary to create a first mortgage lien on a Mortgaged
Property.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Register" shall have the meaning specified in Section 2.5.
"Reimbursable Expenses" shall mean the unreimbursed out-of-pocket expenses
which have been incurred by the Company in connection with the construction
or acquisition of Improvements of or to any Mortgaged Property, which
Improvements are permitted by Section 2.5 of the Mortgage relating to such
Mortgaged Property but do not constitute repairs or restoration which the
Company is required to make upon such Mortgaged Property pursuant to any
provision of this Indenture or the Mortgage relating to such Mortgaged
Property. The construction of any such Improvements shall have commenced not
earlier than two years prior to the date the Company proposes to issue
Improvement Notes in connection therewith and shall have been completed and
the amount of such Reimbursable Expenses shall not be less than U.S.
$500,000.
"Responsible Officer" shall mean the President, the Executive Vice
President, any Vice President or the Treasurer of the Company.
"Security" shall have the same meaning as in Section 2(l) of the
Securities Act of 1933, as amended.
"S&P" shall mean Standard & Poor's Corporation or any successor thereto.
"Subsidiary" shall mean a corporation:
(a) organized under the laws of the United States or a jurisdiction
thereof, the laws of Canada or a Province thereof or the laws of Puerto
Rico;
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(b) which conducts substantially all of its business and has
substantially all of its Property within the United States, Canada or
Puerto Rico; and
(c) at least 50% (by number of votes) of the Voting Stock of which
is legally and beneficially owned by the Company and its Wholly-Owned
Subsidiaries.
"Title Company" shall mean First American Title Insurance Company or such
other nationally recognized title insurance company which shall be acceptable
to the holders of at least 51% of the outstanding principal amount of the
Notes.
"Total Cost" of a Mortgaged Property shall mean the sum of (a) the actual
construction cost and purchase price, including the cost of land, buildings,
signs, landscaping, architectural and engineering fees and the cost of any
improvements made thereto, whether financed by Improvement Notes, if any, or
otherwise, but excluding the cost of trade fixtures, furniture and equipment
and (b) all fees and expenses referred to in Section 9 of the Note Agreements
allocated by the Company to such Mortgaged Property and the physical survey
and title charges referred to in Section 6(c) and 6(g) of the Note Agreements
in respect of such Mortgaged Property incurred by the Company in connection
with the acquisition of such Mortgaged Property and, the construction of the
buildings and improvements thereon; provided that the aggregate amount of the
fees, expenses, charges and costs described in this clause (b) and included
in the Total Cost of such Mortgaged Property shall not exceed 10% of the
aggregate amount thereof.
"U.S.$" or "U.S. Dollars" shall mean lawful currency of the United States
of America in same day immediately available freely transferable funds.
"Voting Stock" shall mean Securities of any class or classes of a
corporation the holders of which ordinarily, in the absence of contingencies,
are entitled to elect a majority of the corporate directors (or Persons
performing similar functions).
"Wholly-Owned Subsidiary" shall mean any Subsidiary of which all of the
equity Securities (except directors' qualifying shares) are owned by the
Company and/or the Company's other Wholly-Owned Subsidiaries.
Section 1.2. Accounting Principles. Where the character or amount of any
asset or liability or item of income or expense is required to be determined or
any consolidation or other accounting computation is required to be made for
the purposes of this Indenture, the same shall be done in accordance with
United States GAAP, to the extent applicable.
Section 1.3. Directly or Indirectly. Where any provision in this Indenture
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether the action in question
is taken directly or indirectly by such Person.
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SECTION 2. THE NOTES.
Section 2.1. Description of Notes. (a) There is hereby created under this
Indenture, a series of Notes entitled "9.06% Senior Secured Notes due February
1, 2012" limited to U.S. $71,417,590.00 in aggregate principal amount,
exclusive of the principal amounts of Secured Notes issued pursuant to Sections
2.2 and 2.6 hereof. The Notes shall be issuable as fully registered Notes in
the forms attached hereto as Exhibit A.
(b) The Notes shall be dated the date of issuance thereof (except in the
case of Notes issued pursuant to Section 2.6), shall bear interest on the
unpaid principal amount thereof at the rate of 9.06% per annum and at the
Overdue Rate on any overdue principal thereof and on any overdue premium and
(to the extent permitted by law) any overdue interest thereon (computed, in
each case, on the basis of a 360-day year of twelve 30-day months).
(c) The Notes will be expressed to mature as follows:
(1) an installment of interest only for the period from and including the
date of issue to but not including February 1, 1992, payable on February 1,
1992;
(2) two hundred thirty-nine (239) equal installments, including both
principal and interest, each in an amount equal to .903589% of the original
principal amount of such Notes, payable monthly on March 1, 1992 and on the
first day of each month thereafter to and including January 1, 2012; and
(3) a final installment on February 1, 2012 in an amount equal to the
entire principal and interest remaining unpaid as of said date.
(d) Interest, premium, if any, and principal payments in respect of the
Initial Notes will be made by the Company on the respective dates for the
payment thereof by deposit with the Corporate Trustee or by bank wire transfer
of Federal reserve funds or other funds current and immediately available to
the Corporate Trustee in its account in XXX, each such payment to be made in
sufficient time (but in any event not later than 11:00 a.m. New York, New York
time) so as to permit the Corporate Trustee to satisfy the requirements of
Section 2.4(b).
(e) The Notes and the Corporate Trustee's certificate of authentication to
be borne by the Notes shall be substantially of the tenor and purport as set
forth in Exhibit A hereto, and the Initial Notes may have such letters, numbers
or other marks of identification or designation and such legends or
endorsements thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Indenture, or as may be required to
comply with any law or any rule or regulation made pursuant thereto, and in any
such event as are acceptable to the holders of at least 66-2/3% of the
outstanding principal amount of the Initial Notes.
Section 2.2. Improvement Notes. (a) From time to time the Company may, on
the date for payment of an installment of principal and interest, issue
Improvement Notes (the
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"Improvement Notes") with respect to any of the Mortgaged Properties to finance
the Reimbursable Expenses of the Company with respect to such Improvements,
subject to compliance with the provisions of subsection (c) below and the
rights of the Initial Purchasers under the Note Agreements and provided that
the aggregate original principal amount of each series of Improvement Notes (1)
is not less than U.S. $500,000, and (2) does not exceed 100% of the Company's
Reimbursable Expenses in respect of such Improvements. Each series of
Improvement Notes will be issued solely for the purpose of financing the
Company's Reimbursable Expenses incurred with respect to Improvements to the
Mortgaged Properties. All such Improvement Notes issued by the Company on any
one date shall constitute a separate series of Improvement Notes hereunder.
The Company shall deliver such Improvement Notes to the Corporate Trustee for
authentication, and such Improvement Notes shall be authenticated by the
Corporate Trustee and delivered in accordance with the order of the Company
evidenced by an Officers' Certificate.
(b) Each series of Improvement Notes shall be created and designated as
shall be prescribed by the supplemental indenture creating such series referred
to in clause (4) of subsection (c) below, and the Improvement Notes of such
series shall:
(1) be in such form, bear interest on the unpaid principal amount thereof
at such rate, and be subject to such prepayments at the option of the Company
(in addition to any prepayments as provided in Section 5), as shall be
prescribed in such supplemental indenture;
(2) not exceed 100% of the Company's Reimbursable Expenses with respect to
the related Improvements to a Mortgaged Property;
(3) not provide for prepayments of principal at a rate greater than that
provided in respect of the Initial Notes and not mature earlier than the
maturity date of the Initial Notes;
(4) not have a Weighted Average Life to Maturity shorter than the then
remaining Weighted Average Life to Maturity of the Initial Notes;
(5) be dated the date of issue (except in the case of Improvement Notes
issued in exchange for or in lieu of Improvement Notes pursuant to Section
2.6) and shall be payable on the first of each calendar month in each year
subsequent to the date thereof, to and including the maturity date thereof in
monthly installment payments of principal and interest in amounts such that
upon the due payment of all such installments there shall have been paid to
each holder of such Improvement Note 100% of the principal amount thereof,
together with all accrued interest thereon;
(6) be offered to the Initial Purchasers upon the terms and conditions
provided in Section 8 of the Note Agreements prior to their issuance, sale
and delivery to any other Person or Persons; provided that neither the
Company nor any agent on its behalf shall offer such Improvement Notes for
sale to, or solicit any offers to buy such Improvement Notes from, or
otherwise approach or negotiate in
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respect of such Notes with, any Person or Persons so as to require
registration of such Improvement Notes under the provisions of Section 5 of
the Securities Act of 1933, as amended, or so as to require the qualification
of this Indenture under the Trust Indenture Act of 1939, as amended; and
provided further that if the Initial Purchasers do not accept such offer,
that portion of the Improvement Notes not so accepted may be offered to any
Institutional Investor or Investors; and
(7) be secured equally and ratably with all other Notes issued and
outstanding hereunder by, and be entitled to the benefits of, this Indenture.
(c) Each of such series of Improvement Notes may be issued hereunder only if
prior to or concurrently with the issuance thereof, the purchaser of such
Improvement Notes and the holders of the Initial Notes and the Corporate
Trustee shall have received the following:
(1) the prior written consent of the holders of at least 70% of the
outstanding principal amount of the Notes if the aggregate principal amount
of such series of Improvement Notes when added to the aggregate principal
amount of all other series of Improvement Notes theretofor issued pursuant to
this Section 2.2 equals or exceeds 49% of the sum of (i) the original
principal amount of the Initial Notes plus (ii) the original principal amount
of all series of Improvement Notes theretofor issued pursuant to this Section
2.2 plus (iii) the original principal amount of the series of Improvement
Notes then to be issued pursuant to this Section 2.2, in each such case
computed based upon 1991 U.S. Dollars held constant;
(2) a resolution of the Board of Directors or of the Executive
Committee of the Board of Directors of the Company authorizing the
issuance of a specified principal amount of such Improvement Notes;
(3) an Officers' Certificate dated the date of issuance of such
Improvement Notes, setting forth in reasonable detail the amount and
character of the Reimbursable Expenses with respect to which, and a
description of the Improvements in respect of which, such Improvement Notes
are to be issued, and stating that: (i) the construction of the Improvements
has been completed, specifying the dates on which the construction of such
Improvements was commenced and completed, which in each such case shall be
not more than 24 months prior to the date of issuance of such Improvement
Notes, (ii) 100% of such Reimbursable Expenses are reimbursable in the
principal amount of Improvement Notes then to be issued, (iii) the principal
amount of the Improvement Notes then to be issued does not exceed such
Reimbursable Expenses, and (iv) no Default or Event of Default has occurred
and is continuing;
(4) an indenture supplemental hereto creating such series of
Improvement Notes (herein called a "Supplemental Indenture") in form and
substance satisfactory to the Trustees and their counsel, duly authorized,
executed and delivered by the Company;
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(5) a supplement (herein called the "Mortgage Supplement") to the
Mortgage to which the Improvements financed with the proceeds of such
Improvement Notes relate, in form and substance satisfactory to the
Trustees and their counsel, duly authorized, executed and delivered by
the Company, which Mortgage Supplement shall as of the date of the
issuance of such Improvement Notes, (i) increase the lien of such
Mortgage by an amount equal to the original principal amount of the
Improvement Notes, (ii) provide for such Mortgage to secure the
Improvement Notes, and (iii) subject the Improvements and the additional
land, if any, financed by the issuance of the Improvement Notes to the
lien of such Mortgage;
(6) an opinion of counsel for the Company satisfactory to the
Trustees and in form and substance satisfactory to the Trustees and dated
the date of issuance of such Improvement Notes, to the effect that:
(i) all requirements of this Indenture which must be satisfied by the
Company prior to the issuance of such Improvement Notes have been
satisfied, (ii) the Supplemental Indenture and the Mortgage Supplement
have been duly authorized, executed and delivered by the Company and
constitute legal, valid and binding instruments enforceable in accordance
with their respective terms, and the Trustees may properly execute and
deliver the Supplemental Indenture, (iii) such Improvement Notes have
been duly authorized, executed and delivered by the Company and are
legal, valid and binding obligations of the Company enforceable in
accordance with the terms thereof and of this Indenture, as so
supplemented, and are entitled to the benefits and security of the
Indenture, as supplemented by the Supplemental Indenture, (iv) the
Mortgage Supplement and all financing statements or similar notices
thereof if and to the extent permitted or required by applicable law have
been filed for record and/or recorded in the manner and place required by
law in order to establish, preserve and protect the first lien of the
Mortgage, as so supplemented (or in lieu of the opinion described in this
clause (iv), an endorsement to the related mortgage title insurance
policy to the same such effect), (v) no approval, consent or withholding
of objection on the part of, or filing, registration or qualification
with any governmental body, Federal, state or local, is necessary in
connection with the execution and delivery by the Company of the
Mortgage, as supplemented by the Mortgage Supplement, the Indenture, as
supplemented by the Supplemental Indenture, or the Improvement Notes or
the performance by the Company of any of the matters required of the
Company thereunder or hereunder, (vi) the issuance and sale of the
Improvement Notes and compliance by the Company with all of the
provisions of the Indenture, as supplemented by the Supplemental
Indenture, and the Mortgage, as supplemented by the Mortgage Supplement,
will not conflict with or result in any breach of any of the provisions
of or constitute a default under or result in the creation or imposition
of any lien on any of the Trust Estate pursuant to the provisions of the
Articles of Incorporation or by-laws of the Company or any agreement or
other instrument known to such counsel to which the Company is a party or
by which the Company may be bound, (vii) the issuance, sale and delivery
of the Improvement Notes by the Company is an exempt transaction under
the Securities Act of 1933, as amended; and existing law does not require
the registration of the Improvement Notes under said Securities Act or
qualification of this Indenture, as supplemented by the Supplemental
Indenture, under the Trust Indenture Act of
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1939, as amended, and (viii) such other matters incident to the issuance
and sale of such Improvement Notes as the Trustees may request.
Such opinion may be subject to the qualifications that the
instruments referred to in this clause (6) are subject to applicable
bankruptcy, reorganization and other laws of general application relating
to or affecting the enforcement of creditors' rights or the enforcement
of the security provided by such instruments, and certain remedies under
the Indenture, as supplemented by the Supplemental Indenture, or such
Mortgage, as so supplemented, may be qualified by applicable state laws,
none of which qualifications will materially interfere with the practical
realization of the benefits or the security provided by the Indenture, as
supplemented by the Supplemental Indenture and the Mortgage, as so
supplemented;
(7) if applicable, a revised survey in respect of the Mortgaged
Property to which such Improvements relate which shall show (i) any
easements arising on the real Property after the date of the
original survey and (ii) no encroachments upon the real Property upon
which the same is located by adjoining buildings or structures and no
encroachments on adjoining premises by the buildings or improvements,
including the Improvements, erected thereon;
(8) if applicable, a "date down" endorsement to the policy of
mortgage title insurance in respect of the Mortgaged Property, which
"date down" endorsement shall increase the coverage of such policy on
and after the date of issuance of the Improvement Notes by an amount
equal to the original principal amount of such Improvement Notes, redate
such policy as of the date of issuance of such Improvement Notes, and
specify as exceptions in such policy only such liens as are permitted by
the original mortgage title insurance policy;
(9) if applicable, a down-date in form and substance satisfactory
to the Corporate Trustee and its counsel of the environmental audit
report with respect to the Mortgaged Property to which such
Improvements relate delivered on the Closing Date to the holders of the
Initial Notes; and
(10) such other opinions, reports, certificates and other
instruments as the Corporate Trustee, the purchasers of such Improvement
Notes or the holders of the Notes may reasonably request.
The Company shall pay all reasonable costs, charges and expenses in any way
relating to or incurred in connection with the issuance of any series of
Improvement Notes, including reasonable attorneys' fees and expenses of the
Trustees, the holders of the Notes and the Institutional Investors which will
purchase the Improvement Notes, recording fees, premiums covering title
insurance and all applicable taxes which may be incurred or imposed by reason
of the transactions contemplated by the issuance of Improvement Notes.
(d) The Improvement Notes of each series may have such letters,
numbers or other marks of identification and such legends or endorsements
thereon as the Company may determine with the approval of the Corporate
Trustee and as are not inconsistent with the
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provisions of this Indenture, or as may be required to comply with any law or
any rule or regulation made pursuant thereto, and in any such event as are
acceptable to the holders of at least 66-2/3% of the outstanding principal
amount of the Notes.
(e) The Trustees shall provide written notice of the issuance of each series
of the Improvement Notes to the holders of the Notes. Without limiting the
foregoing, the Trustees shall furnish copies of any of the instruments,
opinions or other showings delivered in connection with the issuance of any
such series of Improvement Notes to any holder of the Notes upon written
request therefor.
Section 2.3. Denominations; Execution of Notes; Certificate of
Authentication. Each Note shall be in the denomination of U.S. $500,000 or any
multiple of U.S. $100,000 in excess of U.S. $500,000, except as may be
necessary to reflect any principal amount not evenly divisible by U.S.
$100,000. The Notes shall be signed on behalf of the Company by its President
or any of its Vice Presidents, under its corporate seal attested by its
Secretary or an Assistant Secretary. In case any officer who shall have signed
any Note shall cease to be such officer before such Note shall have been
authenticated by the Corporate Trustee or delivered by the Company, such Notes
may nevertheless be executed and delivered with the same force and effect as
though the Person or Persons who signed such Note had not ceased to be such
officer of the Company; and any Note may be signed on behalf of the Company by
a Person who, at the actual date of execution of such Note, shall be a proper
officer of the Company, although at the date of such Note, such Person was not
then such officer of the Company. Only such Notes as shall bear thereon a
certificate of authentication substantially in the form set forth in Exhibit A
hereto shall be entitled to the benefits of this Indenture or be valid or
obligatory for any purpose. Such certificate by the Corporate Trustee upon any
Note executed by the Company shall be conclusive evidence that the Note so
authenticated has been duly authenticated and delivered hereunder and that the
holder is entitled to the benefits of this Indenture. The authentication by
the Corporate Trustee of any Note issued hereunder shall not be construed as a
representation or warranty by the Trustees as to the validity or security of
this Indenture or of such Note, and the Trustees shall in no respect be liable
or answerable for the use made of such Note or the proceeds thereof.
Section 2.4. Payment of the Notes. (a) The principal of, premium, if any, and
interest on the Notes shall be payable at the principal office of the Corporate
Trustee, in lawful money of the United States of America.
(b) Notwithstanding the provisions of the preceding paragraph (a), if any
Note is held by an Initial Purchaser or any Institutional Investor or any
Person affiliated with any of the foregoing or is registered in the name of any
holder named in a written notice from the Company to the Corporate Trustee and
stating that the provisions of this Section 2.4(b) shall apply, the Corporate
Trustee shall make payment of interest on such Notes and shall make payments or
prepayments, as the case may be, of the principal thereof, and any premium, if
any, immediately upon receipt thereof from the Company but, in any event,
before 12:00 Noon, New York, New York time on the date of receipt thereof
(subject to timely receipt of such payment or prepayment from the Company as
provided in Section 2.1(d) hereof), by wire transfer in immediately available
Federal reserve funds as set forth in Schedule I to the
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Note Agreements in the case of the Initial Purchasers or as shall be specified
in writing to the Corporate Trustee by such holder. All payments so made shall
be valid and effective to satisfy and discharge the liability upon such Note to
the extent of the sums so paid. The Corporate Trustee is authorized to act in
accordance with the foregoing provisions and shall not be liable or responsible
to any such holder or to the Company or to any other Person for any act or
omission on the part of the Company or such holder in connection therewith.
Section 2.5. The Register. The Company shall cause to be kept at the
principal office of the Corporate Trustee a register for the registration and
transfer of Notes (herein called the "Register"). The names and addresses of
the holders of the Notes, the transfers of the Notes and the names and
addresses of the transfers of all Notes shall be registered in the Register.
Section 2.6. Transfers and Exchanges. (a) The holder of any Note may transfer
such Note upon the surrender thereof at the principal office of the Corporate
Trustee. Thereupon, the Company shall execute in the name of the transferee a
new Note or Notes in aggregate principal amount equal to the aggregate unpaid
principal amount of the Note so surrendered, and the Corporate Trustee shall
authenticate and deliver such new Note or Notes to such transferee.
(b) The holder of any Note may at any time surrender such Note at the
principal office of the Corporate Trustee in exchange for an equal aggregate
principal amount of Notes in any authorized denominations.
(c) All Notes presented or surrendered for exchange or transfer shall be
accompanied by a written instrument or instruments of assignment or transfer,
in form reasonably satisfactory to the Corporate Trustee, duly executed by the
registered holder or by its attorney duly authorized in writing. The Company
and the Corporate Trustee shall not be required to make a transfer or an
exchange of any Note for a period of 10 days preceding any payment date with
respect thereto.
(d) In case any Note shall become mutilated or be destroyed, lost or stolen,
the Company, upon the written request of the holder thereof, shall execute and
the Corporate Trustee shall authenticate and deliver, a new Note in exchange
and substitution for the mutilated Note, or in lieu of and in substitution for
the Note so destroyed, lost or stolen, which new Note shall be in an aggregate
principal amount equal to the aggregate unpaid principal amount of such
destroyed, lost or stolen Note. In every case the applicant for a substituted
Note shall furnish to the Company and to the Corporate Trustee such security or
indemnity as may be required by them to save each of them harmless from all
risks, and the applicant shall also furnish to the Company and to the Corporate
Trustee evidence to their satisfaction of the mutilation, destruction, loss or
theft of the applicant's Note and of the ownership thereof. In case any Note
which has matured or will mature within 30 days shall become mutilated or be
destroyed, lost or stolen, the Company may, instead of issuing a substituted
Note, pay or authorize the payment of the same (without surrender thereof
except in the case of a mutilated Note), if the applicant for such payment
shall furnish to the Company and to the Trustees such security or indemnity as
they may require to save them
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harmless, and evidence to the satisfaction of the Company and the Corporate
Trustee of the destruction, loss or theft of such Note and of the ownership
thereof. If an Institutional Investor or its nominee is the owner of any
destroyed, lost or stolen Note, then the affidavit of its President, Vice
President, Assistant Vice President, Treasurer or any other Person authorized
to act on behalf of such Institutional Investor setting forth the fact of
destruction, loss or theft and the Institutional Investor's ownership of the
Note at the time of such destruction, loss or theft shall be accepted as
satisfactory evidence thereof and no indemnity shall be required as a condition
to execution and delivery of a new Note other than the written agreement of
such Institutional Investor to indemnify the Company and the Trustees.
(e) No notarial act shall be necessary for the transfer or exchange of any
Note pursuant to this Section 2.6, and the holder of any Note issued as
provided in this Section 2.6 shall be entitled to any and all rights and
privileges granted under this Indenture to a holder of a Note.
Section 2.7. The New Notes. (a) Each new Note (herein in this Section 2.7
called a "New Note") issued pursuant to Section 2.6(a), (b) or (d) in exchange
for or in substitution or in lieu of an outstanding Note (herein in this
Section 2.7 called an "Old Note") shall be dated the date of such Old Note.
The Corporate Trustee shall mark on each New Note (1) the date to which
principal and interest have been paid on such Old Note, and (2) all payments
and prepayments of principal previously made on such Old Note which are
allocable to such New Note. Interest shall be deemed to have been paid on such
New Note to the date on which interest shall have been paid on such Old Note,
and all payments and prepayments of principal marked on such New Note, as
provided in clause (2) above, shall be deemed to have been made thereon.
(b) Upon the issuance of a New Note pursuant to Section 2.6(a), (b) or (d),
the Company may require the payment of a sum to reimburse it for, or to provide
it with funds for, the payment of any tax or other governmental charge or any
other charges and expenses connected therewith which are paid or payable by the
Company in connection with the transfer or exchange.
(c) All New Notes issued pursuant to Section 2.6(a), (b) or (d) in exchange
for in substitution or in lieu of Old Notes shall be valid obligations of the
Company evidencing the same outstanding debt as the Old Notes and shall be
entitled to the benefits and security of this Indenture to the same extent as
the Old Notes.
Section 2.8. Cancellation of Notes. All Notes surrendered for the purpose of
payment, redemption, transfer or exchange shall be delivered to the Corporate
Trustee for cancellation or, if surrendered to the Corporate Trustee, shall be
cancelled by it, and no Notes shall be issued in lieu thereof except as
expressly required or permitted by any of the provisions of this Indenture. The
Corporate Trustee shall hold all such cancelled Notes until this Indenture
shall have been discharged, at which time the Corporate Trustee shall either
deliver such cancelled Notes in a manner necessary to effect the discharge and
release of this Indenture of record or, if no such delivery is necessary, shall
deliver such cancelled Notes to the Company. The Corporate Trustee shall
deliver a certificate to the Company specifying
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any cancellation of Notes which has been made. If the Company shall acquire
any of the Notes, however, such acquisition shall not operate as a redemption
or satisfaction of the indebtedness represented by such Notes unless and until
the same are surrendered to the Corporate Trustee for cancellation.
Section 2.9. Corporate Trustee as Agent. The Corporate Trustee is
hereby appointed the agent of the Company for the payment, registration,
transfer and exchange of Notes. Subject to the provisions of Section 2.4(b),
the Notes may be presented at, and notices or demands with respect to the Notes
or this Indenture may be served or made at, the principal office of the
Corporate Trustee, provided that copies of all such notices or demands shall be
delivered to the Company.
Section 2.10. Ownership. The Person in whose name any Note shall be
registered shall be deemed and treated as the owner thereof for all purposes of
this Indenture and neither the Company nor the Corporate Trustee shall be
affected by any notice to the contrary. Payment of or on account of the
principal of, premium, if any, and interest on such Note shall be made only to
or upon the order in writing of such registered owner. For the purpose of any
request, direction or consent hereunder, the Company and the Corporate Trustee
may deem and treat the registered owner of any Note as the owner thereof
without production of such Note.
SECTION 3. PARTICULAR COVENANTS OF THE COMPANY.
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note or due or owing under this Indenture or any
Mortgage, the Company covenants with the Trustees for the benefit of the
Trustees and the holders of the Notes as follows:
Section 3.1. Warranty of Title. Subject only to the lien of the
Mortgages and liens permitted thereby, the Company has good and marketable
title in fee simple to all of the Mortgaged Properties (other than the
Leasehold Mortgaged Property) and is lawfully possessed of all of the Mortgaged
Properties and has and will continue to have full right, power and lawful
authority to Pledge the Mortgaged Properties, and the Trustees have as of the
Closing Date and will continue to have a valid and enforceable first priority
lien on the same, and the Company will warrant and defend title thereto to the
Trustees against claims of all Persons whomsoever.
Section 3.2. Payment of Principal, Premium and Interest. The Company
will duly and punctually pay the principal of, premium, if any, and interest
(including interest at the Overdue Rate if due and owing on the Notes) on, each
and every Note, at the dates and the places and in the manner mentioned in the
Notes and in this Indenture, according to the true intent and meaning thereof
and hereof.
Section 3.3. Office for Notices. The Company will keep an office
while any of the Notes issued hereunder are outstanding, at Troy, Michigan
where notices, presentations and/or demands to or upon the Company in respect
of said Notes, the Note Agreements, the Mortgages or this Indenture may be
given or made, until such time as the Company shall so
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notify the Corporate Trustee and the holders of the Notes of any change of
location of such office.
Section 3.4. Note Agreement and Mortgage Covenants. Each and all of
the terms, provisions, restrictions, covenants and agreements set forth in the
Note Agreements and the Mortgages, and in each and every supplement thereto or
amendment thereof which may at any time or from time to time be executed and
delivered by the parties thereto or their successors and assigns, are
incorporated herein by reference to the same extent as though each and all of
said terms, provisions, restrictions, covenants and agreements were fully set
out herein and as though any amendment or supplement to the Note Agreements and
the Mortgages were fully set out in an amendment or supplement to this
Indenture; and the Company does hereby covenant and agree well and truly to
abide by, perform and be governed and restricted by each and all of the matters
provided for by the Note Agreements and the Mortgages and so incorporated
herein to the same extent and with the same force and effect as if each and all
of said terms, provisions, restrictions, covenants and agreements so
incorporated herein by reference were set out and repeated herein at length.
Section 3.5. Maintenance of Corporate Existence, Rights. The Company
will at all times preserve its corporate existence (except as otherwise
permitted by Section 3.12 hereof) and will obtain and maintain in full force
and effect all franchises, privileges, rights, licenses and permits and all
other consents, approvals and authorizations of any governmental authority
necessary for the ownership and efficient operation and maintenance of its
business and Property which failure to obtain and maintain would materially
affect adversely the Properties (including the Mortgaged Properties), business,
prospects, profits, operations or condition (financial or otherwise) of the
Company.
Section 3.6. Maintenance of Lien; Recording. (a) The Company will, at
its expense, take all necessary action to maintain and preserve the first and
prior perfected lien of this Indenture and the Mortgages (including, without
limitation, the filing of all financing statements or similar notices thereof
if and to the extent permitted or required by applicable law) so long as any
Notes are outstanding.
(b) The Company will, forthwith after the execution and delivery
of this Indenture and each and every Mortgage and thereafter from time to time,
cause this Indenture and each Mortgage (and all financing statements or similar
notices thereof if and to the extent permitted or required by applicable law)
to be filed, registered and recorded in such manner and in such places as may
be required by law in order to publish notice of and fully to protect the lien
of the Trustees in and to the Mortgaged Properties; and from time to time will
perform or cause to be performed any other act as provided by law and will
execute or cause to be executed any and all further instruments that may be
requested by the Trustees or any of them for such publication and protection.
The Company will, within 10 days after any such filing, registering, recording
or other act, furnish the Trustees with an Opinion of Counsel as to the
adequacy and reciting the details of such filing, registering, recording or
other act and specifying any re-recording or refiling to be effected in the
future with respect to this Indenture or such Mortgage. The Company will pay
or cause to be paid all filing, registration and recording taxes and fees
incident to such filing, registration and recording,
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and all expenses incident to the preparation, execution and acknowledgment of
this Indenture and each Mortgage (and all financing statements or similar
notices thereof if and to the extent permitted or required by applicable law),
and of any instrument of further assurance, and all Federal or state stamp
taxes and other taxes, duties, imposts, assessments and charges arising out of
or in connection with the execution and delivery of this Indenture and each
Mortgage and such instrument of further assurance.
Section 3.7. Further Assurances; Right of Trustees to Perform
Covenants. (a) The Company will do, execute, acknowledge and deliver, or cause
to be done, executed, acknowledged and delivered, all such further acts, deeds,
conveyances, mortgages, financing and continuation statements, assignments,
transfers and assurances as the Corporate Trustee reasonably may require for
the perfection of the lien being herein provided for in the Mortgaged
Properties.
(b) If the Company shall fail to make any payment or perform any
act required to be made or performed hereunder, the Trustees, after five
Business Days' prior written notice to the Company and without waiving or
releasing any obligation or Default, may (but shall be under no obligation to)
at any time thereafter make such payment or perform such an act for the account
and at the expense of the Company, as, in the opinion of the Trustees, may be
necessary or appropriate. All sums so paid by the Trustees and all costs and
expenses (including without limitation, reasonable attorneys' fees and
expenses) so incurred, together with interest thereon at the Overdue Rate from
the date of payment or incurrence, shall be secured hereby and shall be paid by
the Company to the Trustees on demand.
Section 3.8. Maintenance of Property. (a) The Company will at all
times maintain, preserve and keep, and will cause each Subsidiary to maintain,
preserve and keep, its Property (whether owned in fee or a leasehold interest)
in good condition and working order and make all necessary repairs, renewals,
replacements, additions, betterments and improvements thereto in order that the
business carried on in connection therewith may be properly conducted at all
times; provided that nothing contained in this Section 3.8 shall prevent the
sale, abandonment or other disposition of any Property (other than the
Mortgaged Properties) in the ordinary course of business.
(b) Anything contained in Section 3.8(a) to the contrary
notwithstanding, the Company may discontinue the retail operations at any
Mortgaged Property and permit such Mortgaged Property to remain unused (for
purposes of this Section 3.8(b) "go dark" or "remain dark"); provided that (1)
the Company takes appropriate precautions to secure the Mortgaged Property
against damage by vandalism, neglect or waste, (2) the Company continues to
insure the Mortgaged Property in accordance with the requirements of Section
2.6 of the related Mortgage, (3) such determination by the Company to go dark
is made in the ordinary course of the Company's business, (4) no more than two
Mortgaged Properties may remain dark during any one period, (5) no Mortgaged
Property may remain dark for a period in excess of 6 months; provided, however,
that a Mortgaged Property may remain dark for a period of 30 days in excess of
6 months, if the Company shall, within such 30 day period, elect to either (i)
prepay an amount of the outstanding Notes equal to the Loan Value (as defined
in the Mortgages) of such Mortgaged Property, together with the
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premium, if any, and interest accrued thereon to the date of payment in
accordance with the provisions of Section 5.6 hereof or (ii) substitute a
Substitute Financed Property (as defined in the Mortgages) for such Mortgaged
Property in accordance with the provisions of Section 3.4 of the related
Mortgage and (6) at the time the Company determines to have a Mortgaged
Property go dark, no Default or Event of Default shall have occurred and be
continuing. The Company shall give notice to the Trustees and each holder of
the Notes of its determination to let a Mortgaged Property go dark within 30
days of such determination.
Section 3.9. Insurance. Without limiting the terms and provisions of
the Mortgages, the Company will at all times maintain, and will cause each
Subsidiary to maintain, with financially sound and reputable insurers,
insurance with respect to its Properties and business against such casualties
and contingencies, of such types (including, without limitation, fire insurance
and public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with the use of any
of its Properties) and in such amounts (including such amounts of
self-insurance) as are customary in the case of prudent corporations of
established reputations engaged in the same or a similar business and similarly
situated. Anything contained in this Section 3.9 to the contrary
notwithstanding, during any period that Consolidated Tangible Net Worth equals
or exceeds Three Billion and 00/100 (U.S. $3,000,000,000 Dollars), the Company
may elect to self-insure with respect to the insurance required to be
maintained by the Company pursuant to this Section 3.9.
Section 3.10. Payment of Taxes and Other Charges. Without limiting
the terms and provisions of the Mortgages, the Company will pay and discharge,
and will cause each Subsidiary to pay and discharge, before they become
delinquent:
(a) all lawful taxes, assessments and governmental charges
or levies imposed upon it or its Property, and
(b) all claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons which, if
unpaid, might result in the creation of a lien upon its Property;
provided that items of the foregoing description need not be paid while being
contested in good faith and by appropriate proceedings and provided further,
that book reserves deemed by it to be adequate have been established with
respect thereto and provided further, that the Company's title to and its right
to use its Property is not materially adversely affected thereby.
Section 3.11. Compliance with Laws. Without limiting the terms and
provisions of any of the Mortgages, the Company will promptly comply and will
cause each Subsidiary to promptly comply with all laws, ordinances or
governmental rules or regulations to which it is subject, including without
limitation, the Occupational Safety and Health Act of 1970, ERISA and all
Environmental Legal Requirements, the violation of which would individually or
in the aggregate be likely to materially affect adversely the Properties
(including the Mortgaged Properties), business, prospects, profits, operations
or condition
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(financial or otherwise) of the Company or any of its Subsidiaries or the
ability of the Company to perform its obligations under this Indenture, the
Mortgages and the Notes.
Section 3.12. Mergers and Consolidations. The Company will not
consolidate with or into or be a party to a merger with or into any other
corporation or sell or otherwise dispose of all or substantially all of its
assets, provided that the Company may consolidate with or merge with or into
any other corporation and any other corporation may merge with or into the
Company, if in any such case (a) the corporation resulting from such merger or
consolidation (the "surviving corporation") shall be a corporation organized
under the laws of the United States of America or a jurisdiction thereof, (b)
the surviving corporation shall assume by a written instrument the due and
punctual payment of the principal of, premium, if any, and interest on all of
the Notes and the due and punctual performance and observance of all of the
covenants and conditions of the Company under and in respect of the Notes, the
Note Agreements, the Mortgages and this Indenture and shall furnish to the
holders of the Notes and the Trustees an Opinion of Counsel satisfactory to
such holders and the Trustees to the effect that such instrument has been duly
authorized, executed and delivered and constitutes the legal, valid and binding
contract and agreement of the surviving corporation enforceable in accordance
with its terms, (c) at the time of such consolidation or merger and after
giving effect thereto, and to the creation and delivery of such instrument, no
Default or Event of Default shall exist and (d) the surviving corporation shall
have complied with the requirements of Section 5.5 to the extent applicable.
Section 3.13. Consolidated Tangible Net Worth. The Company will at
all times keep and maintain Consolidated Tangible Net Worth at an amount not
less than Three Billion and 00/100 (U.S. $3,000,000,000) Dollars.
Section 3.14. Maintenance of Rating. The Company will at all times
maintain a credit rating which is Investment Grade in respect of its senior
unsecured indebtedness for borrowed money with Moody's or S&P.
Section 3.15. Termination of Pension Plans. The Company will not and
will permit any Subsidiary to withdraw from any Multiemployer Plan or permit
any employee benefit plan maintained by it to be terminated if such withdrawal
or termination could result in withdrawal liability (as described in Part I of
Subtitle E of Title IV of ERISA) or the imposition of a lien, claim or
encumbrance on any Property of the Company pursuant to Section 4068 of ERISA.
Section 3.16. Transactions with Affiliates. The Company will not, and
will not permit any Subsidiary to, enter into or be a party to, any transaction
or arrangement with any Affiliate (including without limitation, the purchase
from, sale to or exchange of Property or assets with, or the rendering of any
service by or for, any Affiliate), except in the ordinary course of and
pursuant to the reasonable requirements of the Company's or such Subsidiary's
business and upon fair and reasonable terms no less favorable to the Company or
such Subsidiary than it would obtain in a comparable arm's-length transaction
with a Person other than an Affiliate.
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Section 3.17. Repurchase of Notes. Neither the Company nor any
Subsidiary nor any Affiliate will, directly or indirectly, repurchase or make
any offer to repurchase any Notes unless the Company or such Subsidiary or
Affiliate has offered to repurchase such Notes, pro rata, from all holders of
the Notes and otherwise upon the terms and conditions set forth in Section 8.2
hereof. In case the Company or any Subsidiary or Affiliate repurchases any
Notes, such Notes shall thereafter be cancelled and no Notes shall be issued in
substitution therefor. Without limiting the foregoing, upon the purchase or
other acquisition of any Notes by the Company, any Subsidiary or any Affiliate,
such Notes shall no longer be outstanding for purposes of any section of the
Note Agreements, this Indenture or any of the Mortgages relating to the taking
by the holders of the Notes of any actions with respect thereto or hereto,
including, without limitation, Sections 6.1, 6.2, 6.13 or 8.2 hereof.
Section 3.18. Financial Information and Reports. The Company will
keep proper books of record and account in which full, true and correct entries
will be made of all dealings or transactions of, or in relation to, the
business and affairs of the Company, in accordance with GAAP consistently
applied (except for changes disclosed in the financial statements furnished to
any holder of outstanding Notes pursuant to this Section 3.18 and concurred in
by the independent public accountants referred to in Section 3.18(b) hereof)
and will furnish to each holder of outstanding Notes and the Trustees in
duplicate:
(a) As soon as available and in any event within 60 days
after the end of each quarterly fiscal period (except the last) of
each fiscal year, copies of:
(1) a consolidated balance sheet of the Company
and its Subsidiaries as of the close of such period, and
(2) consolidated statements of income,
shareholders' equity and cash flows of the Company and its
Subsidiaries for the portion of the fiscal year ending with
such period;
in each case setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year, all in reasonable
detail and certified as complete and correct, subject to changes
resulting from year-end audit adjustments, by the chief accounting
officer of the Company; provided that the Company will have satisfied
the requirements of this Section 3.18(a) by the delivery within the
time period described hereinabove of its quarterly reports on Form
10-Q as filed with the Securities and Exchange Commission so long as
such Form 10-Q contains quarterly statements reflecting the financial
position and results of operations of the Company and its consolidated
Subsidiaries for such quarter,
(b) As soon as available and in any event within 120 days
after the close of each fiscal year of the Company, copies of:
(1) a consolidated balance sheet of the Company and
its Subsidiaries as of the close of such fiscal year, and
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(2) consolidated statements of income,
shareholders' equity and cash flows of the Company and its
Subsidiaries for such fiscal year;
in each case setting forth in comparative form the consolidated
figures for the preceding fiscal year, all in reasonable detail and
accompanied by an opinion thereon of a firm of independent public
accounts of recognized national standing selected by the Company to
the effect that such financial statements present fairly, in all
material respects, the consolidated financial condition of the Company
and its Subsidiaries as of the end of the fiscal year being reported
in and that the consolidated results of the operations and cash flows
for said year are in conformity with GAAP and that the examination of
such accountants in connection with such financial statements has been
conducted in accordance with generally accepted auditing standards and
included such tests of the accounting records and such other auditing
procedures as said accountants deemed necessary in the circumstances;
provided that the Company will have satisfied the requirements of this
Section 3.19(b) by the delivery within the time period described
hereinabove of its annual report on Form 10-K as filed with the
Securities and Exchange Commission so long as such Form 10-K contains
the annual statements reflecting the financial position and results of
operations of the Company and its consolidated Subsidiaries for such
year;
(c) Promptly upon their becoming available, one copy of
each financial statement, report, notice or proxy statement sent by
the Company to stockholders generally and of each Form 8-K and, upon
the written request of the Trustees or any of the holders of the
Notes, any other periodic reports (other than Form S-8 or any other
form relating to employee benefit plans or dividend reinvestment
plans) registration statement or prospectus filed by the Company or
any Subsidiary with any Securities exchange or the Securities and
Exchange Commission or any successor agency;
(d) Within the period provided in paragraph (b) above,
the written statement of the Company, signed by an authorized
financial officer, stating whether there existed as of the date of
such financial statements and whether, to the best of his knowledge,
there exists on the date of the certificate any Default or Event of
Default under this Indenture, the Note Agreements or any Mortgage and
specifying the nature and period of existence thereof and the action
the Company is taking and proposes to take with respect thereto;
(e) Within the period provided in paragraph (b) above, a
certificate of the accountants who render an opinion with respect to
such financial statements, stating that they have reviewed this
Indenture and stating further whether, in making their audit, anything
came to their attention that caused them to believe that the Company
had failed in compliance or continues to be in noncompliance with the
the terms, covenants, provisions and conditions of this Indenture
insofar as the same relate, pertain to or involve accounting matters
or determinations, and if such condition or event then exists,
specifying the nature and period of existence thereof; and
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(f) With reasonable promptness, such additional financial
information as such holder may reasonably request concerning the
Company or any of its Subsidiaries.
The Company will permit each holder of outstanding Notes (or such Persons as
any such holder may designate) to visit and inspect, under the Company's
guidance, any of the Mortgaged Properties, to examine all the books of account,
records, reports and other papers, to make copies and extracts therefrom and to
discuss its affairs, finances and accounts with its officers, employees and
independent public accountants (and by this provision the Company authorizes
said accountants to discuss with each holder of the Notes the finances and
affairs of the Company), all at such reasonable times and as often as any such
holder may reasonably desire. Any visitation or inspection or discussion with
the accountants shall be at the sole expense of such holder of the Notes unless
a Default or Event of Default shall have occurred and be continuing, in which
case any such visitation or inspection or discussion with the accountants shall
be at the sole expense of the Company.
Each holder of the Notes by its acceptance thereof agrees that any
information obtained by such Person pursuant to this Section 3.19 will be
treated as confidential; provided, however, that nothing herein contained shall
limit or impair the right or obligation of any Institutional Investor of the
Notes to disclose such information: (1) to its auditors, attorneys, employees
or agents, (2) when required by any law, ordinance or governmental order,
regulation, rule, policy, investigation or any regulatory authority request,
(3) as may be required or appropriate in any report, statement or testimony
submitted to any municipal, state, provincial or Federal regulatory body having
or claiming to have jurisdiction over such Institutional Holder or to the
United States National Association of Insurance Commissioners or similar
organizations or their successors, (4) in connection with the enforcement of
the terms and conditions of this Agreement and the Notes, (5) which is publicly
available or readily ascertainable from public sources, or which is received by
any Institutional Investor of the Notes from a third Person who or which is not
bound to keep the same confidential, (6) as required by legal process in
connection with any proceeding, case or matter pending (or on its face
purported to be pending) before any court, tribunal, arbitration board or any
governmental agency, commission, authority, board or similar entity, or (7) to
the extent necessary in connection with any contemplated transfer of any Notes
by any Institutional Investor thereof (it being understood and agreed that any
such transferee which purchases such Notes shall itself be bound by the terms
and provisions hereof).
Section 3.19. Notice of Default. The Company will:
(a) immediately upon becoming aware of the existence of
any condition or event which constitutes a Default or Event of Default
(including without limitation any condition or event which constitutes
the failure of the Company to comply with any provision of Section
2.5(a) of any of the Mortgages); or
(b) immediately upon becoming aware that the holder of any
Note has given notice or taken any other action with respect to a
claimed Default or Event of Default;
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furnish a written notice to each of the holders of the Notes and the Trustees
specifying the nature and period of existence of such condition or event and/or
the notice given or action taken by such holder, as the case may be, and what
action the Company is taking or proposes to take with respect thereto.
Compliance with the provisions of this Section 3.19 shall not be deemed or
construed to constitute a waiver of or consent to any Default or Event of
Default of which the Company has given the Trustees and the holders of the
Notes notice pursuant to this Section 3.19.
SECTION 4. POSSESSION, USE, SUBSTITUTION AND RELEASE OF PROPERTY.
Section 4.1. Company's Right of Possession. Provided no Default or
Event of Default has occurred and is continuing, the Company shall be suffered
and permitted to remain in full possession, enjoyment and control of the
Mortgaged Properties subject always to the observance and performance of the
terms of this Indenture and the Mortgages.
Section 4.2. Release of Mortgaged Property - Consent of Noteholders.
In addition to the sale and release of any Mortgaged Property pursuant to
Section 3.2 or 3.3 of the related Mortgage, the Company may sell or otherwise
dispose of any Mortgaged Property then subject to the lien of this Indenture or
any indenture supplemental hereto and the related Mortgage, and the Trustees
shall release the same from the lien hereof or thereof to the extent and on the
terms and upon compliance with the conditions provided for in any written
consent given thereto at any time or from time to time by the holder or holders
of all of the then outstanding Notes.
SECTION 5. PREPAYMENT OF NOTES.
Section 5.1. Prepayments and Manner Thereof. Except to the extent
provided for in this Section 5, the Notes shall not be subject to prepayment or
redemption in whole or in part at the option of the Company prior to the
expressed maturity dates thereof. Every prepayment of the Notes shall be made
in accordance with the provisions of this Section 5.
Section 5.2. Optional Prepayment in the Event of Casualty or
Condemnation. The Notes may be prepaid at any time prior to maturity, either
in whole or in part, through the application of moneys received by the
Corporate Trustee pursuant to the provisions of Section 4.1 of any of the
Mortgages upon payment of the principal amount of the Notes so to be prepaid
and accrued interest thereon to the date of prepayment, together with a premium
equal to the Make Whole Amount. If the moneys received pursuant to the
provisions of Section 4.1 of any of the Mortgages are insufficient to pay the
remaining principal balance so to be prepaid then the Company shall pay any
additional amounts necessary, together with a premium equal to the Make Whole
Amount.
Section 5.3. Optional Prepayment upon Election to Withdraw. The Notes
may be prepaid at any time, either in whole or in part, through the application
of monies received by the Corporate Trustee pursuant to the provisions of
Section 3.3 of any of the Mortgages upon payment of the principal amount of the
Notes so to be prepaid and accrued interest
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thereon to the date of prepayment, together with a premium equal to the Make
Whole Amount.
Section 5.4. Optional Prepayment with Premium. In addition to the
rights of prepayment set forth in Sections 5.2 and 5.3, the Company shall have
the privilege, on any date on which regularly scheduled payments of principal
and interest are due on or in respect of the Notes of prepaying the Notes,
either in whole or in part (but if in part in units of U.S. $1,000,000 or an
integral multiple of U.S. $100,000 in excess thereof), by payment of the
principal amount of the Notes or a portion thereof to be prepaid, and accrued
interest thereon to the date of prepayment, together with a premium equal to
the Make Whole Amount.
Section 5.5. Prepayment of Notes upon a Designated Event. (a) In the
event that a Designated Event shall occur or the Company shall have knowledge
of any proposed Designated Event, the Company will give written notice (the
"Company Notice") of such fact to all of the holders of the Notes and the
Trustees. The Company Notice shall be delivered promptly upon receipt of such
knowledge by the Company and in any event not later than three days following
the occurrence of a Designated Event. The Company Notice shall (1) describe
the facts and circumstances of such Designated Event in reasonable detail, (2)
make reference to this Section 5.5 and the right of the holders of the Notes to
require prepayment on the terms and conditions provided for in this Section
5.5, (3) offer in writing to prepay the outstanding Notes, together with
accrued interest thereon to the date of prepayment and a premium equal to the
then applicable Make Whole Amount, and (4) specify a date for such prepayment
(the "Designated Event Prepayment Date") which Designated Event Prepayment Date
shall be not more than 40 days nor less than 20 days following the date of such
Company Notice. Each holder of the outstanding Notes shall have the right to
accept such offer and require prepayment of the Notes held by such holder, by
written notice to the Company (a "Noteholder Notice") given to the Company not
later than 15 days after the date of the Company Notice. The Company shall on
the Designated Event Prepayment Date prepay all Notes held by holders which
have so accepted such offer of prepayment. The prepayment price of the Notes
payable upon the occurrence of any Designated Event shall be an amount equal to
100% of the principal amount of the Notes so to be prepaid together with
accrued interest thereon to the date of prepayment and a premium equal to the
then applicable Make Whole Amount.
(b) Without limiting the foregoing, notwithstanding any failure on
the part of the Company to give the Company Notice herein required as the
result of the occurrence of a Designated Event, each holder of the Notes shall
have the right by delivery of written notice to the Company (with a copy of
such written notice to the Trustees) to require the Company to prepay, and the
Company will prepay, such holder's outstanding Notes in full, together with
accrued interest thereon to the date of prepayment and a premium equal to the
then applicable Make Whole Amount at any time after such holder has actual
knowledge of any such Designated Event. Notice of any required prepayment
pursuant to this Section 5.5(b) shall be delivered to the Company and the
Trustees by the holder of the Notes which was entitled to, but did not receive,
such Company Notice after such holder has actual knowledge of such Designated
Event. On the date (the "Designated Event Delayed
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Prepayment Date") designated in such holder's notice (which shall not be
earlier than 20 days after the date of such holder's notice), the Company shall
prepay in full such holder's outstanding Notes, together with accrued interest
thereon to the date of prepayment and a premium equal to the the applicable
Make Whole Amount. If the holder of any Note gives notice pursuant to this
Section 5.5(b), the Company shall give a Company Notice within three days of
receipt of such notice and identify the Designated Event Delayed Prepayment
Date to all holders of the Notes and each of such holders shall then and
thereupon have the right to accept the Company's offer to prepay the Notes held
by such holder and require prepayment of such Notes by delivery of a Noteholder
Notice within ten days following receipt of such Company Notice; provided only
that any date for prepayment of such holders Notes shall be the Designated
Event Delayed Prepayment Date.
(c) A "Designated Event" shall have occurred if:
(1) (i) a "Person" or "Group" of Persons (within the
meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), shall
directly or indirectly become Beneficial Owner of more than 50% of (y)
the total voting power of the Voting Stock of the Company then
outstanding, or (z) of the assets of the Company and its Subsidiaries;
or
(ii) the Company shall have consolidated with or merged
into any other corporation and the corporation resulting from such
consolidation or merger (the "surviving corporation") shall not be
the Company; or
(iii) the Company directly or indirectly or through its
Subsidiaries purchases or otherwise acquires directly or indirectly,
Beneficial Ownership of outstanding Voting Stock of the Company for
cash, Property, Securities or other assets (other than solely in
exchange for or upon conversion of Voting Stock of the Company) and
the sum of the percentages of (y) the aggregate total voting power of
the Voting Stock purchased or acquired in connection with such
purchase or acquisition of Voting Stock of the Company (expressed as a
percentage of the total voting power of the Voting Stock of the
Company outstanding one day before the date of such purchase or
acquisition) and (z) the aggregate voting power of the Voting Stock
purchased or acquired in connection with all other such purchases or
acquisitions of such Voting Stock (in each case expressed as a
percentage of the total voting power of the Voting Stock of the
Company outstanding one day before the date of such purchase or
acquisition) effected within the twelve month period ending on the
date on which the purchase or acquisition referred to in (y) is
effected exceeds 50%; or
(iv) the Company, directly or indirectly, distributes
cash, Property, Securities (other than Voting Stock of the Company) or
other assets in respect of its Voting Stock and the aggregate fair
market value of all cash, property, Securities (other than Voting
Stock of the Company) or other assets distributed in connection with
(y) such distributions and (z) all other such distributions made
during the twelve month period ending on the date on which the
distribution described in (i) is effected exceeds 50% of the aggregate
Fair Market Value of all outstanding Voting Stock of the Company
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determined as of the date immediately prior to the beginning
of such twelve month period;
and
(2) after giving effect to the occurrence of any event
described in clauses (i), (ii), (iii) or (iv) of this Section 5.5(c),
either (x) a Default or Event of Default exists or (z) the Company or
the surviving corporation for any reason is not rated Investment Grade
by Moody's or S&P.
(d) For purposes of this Section 5.5, the following terms shall have
the following meanings:
(i) "Beneficial Ownership" as to any Voting Stock shall be
determined pursuant to Rule 13(d)-3 or 13(d)-5 promulgated under the
Exchange Act.
(ii) "Fair Market Value" shall mean with respect to the Voting
Stock of the Company as of any date, the arithmetic average of the
closing prices per share for such Voting Stock for the 20 most recent
trading days on the principal stock exchange on which such shares are
listed or, if such shares are not so listed, the arithmetic average of
the closing or last sales price per share for such Voting Stock for
the 20 most recent trading days on the automated quotron system in
which such shares are quoted or, if such shares are not so quoted or
listed, the fair market value thereof as determined in good faith by
the Board of Directors of the Company.
Section 5.6. Optional Prepayment of Notes upon Determination to Remain
Dark. The Notes may be prepaid at any time, either in whole or in part,
pursuant to the provisions of Section 3.8(b) hereof upon payment of the
principal amount of the Notes so to be prepaid and accrued interest thereon to
the date of prepayment, together with a premium equal to the Make Whole Amount.
Section 5.7. Notice of Prepayments. The Company will give written
notice of any prepayment of the Notes to each holder thereof (with a copy to
the Trustees) not less than 30 days nor more than 60 days before the date fixed
for such prepayment specifying (a) such date, (b) the section of this Indenture
and/or the related Mortgage under which the prepayment is to be made, (c) the
principal amount of the holder's Notes to be prepaid on such date, and (d) the
estimated premium, if any, and accrued interest applicable to the prepayment.
Such notice of prepayment shall also certify all facts which are conditions
precedent to any such prepayment. Notice of prepayment having been so given,
the aggregate principal amount of the Notes specified in such notice, together
with premium, if any, and accrued interest thereon shall become due and payable
on the prepayment date. Not later than two Business Days prior to the
prepayment date specified in such notice, the Company shall provide each holder
of a Note written notice of the premium, if any, payable in connection with
such prepayment and, whether or not any premium is payable, a reasonably
detailed computation of the Make Whole Amount.
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Section 5.8. Allocation of Prepayments. The aggregate principal
amount of each required or optional partial prepayment of the Notes shall be
allocated in units of U.S. $1,000 or multiples thereof among the holders of the
Notes at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts of the Notes to be prepaid then
outstanding, with adjustments, to the extent practicable, to equalize for any
prior prepayments not in such proportion. Partial prepayments, other than
partial prepayments pursuant to Section 5.5, shall be applied on all
outstanding Notes ratably in accordance with the unpaid principal amounts
thereof. Partial prepayments made pursuant to Section 5.4 shall be credited in
each case first, against the final maturities of the Notes being prepaid and
then, against the installments on such Notes in the inverse order of the
maturities thereof.
SECTION 6. REMEDIES OF THE TRUSTEES AND THE NOTEHOLDERS.
Section 6.1. Definition of Event of Default. The following events
are hereby defined for all purposes of this Indenture as "Events of Default":
(a) Default in the payment of interest on any Note when the
same shall become due and such default shall continue for more than
five days; or
(b) Default shall occur in the making of any payment of
the principal of any Note or premium, if any, thereon at the expressed
or any accelerated maturity date or at any date fixed for prepayment
or payment; or
(c) For any reason whatsoever the Company is not rated at
least Investment Grade by Moody's and S&P; or
(d) Default shall occur in the observance or performance
of any other covenants or provisions of this Indenture (other than
Section 3.14 hereof, provision for which is made in Section 6.1(c)
hereof) which is not remedied within 30 days after the day on which a
Responsible Officer of the Company first obtains knowledge of such
Default; or
(e) An Event of Default shall occur and be continuing under
any of the Mortgages; or
(f) If any representation or warranty made by the Company
herein or in any Mortgage or in the Note Agreements, or made by the
Company in any statement or certificate furnished by the Company in
connection with the consummation of the issuance and sale of the Notes
or furnished by the Company pursuant to this Indenture, any Mortgage
or the Note Agreements, proves untrue in any material respect as of
the date of the issuance or making thereof; or
(g) A custodian, liquidator, trustee or receiver is
appointed for the Company or for the major part of its property and is
not discharged within 60 days after such appointment; or
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(h) The Company becomes insolvent or bankrupt, is
generally not paying its debts as they become due or makes an
assignment for the benefit of creditors, or the Company applies for or
consents to the appointment of a custodian, liquidator, trustee or
receiver for the Company or for the major part of its property; or
(i) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or
similar law or laws for the relief of debtors, are instituted by or
against the Company and, if instituted against the Company, are
consented to or are not dismissed within 60 days after such
institution.
When any Event of Default described in subparagraph (a) or (b) of this
Section 6.1 has occurred and is continuing, the Trustees at the direction of
any holder of the Notes shall or any holder of any Note may, by notice in
writing sent in the manner provided in Section 11.5 hereof to the Company (and
to the Trustees, if such notice is delivered by a holder or the holders of the
Notes), declare the entire principal and all interest accrued on such Note to
be, and such Note shall thereupon become, forthwith due and payable, without
any presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived. When any Event of Default described in subparagraphs
(a) through (f), inclusive of this Section 6.1 has happened and is continuing,
the Trustees at the direction of the holder or holders of 35% or more of the
principal amount of the Notes at the time outstanding or the holder or holders
of 35% or more of the principal amount of Notes at the time outstanding may, by
notice in writing sent in the manner provided in Section 11.5 hereof to the
Company (and to the Trustees if such notice is delivered by a holder or the
holders of the Notes), declare the entire principal and all interest accrued on
all Notes to be, and all Notes shall thereupon become, forthwith due and
payable, without any presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived. When any Event of Default described
in subparagraph (g), (h) or (i) of this Section 6.1 has occurred, then all
outstanding Notes shall immediately become due and payable without presentment,
demand or notice of any kind. Upon the Notes becoming due and payable as a
result of any Event of Default as aforesaid, the Company will forthwith pay to
the Trustees for the benefit of the holders of the Notes then outstanding the
entire principal and interest accrued on the Notes and, to the extent not
prohibited by applicable law an amount as liquidated damages for the loss of
the bargain evidenced hereby (and not as a penalty) equal to the Make Whole
Amount. The Company further agrees, to the extent permitted by law, to pay to
the Trustees and the holders of the Notes all costs and expenses incurred by
them in the collection of any Notes upon any default hereunder or thereon,
including reasonable compensation to such Trustees' and to such holders'
attorneys for all services rendered in connection therewith, whether or not a
lawsuit is filed in connection therewith.
In case the Company shall fail to pay the same forthwith, the
Trustees, in their own names and as trustees of an express trust, shall be
entitled to recover judgment for the whole amount so due and unpaid against the
Company and/or any other obligor on the Notes. The right of the Trustees to
recover such judgment shall not be affected by the exercise of any other right,
power or remedy for the enforcement of the provisions of this Indenture.
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THE COMPANY ACKNOWLEDGES THAT THE PURCHASERS WOULD NOT PURCHASE THE
NOTES WITHOUT THE COMPANY'S AGREEMENT, AS SET FORTH ABOVE IN THIS SECTION 6.1,
TO PAY THE PURCHASERS OR ANY OTHER HOLDERS OF THE NOTES A PREPAYMENT PREMIUM
UPON THE SATISFACTION OF ALL OR ANY PORTION OF THE PRINCIPAL INDEBTEDNESS
EVIDENCED BY THE NOTES FOLLOWING THE ACCELERATION OF THE MATURITY DATE BY
REASON OF AN EVENT OF DEFAULT OCCURRING AND CONTINUING HEREUNDER, AND THE
COMPANY HAS CAUSED THE PERSON SIGNING THIS INDENTURE ON THE COMPANY'S BEHALF
SEPARATELY TO INITIAL THE AGREEMENT CONTAINED IN THIS SECTION 6.1, IN
COMPLIANCE WITH SECTION 2954.10 OF THE CALIFORNIA CIVIL CODE, BY PLACING HIS
INITIALS BELOW:
INITIALS: /s/ JPC
------------
Section 6.2. Suits for Endorsement; Power of Sale. In case of the
happening of an Event of Default as defined in Section 6.1 and during the
continuance thereof, the Trustees from time to time in their discretion may,
but subject always to the written direction of the holders of at least 51% of
the outstanding principal amount of the Notes, exercise, in addition to all
other rights and powers described herein or permitted under applicable law, all
or any of the following powers as they may deem best for the protection and
enforcement of the interests and rights of the Trustees and of the holders of
the Notes then outstanding:
(a) the Trustees may, in their own name and as trustees of
an express trust, protect and enforce their rights and the rights of
the holders of the Notes by bringing such actions, at law or in equity
or before any administrative tribunal, as the Trustees, being advised
by counsel, shall deem appropriate, including, without limitation,
actions for the specific performance of any covenant hereof, or of the
Notes, and for the foreclosure of one or all of the Mortgages; and the
Trustees shall be entitled, in their own names and as trustees of an
express trust, to recover judgment for any and all sums then, or
during any Default becoming due and payable by the Company under any
provisions hereof or of the Notes or any of the Mortgages, including,
without limitation, any deficiency in the payment of all amounts due
under the provisions hereof or of the Notes or any of the Mortgages
remaining after any sale of the Mortgaged Properties in foreclosure
proceedings or by virtue of the Trustees' power of sale or otherwise,
and, in addition thereto, such amounts as shall be sufficient to cover
the costs and expenses of collection, including attorneys' fees, and
of other proceedings hereunder, and to collect out of the Trust Estate
in any manner provided by law all amounts adjudged or decreed to be
payable;
(b) the Trustees as a matter of contract right and not as
a penalty shall be entitled to the appointment of a receiver of, or
may enter upon and take possession of, all or any part of the
Mortgaged Properties and such receiver or the Trustees shall thereupon
be entitled to operate all or any part of the Mortgaged Properties and
to make all expenditures and to take all actions necessary or
desirable therefor, and to collect and retain all income and earnings
arising from the Trust Estate;
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(c) the Trustees may, with or without entry as aforesaid,
sell all or any part of the Mortgaged Properties at public or private
sale, upon such notice, in such manner, at such time or times, and
upon such terms consistent with the applicable laws of the respective
States wherein such Mortgaged Properties are located, as the Trustees
may determine;
(d) the Trustees may exercise any remedies and take any
other appropriate action to protect and enforce the rights and
remedies of the Trustees or the holders of the Notes under the
Mortgages; and
(e) the Trustees shall have any and all rights and remedies
provided to a secured party by the Uniform Commercial Code with
respect to all parts of the Mortgaged Properties which are or which
are deemed to be governed by the Uniform Commercial Code.
The Company, to the extent permitted by law, shall not claim any
rights under any stay, valuation, exemption or extension law, and hereby waives
any right of redemption which it may have in respect of the Mortgaged
Properties.
Section 6.3. Foreclosure and Sale of Mortgaged Property. In the event
of any sale made under or by virtue of this Indenture or any of the Mortgages,
whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or decree of foreclosure and sale, the whole of the
Mortgaged Properties may be sold in one parcel and as an entirety, or in
separate parcels or lots, as the Trustees may reasonably determine, or as they
may be directed by the written direction of the holders of not less than a
majority in principal amount of the Notes then outstanding.
Section 6.4. Adjournment of Sale. The Trustees may adjourn from time
to time any sale by them to be made under the provisions of this Indenture or
any of the Mortgages, by announcement at the time and place appointed for such
sale or for such adjourned sale or sales; and, except as otherwise provided by
law, the Trustees, without further notice or publication, may make such sale at
the time and place to which the same shall be so adjourned.
Section 6.5. Trustees May Execute Conveyances and Deliver Possession;
Sale a Bar. Upon the completion of any foreclosure sale or sales made under or
by virtue of this Indenture or any of the Mortgages and in accordance with
applicable law, the Trustees shall execute and deliver to the accepted
purchaser or purchasers a good and sufficient deed, or good and sufficient
deeds, and other instruments conveying, assigning and transferring all their
estate, right, title and interest in and to the Mortgaged Properties,
privileges and rights so sold. The Trustees are hereby irrevocably appointed
the true and lawful attorneys-in-fact of the Company, in its name, place and
stead or in the name of the Trustees, to make all such necessary conveyances,
assignments, transfers and deliveries of the premises and the Mortgaged
Properties, privileges and rights so sold and for that purpose the Trustees may
execute all necessary deeds and instruments of assignment and transfer, and may
substitute one or more Persons with like power, the Company hereby ratifying
and confirming all that
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its said attorneys or such substitute or substitutes shall lawfully do by
virtue hereof. Nevertheless, the Company, if so requested in writing by the
Trustees, shall ratify and confirm any such sale or sales by executing and
delivering to the Trustees or to such purchaser or purchasers all such
instruments as may be advisable, in the judgment of the Trustees, for the
purpose and as may be designated in such request.
Any such sale or sales made under or by virtue of this Indenture or
any of the Mortgages, whether made under the power of sale herein granted or
under or by virtue of judicial proceedings or of a judgment or decree of
foreclosure and sale, shall operate to divest all estate, right, title,
interest, claim or demand whatsoever, whether at law or in equity, of the
Company, in and to the Mortgaged Properties, privileges and rights so sold, and
shall be a perpetual bar both at law and in equity against the Company, its
successors and assigns, and against any and all Persons claiming or who may
claim the same, or any part thereof from, through or under the Company, its
successors or assigns.
Section 6.6. Receipt Sufficient Discharge for Purchaser. The receipt
of the Trustees or of the court officer conducting any such sale for the
purchase money paid at any such sale shall be a sufficient discharge therefor
to any purchaser of the Mortgaged Properties, or any part thereof, sold as
aforesaid; and no such purchaser or his representatives, grantees or assigns,
after paying such purchase money and receiving such receipt, shall be bound to
see the application of such purchase money upon or for any trust or purpose of
this Indenture, or shall be answerable in any manner whatsoever for any loss,
misapplication or nonapplication of any such purchase money or any part
thereof, nor shall any such purchaser be bound to inquire as to the necessity
or expediency of any such sale.
Section 6.7. Sale to Accelerate Notes. In the event of any sale made
under or by virtue of this Indenture or any of the Mortgages, whether made
under the power of sale herein granted or under or by virtue of judicial
proceedings or of a valid judgment or decree of foreclosure and sale, the
entire principal amount of the Notes, together with accrued and unpaid interest
thereon and the Make Whole Amount, if any, if not previously due, immediately
thereupon shall become due and payable, anything in the Notes or in this
Indenture to the contrary notwithstanding.
Section 6.8. Application of Proceeds of Sale. The purchase money
proceeds or avails of any such sale, together with any other sums which then
may be held by the Trustees under this Indenture as part of the Trust Estate or
the proceeds thereof, whether under the provisions of this Section 6 or
otherwise, shall be applied as follows:
First: To the payment of the costs and expenses of
foreclosure or suit, if any, and of such sale, and to the extent
permitted by applicable law, the reasonable compensation of the
Trustees, their agents, attorneys and counsel, and of all proper
expenses, liability and advances incurred or made hereunder by the
Trustees;
Second: To the payment of the amount then owing or unpaid on
the Notes for principal, premium, if any, and interest; and in case
such proceeds shall be insufficient to pay in full the whole amount so
due, owing or unpaid upon the Notes, then ratably
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according to the aggregate of such principal and the accrued and
unpaid interest and premium, if any, with application on each Note to
be made, first, to the unpaid premium, if any, thereon, second, to
unpaid interest, thereon, and third, to unpaid principal thereof;
Third: To the payment of any other sums required to be paid
by the Company pursuant to any provision of this Indenture, the Note
Agreements, any of the Mortgages, the Notes or any other instrument
given to secure the Notes; and
Fourth: To the payment of the surplus, if any, to the
Company, its successors or assigns, upon the written request of the
Company or to whomsoever may be lawfully entitled to receive the same.
Section 6.9. Purchase of Mortgaged Properties. Upon any sale made
under or by virtue of this Indenture or any of the Mortgages, whether made
under the power of sale herein granted or under or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale, the Trustees
may bid for and purchase the Mortgaged Properties being sold, and upon
compliance with the terms of sale, may hold, retain and possess and dispose of
such Mortgaged Properties in its own absolute right without further
accountability; and any purchaser at any such sale may, in paying the purchase
price, turn in any of the Notes in lieu of cash to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon. Said Notes,
in case the amounts so payable thereon shall be less than the amount due
thereon, shall be returned to the holders thereof after a notation of such
partial payment shall have been made thereon.
Section 6.10. Trustees Entitled to Appointment of Receiver. The
Company further covenants that upon the happening of any Event of Default and
thereafter during the continuance of such Event of Default unless the same
shall have been waived as hereinafter provided, the Trustees shall be entitled,
as a matter of right, if they shall so elect, (a) forthwith and without
declaring the principal of the Notes to be due and payable, or (b) after
declaring the same to be due and payable, or (c) upon the filing of a bill in
equity to foreclose this Indenture or to enforce the specific performance
hereof or in aid thereof or upon the commencement of any other judicial
proceeding to enforce any right of the Trustees or of the holders of the Notes,
to the appointment of a receiver or receivers of the Mortgaged Properties and
of all the earnings, revenues, rents, issues, profits and income thereof, with
such powers as the court making such appointment shall confer, which may
comprise any or all of the powers which the Trustees are authorized to exercise
by the provisions of Section 6.2. The Company, if requested so to do by the
Trustees, will consent to the appointment of any such receiver as aforesaid.
Section 6.11. Trustees May Enforce Rights without Notes. All rights
of action under this Indenture or under any of the Mortgages or Notes may be
enforced by the Trustees without the possession of any of the Notes and without
the production thereof at any trial or other proceedings relative thereto. Any
such suit or proceedings instituted by the Trustees shall be brought in their
own names or as Trustees, and any recovery of judgment shall be,
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subject to the rights of the Trustees, for the ratable benefit of the holders
of the Notes outstanding.
Section 6.12. Notice of Event of Default; Waiver. The Corporate
Trustee shall promptly (and in no event more than two Business Days) after
obtaining actual knowledge of any Event of Default give notice thereof to the
holders of all Notes at the time outstanding. The holders of at least 66 2/3%
in principal amount of the Notes at the time outstanding hereunder may waive
any Event of Default hereunder and its consequences which result from the
failure of the Company to comply with any provisions of this Indenture,
compliance with which can be waived by such holders pursuant to Section 8.1 and
rescind or annul any declaration of maturity made pursuant to Section 6.1
hereof; provided, that at the time such declaration is rescinded or annulled:
(a) no judgment or decree has been entered for the payment of
any moneys due pursuant to the Notes, this Indenture or any of the
Mortgages;
(b) all arrears of interest upon and principal payable in
respect of all of the Notes and all other sums payable under the
Notes, this Indenture and the Mortgages (except any principal,
interest or premium on the Notes which has become due and payable
solely by reason of such declaration under Section 6.1 hereof) shall
have been duly paid; and
(c) each and every other Default and Event of Default shall
have been made good, cured or waived pursuant to Section 8.1 hereof.
In case of any such waiver, or in case any proceedings taken on account of any
such Default or Event of Default shall be discontinued or abandoned or
determined adversely to the Trustees, then and in every such case, the Company,
the Trustees and the holders of the Notes shall be restored to their former
positions and rights hereunder respectively. No such waiver shall extend to
any subsequent or other Event of Default or impair any right consequent
thereon.
Section 6.13. Limitation on Noteholders' Right to Sue. No holder of
any Note shall have any right to institute any suit, action or proceeding at
law or in equity growing out of any provision of this Indenture or any of the
Mortgages, or for the foreclosure or enforcement of this Indenture or any of
the Mortgages, unless and until an Event of Default shall have happened and
unless and until such holder shall have previously given to the Corporate
Trustee written notice of the happening of such Event of Default and of the
continuance thereof as hereinbefore provided, and also (except as hereinafter
provided) unless and until the holders of at least 35% in principal amount of
the Notes then outstanding shall have made written request upon the Trustees
and shall have afforded to them a reasonable opportunity to institute such
action, suit or proceeding in their own names unless also the Trustees in
conjunction with any such written request shall have been offered by such
holders indemnity reasonably satisfactory to them against the costs, expenses
and liabilities to be incurred as a result of the Trustees instituting such
action, suit or proceeding, and the Trustees shall have neglected or refused to
so institute such action, suit or
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proceeding within a reasonable time after receipt of such notification, request
and offer of indemnity; and such notification, request, offer of indemnity and
refusal or neglect are hereby declared in every such case to be conditions
precedent to the institution by such holder of the Notes of any such action,
suit or proceeding; it being understood and intended and being expressly
covenanted by the holder of every Note with every other holder and with the
Trustees that no one or more holders of the Notes shall be entitled to take any
action or institute any such suit to enforce the payment of its Notes if and to
the extent that the taking of such action or the institution or prosecution of
any such suit or the entry of judgment therein would under applicable law
result in a surrender, impairment, waiver or loss of the lien of this Indenture
or any of the Mortgages upon the Mortgaged Properties, or any part thereof, as
security for Notes held by any other holder of the Notes, or shall have any
right in any manner whatever to affect, disturb or prejudice the rights of the
holders of any other of the Notes, or to enforce any right hereunder, except in
the manner herein provided, and for the equal, ratable and common benefit of
all holders of the Notes. Nothing in this Section 6.13 or elsewhere in this
Indenture or in the Notes contained, however, shall affect or impair the
obligation of the Company, which is unconditional and absolute, to pay the
principal of, premium, if any, and interest on, the Notes to the respective
holders of the Notes, in the manner and at the time and places therein
respectively expressed, nor shall it affect or impair the right of the
respective holders of the Notes, by an action at law upon the promises to pay
therein contained, to enforce such payment.
Section 6.14. Remedies Cumulative. No remedy herein conferred upon or
reserved to the Trustees or to the holders of the Notes is intended to be
exclusive of any other remedy or remedies, and each and every such remedy shall
be cumulative, and shall be in addition to every other remedy given hereunder
or now or hereafter existing at law or in equity or by statute.
Section 6.15. Delay or Omission Not a Waiver. No delay or omission of the
Trustees, or of any holder of the Notes, to exercise any right or power
accruing upon any Default or Event of Default, shall impair any such right or
power, or shall be construed to be a waiver of any such Default or Event of
Default or an acquiescence therein; and every power and remedy given by this
Indenture or any of the Mortgages to the Trustees or to the holders of the
Notes may be exercised from time to time and as often as may be deemed
expedient by the Trustees or by the holders of the Notes.
Section 6.16. Waiver of Extension, Appraisement, Stay, Laws. The Company
will not at any time insist upon, or plead, or in any manner whatever claim or
take any benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants and terms
of performance of this Indenture or any of the Mortgages; nor claim, take or
insist upon any benefit or advantage of any law now or hereafter in force
providing for the valuation or appraisement of the Mortgaged Properties, or any
part thereof, prior to any sale or sales thereof which may be made pursuant to
any provision herein contained, or pursuant to the decree, judgment or order of
any court of competent jurisdiction; nor after any such sale or sales, claim or
exercise any right under any statute heretofore or hereafter enacted by the
United States of America or by any state or territory, or otherwise, to redeem
any of the Mortgaged Properties so sold or any part
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thereof, and the Company hereby expressly waives all benefits or advantage of
any such law or laws, and covenants not to hinder, delay or impede the
execution of any power herein granted or delegated to the Trustees, but to
suffer and permit the execution of every power as though no such law or laws
had been made or enacted.
Section 6.17. Restoration of Positions. If the Trustees or any holder of
the Notes has instituted any proceeding to enforce any right or remedy under
this Indenture or any of the Mortgages by foreclosure, entry or otherwise and
such proceeding has been discontinued or abandoned for any reason or has been
determined adversely to the Trustees or to such holder of the Notes, then and
in every such case the Company, the Trustees and the holders of the Notes
shall, subject to any determination in such proceeding, be restored to their
former positions hereunder, and thereafter all rights and remedies of the
Trustees and the holders of the Notes shall continue as though no such
proceeding had been instituted.
Section 6.18. Control of Remedies by Noteholders. Notwithstanding any
other provision of this Section 6, the holders of at least 51% in principal
amount of the Notes from time to time outstanding shall have the right, by an
instrument in writing delivered to the Trustees, to determine which of the
remedies herein set forth shall be adopted and to direct the time, method and
place of conducting all proceedings to be taken under the provisions of this
Indenture or any of the Mortgages for the enforcement thereof or of the Notes;
provided, however, that the Trustees shall have the right to decline to follow
any such direction if the Trustees shall be advised by an Opinion of Counsel
that the action or proceeding so directed may not lawfully be taken or would be
unjustly prejudicial to holders of Notes not parties to such direction.
Section 6.19. Trustees May File Proofs of Claims. The Trustees are hereby
appointed, and each and every holder of the Notes, by receiving and holding the
same, shall be conclusively deemed to have appointed the Trustees the true and
lawful attorneys-in-fact of such holder, with authority to make or file, in
their own names as trustees of an express trust or otherwise as they shall deem
advisable, in any receivership, insolvency, liquidation, bankruptcy,
arrangement, reorganization or other judicial proceedings relative to the
Company or any other obligor upon the Notes or to their respective creditors or
Property, any and all claims, proofs of debt, petitions, consents, other
documents and amendments of any thereof, as may be necessary or advisable in
order to have the claims of the Trustees and of the holders of the Notes
allowed in any such proceeding, and to collect and receive any moneys or other
Property payable or deliverable on any such claim, proof of debt, petition or
other document and to distribute the same after the deduction of the charges
and expenses of the Trustees, and to execute and deliver any and all other
papers and documents and to do and perform any and all other acts and things,
as they may deem necessary or advisable in order to enforce in any such
proceedings any of the claims of the Trustees and of any such holders in
respect of any of the Notes; and any receiver, assignee, trustee or debtor in
any such proceedings is hereby authorized, and each and every holder of the
Notes, by receiving and holding the same, shall be deemed to have authorized
any such receiver, assignee, trustee or debtor, to make any such payment or
delivery to or on the order of the Trustees, and in the event that the Trustees
shall consent to the making of such payments or deliveries directly to the
holders of the Notes to pay to the Trustees any amount due them for
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compensation and expenses, including counsel fees, incurred by them down to the
date of such payment or delivery; provided, however, that nothing herein
contained shall be deemed to authorize or empower the Trustees to consent to or
accept or adopt, on behalf of any holder of Notes, any plan of reorganization
or readjustment of the Company affecting the Notes or the rights of any holder
thereof, or to authorize or empower the Trustees to vote in respect of the
claim of any holder of any Note in any such proceedings.
Section 6.20. Remedies Subject to Provisions of Law. All rights, remedies
and powers provided by this Section 6 may be exercised only to the extent that
the exercise thereof does not violate any applicable provision of law in the
premises, and all the provisions of this Section 6 are intended to be subject
to all applicable mandatory provisions of law which may be controlling in the
premises and to be limited to the extent necessary so that they will not render
this Indenture invalid or unenforceable under the provisions of any applicable
law.
SECTION 7. CONCERNING THE TRUSTEES.
The Trustees accept the trusts hereunder and agree to perform the same and
all other actions to be taken by the Trustees under the Mortgages, but only
upon the terms and conditions hereof, including the following, to all of which
the Company and the respective holders of the Notes at any time outstanding by
their acceptance thereof agree:
Section 7.1. Duties of Trustees. The Trustees undertake (a) except
while an Event of Default actually known to the Trustees shall have occurred
and be continuing, to perform such duties and only such duties as are
specifically set forth in this Indenture, and (b) while an Event of Default
actually known to the Trustees shall have occurred and be continuing, to
exercise such of the rights and powers as are vested in them by this Indenture,
and to use the same degree of care and skill in their exercise as a prudent
person would exercise or use under the circumstances in the conduct of his own
affairs.
The Trustees upon receipt of instruments furnished to the Trustees
pursuant to the provisions of this Indenture, shall examine the same to
determine whether or not such instruments appear to conform to the requirements
of this Indenture.
Section 7.2. Trustees' Liability. No provision of this Indenture shall be
construed to relieve the Trustees from liability for their own negligent
action, negligent failure to act, or their own willful misconduct, except that:
(a) unless an Event of Default shall have occurred and be
continuing, the Trustees shall not be liable except for the performance of
such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustees but the duties and obligations of the Trustees shall be
determined solely by the express provisions of this Indenture;
(b) in the absence of bad faith on the part of the Trustees, the
Trustees may rely upon the authenticity of, and the truth of the
statements and the correctness of the
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opinions expressed in, and shall be protected in acting upon, any
resolution, Officers' Certificate, Opinion of Counsel, Note, request,
notice, consent, waiver, order, signature guaranty, notarial seal, stamp,
acknowledgment, verification, appraisal, report, stock certificate, or
other paper or document believed by the Trustees to be genuine and to have
been signed, affixed or presented by the proper party or parties;
(c) in the absence of bad faith on the part of the Trustees,
whenever the Trustees, or any of their agents, representatives, experts or
counsel, shall consider it necessary or desirable that any matter be
proved or established, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by an Officers' Certificate; provided,
however, that the Trustees, or such agent, respectively, expert or
counsel, may require such further and additional evidence and make such
further investigation as it or they may consider reasonable;
(d) the Trustees may consult with counsel and the advice or opinion
of such counsel shall be full and complete authorization and protection in
respect of any action taken or suffered hereunder in good faith and in
accordance with such advice or Opinion of Counsel;
(e) the Trustees shall not be liable with respect to any action
taken or omitted to be taken by them in good faith in accordance with any
direction or request of a holder or holders of the Notes with which the
Trustees are required by the provisions hereof to comply;
(f) the Trustees shall not be liable for any error of judgment made
in good faith by an officer of the Corporate Trustee unless it shall be
proved that the Corporate Trustee was negligent in ascertaining the
pertinent facts;
(g) the Trustees shall not be deemed to have knowledge of any
Default or Event of Default unless and until they shall have actual
knowledge thereof or have received written advice thereof from the holder
of any Note;
(h) whether or not an Event of Default shall have occurred, the
Trustees shall not be under any obligation to take any action under this
Indenture (including action under Section 6.18 hereof) which may tend to
involve them in any expense or liability, the payment of which within a
reasonable time is not, in their reasonable opinion, assured to them by
the security afforded to them by the terms of this Indenture, unless and
until requested in writing so to do by one or more holders of Notes
outstanding hereunder and furnished, from time to time as they may
require, with reasonable security and indemnity; and
(i) whether or not an Event of Default shall have occurred whenever
it is provided in this Indenture that the Trustees consent to any act or
omission by any Person or that the Trustees exercise their discretion in
any manner, the Trustees may (but need not) seek the written acquiescence
of the holders of at least 51% in principal
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amount of the Notes then outstanding and, unless written evidence of such
acquiescence has been received by the Trustees, they shall be fully
justified in refusing so to consent or so to exercise their discretion.
Section 7.3. No Responsibility of Trustees for Recitals. The recitals and
statements contained herein and in the Notes (except for the Corporate
Trustee's certificate of authentication endorsed on the Notes) shall be taken
as the recitals and statements of the Company, and the Trustees assume no
responsibility for the correctness of the same.
The Trustees make no representation as to the validity or sufficiency of
this Indenture or any of the Mortgages, or of the Notes secured hereby, the
security hereby or thereby afforded, the title of the Company to the Mortgaged
Properties or the descriptions thereof, or the filing or recording or
registering of this Indenture or any other document.
The Trustees shall not be concerned with or accountable to anyone for the
use or application of any deposited moneys which shall be released or withdrawn
in accordance with the provisions of this Indenture or of any Property or
Securities or the proceeds thereof which shall be released from the lien hereof
and any of the Mortgages in accordance with the provisions of this Indenture or
the Mortgages, as the case may be.
Section 7.4. Compensation and Expenses of Trustees; Indemnification; Lien
Therefor. The Company covenants to pay to the Trustees such compensation for
their services hereunder and under the Mortgages as shall be agreed to by the
Company and the Trustees, or, in the absence of such agreement, reasonable
compensation therefor (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust), and to pay, or
reimburse, the Trustees for all reasonable expenses incurred hereunder,
including the reasonable compensation, expenses and disbursements of such
agents, representatives, experts and counsel as the Trustees may employ in
connection with the exercise and performance of their powers and duties
hereunder.
The Company will also indemnify and save the Trustees, their agents,
employees and representatives, harmless against any expenses (including
reasonable attorneys' fees), liabilities and damages, not arising from their
own willful misconduct or negligence, which they or any of them may incur in
the exercise and performance of their rights, powers, trusts, duties and
obligations hereunder.
The Trustee shall have no right against the holder of any Note for the
payment of compensation for its services hereunder or any expenses or
disbursements incurred in connection with the exercise and performance of its
powers and duties hereunder or any indemnification against liabilities which it
may incur in the exercise and performance of such powers and duties but, on the
contrary, shall look solely to the Company for payment and indemnification and
it shall have no lien on the Trust Estate as security for such compensation,
expenses, disbursements and indemnification except to the extent provided in
Section 6.8 hereof.
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Section 7.5. Moneys Received by Trustees; Trust Funds - Segregation. All
moneys received by the Trustees under or pursuant to any provision of this
Indenture shall constitute trust funds for the purpose for which they were paid
or are held and shall be segregated from other moneys held by the Trustees
under such conditions as may be prescribed by applicable law for trust funds.
The Trustees shall not be responsible for the payment of interest on any
such moneys except as otherwise expressly provided herein.
Section 7.6. Action by Individual Trustee. The Individual Trustee shall
act as and be such upon the following terms and conditions:
(a) Subject to the provisions of Section 7.17, all rights, powers,
duties and obligations confer-red or imposed upon the Trustees shall be
conferred or imposed solely upon and solely exercised and performed by the
Corporate Trustee except as expressly provided otherwise in this Indenture
and except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed the Corporate Trustee shall
be incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations shall be exercised and
performed by the Individual Trustee.
(b) No power granted by this Indenture to, or which this Indenture
provides may be exercised by, the Individual Trustee shall be exercised by
the Individual Trustee except jointly with, or with the consent in writing
of, the Corporate Trustee, anything herein contained to the contrary
notwithstanding.
Section 7.7. Resignation of Corporate Trustee. The Corporate Trustee may
resign and be discharged from the trusts created hereby by delivering notice
thereof to the Company and all holders of the Notes at the time outstanding,
specifying a date (not earlier than 120 days after the date of such notice)
when such resignation shall take effect; provided that in no event shall any
such resignation be effective until a successor Corporate Trustee has been
appointed pursuant to Section 7.9 hereof.
Such resignation shall take effect on the day on which a qualified
successor Corporate Trustee shall have been appointed as provided in Section
7.9 and shall have accepted in writing its obligations hereunder.
Section 7.8. Removal of Corporate Trustee. The Corporate Trustee may be
removed at any time, for or without cause, by an instrument or instruments in
writing executed by the holders of at least 51% in aggregate principal amount
of the Notes at the time outstanding and delivered to the Corporate Trustee
with a copy to the Company, specifying the removal and the date when it shall
take effect.
Section 7.9. Appointment of Successor Corporate Trustee. in case at
any time the Corporate Trustee shall resign or be removed or become incapable
of acting, a successor Corporate Trustee may be appointed by the holders of at
least 51% in aggregate principal
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amount of the Notes at the time outstanding, by an instrument or instruments in
writing executed by such holders of the Notes and filed with such successor
Corporate Trustee with a copy of such instrument or instruments to the Company;
provided that if no Default or Event of Default shall have occurred and be
continuing at the time such holders of the Notes shall so appoint a successor
Corporate Trustee, the concurrence of the Company in the selection of such
successor Corporate Trustee shall be required.
Section 7.10. Succession of Successor Trustee. Any successor Corporate
Trustee appointed hereunder shall execute, acknowledge and deliver to the
Company and the predecessor Corporate Trustee an instrument accepting such
appointment, and thereupon such successor Corporate Trustee, without any
further act, deed, conveyance or transfer, shall become vested with the title
to the Trust Estate, and with all the rights, powers, trusts, duties and
obligations of the predecessor Corporate Trustee in the trust hereunder, with
like effect as if originally named as Corporate Trustee herein. Without
limiting the foregoing, such successor Corporate Trustee shall also execute,
acknowledge and deliver to the Company and the holders of the Notes such
further act, deed, conveyance or transfer as may reasonably be requested by any
holder of the Notes for more fully and certainly vesting and confirming to such
successor Corporate Trustee the title of the Trust Estate and all rights,
powers, trusts, duties and obligations of the predecessor Corporate Trustee.
Upon the request of any such successor Corporate Trustee, however, the
Company and the predecessor Corporate Trustee shall execute and deliver such
instruments of conveyance and further assurance and do such other things as may
reasonably be required for more fully and certainly vesting and confirming in
such successor Corporate Trustee the title to the Trust Estate and all such
rights, powers, trusts, duties and obligations of the predecessor Corporate
Trustee hereunder, and the predecessor Corporate Trustee shall also assign and
deliver to the successor Corporate Trustee any property subject to the lien of
this Indenture which may then be in its possession.
Section 7.11. Eligibility of Corporate Trustee. The Corporate Trustee
shall be a state or national bank or trust company in good standing, organized
under the laws of the United States of America or any state thereof and having
(or having a parent which has) a capital, surplus and undivided profits
aggregating at least Five Hundred Million and 00/100 (U.S.$500,000,000)
Dollars.
In case the Corporate Trustee shall cease to be eligible in accordance
with the provisions of this Section, the Corporate Trustee shall resign
immediately in the manner and with the effect specified in Section 7.7.
Section 7.12. Successor Trustee by Merger. Any corporation into which the
Corporate Trustee may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Corporate
Trustee shall be a party, or any state or national bank or trust company in any
manner succeeding to the corporate trust business of the Corporate Trustee as a
whole or substantially as a whole, if eligible as provided in Section 7.11,
shall be the successor of the Corporate Trustee hereunder without
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the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything to the contrary contained herein notwithstanding.
Section 7.13. Resignation of Individual Trustee. The Individual Trustee
or any of his successors may resign and may be discharged of the trusts created
by this Indenture by giving written notice thereof to the Company and the
Corporate Trustee and all holders of the Notes at the time outstanding
specifying the date (not earlier than 120 days after the date of such notice)
when such resignation shall take effect; provided that in no event shall any
such resignation be effective until a successor Individual Trustee has been
appointed pursuant to Section 7.15 hereof.
Such resignation shall take effect on the day on which a qualified
successor Individual Trustee shall have been appointed as provided in Section
7.15 and shall have accepted in writing its obligations hereunder.
Section 7.14. Removal of Individual Trustee. The Individual Trustee or
any of his successors may be removed at any time, for or without cause, by the,
holders of at least 51% in aggregate principal amount of the Notes at the
time outstanding or by the Corporate Trustee, by delivery of a notice of such
removal to the Individual Trustee, to the Company, and in the case of removal
by such holders to the Corporate Trustee, signed by such holders or the
Corporate Trustee, as the case may be.
Section 7.15. Appointment of Successor to Individual Trustee. If at any
time the Individual Trustee or any of his successors shall die, resign or be
removed or otherwise become incapable of acting, or if for any reason the
office of Individual Trustee shall become vacant, a successor to the Individual
Trustee shall forthwith be appointed by the Corporate Trustee or, in the event
that the Corporate Trustee shall fail to make such appointment within 10 days
after the occurrence of such death, resignation, removal, incapacity or
vacancy, by the holders of at least 51% in aggregate principal amount of the
Notes at the time outstanding by an instrument signed by the Corporate Trustee
or by such holders, notice of which appointment shall be sent to the Company.
Section 7.16. Succession of Successor to Individual Trustee. Any Person
appointed as a successor to the Individual Trustee shall execute, acknowledge
and deliver to his predecessor, to the Corporate Trustee and to the Company, an
instrument accepting such appointment hereunder, and thereupon such Person
without any further act, deed or conveyance shall become vested with all the
estates, Properties, rights, powers, duties and trusts of his predecessor in
the trusts hereunder with like effect as if originally named as Individual
Trustee herein; but nevertheless, on the written request of the Company or of
the Corporate Trustee or of the Individual Trustee, the predecessor shall
execute and deliver an instrument transferring to the Individual Trustee, upon
the trusts expressed in this Indenture, all the estates, Properties, rights,
powers and trusts granted to him by this Indenture and shall duly assign,
transfer, deliver and pay over to the Individual Trustee any Property and money
subject to the lien of this Indenture held by such predecessor. Should any
instrument in writing from the Company or from the Corporate Trustee be
required by any Person who becomes the Individual Trustee for more fully and
certainly vesting in and
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<PAGE> 51
confirming to such Individual Trustee such estates, Properties, rights, powers
and trusts, then, on request, any and all such instruments in writing shall be
made, executed, acknowledged and delivered by the Company and/or the Corporate
Trustee.
Section 7.17. Co-Corporate Trustees. At any time or times, for the
purpose of meeting the legal requirements of any jurisdiction in which any of
the Mortgaged Properties may be located, the Company and the Corporate Trustee
shall have the power to appoint, and, upon the written request of the Corporate
Trustee or of the holders of at least 51% in aggregate principal amount of the
Notes outstanding, the Company shall for such purpose join with the Corporate
Trustee in the execution, delivery and performance of all instruments and
agreements necessary or proper to appoint one or more Persons approved by the
Corporate Trustee either to act as co-trustee, jointly with the Corporate
Trustee, of all or any part of the Mortgaged Properties, or to act as separate
trustee of any Mortgaged Property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid any part or portion of the Trust Estate,
title, right or power deemed necessary or desirable, subject to the other
provisions of this Section 7.17. If the Company does not join in such
appointment within 10 days after the receipt by it of a request so to do, or in
case a Default or Event of Default has occurred and is continuing, the
Corporate Trustee alone shall have power to make such appointment.
Should any written instrument from the Company be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such part or portion of the Trust Estate, title,
right or power, any and all such instruments shall, on requires, be executed,
acknowledged and delivered by the Company.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(a) The Notes shall be authenticated and delivered and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or Pledged with, the Trustees hereunder, shall be exercised
solely by the Corporate Trustee.
(b) The rights, powers, duties and obligations hereby conferred or
conferred by any of the Mortgages or imposed upon the Trustees in respect
of any Property covered by such appointment shall be conferred or imposed
upon and exercised or performed by the Corporate Trustee or by the
Corporate Trustee and such co-trustee or separate trustee jointly, as
shall be provided in the instrument appointing such co-trustee or separate
trustee, except to the extent that under any law of any jurisdiction in
which any particular act is to be performed, the Corporate Trustee shall
be incompetent or unqualified to perform such act, in which event such
rights, powers, duties and obligations shall be exercised and performed by
such co-trustee or separate trustee.
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<PAGE> 52
(c) The Corporate Trustee at any time, by an instrument in writing
executed by it, with the concurrence of the Company evidenced by an
Officer's Certificate, may accept the resignation of or remove any
co-trustee or separate trustee appointed under this Section 7.17, and, in
case a Default or Event of Default has occurred and is continuing, the
Corporate Trustee shall have power to accept the resignation of, or
remove, any such co-trustee or separate trustee without the concurrence of
the Company. Upon the written request of the Corporate Trustee, the
Company shall join with the Corporate Trustee in the execution, delivery
and performance of all instruments and agreements necessary or proper to
effectuate such resignation or removal. A successor to any co-trustee or
separate trustee that has so resigned or been removed may be appointed in
the manner provided in this Section.
(d) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Corporate Trustee, or any
other such trustee hereunder nor shall the Corporate Trustee be liable by
reason of any act or omission of any co-trustee or separate trustee
hereunder.
(e) Any written direction of the holders of the Notes delivered to
the Corporate Trustee shall be deemed to have been delivered to each such
co-trustee and separate trustee.
SECTION 8. SUPPLEMENTAL INDENTURES, AMENDMENTS, WAIVERS AND CONSENTS.
Section 8.1. Supplemental Indentures, Amendments, Waivers and Consents by
Noteholders. Upon the waiver or consent of the holders of a least 66-2/3% in
aggregate principal amount of the Notes at the time outstanding (a) the Company
may take any action prohibited, or omit the taking of any action required, by
any of the provisions of this Indenture or any indenture supplemental hereto or
the provisions of any of the Mortgages, or (b) the Company, when authorized by
resolution of its Board of Directors or the Executive Committee of the Board of
Directors, and the Trustees, may enter into an indenture or indentures
supplemental hereto for the purpose of adding, changing or eliminating any
provisions of this Indenture or of any indenture supplemental hereto or enter
into any amendment to any of the Mortgages for the purpose of adding, changing
or eliminating any provision of such Mortgage or modifying in any other manner
the rights and obligations of the holders of the Notes and the Company;
provided that notwithstanding the foregoing (1) the waiver or consent of such
holders of the Notes shall not be required to enter into a supplemental
indenture to provide for the creation of any series of Improvement Notes
pursuant to and within the limitations of the provisions of Section 2.2 hereof
except to the extent such consent is expressly required by the terms and
provisions of Section 2.2(c)(1), and (2) no supplemental indenture, amendment,
waiver or consent shall:
(i) impair or affect the right of any holder to receive payments or
prepayments of the principal of and payments of the interest and
premium, if any, on its Note, as therein and herein provided,
without the consent of such holder,
(ii) amend Sections 6.1(a) and (b),
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(iii) other than pursuant to Section 2.2 hereof, permit the
creation of any lien prior to, or on a parity with, the lien of this
Indenture and the Mortgages with respect to any of the Mortgaged
Properties, without the consent of the holders of all the Notes at the
time outstanding,
(iv) effect the deprivation of any holder of the Notes of the
benefit of the lien of this Indenture upon all or any part of the Trust
Estate without the consent of such holder of the Notes,
(v) reduce the aforesaid percentage of the aggregate principal
amount of Notes, the holders of which are required to consent to any such
supplemental indenture, amendment, waiver or consent pursuant to this
Section, without the consent of the holders of all of the Notes at the
time outstanding, or
(vi) modify the rights, duties or immunities of the Corporate
Trustee or the Individual Trustee without its consent.
Section 8.2. Solicitation of Noteholders. The Company will not solicit,
request or negotiate for or with respect to any proposed supplemental
indenture, amendment, waiver or consent of any of the provisions of this
Indenture, any Mortgage or the Notes unless each holder of the Notes
(irrespective of the amount of Notes then owned by it) shall be informed
thereof by the Company and shall be afforded the opportunity of considering the
same and shall be supplied by the Company with sufficient information to enable
it to make an informed decision with respect thereto. The Company will not,
directly or indirectly, pay or cause to be paid any remuneration, whether by
way of supplemental or additional interest, fee or otherwise, to any holder of
the Notes as consideration for or as an inducement to the entering into by any
holder of the Notes of any amendment, waiver or consent with respect to any of
the terms and provisions of this Indenture, any Mortgage or the Notes unless
such remuneration is currently paid, on the same terms, ratably to the holders
of all of the Notes then outstanding.
Section 8.3. Notice of Supplemental Indentures Amendments, Waivers and
Consents. Within five Business Days after the execution by the Company and the
Trustees of any supplemental indenture, amendment, waiver or consent pursuant
to the provision of Section 8.1 hereof, the Company shall give written notice
setting in general terms the substance of such supplemental indenture,
amendment, waiver or consent together with a copy thereof, mailed in the manner
provided in Section 11.5 hereof, to each holder of the Notes at its address set
forth in the Register.
Section 8.4. Opinion of Counsel Conclusive as to Supplemental Indenture,
Amendment, Waiver and Consent. The Trustees are hereby authorized to join with
the Company in the execution of any such supplemental indenture, amendment,
waiver or consent authorized or permitted by the terms of this Indenture to
make the further. agreements and stipulations which may be therein contained,
and the Trustees may receive an Opinion of Counsel and an Officers' Certificate
as conclusive evidence that any
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<PAGE> 54
supplemental indenture, amendment, waiver or consent executed pursuant to the
provisions of this Section 8 complies with the requirements of this Section 8.
Section 8.5. Expenses of Supplemental Indentures; Amendments, Waivers and
Consents. The Company hereby covenants and agrees to pay all fees, expenses
and disbursements of the Trustees and the holders of the Notes (including
without limitation, reasonable attorneys' fees and court costs) relating to any
supplemental indentures, amendments, waivers or consents pursuant to the
provisions of this Indenture, any of the Mortgages or the Notes (whether or not
the same are actually executed or delivered), including without limitation,
the fees, expenses and disbursements of the holders of the Notes and of an
investment banker or other firm acting as financial advisor to the holders of
the Notes following the occurrence and during the continuance of a Default or
an Event of Default or in connection with any supplemental indenture,
amendment, waiver or consent resulting from any work-out, restructuring or
similar proceeding relating to the performance or nonperformance by the Company
of its obligations under the provisions of this Indenture, any of the Mortgages
or the Notes as the result of any potential Default or Event of Default or
incurred in connection with the enforcement of rights hereunder or under any of
the Mortgages or under the Notes as a result of any potential Default or Event
of Default, whether or not a lawsuit is filed in connection therewith.
SECTION 9. ACTION BY NOTEHOLDERS.
Section 9.1. Evidence of Action by Noteholders. Whenever in this
Indenture it is provided that the holders of a specified percentage in
aggregate principal amount of the Notes may take any action (including the
making of any demand or request, the giving of any notice, consent or waiver or
the taking of any other action), the fact that at the time of taking any such
action the holders of such specified percentage have joined therein may be
evidenced by any instrument or any number of instruments of similar tenor
executed by holders of the Notes in person or by attorney or proxy appointed in
writing.
Section 9.2. Noteholders' Execution of Instruments; Proof of Holdings.
The fact and date of the execution of any instrument by a holder of the Notes
or his attorney or proxy may be proved by the certificate under his official
seal of any notary public or other officer in any jurisdiction who, by the laws
thereof, has power to take acknowledgements or proof of deeds to be recorded
within such jurisdiction, that the Person who signed such instrument did
acknowledge before such notary public or other officer the execution thereof,
or by the affidavit of a witness to such execution; where such execution is by
an officer of a corporation or association or a member of a partnership on
behalf of such corporation, association or partnership such certificate or
affidavit shall also constitute sufficient proof of his authority.
SECTION 10. DISCHARGE.
Section 10.1. Discharge. If the Company shall pay and discharge the
whole amount of the principal of, premium if any, and interest on all Notes at
the time outstanding in
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<PAGE> 55
accordance with the terms hereof and thereof and shall pay or cause to be paid
all other sums payable hereunder or under any of the Mortgages, then and in
that case all Property, rights and interests hereby conveyed or assigned or
Pledged shall revert to the Company, and the estate, right, title and interest
of the Trustees and the holders of the Notes therein shall thereupon cease,
terminate and become void; and the Trustees, in such case, on demand of the
Company and at its cost and expense, shall execute and deliver to the Company a
proper instrument or proper instruments acknowledging the satisfaction and
termination of this Indenture, and shall convey, assign and transfer, or cause
to be conveyed, assigned or transferred, and shall deliver or cause to be
delivered, to the Company, all Property, including money, then held by the
Trustees, other than moneys deposited with the Corporate Trustee for the
payment of the principal of and premium, if any, or interest on any Notes.
Without limiting the foregoing, if any Mortgage shall be terminated as and to
the extent contemplated by Section 4 hereof and upon satisfaction of the
Company's obligations pursuant to Section 5.2 or 5.3 hereof, as the case may
be, with respect to such Mortgaged Property, the Trustee shall, at the
Company's expense, do, execute, acknowledge and deliver each and every deed,
conveyance, transfer and release necessary or proper to evidence the release of
the Mortgage relating to such Mortgaged Property, whereupon such Mortgage and
the lien created thereby with respect to such Mortgaged Property shall
terminate and be of no further force and effect.
Section 10.2. Corporate Trustee's Retention of Moneys Deposited for
Payment of Notes. Payment of the Notes being so duly provided for, the Company
shall not be required to pay interest in respect of any period after the
maturity date. thereof to any holder of Notes, and moneys deposited for the
payment of principal or interest or for prepayment, or otherwise, remaining
unclaimed in the possession of the Corporate Trustee for six years after the
date of the maturity of the Notes or the date fixed for the prepayment of the
Notes, as the case may be, shall be repaid to the Company upon its request and
holders of such Notes shall thereafter be entitled to look only to the Company
for payment thereof. On the date payment of the Notes is due, the Trustees
shall pay the money deposited by the Company with the Corporate Trustee to the
holders of the Notes. If the Corporate Trustee does not pay to the holders of
the Notes as provided in Section 2.4 hereof the money so deposited by the
Company within one Business Day of such date of deposit, the Corporate Trustee
shall pay interest thereon at the Overdue Rate on any monies so deposited but
not so paid for the period from and including such date of deposit to but not
including the date of payment by the Corporate Trustee.
SECTION 11. MISCELLANEOUS PROVISIONS.
Section 11.1. Recapture. To the extent any holder of the Notes
receives any payment by or on behalf of the Company, which payment or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to the Company or its respective trustee,
receiver, custodian, liquidator or any other party under any bankruptcy law,
state or Federal law, common law or equitable cause, then to the extent of such
payment or repayment, the obligation or part thereof which has been paid,
reduced or satisfied by the amount so repaid shall be reinstated and shall be
included within
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<PAGE> 56
the liabilities of the Company to the holders of the Notes as of the date such
initial payment, reduction or satisfaction occurred.
Section 11.2. Indenture for Benefit of Parties Hereto. Nothing in this
Indenture, expressed or implied, is intended or shall be construed to confer
upon or to give to, any Person other than the parties hereto, and the holders
of the Notes, any right, remedy or claim under or by reason of this Indenture
or any covenant, condition or stipulation hereof; and the covenants,
stipulations and agreements in this Indenture contained are and shall be for
the sole and exclusive benefit of the parties hereto, their successors and
assigns, and the holders of the Notes.
Section 11.3. Severability. In case any one or more of the provisions
contained in this Indenture or in the Notes shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby.
Section 11.4. Basis of Opinions of Counsel and Certificates. Any Opinion
of Counsel required to be furnished pursuant to any of the provisions of this
Indenture may, in lieu of stating the facts required by the provisions hereof,
state that the required conditions will be fulfilled on the execution and
delivery of designated instruments, which instruments shall be delivered in
form approved by such counsel prior to or concurrently with the taking or
suffering by the Corporate Trustee of the action as a condition precedent to
which such opinion is required to be furnished under the terms of this
Indenture.
Any certificate or opinion of an officer of the Company or an accountant
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of or upon representations by counsel, unless such officer or
accountant knows that the certificates or opinions or representations with
respect to the matters upon which his opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should have known that the
same were erroneous.
Any Opinion of Counsel may be based, insofar as it relates to factual
matters, or information with respect to which is in the possession of the
Company, upon the certificate or opinion of or representations by an officer or
officers of the Company unless such counsel knows that the certificate or
opinion or representations with respect to the matters upon which his opinion
may be based as aforesaid are erroneous, or in the exercise of reasonable care
should have known that the same were erroneous.
Section 11.5. Addresses for Notices and Demands. Any notice to or
demand upon the Corporate Trustee or the Individual Trustee may be served or
presented, and such demand may be made, in writing by telex, telegraph,
telecopy or other means of recorded electronic communication (with a copy of
any such communication promptly mailed by registered or certified mail or
prepaid nationally recognized overnight air courier service) or by prepaid
nationally recognized overnight air courier service, in any such case at the
principal office of the Corporate Trustee, XXX, Attention: Corporate Trust
Department. Any notice to or demand upon the Company may be served
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<PAGE> 57
or presented, and such demand may be made to the Company in writing, by means
of telex, telegraph, telecopy or by other means of recorded electronic
communication (with a copy of any such communication promptly mailed by
registered or certified mail or prepaid nationally recognized overnight air
courier service) or by prepaid nationally recognized overnight air courier
service, in any such case to the Company at International Headquarters, 3100
West Big Beaver Road, Troy, Michigan 48084-3163, Attention: Treasurer, or to
the Company at such other address as may be filed in writing by the Company
with the Corporate Trustee. A copy of any notice served or presented to the
Trustees or the Company shall be sent to each of the holders of the Notes. Any
notice or report required by any provision of this Indenture to be given or
made to holders of the Notes shall be deemed to have been sufficiently given or
made if copies thereof are sent to the holders of the Notes in writing, by
means of telex, telegraph, telecopy or other by other means of recorded
electronic communication (with a copy of any such communication promptly mailed
by registered or certified mail or prepaid nationally recognized overnight air
courier service) or by prepaid nationally recognized overnight air courier
service, in any such case addressed to each holder of the Notes at the address
of such holder set forth in the Register.
Section 11.6. Environmental Indemnity and Covenant Not to Sue. (a) The
Company agrees to indemnify and hold harmless the Trustees and each holder of
the Notes, each Person claiming by, through, under or on account of any of the
foregoing and the respective directors, officers, counsel and employees of each
of the foregoing Persons (the "Indemnified Parties") from and against any and
all losses, claims, cost recovery actions, administrative orders or
proceedings, damages and liabilities to which any such Indemnified Party may
become subject (a) under any Environmental Legal Requirement applicable to the
Company or any of the Mortgaged Properties, including without limitation the
treatment or disposal of Hazardous Substances on any of the Mortgaged
Properties, (b) as a result of the breach or non-compliance by the Company with
any Environmental Legal Requirement applicable to the Company or any of the
Mortgage Properties and (c) due to past ownership of any of the Mortgaged
Properties or past activity on any of the Mortgaged Properties which, though
lawful and fully permissible at the time, could result in present liability.
The provisions of this Section 11.6(a) shall survive termination of this
Indenture by payment in full of all of the Notes issued hereunder, by the
foreclosure by the Trustees on the Mortgaged Properties under this Indenture or
any of the Mortgages or otherwise, and shall survive the transfer of any Note
or Notes issued hereunder.
(b) Without limiting the provisions of clause (a) of this Section 11.6,
the Company and its successors and assigns hereby waive, release and covenant
not to bring against any of the Indemnified Parties any demand, claim, cost
recovery action or lawsuit they may now or hereafter have or accrue arising
from (1) any Environmental Legal Requirement now or hereafter enacted
(including those applicable to the Company or any of the Mortgaged Properties,
(2) the presence, use, release, storage, treatment or disposal of Hazardous
Substances on or at any of the Mortgaged Properties, (3) the breach or
non-compliance by the Company with any Environmental Legal Requirement or
environmental covenant applicable to the Company or any of the Mortgaged
Properties, or (4) any environmental, health or safety condition on or at any
of the Mortgaged Properties.
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<PAGE> 58
(c) Notwithstanding any provision in any Deed of Trust relating to any
Mortgaged Property located in California to the contrary, neither the
obligations of, or the payment of any amount by, the Company under this Section
11.6 shall be secured by any such California Deed of Trust, and the Trustee may
enforce the provisions of this Section 11.6 with respect to any of the
Mortgaged Properties located in California by appropriate proceedings in
accordance with Section 736 of the California Code of Civil Procedure. The
Company acknowledges and agrees that, in accordance with Section 736 of the
California Code of Civil Procedure, such proceedings shall not constitute an
action within the meaning of subdivision (a) of Section 726 of the California
Code of Civil Procedure.
Section 11.7. Successors and Assigns. Whenever in this Indenture any of
the parties hereto is named or referred to, the successors and assigns of such
party shall be deemed to be included, and all the covenants, promises and
agreements in this Indenture contained by or on behalf of the Company, or by or
on behalf of the Trustees, shall bind and inure to the benefit of the
respective successors and assigns, whether so expressed or not.
Section 11.8. Counterparts; Descriptive Headings. This Indenture is being
executed in any number of counterparts, each of which is an original and all of
which are identical. Each counterpart of this Indenture is to be deemed an
original hereof and all counterparts collectively are to be deemed but one
instrument. The descriptive headings of the several Sections of and Exhibits
to this Indenture were formulated, used and inserted in this Indenture for
convenience only and shall not be deemed to affect the meaning or construction
of any of the provisions hereof.
Section 11.9. Governing Law. THIS INDENTURE AND THE NOTES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE
CONFLICTS LAW) OF THE STATE OF MICHIGAN.
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<PAGE> 59
IN WITNESS WHEREOF, Kmart Corporation has caused this Indenture to be
executed on its behalf by its Vice President; and XXX in evidence of its
acceptance of the trusts hereby created, has caused this Indenture to be
executed on its behalf by one of its Assistant Secretary , and XXXXXXXXXX in
token of his acceptance of the trusts hereby created, has hereunto set his
hand and seal, all as of the date first above written.
KMART CORPORATION
By /s/ James P. Churilla
-------------------------------
Its Vice President
XXX
By /s/ XXXXXXXXXX
-------------------------------
Its Assistant Secretary
As Corporate Trustee
/s/ XXXXXXXXXX
-------------------------------
XXXXXXXXXX
As Individual Trustee
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<PAGE> 1
EXHIBIT 99.6
KMART CORPORATION
9.06% Senior Secured Note,
Due February 1, 2012
No. R- ______________, 1992
U.S. $
KMART CORPORATION, a Michigan corporation (the "Company") for value
received promises to pay to
or registered assigns
the principal sum of
DOLLARS (U.S. $___________)
together with interest from the date hereof until maturity at the rate of 9.06%
per annum (computed on the basis of a 360-day year of twelve consecutive 30-day
months) in installments as follows:
(a) one installment of interest only for the period from and
including the date of issue to but not including February 1, 1992,
payable on February 1, 1992;
(b) two hundred thirty-nine (239) equal installments,
including both principal and interest, each in the amount of U.S.
$ ____________, payable monthly on March 1, 1992 and on the first day
of each month thereafter to and including January 1, 2012; and
(c) a final installment on February 1, 2012 in an amount
equal to the entire principal and interest remaining unpaid as of said
date.
The Company further promises to pay interest at the Overdue Rate on
each overdue installment of principal, premium, if any, and (to the extent
permitted by law) upon each overdue installment of interest in each case from
and after the due date of each such installment until paid. "Overdue Rate"
shall mean the lesser of (a) the maximum rate permitted by applicable law and
(b) 11.06% per annum.
If any amount of interest, premium, if any, or interest on or in
respect of the Notes becomes due and payable on any date which not a Business
Day, such amount shall be payable on the next succeeding Business Day.
"Business Day" means any day other than a Saturday, Sunday, statutory holiday
or other day on which banks in Detroit, Michigan, New York, New York, XXX
or XXX are required by law to close or are customarily closed.
EXHIBIT A
(to Trust Indenture)
<PAGE> 2
All payments of principal, premium, if any, and interest shall be
payable upon presentation of this Note at the principal office of XXX (the
"Corporate Trustee"), located at, XXX Attention: Corporate Trust Department,
as corporate trustee under the Trust Indenture dated as of January 1, 1992
(herein, together with any supplements and amendments thereto, called the
"Indenture"), from the Company to the Corporate Trustee and XXXXXXXXXX (the
"Individual Trustee"), as trustees (the Corporate Trustee and the Individual
Trustee hereinafter referred to collectively as the "Trustees"), or at the
office of its successor as such Corporate Trustee, in lawful money in the
United States of America. Upon any partial prepayment of this Note, said
installment payments shall be reduced as provided by the Indenture.
This Note is one of the Company's 9.06% Senior Secured Notes due
February 1, 2012 (the "Notes") in an aggregate principal amount not exceeding
U.S. $71,417,590.00 which, together with all Improvement Notes of the Company
(as each such term is defined in the Indenture) are equally and ratably secured
by and entitled to the benefits of the Indenture and the Mortgages referred to
in the Indenture. Reference is hereby made to the Indenture for a description
of the property thereby mortgaged, conveyed, assigned, affected and specially
hypothecated, the nature and extent of the security for the Notes, the rights
of the holders of the Notes, the Trustees and the Company in respect of such
security and otherwise and the terms upon which the Notes are to be
authenticated and delivered.
This Note and the other Notes outstanding under the Indenture may be
declared due prior to their expressed maturity dates, voluntary prepayments may
be made thereon by the Company and certain prepayments are required to be made
thereon, all in the events, on the terms and in the manner and amounts as
provided in the Indenture.
The terms and provisions of the Indenture and the rights and
obligations of the Company and the rights of the holders of the Notes may be
changed and modified to the extent permitted by and as provided in the
Indenture.
This Note is registered on the books of the Company and is
transferable only by surrender thereof at the principal office of the Corporate
Trustee duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of this Note or its attorney duly authorized
in writing. Payment of or on account of principal, premium, if any, and
interest on this Note shall be made only to or upon the order in writing of the
registered holder.
The Company hereby waives presentment, demand, protest, notice of
protest and notice of dishonor.
This Note shall not be valid until the certificate of authentication
hereon shall have been signed by the Corporate Trustee.
A-2
<PAGE> 3
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed
and its corporate seal to be affixed hereto.
KMART CORPORATION
By ______________________
Its
ATTEST:
____________________________
_______ Secretary
A-3
<PAGE> 4
(FORM OF CORPORATE TRUSTEE'S CERTIFICATE OF AUTHENTICATION)
This Note is one of the Notes described in the within-mentioned Indenture.
XXX
By ________________________________
Authorized Officer
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<PAGE> 1
EXHIBIT 99.7
NOTE PURCHASE AND PARTICIPATION AGREEMENT
Dated as of May 28, 1993
Relating to the Issuance by
KMART CORPORATION
of its
7.05% SERIES A SENIOR SECURED NOTES DUE 2009
7.45% SERIES B SENIOR SECURED NOTES DUE 2013
In the Aggregate Principal Amount of
$42,000,000
------------------------------
Relating to two stores
and a warehouse
Series A: XXXXXXXXXX
Series B: XXXXXXXXXX
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TABLE OF CONTENTS
SECTION 1: Authorization, Sale and Purchase of
the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2: Summary of Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3: Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 4: The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 5: Conditions of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Part A: Conditions to Note
Purchasers' Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5.1 Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5.2 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5.3 Status of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5.4 Loan Policy Title Insurance . . . . . . . . . . . . . . . . . . . . . 6
Section 5.5 Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.6 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.8 UCC Searches . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.9 Confirmation Letter . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.10 PPN Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.11 Certificate of Cost . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.12 Legal Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Part B: Conditions to Owner's Obligations . . . . . . . . . . . . . . . . . . . . 8
Section 5.13 Certain Note Purchaser Conditions . . . . . . . . . . . . . . . . . . 8
Section 5.14 Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Part C: Proceedings and Documents . . . . . . . . . . . . . . . . . . . . . . . . 9
Part D: Deemed Waiver of Conditions . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 6: Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 9
Section 6.1 Warranties and Representations of
Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 6.2 Representations of the Note
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 7: Covenants of the Note Purchaser
and Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.1 Covenants of the Note Purchaser . . . . . . . . . . . . . . . . . . 16
</TABLE>
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Section 7.2 Covenants of Owner . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 8: Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 8.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 8.2 Transmission of the Notes . . . . . . . . . . . . . . . . . . . . . 18
Section 8.3 Brokers' Fees and Stamp Taxes . . . . . . . . . . . . . . . . . . . 18
Section 8.4 Certain Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 18
SECTION 9: Survival of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 10: Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 11: Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 12: Home Office Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 13: Obligation to Record . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 14: Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 15: Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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Exhibit A List of Note Purchasers, Commitment Amounts, Wiring and Notice Instructions
Exhibit B Location of Land Parcels
Exhibit C-1 Form of Note Purchasers'
Special Counsel Opinion
Exhibit C-2 Form of Dickinson, Wright, Moon, Van Dusen & Freeman Opinion (regarding formation,
existence of Owner, due authorization, execution and delivery by Owner, etc.)
Exhibit C-3 Form of Sullivan & Cromwell Opinion (regarding enforceability of those Loan Document
provisions governed by New York law)
Exhibit D List of Local Counsel
Exhibit E Wire instructions for Payment of Purchase Price of Notes to Owner
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NOTE PURCHASE AND PARTICIPATION AGREEMENT
Dated as of May 28, 1993
To Each of the Addressees
Listed in Exhibit A hereto,
individually and not jointly
Dear Sirs:
KMART CORPORATION, a Michigan corporation ("Owner"), does hereby
agree with you as follows:
SECTION 1. AUTHORIZATION, SALE AND PURCHASE OF THE NOTES. (a) Owner
will issue its 7.05% Series A Senior Secured Notes Due 2009 in the aggregate
original principal amount of TWENTY EIGHT MILLION DOLLARS ($28,000,000), and
its 7.45% Series B Senior Secured Notes Due 2013 in the aggregate original
principal amount of FOURTEEN MILLION DOLLARS ($14,000,000) (herein, together
with any note or notes issued in exchange or substitution therefor in
accordance with the Indenture, called the "Notes").
The Notes shall be issued pursuant to a Trust Indenture, dated as of
the date hereof (herein, together with all amendments and supplements thereto,
the "Indenture"), between Owner, and XXXXXXXXXX, a duly organized
and existing New York banking corporation (the "Trustee"), and XXXXXXXXXX,
an individual (the "Individual Trustee", and together with the Trustee, the
"Trustees").
(b) Subject to the terms and conditions herein set forth, Owner
agrees to sell to you and you agree to purchase from Owner one or more Notes in
an amount and series each as set forth opposite your name in Exhibit A hereto,
at a price equal to 100% of the principal amount thereof to be purchased by
you. Simultaneously with the issuance and sale to you of the Notes, Owner will
issue and sell to the other purchasers listed in Exhibit A hereto (the "Other
Purchasers"), pursuant to Note Purchase Agreements with such Other Purchasers
(the "Other Agreements"), one or more Notes in respective amounts and series as
set forth opposite the name of such Other Purchaser in Exhibit A hereto. Your
obligation under this Agreement and the obligations of the Other Purchasers
under the Other Agreements shall be several
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and not joint, and no purchaser of Notes shall be liable or responsible for
the acts or omissions of any Other Purchaser.
Capitalized terms not otherwise defined herein have the meanings
specified in Section 3.
SECTION 2. SUMMARY OF TRANSACTION. As of the Closing Date, Owner will
hold fee title to certain land parcels (the "Land Parcels") and condominium
apartments (the "Condominium Apartments"), the location of which is set forth
in Exhibit B hereto and the improvements thereon (such Land Parcels, together
with all easements and appurtenances thereto, and the improvements located
thereon and the Condominium Apartments, the "Properties"). The Properties, and
Owner's rights and interest therein or in connection therewith, will be subject
to the lien and security interest of the Deed of Trust and the Mortgage as
security for the Notes.
SECTION 3. CERTAIN DEFINITIONS. The following terms have the meanings
set forth below or in the section of this Agreement or in the Loan Documents
specified below, such meanings to be applicable equally to the singular and
plural nouns and verbs of any tense:
"Affiliate" means Affiliate as defined in the Indenture.
"Business Day" means Business Day as defined in the Indenture.
"Closing" is defined in Section 4.
"Closing Date" is defined in Section 4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Condominium Apartments" is defined in Section 2.
"Deed of Trust" means the Deed of Trust, Fixture Filing and
Security Agreement dated, executed and delivered as of the date
hereof, and made by owner to the Trustees, as trustees, for the
benefit of the Registered Holders, as beneficiaries, affecting the
Property in California.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
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"Event of Default" means any occurrence or act of the character
specified in Section 4.01 of the Deed of Trust and the Mortgage.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Improvements" are defined in the Indenture.
"Indenture" is defined in Section l(a) of this Agreement.
"Individual Trustee" is defined in Section 1(a) of this
Agreement.
"Institutional Investor" means any of the following Persons
existing under the laws of the United States or any state thereof or
of the District of Columbia or of Canada or any province thereof: (i)
any bank, bank holding company, savings institution or trust company,
acting for its own account or in a fiduciary capacity, (ii) any
charitable foundation or other eleemosynary institution, (iii) any
insurance company or fraternal benefit society, (iv) any pension,
retirement or profit sharing fund or trust for which any bank, trust
company or national banking association or investment advisor
registered under the Investment Advisers Act of 1940, as amended, is
acting as trustee or agent, or if self managed, having funds of at
least $50,000,000, (v) any investment company, as defined in the
Investment Company Act of 1940, as amended, (vi) any college or
university, (vii) any government, any public employees' pension or
retirement system, or any other governmental agency supervising the
investment of public funds, (viii) a "real estate investment trust",
as defined in Section 856 of the Internal Revenue Code of 1986, as
amended, (ix) any finance company, or (x) any financial services
corporation.
"Land Parcels" is defined in Section 2 of this Agreement.
"Loan Documents" mean the following:
(a) this Agreement and the Other Agreements;
(b) the Notes;
(c) the Indenture;
(d) the Deed of Trust;
(e) the Mortgage; and
(f) Uniform Commercial Code financing statements by Owner.
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"Mortgage" means the Mortgage, Security Agreement and
Financing Statement, dated, executed and delivered as of the date
hereof, made by Owner to the Individual Trustee for the benefit of the
Registered Holders of the Notes, affecting the Property in Hawaii.
"Note Purchasers" mean the Other Purchasers and you.
"Notes" are defined in Section 1(a) of this Agreement.
"Other Agreements" are defined in Section 1(b) of this
Agreement.
"Other Purchasers" are defined in Section 1(b) of this
Agreement.
"Owner" is defined in the first paragraph of this Agreement.
"Permitted Exceptions", with respect to any Property, are
defined in the Deed of Trust or the Mortgage encumbering such
Property.
"Person" means any individual, partnership, corporation, trust,
unincorporated association, joint venture or other organization, or
government or any department or agency thereof or any other entity.
"Placement Agent" means XXXXXXXXXX.
"Properties" is defined in Section 2(a) of this Agreement.
"Registered Holder of Notes" or "Registered Holder" is defined
in the Indenture.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Title Company" shall mean First American Title Insurance
Company, a California corporation.
"Trustee" is defined in Section 1(a) of this Agreement.
"Trustees" is defined in Section 1(a) of this Agreement.
"Trust Estate" is defined in the Indenture.
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"Trust Indenture Act" shall mean the Trust Indenture Act of
1939, as amended.
Any term not otherwise defined herein shall have the meaning
set forth in the Indenture.
SECTION 4. THE CLOSING. The closing for the purchase and sale of the
Notes (the "Closing") shall take place at the offices of Sullivan & Cromwell,
250 Park Avenue, New York, New York, on May 28, 1993 (the "Closing Date"). On
the Closing Date, your payment for the purchase of the Notes to be purchased by
you or your designee shall be made by you, in immediately available federal
funds wired to the account designated by Owner on Exhibit E, and Owner will
execute and deliver to you the Notes, dated the Closing Date, to be purchased
by you or your designee, registered in your name or in the name or names of one
or more other Persons, all as you may designate, for delivery to you or your
designee.
If you or your designee and the Other Purchasers shall fail to pay for
the purchase of one or more of the Notes on the Closing Date, or if prior to
the Closing the conditions to Owner's obligations specified in this Agreement
shall not have been fulfilled to Owner's satisfaction or waived, or if prior to
the Closing the conditions to your obligations specified in this Agreement or
those of any Other Purchaser specified in any Other Agreement shall not have
been fulfilled to your or such Other Purchaser's satisfaction or waived, then
to the extent any documents have been delivered with respect to the Closing,
such documents (other than any commitment letter) shall be returned to the
appropriate parties and to the extent any documents have been recorded, they
shall be released by the appropriate parties, in each case without affecting
any rights or obligations that may exist between or among the parties as a
result of any of the foregoing. This paragraph shall be of no further force
and effect upon the Closing with respect to such matters as are to be performed
or complied with prior to the Closing.
SECTION 5. CONDITIONS OF CLOSING.
Part A: Conditions to Note Purchasers' Obligations. The obligation of
you or your designee and each Other Purchaser to purchase and pay for Notes on
the Closing Date is subject to satisfaction of the conditions set forth in Part
C of this Section 5 and (a) the accuracy and correctness on the Closing Date of
the representations and warranties of Owner contained herein, (b) the
performance by Owner of its agreements contained herein and to be performed by
Owner on or prior to the Closing Date and
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(c) the satisfaction of all of the following conditions on or prior to the
Closing Date:
5.1. Loan Documents. Each of the Loan Documents shall have been duly
authorized, executed and delivered by the parties thereto, other than you; no
default shall exist under any of the Loan Documents; and the Note Purchasers
and your special counsel, Day, Berry & Howard, shall have received a fully
executed copy of this Agreement and each of the other Loan Documents (except
that only you and the other Purchasers shall receive your respective executed
Notes). The Indenture, the Deed of Trust, the Mortgage and any financing
statements under the Uniform Commercial Code included within the definition of
Loan Documents shall have been recorded, registered and filed, if necessary, or
provision therefor shall have been made, in such manner as to enable your
special counsel to render its opinion referred to in Section 5.6.
5.2. Taxes. All taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of the Loan Documents
shall have been paid or provisions for such payment shall have been made to the
satisfaction of you and your special counsel.
5.3. Status of Title. You shall be satisfied as to the title to each
Property and the validity and priority of the lien of the Deed of Trust and the
Mortgage as to each Property (subject only to the funding on the Closing Date
of the purchase prices for the Notes by you and the Other Purchasers).
5.4. Loan Policy Title Insurance. The Trustee shall have received a
title insurance loan policy on the ALTA standard loan policy Form 1990 (without
creditors' rights exceptions), with respect to each Property, issued by the
Title Company as of the Closing Date and insuring that the applicable Deed of
Trust or the Mortgage, as the case may be, constitutes a valid first lien on
such Property, without survey exception, subject only to Permitted Exceptions
and otherwise in conformity with the title commitments approved by your special
counsel as of the Closing Date. Each such policy shall include mechanics, lien
coverage or shall insure the Trustees against loss on account of any mechanics'
lien, a zoning endorsement and any and all additional endorsements thereto as
shall be reasonably required by you, the Other Purchasers or your special
counsel; shall be satisfactory in form and substance to you and your special
counsel; and shall insure the Trustees against loss with respect to the
Properties in an amount not less than the face amount of the Notes secured by
the Deed of Trust or Mortgage, as shall be specified and
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approved by your special counsel as of the Closing Date and shall be reinsured
pursuant to reinsurance agreements providing for direct access, in form and
substance and with insurers reasonably satisfactory to you and your special
counsel.
5.5. Surveys. Your special counsel shall have received a copy of the
ALTA 1993 "as-built" survey of each Property issued in connection with the
acquisition or construction of such Property by the Owner and certified to the
Title Company by an independent surveyor licensed in the state in which such
Property is located.
5.6. Opinions of Counsel. (a) Your special counsel shall have issued
to you and the Other Purchasers its opinion to the effect and substantially in
the form of Exhibit C-1, and you shall have received the opinions of Dickinson,
Wright, Moon, Van Dusen & Freeman and Sullivan & Cromwell, counsel to owner,
substantially in the forms of Exhibit C-2 and C-3, respectively, each dated the
Closing Date.
(b) Your special counsel shall have retained counsel as set forth in
Exhibit D hereto as counsel to your special counsel. Such counsel shall have
issued to you, your special counsel, the Other Purchasers, Owner, Sullivan &
Cromwell (Owner's special counsel) and the Trustees its opinion with respect to
the laws of the State indicated thereon, dated as of the Closing Date and as
approved by your special counsel.
5.7. Litigation. As of the Closing Date, no action or proceeding
shall have been instituted, nor shall any governmental action be threatened,
before any court or governmental agency, nor shall any order, judgment or
decree have been issued or proposed to be issued by any court or governmental
agency, to set aside, restrain, enjoin or prevent the performance of this
Agreement or any transaction contemplated hereby.
5.8. UCC Searches. You shall have received searches of the
appropriate UCC filing offices showing no security interest affecting any of
the Properties, other than Permitted Exceptions.
5.9. Confirmation Letter. Your special counsel shall have received a
letter from the Placement Agent confirming that (i) neither the Placement
Agent, nor any Person authorized or employed by the Placement Agent as agent,
broker, dealer or otherwise in connection with the offering or sale of the
Notes or any similar security, has offered any of the Notes or any similar
securities for sale
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to, or solicited offers to buy any thereof from, or otherwise approached or
negotiated with, any prospective purchaser other than you and not more than
forty-nine other Institutional Investors, and (ii) with respect to such
Institutional Investors, each of which was offered a portion of the Notes or
similar security at private sale for investment, the Placement Agent or such
Person had reasonable grounds to believe, and did believe, and as to you, the
Other Purchasers and Owner, after reasonable inquiry, does believe, has such
knowledge and experience in financial and business matters that it is capable
of evaluating the merits and risks of investment in the Notes.
5.10. PPN Number. Standard & Poor's Corporation Cusip Service Bureau
shall have assigned a "private placement number" to each Series of Notes.
5.11. Certificate of Cost. Owner shall have delivered a certificate
showing, separately, the cost to Owner of acquiring and/or constructing each of
the Properties.
5.12 Legal Investments. On the Closing Date you shall have determined
that the Notes to be purchased by you hereunder shall be a legal investment by
you under the laws of the jurisdiction to which you are subject (without regard
to any so-called basket or leeway provision of said laws, such as Section
1405(a)(8) of the New York Insurance Law), and you shall have received such
certificates or other evidence as you may reasonably request demonstrating the
legality of such purchase under such laws.
Part B: Conditions to Owner's Obligations. The obligation of owner to
issue the Notes and execute and deliver the Loan Documents to which it is a
party on the Closing Date is subject to satisfaction of the conditions set
forth in Part C of this Section 5 and (a) the accuracy and correctness on the
Closing Date of the representations and warranties of the other parties hereto
contained herein, (b) the performance by the other parties hereto of their
respective agreements contained herein and to be performed by them on or prior
to the Closing Date and (c) the satisfaction of all of the following conditions
on or prior to the Closing Date:
5.13. Certain Note Purchaser Conditions. The conditions specified in
Sections 5.7 and 5.9 shall have been satisfied.
5.14. Loan Documents. On the Closing Date, each of the Loan Documents
shall have been duly authorized, executed and delivered by the parties thereto,
other than
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Owner, and no default by a party other than Owner shall exist
thereunder.
Part C: Proceedings and Documents. All opinions, certificates and
other instruments and all proceedings in connection with the transactions
contemplated by this Agreement shall be reasonably satisfactory in form and
substance to each of the parties hereto and its special counsel. Each of the
parties hereto shall have received all instruments and other evidence as it may
reasonably request, in form and substance satisfactory to it and its special
counsel, with respect to such transactions and the taking of all proceedings in
connection therewith. If any provision of any Loan Document requires the
certification, representation or warranty of the existence or nonexistence of
any particular fact or implies as a condition the existence or nonexistence of
any particular fact, then the party which is the beneficiary thereof shall be
free to require the establishment to its reasonable satisfaction of the
existence or nonexistence of such fact.
Part D: Deemed Waiver of Conditions. With respect to any condition to
Closing set forth in Section 5.1 through 5.14, inclusive, that shall have not
been satisfied at or prior to the Closing, the occurrence of the Closing shall
be deemed for purposes of Section 5 to constitute the waiver of such condition
by the party to be benefitted thereby; provided, however, such deemed waiver
shall in no way constitute a waiver by such party with respect to any
representation, warranty or covenant stated herein or in any other Loan
Document; provided further, however, any right or remedy that might be
available to you by reason of any misrepresentation or breach of warranty or
covenant on the part of Owner hereunder shall be exercised under and subject to
the terms of the Indenture (including the grace periods provided to Owner
therein).
SECTION 6. REPRESENTATIONS AND WARRANTIES.
6.1. Warranties and Representations of Owner. Owner warrants and
represents to you, any Registered Holder of the Notes and the Trustees that, as
of the Closing Date:
(a) Organization of Owner. Owner is a corporation duly formed and
validly existing and in good standing under the laws of the State of
Michigan. Owner has full power, authority and legal right to carry on its
business as now conducted and as presently proposed to be conducted. Owner
is licensed or qualified to do business in each state where failure to be
so licensed or qualified would have a material adverse effect on its
business, and will be qualified or licensed to do business in any state
where such
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license or qualification is necessary to engage in the transactions
contemplated hereby or to perform its obligations under the Loan Documents.
Owner has the legal right to own its property and carry on its business and is
in compliance with all material laws affecting its business as now being
conducted.
(b) Agreements Are Legal and Authorized; No Violation. The execution
and delivery of the Loan Documents by Owner and performance by Owner of all of
the provisions thereof: (i) are within its rights, powers and authority; (ii)
have been duly authorized by all necessary action and (iii) do not and will not
violate any law or any order of any court or governmental authority or agency
and do not and will not conflict with, or result in any breach of any of the
terms, conditions or provisions of, or constitute a default under, its
certificate of incorporation and bylaws, or any trust agreement, indenture,
mortgage, conditional sale, loan or credit agreement or other instrument or
agreement to which it is a party or by which it or any of its property
or assets are bound or result in the imposition of any lien, charge or
encumbrance on it or any of its property or assets (other than the liens upon
the Trust Estate as contemplated by the Loan Documents). The Loan Documents
(other than the Notes) have been, or on the Closing Date have been or will be,
duly executed and delivered by Owner and, assuming the due authorization,
execution and delivery thereof by the other parties thereto, such documents
constitute, or on the Closing Date will constitute, the legal, valid and
binding obligations of Owner, enforceable against Owner in accordance with
their respective terms. On the Closing Date, the Notes (i) will be duly
executed and delivered by Owner, (ii) will be entitled to the benefits and
security provided by the Indenture, the Deed of Trust and the Mortgage, and
(iii) will constitute the legal, valid and binding obligations of Owner
enforceable against Owner in accordance with their respective terms.
(c) Pending Litigation. Except as disclosed in the most recent 10-Q,
there are no actions, suits or proceedings pending or, other than a potential
condemnation of a portion of the XXXXXXXXXX, California Property, to the
knowledge of Owner, after due inquiry, threatened against Owner or any of its
subsidiaries or any Property in any court or before any governmental authority
or arbitration board or tribunal which, if adversely determined, would
materially and adversely affect Owner or the Trust Estate or would question the
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right, power and authority of Owner to enter into or perform the Loan
Documents to which it is a party or by which it is bound.
(d) Financial Condition. Since Owner's most recent
public financial statements, there has not been any material adverse
change in the financial condition or results of operations of Owner.
(e) Use of Proceeds. The net proceeds from the issuance
and sale of the Notes will be used for general corporate purposes of
Owner. No part of the proceeds of the sale of the Notes are intended
to be used, directly or indirectly, for the purchasing, carrying or
refinancing of any "margin stock" within the meaning of Regulations
G,T,U or X of the Board of Governors of the Federal Reserve System.
(f) Certain Regulatory Exclusions. Owner is not an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended and Owner is not directly or indirectly controlled
by an "investment company." Owner is not a "holding company" or a
"subsidiary company" of a holding company or an "affiliate" of a
"holding company" or a "public utility company" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
(g) Material Indebtedness Defaults. After reasonable
investigation, Owner is not in default in the payment of principal or
interest on any indebtedness for borrowed money aggregating
$100,000,000 or more (collectively, "Material Indebtedness") and has
no written notice and no actual knowledge that it is in default under
any instrument or instruments or agreements under and subject to which
any Material Indebtedness has been issued.
(h) Title to the Properties. Except for the Permitted
Exceptions, (i) Owner has fee simple and marketable title to the
Properties and (ii) Owner has not granted any lien or other interest
in the General Intangibles (as defined in the Deed of Trust and the
Mortgage).
(i) No Defaults. There is no default or Event of Default
on the part of Owner under any of the Loan Documents.
(j) Governmental Consent. Neither the execution and
delivery by Owner of each of the Loan Documents, nor the consummation
of the transactions contemplated
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hereby, requires the consent or approval of, the giving of notice to,
or the registration with, any governmental authority or agency (except
as contemplated in Section 13 hereof).
(k) Manner of offering. Within the preceding six months
neither Owner nor anyone acting on behalf of Owner has offered the
Notes or any part thereof or any similar security for sale to,
solicited offers to buy any thereof from or otherwise approached or
negotiated with anyone other than you and forty-nine other
Institutional Investors (provided that, with respect to actions taken
by the Placement Agent, the foregoing representation is made in
reliance on the letter described in Section 5.9 hereof). Neither
Owner nor to its knowledge any Person acting on its behalf has offered
or sold the Notes by means of any general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities
Act.
(l) Future Offers. Neither Owner nor any Person acting
on its behalf will offer the Notes, or any similar security, for issue
or sale to, or solicit any offer to acquire the Notes, from, or
otherwise approach or negotiate with respect thereto with anyone so as
to subject the offering and sale of the Notes to the provisions of
Section 5 of the Securities Act, or so as to require the qualification
of the Indenture under the Trust Indenture Act, as amended.
(m) Status of the Notes. No securities of Owner of the
same class (within the meaning of Rule 144A under the Securities Act)
as the Notes are listed on any national securities exchange registered
under Section 6 of the Exchange Act or quoted in a U.S. automated
inter-dealer quotation system.
(n) Unregistered Notes. Neither the registration of the
Notes under the Securities Act, nor the qualification of an indenture
under the Trust Indenture Act of 1939, as amended, is required for the
offer and sale of the Notes in the manner contemplated by this
Agreement; provided that in giving this representation, Owner is also
relying on the Note Purchasers' representations in Section 6.2 and the
Placement Agent's representations made to Owner.
6.2. Representations of the Note Purchaser. (a) You
represent that (i) you are an "accredited investor" within the meaning
of Rule 501(a)(1) under the Securities Act.
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<PAGE> 16
(b) You represent that you or your designee are acquiring
the Notes for your or its own account for investment and not with a
view to distribution or resale thereof, but subject, nevertheless, to
any requirement of law or regulation that the disposition of your or
its property shall at all times be within your or its control. You
acknowledge that the Notes you or your designee are acquiring have not
been registered under the Securities Act or any state securities laws,
and the Indenture has not been qualified under the Trust Indenture Act
of 1939, as amended, and that Owner does not contemplate filing and is
not legally required to file any such registration; that you and your
designee have been advised that the Notes which you or it are
acquiring may not be sold or disposed of unless such Notes are
subsequently registered under the Securities Act or are resold in
accordance with Section 7.1; that except for any representations and
warranties expressly made by owner herein or in any Loan Document,
neither Owner nor any of its officers, directors, employees,
affiliates, agents or representatives, has made any representations or
warranties to you, either express or implied, in connection with the
sale to you of the Notes or the transactions contemplated by the Loan
Documents; except as contained in the letter described in Section 5.9,
you did not rely on any representations or warranties of BT Securities
Corporation in connection with any aspect of the transactions
contemplated by the Loan Documents; that you have no contract,
undertaking, agreement, understanding, or arrangement with any Person
to sell, transfer, or pledge to any Person any part or all of the
Notes which you are acquiring pursuant to this Agreement or any
interest therein and have no present plans to enter into the same; the
Notes shall not be, and purchasers of the Notes have no rights to
require that the Notes be, registered under the Securities Act; there
shall be no public market for the Notes; and no federal or state
agency has made any finding or determination as to the fairness of the
offering of Notes for investment.
(c) You or your designee acknowledge and confirm the
representations and limitations set forth in the Notes and understand
that the Notes will bear a legend to the following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED OR SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
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<PAGE> 17
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. EACH INITIAL
PURCHASER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO
AND AGREES WITH THE ISSUER THAT SUCH PURCHASER WILL NOT SELL OR
OTHERWISE TRANSFER THIS SECURITY (WITHOUT CONSENT OF THE ISSUER) PRIOR
TO THREE YEARS FROM MAY 28, 1993 OTHER THAN (I) TO A QUALIFIED
INSTITUTIONAL BUYER, OR TO A PERSON WHO SUCH INITIAL PURCHASER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, IN A
TRANSACTION COMPLYING WITH RULE 144A, (II) TO A NON-U.S. PERSON IN A
TRANSACTION COMPLYING WITH REGULATION S UNDER THE SECURITIES ACT OR
(III) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT, EACH AS CONFIRMED BY AN OPINION OF COUNSEL, AS
REQUIRED UNDER THE INDENTURE. EACH SUBSEQUENT PURCHASER OF THIS
SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO AND AGREES WITH THE
ISSUER THAT SUCH PURCHASER WILL NOT SELL OR OTHERWISE TRANSFER THIS
SECURITY (WITHOUT THE CONSENT OF THE ISSUER) PRIOR TO THREE YEARS FROM
MAY 28, 1993 OTHER THAN PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT. EACH PURCHASER BY ITS ACCEPTANCE HEREOF
AGREES THAT IT WILL NOTIFY ANY PURCHASER OF THIS SECURITY OF THE
RESALE RESTRICTIONS DESCRIBED ABOVE.
THE PURCHASER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF,
REPRESENTS ALSO THAT IT IS ACTIVELY AND REGULARLY ENGAGED IN THE
BUSINESS OF LENDING MONEY AS A QUALIFIED PERSON WITHIN THE MEANING OF
SECTION 465(b)(6)(D) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
THIS SECURITY, OR DIRECT OR INDIRECT BENEFICIAL INTERESTS THEREIN, MAY
BE TRANSFERRED ONLY IN ORIGINAL PRINCIPAL AMOUNTS NOT LESS THAN AS
PROVIDED IN AND IN ACCORDANCE WITH THE REGISTRATION PROVISIONS OF,
THAT CERTAIN INDENTURE DATED AS OF MAY 28, 1993 REFERRED TO IN THIS
NOTE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION AT THE CORPORATE
TRUST OFFICE OF THE TRUSTEE.
(d) You represent that statement (ii) below and at least
one additional other numbered statement set forth below in this clause
(b) concerning each source of funds to be used by you or your designee
to purchase Notes (respectively, the "Source") will be accurate as
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<PAGE> 18
of the Closing Date on which you or your designee purchase such Notes:
(i) The Source is not an "employee benefit plan" as defined
in Title I, Section 3(3) of ERISA;
(ii) The Source is not a "governmental plan" as defined in
Title I, Section 3(32) of ERISA;
(iii) The Source is an insurance company pooled separate
account, and the purchase is exempt in accordance with
Prohibited Transaction Exemption (PTE) 90-1 except with
respect to any employee benefit plan which is an
"Identified Plan" (as defined below) because the assets
in the pooled separate account of the Identified Plan
(treating as one all employee benefit plans maintained
by the same employer or employee organization) exceed
10% of the total assets in that account;
(iv) The Source is an "investment fund" (as defined in
Section V(b) of PTE 84-14) managed by a "qualified
professional asset manager" or "QPAM" (as defined in
Section V(a) of PTE 84-14), and the purchase is exempt
under PTE 84-14 except with respect to any employee
benefit plan which is an Identified Plan because at
least one of the conditions to exemption set forth in
the PTE is not satisfied;
(v) The Source is a bank collective investment fund, and
the purchase is exempt in accordance with Prohibited
Transaction Exemption (PTE) 91-38 except with respect
to any employee benefit plan which is an Identified
Plan because the assets in the collective investment
fund of the Identified Plan (treating as one all
employee benefit plans maintained by the same employer
or employee organization) exceed 10 percent of the
total assets in that fund; or
(vi) The Source is an Identified Plan for any other reason.
An "Identified Plan" is any plan referred to as such above and named
by you in writing at least 5 days prior to the Closing (and, if
applicable, any subsequent transfer of an interest in a Note) (with
such additional identifying information as any recipient may
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<PAGE> 19
reasonably request) to Owner and Trustee. Owner (and with respect
to each subsequent transfer, each party) shall deliver a certificate
at Closing (or 5 days prior to any subsequent transfer) which shall
state, whether or not, to the best of such party's knowledge and
belief after due inquiry, it is a "party in interest" (as defined in
Section 3(14) of ERISA) or a "disqualified person" (as defined in
Section 4975(e)(2) of the Code), in respect of such Identified Plan
or owner, as applicable, and setting forth the basis for any party
in interest or disqualified person relationship. The Closing (or
subsequent transfer) shall not occur with respect to an Identified
Plan unless all of the certificates which have been returned certify
the absence of such relationships with respect to the Identified
Plan or the parties reasonably agree that purchase of an interest in
any Note by such Identified Plan does not constitute a prohibited
transaction, as defined in ERISA.
(e) You represent that in connection with the sale
to you of the Notes or any of the other transactions contemplated by
the Loan Documents, you have not dealt with any Person or entity
(other than the Placement Agent) who might claim from Owner a
financial advisory fee or other similar compensation.
SECTION 7. COVENANTS OF THE NOTE PURCHASER AND OWNER
7.1. Covenants of the Note Purchaser. You agree that
you will not sell, pledge or otherwise transfer the Notes except (i) to a
person who is, or who you reasonably believe is, a "qualified institutional
buyer" within the meaning of Rule 144A under the Securities Act in transactions
meeting the requirements of such Rule 144A, (ii) to a non-U.S. person in a
transaction complying with Regulation S under the Securities Act or (iii)
pursuant to another exemption under the Securities Act. In connection with any
such transfer, you will provide to the Trustee the certificate required by
Section 208 of the Indenture.
7.2. Covenants of owner. Owner agrees with each
Note Purchaser:
(a) Not to be or become, at any time prior to the
expiration of three years after the date hereof, an open-end
investment trust, unit investment trust or face-amount certificate
company that is or is required to be registered under Section 8 of
the Investment Company Act;
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<PAGE> 20
(b) At any time when Owner is not subject to Section
13 or 15(d) of the United States Securities Exchange Act of 1934, as
amended, upon the request of a Registered Holder of any Note, Owner
will promptly furnish or cause to be furnished Rule 144A Information
(as defined below) to such Registered Holder or to a prospective
purchaser of such Note designated by such Registered Holder, as the
case may be, in order to permit compliance by such Registered Holder
with Rule 144A under the Securities Act (or any successor provision
thereto) in connection with the resale of such Note by such
Registered Holder; provided, however, that Owner shall not be
required to furnish such information in connection with any request
made on or after the date which is three years from the later of (i)
the date such Note (or any Predecessor Note, as such term is defined
in the Indenture) was acquired from Owner or (ii) the date such Note
(or any Predecessor Note) was last acquired from an "affiliate" of
owner within the meaning of Rule 144 under the Securities Act (or
any successor provision thereto); and Provided further, that Owner
shall not be required to furnish such information at anytime to a
prospective purchaser located outside the United States who is not a
"U.S. person" within the meaning of Regulation S under the
Securities Act if such Note may then be sold to such prospective
purchaser in accordance with Rule 904 under the Securities Act (or
any successor provision thereto). "Rule 144A Information" shall be
such information as is specified pursuant to Rule 144A(d)(4) under
the Securities Act (or any successor provision thereto).
(c) Not to sell or cause its affiliates to sell, any
Notes acquired by Owner or such affiliate, as the case may be, until
the expiration of three years after the original issuance thereof.
(d) Neither Owner nor anyone acting on behalf of
Owner will offer the Notes for issue or sale to, or solicit any
offer to acquire the Notes from, or otherwise approach or negotiate
with respect thereto with, anyone so as to subject the offering and
sale of the Notes to the provisions of Section 5 of the Securities
Act, as amended, or so as to require the qualification of the
Indenture under the Trust Indenture Act of 1939, as amended.
(e) To file with the Securities and Exchange
Commission (the "Commission"), not later than 15 days after the date
hereof, five copies of a notice on Form D (one of which will be
manually signed by a
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<PAGE> 21
person duly authorized by Owner); to otherwise comply with the
requirements of Rule 503 under the Securities Act; and to furnish
promptly to your special counsel evidence of each such required
timely filing (including a copy thereof).
SECTION 8. PAYMENT OF EXPENSES.
Whether or not the Closing shall occur (but provided you or your
designee shall have not defaulted in your obligations hereunder), Owner will:
8.1. Fees and Expenses. Pay or cause to be paid all
reasonable fees, expenses and disbursements of your special counsel and counsel
to your special counsel in each state in which a Property is located in
connection with the negotiation and preparation of the Loan Documents, and
other reasonable costs and expenses incurred in connection therewith, including
title insurance premiums, survey expenses and all fees, taxes and expenses for
the recording, registration and filing of the Loan Documents, but excluding
capital gains, income, franchise or similar taxes.
8.2. Transmission of the Notes. Pay or cause to be paid the
reasonable cost of transmitting the Notes to your principal office (or such
other place as you may direct) upon the issuance thereof.
8.3. Brokers' Fees and Stamp Taxes. Pay or cause to be
paid, or save you and each subsequent Registered Holder of the Notes (and each
nominee of, or payee designated by, you or such subsequent Registered Holder of
the Notes) harmless from and against any and all liability and loss with
respect to or resulting from the nonpayment or delayed payment of any brokers,
fees and any and all stamp taxes (and other taxes, fees and excises similar to
stamp taxes), if any, including any interest and penalties, which are payable
in connection with the transactions contemplated by this Agreement. The
foregoing shall not apply to any claims for fees, taxes or both set forth in
this Section 8.3 which result from any transfer of Notes by you or any Other
Purchaser or any other Person.
8.4. Certain Fees and Expenses. Pay or cause to be paid (i)
the initial and annual Trustee's fee and all expenses of the Trustees and any
necessary co-trustees (including reasonable counsel fees and expenses) or any
successor trustee, for acting as trustee under the Indenture, (ii) the
financial advisor fee of the Placement Agent and (iii) all reasonable
out-of-pocket costs and expenses incurred by the Trustees, you and the Other
Purchasers (including, without limitation, reasonable counsel fees and expenses
and financial advisor fees) in
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<PAGE> 22
entering into any future amendments or supplements with respect to any of the
Loan Documents, whether or not such amendments or supplements are ultimately
entered into, or giving or withholding of waivers of consents hereto or
thereto, which have been requested by Owner.
SECTION 9. SURVIVAL OF AGREEMENTS. All agreements,
representations and warranties contained herein (including without limitation
the obligations contained in Section 8) shall survive the execution and
delivery of this Agreement and the Other Agreements, the issuance, sale and
delivery of the Notes and payment therefor, any disposition thereof by the
owners thereof, and any investigation at any time made by such owner or on its
behalf.
SECTION 10. BROKERS. Owner warrants and represents that it has
not retained, authorized or employed any brokers in connection with the
consummation of the transactions contemplated hereby, except that it has
retained, and shall pay compensation owing to, the Placement Agent as Owner's
financial advisor.
SECTION 11. NOTICES. All notices, offers, acceptances,
rejections, consents, requests and other communications hereunder shall be in
writing and shall be deemed to have been given (i) when delivered by hand, (ii)
five Business Days after being sent by first class registered or certified
mail, postage prepaid, return receipt requested, (iii) when sent by telecopier
(provided that such notice is legible and an original copy of such notice is
also subsequently sent by overnight courier in the manner described in the
following clause (iv) within two Business Days thereafter), or (iv) one
Business Day after being sent by Federal Express or any other nationally
recognized overnight courier, in each case addressed as follows:
If to the Trustee: XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Attention: XXXXXXXXXX
Telecopier No.: XXXXXXXXXX
If to Owner: Kmart Corporation
3100 West Big Beaver Road
Troy, Michigan 48084
Attention: M.L. Skiles
Telecopier No.: 313-643-2689
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<PAGE> 23
with a copy to:
Dickinson, Wright, Moon, Van Dusen & Freeman
525 North Woodward Avenue
P.O. Box 509
Bloomfield Hills, Michigan 48303-0509
Attention: Erik J. Stone, Esq.
Telecopier No.: 313-433-7274
If to you: At your address set forth in Exhibit A hereto
If to any Other At its address set forth in Exhibit A
Purchaser: hereto
or to such other Person or address as any such party shall furnish to the other
parties in writing.
SECTION 12. HOME OFFICE PAYMENT. So long as you, your Affiliate
or nominee, or any Registered Holder pursuant to Section 208 of the Indenture
which is an Institutional Investor, is a Registered Holder of the Notes, (a)
Owner shall pay or cause to be paid all amounts which become due and payable on
such Note (except a payment of principal which will discharge all indebtedness
evidenced by such Note) in a manner such that, as of 12:00 noon (New York City
time), the Trustee shall be in actual receipt from Owner of immediately
available federal funds, whereupon the Trustee shall make all such payments by
bank wire transfer of immediately available federal funds or, at your option,
the option of your Affiliate or nominee, or at the option of such Registered
Holder of the Notes, by check of the Trustee, which wire transfer shall be duly
transmitted or which check shall be duly mailed on the Business Day such
amounts become due, to you, your Affiliate or nominee, or such Registered
Holder of the Notes, as the case may be, at the account or address appearing on
the Register (as such term is defined in the Indenture), without presentation
of such Note to the Trustee, and (b) you, your Affiliate or nominee and any
such Registered Holder of the Notes shall not sell, transfer or otherwise
dispose of such Note other than as provided in Section 208 of the Indenture.
SECTION 13. OBLIGATION TO RECORD. Owner will, either prior to or
promptly after the Closing Date, cause the Recordable Documents (as defined in
the Deed of Trust and the Mortgage) with respect to the Properties to be filed,
registered and recorded in accordance with the provisions of Section 2.03 of
the Deed of Trust and the Mortgage.
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<PAGE> 24
SECTION 14. MISCELLANEOUS. This Agreement cannot be changed,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the same is sought. All the terms of
this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto,
and, in particular, shall inure to the benefit of and be enforceable by any
Registered Holder of the Notes. The Table of Contents preceding this Agreement
and the headings to the various Sections of this Agreement have been inserted
for convenience of reference only and shall not limit or otherwise affect any
of the terms hereof. This Agreement may be executed in any number of
counterparts. All counterparts shall constitute one instrument.
SECTION 15. APPLICABLE LAW. This agreement shall be governed by,
and shall be construed and enforced in accordance with, (i) the internal laws
of the State of New York (without regard to conflicts of laws) as to
interpretation, enforcement, validity, construction, effect and in all other
respects, including, but not limited to, the legality of the interest rate and
other charges, and (ii) the federal laws of the United States of America with
regard to U.S. Federal Securities Law, ERISA and any other applicable matters.
-21-
<PAGE> 25
[EXHIBITS INTENTIONALLY OMITTED]
<PAGE> 1
EXHIBIT 99.8
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. EACH INITIAL PURCHASER OF THIS
SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO AND AGREES WITH THE ISSUER
THAT SUCH PURCHASER WILL NOT SELL OR OTHERWISE TRANSFER THIS SECURITY (WITHOUT
CONSENT OF THE ISSUER) PRIOR TO THREE YEARS FROM MAY 28, 1993 OTHER THAN (I) TO
A QUALIFIED INSTITUTIONAL BUYER, OR TO A PERSON SUCH INITIAL PURCHASER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, IN A TRANSACTION
COMPLYING WITH RULE 144A, (II) TO A NON-U.S. PERSON IN A TRANSACTION COMPLYING
WITH REGULATION S UNDER THE SECURITIES ACT OR (III) PURSUANT TO ANOTHER
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, EACH AS CONFIRMED BY AN
OPINION OF COUNSEL, AS REQUIRED UNDER THE INDENTURE. EACH SUBSEQUENT PURCHASER
OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO AND AGREES WITH THE
ISSUER THAT SUCH PURCHASER WILL NOT SELL OR OTHERWISE TRANSFER THIS SECURITY
(WITHOUT THE CONSENT OF THE ISSUER) PRIOR TO THREE YEARS FROM MAY 28, 1993
OTHER THAN PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
EACH PURCHASER BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL NOTIFY ANY
PURCHASER OF THIS SECURITY OF THE RESALE RESTRICTIONS DESCRIBED ABOVE.
THE PURCHASER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF,
REPRESENTS ALSO THAT IT IS ACTIVELY AND REGULARLY ENGAGED IN THE BUSINESS OF
LENDING MONEY AS A QUALIFIED PERSON WITHIN THE MEANING OF SECTION 465(b)(6)(D)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THIS SECURITY, OR DIRECT OR
INDIRECT BENEFICIAL INTERESTS THEREIN, MAY BE TRANSFERRED ONLY IN ORIGINAL
PRINCIPAL AMOUNTS NOT LESS THAN THOSE PROVIDED FOR IN AND IN ACCORDANCE WITH
THE REGISTRATION PROVISIONS OF, THAT CERTAIN TRUST INDENTURE DATED AS OF MAY
28, 1993 REFERRED TO IN THIS NOTE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION
AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE.
<PAGE> 2
New York, New York
May 28, 1993
7.05% SERIES A-1 SENIOR SECURED NOTES DUE 2009
Registered No.: 1
Principal Amount: $2,601,250
Registered Holder: XXXXXXXXXX
KMART CORPORATION, a corporation organized and in good
standing under the laws of the State of Michigan ("Owner"), for value received,
hereby promises to pay to the Registered Holder shown above ("Payee"), or its
registered assigns, on or before December 15, 2009, as herein provided, the
principal sum shown above and to pay interest on the unpaid principal amount
hereof from the date hereof to maturity at the rate of 7.05% per annum computed
on the basis of a 360-day year of twelve 30-day months.
Such principal, premium, if any, and interest shall be payable
upon presentation of this Note (except that upon compliance with the conditions
of Section 203 of the Indenture, such payment shall be made by wire transfer to
the Registered Holder hereof) at the Corporate Trust Office of XXXXXXXXXX
or its successor, not in its individual capacity, but solely as trustee
(the "Trustee") under the Trust Indenture, dated as of May 28, 1993 (herein,
together with all supplements and amendments thereto, the "Indenture"), from
Owner, as issuer, to the Trustee and XXXXXXXXXX, as individual trustee
(the "Individual Trustee," and, together with the Trustee, the "Trustees"), in
lawful money of the United States of America, in the following manner:
(i) One payment of interest only (payable in arrears) in
the amount set forth on the attached Schedule I
(which is hereby made a part hereof) for the first,
unnumbered period on said Schedule, payable June 15,
1993; and
(ii) Thirty-three semi-annual payments of interest
(payable in arrears) and principal, each in the
amount set forth on attached Schedule I for periods
numbered one through thirty-three shall be payable on
the fifteenth day of each June and December,
commencing on December 15, 1993 and continuing to and
including December 15, 2009; the final payment shall
also
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<PAGE> 3
include all other amounts, if any, then due and owing
with respect to this Note or pursuant to the terms of
the Indenture.
The payments described in clauses (i) and (ii) are herein called the
"Installment Payments" and the dates upon which such payments are due are
herein called the "Installment Payment Dates".
Any Installment Payment or other payment due and payable on a
day which is not a Business Day shall be payable by Owner on the immediately
succeeding Business Day without additional interest or charge.
Owner agrees, to the extent not prohibited by applicable law,
to pay interest on any overdue Installment Payment or prepayment of principal
at the Overdue Rate (as such terms are defined in the below-described Trust
Indenture) on a per diem basis.
This Note is one of Owner's Series A Notes, which are issued
in subseries -1 and -2 (together with Owner's Series B Notes, the "Notes"),
which Notes are equally and ratably secured by and entitled to the benefits of
the Indenture, subject to the terms thereof and of the other Loan Documents.
In addition, the subseries -1 Notes are equally and ratably secured by and
entitled to the benefits of the Deed of Trust, Fixture Filing and Security
Agreement, dated as of the date hereof, between Owner and the Individual
Trustee (the "Deed of Trust"), and the subseries -2 Notes are equally and
ratably secured by and entitled to the benefits of the Mortgage, Security
Agreement and Financing Statement, dated as of the date hereof, between Owner
and the Trustees (the "Mortgage"). The Indenture, the Deed of Trust and the
Mortgage contain, inter alia, provisions for the acceleration of maturity of
this Note upon the happening of certain Events of Default as defined therein,
certain events of condemnation or taking of any Property and certain other
events. Additionally, reference is hereby made to the Indenture, the Deed of
Trust and the Mortgage for a description of the Trust Estate Granted by the
Indenture, the nature and extent of the security for the Notes, the rights of
the Registered Holders, the Trustee and Owner in respect of such security and
otherwise and a description of the terms upon which the Notes are authenticated
and delivered. Capitalized terms not otherwise defined herein have the
meanings set forth in the Indenture.
The principal of this Note is subject to prepayment in whole
or in part at the option of Owner only in the manner, to the extent, and under
the circumstances
-3-
<PAGE> 4
set forth in the Indenture at a price equal to 100% of the outstanding
principal amount hereof to be prepaid, together with interest accrued thereon
to the date of prepayment, plus any premium, if required pursuant to the terms
of the Indenture.
Upon the occurrence of an Event of Default specified in the
Deed of Trust or the Mortgage, the principal hereof, the Make-Whole Payment
hereon, if any, the interest accrued and unpaid hereon, if any, and all other
amounts then due and payable hereon may be declared to be forthwith due and
payable as provided in the Indenture.
By placing its initials immediately following this paragraph,
Owner expressly agrees that in the event of an acceleration of the maturity of
this Note as a result of any event of default, including, without limitation,
any acceleration upon the transfer of any interest in the Trust Estate, a
tender by Owner or by anyone on behalf of Owner of payment of the amount
necessary to satisfy the indebtedness evidenced hereby made at any time prior
to a foreclosure sale, or a sale under the power of sale contained in the Deed
of Trust, shall constitute an evasion of the prepayment terms hereof and shall
be deemed to be a voluntary prepayment hereunder. Therefore, with any such
payment, the Owner shall pay to the Registered Holder the Make-Whole Payment.
Owner expressly waives the provisions of any present or future statute or law
which prohibits or may prohibit the collection of the foregoing Make-Whole
Payment in connection with any such acceleration, including, without
limitation, California Civil Code Section 2954.10.
/s/
------------
Initials
The Notes are issuable only as fully registered Notes. Owner
and the Trustee shall deem and treat the Person in whose name this Note is
registered on the Register as the absolute owner hereof (whether or not this
Note shall be overdue) for the purpose of receiving payments of principal,
premium, if any, and interest and for all other purposes, and neither Owner nor
the Trustee shall be affected by any notice to the contrary. Subject to and in
accordance with the provisions of the Indenture, this Note may be transferred
and exchanged for Notes of other denominations in accordance with the
procedures set forth in the Indenture.
Should any indebtedness represented by this Note be collected
at law or in equity, or in bankruptcy or other proceedings, or should this Note
be placed in the hands of attorneys for collection after default, Owner agrees
to pay,
-4-
<PAGE> 5
in addition to the principal, premium, if any, and interest due and payable
hereon, if any, all costs of collecting or attempting to collect this Note,
including attorneys' reasonable fees and expenses (including those incurred
in connection with any appeal).
Subject to certain limitations in the Indenture, at any time
when Owner is not subject to Section 13 or 15(d) of the United States
Securities Exchange Act of 1934, upon the request of a Payee, Owner will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Payee or to a purchaser of this Security designated by such
Payee, as the case may be, in order to permit compliance by such Payee with
Rule 144A under the Securities Act. "Rule 144A Information" shall be such
information as is specified in Rule 144A(d) under the Securities Act (or any
successor provision thereto).
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, (i) THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO CONFLICTS OF LAWS) AS TO INTERPRETATION, ENFORCEMENT,
VALIDITY, CONSTRUCTION, EFFECT AND IN ALL OTHER RESPECTS, INCLUDING, BUT NOT
LIMITED TO, THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, AND (ii) THE
FEDERAL LAWS OF THE UNITED STATES OF AMERICA WITH REGARD TO U.S. FEDERAL
SECURITIES LAW, ERISA AND ANY OTHER APPLICABLE MATTERS.
-5-
<PAGE> 6
IN WITNESS WHEREOF, Owner has caused this Note to be duly
executed.
KMART CORPORATION
By: /s/ M.L. SKILES
------------------------------
M.L. Skiles
Senior Vice President
[SEAL]
Attest: /s/
------------------------
Name:
Title:
-6-
<PAGE> 7
Trustee's Certificate of Authentication
This Note is one of the Series A Notes of Kmart Corporation
described in the within-mentioned Indenture.
XXXXXXXXXX, not in its individual
capacity, but solely as Trustee
By: /s/ XXXXXXXXXX
------------------------------
XXXXXXXXXX,
Assistant Secretary
-7-
<PAGE> 1
EXHIBIT 99.9
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. EACH INITIAL PURCHASER OF THIS
SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO AND AGREES WITH THE ISSUER
THAT SUCH PURCHASER WILL NOT SELL OR OTHERWISE TRANSFER THIS SECURITY (WITHOUT
CONSENT OF THE ISSUER) PRIOR TO THREE YEARS FROM MAY 28, 1993 OTHER THAN (I) TO
A QUALIFIED INSTITUTIONAL BUYER, OR TO A PERSON SUCH INITIAL PURCHASER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, IN A TRANSACTION
COMPLYING WITH RULE 144A, (II) TO A NON-U.S. PERSON IN A TRANSACTION COMPLYING
WITH REGULATION S UNDER THE SECURITIES ACT OR (III) PURSUANT TO ANOTHER
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, EACH AS CONFIRMED BY AN
OPINION OF COUNSEL, AS REQUIRED UNDER THE INDENTURE. EACH SUBSEQUENT PURCHASER
OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO AND AGREES WITH THE
ISSUER THAT SUCH PURCHASER WILL NOT SELL OR OTHERWISE TRANSFER THIS SECURITY
(WITHOUT THE CONSENT OF THE ISSUER) PRIOR TO THREE YEARS FROM MAY 28, 1993
OTHER THAN PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
EACH PURCHASER BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL NOTIFY ANY
PURCHASER OF THIS SECURITY OF THE RESALE RESTRICTIONS DESCRIBED ABOVE.
THE PURCHASER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF,
REPRESENTS ALSO THAT IT IS ACTIVELY AND REGULARLY ENGAGED IN THE BUSINESS OF
LENDING MONEY AS A QUALIFIED PERSON WITHIN THE MEANING OF SECTION 465(b)(6)(D)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THIS SECURITY, OR DIRECT OR
INDIRECT BENEFICIAL INTERESTS THEREIN, MAY BE TRANSFERRED ONLY IN ORIGINAL
PRINCIPAL AMOUNTS NOT LESS THAN THOSE PROVIDED FOR IN AND IN ACCORDANCE WITH
THE REGISTRATION PROVISIONS OF, THAT CERTAIN TRUST INDENTURE DATED AS OF MAY
28, 1993 REFERRED TO IN THIS NOTE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION
AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE.
<PAGE> 2
New York, New York
May 28, 1993
7.05% SERIES A-2 SENIOR SECURED NOTES DUE 2009
Registered No.: 2
Principal Amount: $11,398,750
Registered Holder: XXXXXXXXXX
KMART CORPORATION, a corporation organized and in good
standing under the laws of the State of Michigan ("Owner"), for value received,
hereby promises to pay to the Registered Holder shown above ("Payee"), or its
registered assigns, on or before December 15, 2009, as herein provided, the
principal sum shown above and to pay interest on the unpaid principal amount
hereof from the date hereof to maturity at the rate of 7.05% per annum computed
on the basis of a 360-day year of twelve 30-day months.
Such principal, premium, if any, and interest shall be payable
upon presentation of this Note (except that upon compliance with the conditions
of Section 203 of the Indenture, such payment shall be made by wire transfer to
the Registered Holder hereof) at the Corporate Trust Office of XXXXXXXXXX
or its successor, not in its individual capacity, but solely as trustee
(the "Trustee") under the Trust Indenture, dated as of May 28, 1993 (herein,
together with all supplements and amendments thereto, the "Indenture"), from
Owner, as issuer, to the Trustee and XXXXXXXXXX, as individual trustee
(the "Individual Trustee," and, together with the Trustee, the "Trustees"), in
lawful money of the United States of America, in the following manner:
(i) One payment of interest only (payable in arrears) in
the amount set forth on the attached Schedule I
(which is hereby made a part hereof) for the first,
unnumbered period on said Schedule, payable June 15,
1993; and
(ii) Thirty-three semi-annual payments of interest
(payable in arrears) and principal, each in the
amount set forth on attached Schedule I for periods
numbered one through thirty-three shall be payable on
the fifteenth day of each June and December,
commencing on December 15, 1993 and continuing to and
including December 15, 2009; the final payment shall
also
-2-
<PAGE> 3
include all other amounts, if any, then due and owing
with respect to this Note or pursuant to the terms of
the Indenture.
The payments described in clauses (i) and (ii) are herein called the
"Installment Payments" and the dates upon which such payments are due are
herein called the "Installment Payment Dates".
Any Installment Payment or other payment due and payable on a
day which is not a Business Day shall be payable by Owner on the immediately
succeeding Business Day without additional interest or charge.
Owner agrees, to the extent not prohibited by applicable law,
to pay interest on any overdue Installment Payment or prepayment of principal
at the Overdue Rate (as such terms are defined in the below-described Trust
Indenture) on a per diem basis.
This Note is one of Owner's Series A Notes, which are issued
in subseries -1 and -2 (together with Owner's Series B Notes, the "Notes"),
which Notes are equally and ratably secured by and entitled to the benefits of
the Indenture, subject to the terms thereof and of the other Loan Documents.
In addition, the subseries -1 Notes are equally and ratably secured by and
entitled to the benefits of the Deed of Trust, Fixture Filing and Security
Agreement, dated as of the date hereof, between Owner and the Individual
Trustee (the "Deed of Trust"), and the subseries -2 Notes are equally and
ratably secured by and entitled to the benefits of the Mortgage, Security
Agreement and Financing Statement, dated as of the date hereof, between Owner
and the Trustees (the "Mortgage"). The Indenture, the Deed of Trust and the
Mortgage contain, inter alia, provisions for the acceleration of maturity of
this Note upon the happening of certain Events of Default as defined therein,
certain events of condemnation or taking of any Property and certain other
events. Additionally, reference is hereby made to the Indenture, the Deed of
Trust and the Mortgage for a description of the Trust Estate Granted by the
Indenture, the nature and extent of the security for the Notes, the rights of
the Registered Holders, the Trustee and Owner in respect of such security and
otherwise and a description of the terms upon which the Notes are authenticated
and delivered. Capitalized terms not otherwise defined herein have the
meanings set forth in the Indenture.
The principal of this Note is subject to prepayment in whole
or in part at the option of Owner only in the manner, to the extent, and under
the circumstances
-3-
<PAGE> 4
set forth in the Indenture at a price equal to 100% of the outstanding
principal amount hereof to be prepaid, together with interest accrued thereon
to the date of prepayment, plus any premium, if required pursuant to the terms
of the Indenture.
Upon the occurrence of an Event of Default specified in the
Deed of Trust or the Mortgage, the principal hereof, the Make-Whole Payment
hereon, if any, the interest accrued and unpaid hereon, if any, and all other
amounts then due and payable hereon may be declared to be forthwith due and
payable as provided in the Indenture.
By placing its initials immediately following this paragraph,
Owner expressly agrees that in the event of an acceleration of the maturity of
this Note as a result of any event of default, including, without limitation,
any acceleration upon the transfer of any interest in the Trust Estate, a
tender by Owner or by anyone on behalf of Owner of payment of the amount
necessary to satisfy the indebtedness evidenced hereby made at any time prior
to a foreclosure sale, or a sale under the power of sale contained in the Deed
of Trust, shall constitute an evasion of the prepayment terms hereof and shall
be deemed to be a voluntary prepayment hereunder. Therefore, with any such
payment, the Owner shall pay to the Registered Holder the Make-Whole Payment.
Owner expressly waives the provisions of any present or future statute or law
which prohibits or may prohibit the collection of the foregoing Make-Whole
Payment in connection with any such acceleration, including, without
limitation, California Civil Code Section 2954.10.
/s/
------------
Initials
The Notes are issuable only as fully registered Notes. Owner
and the Trustee shall deem and treat the Person in whose name this Note is
registered on the Register as the absolute owner hereof (whether or not this
Note shall be overdue) for the purpose of receiving payments of principal,
premium, if any, and interest and for all other purposes, and neither Owner nor
the Trustee shall be affected by any notice to the contrary. Subject to and in
accordance with the provisions of the Indenture, this Note may be transferred
and exchanged for Notes of other denominations in accordance with the
procedures set forth in the Indenture.
Should any indebtedness represented by this Note be collected
at law or in equity, or in bankruptcy or other proceedings, or should this Note
be placed in the hands of attorneys for collection after default, Owner agrees
to pay,
-4-
<PAGE> 5
in addition to the principal, premium, if any, and interest due and payable
hereon, if any, all costs of collecting or attempting to collect this Note,
including attorneys' reasonable fees and expenses (including those incurred
in connection with any appeal).
Subject to certain limitations in the Indenture, at any time
when Owner is not subject to Section 13 or 15(d) of the United States
Securities Exchange Act of 1934, upon the request of a Payee, Owner will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Payee or to a purchaser of this Security designated by such
Payee, as the case may be, in order to permit compliance by such Payee with
Rule 144A under the Securities Act. "Rule 144A Information" shall be such
information as is specified in Rule 144A(d) under the Securities Act (or any
successor provision thereto).
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, (i) THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO CONFLICTS OF LAWS) AS TO INTERPRETATION, ENFORCEMENT,
VALIDITY, CONSTRUCTION, EFFECT AND IN ALL OTHER RESPECTS, INCLUDING, BUT NOT
LIMITED TO, THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, AND (ii) THE
FEDERAL LAWS OF THE UNITED STATES OF AMERICA WITH REGARD TO U.S. FEDERAL
SECURITIES LAW, ERISA AND ANY OTHER APPLICABLE MATTERS.
-5-
<PAGE> 6
IN WITNESS WHEREOF, Owner has caused this Note to be duly
executed.
KMART CORPORATION
By: /s/ M.L. SKILES
------------------------------
M.L. Skiles
Senior Vice President
[SEAL]
Attest: /s/
------------------------
Name:
Title:
-6-
<PAGE> 7
Trustee's Certificate of Authentication
This Note is one of the Series A Notes of Kmart Corporation
described in the within-mentioned Indenture.
XXXXXXXXXX, not in its individual
capacity, but solely as Trustee
By: /s/ XXXXXXXXXX
------------------------------
XXXXXXXXXX,
Assistant Secretary
-7-
<PAGE> 1
EXHIBIT 99.10
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. EACH INITIAL PURCHASER OF THIS
SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO AND AGREES WITH THE ISSUER
THAT SUCH PURCHASER WILL NOT SELL OR OTHERWISE TRANSFER THIS SECURITY (WITHOUT
CONSENT OF THE ISSUER) PRIOR TO THREE YEARS FROM MAY 28, 1993 OTHER THAN (I) TO
A QUALIFIED INSTITUTIONAL BUYER, OR TO A PERSON SUCH INITIAL PURCHASER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, IN A TRANSACTION
COMPLYING WITH RULE 144A, (II) TO A NON-U.S. PERSON IN A TRANSACTION COMPLYING
WITH REGULATION S UNDER THE SECURITIES ACT OR (III) PURSUANT TO ANOTHER
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, EACH AS CONFIRMED BY AN
OPINION OF COUNSEL, AS REQUIRED UNDER THE INDENTURE. EACH SUBSEQUENT PURCHASER
OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO AND AGREES WITH THE
ISSUER THAT SUCH PURCHASER WILL NOT SELL OR OTHERWISE TRANSFER THIS SECURITY
(WITHOUT THE CONSENT OF THE ISSUER) PRIOR TO THREE YEARS FROM MAY 28, 1993
OTHER THAN PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
EACH PURCHASER BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL NOTIFY ANY
PURCHASER OF THIS SECURITY OF THE RESALE RESTRICTIONS DESCRIBED ABOVE.
THE PURCHASER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF,
REPRESENTS ALSO THAT IT IS ACTIVELY AND REGULARLY ENGAGED IN THE BUSINESS OF
LENDING MONEY AS A QUALIFIED PERSON WITHIN THE MEANING OF SECTION 465(b)(6)(D)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THIS SECURITY, OR DIRECT OR
INDIRECT BENEFICIAL INTERESTS THEREIN, MAY BE TRANSFERRED ONLY IN ORIGINAL
PRINCIPAL AMOUNTS NOT LESS THAN THOSE PROVIDED FOR IN AND IN ACCORDANCE WITH
THE REGISTRATION PROVISIONS OF, THAT CERTAIN TRUST INDENTURE DATED AS OF MAY
28, 1993 REFERRED TO IN THIS NOTE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION
AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE.
<PAGE> 2
New York, New York
May 28, 1993
7.05% SERIES A-1 SENIOR SECURED NOTES DUE 2009
Registered No.: 3
Principal Amount: $2,601,250
Registered Holder: XXXXXXXXXX
KMART CORPORATION, a corporation organized and in good
standing under the laws of the State of Michigan ("Owner"), for value received,
hereby promises to pay to the Registered Holder shown above ("Payee"), or its
registered assigns, on or before December 15, 2009, as herein provided, the
principal sum shown above and to pay interest on the unpaid principal amount
hereof from the date hereof to maturity at the rate of 7.05% per annum computed
on the basis of a 360-day year of twelve 30-day months.
Such principal, premium, if any, and interest shall be payable
upon presentation of this Note (except that upon compliance with the conditions
of Section 203 of the Indenture, such payment shall be made by wire transfer to
the Registered Holder hereof) at the Corporate Trust Office of XXXXXXXXXX
or its successor, not in its individual capacity, but solely as trustee
(the "Trustee") under the Trust Indenture, dated as of May 28, 1993 (herein,
together with all supplements and amendments thereto, the "Indenture"), from
Owner, as issuer, to the Trustee and XXXXXXXXXX, as individual trustee
(the "Individual Trustee," and, together with the Trustee, the "Trustees"), in
lawful money of the United States of America, in the following manner:
(i) One payment of interest only (payable in arrears) in
the amount set forth on the attached Schedule I
(which is hereby made a part hereof) for the first,
unnumbered period on said Schedule, payable June 15,
1993; and
(ii) Thirty-three semi-annual payments of interest
(payable in arrears) and principal, each in the
amount set forth on attached Schedule I for periods
numbered one through thirty-three shall be payable on
the fifteenth day of each June and December,
commencing on December 15, 1993 and continuing to and
including December 15, 2009; the final payment shall
also include all other amounts, if any, then due
-2-
<PAGE> 3
and owing with respect to this Note or pursuant to
the terms of the Indenture.
The payments described in clauses (i) and (ii) are herein called the
"Installment Payments" and the dates upon which such payments are due are
herein called the "Installment Payment Dates".
Any Installment Payment or other payment due and payable on a
day which is not a Business Day shall be payable by Owner on the immediately
succeeding Business Day without additional interest or charge.
Owner agrees, to the extent not prohibited by applicable law,
to pay interest on any overdue Installment Payment or prepayment of principal
at the Overdue Rate (as such terms are defined in the below-described Trust
Indenture) on a per diem basis.
This Note is one of Owner's Series A Notes, which are issued
in subseries -1 and -2 (together with Owner's Series B Notes, the "Notes"),
which Notes are equally and ratably secured by and entitled to the benefits of
the Indenture, subject to the terms thereof and of the other Loan Documents.
In addition, the subseries -1 Notes are equally and ratably secured by and
entitled to the benefits of the Deed of Trust, Fixture Filing and Security
Agreement, dated as of the date hereof, between Owner and the Individual
Trustee (the "Deed of Trust"), and the subseries -2 Notes are equally and
ratably secured by and entitled to the benefits of the Mortgage, Security
Agreement and Financing Statement, dated as of the date hereof, between Owner
and the Trustees (the "Mortgage"). The Indenture, the Deed of Trust and the
Mortgage contain, inter alia, provisions for the acceleration of maturity of
this Note upon the happening of certain Events of Default as defined therein,
certain events of condemnation or taking of any Property and certain other
events. Additionally, reference is hereby made to the Indenture, the Deed of
Trust and the Mortgage for a description of the Trust Estate Granted by the
Indenture, the nature and extent of the security for the Notes, the rights of
the Registered Holders, the Trustee and Owner in respect of such security and
otherwise and a description of the terms upon which the Notes are authenticated
and delivered. Capitalized terms not otherwise defined herein have the
meanings set forth in the Indenture.
The principal of this Note is subject to prepayment in whole
or in part at the option of Owner only in the manner, to the extent, and under
the circumstances set forth in the Indenture at a price equal to 100% of the
-3-
<PAGE> 4
outstanding principal amount hereof to be prepaid, together with interest
accrued thereon to the date of prepayment, plus any premium, if required
pursuant to the terms of the Indenture.
Upon the occurrence of an Event of Default specified in the
Deed of Trust or the Mortgage, the principal hereof, the Make-Whole Payment
hereon, if any, the interest accrued and unpaid hereon, if any, and all other
amounts then due and payable hereon may be declared to be forthwith due and
payable as provided in the Indenture.
By placing its initials immediately following this paragraph,
Owner expressly agrees that in the event of an acceleration of the maturity of
this Note as a result of any event of default, including, without limitation,
any acceleration upon the transfer of any interest in the Trust Estate, a
tender by Owner or by anyone on behalf of Owner of payment of the amount
necessary to satisfy the indebtedness evidenced hereby made at any time prior
to a foreclosure sale, or a sale under the power of sale contained in the Deed
of Trust, shall constitute an evasion of the prepayment terms hereof and shall
be deemed to be a voluntary prepayment hereunder. Therefore, with any such
payment, the Owner shall pay to the Registered Holder the Make-Whole Payment.
Owner expressly waives the provisions of any present or future statute or law
which prohibits or may prohibit the collection of the foregoing Make-Whole
Payment in connection with any such acceleration, including, without
limitation, California Civil Code Section 2954.10.
/s/
------------
Initials
The Notes are issuable only as fully registered Notes. Owner
and the Trustee shall deem and treat the Person in whose name this Note is
registered on the Register as the absolute owner hereof (whether or not this
Note shall be overdue) for the purpose of receiving payments of principal,
premium, if any, and interest and for all other purposes, and neither Owner nor
the Trustee shall be affected by any notice to the contrary. Subject to and in
accordance with the provisions of the Indenture, this Note may be transferred
and exchanged for Notes of other denominations in accordance with the
procedures set forth in the Indenture.
Should any indebtedness represented by this Note be collected
at law or in equity, or in bankruptcy or other proceedings, or should this Note
be placed in the hands of attorneys for collection after default, Owner agrees
to pay, in addition to the principal, premium, if any, and interest
-4-
<PAGE> 5
due and payable hereon, if any, all costs of collecting or attempting
to collect this Note, including attorneys' reasonable fees and expenses
(including those incurred in connection with any appeal).
Subject to certain limitations in the Indenture, at any time
when Owner is not subject to Section 13 or 15(d) of the United States
Securities Exchange Act of 1934, upon the request of a Payee, Owner will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Payee or to a purchaser of this Security designated by such
Payee, as the case may be, in order to permit compliance by such Payee with
Rule 144A under the Securities Act. "Rule 144A Information" shall be such
information as is specified in Rule 144A(d) under the Securities Act (or any
successor provision thereto).
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, (i) THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO CONFLICTS OF LAWS) AS TO INTERPRETATION, ENFORCEMENT,
VALIDITY, CONSTRUCTION, EFFECT AND IN ALL OTHER RESPECTS, INCLUDING, BUT NOT
LIMITED TO, THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, AND (ii) THE
FEDERAL LAWS OF THE UNITED STATES OF AMERICA WITH REGARD TO U.S. FEDERAL
SECURITIES LAW, ERISA AND ANY OTHER APPLICABLE MATTERS.
-5-
<PAGE> 6
IN WITNESS WHEREOF, Owner has caused this Note to be duly
executed.
KMART CORPORATION
By: /s/ M.L. SKILES
------------------------------
M.L. Skiles
Senior Vice President
[SEAL]
Attest: /s/
------------------------
Name:
Title:
-6-
<PAGE> 7
Trustee's Certificate of Authentication
This Note is one of the Series A Notes of Kmart Corporation
described in the within-mentioned Indenture.
XXXXXXXXXX, not in its individual
capacity, but solely as Trustee
By: /s/ XXXXXXXXXX
------------------------------
XXXXXXXXXX,
Assistant Secretary
-7-
<PAGE> 1
EXHIBIT 99.11
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. EACH INITIAL PURCHASER OF THIS
SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO AND AGREES WITH THE ISSUER
THAT SUCH PURCHASER WILL NOT SELL OR OTHERWISE TRANSFER THIS SECURITY (WITHOUT
CONSENT OF THE ISSUER) PRIOR TO THREE YEARS FROM MAY 28, 1993 OTHER THAN (I) TO
A QUALIFIED INSTITUTIONAL BUYER, OR TO A PERSON SUCH INITIAL PURCHASER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, IN A TRANSACTION
COMPLYING WITH RULE 144A, (II) TO A NON-U.S. PERSON IN A TRANSACTION COMPLYING
WITH REGULATION S UNDER THE SECURITIES ACT OR (III) PURSUANT TO ANOTHER
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, EACH AS CONFIRMED BY AN
OPINION OF COUNSEL, AS REQUIRED UNDER THE INDENTURE. EACH SUBSEQUENT PURCHASER
OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO AND AGREES WITH THE
ISSUER THAT SUCH PURCHASER WILL NOT SELL OR OTHERWISE TRANSFER THIS SECURITY
(WITHOUT THE CONSENT OF THE ISSUER) PRIOR TO THREE YEARS FROM MAY 28, 1993
OTHER THAN PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
EACH PURCHASER BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL NOTIFY ANY
PURCHASER OF THIS SECURITY OF THE RESALE RESTRICTIONS DESCRIBED ABOVE.
THE PURCHASER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF,
REPRESENTS ALSO THAT IT IS ACTIVELY AND REGULARLY ENGAGED IN THE BUSINESS OF
LENDING MONEY AS A QUALIFIED PERSON WITHIN THE MEANING OF SECTION 465(b)(6)(D)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THIS SECURITY, OR DIRECT OR
INDIRECT BENEFICIAL INTERESTS THEREIN, MAY BE TRANSFERRED ONLY IN ORIGINAL
PRINCIPAL AMOUNTS NOT LESS THAN THOSE PROVIDED FOR IN AND IN ACCORDANCE WITH
THE REGISTRATION PROVISIONS OF, THAT CERTAIN TRUST INDENTURE DATED AS OF MAY
28, 1993 REFERRED TO IN THIS NOTE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION
AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE.
<PAGE> 2
New York, New York
May 28, 1993
7.05% SERIES A-2 SENIOR SECURED NOTES DUE 2009
Registered No.: 4
Principal Amount: $11,398,750
Registered Holder: XXXXXXXXXX
KMART CORPORATION, a corporation organized and in good
standing under the laws of the State of Michigan ("Owner"), for value received,
hereby promises to pay to the Registered Holder shown above ("Payee"), or its
registered assigns, on or before December 15, 2009, as herein provided, the
principal sum shown above and to pay interest on the unpaid principal amount
hereof from the date hereof to maturity at the rate of 7.05% per annum computed
on the basis of a 360-day year of twelve 30-day months.
Such principal, premium, if any, and interest shall be payable
upon presentation of this Note (except that upon compliance with the conditions
of Section 203 of the Indenture, such payment shall be made by wire transfer to
the Registered Holder hereof) at the Corporate Trust Office of XXXXXXXXXX
or its successor, not in its individual capacity, but solely as trustee
(the "Trustee") under the Trust Indenture, dated as of May 28, 1993 (herein,
together with all supplements and amendments thereto, the "Indenture"), from
Owner, as issuer, to the Trustee and XXXXXXXXXX, as individual trustee
(the "Individual Trustee," and, together with the Trustee, the "Trustees"), in
lawful money of the United States of America, in the following manner:
(i) One payment of interest only (payable in arrears) in
the amount set forth on the attached Schedule I
(which is hereby made a part hereof) for the first,
unnumbered period on said Schedule, payable June 15,
1993; and
(ii) Thirty-three semi-annual payments of interest
(payable in arrears) and principal, each in the
amount set forth on attached Schedule I for periods
numbered one through thirty-three shall be payable on
the fifteenth day of each June and December,
commencing on December 15, 1993 and continuing to and
including December 15, 2009; the final payment shall
also include all other amounts, if any, then due
-2-
<PAGE> 3
and owing with respect to this Note or pursuant to the
terms of the Indenture.
The payments described in clauses (i) and (ii) are herein called the
"Installment Payments" and the dates upon which such payments are due are
herein called the "Installment Payment Dates".
Any Installment Payment or other payment due and payable on a
day which is not a Business Day shall be payable by Owner on the immediately
succeeding Business Day without additional interest or charge.
Owner agrees, to the extent not prohibited by applicable law,
to pay interest on any overdue Installment Payment or prepayment of principal
at the Overdue Rate (as such terms are defined in the below-described Trust
Indenture) on a per diem basis.
This Note is one of Owner's Series A Notes, which are issued
in subseries -1 and -2 (together with Owner's Series B Notes, the "Notes"),
which Notes are equally and ratably secured by and entitled to the benefits of
the Indenture, subject to the terms thereof and of the other Loan Documents.
In addition, the subseries -1 Notes are equally and ratably secured by and
entitled to the benefits of the Deed of Trust, Fixture Filing and Security
Agreement, dated as of the date hereof, between Owner and the Individual
Trustee (the "Deed of Trust"), and the subseries -2 Notes are equally and
ratably secured by and entitled to the benefits of the Mortgage, Security
Agreement and Financing Statement, dated as of the date hereof, between Owner
and the Trustees (the "Mortgage"). The Indenture, the Deed of Trust and the
Mortgage contain, inter alia, provisions for the acceleration of maturity of
this Note upon the happening of certain Events of Default as defined therein,
certain events of condemnation or taking of any Property and certain other
events. Additionally, reference is hereby made to the Indenture, the Deed of
Trust and the Mortgage for a description of the Trust Estate Granted by the
Indenture, the nature and extent of the security for the Notes, the rights of
the Registered Holders, the Trustee and Owner in respect of such security and
otherwise and a description of the terms upon which the Notes are authenticated
and delivered. Capitalized terms not otherwise defined herein have the
meanings set forth in the Indenture.
The principal of this Note is subject to prepayment in whole
or in part at the option of Owner only in the manner, to the extent, and under
the circumstances set forth in the Indenture at a price equal to 100% of the
-3-
<PAGE> 4
outstanding principal amount hereof to be prepaid, together with interest
accrued thereon to the date of prepayment, plus any premium, if required
pursuant to the terms of the Indenture.
Upon the occurrence of an Event of Default specified in the
Deed of Trust or the Mortgage, the principal hereof, the Make-Whole Payment
hereon, if any, the interest accrued and unpaid hereon, if any, and all other
amounts then due and payable hereon may be declared to be forthwith due and
payable as provided in the Indenture.
By placing its initials immediately following this paragraph,
Owner expressly agrees that in the event of an acceleration of the maturity of
this Note as a result of any event of default, including, without limitation,
any acceleration upon the transfer of any interest in the Trust Estate, a
tender by Owner or by anyone on behalf of Owner of payment of the amount
necessary to satisfy the indebtedness evidenced hereby made at any time prior
to a foreclosure sale, or a sale under the power of sale contained in the Deed
of Trust, shall constitute an evasion of the prepayment terms hereof and shall
be deemed to be a voluntary prepayment hereunder. Therefore, with any such
payment, the Owner shall pay to the Registered Holder the Make-Whole Payment.
Owner expressly waives the provisions of any present or future statute or law
which prohibits or may prohibit the collection of the foregoing Make-Whole
Payment in connection with any such acceleration, including, without
limitation, California Civil Code Section 2954.10.
/s/
------------
Initials
The Notes are issuable only as fully registered Notes. Owner
and the Trustee shall deem and treat the Person in whose name this Note is
registered on the Register as the absolute owner hereof (whether or not this
Note shall be overdue) for the purpose of receiving payments of principal,
premium, if any, and interest and for all other purposes, and neither Owner nor
the Trustee shall be affected by any notice to the contrary. Subject to and in
accordance with the provisions of the Indenture, this Note may be transferred
and exchanged for Notes of other denominations in accordance with the
procedures set forth in the Indenture.
Should any indebtedness represented by this Note be collected
at law or in equity, or in bankruptcy or other proceedings, or should this Note
be placed in the hands of attorneys for collection after default, Owner agrees
to pay, in addition to the principal, premium, if any, and interest
-4-
<PAGE> 5
due and payable hereon, if any, all costs of collecting or attempting to
collect this Note, including attorneys' reasonable fees and expenses
(including those incurred in connection with any appeal).
Subject to certain limitations in the Indenture, at any time
when Owner is not subject to Section 13 or 15(d) of the United States
Securities Exchange Act of 1934, upon the request of a Payee, Owner will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Payee or to a purchaser of this Security designated by such
Payee, as the case may be, in order to permit compliance by such Payee with
Rule 144A under the Securities Act. "Rule 144A Information" shall be such
information as is specified in Rule 144A(d) under the Securities Act (or any
successor provision thereto).
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, (i) THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO CONFLICTS OF LAWS) AS TO INTERPRETATION, ENFORCEMENT,
VALIDITY, CONSTRUCTION, EFFECT AND IN ALL OTHER RESPECTS, INCLUDING, BUT NOT
LIMITED TO, THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, AND (ii) THE
FEDERAL LAWS OF THE UNITED STATES OF AMERICA WITH REGARD TO U.S. FEDERAL
SECURITIES LAW, ERISA AND ANY OTHER APPLICABLE MATTERS.
-5-
<PAGE> 6
IN WITNESS WHEREOF, Owner has caused this Note to be duly
executed.
KMART CORPORATION
By: /s/ M.L. SKILES
------------------------------
M.L. Skiles
Senior Vice President
[SEAL]
Attest: /s/
------------------------
Name:
Title:
-6-
<PAGE> 7
Trustee's Certificate of Authentication
This Note is one of the Series A Notes of Kmart Corporation
described in the within-mentioned Indenture.
XXXXXXXXXX, not in its individual
capacity, but solely as Trustee
By: /s/ XXXXXXXXXX
------------------------------
XXXXXXXXXX,
Assistant Secretary
-7-
<PAGE> 1
EXHIBIT 99.12
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. EACH INITIAL PURCHASER OF THIS
SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO AND AGREES WITH THE ISSUER
THAT SUCH PURCHASER WILL NOT SELL OR OTHERWISE TRANSFER THIS SECURITY (WITHOUT
CONSENT OF THE ISSUER) PRIOR TO THREE YEARS FROM MAY 28, 1993 OTHER THAN (I) TO
A QUALIFIED INSTITUTIONAL BUYER, OR TO A PERSON SUCH INITIAL PURCHASER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, IN A TRANSACTION
COMPLYING WITH RULE 144A, (II) TO A NON-U.S. PERSON IN A TRANSACTION COMPLYING
WITH REGULATION S UNDER THE SECURITIES ACT OR (III) PURSUANT TO ANOTHER
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, EACH AS CONFIRMED BY AN
OPINION OF COUNSEL, AS REQUIRED UNDER THE INDENTURE. EACH SUBSEQUENT PURCHASER
OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO AND AGREES WITH THE
ISSUER THAT SUCH PURCHASER WILL NOT SELL OR OTHERWISE TRANSFER THIS SECURITY
(WITHOUT THE CONSENT OF THE ISSUER) PRIOR TO THREE YEARS FROM MAY 28, 1993
OTHER THAN PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
EACH PURCHASER BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL NOTIFY ANY
PURCHASER OF THIS SECURITY OF THE RESALE RESTRICTIONS DESCRIBED ABOVE.
THE PURCHASER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF,
REPRESENTS ALSO THAT IT IS ACTIVELY AND REGULARLY ENGAGED IN THE BUSINESS OF
LENDING MONEY AS A QUALIFIED PERSON WITHIN THE MEANING OF SECTION 465(b)(6)(D)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THIS SECURITY, OR DIRECT OR
INDIRECT BENEFICIAL INTERESTS THEREIN, MAY BE TRANSFERRED ONLY IN ORIGINAL
PRINCIPAL AMOUNTS NOT LESS THAN THOSE PROVIDED FOR IN AND IN ACCORDANCE WITH
THE REGISTRATION PROVISIONS OF, THAT CERTAIN TRUST INDENTURE DATED AS OF MAY
28, 1993 REFERRED TO IN THIS NOTE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION
AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE.
<PAGE> 2
New York, New York
May 28, 1993
7.45% SERIES B-1 SENIOR SECURED NOTES DUE 2013
Registered No.: 1
Principal Amount: $1,300,625
Registered Holder: XXXXXXXXXX
KMART CORPORATION, a corporation organized and in good
standing under the laws of the State of Michigan ("Owner"), for value received,
hereby promises to pay to the Registered Holder shown above ("Payee"), or its
registered assigns, on or before June 15, 2013, as herein provided, the
principal sum shown above and to pay interest on the unpaid principal amount
hereof from the date hereof to maturity at the rate of 7.45% per annum computed
on the basis of a 360-day year of twelve 30-day months.
Such principal, premium, if any, and interest shall be payable
upon presentation of this Note (except that upon compliance with the conditions
of Section 203 of the Indenture, such payment shall be made by wire transfer to
the Registered Holder hereof) at the corporate trust office of XXXXXXXXXX
or its successor, not in its individual capacity, but solely as trustee
(the "Trustee") under the Trust Indenture, dated as of May 28, 1993 (herein,
together with all supplements and amendments thereto, the "Indenture"), from
Owner, as issuer, to the Trustee and XXXXXXXXXX, as individual trustee
(the "Individual Trustee," and, together with the Trustee, the "Trustees"), in
lawful money of the United States of America, in the following manner:
(i) One payment of interest only (payable in arrears) in
the amount set forth on the attached Schedule I
(which is hereby made a part hereof) for the first,
unnumbered period on said Schedule, payable June 15,
1993; and
(ii) Forty semi-annual payments of interest
(payable in arrears) and principal, each in the
amount set forth on attached Schedule I for periods
numbered one through forty shall be payable on
the fifteenth day of each June and December,
commencing on December 15, 1993 and continuing to and
including June 15, 2013; the final payment shall
also include
-2-
<PAGE> 3
all other amounts, if any, then due and owing with
respect to this Note or pursuant to the terms of the
Indenture.
The payments described in clauses (i) and (ii) are herein called the
"Installment Payments" and the dates upon which such payments are due are
herein called the "Installment Payment Dates".
Any Installment Payment or other payment due and payable on a
day which is not a Business Day shall be payable by Owner on the immediately
succeeding Business Day without additional interest or charge.
Owner agrees, to the extent not prohibited by applicable law,
to pay interest on any overdue Installment Payment or prepayment of principal
or Make-Whole Payment at the Overdue Rate (as such terms are defined in the
below-described Trust Indenture) on a per diem basis.
This Note is one of Owner's Series B Notes, which are issued
in subseries -1 and -2 (together with Owner's Series A Notes, the "Notes"),
which Notes are equally and ratably secured by and entitled to the benefits of
the Indenture, subject to the terms thereof and of the other Loan Documents.
In addition, the subseries -1 Notes are equally and ratably secured by and
entitled to the benefits of the Deed of Trust, Fixture Filing and Security
Agreement, dated as of the date hereof, between Owner and the Individual
Trustee (the "Deed of Trust"), and the subseries -2 Notes are equally and
ratably secured by and entitled to the benefits of the Mortgage, Security
Agreement and Financing Statement, dated as of the date hereof, between Owner
and the Trustees (the "Mortgage"). The Indenture, the Deed of Trust and the
Mortgage contain, inter alia, provisions for the acceleration of maturity of
this Note upon the happening of certain Events of Default as defined therein,
certain events of condemnation or taking of any Property and certain other
events. Additionally, reference is hereby made to the Indenture, the Deed of
Trust and the Mortgage for a description of the Trust Estate Granted by the
Indenture, the nature and extent of the security for the Notes, the rights of
the Registered Holders, the Trustee and Owner in respect of such security and
otherwise and a description of the terms upon which the Notes are authenticated
and delivered. Capitalized terms not otherwise defined herein have the
meanings set forth in the Indenture.
The principal of this Note is subject to prepayment in whole
or in part at the option of Owner only in the manner, to the extent, and under
the circumstances
-3-
<PAGE> 4
set forth in the Indenture at a price equal to 100% of the outstanding
principal amount hereof to be prepaid, together with interest accrued thereon
to the date of prepayment, plus any premium, if required pursuant to the terms
of the Indenture.
Upon the occurrence of an Event of Default specified in the
Deed of Trust or the Mortgage, the principal hereof, the Make-Whole Payment
hereon, if any, the interest accrued and unpaid hereon, if any, and all other
amounts then due and payable hereon may be declared to be forthwith due and
payable as provided in the Indenture.
By placing its initials immediately following this paragraph,
Owner expressly agrees that in the event of an acceleration of the maturity of
this Note as a result of any event of default, including, without limitation,
any acceleration upon the transfer of any interest in the Trust Estate, a
tender by Owner or by anyone on behalf of Owner of payment of the amount
necessary to satisfy the indebtedness evidenced hereby made at any time prior
to a foreclosure sale, or a sale under the power of sale contained in the Deed
of Trust, shall constitute an evasion of the prepayment terms hereof and shall
be deemed to be a voluntary prepayment hereunder. Therefore, with any such
payment, the Owner shall pay to the Registered Holder the Make-Whole Payment.
Owner expressly waives the provisions of any present or future statute or law
which prohibits or may prohibit the collection of the foregoing Make-Whole
Payment in connection with any such acceleration, including, without
limitation, California Civil Code Section 2954.10.
/s/
------------
Initials
The Notes are issuable only as fully registered Notes. Owner
and the Trustee shall deem and treat the Person in whose name this Note is
registered on the Register as the absolute owner hereof (whether or not this
Note shall be overdue) for the purpose of receiving payments of principal,
premium, if any, and interest and for all other purposes, and neither Owner nor
the Trustee shall be affected by any notice to the contrary. Subject to and in
accordance with the provisions of the Indenture, this Note may be transferred
and exchanged for Notes of other denominations in accordance with the
procedures set forth in the Indenture.
Should any indebtedness represented by this Note be collected
at law or in equity, or in bankruptcy or other proceedings, or should this Note
be placed in the hands of attorneys for collection after default, Owner agrees
to pay,
-4-
<PAGE> 5
in addition to the principal, premium, if any, and interest due and payable
hereon, if any, all costs of collecting or attempting to collect this Note,
including attorneys' reasonable fees and expenses (including those incurred
in connection with any appeal).
Subject to certain limitations in the Indenture, at any time
when Owner is not subject to Section 13 or 15(d) of the United States
Securities Exchange Act of 1934, upon the request of a Payee, Owner will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Payee or to a purchaser of this Security designated by such
Payee, as the case may be, in order to permit compliance by such Payee with
Rule 144A under the Securities Act. "Rule 144A Information" shall be such
information as is specified in Rule 144A(d) under the Securities Act (or any
successor provision thereto).
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, (i) THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO CONFLICTS OF LAWS) AS TO INTERPRETATION, ENFORCEMENT,
VALIDITY, CONSTRUCTION, EFFECT AND IN ALL OTHER RESPECTS, INCLUDING, BUT NOT
LIMITED TO, THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, AND (ii) THE
FEDERAL LAWS OF THE UNITED STATES OF AMERICA WITH REGARD TO U.S. FEDERAL
SECURITIES LAW, ERISA AND ANY OTHER APPLICABLE MATTERS.
-5-
<PAGE> 6
IN WITNESS WHEREOF, Owner has caused this Note to be duly
executed.
KMART CORPORATION
By: /s/ M.L. SKILES
------------------------------
M.L. Skiles
Senior Vice President
[SEAL]
Attest: /s/
------------------------
Name:
Title:
-6-
<PAGE> 7
Trustee's Certificate of Authentication
This Note is one of the Series B Notes of Kmart Corporation
described in the within-mentioned Indenture.
XXXXXXXXXX, not in its individual
capacity, but solely as Trustee
By: /s/ XXXXXXXXXX
------------------------------
XXXXXXXXXX,
Assistant Secretary
-7-
<PAGE> 1
EXHIBIT 99.13
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. EACH INITIAL PURCHASER OF THIS
SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO AND AGREES WITH THE ISSUER
THAT SUCH PURCHASER WILL NOT SELL OR OTHERWISE TRANSFER THIS SECURITY (WITHOUT
CONSENT OF THE ISSUER) PRIOR TO THREE YEARS FROM MAY 28, 1993 OTHER THAN (I) TO
A QUALIFIED INSTITUTIONAL BUYER, OR TO A PERSON SUCH INITIAL PURCHASER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, IN A TRANSACTION
COMPLYING WITH RULE 144A, (II) TO A NON-U.S. PERSON IN A TRANSACTION COMPLYING
WITH REGULATION S UNDER THE SECURITIES ACT OR (III) PURSUANT TO ANOTHER
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, EACH AS CONFIRMED BY AN
OPINION OF COUNSEL, AS REQUIRED UNDER THE INDENTURE. EACH SUBSEQUENT PURCHASER
OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO AND AGREES WITH THE
ISSUER THAT SUCH PURCHASER WILL NOT SELL OR OTHERWISE TRANSFER THIS SECURITY
(WITHOUT THE CONSENT OF THE ISSUER) PRIOR TO THREE YEARS FROM MAY 28, 1993
OTHER THAN PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
EACH PURCHASER BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL NOTIFY ANY
PURCHASER OF THIS SECURITY OF THE RESALE RESTRICTIONS DESCRIBED ABOVE.
THE PURCHASER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF,
REPRESENTS ALSO THAT IT IS ACTIVELY AND REGULARLY ENGAGED IN THE BUSINESS OF
LENDING MONEY AS A QUALIFIED PERSON WITHIN THE MEANING OF SECTION 465(b)(6)(D)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THIS SECURITY, OR DIRECT OR
INDIRECT BENEFICIAL INTERESTS THEREIN, MAY BE TRANSFERRED ONLY IN ORIGINAL
PRINCIPAL AMOUNTS NOT LESS THAN THOSE PROVIDED FOR IN AND IN ACCORDANCE WITH
THE REGISTRATION PROVISIONS OF, THAT CERTAIN TRUST INDENTURE DATED AS OF MAY
28, 1993 REFERRED TO IN THIS NOTE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION
AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE.
<PAGE> 2
New York, New York
May 28, 1993
7.45% SERIES B-2 SENIOR SECURED NOTES DUE 2013
Registered No.: 2
Principal Amount: $5,699,375
Registered Holder: XXXXXXXXXX
KMART CORPORATION, a corporation organized and in good
standing under the laws of the State of Michigan ("Owner"), for value received,
hereby promises to pay to the Registered Holder shown above ("Payee"), or its
registered assigns, on or before June 15, 2013, as herein provided, the
principal sum shown above and to pay interest on the unpaid principal amount
hereof from the date hereof to maturity at the rate of 7.45% per annum computed
on the basis of a 360-day year of twelve 30-day months.
Such principal, premium, if any, and interest shall be payable
upon presentation of this Note (except that upon compliance with the conditions
of Section 203 of the Indenture, such payment shall be made by wire transfer to
the Registered Holder hereof) at the corporate trust office of XXXXXXXXXX
or its successor, not in its individual capacity, but solely as trustee
(the "Trustee") under the Trust Indenture, dated as of May 28, 1993 (herein,
together with all supplements and amendments thereto, the "Indenture"), from
Owner, as issuer, to the Trustee and XXXXXXXXXX, as individual trustee
(the "Individual Trustee," and, together with the Trustee, the "Trustees"), in
lawful money of the United States of America, in the following manner:
(i) One payment of interest only (payable in arrears) in
the amount set forth on the attached Schedule I
(which is hereby made a part hereof) for the first,
unnumbered period on said Schedule, payable June 15,
1993; and
(ii) Forty semi-annual payments of interest
(payable in arrears) and principal, each in the
amount set forth on attached Schedule I for periods
numbered one through forty shall be payable on
the fifteenth day of each June and December,
commencing on December 15, 1993 and continuing to and
including June 15, 2013; the final payment shall
also include
-2-
<PAGE> 3
all other amounts, if any, then due and owing with
respect to this Note or pursuant to the terms of the
Indenture.
The payments described in clauses (i) and (ii) are herein called the
"Installment Payments" and the dates upon which such payments are due are
herein called the "Installment Payment Dates".
Any Installment Payment or other payment due and payable on a
day which is not a Business Day shall be payable by Owner on the immediately
succeeding Business Day without additional interest or charge.
Owner agrees, to the extent not prohibited by applicable law,
to pay interest on any overdue Installment Payment or prepayment of principal
or Make-Whole Payment at the Overdue Rate (as such terms are defined in the
below-described Trust Indenture) on a per diem basis.
This Note is one of Owner's Series B Notes, which are issued
in subseries -1 and -2 (together with Owner's Series A Notes, the "Notes"),
which Notes are equally and ratably secured by and entitled to the benefits of
the Indenture, subject to the terms thereof and of the other Loan Documents.
In addition, the subseries -1 Notes are equally and ratably secured by and
entitled to the benefits of the Deed of Trust, Fixture Filing and Security
Agreement, dated as of the date hereof, between Owner and the Individual
Trustee (the "Deed of Trust"), and the subseries -2 Notes are equally and
ratably secured by and entitled to the benefits of the Mortgage, Security
Agreement and Financing Statement, dated as of the date hereof, between Owner
and the Trustees (the "Mortgage"). The Indenture, the Deed of Trust and the
Mortgage contain, inter alia, provisions for the acceleration of maturity of
this Note upon the happening of certain Events of Default as defined therein,
certain events of condemnation or taking of any Property and certain other
events. Additionally, reference is hereby made to the Indenture, the Deed of
Trust and the Mortgage for a description of the Trust Estate Granted by the
Indenture, the nature and extent of the security for the Notes, the rights of
the Registered Holders, the Trustee and Owner in respect of such security and
otherwise and a description of the terms upon which the Notes are authenticated
and delivered. Capitalized terms not otherwise defined herein have the
meanings set forth in the Indenture.
The principal of this Note is subject to prepayment in whole
or in part at the option of Owner only in the manner, to the extent, and under
the circumstances
-3-
<PAGE> 4
set forth in the Indenture at a price equal to 100% of the outstanding
principal amount hereof to be prepaid, together with interest accrued thereon
to the date of prepayment, plus any premium, if required pursuant to the terms
of the Indenture.
Upon the occurrence of an Event of Default specified in the
Deed of Trust or the Mortgage, the principal hereof, the Make-Whole Payment
hereon, if any, the interest accrued and unpaid hereon, if any, and all other
amounts then due and payable hereon may be declared to be forthwith due and
payable as provided in the Indenture.
By placing its initials immediately following this paragraph,
Owner expressly agrees that in the event of an acceleration of the maturity of
this Note as a result of any event of default, including, without limitation,
any acceleration upon the transfer of any interest in the Trust Estate, a
tender by Owner or by anyone on behalf of Owner of payment of the amount
necessary to satisfy the indebtedness evidenced hereby made at any time prior
to a foreclosure sale, or a sale under the power of sale contained in the Deed
of Trust, shall constitute an evasion of the prepayment terms hereof and shall
be deemed to be a voluntary prepayment hereunder. Therefore, with any such
payment, the Owner shall pay to the Registered Holder the Make-Whole Payment.
Owner expressly waives the provisions of any present or future statute or law
which prohibits or may prohibit the collection of the foregoing Make-Whole
Payment in connection with any such acceleration, including, without
limitation, California Civil Code Section 2954.10.
/s/
------------
Initials
The Notes are issuable only as fully registered Notes. Owner
and the Trustee shall deem and treat the Person in whose name this Note is
registered on the Register as the absolute owner hereof (whether or not this
Note shall be overdue) for the purpose of receiving payments of principal,
premium, if any, and interest and for all other purposes, and neither Owner nor
the Trustee shall be affected by any notice to the contrary. Subject to and in
accordance with the provisions of the Indenture, this Note may be transferred
and exchanged for Notes of other denominations in accordance with the
procedures set forth in the Indenture.
Should any indebtedness represented by this Note be collected
at law or in equity, or in bankruptcy or other proceedings, or should this Note
be placed in the hands of attorneys for collection after default, Owner agrees
to pay,
-4-
<PAGE> 5
in addition to the principal, premium, if any, and interest due and payable
hereon, if any, all costs of collecting or attempting to collect this Note,
including attorneys' reasonable fees and expenses (including those incurred
in connection with any appeal).
Subject to certain limitations in the Indenture, at any time
when Owner is not subject to Section 13 or 15(d) of the United States
Securities Exchange Act of 1934, upon the request of a Payee, Owner will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Payee or to a purchaser of this Security designated by such
Payee, as the case may be, in order to permit compliance by such Payee with
Rule 144A under the Securities Act. "Rule 144A Information" shall be such
information as is specified in Rule 144A(d) under the Securities Act (or any
successor provision thereto).
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, (i) THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO CONFLICTS OF LAWS) AS TO INTERPRETATION, ENFORCEMENT,
VALIDITY, CONSTRUCTION, EFFECT AND IN ALL OTHER RESPECTS, INCLUDING, BUT NOT
LIMITED TO, THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, AND (ii) THE
FEDERAL LAWS OF THE UNITED STATES OF AMERICA WITH REGARD TO U.S. FEDERAL
SECURITIES LAW, ERISA AND ANY OTHER APPLICABLE MATTERS.
-5-
<PAGE> 6
IN WITNESS WHEREOF, Owner has caused this Note to be duly
executed.
KMART CORPORATION
By: /s/ M.L. SKILES
------------------------------
M.L. Skiles
Senior Vice President
[SEAL]
Attest: /s/
------------------------
Name:
Title:
-6-
<PAGE> 7
Trustee's Certificate of Authentication
This Note is one of the Series B Notes of Kmart Corporation
described in the within-mentioned Indenture.
XXXXXXXXXX, not in its individual
capacity, but solely as Trustee
By: /s/ XXXXXXXXXX
------------------------------
XXXXXXXXXX,
Assistant Secretary
-7-
<PAGE> 1
EXHIBIT 99.14
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. EACH INITIAL PURCHASER OF THIS
SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO AND AGREES WITH THE ISSUER
THAT SUCH PURCHASER WILL NOT SELL OR OTHERWISE TRANSFER THIS SECURITY (WITHOUT
CONSENT OF THE ISSUER) PRIOR TO THREE YEARS FROM MAY 28, 1993 OTHER THAN (I) TO
A QUALIFIED INSTITUTIONAL BUYER, OR TO A PERSON SUCH INITIAL PURCHASER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, IN A TRANSACTION
COMPLYING WITH RULE 144A, (II) TO A NON-U.S. PERSON IN A TRANSACTION COMPLYING
WITH REGULATION S UNDER THE SECURITIES ACT OR (III) PURSUANT TO ANOTHER
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, EACH AS CONFIRMED BY AN
OPINION OF COUNSEL, AS REQUIRED UNDER THE INDENTURE. EACH SUBSEQUENT PURCHASER
OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO AND AGREES WITH THE
ISSUER THAT SUCH PURCHASER WILL NOT SELL OR OTHERWISE TRANSFER THIS SECURITY
(WITHOUT THE CONSENT OF THE ISSUER) PRIOR TO THREE YEARS FROM MAY 28, 1993
OTHER THAN PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
EACH PURCHASER BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL NOTIFY ANY
PURCHASER OF THIS SECURITY OF THE RESALE RESTRICTIONS DESCRIBED ABOVE.
THE PURCHASER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF,
REPRESENTS ALSO THAT IT IS ACTIVELY AND REGULARLY ENGAGED IN THE BUSINESS OF
LENDING MONEY AS A QUALIFIED PERSON WITHIN THE MEANING OF SECTION 465(b)(6)(D)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THIS SECURITY, OR DIRECT OR
INDIRECT BENEFICIAL INTERESTS THEREIN, MAY BE TRANSFERRED ONLY IN ORIGINAL
PRINCIPAL AMOUNTS NOT LESS THAN THOSE PROVIDED FOR IN AND IN ACCORDANCE WITH
THE REGISTRATION PROVISIONS OF, THAT CERTAIN TRUST INDENTURE DATED AS OF MAY
28, 1993 REFERRED TO IN THIS NOTE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION
AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE.
<PAGE> 2
New York, New York
May 28, 1993
7.45% SERIES B-1 SENIOR SECURED NOTES DUE 2013
Registered No.: 3
Principal Amount: $1,300,625
Registered Holder: XXXXXXXXXX
KMART CORPORATION, a corporation organized and in good
standing under the laws of the State of Michigan ("Owner"), for value received,
hereby promises to pay to the Registered Holder shown above ("Payee"), or its
registered assigns, on or before June 15, 2013, as herein provided, the
principal sum shown above and to pay interest on the unpaid principal amount
hereof from the date hereof to maturity at the rate of 7.45% per annum computed
on the basis of a 360-day year of twelve 30-day months.
Such principal, premium, if any, and interest shall be payable
upon presentation of this Note (except that upon compliance with the conditions
of Section 203 of the Indenture, such payment shall be made by wire transfer to
the Registered Holder hereof) at the corporate trust office of XXXXXXXXXX
or its successor, not in its individual capacity, but solely as trustee
(the "Trustee") under the Trust Indenture, dated as of May 28, 1993 (herein,
together with all supplements and amendments thereto, the "Indenture"), from
Owner, as issuer, to the Trustee and XXXXXXXXXX, as individual trustee
(the "Individual Trustee," and, together with the Trustee, the "Trustees"), in
lawful money of the United States of America, in the following manner:
(i) One payment of interest only (payable in arrears) in
the amount set forth on the attached Schedule I
(which is hereby made a part hereof) for the first,
unnumbered period on said Schedule, payable June 15,
1993; and
(ii) Forty semi-annual payments of interest
(payable in arrears) and principal, each in the
amount set forth on attached Schedule I for periods
numbered one through forty shall be payable on
the fifteenth day of each June and December,
commencing on December 15, 1993 and continuing to and
including December 15, 2013; the final payment shall
also include all other amounts, if any, then due and
owing
-2-
<PAGE> 3
with respect to this Note or pursuant to the terms of
the Indenture.
The payments described in clauses (i) and (ii) are herein called the
"Installment Payments" and the dates upon which such payments are due are
herein called the "Installment Payment Dates".
Any Installment Payment or other payment due and payable on a
day which is not a Business Day shall be payable by Owner on the immediately
succeeding Business Day without additional interest or charge.
Owner agrees, to the extent not prohibited by applicable law,
to pay interest on any overdue Installment Payment or prepayment of principal
or Make-Whole Payment at the Overdue Rate (as such terms are defined in the
below-described Trust Indenture) on a per diem basis.
This Note is one of Owner's Series B Notes, which are issued
in subseries -1 and -2 (together with Owner's Series A Notes, the "Notes"),
which Notes are equally and ratably secured by and entitled to the benefits of
the Indenture, subject to the terms thereof and of the other Loan Documents.
In addition, the subseries -1 Notes are equally and ratably secured by and
entitled to the benefits of the Deed of Trust, Fixture Filing and Security
Agreement, dated as of the date hereof, between Owner and the Individual
Trustee (the "Deed of Trust"), and the subseries -2 Notes are equally and
ratably secured by and entitled to the benefits of the Mortgage, Security
Agreement and Financing Statement, dated as of the date hereof, between Owner
and the Trustees (the "Mortgage"). The Indenture, the Deed of Trust and the
Mortgage contain, inter alia, provisions for the acceleration of maturity of
this Note upon the happening of certain Events of Default as defined therein,
certain events of condemnation or taking of any Property and certain other
events. Additionally, reference is hereby made to the Indenture, the Deed of
Trust and the Mortgage for a description of the Trust Estate Granted by the
Indenture, the nature and extent of the security for the Notes, the rights of
the Registered Holders, the Trustee and Owner in respect of such security and
otherwise and a description of the terms upon which the Notes are authenticated
and delivered. Capitalized terms not otherwise defined herein have the
meanings set forth in the Indenture.
The principal of this Note is subject to prepayment in whole
or in part at the option of Owner only in the manner, to the extent, and under
the circumstances set forth in the Indenture at a price equal to 100% of the
-3-
<PAGE> 4
outstanding principal amount hereof to be prepaid, together with interest
accrued thereon to the date of prepayment, plus any premium, if required
pursuant to the terms of the Indenture.
Upon the occurrence of an Event of Default specified in the
Deed of Trust or the Mortgage, the principal hereof, the Make-Whole Payment
hereon, if any, the interest accrued and unpaid hereon, if any, and all other
amounts then due and payable hereon may be declared to be forthwith due and
payable as provided in the Indenture.
By placing its initials immediately following this paragraph,
Owner expressly agrees that in the event of an acceleration of the maturity of
this Note as a result of any event of default, including, without limitation,
any acceleration upon the transfer of any interest in the Trust Estate, a
tender by Owner or by anyone on behalf of Owner of payment of the amount
necessary to satisfy the indebtedness evidenced hereby made at any time prior
to a foreclosure sale, or a sale under the power of sale contained in the Deed
of Trust, shall constitute an evasion of the prepayment terms hereof and shall
be deemed to be a voluntary prepayment hereunder. Therefore, with any such
payment, the Owner shall pay to the Registered Holder the Make-Whole Payment.
Owner expressly waives the provisions of any present or future statute or law
which prohibits or may prohibit the collection of the foregoing Make-Whole
Payment in connection with any such acceleration, including, without
limitation, California Civil Code Section 2954.10.
/s/
------------
Initials
The Notes are issuable only as fully registered Notes. Owner
and the Trustee shall deem and treat the Person in whose name this Note is
registered on the Register as the absolute owner hereof (whether or not this
Note shall be overdue) for the purpose of receiving payments of principal,
premium, if any, and interest and for all other purposes, and neither Owner nor
the Trustee shall be affected by any notice to the contrary. Subject to and in
accordance with the provisions of the Indenture, this Note may be transferred
and exchanged for Notes of other denominations in accordance with the
procedures set forth in the Indenture.
Should any indebtedness represented by this Note be collected
at law or in equity, or in bankruptcy or other proceedings, or should this Note
be placed in the hands of attorneys for collection after default, Owner agrees
to pay, in addition to the principal, premium, if any, and interest
-4-
<PAGE> 5
due and payable hereon, if any, all costs of collecting or attempting to
collect this Note, including attorneys' reasonable fees and expenses
(including those incurred in connection with any appeal).
Subject to certain limitations in the Indenture, at any time
when Owner is not subject to Section 13 or 15(d) of the United States
Securities Exchange Act of 1934, upon the request of a Payee, Owner will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Payee or to a purchaser of this Security designated by such
Payee, as the case may be, in order to permit compliance by such Payee with
Rule 144A under the Securities Act. "Rule 144A Information" shall be such
information as is specified in Rule 144A(d) under the Securities Act (or any
successor provision thereto).
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, (i) THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO CONFLICTS OF LAWS) AS TO INTERPRETATION, ENFORCEMENT,
VALIDITY, CONSTRUCTION, EFFECT AND IN ALL OTHER RESPECTS, INCLUDING, BUT NOT
LIMITED TO, THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, AND (ii) THE
FEDERAL LAWS OF THE UNITED STATES OF AMERICA WITH REGARD TO U.S. FEDERAL
SECURITIES LAW, ERISA AND ANY OTHER APPLICABLE MATTERS.
-5-
<PAGE> 6
IN WITNESS WHEREOF, Owner has caused this Note to be duly
executed.
KMART CORPORATION
By: /s/ M.L. SKILES
-------------------------
M.L. Skiles
Senior Vice President
[SEAL]
Attest: /s/
---------------------
Name:
Title:
-6-
<PAGE> 7
Trustee's Certificate of Authentication
This Note is one of the Series B Notes of Kmart Corporation
described in the within-mentioned Indenture.
XXXXXXXXXX, not in its individual
capacity, but solely as Trustee
By: /s/ XXXXXXXXXX
--------------------------------
XXXXXXXXXX,
Assistant Secretary
-7-
<PAGE> 1
EXHIBIT 99.15
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. EACH INITIAL PURCHASER OF THIS
SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO AND AGREES WITH THE ISSUER
THAT SUCH PURCHASER WILL NOT SELL OR OTHERWISE TRANSFER THIS SECURITY (WITHOUT
CONSENT OF THE ISSUER) PRIOR TO THREE YEARS FROM MAY 28, 1993 OTHER THAN (I) TO
A QUALIFIED INSTITUTIONAL BUYER, OR TO A PERSON SUCH INITIAL PURCHASER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, IN A TRANSACTION
COMPLYING WITH RULE 144A, (II) TO A NON-U.S. PERSON IN A TRANSACTION COMPLYING
WITH REGULATION S UNDER THE SECURITIES ACT OR (III) PURSUANT TO ANOTHER
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, EACH AS CONFIRMED BY AN
OPINION OF COUNSEL, AS REQUIRED UNDER THE INDENTURE. EACH SUBSEQUENT PURCHASER
OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS TO AND AGREES WITH THE
ISSUER THAT SUCH PURCHASER WILL NOT SELL OR OTHERWISE TRANSFER THIS SECURITY
(WITHOUT THE CONSENT OF THE ISSUER) PRIOR TO THREE YEARS FROM MAY 28, 1993
OTHER THAN PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
EACH PURCHASER BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL NOTIFY ANY
PURCHASER OF THIS SECURITY OF THE RESALE RESTRICTIONS DESCRIBED ABOVE.
THE PURCHASER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF,
REPRESENTS ALSO THAT IT IS ACTIVELY AND REGULARLY ENGAGED IN THE BUSINESS OF
LENDING MONEY AS A QUALIFIED PERSON WITHIN THE MEANING OF SECTION 465(b)(6)(D)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THIS SECURITY, OR DIRECT OR
INDIRECT BENEFICIAL INTERESTS THEREIN, MAY BE TRANSFERRED ONLY IN ORIGINAL
PRINCIPAL AMOUNTS NOT LESS THAN THOSE PROVIDED FOR IN AND IN ACCORDANCE WITH
THE REGISTRATION PROVISIONS OF, THAT CERTAIN TRUST INDENTURE DATED AS OF MAY
28, 1993 REFERRED TO IN THIS NOTE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION
AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE.
<PAGE> 2
New York, New York
May 28, 1993
7.45% SERIES A-2 SENIOR SECURED NOTES DUE 2013
Registered No.: 4
Principal Amount: $5,699,375
Registered Holder: XXXXXXXXXX
KMART CORPORATION, a corporation organized and in good
standing under the laws of the State of Michigan ("Owner"), for value received,
hereby promises to pay to the Registered Holder shown above ("Payee"), or its
registered assigns, on or before June 15, 2013, as herein provided, the
principal sum shown above and to pay interest on the unpaid principal amount
hereof from the date hereof to maturity at the rate of 7.45% per annum computed
on the basis of a 360-day year of twelve 30-day months.
Such principal, premium, if any, and interest shall be payable
upon presentation of this Note (except that upon compliance with the conditions
of Section 203 of the Indenture, such payment shall be made by wire transfer to
the Registered Holder hereof) at the corporate trust office of XXXXXXXXXX
or its successor, not in its individual capacity, but solely as trustee
(the "Trustee") under the Trust Indenture, dated as of May 28, 1993 (herein,
together with all supplements and amendments thereto, the "Indenture"), from
Owner, as issuer, to the Trustee and XXXXXXXXXX, as individual trustee
(the "Individual Trustee," and, together with the Trustee, the "Trustees"), in
lawful money of the United States of America, in the following manner:
(i) One payment of interest only (payable in arrears) in
the amount set forth on the attached Schedule I
(which is hereby made a part hereof) for the first,
unnumbered period on said Schedule, payable June 15,
1993; and
(ii) Forty semi-annual payments of interest
(payable in arrears) and principal, each in the
amount set forth on attached Schedule I for periods
numbered one through forty shall be payable on
the fifteenth day of each June and December,
commencing on December 15, 1993 and continuing to and
including June 15, 2013; the final payment shall
also include all other amounts, if any, then due and
owing
-2-
<PAGE> 3
with respect to this Note or pursuant to the terms of
the Indenture.
The payments described in clauses (i) and (ii) are herein called the
"Installment Payments" and the dates upon which such payments are due are
herein called the "Installment Payment Dates".
Any Installment Payment or other payment due and payable on a
day which is not a Business Day shall be payable by Owner on the immediately
succeeding Business Day without additional interest or charge.
Owner agrees, to the extent not prohibited by applicable law,
to pay interest on any overdue Installment Payment or prepayment of principal
at the Overdue Rate (as such terms are defined in the below-described Trust
Indenture) on a per diem basis.
This Note is one of Owner's Series B Notes, which are issued
in subseries -1 and -2 (together with Owner's Series A Notes, the "Notes"),
which Notes are equally and ratably secured by and entitled to the benefits of
the Indenture, subject to the terms thereof and of the other Loan Documents.
In addition, the subseries -1 Notes are equally and ratably secured by and
entitled to the benefits of the Deed of Trust, Fixture Filing and Security
Agreement, dated as of the date hereof, between Owner and the Individual
Trustee (the "Deed of Trust"), and the subseries -2 Notes are equally and
ratably secured by and entitled to the benefits of the Mortgage, Security
Agreement and Financing Statement, dated as of the date hereof, between Owner
and the Trustees (the "Mortgage"). The Indenture, the Deed of Trust and the
Mortgage contain, inter alia, provisions for the acceleration of maturity of
this Note upon the happening of certain Events of Default as defined therein,
certain events of condemnation or taking of any Property and certain other
events. Additionally, reference is hereby made to the Indenture, the Deed of
Trust and the Mortgage for a description of the Trust Estate Granted by the
Indenture, the nature and extent of the security for the Notes, the rights of
the Registered Holders, the Trustee and Owner in respect of such security and
otherwise and a description of the terms upon which the Notes are authenticated
and delivered. Capitalized terms not otherwise defined herein have the
meanings set forth in the Indenture.
The principal of this Note is subject to prepayment in whole
or in part at the option of Owner only in the manner, to the extent, and under
the circumstances set forth in the Indenture at a price equal to 100% of the
-3-
<PAGE> 4
outstanding principal amount hereof to be prepaid, together with interest
accrued thereon to the date of prepayment, plus any premium, if required
pursuant to the terms of the Indenture.
Upon the occurrence of an Event of Default specified in the
Deed of Trust or the Mortgage, the principal hereof, the Make-Whole Payment
hereon, if any, the interest accrued and unpaid hereon, if any, and all other
amounts then due and payable hereon may be declared to be forthwith due and
payable as provided in the Indenture.
By placing its initials immediately following this paragraph,
Owner expressly agrees that in the event of an acceleration of the maturity of
this Note as a result of any event of default, including, without limitation,
any acceleration upon the transfer of any interest in the Trust Estate, a
tender by Owner or by anyone on behalf of Owner of payment of the amount
necessary to satisfy the indebtedness evidenced hereby made at any time prior
to a foreclosure sale, or a sale under the power of sale contained in the Deed
of Trust, shall constitute an evasion of the prepayment terms hereof and shall
be deemed to be a voluntary prepayment hereunder. Therefore, with any such
payment, the Owner shall pay to the Registered Holder the Make-Whole Payment.
Owner expressly waives the provisions of any present or future statute or law
which prohibits or may prohibit the collection of the foregoing Make-Whole
Payment in connection with any such acceleration, including, without
limitation, California Civil Code Section 2954.10.
/s/
------------
Initials
The Notes are issuable only as fully registered Notes. Owner
and the Trustee shall deem and treat the Person in whose name this Note is
registered on the Register as the absolute owner hereof (whether or not this
Note shall be overdue) for the purpose of receiving payments of principal,
premium, if any, and interest and for all other purposes, and neither Owner nor
the Trustee shall be affected by any notice to the contrary. Subject to and in
accordance with the provisions of the Indenture, this Note may be transferred
and exchanged for Notes of other denominations in accordance with the
procedures set forth in the Indenture.
Should any indebtedness represented by this Note be collected
at law or in equity, or in bankruptcy or other proceedings, or should this Note
be placed in the hands of attorneys for collection after default, Owner agrees
to pay, in addition to the principal, premium, if any, and interest
-4-
<PAGE> 5
due and payable hereon, if any, all costs of collecting or attempting to
collect this Note, including attorneys' reasonable fees and expenses
(including those incurred in connection with any appeal).
Subject to certain limitations in the Indenture, at any time
when Owner is not subject to Section 13 or 15(d) of the United States
Securities Exchange Act of 1934, upon the request of a Payee, Owner will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Payee or to a purchaser of this Security designated by such
Payee, as the case may be, in order to permit compliance by such Payee with
Rule 144A under the Securities Act. "Rule 144A Information" shall be such
information as is specified in Rule 144A(d) under the Securities Act (or any
successor provision thereto).
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, (i) THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO CONFLICTS OF LAWS) AS TO INTERPRETATION, ENFORCEMENT,
VALIDITY, CONSTRUCTION, EFFECT AND IN ALL OTHER RESPECTS, INCLUDING, BUT NOT
LIMITED TO, THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, AND (ii) THE
FEDERAL LAWS OF THE UNITED STATES OF AMERICA WITH REGARD TO U.S. FEDERAL
SECURITIES LAW, ERISA AND ANY OTHER APPLICABLE MATTERS.
-5-
<PAGE> 6
IN WITNESS WHEREOF, Owner has caused this Note to be duly
executed.
KMART CORPORATION
By: /s/ M.L. SKILES
------------------------------
M.L. Skiles
Senior Vice President
[SEAL]
Attest: /s/
-----------------------
Name:
Title:
-6-
<PAGE> 7
Trustee's Certificate of Authentication
This Note is one of the Series B Notes of Kmart Corporation
described in the within-mentioned Indenture.
XXXXXXXXXX, not in its individual
capacity, but solely as Trustee
By: /s/ XXXXXXXXXX
------------------------------
XXXXXXXXXX,
Assistant Secretary
-7-
<PAGE> 1
EXHIBIT 99.16
TRUST INDENTURE
Made by
KMART CORPORATION
to
XXXXXXXXXX
and
XXXXXXXXXX,
as Trustees
Dated as of May 28, 1993
<PAGE> 2
TABLE OF CONTENTS
Page
----
Preliminary Statement of Owner . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
Definitions and other Provisions of General Application
SECTION 101 Specific Terms Defined . . . . . . . . . . . . . . . . 2
"Acceleration" . . . . . . . . . . . . . . . . . . . 2
"Act" . . . . . . . . . . . . . . . . . . . . . . . 2
"Affiliate" . . . . . . . . . . . . . . . . . . . . 3
"Business Day" . . . . . . . . . . . . . . . . . . . 3
"Condominium Apartments" . . . . . . . . . . . . . . 3
"Corporate Trust Office" . . . . . . . . . . . . . . 3
"Deed of Trust" . . . . . . . . . . . . . . . . . . 3
"Event of Default" . . . . . . . . . . . . . . . . . 3
"Grant" . . . . . . . . . . . . . . . . . . . . . . 3
"Hazardous Material" . . . . . . . . . . . . . . . . 3
"Improvements" . . . . . . . . . . . . . . . . . . . 3
"Indenture" . . . . . . . . . . . . . . . . . . . . 3
"Individual Trustee" . . . . . . . . . . . . . . . . 3
"Installment Payment Date" . . . . . . . . . . . . . 4
"Installment Payments" . . . . . . . . . . . . . . . 4
"Land Parcel" . . . . . . . . . . . . . . . . . . . 4
"Lien of the Deed of Trust and the Mortgage" . . . . 4
"Loan Documents" . . . . . . . . . . . . . . . . . . 4
"Majority of the Holders" . . . . . . . . . . . . . 4
"Make-Whole Payment" . . . . . . . . . . . . . . . . 4
"Maturity" . . . . . . . . . . . . . . . . . . . . . 5
"Mortgage" . . . . . . . . . . . . . . . . . . . . . 5
"New Note" . . . . . . . . . . . . . . . . . . . . . 5
"Note Agreements" . . . . . . . . . . . . . . . . . 5
"Notes" . . . . . . . . . . . . . . . . . . . . . . 5
"Opinion of Counsel" . . . . . . . . . . . . . . . . 5
"Outstanding" . . . . . . . . . . . . . . . . . . . 6
"Outstanding Principal Amount" . . . . . . . . . . . 6
"Overdue Rate" . . . . . . . . . . . . . . . . . . . 6
"Owner". . . . . . . . . . . . . . . . . . . . . . . 6
"Owner's Certificate" . . . . . . . . . . . . . . . 6
"Permitted Exceptions" . . . . . . . . . . . . . . . 7
"Permitted Investments" . . . . . . . . . . . . . . 7
"Person" . . . . . . . . . . . . . . . . . . . . . . 8
"Predecessor Note" . . . . . . . . . . . . . . . . 8
"Preponderance of the Holders" . . . . . . . . . . . 8
"Property" . . . . . . . . . . . . . . . . . . . . . 8
"Register" . . . . . . . . . . . . . . . . . . . . . 8
"Registered Holder of Notes" or
"Registered Holder" . . . . . . . . . . . . . . . 8
"Responsible Officer" . . . . . . . . . . . . . . . 8
-i-
<PAGE> 3
Page
----
"Restricted Notes" . . . . . . . . . . . . . . . . . 9
"Series" . . . . . . . . . . . . . . . . . . . . . . 9
"Series A Notes" and "Series B Notes" . . . . . . . 9
"Stated Maturity" . . . . . . . . . . . . . . . . . 9
"Subseries" . . . . . . . . . . . . . . . . . . . . 9
"Substitute Property" . . . . . . . . . . . . . . . 9
"Title Company" . . . . . . . . . . . . . . . . . . 9
"Trust Estate" . . . . . . . . . . . . . . . . . . . 9
"Trustee" . . . . . . . . . . . . . . . . . . . . . 9
"Weighted Average Life to Stated Maturity" . . . . . 9
"Withdrawn Property" . . . . . . . . . . . . . . . . 10
Terms Generally . . . . . . . . . . . . . . . . . . 10
SECTION 102 Compliance Certificates and Opinions. . . . 10
SECTION 103 Form of Documents Delivered to the
Trustee . . . . . . . . . . . . . . . . . 11
SECTION 104 Acts of Registered Holders . . . . . . . . 11
SECTION 105 Notices and Other Communications
to the Trustee and Owner. . . . . . . . . 12
SECTION 106 Notice to Registered Holders; Waiver. . . . 13
SECTION 107 Effect of Headings and Table of
Contents. . . . . . . . . . . . . . . . . 14
SECTION 108 Successors and Assigns . . . . . . . . . . 14
SECTION 109 Separability Clause . . . . . . . . . . . 14
SECTION 110 Benefits of Indenture . . . . . . . . . . . 14
SECTION 111 Applicable Law. . . . . . . . . . . . . . . 15
SECTION 112 Legal Holidays. . . . . . . . . . . . . . . 15
SECTION 113 Modifications; Waiver . . . . . . . . . . . 15
SECTION 114 Maximum Interest Payable. . . . . . . . . . 15
SECTION 115 Satisfaction. . . . . . . . . . . . . . . . 15
SECTION 116 Counterparts. . . . . . . . . . . . . . . . 16
SECTION 117 Estoppel Certificates . . . . . . . . . . . 16
SECTION 118 Schedules . . . . . . . . . . . . . . . . . 16
ARTICLE TWO
The Notes
SECTION 201 Issuance of the Notes . . . . . . . . . . . 16
SECTION 202 Execution of Notes. . . . . . . . . . . . . 18
SECTION 203 Home Office Payment . . . . . . . . . . . . 18
SECTION 204 Register. . . . . . . . . . . . . . . . . . 19
SECTION 205 Registered Holders. . . . . . . . . . . . . 19
SECTION 206 Certificate of Authentication . . . . . . . 19
SECTION 207 Legend on Restricted Notes. . . . . . . . . 19
SECTION 208 Transfer and Exchange of Notes. . . . . . . 20
SECTION 209 New Notes; Notation of Amounts Paid . . . . 22
SECTION 210 Form of Certification . . . . . . . . . . . 23
SECTION 211 The Trustee as Agent . . . . . . . . . . . 24
SECTION 212 Investments . . . . . . . . . . . . . . . . 24
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ARTICLE THREE
Particular Covenants
SECTION 301 Payment of the Notes and Performance
of Other Obligations ............................. 25
SECTION 302 Installment Payments ................................ 25
SECTION 303 Negative Covenants .................................. 25
SECTION 304 Consolidation, Merger, Sale or
Conveyance ........................................ 26
SECTION 305 Transfers by Owner .................................. 27
SECTION 306 Financial Reports ................................... 27
SECTION 307 Delivery of Certain Information ..................... 28
ARTICLE FOUR
Condemnation; Hazardous Material; Substitution
of Collateral and Mandatory and Optional Prepayments
SECTION 401 Condemnation ........................................ 29
SECTION 402 Hazardous Material .................................. 30
SECTION 403 Hawaii Taxes ........................................ 30
SECTION 404 Substitute Property ................................. 30
405 Optional Prepayment of All Notes by
SECTION Owner ............................................. 32
SECTION 406 Rating Decline Put .................................. 32
SECTION 407 No Other Prepayment ................................. 32
ARTICLE FIVE
Application of Moneys
SECTION 501 Installment Payments ................................ 33
SECTION 502 Prepayments.......................................... 33
ARTICLE SIX
Remedies
SECTION 601 Cross-Default of Notes with Other Loan
Documents; Remedies Cumulative ................... 34
SECTION 602 Rescission of Acceleration ......................... 35
SECTION 603 The Trustees May Enforce Claims Without
Possession of Notes .............................. 35
SECTION 604 Limitation on Suits ................................ 35
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ARTICLE SEVEN
Security Agreement
SECTION 701 Security Agreement ................................. 36
ARTICLE EIGHT
The Trustees
SECTION 801 Rights and Obligations of the
Trustee .......................................... 37
SECTION 802 Resignation and Removal of the
Trustee .......................................... 41
SECTION 803 Successor Trustee .................................. 41
SECTION 804 Liability of the Trustee for other
Trustees ......................................... 42
SECTION 805 Merger, Conversion, Consolidation
or Succession to Business ........................ 42
SECTION 806 The Individual Trustee.............................. 42
SECTION 807 Separate and Co-Trustees ........................... 43
ARTICLE NINE
Supplements
SECTION 901 Supplements Without Consent ........................ 45
SECTION 902 Supplements With Consent ........................... 46
---------------------------------
Schedule A: Land Parcels and Condominium Apartments
Schedule B: List of Initial Registered Holders
Schedule C-1 Aggregate Principal Amount (By Subseries) of
Notes
Schedule C-2 Minimum Denominations of Each Subseries
Schedule D-1: Form of Series A Notes
Schedule D-2: Form of Series B Notes
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<PAGE> 6
THIS TRUST INDENTURE, dated as of May 28, 1993 (together with all
amendments and supplements thereto, this "Indenture"), from KMART CORPORATION,
a Michigan corporation ("Owner"), having an address at 3100 West Big Beaver
Road, Troy, Michigan 48084, as grantor, to XXXXXXXXXX, a New York
banking corporation duly organized and existing under the laws of the State of
New York, as trustee (together with its successors as trustee as hereinbelow
provided, the "Trustee"), and XXXXXXXXXX, as individual trustee (together
with his successors as hereinbelow provided, the "Individual Trustee"), each
having an address at XXXXXXXXXX (with the Trustee and the Individual Trustee
being sometimes hereinafter collectively referred to as the "Trustees"), for
the benefit of the Registered Holders of the Notes (as hereinbelow defined).
Owner has received a true copy of this Indenture, which copy was provided
without charge.
PRELIMINARY STATEMENT OF OWNER
The defined terms used herein but not otherwise defined have the meanings
set forth in Article One.
This Indenture shall be effective on the date of delivery.
Concurrently herewith and pursuant to the terms hereof, Owner is issuing
to the Registered Holders its 7.05% Series A Senior Secured Notes due 2009 in
the aggregate principal amount of $28,000,000 (the "Series A Notes."), and its
7.45% Series B Senior Secured Notes due 2013 in the aggregate principal amount
of $14,000,000 (the "Series B Notes", and together with the Series A Notes, the
"Notes") to be delivered by Owner to the Registered Holders against payment
therefor in accordance with the Note Agreements.
Owner has fee title to certain parcels of land (the "Land Parcels") and
the Improvements located thereon and to certain condominium apartments (the
"Condominium Apartments"). Each such Land Parcel and Condominium Apartment is
listed in Schedule A hereto.
Concurrently herewith, Owner is executing and delivering the Deed of Trust
and the Mortgage affecting the Land Parcels and the Condominium Apartments to
secure Owner's performance of its obligations hereunder and under the other
Loan Documents.
Owner is duly authorized to issue the Notes and to execute and deliver
this Indenture and the other Loan Documents, and all actions required by law
and all actions of Owner required therefor have been duly taken.
<PAGE> 7
NOW, THEREFORE, THIS INDENTURE WITNESSETH: that Owner has executed and
delivered this Indenture and the other Loan Documents and hereby Grants unto
the Trustees, their successors and assigns, in trust for the security and
benefit of the Registered Holders from time to time a security interest in all
of the Trust Estate, in consideration of the premises, the acceptance by the
Trustees of the trusts created hereby, the purchase and acceptance of the Notes
by the Registered Holders, and in order to secure the payment of the principal
and interest and any Make-Whole Payment or other sums payable on the Notes
(including any renewal, extension or modification thereof and all future
advances and readvances that may subsequently be made to Owner by the Trustees
or the Registered Holders under the Notes (including any interest added to
principal), but nothing contained herein shall create an obligation on the part
of any of such parties to make future advances or readvances to Owner), and in
all instances under this Indenture to secure the performance of the covenants
and agreements contained in the Notes, this Indenture and the other Loan
Documents.
TO HAVE AND TO HOLD all and singular the Trust Estate unto the
Trustees, their successors and assigns, in trust for the benefit and security
of the Registered Holders from time to time, for the uses and purposes and
subject to the terms and provisions set forth in this Indenture and the other
Loan Documents.
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101 Specific Terms Defined. Unless the context otherwise
specifies or requires, the following terms have the meanings specified below:
"Acceleration" means a declaration by the Trustee pursuant to Section
4.01(I) of the Deed of Trust and the Mortgage (or by one or more Registered
Holders in accordance with and subject to Section 604 of this Indenture) that
the principal of all the Notes and all other amounts for which Owner is
obligated under the Notes, hereunder and the other Loan Documents are due and
payable immediately, which declaration shall have not been rescinded and
annulled by the Registered Holders in the manner provided in Section 602
hereof.
"Act", when used with respect to any Registered Holder, has the
meaning specified in Section 104.
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"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control,, when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or
Friday that commercial banks in New York, New York, are open for business.
"Condominium Apartments" has the meaning specified in the Preliminary
Statement.
"Corporate Trust Office" shall mean the principal office of the
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Indenture is
located at XXXXXXXXXX.
"Deed of Trust" means the Deed of Trust, Fixture Filing and Security
Agreement, dated as of the date hereof, between Owner and the Trustee,
affecting the Property in XXXXXXXXXX, California.
"Event of Default" has the meaning specified in the Deed of Trust and
the Mortgage in respect of the applicable Subseries of Notes and an Event of
Default under either of such instruments shall be an Event of Default
hereunder.
"Grant" means mortgage and warrant, grant, convey, assign, create a
security interest in, bargain, sell, pledge, give, transfer and set over.
"Hazardous Material" has the meaning specified in the Deed of Trust
and the Mortgage.
"Improvements" has the meaning specified in the Deed of Trust and the
Mortgage.
"Indenture" means this original Trust Indenture, together with any
amendments or supplements thereto executed from time to time.
"Individual Trustee" has the meaning specified in the introductory
paragraph hereof.
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<PAGE> 9
"Installment Payment Date" means any date on which interest or
interest and principal are due on the Notes.
"Installment Payments" has the meaning specified in the Notes.
"Land Parcel" has the meaning specified in the Preliminary Statement.
"Lien of the Deed of Trust and the Mortgage" and terms of like import
mean the lien or security interest or other interest or charge Granted to
either or both of the Trustees by the Deed of Trust and the Mortgage (including
the after-acquired property clauses thereof) or subsequently Granted thereunder
or pursuant thereto to the Trustees.
"Loan Documents" means the Notes, this Indenture, the Deed of Trust,
the Mortgage, the Note Agreements and the Uniform Commercial Code financing
statements filed in favor of either or both of the Trustees with respect to the
Trust Estate.
"Majority of the Holders" means the Registered Holders holding a
majority of the Outstanding Principal Amount of the Notes.
"Make-Whole Payment", when used with respect to any Note, means the
excess, if any, of (i) the sum of the respective present values of each
prospective Installment Payment in respect of such Note (or the portion of such
Installment Payment corresponding to the portion of such Note to be prepaid)
for the period from the Installment Payment Date of such Installment Payment to
the date of Acceleration or prepayment, discounted at a rate equal to the
"Treasury Constant Yield," based on a 360-day year of twelve 30-day months over
(ii) the then current Outstanding Principal Amount of such Note (or the then
unpaid portion thereof to be prepaid). As used above in this definition, the
"Treasury Constant Yield" means the sum of 0.50 percent (or 50 basis points)
plus the arithmetic mean of the rates published as "Treasury Constant
Maturities" as of 11:00 a.m. eastern standard time for the five Business Days
preceding the date on which Acceleration has been declared or the notice of
prepayment is given by Owner as shown on the USD screen of the Bloomberg
service, or if such service is not available, the Telerate service, or if
neither the Bloomberg nor the Telerate service are available, under Section 504
in the weekly statistical release designated H.15(519) (or any successor
publication) published by the Board of Governors of the Federal Reserve System,
for "On the Run" U.S. Treasury obligations corresponding to the Weighted
Average Life to Stated Maturity of the principal of the Note
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<PAGE> 10
accelerated or prepaid; if no such maturity shall so exactly correspond, yields
for the two most closely corresponding published maturities shall be calculated
pursuant to the foregoing sentence and the Treasury Constant Yield shall be
interpolated or extrapolated (as applicable) from such yields on a
straight-line basis (rounding, in the case of relevant periods, to the nearest
month). If the Make Whole Payment as calculated pursuant to the above
provisions of this definition would not be a positive number, the Make Whole
Payment is zero. The Make-Whole Payment, if any, to be paid in connection with
any prepayment, shall be determined by the Trustee and written notice of the
respective amounts thereof shall be furnished to the Owner and the Registered
Holders by the Trustee at least three Business Days prior to the date fixed for
such prepayment, which notice shall set forth in reasonable detail the
computation thereof. Each Registered Holder shall have two Business Days after
receipt in which to object to such computation and, absent such objection, each
such determination of the Make-Whole Payment shall be binding upon the Owner
and the Registered Holders absent manifest error.
"Maturity", when used with respect to any Note, means the date on
which the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of Acceleration,
prepayment or otherwise.
"Mortgage" means the Mortgage, Security Agreement and Financing
Statement, dated as of the date hereof, between Owner and the Individual
Trustee, affecting the Property in XXXXXXXXXX, Hawaii.
"New Note" has the meaning specified in Section 209 hereof.
"Note Agreements" means the two Note Purchase and Participation
Agreements, dated as of the date hereof, between Owner and each of the two
original Registered Holders.
"Notes" has the meaning specified in the Preliminary Statement.
"Opinion of Counsel" means a written opinion of independent legal
counsel, who may be counsel to and employed by Owner (or any Affiliate of
Owner), and who shall be reasonably acceptable to the Trustee.
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<PAGE> 11
"Outstanding", when used with respect to Notes, means, as of the date
of determination, (i) all Notes delivered by Owner on the date hereof and
thereafter authenticated by the Trustee and (ii) after the date hereof, all
Notes authenticated and delivered by the Trustee, pursuant to this Indenture,
except:
(i) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation pursuant to this Indenture;
(ii) Notes to be prepaid in accordance with the terms of this
Indenture and for which the prepayment amount shall have been deposited
in trust with the Trustee; provided that notice shall have been given in
accordance with the terms hereof;
(iii) Notes in substitution for which other Notes shall have been
authenticated and delivered pursuant to Section 208; and
(iv) Notes held by or registered in the name of Owner or any
nominee or Affiliate of Owner; provided, however, this clause (iv)
shall not be construed to preclude any of the foregoing Persons from
acquiring any Note and receiving an appropriate portion of amounts received
by the Trustee with respect to Notes held by such Persons pursuant to the
terms hereof.
"Outstanding Principal Amount", when used with respect to any Note or
Notes, means the aggregate outstanding principal balance of such Note or Notes
not held by Owner or Owner's Affiliates.
"Overdue Rate" means an interest rate equal to the sum of two percent
plus the stated rate of interest in such Note.
"Owner" means the Owner as defined in the initial paragraph of this
Indenture, until a successor or assign shall have become such, but only as may
be expressly permitted by Section 304, and thereafter "Owner" shall mean such
successor or assign.
"Owner's Certificate" means a certificate signed by the Chairman of
the Board, the President or a Vice President of Owner (or of a general partner
thereof, if Owner is a partnership), and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of Owner (or of a general
partner thereof, if Owner is a partnership).
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<PAGE> 12
"Permitted Exceptions" has the meaning given such term in the Deed of
Trust and the Mortgage.
"Permitted Investments" means:
(a) (i) Direct obligations of, or obligations the principal of and
interest on which are unconditionally guarantied as to full and timely
payment by, the United States of America; (ii) obligations of agencies of
the United States of America which are unconditionally guarantied by or
otherwise afforded the full faith and credit of the United States of America
as to full and timely payment; and (iii) time deposits secured exclusively
by any of the obligations described in (i) or (ii) above, provided that all
of the foregoing shall have maturities of less than one year so long as no
Event of Default has occurred and (to the actual knowledge of the Trustee)
is continuing (in which event, all of the foregoing investments to be made
during such time shall have maturities of less than 90 days);
(b) Demand and time deposits in, certificates of deposits of, or
bankers' acceptances issued by, any depository institution or trust
company incorporated or organized under the laws of the United States of
America or any state thereof which is a member in good standing of the
Federal Reserve System and has a combined capital, surplus, and undivided
profits of not less than $250,000,000, so long as, at the time of investment
or the contractual commitment providing for such investment, the commercial
paper or other short-term debt obligations of such depository institution or
trust company are rated at least "A-1" by Standard & Poor's Corporation and
"P1" by Moody's Investors Service, Inc., and the long-term debt obligations
of such depository institution or trust company are rated "A" by Standard &
Poor's Corporation and "A2" by Moody's Investors Service, Inc. (and, subject
to all of the foregoing conditions, may include the Trustee), provided that
all of the foregoing shall have maturities of less than one year so long as
no Event of Default has occurred and (to the actual knowledge of the
Trustee) is continuing (in which event, all of the foregoing investments to
be made during such time shall have maturities of less than 90 days);
(c) Repurchase agreements or obligations with respect to any
security described in clause (a) above where such repurchase obligation
has been entered into with a depository institution or trust company (acting
as principal) described in clause (b) above, provided
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<PAGE> 13
that all of the foregoing shall have maturities of less than one year
so long as no Event of Default has occurred and (to the actual knowledge of
the Trustee) is continuing (in which event, all of the foregoing investments
to be made during such time shall have maturities of less than 90 days); and
(d) Shares of money market mutual funds having a rating of AAAm-G
from Standard & Poor's Corporation and Aaa from Moody's Investors
Service, Inc. or otherwise approved by these rating agencies.
"Person" means any individual, partnership, corporation, trust,
estate, unincorporated association, syndicate, joint venture or organization,
or a government or any department or agency thereof.
"Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 208 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Note.
"Preponderance of the Holders" means the Registered Holders holding
70% of the Outstanding Principal Amount of the Notes.
"Property" means any Land Parcel together with the Improvements
thereon or, collectively, the Condominium Apartments, as the case may be,
including any Substitute Property but excluding any Withdrawn Property.
"Register" has the meaning specified in Section 204.
"Registered Holder of Notes" or "Registered Holder" means any Person
whose name appears on the Register as the owner of a Note other than owner or
owner's Affiliates.
"Responsible Officer", when used with respect to the Trustee, means
any officer within the Corporate Trust Office, including any vice-president,
assistant vice-president, assistant secretary or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and, with respect to a particular matter, any
other officer at the Corporate Trust Office to whom such matter is referred
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<PAGE> 14
because of his knowledge of and familiarity with the particular subject.
"Restricted Notes" has the meaning specified in Section 207.
"Series", with respect to Notes, means all of the Notes with the same
prefix (e.g., A- or B-).
"Series A Notes" and "Series B Notes" each has the meaning specified
in the Preliminary Statement hereinabove.
"Stated Maturity", when used with respect to (a) any Series A Note
means December 15, 2009 and (b) any Series B Note means June 15, 2013.
"Subseries", with respect to Notes, means all of the Notes with the
same suffix (e.g., -1 or -2).
"Substitute Property" means any retail, distribution or, subject to
approval by a Majority of the Holders, other type of property subjected to the
lien of a new deed of trust or mortgage or deeds of trust or mortgages, as
appropriate, pursuant to Section 404 hereof.
"Title Company" means First American Title Insurance Company or any
other national title company selected by Owner and reasonably acceptable to the
Trustee.
"Trust Estate" means all property subject (a) as provided in this
Indenture to the lien or security interest hereof or (b) to the lien or
security interest created in the Trustees or either of them by any other Loan
Document and any property or receipts received by the Trustees or either of
them for the benefit of the Registered Holders of the Notes pursuant to any
other Loan Document.
"Trustee" has the meaning specified in the introductory paragraph
hereof.
"Weighted Average Life to Stated Maturity" means, with respect to the
Outstanding Principal Amount of any Note as of the date of determination, the
number of years (calculated to the nearest 1/12 year) obtained by (x)
multiplying each remaining scheduled principal payment on such Note by the
number of years (calculated to the nearest 1/12 year) that will elapse between
the prepayment date and the scheduled Installment Payment Date for such
payment, (y) adding such products together and (z) dividing such sum by the
total Outstanding Principal Amount of such Note as of the date of
determination.
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<PAGE> 15
"Withdrawn Property" means any Property released from the lien of the Deed
of Trust or the Mortgage pursuant to Section 404 hereof.
Terms Generally. For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them
in this Article and include both the plural and the singular;
(b) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(c) the words "including" and "include" and other words of similar import
shall be deemed to be followed by the phrase "without limitation".
SECTION 102 Compliance Certificates and Opinions. Upon any application
or request by Owner to the Trustee to take any action under any provision of
this Indenture or any other Loan Document, Owner shall furnish to the Trustee
an Owner's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and, if requested by the Trustee and the same is in the Trustee's view
reasonably necessary for the Trustee to make an informed decision, an Opinion
of Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of a document is specifically
required by any provision of this Indenture or any other Loan Document relating
to such particular application or request, no additional certificate or opinion
need be furnished.
Every certificate or opinion required with respect to compliance with a
condition or covenant provided for in this Indenture or any other Loan Document
shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions
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<PAGE> 16
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103 Form of Documents Delivered to the Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any certificate of an officer of Owner (or of a general partner thereof)
may be based, insofar as it relates to legal matters, upon an Opinion of
Counsel. Any Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate of, or representations by, an officer of Owner (or
of the general partner thereof) stating that the information with respect to
such factual matters is in the possession of Owner, unless such counsel knows
that the certificate or representations with respect to such matters are
erroneous.
SECTION 104 Acts of Registered Holders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture or any other Loan Document to be given or taken by the
Registered Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Registered Holders in person or
by an agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to Owner. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Registered Holders signing such instrument or instruments. Proof of
execution of any such instrument
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<PAGE> 17
or of a writing appointing any such agent shall be sufficient for any purpose
of this Indenture or any other Loan Document and (subject to Section 801)
conclusive in favor of the Trustee and Owner, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Registered Holder of any Note shall bind every
future Registered Holder of the same Note and the Registered Holder of every
Note issued upon the registration of transfer thereof or in exchange therefor
or in lieu thereof in respect of anything done, omitted or suffered to be done
by the Trustee or Owner in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 105. Notices and Other Communications to the Trustee and Owner.
Any request, demand, authorization, direction, notice, consent, waiver or Act
of Registered Holders or other document provided or permitted by this Indenture
or any other Loan Document to be made upon, given or furnished to, or filed
with,
(1) the Trustees by any Registered Holder or by Owner shall be
sufficient for every purpose under this Indenture or any other Loan
Document if made, given, furnished or filed in writing with the Trustees at
the following address, or to such other address as the Trustees may
specify, by notice:
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<PAGE> 18
XXXXXXXXXX and
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Attention: XXXXXXXXXX
Telecopier No.: XXXXXXXXXX
(2) Owner by the Trustee or by any Registered Holder shall be
sufficient for every purpose under the Indenture or any other Loan
Document (unless otherwise herein expressly provided) if in writing and
delivered to Owner at the following address:
Kmart Corporation
3100 West Big Beaver Road
Troy, Michigan 48084
Attention: M.L. Skiles
Telecopier No.: 313-643-2689
with a copy to:
Dickinson, Wright, Moon, Van Dusen & Freeman
525 North Woodward Avenue
P.O. Box 509
Bloomfield Hills, Michigan 48303-0509
Attention: Erik J. Stone, Esq.
Telecopier No.: 313-433-7274
or to such other address as Owner may specify by notice.
All notices, offers, acceptances, rejections, consents, requests and other
communications hereunder shall be in writing and shall be deemed to have been
given (i) when delivered by hand, (ii) five Business Days after being sent by
first class registered or certified mail, postage prepaid, return receipt
requested, (iii) when sent by telecopier (provided that such notice is legible
and an original copy of such notice is also subsequently sent by overnight
courier in the manner described in the following clause (iv) within two
Business Days thereafter), or (iv) one Business Day after being sent by Federal
Express or any other nationally recognized overnight courier, in each case
addressed as aforesaid.
SECTION 106 Notice to Registered Holders; Waiver. Where this Indenture or
any other Loan Document provides for notice to the Registered Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and given in the same manner provided for in
Section 105, to each Registered
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Holder affected by such event, at its address as it appears in the Register or
such other address for notice provided in writing by such Registered Holder,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to the
Registered Holders is given by mail, neither the failure to mail such notice,
nor any defect in any notice so mailed, to any particular Registered Holder
shall affect the sufficiency of such notice with respect to other Registered
Holders. Where this Indenture or any other Loan Document provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by the Registered Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then
during the pendency of such suspension or other cause, such notification as
shall be made with the approval of the Trustee shall constitute a sufficient
notification for every purpose hereunder.
SECTION 107 Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 108 Successors and Assigns. The provisions of this Indenture
shall bind and inure to the benefit of the parties hereto and their respective
successors and assigns, whether so expressed or not.
SECTION 109 Separability Clause. In the case that any provision in this
Indenture, any other Loan Document or the Notes shall be deemed invalid,
illegal or unenforceable, the validity, legality and enforceability of such
provisions in other contexts, and the remaining provisions hereof, shall not in
any way be affected or impaired thereby.
SECTION 110 Benefits of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder and the Registered Holders, any benefit
or any legal or equitable right, remedy or claim under this Indenture or any
other Loan Document.
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SECTION 111 Applicable Law. This Indenture shall be governed by, and
shall be construed and enforced in accordance with, (i) the internal laws of
the State of New York (without regard to conflicts of laws) as to creation and
enforcement of the trusts and security interests created hereby,
interpretation, enforcement, validity, construction, effect and in all other
respects, including, but not limited to, the legality of the interest rate and
other charges, and (ii) the federal laws of the United States of America with
regard to U.S. Federal Securities laws, ERISA and any other applicable matters.
SECTION 112 Legal Holidays. In any case where any Installment Payment
Date or Maturity of any Note shall not be a Business Day, then (notwithstanding
any other provision of this Indenture, any other Loan Document or the Notes)
any payment due shall be made on the immediately succeeding Business Day
without additional interest or charge.
SECTION 113 Modifications; Waiver. This Indenture may not be modified
except in accordance with the provisions of Section 901 without consent or
Section 902 with consent, in either case by an instrument in writing executed
by Owner and the Trustee. No requirement hereof may be waived at any time
except by a writing signed by the party against whom such waiver is sought to
be enforced nor shall any waiver be deemed a waiver of any subsequent breach or
default.
SECTION 114 Maximum Interest Payable. Neither this Indenture nor the
Notes nor any other Loan Document shall require the payment or permit the
collection of interest in excess of the maximum amount not prohibited by law.
If any such excess is provided for herein or in the Notes or any other Loan
Document or shall be adjudicated to be so provided for, neither Owner nor its
successors or assigns shall be obligated to pay such excess and the right to
demand the payment of any such excess is hereby waived and any excess shall be
promptly refunded. This Section 114 shall control any other provision of this
Indenture, the Notes or any other Loan Document.
SECTION 115 Satisfaction. If and when the Notes shall have become due
and payable (whether by lapse of time, Acceleration or a required or elected
prepayment), and Owner shall have paid or caused to be paid the full amount of
the aggregate principal, interest and Make-Whole Payment, if any, on the Notes
and shall also pay or cause to be paid all other sums then payable hereunder by
Owner, then this Indenture and the Loan Documents (and the liens Granted
thereunder) shall become null and void and the Trustees at
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the written request and expense of Owner shall issue, execute and deliver such
instruments as may be necessary and appropriate for the release of the Lien of
the Deed of Trust or the Mortgage, as applicable, with respect to such
Property. Anything set forth in the preceding sentence to the contrary
notwithstanding, the indemnities by Owner contained in Section Eight of
the Note Agreements, Sections 801(a) and (b) of this Indenture, and Sections
2.08 and 2.14 of the Deed of Trust and the Mortgage shall survive the
termination of this Indenture. In the event of a prepayment required under the
terms of Article Four of this Indenture resulting in the prepayment of the
entire Subseries of Notes relating to a Property, the Trustees at the written
request and expense of Owner shall issue, execute and deliver such instruments
as may be necessary and appropriate for the release of the Lien of the Deed of
Trust or the Mortgage, as applicable, with respect to such Property.
SECTION 116 Counterparts. This Indenture may be executed in
counterparts. All counterparts shall constitute one instrument.
SECTION 117 Estoppel Certificates. At any time and from time to time
upon not less than twenty days' prior request by Owner, the Trustees shall
furnish a certificate certifying that (i) this Indenture or any other Loan
Document is in full force and effect as it relates to the Trustee (or that this
Indenture is in full force and effect as modified and setting forth the
modifications); (ii) the dates to which principal and interest have been paid;
(iii) to the best knowledge of the signer of such certificate, whether or not
Owner is in default under any of its obligations hereunder (and, if so, the
nature of such alleged default); and (iv) such other matters as Owner may
reasonably request. Any such certificate furnished pursuant to this Section
may be relied upon by Owner, and any existing or prospective purchaser or
sublessee, and any accountant or auditor of, from or to Owner.
SECTION 118 Schedules. Immediately following are Schedules A, B, C-1,
C-2, D-1 and D-2 referred to in this Indenture, which Schedules are hereby
incorporated by reference herein.
ARTICLE TWO
The Notes
SECTION 201 Issuance of the Notes. Except for Notes issued pursuant to
Section 208 hereof, Notes may be issued only on the effective date of this
Indenture. On the effective date of this Indenture, owner shall execute and
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deliver the Notes to the Note Purchasers (as defined in the Note Agreements).
The Trustee shall subsequently authenticate the Notes.
(i) The Notes will be issued in Series A and B, Subseries -1 and -2.
Each Subseries of Notes shall be in the aggregate amount stated on Schedule
C-1 hereto.
(ii) The Series A Notes shall be limited in aggregate original
principal amount to TWENTY-EIGHT MILLION DOLLARS ($28,000,000), and the
Series B Notes shall be limited in aggregate original principal amount to
FOURTEEN MILLION DOLLARS ($14,000,000);
(iii) The Notes shall be issuable only as fully registered Notes in the
minimum denominations set forth on Schedule C-2 hereto with respect to each
Subseries;
(iv) The Notes (including New Notes issued pursuant to Section 208)
shall be dated May 28, 1993;
(v) The Notes shall mature, unless sooner paid in full pursuant to
this Indenture, on the Stated Maturity thereof;
(vi) The Series A Notes shall bear interest on the unpaid principal
amount thereof from the date of issuance thereof until paid in full at the
rate of 7.05% per annum, and shall be due and payable in the manner shown
on the amortization schedule attached to Schedule D-1 hereto;
(vii) The Series B Notes shall bear interest on the unpaid principal
amount thereof from the date of issuance thereof until paid in full at the
rate of 7.45% per annum, and shall be due and payable in the manner shown
on the amortization schedule attached to Schedule D-2 hereto;
(viii) The Notes shall be prepayable only as provided in Article Four
hereof; and
(ix) The Series A Notes and Series B Notes, including the Trustee's
authentication thereof, shall be in the forms set forth in, respectively,
Schedules D-1 and D-2 attached hereto.
The Notes shall have such marks and such legends or endorsements thereon as are
provided by Section 207 hereof and as may be required to comply with any legal
requirement.
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SECTION 202 Execution of Notes. The Notes shall be signed on behalf of
Owner by the chairman, president or vice president, and a secretary or
assistant secretary, of Owner (or, if Owner is a partnership, of a general
partner thereof).
SECTION 203 Home Office Payment. The principal of and interest on the
Notes shall be payable at the Corporate Trust Office (or such other office
designated by the Trustee) in lawful money of the United States of America,
against presentation of the Notes for notation of the payment or prepayment
made thereon, or in the case of a payment or prepayment which will discharge
all indebtedness evidenced thereby, against surrender thereof. Notwithstanding
the foregoing sentence, if any Registered Holder who shall file with the
Trustee an executed copy of an agreement between Owner and such Registered
Holder, or the Person for whom such Registered Holder of the Notes is a
nominee, or a conformed copy thereof certified by Owner to be a true and
complete copy thereof, to the effect that (i) Owner will pay or cause to be
paid all amounts which become due and payable on such Note (except a payment of
principal which will discharge all indebtedness evidenced by such Note), in a
manner such that, as of 12:00 noon (New York City time), the Trustee shall be
in actual possession of immediately available federal funds, whereupon the
Trustee shall make all such payments by check or bank wire transfer in
accordance with such agreement duly mailed, delivered or made to such
Registered Holder at its address or account set forth on the Register as
provided in such agreement, without presentation of such Note to the Trustee,
and (ii) such Registered Holder or Person will not sell, transfer or otherwise
dispose of such Note, other than as provided in Section 208, then the Trustee
shall, until such Note has been transferred on the Register in accordance with
Section 208, pay all amounts which become due and payable on such Note in
accordance with such agreement. Each Note Agreement constitutes an agreement
described in the immediately preceding sentence, and the Trustee hereby
acknowledges receipt of executed copies thereof or a conformed copy certified
by Owner to be true and complete. In the event that the Trustee does not
transmit any such payment or prepayment that is received by the Trustee in
immediately available funds before 12:00 noon (New York City time) on a
Business Day to such Registered Holder in accordance with a Note Agreement or
such other agreement on the date of the Trustee's receipt thereof or on the
date on which such payment or prepayment is due, whichever occurs later, the
Trustee, in its individual capacity, shall pay per diem interest on such
payment or redemption to such Registered Holder, at the "Federal Funds Rate"
which prevails at the close of business on such date. Any payment
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received by the Trustee after 12:00 noon (New York City time) on any Business
Day shall be deemed to be received by the Trustee at 9 A.M. on the immediately
following Business Day for purposes of the immediately preceding sentence.
SECTION 204 Register. The Trustee shall cause to be kept at the
Corporate Trust Office a register (the "Register") for the registration of
transfer of the Notes. The Register shall be maintained by the Trustee, and
the names and addresses of the Registered Holders of the Notes, the transfers
of the Notes and the names and addresses of the transferees of the Notes shall
be entered in the Register under such reasonable regulations as the Trustee may
prescribe.
SECTION 205 Registered Holders. Owner and the Trustee may deem and treat
the Registered Holder of any Note as the absolute owner thereof (whether or not
such Note shall be overdue) for all purposes, and neither Owner nor the Trustee
shall be affected by any notice to the contrary (subject to Section 208), and
payment of the principal of, Make-Whole Payment, if any, and interest on such
Note shall be made only to or upon the order of such Registered Holder. All
such payments so made, including, without limitation, all payments made
pursuant to the second sentence of Section 203, shall be valid and effectual to
satisfy and discharge the liability of Owner upon such Note to the extent of
the sum or sums so paid.
SECTION 206 Certificate of Authentication. No Note, other than the Notes
issued as of the date hereof, for which authentication shall not be required,
shall be valid until it has been authenticated by the execution by the Trustee
of the certificate of authentication thereon. The delivery and, with regard to
Notes issued after the date hereof, authentication by the Trustee of any Note
shall be conclusive evidence that such Note has been duly issued hereunder and
is entitled to the benefits and security of this Indenture and the other Loan
Documents.
SECTION 207 Legend on Restricted Notes. During the period beginning on
the date of issuance of the Notes and ending on the date three years from such
date, all Notes, however such Notes came to be outstanding, shall be deemed
"Restricted Notes" and shall be subject to the restrictions on transfer
provided in the legend set forth in the first paragraph on the face of the
forms of the Notes in Schedules D-1 and D-2; provided, however, that the term
"Restricted Notes" shall not include Notes as to which restrictions have been
terminated in accordance with Section 208 hereof. All Restricted Notes shall
bear the legend set forth in the first paragraph on the face of the
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Notes in Schedules D-1 and D-2. Notes that are not Restricted Notes shall not
bear such legend. Notwithstanding the foregoing, all Notes shall continuously
bear the legend set forth in the second paragraph on the face of the Notes in
Schedules D-1 and D-2.
SECTION 208 Transfer and Exchange of Notes. Notes may be transferred
only on the Register. Any transferee of a Note shall be required as a
condition to such transfer to execute and deliver to the Owner and the Trustee
at the Corporate Trust Office a certificate containing the representations made
in Section 6.2(d) of the Note Agreements regarding ERISA (as defined therein)
and to comply with the notice provisions of said Section (and references
therein to "Closing" shall be deemed, for purposes of the above provisions of
this Section, to refer to the time of transfer of a Note). For purposes of the
preceding sentence, a prepayment pursuant to Section 404(c) shall not be deemed
a transfer. Subject to the foregoing, upon surrender for registration of
transfer of any Note at the Corporate Trust Office, the Owner shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Notes, of any authorized
denominations and of a like aggregate principal amount, bearing such
restrictive legends as may be required by this Indenture. Further, the Trustee
shall mark such Note in accordance with Section 209 hereof.
Any Note or Notes may be exchanged for a new Note or Notes if such Note or
Notes to be so exchanged are surrendered for cancellation at the Corporate
Trust Office and are accompanied by the request of the Registered Holder
thereof specifying the denomination of the new Note or Notes to be issued in
exchange therefor. A new Note or Notes prepared and executed by Owner and
payable to such Registered Holder in the denominations so requested (but in no
denominations less than the minimum denomination specified in Section 201
hereof), and in an aggregate principal amount equal to the aggregate original
principal amount of such Note or Notes to be so exchanged, shall be
authenticated and delivered by the Trustee to such Registered Holder in
exchange for such Note or Notes to be so exchanged.
If any Notes become mutilated or are destroyed, lost or stolen, upon
request of the Registered Holder thereof, a new Note, prepared and executed by
Owner and payable to such Registered Holder in the same principal amount as
such Note so mutilated, destroyed, lost or stolen, shall be authenticated and
delivered by the Trustee to such Registered Holder in exchange for such Note,
if mutilated, or in substitution for such Note, if destroyed, lost or
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stolen, provided that (i) in the case of a mutilated Note, such Note shall be
surrendered for cancellation at the Corporate Trust Office, and (ii) in the
case of a destroyed, lost or stolen Note the Registered Holder thereof shall
furnish to Owner and the Trustee such indemnity and security as may be
reasonably required by Owner to indemnify, defend and save Owner and the
Trustee harmless and to evidence to their satisfaction, the destruction, loss
or theft of such Note and the ownership thereof (provided that, in connection
with such indemnity, no security shall be required from any Registered Holder
that is a Registered Holder as of the date hereof or an Institutional Investor
(as defined in the Note Agreement), and, in that event, if there shall occur
any losses resulting from the nonperformance on such indemnity, Owner agrees
that, as between Owner and the Trustee, such losses shall be Owner's sole
responsibility and liability).
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Owner, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or for
exchange shall (if so required by the Owner or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer or acknowledgement of
surrender in form satisfactory to the Owner and the Trustee duly executed, by
the Registered Holder thereof or his attorney duly authorized in writing.
Every Restricted Note shall be subject to the restrictions on transfer
provided in the legend required to be set forth on the face of each Restricted
Note pursuant to Section 207 and Schedules D-1 and D-2, unless such
restrictions on transfer shall be waived by the written consent of the Owner,
and the Registered Holder of each Restricted Note, by such Registered Holder's
acceptance thereof, agrees to be bound by such restrictions on transfer.
Whenever any Restricted Note is presented or surrendered by the initial
purchaser of such Restricted Note for registration of transfer or for exchange
for a Note registered in a name other than that of the Registered Holder, such
Restricted Note must be accompanied by a certificate in substantially the form
set forth in Section 210, dated the date of such surrender and signed by the
Registered Holder of such Restricted Note, as to compliance with such
restrictions on transfer and, for transfers not made pursuant to Rule 144A of
the Securities Act, by an opinion of in-house counsel, addressed to the Owner
and the Trustee and in form acceptable to the Owner, to the effect that the
transfer of such Restricted Note is exempt from registration. The
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Trustee shall not be required to accept for such registration of transfer or
exchange any Restricted Note not so accompanied by a properly completed
certificate and such opinion.
The restrictions imposed by this Section 208 and Section 207 upon the
transferability of any particular Restricted Note shall cease and terminate
when such Restricted Note has been sold pursuant to an effective registration
statement under the Securities Act or transferred pursuant to Rule 144 under
the Securities Act (or any successor provision thereto), unless the Registered
Holder thereof is an affiliate of the Owner within the meaning of Rule 144 (or
such successor provision). Any Restricted Note as to which such restrictions
on transfer shall have expired in accordance with their terms or shall have
terminated may, upon surrender of such Restricted Note for exchange to the
Trustee in accordance with the provisions of this Section 208, be exchanged for
a new Note, of like tenor and aggregate principal amount, which shall not bear
the restrictive legend required by Section 207. The Owner shall inform the
Trustee of the effective date of any registration statement registering the
Notes under the Securities Act. The Trustee shall not be liable for any action
taken or omitted to be taken by it in good faith in accordance with the
aforementioned opinion of counsel or registration statement.
As used in the preceding two paragraphs of this Section 208, the term
"transfer" encompasses any sale, pledge, transfer or other disposition of any
Restricted Note.
SECTION 209 New Notes; Notation of Amounts Paid. Each new Note (as used in
this Section, a "New Note") issued pursuant to Section 208 in exchange for, in
substitution for, or in lieu of a Predecessor Note shall be dated the date of
authentication of the New Note. The Trustee shall mark on each New Note, as
well as on any Note to be transferred (i) the date to which principal and
interest have been paid on such Predecessor Note (or if no New Note is being
issued, on such Note to be transferred) and (ii) all payments and prepayments
of principal made on such Predecessor Note which are allocable to such New Note
(or if no New Note is being issued, on such Note to be transferred). Interest
shall be deemed to have been paid on such New Note to the date to which
interest was paid on such Predecessor Note, and all payments and prepayments of
principal marked on such New Note, as provided in clause (ii) above, shall be
deemed to have been made thereon. All New Notes issued pursuant to Section 208
in exchange for or in substitution for or in lieu of Predecessor Notes shall be
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valid obligations of Owner evidencing the same debt as such Predecessor Notes
and shall be entitled to the benefits and security of this Indenture to the
same extent as such Predecessor Notes.
SECTION 210 Form of Certification. In connection with the certification
contemplated by Section 208 relating to the compliance with certain
restrictions relating to transfers of a Restricted Note by the initial
purchaser of such Restricted Note, such certification shall be provided
substantially in the form of the following certificate, with only such changes
as shall be approved by Owner:
CERTIFICATE
KMART CORPORATION
(1)
[7.05% Series A Senior Secured Notes Due 2009]
[7.45% Series B Senior Secured Notes Due 2013]
This is to certify that as of the date hereof with respect to U.S. $_______
principal amount of the above-captioned notes presented or surrendered on the
date hereof (the "Surrendered Notes") for registration of transfer, or for
exchange where the notes issuable upon such exchange are to be registered in a
name other than that of the undersigned registered owner (each such transaction
being a "transfer"), that the transfer of Surrendered Notes associated with
such transfer complies with the restrictive legend set forth in the first
paragraph on the face of the Surrendered Notes for the reason checked below:
The transfer of the
- ----------- Surrendered Notes complies
with Rule 144A under the U.S.
Securities Act of 1933, as
amended (the "Securities
Act"); or
______________
(1) Bracketed provisions are in the alternative and the party delivering the
certificate should select the appropriate series.
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- --------- The transfer of the
Surrendered Notes complies
with Rule 904 under the
Securities Act.
- --------- The transfer of the surrendered Notes
complies with another exemption from Section
5 of the Securities Act.
[NAME OF HOLDER]
By:
-----------------------------
Name:
Title:
Dated:
------------,-----*
* To be dated the date
of presentation or
surrender
SECTION 211 The Trustee as Agent. The Trustee is hereby appointed the
agent of Owner for the payment, registration, transfer and exchange of Notes,
and the Trustee agrees to act in compliance with the terms of Sections 203
through 209. In all cases, the relationship of the Trustee to Owner is that of
an independent contractor.
SECTION 212 Investments. The Trustee shall invest any amounts held
hereunder pending their application to the purposes herein provided in
Permitted Investments, which investment, so long as no Event of Default has
occurred and is continuing hereunder, shall be upon the written direction of
Owner. Unless otherwise instructed by Owner, Owner hereby directs the Trustee
to invest any amounts held pending their application to the purposes herein
provided in Permitted Investments described in paragraph (d) of the definition
thereof (or, if such investments are unavailable, described in paragraph (b) of
the definition thereof). Any such investments shall mature or be redeemable at
par and without penalty upon the option of the Trustee, as the holder thereof,
on or prior to the time such amounts are required to be applied hereunder.
Notwithstanding the foregoing, the Trustee shall insure that all funds in
investments that will be needed to make an Installment Payment on an
Installment Payment Date (or to pay on any other date any other amount
anticipated to be due to the Registered Holders of the Notes hereunder or under
any other Loan Document) are available one day prior to the Installment Payment
Date (or such other date). Owner, and not the Trustee, shall bear any losses
resulting from such investments. The Trustee shall not be responsible for its
inability to invest funds received after 10:00 a.m. (New
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York City time), but shall use reasonable efforts to do so. After application
to the purposes for which any amounts invested hereunder are held, any
investment income remaining from such investments shall be paid to Owner, upon
Owner's written instruction.
ARTICLE 3
Particular Covenants
Owner hereby represents, warrants and covenants as follows:
SECTION 301 Payment of the Notes and Performance of Other
Obligations. Owner will punctually pay the principal, interest, Make-Whole
Payment, if any, and all other sums to become due in respect of the Notes in
accordance with this Indenture and the Notes. Owner will punctually pay and
perform the obligations of Owner under the other Loan Documents. Owner will
promptly deliver to the Trustees written notice of any material default by it
in the performance of its obligations hereunder.
SECTION 302 Installment Payments. Owner shall, (i) on each
Installment Payment Date, deposit with the Trustee, in accordance with Section
203, a sum sufficient to pay the Installment Payment due on such Installment
Payment Date and (ii) on or before the due date for any other payment of
principal or interest on the Notes or any Make-Whole Payment, deposit with the
Trustee, in accordance with Section 203, a sum sufficient to pay such
principal, interest or Make-Whole Payment, and shall promptly notify the
Trustee of its action or failure so to act.
SECTION 303 Negative Covenants. (a) Owner will not (i) sell, convey,
assign or otherwise dispose of its interest in the Trust Estate or any part
thereof or create a lien for borrowed indebtedness on all or any portion of the
Trust Estate, except as permitted below in Sections 304 and 305; (ii) claim any
credit on, or make any deduction from, any Make-Whole Payment, interest or
principal of the Notes by reason of payment of any taxes levied or assessed or
to be levied or assessed on the Trust Estate or any part thereof; or (iii)
create or (subject to the rights to contest as provided herein and in the Deed
of Trust or the Mortgage) suffer to be created, any mortgage, lien,
encumbrance, charge or other exception to title or ownership upon or against
its interest in the Trust Estate or any part thereof, other than Permitted
Exceptions. Notwithstanding anything in this Section 303(a) to the contrary,
Owner shall have the right to lease the Properties subject to the Lien of the
Deed of Trust or the Mortgage.
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(b) Any transfer or attempted transfer by Owner of all or any part
of the Trust Estate, except as permitted below in Sections 304 and 305, shall
be void and of no effect.
SECTION 304 Consolidation, Merger Sale or Conveyance. (a) Owner
covenants that it will not merge or, consolidate with any other corporation or
sell or convey all or substantially all of its assets to any Person, unless (i)
either Owner shall be the continuing corporation, or the successor corporation
(if other than Owner) shall be a corporation organized under the laws of the
United States of America or any State thereof and shall expressly assume the
due and punctual payment of the principal of and interest on all the Notes,
according to their tenor, and the due and punctual performance and observance
of all of the covenants and conditions of this Indenture to be performed or
observed by Owner, by supplemental indenture satisfactory to the Trustee,
executed and delivered to the Trustee by such corporation, and (ii) Owner or
such successor corporation, as the case may be, shall not, immediately after
such merger or consolidation, or such sale or conveyance, be in default in the
performance of any such covenant or condition.
(b) In case of any such consolidation, merger, sale or conveyance,
and following such an assumption by the successor corporation, such successor
corporation shall succeed to and be substituted for Owner, with the same effect
as if it had been named herein. Such successor corporation may cause to be
signed, and may issue either in its own name or in the name of Owner prior to
such succession all New Notes issuable under Section 208; and, subject to all
the terms, conditions and limitations in Section 208, the Trustee shall
authenticate and shall deliver any New Notes which previously shall have been
signed and delivered by the officers of Owner to the Trustee for
authentication, and any New Notes which such successor corporation thereafter
shall cause to be signed and delivered to the Trustee for that purpose. All of
the Notes so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Notes therefore or thereafter issued in accordance
with the terms of this Indenture as though all of such Notes had been issued at
the date of the execution hereof.
In case of any such consolidation, merger, sale or conveyance such
changes in phraseology and form (but not in substance) may be made in the Notes
thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a conveyance
by way of lease) Owner or any successor
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corporation which shall theretofore have become such in the manner described in
this Section shall be discharged from all obligations and covenants under this
Indenture and the Notes and may be liquidated and dissolved.
(c) The Trustee shall receive an Opinion of Counsel as conclusive
evidence that any such consolidation, merger, sale or conveyance, and any such
assumption, and any such liquidation or dissolution, complies with the
applicable provisions of this Indenture.
SECTION 305 Transfers by Owner. Owner may transfer one or more of the
Properties to another Person subject to the Lien of the Mortgage and/or the
Deed of Trust, as applicable, provided that (i) the Notes remain recourse
obligations of Owner, (ii) Owner enters into a triple net lease with such
Person, under which the rent payments payable by Owner are in amounts equal to
or greater than the payments of principal and interest on the applicable Notes,
a copy of which Owner shall provide to the Trustee, (iii) the lien of such
lease is subordinate to the Lien of the Mortgage and/or Deed of Trust, as
applicable and (iv) the Trustees receive collateral assignment of the lessor's
rights under such lease.
SECTION 306 Financial Reports. Owner will furnish to each Registered
Holder:
(a) As soon as available and in any event within sixty
days after the end of each quarterly fiscal period (except the last) of each
fiscal year, copies of:
(i) a consolidated balance sheet of Owner and its subsidiaries as of
the close of such period, and
(ii) consolidated statements of income, shareholders' equity and cash
flows of Owner and its subsidiaries for the portion of the fiscal year
ending with such period;
in each case setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year, all in reasonable detail and
certified as complete and correct, subject to changes resulting from year-end
audit adjustments, by the chief accounting officer of Owner; provided that
Owner will have satisfied the requirements of this Section 306(a) by delivery
within the time period described hereinabove of its quarterly reports on Form
10-Q as filed with the Securities and Exchange Commission so long as such Form
10-Q contains quarterly statements reflecting the financial position and result
of operations of Owner and its consolidated subsidiaries for such quarter;
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(b) As soon as available and in any event within one
hundred twenty days after the close of each fiscal year of Owner, copies of:
(i) an audited consolidated balance sheet of Owner and
its subsidiaries as of the close of such fiscal year, and
(ii) audited consolidated statements of income, shareholders,
equity and cash flows of Owner and its subsidiaries for such fiscal year;
provided that Owner will have satisfied the requirements of this Section 306(b)
by delivery within the time period described hereinabove of its annual reports
on Form 10-K as filed with the Securities and Exchange Commission so long as
such Form 10-K contains annual statements reflecting the financial position and
result of operations of Owner and its consolidated subsidiaries for such fiscal
year; and
(c) Promptly, upon their becoming available and concurrent with
sending to stockholders or debenture holders, and the provision of subsections
306(a) and (b) notwithstanding, copies of each financial statement, report,
notice or proxy statement sent by Owner to such stockholders or debenture
holders generally including, without limitation, all annual reports of Owner
filed on Form 10-K.
SECTION 307 Delivery of Certain Information. At any time when Owner
is not subject to Section 13 or 15(d) of the United States Securities Exchange
Act of 1934, as amended, upon the request of any Registered Holder, Owner will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Registered Holder or to a prospective purchaser of such Note
designated by such Registered Holder, as the case may be, in order to permit
compliance by such Registered Holder with Rule 144A under the Securities Act
(or any successor provision thereto) in connection with the resale of such Note
by such Registered Holder; provided, however, that Owner shall not be required
to furnish such information in connection with any request made on or after the
date which is three years from the later of (i) the date such Note (or any
Predecessor Note) was acquired from Owner or (ii) the date such Note (or any
Predecessor Note) was last acquired from an "affiliate" of Owner within the
meaning of Rule 144 under the Securities Act (or any successor provision
thereto); and provided further, that Owner shall not be required to furnish
such information at any time to a prospective purchaser located outside the
United States who is not a "U.S. person" within the meaning of Regulation S
under the Securities Act if such Note may then be sold to such prospective
purchaser in
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accordance with Rule 904 under the Securities Act (or any successor provision
thereto). "Rule 144A Information" shall be such information as is specified
pursuant to Rule 144A(d)(4) under the Securities Act (or any successor
provision thereto).
ARTICLE FOUR
Condemnation; Hazardous Material; Substitution of
Collateral and Mandatory and Optional Prepayments
SECTION 401 Condemnation. (a) Promptly upon obtaining actual
knowledge of any proceedings for the taking of any Property or any part thereof
in condemnation or other eminent domain proceeding (collectively, a
"condemnation"), Owner shall notify the Trustees in writing of the pendency
thereof. The Trustees may (but shall have no obligation to) participate in
such proceedings, and Owner will deliver all instruments reasonably requested
by the Trustees to permit such participation. Owner will pay or cause to be
paid the reasonable cost of any such proceedings, action, negotiation, appeal,
prosecution or adjustment.
(b) In the event that less than fifteen percent of the
buildings comprising the Improvements of any Property shall be permanently
expropriated, Owner shall, at its sole cost and expense, promptly and with due
diligence restore such Property as nearly as practicable to complete units of
like quality and character as existed just prior to such expropriation. Any
condemnation award or compensation in lieu thereof received by the Trustee or
Owner shall be applied (i) to reimburse Owner for the costs of such
restoration, (ii) to the extent of any remaining proceeds, at the option of the
Holder thereof, to the pro rata prepayment of a portion of each Note secured by
such Property, in accordance with Section 502 hereof and (iii) to the extent of
any remaining proceeds, as Owner may determine.
(c) In the event that (i) a public or quasi-public
authority has permanently expropriated more than fifteen percent of the
buildings comprising the Improvements of any Property or (ii) permanent
expropriation by a public or quasi-public authority has materially impaired the
points of ingress and egress to the public roadways of a Property substantially
as in existence on the date hereof (with no reasonable replacement points of
ingress-egress available), Owner, in accordance with the provisions of Section
404 below, shall either deliver Substitute Property to the Trustee or, failing
such delivery, prepay the Notes secured by such Property in accordance with
Section 502 hereof.
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SECTION 402 Hazardous Material. (a) Owner, promptly upon the receipt
of any notice from any governmental authority with regard to any alleged
Hazardous Material with respect to any Property, shall deliver a copy of such
notice to the Trustee.
(b) If a governmental authority acting under applicable laws has
directed Owner to remediate any alleged Hazardous Material existing on or
discharged from any Property, Owner shall engage an independent environmental
engineering firm reasonably acceptable to the Trustee to perform an
environmental assessment. If, based upon such environmental assessment, Owner
reasonably determines that the costs of remediating such Hazardous Material
will exceed 25% of Owner's original costs for such Property (such original
costs being $7,988,625, in respect of the XXXXXXXXXX, California Property and
$35,006,352 in respect of the XXXXXXXXXX, Hawaii Property), Owner, in accordance
with the provisions of Section 404 or 502 below, shall either deliver
Substitute Property to the Trustee or, failing such delivery, prepay the Notes
secured by such Property.
(c) If Owner has an environmental assessment prepared in response
to any notice from any governmental authority with regard to any alleged
Hazardous Material with respect to any Property, Owner shall promptly deliver a
copy of such assessment to the Trustee.
SECTION 403 Hawaii Taxes. If Owner, in accordance with Section
2.07(c) of the Mortgage, shall be obligated to pay any taxes or assessments of
the State of Hawaii or any political subdivision thereof, that are levied,
assessed or imposed on any Registered Holder with respect to interest or
principal payable under the Notes, Owner, in accordance with the provisions of
Section 404 below, may elect to deliver to the Trustee Substitute Property for
the Hawaii Property.
SECTION 404 Substitute Property. (a) In the event that Owner shall be
required or elects to deliver Substitute Property to the Trustee under Sections
401(c), 402(b) above, Owner shall deliver to the Trustee:
(1) a mortgage or deed of trust or mortgages or deeds of
trust, as appropriate, in favor either or both of the Trustees and
executed by Owner, for a property or properties occupied by
Owner or its wholly-owned subsidiaries, containing terms,
conditions and covenants not less favorable to the Trustees than the
Deed of Trust or the Mortgage for the Property such Substitute
Property replaces;
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(2) a valid and enforceable ALTA loan policy of title
insurance for each Substitute Property issued by a title insurer
qualified to do business in the jurisdiction where the Substitute
Property is located, in an amount not less than the appraised value
of the Substitute Property, insuring that the Owner has good and
marketable title to the Property, free and clear of all encumbrances
and liens, subject only to covenants, conditions and restrictions,
rights-of-way, easements and other matters of public record that do
not have a material adverse effect on the value of the Substitute
Property and insuring that under the new mortgage or deed of trust the
Trustees will have a valid first lien on the Substitute Property,
subject only to Permitted Exceptions;
(3) a "Phase I" environmental assessment report addressed
to the Trustees with respect to each Substitute Property prepared by
an independent environmental engineering firm, stating that there is
no evidence that a release of hazardous materials has occurred and
not been remediated on the Substitute Property or that a release of
hazardous materials has occurred in the vicinity of the Substitute
Property that would likely migrate to the Substitute Property and
recommending no further environmental evaluation;
(4) an appraisal or appraisals prepared by a member of
the American Institute of Appraisers of the Substitute Property,
showing that the aggregate fair market value of the Substitute
Property is equal to or greater than the greater of the value
of the Property such Substitute Property replaces or the Outstanding
Principal Amount of the Notes to be secured by such Substitute
Property; and
(5) such other instruments or certificates from Owner
(including legal opinions) as the Trustee may reasonably request.
(b) Upon Owner's compliance with Section 404(a) above, the Deed of
Trust or the Mortgage for the Property replaced by the Substitute Property
(the "Withdrawn Property") shall become null and void and the Trustees, at the
request and expense of Owner, shall issue, execute and deliver such instruments
as may be necessary and appropriate for the release of the Lien of such Deed of
Trust or
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Mortgage, as well as such other instruments as Owner may reasonably request.
(c) In the event that Owner shall fail to provide in
accordance with Section 404(a) above any Substitute Property it is required to
provide under Sections 401(c) or 402(b) within six months after such
requirement arises, the Trustee, if directed to do so by the Preponderance of
the Holders, shall notify the Owner to pay to the Trustee cash in an amount
sufficient for the Trustee to prepay the Notes previously secured by the
Property being withdrawn, plus any Make-Whole Payment. Upon receipt of such
amount, the Trustee shall apply such amount to the prepayment of such Notes
plus any Make-Whole Payment in accordance with Section 502(a).
SECTION 405 Optional Prepayment of All Notes by Owner. Upon
thirty days' prior written notice to the Registered Holders, the Notes are
subject to prepayment on any Installment Payment Date, in whole, but not in
part (i.e., all of the Notes must be prepaid concurrently), at a price equal to
100% of the Outstanding Principal Amount thereof, together with accrued and
unpaid interest thereon, plus a premium equal to the Make-Whole Payment.
SECTION 406 Rating Decline Put. If the rating assigned to the
long-term unsubordinated, senior, unsecured indebtedness of the Owner by either
Moody's Investors Service, Inc. or Standard & Poor's Corporation declines to a
rating below minimum investment grade (i.e., below a Moody's Investors Service,
Inc. rating of Baa3 or below a Standard & Poor's Corporation rating of BBB-),
or if such indebtedness of Owner ceases to be rated by both Moody's Investors
Service, Inc. and Standard & Poor's Corporation for any reason other than a
business failure or interruption affecting both Moody's Investors Service, Inc.
and Standard & Poor's Corporation, the Trustee, if so directed by a Registered
Holder, shall direct the Owner to deposit with the Trustee cash in an amount
sufficient for the Trustee to prepay 100% of the Outstanding Principal Amount
of all Notes held by such Registered Holder (i.e., at par, plus accrued
interest thereon). Upon receipt of such amount, the Trustee shall apply such
amount to the prepayment of such Notes.
Section 407 No Other Prepayment. Except as specified herein,
Owner shall not have the right to prepay the Notes, in whole or in part.
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ARTICLE FIVE
Application of Moneys
SECTION 501 Installment Payments. Unless and until an Event
of Default shall have occurred and be continuing to the Trustee's actual
knowledge, moneys held by the Trustee under this Indenture shall be applied as
follows:
(i) to any Installment Payment and any other sums
then due and owing hereunder;
(ii) to the purposes for which such moneys were
paid; and
(iii) the excess, if any, shall be paid to Owner, or upon its
written order, free of the lien hereof or of any other Loan Document.
SECTION 502 Prepayments. (a) Any net award or other monies paid or
available to the Trustees by reason of a condemnation of any portion of any
Property (subject to the rights thereto of Owner hereunder), shall be applied
in full to the prepayment of those Notes secured by such Property or portions
thereof to be prepaid pursuant to Sections 401(b)(ii), 402(b) or 404(c) at a
price equal to 100% of the Outstanding Principal Amount thereof, plus a premium
equal to the Make-Whole Payment, plus accrued and unpaid interest thereon to
the date of such prepayment and any expenses of such prepayment, and the
balance, if any, shall be paid to Owner or upon its written order, with
reasonable promptness, free of the lien hereof or of any other Loan Document.
(b) Upon any partial prepayment of Notes, the aggregate
Outstanding Principal Amount of the Notes to be prepaid shall be prorated by
the Trustee among the Registered Holders of all of such Notes in the proportion
which the Outstanding Principal Amount of each of such Notes bears to the
aggregate Outstanding Principal Amount of all of such Notes, and the Trustee
shall specify those Notes or portions thereof of each Registered Holder to be
prepaid (it being the intent and agreement that a prepayment with regard to a
Property be applied only to the corresponding subseries of Notes). Upon any
such partial prepayment, each Installment Payment thereafter payable on such
Notes shall be appropriately reduced by reamortizing the aggregate Outstanding
Principal Amount subsequent to such partial prepayment so that the same shall
amortize at the same rate of amortization as the Outstanding Principal Amount
of such Note immediately prior to such prepayment. On or prior to the date of
each partial prepayment of Notes, the Trustee
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shall, at Owner's expense, cause to be prepared a new amortization schedule
with respect to each such Note, setting forth the amount of the interest
portion and the principal portion of each Installment Payment thereafter to be
made on such Note and the amount of the principal of such Note that will remain
unpaid after each such Installment Payment is made. The Trustee shall retain
one copy and deliver a copy to Owner and each of the Registered Holders.
(c) In the case of any prepayment, notice thereof shall
be mailed (by prepaid registered or certified mail) by Owner to each Registered
Holder as soon as practical but in any event at least thirty days prior to the
date fixed for prepayment. Each such notice shall specify: (1) the date fixed
for prepayment, (2) the Outstanding Principal Amount to be prepaid, (3) any
Make-Whole Payment to be paid and (4) that on the date fixed for prepayment
such Outstanding Principal Amount will become due and payable and, provided
that such amount, together with any accrued interest thereon, is paid, that
interest thereon will cease to accrue on and after said date. Notice of
prepayment of Notes shall be given by Owner or, at Owner's request, by the
Trustee in the name and at the expense of Owner.
(d) Any Note prepaid only in part shall, at the time of
transfer thereof, if any, be marked by the Trustee in accordance with Section
209.
ARTICLE SIX
Remedies
SECTION 601 Cross-Default of Notes with Other Loan Documents;
Remedies Cumulative. (a) Upon the occurrence of an Event of Default, the
Trustees may declare an Acceleration and pursue all remedies available to it
in law or in equity hereunder or under the Deed of Trust, the Mortgage or any
other Loan Document.
(b) No remedy herein shall be exclusive of any other
remedy or remedies, and each such remedy shall be cumulative and in addition to
every other remedy given hereunder or under any other Loan Document or now or
hereafter existing at law or in equity; and every power and remedy of the
Trustees hereunder or under any other Loan Document may be exercised from time
to time and as often as may be deemed expedient by the Trustees. The Trustees
may enforce the provisions of the Notes without enforcing or realizing upon all
or any part of the security granted hereunder or under the Deed of Trust or the
Mortgage. No delay or omission of the Trustees to exercise any right or power
accruing upon an Event of Default shall impair any
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such right or power or shall be construed to be a waiver of
any such Event of Default or an acquiescence therein.
SECTION 602 Rescission of Acceleration. At any time after a
declaration of Acceleration and before a judgment or decree for payment of the
money due has been obtained by the Trustees, a Preponderance of the Holders, by
written notice to Owner and the Trustee, may rescind and annul such declaration
and its consequences if (1) Owner has paid or deposited with the Trustee a sum
sufficient to pay: (A) the principal of any Notes which have become due
(otherwise than by such declaration of Acceleration) and accrued interest
thereon and (B) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel; and (2) all Events of Default, other than the
non-payment of the principal of Notes (and accrued interest thereon) which have
become due solely by such declaration of Acceleration, have been cured or
waived as provided herein. No such rescission shall affect any subsequent
default or impair any right consequent thereon.
SECTION 603 The Trustees May Enforce Claims Without Possession
of Notes. All rights of action and claims under the Notes, this Indenture, the
Deed of Trust, the Mortgage or any other Loan Document may be prosecuted and
enforced by the Trustees without the possession of any of the Notes or the
production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustees shall be brought in the name of either or both of
the Trustees as trustees of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustees, its agents and counsel,
be for the ratable benefit of the Registered Holders of the Notes in respect of
which such judgment has been recovered.
SECTION 604 Limitation on Suits. A Registered Holder may
institute a proceeding, judicial or otherwise, with respect to this Indenture,
the Deed of Trust, the Mortgage or any other Loan Document or property included
in the Trust Estate, or for the appointment of a receiver or trustee, or for
any other remedy hereunder, only if (1) such Registered Holder has previously
given written notice to the Trustee of a continuing Event of Default; (2) the
Registered Holders of not less than 25% of the Outstanding Principal Amount of
the Notes shall have made written request to the Trustees to institute
proceedings in respect of such Event of Default in the name of either or both
Trustees as trustee hereunder (provided that if the proceeding in question is
Acceleration, then the written request shall be required to be made by a
Majority of the Holders); (3) such Registered
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Holder or Registered Holders have offered to the Trustees reasonable indemnity
against the costs, expenses and liabilities to be incurred in compliance with
such request; (4) the Trustees for thirty days after its receipt of such
notice, request and offer of indemnity have failed to institute any such
proceeding (or has earlier notified such Registered Holder of the Trustees'
unwillingness to do so); and (5) no direction inconsistent with such written
request has been given to the Trustees during such thirty-day period by a
Majority of the Holders; provided that no one or more Registered Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Registered Holders, or to obtain or to seek to obtain priority or
preference over any other Registered Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all the Registered Holders.
ARTICLE SEVEN
Security Agreement
SECTION 701 Security Agreement. (a) This Indenture shall be
effective as a security agreement and financing statement by and between Owner,
as debtor, and the Trustees, as secured parties, filed as a security agreement
and financing statement pursuant to the Uniform Commercial Code in the State of
New York with respect to all of the Security described in Section 701(b).
(b) Owner hereby grants the Trustees a security interest
in any and all property which may come into the possession of the Trustees
pursuant to this Indenture or any other Loan Document, including, without
limitation, any condemnation awards, title insurance proceeds and moneys
payable pursuant to Articles Four and Five, and in all additions thereto,
substitutions therefor and proceeds thereof, for the purpose of securing all
indebtedness now or hereafter secured by this Indenture or the other Loan
Documents. Owner agrees to execute and deliver financing and continuation
statements covering such portions of the Trust Estate from time to time as may
be necessary or desirable to perfect or continue a security interest with
respect to such property, either through the proper registration of securities
and/or the filing of financing statements. The Trustees, at owner's request
and expense, shall cooperate with Owner to the extent necessary for Owner to
comply with its obligation hereunder to perfect or continue and confirm the
perfection and continuance of such security interests, including the provision
of written information requested by Owner.
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(c) The information contained in this Section is provided
in order that this Indenture shall comply with the requirements of the Uniform
Commercial Code, as enacted in the State of New York, for instruments to be
filed as financing statements. Owner's identity, mailing address and principal
place of business is set forth on page one. A statement indicating the types,
or describing the items, of collateral is set forth in Section 701 above. The
maturity date of each Note is the applicable Stated Maturity as defined in
Article One hereof and in the Notes.
ARTICLE EIGHT
The Trustees
SECTION 801 Rights and Obligations of the Trustee. (a) The
Trustee accepts the trusts hereby created and agrees to perform the duties
herein required upon the express terms and conditions hereof. The Trustee
shall have the full and complete right, power and authority, at all times,
without the need to obtain the consent of the Registered Holders of the Notes,
except as otherwise provided herein, to do all things consistent with the
express provisions of this Indenture and all other Loan Documents, which it may
deem advisable, in order to enforce the provisions of this Indenture or any
other Loan Document or to take any action with respect to an Event of Default,
or to institute, appear in or defend any suit or other proceeding with respect
thereto, or to protect the interests of the Registered Holders of the
Outstanding Notes. The Trustee shall not be answerable or accountable under
any circumstances, except for bad faith, willful misconduct or negligence, and,
subject to the provisions of this Section, Owner agrees to indemnify and save
harmless the Trustees against and from any liability and damages which they may
incur or sustain, in good faith and without negligence, in the exercise and
performance of any of their powers and duties hereunder. Except as otherwise
expressly set forth in Section 801(f), the Trustee shall be under no obligation
to take any action to protect, preserve or enforce any rights or interests in
the Trust Estate which, in its opinion, shall be likely to involve expense or
liability, unless one or more of the Registered Holders shall furnish to the
Trustee reasonable indemnity against liability and expense, provided that any
such indemnity shall in no way affect or impair Owner's obligation to indemnify
(or otherwise reimburse or hold harmless) the Trustees pursuant to the previous
sentence (or any other provision of this Indenture or any other instrument
contained in the Trust Estate). The Trustee, in its individual or any other
capacity, may become the payee, Registered Holder or pledgee of Notes, with the
same rights which it would have if it
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were not the Trustee hereunder, subject to its fiduciary
duties hereunder.
(b) The Trustees shall receive reimbursement from Owner
for all proper disbursements and compensation on the terms previously agreed
for all services rendered by them hereunder prior to an Event of Default. The
Trustees shall be entitled to reasonable compensation for their services and
reimbursement for all reasonable disbursements, including legal fees and
expenses, if any, incurred by them upon or after an Event of Default, or in
instituting, appearing in or defending any suit or proceeding with respect
thereto. For such compensation and disbursements and the indemnity referred to
in Section 801(a), the Trustee shall be secured hereunder prior to the Notes.
Notwithstanding anything that may be construed herein to the contrary, each of
the Trustees hereby relinquishes and waives any right that may be available to
such Trustee on account of any monies owed to such Trustee in its individual
capacity by owner hereunder to commence an involuntary case to reorganize or
liquidate Owner pursuant to the federal Bankruptcy Code or any similar federal
or state law, or to seek the appointment of a receiver, trustee or liquidator
(or other similar official) of Owner or its assets.
(c) The Trustee shall not be held responsible for the
legality or validity hereof or of the Notes. In executing this Indenture, the
Trustee makes no covenant or representation as to the rights of the Registered
Holders of the Notes, or the title of Owner to, or the condition of, the Trust
Estate or the sufficiency of the security for the Notes afforded thereby.
(d) Except as set forth in the fourth sentence of Section
203 and Section 212, the Trustee shall not be concerned with, accountable to or
liable to any Person for the use or application of any deposited moneys that
are released or withdrawn in accordance with the provisions hereof or any other
Loan Document.
(e) In accepting the Trust Estate, the Trustee acts
solely as trustee hereunder and not in its individual capacity, and all
Persons, other than Owner and the Registered Holders of the Notes, having any
claim against the Trustee hereunder (other than for the Trustee's own bad
faith, willful misconduct or negligence) shall look only to the Trustee's
rights in and to the Trust Estate for payment or satisfaction thereof.
(f) Except as herein stated, the Trustee shall not be required to
inquire as to the performance or observance of any of the covenants or
agreements herein or
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in any other instruments to be performed or observed by Owner (including,
without limitation, the necessity or desirability under any applicable
state law to re-record, re-register or re-file the Deed of Trust, the Mortgage
or any other Loan Document, except for monitoring the timely filing of
Uniform Commercial Code continuation statements by Owner). The Trustee shall
not be deemed to have notice or knowledge of any default or Event of Default
(except default in the payment of moneys to the Trustee which are required to
be paid to the Trustee on or before a specified date or within a specified
time after receipt by the Trustee of a notice or certificate which was in fact
received and except default in the delivery of any certificate, opinion or
other document expressly required to be delivered to the Trustee by a
provision hereof), unless the Trustee shall have actual knowledge that a
default or an Event of Default has occurred or unless the Trustee shall
receive from Owner or a Registered Holder written notice stating that a
default or an Event of Default has occurred and specifying the same, and in the
absence of such notice, the Trustee may assume, and shall be protected in
assuming, that there is no such default or Event of Default, except as
aforesaid. The Trustee shall be deemed to have "actual knowledge, within
the terms of this Indenture at such time as a Responsible Officer has such
actual knowledge. Within a reasonably prompt time after obtaining such actual
knowledge or notice (including, without limitation, with respect to any of
the matters set forth in the parenthetical clause above in this Section
801(f)), the Trustee shall send written notice to each Registered Holder of
an Outstanding Note specifying such default or Event of Default, and
requesting instructions from such Registered Holders with respect thereto.
(g) The Trustee, in its individual capacity, represents and
warrants that it is duly authorized under the law of the State in which its
principal corporate trust office is located, its articles of incorporation
and its bylaws to authenticate the Notes, and to execute and deliver this
Indenture; that any and all action, necessary or required therefor has been
duly and effectively taken or obtained; and that this Indenture is a legal,
valid and binding obligation of the Trustee enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equitable
principles.
(h) There shall at all times be a Trustee hereunder, which shall
always be a bank or trust company, organized under the laws of the United
States or any of the States thereof, and, as of the date of appointment of such
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Trustee (i) shall have a combined capital, surplus and undivided profits (as
shown by its most recent financial statement distributed to its shareholders)
aggregating at least $250,000,000, or such lesser amount as may be agreed upon
by a Preponderance of the Holders, (ii) shall have a long-term unsecured debt
rating from Standard & Poor's Corporation and Moody's Investors Service, Inc.
of "investment grade" or better and (iii) prior to an Event of Default, shall
not be qualified to do business in the State of Hawaii.
(i) Notwithstanding anything herein to the contrary, the Trustee
shall have the right at any time to request direction from the Registered
Holders with respect to any action, consent or approval, or the giving or
withholding of any of the foregoing, or the exercise of any discretion, with
respect to any action, consent, approval or discretion that may be given,
taken or exercised under any provision of this Indenture or any other Loan
Document.
(j) Promptly upon the Trustee's sending or receipt of any notice,
certificate, demand, financial statement, amortization schedule and any other
material written communication pursuant to or in connection with this
Indenture and the Trust Estate, or any portion thereof, or the execution of
any supplement pursuant to Article Nine, the Trustee, at the expense of
Owner, shall send a copy of the same to each Registered Holder of an
Outstanding Note, unless it reasonably believes such Registered Holder is
already in receipt of such item.
(k) All moneys received by the Trustee pursuant to this
Indenture, the Deed of Trust or the Mortgage, including any investments
thereof, (i) shall be held in the name of the Trustee in trust for the
purposes for which they were paid, (ii) shall be segregated from any other
moneys held by the Trustee, (iii) may be deposited by the Trustee under
such general conditions as may be prescribed by law in the corporate trust
department of the Trustee and (iv) to the extent applicable, while held as
security hereunder, shall remain exclusively in the possession of the
Trustee, either itself or through its agents, custodians or nominees, to the
extent permitted under Section 807(d), and the Trustee shall not be liable for
any interest thereon, except as provided in Section 203 or Section 212.
(l) Prior to an Event of Default, the Trustee shall not appoint
an Individual Trustee, separate trustee or co-trustee that shall be either a
resident of Hawaii, if an individual, or qualified to do business in the State
of Hawaii.
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<PAGE> 46
SECTION 802 Resignation and Removal of the Trustee. The Trustee
may resign and be discharged of the trusts created hereby by giving written
notice by mail, first class postage prepaid, to each Registered Holder at its
address appearing on the Register and by giving notice to Owner, of such
resignations, specifying the date (which shall be not less than sixty days
after the date of mailing such notice) when such resignation shall take
effect. Such resignation shall take effect on the date so specified subject
to the immediately following sentence. In no event shall the Trustee's
resignation or removal be effective unless and until a successor trustee shall
have been appointed and shall have accepted such appointment as provided in
Section 803. The Trustee may be removed with or without cause at any time
by a written instrument signed by a Majority of the Holders.
SECTION 803 Successor Trustee. (a) If, at any time, the Trustee shall
have given notice of its intention to resign, shall resign or be removed or
if the Trustee shall be taken under the control of any public officer or
a receiver appointed by a court, then (except as hereinafter provided) a
successor may be appointed by a Majority of the Holders in either case by
an instrument signed by such Registered Holders; provided that if the
Registered Holders of the Outstanding Notes shall not have appointed such
successor prior to the effective date of such resignation, removal or taking
under control, then the retiring Trustee or the Registered Holder of any
Outstanding Note may apply to a court of competent jurisdiction to appoint a
successor to act until a successor trustee shall be appointed by a Majority
of the Holders as above provided. After any such appointment by such court,
the retiring Trustee or such Registered Holder of the Notes, as the case may
be, shall mail written notice thereof to the Registered Holders of the Notes
at their respective addresses appearing on the Register and to Owner; but any
successor trustee so appointed by such court shall immediately and without
further act be superseded by a successor trustee appointed by a Majority of
the Holders as above provided.
(b) Any successor Trustee shall execute and deliver to its
predecessor and Owner an instrument accepting such appointment, and thereupon
such successor, without any further act shall become vested with all the
properties, rights, duties and trusts of its predecessor hereunder with like
effect as if originally named as trustee herein; Provided, however, on the
written request of Owner or the successor Trustee, such predecessor shall
execute and deliver an instrument transferring to such successor, upon the
trusts expressed in this Indenture, such properties, rights and trusts. Such
predecessor shall assign, transfer,
-41-
<PAGE> 47
deliver and pay over to such successor, any property and moneys subject to
the lien hereof and held by such predecessor. Should any deed or conveyance
from Owner be required by such successor for vesting in and confirming to such
successor such properties, rights and trusts, then on request all such deeds,
conveyances and instruments shall be executed, acknowledged and delivered by
owner.
(c) Any successor to the Trustee, however appointed, shall meet
the eligibility requirements of Section 801(h).
SECTION 804 Liability of the Trustee for other Trustees. No
trustee hereunder shall be personally liable by reason of any act or omission
of any other trustee hereunder.
SECTION 805 Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder
(provided such corporation shall be otherwise qualified and eligible under
Section 801(h)), without the execution or filing of any paper or any further
act on the part of any of the parties hereto.
SECTION 806 The Individual Trustee. (a) The Individual Trustee
shall be subject to the following terms and conditions: subject to the
provisions of Section 807, all rights, duties, powers and obligations
conferred or imposed on the Trustees under this Indenture or any other Loan
Document shall be conferred and imposed solely on, and exercised and
performed solely by, the Trustee, except to the extent that under the law of
a particular jurisdiction in which any particular act is to be performed the
Trustee shall be incompetent or unqualified to perform or prohibited from
performing such act, in which event such rights, duties, powers and
obligations shall be exercised and performed by the Individual Trustee.
(b) No power granted by this Indenture or any other Loan
Document to the Individual Trustee or the Trustees, or which this Indenture
provides may be exercised by the Individual Trustee or the Trustees, shall
be exercised by the Individual Trustee except (i) in consultation with the
Trustee (which consultation shall in all events take place outside the State
of Hawaii) and (ii) with the prior consent of the Trustee. The Trustee shall
at
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<PAGE> 48
all times be responsible to the Holders for any acts or omissions by the
Individual Trustee in violation of its duties under this Indenture, the Deed
of Trust or the Mortgage, provided that the Individual Trustee was in the
employ of the Trustee at the time of such violation. In no event shall the
Individual Trustee take possession of, or exercise any control over any
moneys or securities deposited with the Trustee hereunder.
(c) The Individual Trustee may resign and be discharged
of the trusts created hereby by giving written notice by mail, first class
postage prepaid, to Owner and the Trustee, specifying the date (which shall be
not less than thirty days after the date of mailing such notice) when such
resignation shall take effect. Such resignation shall take effect on the
date so specified unless previously a successor Individual Trustee shall
have been appointed by the Trustee or a Majority of the Holders, in which
event such resignation shall take effect immediately upon the appointment of
such successor. The Individual Trustee is required to be an officer of the
Trustee. Prior to an Event of Default, the Individual Trustee may not be a
resident of Hawaii. If the Individual Trustee shall cease to be an officer
of the Trustee, the Trustee shall appoint a successor Individual Trustee,
notwithstanding the first sentence of this clause (c). The Individual
Trustee may be removed with or without cause at any time by the Trustee (upon
written notice to Owner and the Registered Holders) or by means of a written
instrument signed by a Majority of the Holders.
SECTION 807 Separate and Co-Trustees. (a) If at any time the
Trustee shall deem it necessary or prudent so to do, the Trustee, at the
expense of Owner, may appoint one or more Persons to act as separate trustees
or co-trustees, jointly with the Trustee (except as set forth in subsection
(b)(1) of this Section), of any of the property subject to the lien or
security interest hereof or of the Mortgage; and such Person shall have such
powers and duties consistent with this Indenture and the Mortgage as shall be
specified herein. The Trustee shall give notice of such appointment to the
Registered Holders of the Notes and Owner. If the Trustee shall request
Owner to do so, Owner shall join with the Trustee in the execution of such
instrument, but the Trustee shall have the power to make such appointment
without making such request.
(b) Every separate trustee and co-trustee shall, to the
extent permitted by law, be subject to the following terms and conditions:
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<PAGE> 49
(1) the rights, powers, duties and obligations conferred
or imposed upon such separate or co-trustee shall be conferred or
imposed upon and exercised or performed by the Trustee and such
separate trustee or co-trustee jointly, as shall be provided in the
instrument appointing him, except to the extent that under any law
of any jurisdiction in which any particular act to be performed any
non-resident trustee shall be incompetent or unqualified to perform
or prohibited from performing such act (and the Trustee or Individual
Trustee is a non-resident in such jurisdiction), in which event such
rights, powers, duties and obligations shall be exercised and
performed by such separate trustee or co-trustee, but only to the
minimum extent required by such law and the Trustee, to the fullest
extent permitted under such law, shall direct such separate or
co-trustee in the exercise and performance of such rights, powers,
duties and obligations;
(2) all powers, duties, obligations and rights conferred
upon the Trustee, in respect of the custody of all cash deposited
hereunder, shall be exercised solely by the Trustee and Affiliates of
the Trustee, provided that Trustee remains ultimately liable as
provided herein for any such exercise by Affiliates of Trustee; and
(3) The Trustee may at any time by written instrument
accept the resignation of or remove any such separate trustee or co-
trustee, and upon the request of the Trustee, Owner shall join with
the Trustee in the execution of all instruments necessary to make
effective such resignation, but the Trustee shall have the power to
accept such resignation or make such removal without making such
request of Owner. A successor to a separate trustee or co-trustee so
resigning or removed may be appointed in the manner provided in this
Section.
(c) As a condition to the taking, suffering or
omitting of any action by it hereunder, the Trustee may consult with
counsel and the advice of such counsel, or any Opinion of Counsel shall be
full and complete authorization and protection with respect to any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(d) The Trustees may execute any of the trusts or powers
hereunder or perform any duties hereunder, other than as provided by Section
807(b)(2), either directly or by or through agents, attorneys, custodians or
nominees appointed
-44-
<PAGE> 50
with due care by it hereunder. The Trustees shall receive no additional
compensation or reimbursement for those of its duties hereunder that are
performed by or through agents, attorneys, custodians or nominees, except as
provided herein.
ARTICLE NINE
Supplements
SECTION 901 Supplements Without Consent. Without the consent
of, but with twenty days' prior notice to, the Registered Holders of the Notes,
Owner and the Trustee may enter into supplemental indentures hereto or
modifications, amendments or supplements to any of the Deed of Trust, the
Mortgage or any other Loan Document or any other instrument included in the
Trust Estate, in each case for any one or more of the following purposes:
(a) to correct any immaterial inaccuracies or add
property or rights to the description of any property subject
to the liens of the Deed of Trust, the Mortgage or any other
instrument included in the Trust Estate, provided such
correction or addition does not result in a release of any
portion of the Trust Estate, except as otherwise required or
permitted hereunder or under such other instrument;
(b) to Grant to either or both of the Trustees any
additional property;
(c) to cure any ambiguity, or to cure, correct or
supplement any defective or inconsistent provision contained
herein or in any other Loan Document, provided such supplement
does not adversely affect the interests of the Registered
Holders of the Notes under this Indenture or with respect to
the Trust Estate (as to which the Trustee shall be permitted
to rely on Opinions of Counsel); and
(d) to subject to the lien of a new deed of trust
or a new mortgage a Substituted Property or to release
from the lien of this Indenture and the other Loan Documents a
Withdrawn Property, or to make any modification, amendment or
supplement of this Indenture or any other Loan Document
expressly provided for herein or therein and required in
connection with a transfer permitted by Owner of its interest
in the Trust Estate, subject only to the express terms and
conditions herein provided.
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<PAGE> 51
Prior to entering into such supplemental indenture, the Trustee
may require delivery by Owner of an officer's certificate and an opinion of
counsel confirming Trustee's authority to enter into such supplemental
indenture.
SECTION 902 Supplements With Consent. With the written consent
of a Preponderance of the Holders, Owner and the Trustee may enter into
supplemental indentures hereto or modifications, amendments or supplements to
(or waivers with respect to) the Deed of Trust, the Mortgage or any other Loan
Document or any other instrument included in the Trust Estate, in each case
changing in any manner or eliminating any of the provisions of such instrument,
as amended and supplemented; provided that without the consent of the
Registered Holder of each Note no such supplement shall:
(a) change the principal amount of, interest rate
payable on, prepayment provisions or Make-Whole Payment of any
of the Notes or impair or effect the right of each Registered
Holder to receive payments or prepayments of the principal of,
and interest on, its Notes, as therein and herein provided,
including, without limitation, the date upon which such payments
or prepayments are due and payable pursuant to the terms and
conditions of the Notes and this Indenture;
(b) change the percentage of Outstanding Principal Amount
of Notes required by any express term of this Indenture or such
other Loan Document; or
(c) except as specifically permitted hereby, modify or
release any security granted hereunder, under the Deed of Trust
or under the Mortgage.
Upon the filing with the Trustee of consents of the Registered Holders of the
Outstanding Principal Amount of the Notes, the Trustee shall join with Owner in
the execution of such supplement unless such supplement affects the Trustee's
rights, duties or immunities hereunder, in which case the Trustee may, but
shall not be obligated to, enter into such supplement. Prior to such execution
by the Trustee, the Trustee may require delivery by Owner of an officer's
certificate and an opinion of counsel confirming Trustee's authority to execute
such supplement.
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<PAGE> 52
IN WITNESS WHEREOF, Owner and the Trustees have caused this
Indenture to be duly executed and delivered as of the day and year first above
written.
KMART CORPORATION
a Michigan corporation,
as Owner
By: /s/
-----------------------
M.L. Skiles,
Senior Vice President
[SEAL]
Attest: /s/
------------------
Name:
Title:
XXXXXXXXXX, a
New York banking corporation,
not in its individual
capacity, but solely as
Trustee
By: -------------------
XXXXXXXXXX,
Assistant Secretary
--------------------------
XXXXXXXXXX,
as Individual Trustee
<PAGE> 53
STATE OF )
ss: Allstate Acknowledgment
COUNTY OF )
Know all men by these presents that before me, the below-named Notary
Public in and for the State and County named above duly commissioned to
take acknowledgments there personally appeared M.L. Skiles and C.S. Lotzar,
Jr., each of whom is personally known to me to be a person named in and who
signed the legal instrument to which this acknowledgment is attached and which
was produced to me in the State and County aforesaid, and being by me first
duly sworn each did acknowledge before me, depose and say to me that he is,
respectively, Senior Vice President and Secretary of Kmart Corporation, a
Michigan corporation, named as one of the parties to the aforementioned legal
instrument; that he knows the seal of such corporation; that the seal imprinted
on the legal instrument to which this acknowledgment is attached is an imprint
of the true corporate seal of said corporation; that after being duly informed
of the contents and import of such legal instrument he had signed and caused
the seal of such corporation to be imprinted on such legal instrument as the
officer of such corporation indicated above; that he had signed and sealed the
same in the name of and on behalf of such corporation and of said limited
partnership by the authority, order and resolution of its Board of Directors
and by the authority of the partners in the limited partnership; that he had
signed his name thereto on behalf of said corporation and partnership by like
order; that the execution of said legal instrument was the free and voluntary
act and deed of said corporation on behalf of the partnership for the
consideration, purposes, and uses set forth in such legal instrument; that he
had delivered such legal instrument to the other parties thereto as such; and
that on behalf of said corporation and partnership he had received a true copy
of such legal instrument without charge.
IN WITNESS WHEREOF, I have signed and imprinted my official notarial
seal on this acknowledgment in the State and County named above on the 26th day
of May, 1993.
My commission expires:
/s/
--------------------------
Notary Public
Print Name:
----------------
CAROLE SUE RUDOLPH
Notary Public, Oakland County, Michigan
My Commission Expires January 27, 1997
250\43708
<PAGE> 54
IN WITNESS WHEREOF, Owner and the Trustees have caused this Indenture
to be duly executed and delivered as of the day and year first above written.
KMART CORPORATION
a Michigan corporation,
as Owner
By:
-------------------------
M.L. Skiles,
Senior Vice President
[SEAL]
Attest:
--------------------
Name:
Title:
XXXXXXXXXX, a
New York banking corporation,
not in its individual
capacity, but solely
as Trustee
By: XXXXXXXXXX
-------------------------
XXXXXXXXXX,
Assistant Secretary
XXXXXXXXXX
----------------------------
XXXXXXXXXX,
as Individual Trustee
250\43708
<PAGE> 55
STATE OF NEW YORK )
ss.: Allstate Acknowledgment
COUNTY OF NEW YORK)
Know all men by these presents that before me, the below-named Notary
Public in and for the State and County named above duly commissioned to take
acknowledgments, there personally appeared XXXXXXXXXX, who is personally
known to me to be a person named in and who signed the legal instrument to
which this acknowledgment is attached and which was produced to me in the State
and County aforesaid, and being by me first duly sworn did acknowledge before
me, depose and say to me that after being duly informed of the contents and
import of such legal instrument he had signed such legal instrument as his free
and voluntary act and deed for the consideration, purposes, and uses set forth
in such legal instrument; that he had delivered such legal instrument to the
other parties thereto as such; and that he had received a true copy of such
legal instrument without charge.
IN WITNESS WHEREOF, I have signed and imprinted my official notarial
seal on this acknowledgment in the State and County named above on the 27th
day of May, 1993.
My commission expires
KAREN J. MORENA
Notary Public, State of New York
No. 41-4991083
Qualified in Queens County
Commission Expires Jan. 21, 1994
KAREN J. MORENA
---------------------
Notary Public
Print Name: KAREN J. MORENA
----------------------
<PAGE> 56
STATE OF NEW YORK )
: ss.: Allstate Acknowledgment
COUNTY OF NEW YORK )
Know all men by these presents that before me, the below-named Notary
Public in and for the State and County named above duly commissioned to take
acknowledgments, there personally appeared XXXXXXXXXX, who is personally
known to me to be a person named in and who signed the legal instrument to
which this acknowledgment is attached and which was produced to me in the State
and County aforesaid, and being by me first duly sworn did acknowledge before
me, depose and say to me that she is an assistant secretary of XXXXXXXXXX,
a New York banking corporation, named as one of the parties to the
aforementioned legal instrument; that after being duly informed of the contents
and import of such legal instrument she had signed such legal instrument as the
officer of such corporation indicated above; that she had signed the same in
the name of and on behalf of such corporation by the authority, order and
resolution of its Board of Directors; that she had signed his name thereto on
behalf of said corporation by like order; that the execution of said legal
instrument was the free and voluntary act and deed of said corporation for the
consideration, purposes, and uses set forth in such legal instrument; that she
had delivered such legal instrument to the other parties thereto as such; and
that on behalf of said corporation she had received a true copy of such legal
instrument without charge.
IN WITNESS WHEREOF, I have signed and imprinted my official notarial
seal on this acknowledgment in the State and County named above on the 28th day
of May, 1993.
My commission expires: DOMINICK DIGIORGIO
-----------------------------
Notary Public
Print Name: DOMINICK DIGIORGIO
-------------------
DOMINICK DIGIORGIO
Notary Public, State of New York
Qualified in Kings Country
Bronx County Clerk's No. 4979752
Certificate Filed in New York County
Commission Expires April 08, 1995
<PAGE> 57
[Schedules Intentionally Omitted]
<PAGE> 1
EXHIBIT 99.17
- --------------------------------------------------------------------------------
NOTE PURCHASE AGREEMENT
BETWEEN
KMART CORPORATION
AND
XXXXXXXXXX
Dated as of January 21, 1993
$64,523,000 8.20% Collateralized
Promissory Note Due 2018
- --------------------------------------------------------------------------------
<PAGE> 2
Kmart Corporation
3100 West Big Beaver Road
Troy, Michigan 48084-3163
NOTE PURCHASE AGREEMENT
$64,523,000 8.20% Kmart Collateralized
Promissory Notes Due 2018
Dated as of
January 21, 1993
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Gentlemen:
The undersigned, Kmart Corporation, a Michigan corporation ("Company"),
hereby agrees with XXXXXXXXXX (" XXXXXXXXXX") as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
1.1. Description of Notes. Company has authorized the issuance and
sale of $64,523,000 aggregate principal amount of its 8.20% Collateralized
Promissory Notes due 2018 ("Notes"), each to be dated the date of issue, and,
except for the original Note issued to XXXXXXXXXX dated as of January 21,
1993 and the Note issued to XXXXXXXXXX (as defined hereafter) in exchange for
the surrender and cancellation thereof (collectively, "Original Notes") to bear
interest from such date (the Original Notes to bear interest from January 22,
1993) to but not including the date of repayment of such principal amount at
the rate of 8.20% per annum, respectively, payable on the 22nd day of each
January and July in each year (commencing July 22, 1993) and at maturity, and
to bear interest on overdue principal, overdue premium, if any, and any overdue
installment of interest at the Overdue Rate, whether at scheduled maturity,
upon acceleration or otherwise, until paid, to mature on January 22, 2018 and
to be substantially in the form attached hereto as Exhibit 1.1. Interest on the
Notes shall be computed on the basis of a 360-day year of twelve 30-day months.
Principal on the Notes shall be due and payable in annual installments in the
amounts set forth on Schedule 1 attached to the Note commencing on January 22,
1994 and, thereafter, on the twenty-second day of January in each succeeding
year through and including January 22, 2018. The Notes are not subject to
prepayment, purchase or redemption at the option of Company prior to their
expressed maturity date
1
<PAGE> 3
except on the terms and conditions and in the amounts and with the premiums, if
any, set forth in the various paragraphs of Section 2 of this Agreement and in
the Notes. The term "Notes", as used herein shall include each Note delivered
pursuant to this Agreement, and each Note issued in exchange or replacement
therefor. XXXXXXXXXX is hereinafter sometimes referred to as the "Purchaser."
Certain capitalized terms used herein shall have the meanings set forth in
Section 8.1, unless the context shall otherwise require.
1.2. Commitment; Closing Date. Subject to the terms and conditions
hereof and on the basis of the representations and warranties hereinafter set
forth, Company shall issue and sell to Purchaser, and Purchaser shall purchase
from Company, $64,523,000 aggregate principal amount of 8.20% Notes of Company
at a price of 100% of the principal amount thereof for an aggregate purchase
price of $64,523,000 ("Purchase Price"), on the Closing Date hereinafter
mentioned.
Delivery of the Notes will be made at the offices of Sonnenschein Nath
& Rosenthal, 1221 Avenue of the Americas, New York, New York 10022 against
payment therefor in the amount of the Purchase Price at or before 12:00 P.M.,
Eastern Standard time; on January 22, 1993 or such later date as shall be
mutually agreed upon by Company and the Purchaser ("Closing Date"). Payment
for the Notes shall be effected by wire transfer of federal funds to such bank
account of Company as may be specified by Company in writing at least one
Business Day before the Closing Date. The Notes delivered on the Closing Date
will be delivered to Purchaser in the form of one or more registered Notes for
the full amount of Purchaser's purchase, registered in the name of XXXXXXXXXX,
Purchaser's assignee (" XXXXXXXXXX").
1.3 Security for Notes. The Notes will be secured by certain
security documents, including, without limitation, deeds of trust or mortgages
(collectively, "Mortgages") substantially in the form attached hereto as
Exhibits 1.3B and 1.3C with respect to each Mortgaged Estate creating a first
priority mortgage lien on all of Company's right, title and interest in and to
each such Mortgaged Estate and a first priority security interest in all of
Company's right, title and interest in and to the equipment and fixtures
included within each Mortgaged Estate. The Mortgages, at Purchasers election,
may be assigned to a trustee and held in accordance with a Collateral Agency
Agreement as set forth in Section 1.4.
1.4 Collateral Agency Agreement.
(a) Within thirty (30) days of a written request from XXXXXXXXXX,
the Company shall execute and deliver to XXXXXXXXXX a Collateral Agency
Agreement ("Agency Agreement") substantially in the form attached hereto as
Exhibit 1.3A with such collateral agent ("Agent") as XXXXXXXXXX shall choose.
2
<PAGE> 4
(b) From and after the date of the execution and delivery of the
Agency Agreement by the Agent ("Effective Date"), the Agent shall be entitled
to rely on all of the representations, warranties and covenants set forth in
this Agreement, in the Mortgages and in any of the other Note Documents and the
Agent shall be deemed to be the Mortgagee or secured party thereunder as of the
Effective Date.
(c) The Company shall take such actions and execute such
documentation from time to time as XXXXXXXXXX or the Agent deems necessary to
confirm the effectiveness of the Agency Agreement or the interest of the Agent
in the collateral as such Mortgagee or secured party.
1.5 Home Office Payment. Notwithstanding any other provision in
this Agreement or the Notes, Company shall cause all payments of principal,
Make-Whole Premium (if any) and interest on the Notes to be made in the manner
and to the address specified in Exhibit 1.5 hereto, or in such other manner or
to such other address as the holder of any Note may thereafter designate in
writing.
SECTION 2. PREPAYMENT OF NOTES.
No prepayment of the Notes may be made except to the extent and in the
manner expressly provided in this Agreement and the Notes.
2.1. Optional Prepayment. Upon compliance with Section 2.2,
Company shall have the option at any time and from time to time of
prepaying the outstanding Notes, either in whole or in part (but if in part,
then in units of U.S. $1,000,000 or an integral multiple of $100,000 in excess
thereof) by payment of the principal amount of the Notes, or portion thereof to
be prepaid, together with accrued interest thereon to (but not including) the
date of such prepayment and a premium (determined three Business Days prior to
the date of such prepayment) equal to the Make-Whole Premium ("Redemption
Price").
2.2. Notice of Prepayments. Company shall give written notice
of any prepayment of the Notes pursuant to Section 2.1 hereof to each holder
thereof not less than 30 days nor more than 60 days before the date fixed for
such prepayment of the Notes. Notices required by this Section 2.2 shall specify
(a) the date of prepayment, (b) the principal amount of the holder's Notes to
be prepaid on such date, and (c) the estimated Make-Whole Premium and the
accrued interest applicable to the prepayment. Notice of prepayment having
been so given, the aggregate principal amount of the Notes specified in such
notice, together with the Make-Whole Premium and accrued interest thereon shall
become due and payable on the prepayment date set forth in such notice.
Company
3
<PAGE> 5
also shall give written notice to each holder of the Notes, by telecopy or
other same day written communication, setting forth the computation and amount
of the Make-whole Premium payable in connection with a prepayment pursuant to
Section 2.1 at least three Business Days prior to the date of such prepayment.
2.3. Special Put Option of Holders Following a Rating Decline.
(a) Rating Decline. If a Rating Decline (as defined in
paragraph(d) below) occurs, each holder of a Note will have the right, at such
holder's option prior to the Restoration Date, to require Company to redeem
such Note in whole (but not in part) on the Redemption Date (as defined in
paragraph (c) below) at a price equal to the Redemption Price. The obligations
of Company to give the notices required pursuant to paragraph (b) of this
Section 2.3 shall remain in effect so long as any Notes remain outstanding. If
a Rating Decline occurs and subsequent to such Rating Decline another Rating
Decline occurs, then each holder of a Note will again have the rights, and
Company again will have the obligations, as set forth in this Section 2.3.
(b) Notice. Within five (5) days after the first date
on which a Rating Decline has occurred ("Trigger Date"), Company will cause a
notice to be mailed to each holder of Notes, which notice shall (1) state
that a Rating Decline has occurred, (2) describe the action taken with respect
to the rating that constituted the Rating Decline, including the date of the
occurrence thereof, (3) set forth Company's offer to redeem all of the Notes as
provided in paragraph (c) below, and (4) state the party to whom the holder of
a Note electing redemption shall surrender such Note on or before the
Restoration Date.
(c) Election of Redemption. At any time thirty (30)
days after the Trigger Date and prior to the Restoration Date, any holder of a
Note or Notes may, by written notice to the Paying Agent, (or the Company, if
at such time there is no Paying Agent) elect to have the Company redeem the
Note or Notes specified in such notice. The notice to the Paying Agent shall
be delivered to its principal office together with the Note or Notes to be
redeemed, which shall be surrendered, duly endorsed or assigned to the Company
in blank. The Paying Agent (or the Company as the case may be) shall hold the
Notes in trust for the benefit of the holders of the Notes electing redemption
pursuant to this Section 2.3 until payment in full of the Redemption Price to
the holders on the Redemption Date and shall then and thereupon surrender such
Notes to Company. Election of redemption by a holder pursuant to this Section
2.3 shall (unless otherwise provided by law) be irrevocable and the occurrence
of the Restoration Date prior to the Redemption Date shall not
4
<PAGE> 6
affect the Company's obligation to redeem the Note or Notes specified in any
holder's notice of election. "Redemption Date" means a Business Day selected
by Company that is, subject to any contrary requirements of applicable law, not
more than thirty (30) days after any holder of a Note or Notes elects to have
the Company redeem the Note or Notes to be redeemed.
(d) Certain Defined Terms. For purposes of this
Agreement the following terms shall have the following meanings:
"Adjusted Reinvestment Yield" shall mean the Reinvestment yield plus
.50%.
"Make Whole Premium" shall mean at any time with respect to any
prepayment or Payment (whether on account of acceleration or otherwise) of the
Notes, to the extent that the Adjusted Reinvestment Yield at such time is lower
than 8.20%, the excess of (a) the present value of the remaining principal and
interest payments to become due on that portion of the Notes to be prepaid or
paid, as the case may be, that would otherwise become due and payable (without
giving effect to such prepayment or payment, as the case may be) discounted at
a rate which is equal to the Adjusted Reinvestment Yield applicable to such
Notes over (b) 100% of the principal amount of such Notes then to be prepaid or
paid, as the case may be, plus accrued interest thereon to the date of
prepayment. To the extent that the Adjusted Reinvestment Yield at the time of
such prepayment or payment, as the case may be, is equal to or higher than
8.20%, the Make Whole Premium is zero.
"Minimum Investment Grade" is defined to mean a rating of at least
Baa3, in the case of a rating by Moody's, and a rating of at least BBB-, in
the case of a rating by S&P or the then equivalent of such rating by Moody's or
S&P or, to the extent applicable, by another Rating Agency.
"Moody's" means Moody's Investors Service, Inc. or any successor
thereto.
"Rating Agency" and "Rating Agencies" mean Moody's and S&P and, if
either Moody's or S&P (but not both) ceases to rate the indebtedness of
corporations generally or unsubordinated, senior, unsecured indebtedness of
Company in particular, then another comparable rating agency of recognized
national standing in the United States.
"Rating Decline" shall exist upon any date that:
(a) the ratings assigned to unsubordinated, senior,
unsecured indebtedness of Company on such date by either Moody's or S&P:
(1) declines to a rating below the Minimum Investment Grade, or (2) further
declines, in the event then rated below the Minimum Investment Grade; or
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(b) (1) unsubordinated, senior, unsecured indebtedness of
Company ceases to be rated by either Moody's or S&P (other than by reason of
such rating agency ceasing to rate the indebtedness of corporations generally)
at such time as the rating then assigned by the remaining such Rating Agency
shall be below Minimum Investment Grade or (2) unsubordinated, senior,
unsecured indebtedness of Company ceases to be rated by either Moody's or S&P
at such time as the rating then assigned by the remaining such Rating Agency
shall be at least the Minimum Investment Grade and Company is unable to have
such debt rated by another Rating Agency within 90 days thereafter (except that
no Rating Decline shall be deemed to have occurred under this clause (b)(2) if
such debt ceases to be rated by Moody's and S&P by reason of both such Rating
Agencies ceasing to rate the indebtedness of corporations generally); or
(c) unsubordinated, senior, unsecured indebtedness of Company
ceases to be rated by both Moody's and S&P for any reason (except if, through
no fault of Company, both Moody's and S&P are unable to provide a rating due to
a business failure or interruption affecting both Moody's and S&P).
For purposes of determining whether a Rating Decline shall have occurred under
clause (a) of this definition, the rating initially assigned by any Rating
Agency engaged by Company pursuant to clause (b) hereof to replace any rating
withdrawn or otherwise terminated by Moody's or S&P shall be compared to the
last rating assigned by Moody's or S&P, as the case may be.
"Reinvestment Yield" shall be the arithmetic mean of the rates
published in the Statistical Release under the caption "U.S. Government
Securities Treasury Constant Maturities" for the maturity corresponding to the
remaining Weighted Average Life to Maturity of such Notes to be prepaid or
paid, as the case may be, as of the date of such payment or prepayment, as the
case may be, rounded to the nearest month. If no maturity exactly corresponds
to the rounded Weighted Average Life to Maturity of such Notes to be prepaid or
paid, as the case may be, yields for the two most closely corresponding
published maturities next above and below the rounded Weighted Average Life to
Maturity of such Notes to be prepaid or paid, as the case may be, shall be
calculated pursuant to the immediately preceding sentence and the Reinvestment
Yield shall be interpolated for such yields on a straight-line basis, rounding
in each of such relevant periods to the nearest month. For purposes of
calculating the Reinvestment yield, the most recent Statistical Release
published prior to the date of payment or prepayment, as the case may be,
hereunder shall be used.
"Restoration Date" means the date on which any rating (described in the
above definition for "Rating Decline"), as to which a Rating Decline has
occurred, is restored by the Rating Agency to the rating assigned by it
immediately preceding the Rating Decline.
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"S&P" means Standard & Poor's Corporation or any successor thereto.
"Statistical Release" shall mean the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System or the comparable business information obtained from the
applicable Bloomberg Information Service, at the option of the holders of the
Notes and which establishes yields on actively traded U.S. Government
Securities adjusted to constant maturities or, if such statistical release is
not published at the time of any determination hereunder, then such other
reasonably comparable index which shall be designated by the holders of 51% in
aggregate principal amount of the outstanding Notes being prepaid.
"Weighted Average Life to Maturity" means, with respect to the Notes,
as at any time of determination, the number of years obtained by dividing the
then Remaining Dollar-years of the Notes by the then outstanding principal
balance of such Notes (before giving effect to any prepayment to be made at the
time of such determination). For such purposes, the "Remaining Dollaryears" of
the Notes shall be determined by (1) multiplying (a) the amount of each then
remaining required payment of principal of such Notes (including each required
installment payment or mandatory prepayment thereof, if any, and payment of the
principal balance thereof at final maturity, but assuming no optional
prepayments thereof are made) by (b) the number of years (calculated to the
nearest one-twelfth) which will elapse between the time of determination and
the date the respective required payment or mandatory prepayment of principal
is due, and (2) adding all of the products so obtained.
2.4. Other Prepayment. In the event that Company shall be
required to prepay the Notes in full pursuant to any Note Document, then, (i)
each holder of a Note shall be required to surrender such Note, duly endorsed
or assigned to Company in blank, at the principal office of the Agent, if any
(or if no agent at such time exists, to the Company) and (ii) Agent, if any,
shall hold the Notes in trust for the benefit of the holders of the Notes until
payment in full of the Redemption Price shall have been made to such holders
within the time provided in the Mortgages, and shall then and thereupon
surrender such Notes to Company. The holders of the Notes shall apply any
proceeds of any condemnation proceeding, insurance or other award relating to
all or a portion of the Mortgaged Estate to the payment of the Redemption
Price.
2.5. Allocation of Prepayments. All partial prepayments shall be
applied ratably on all outstanding Notes pro rata in the same proportion that
such prepaid amount bears to the
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<PAGE> 9
aggregate unpaid principal balance of the Notes. All prepayments required
pursuant to Section 1.05, 1.13, 5.0l(b), (c) and (d) of the Mortgages and
Section 5A shall be allocated to the Release Amount (as defined in the Granting
Clause of each Mortgage) specified in the Mortgage with respect to which such
prepayment is received. The principal portion of any prepayments shall reduce
pro rata all remaining mandatory payments of principal set forth in Schedule 1
to the Notes.
SECTION 3. REPRESENTATIONS.
3.1. Representations of the Company. The Company hereby
represents and warrants for the benefit of Purchaser that the representations
set forth as follows are true and correct as of the date hereof and shall be
true and correct as of the Closing Date:
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Michigan.
(b) The Company is duly qualified to do business as a foreign
corporation in California and New York and in each other jurisdiction in which
the conduct of its business or the ownership of its properties would require
such qualification, except where the failure to so qualify would not have a
Material Adverse Effect. The Company has requisite corporate power to own the
Mortgaged Estates and carry on its business now being conducted and as proposed
to be conducted.
(c) The execution, delivery and performance of this Agreement,
the Notes and the other Note Documents are within the corporate powers of
Company and have been duly authorized by all necessary corporate action on the
part of Company. On the Closing Date, this Agreement, the Notes and the other
Note Documents will have been duly executed by and will be the legal, valid and
binding obligations of Company, enforceable against Company in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the enforcement of creditors' rights generally
and by general principles of equity.
(d) The audited consolidated financial statements of Company and
its Subsidiaries for Company's fiscal years ended January 31, 1990, January 29,
1991 and January 29, 1992 ("Audited Financials"), each accompanied by a report
thereon containing an opinion unqualified as to scope and limitations imposed
by Company and otherwise without qualification except as therein noted by Price
Waterhouse, have been prepared in accordance with generally accepted accounting
principles, consistent with the principles and practices used in the
preparation of Company's
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audited consolidated financial statements for the immediately preceding fiscal
year (except as otherwise indicated in the Audited Financials, including the
notes thereto) and present fairly in all material respects the consolidated
financial condition of Company at the end of each such financial year and the
consolidated results of operations and changes in financial position of Company
for each of such periods.
The unaudited consolidated financial statements of Company and its
Subsidiaries ("Unaudited Financials") dated as of October 31, 1992 for the
quarterly and nine-month periods ended on said date, prepared by Company and
filed as part of the Company's Form 10-Q for the period ended as of such date,
have been prepared in accordance with GAAP and present fairly, in all material
respects, the consolidated financial condition of Company as of such date and
the consolidated results of operations for such periods.
(e) No consent, approval, certification or authorization of, or
declaration, registration or filing with, or payment to, any governmental body
or any stockholder, creditor, lessor, Superior Party or other non-governmental
Person is required to be obtained or made on or prior to the Closing Date in
connection with the execution, delivery and performance by Company of this
Agreement, the Notes and the other Note Documents or the transactions
contemplated hereby or thereby or as a condition to the legality, validity or
enforceability of Company's obligations under this Agreement, the Notes or the
other Note Documents, or the offer, issue, sale or delivery of the Notes to the
Purchaser or the fulfillment of or compliance with the terms and provisions of
the Notes, this Agreement or the other Note Documents, except for the recording
of the Mortgages and the filing of forms UCC-1 in the appropriate offices in
California and New York which are set forth on Exhibit 3.1(e) attached hereto
and the payment of mortgage recording taxes and nominal filing fees.
(f) Company and its Subsidiaries have filed all tax returns
required to be filed, if failure to file would have a Material Adverse Effect,
and have paid all taxes that they are required to have paid, except for (i)
taxes that are presently payable but not overdue, and (ii) other taxes the
payment of which is being contested in good faith and by appropriate
proceedings, provided that the non-payment would not have a Material Adverse
Effect.
(g) Neither the execution and delivery of this Agreement, the
Notes or the other Note Documents by Company nor the performance of the terms
and provisions hereof and thereof, nor the issuance and sale of the Notes by
Company will conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in any
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<PAGE> 11
violation of, any charter instrument, contract, agreement, mortgage, indenture,
lease, instrument or order, or of any statute, law, rule or regulation of the
United States of America or the States of Michigan, California or New York, to
which Company or any of its properties, including without limitation, the
Mortgaged Estates is subject.
(h) Neither Company's annual report on Form 10-K for the fiscal
year ending January 29, 1992 ("1992 10-K"), Company's quarterly reports on Form
10-Q filed after the 1992 10-K (if any), nor any written statement furnished to
Purchaser by Company in connection with the offering or sale of the Notes or
the negotiation of the transactions contemplated by this Agreement, contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances in which they were made, not misleading.
(i) Since January 29, 1992, there has not been any material
adverse change in the financial condition or results of operations of Company
or in the condition of the Mortgaged Estates.
(j) The net proceeds from the issuance and sale of the Notes
will be used for general corporate purposes of Company. No part of the
proceeds of the sale of the Notes are intended to be used, directly or
indirectly, for the purchasing, carrying or refinancing of any "margin stock"
within the meaning of Regulations G, T or X of the Board of Governors of the
Federal Reserve System. The assets of Company and its Subsidiaries do not
include an amount of "margin stock" that would cause the provisions of Rule
207.2(f)(2) of Regulation G to be inapplicable and neither Company nor any of
its Subsidiaries has any present intention of purchasing, carrying or
refinancing such an amount of "margin stock".
(k) Neither Company nor, to its knowledge, anyone acting on its
behalf has offered the Notes or any similar securities relating to the
Mortgaged Estates to, or solicited any offer to purchase the same from, any
Person other than the Purchaser and not more than 20 other institutional
investors, or has taken or will take any other action which would (1) require
the registration of the Notes under Section 5 of the Act, (2) violate the
provisions of Section 5 of the Act or (3) require registration or qualification
under any securities or blue sky laws of any applicable jurisdiction.
(l) The consummation of the transactions contemplated by this
Agreement and compliance by Company with the provisions hereof and the Notes
issued hereunder and the other Note Documents will not constitute a prohibited
transaction within the meaning of ERISA or Section 4975 of the Code. Each Plan
complies in all material respects with all applicable
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statutes and governmental rules and regulations, and (1) no Reportable Event
has occurred and is continuing with respect to any Plan subject to Title IV of
ERISA, (2) neither Company nor any ERISA Affiliate has withdrawn from any Plan
subject to Title IV of ERISA or any Multiemployer Plan or instituted steps to
do so, and (3) no steps have been instituted to terminate in a distress
termination any Plan subject to Title IV of ERISA. No condition exists or
event or transaction has occurred in connection with any Plan which could
result in the incurrence by Company or any ERISA Affiliate of any material
liability, fine or penalty. No Plan maintained by Company or any ERISA
Affiliate and no trust created thereunder have incurred any "accumulated
funding deficiency" as defined in Section 302 of ERISA, and the present value
of all benefits vested under all Plans subject to Title IV of ERISA does not
exceed the value of the assets of such Plans allocable to such vested benefits
(such present value to be determined as of, and based on, the most recent
valuation of such Plan for funding purposes). The Company has no material
contingent liability with respect to any post-retirement "welfare benefit plan"
(as such term is defined in ERISA), other than as required by section 4980B of
the Code.
(m) The Company is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, and Company is not directly
or indirectly controlled by an "investment company". Company is not a "holding
company" or a "subsidiary company" of a holding company or an "affiliate" of a
"holding company" or a "public utility company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(n) Except as disclosed in the 1992 10-K, there are no actions,
suits or proceedings pending or, to the knowledge of Company, after due
inquiry, threatened against Company or any of its Subsidiaries or any Mortgaged
Estate in any court or before any governmental authority or arbitration board
or tribunal which, if adversely determined, would have a Material Adverse
Effect.
(o) To the knowledge of the Company, Company is not in violation
of, and is not subject to any liability (whether or not contingent) under, any
Environmental Legal Requirement affecting it or its properties, except for
such violations and liabilities as would not in the aggregate have a Material
Adverse Effect. Company has received and reviewed the environmental audit
reports required by Section 4.3(vii) hereof and has delivered the same to
Purchaser, and has no actual knowledge of any adverse condition except as
disclosed in the environmental audit report.
(p) Except for such violations as would not in the aggregate have
a Material Adverse Effect, Company is not in violation of (i) any state, local
or foreign law, ordinance or
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regulation or any other requirement of any government or regulatory body, court
or arbitrator applicable to the business or properties of Company, including,
without limitation, the Mortgaged Estates, and (ii) any federal law or any
order, judgment, injunction, award or decree of any governmental or regulatory
body, court or arbitrator applicable to the business or properties of Company,
including, without limitation, the Mortgaged Estates.
(q) After reasonable investigation, Company is not in default
in the payment of principal or interest on any indebtedness for borrowed money
aggregating $100,000,000 or more (collectively, "Material Indebtedness") and
has no written notice and no actual knowledge that it is in default under any
instrument or instruments or agreements under and subject to which any Material
Indebtedness has been issued.
(r) Except as set forth on Exhibit 3.1(r), no broker's or
finder's fees or commissions or investment banking fees will be payable by
Company with respect to the issuance and sale of the Notes or the transactions
contemplated by the Note Purchase Agreement.
(s) Except for currently valid unrecorded leases, copies of each
of which have been provided to Purchaser, no agreements exist to which it is a
party and, to the best of the Company's knowledge, no agreements exist to which
it is not a party which do not appear of record as a lien or encumbrance
against any of the Mortgaged Estates, the enforcement of the provisions set
forth in which would have Material Adverse Effect on the use, occupancy or
operation of any of the Mortgaged Estates as presently used, occupied and
operated.
(t) Each of the representations and warranties made or to be made
by Company in the other Note Documents shall be incorporated herein on the
Closing Date as if set forth herein in their entirety and shall be true and
correct as of such date.
3.2. Representations and Agreements of the Purchaser. Purchaser
represents that it is acquiring the Notes for its own account and not with a
view to distribution (as such term is used under Section 2(11) of the Act)
thereof except in accordance with the XXXXXXXXXX Assignment; provided that the
disposition of Purchaser's property shall at all times be and remain within its
control.
SECTION 4. CLOSING CONDITIONS.
Purchaser's obligation to purchase the Notes on the Closing Date shall
be subject to the performance by Company of its agreements hereunder and under
the other Note Documents which by the terms hereof are to be performed at or
prior to the time of delivery of the Notes and to the following further
conditions precedent:
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4.1. Company's Closing Certificate. Concurrently with the
delivery of Notes to Purchaser on the Closing Date, Purchaser and XXXXXXXXXX
shall have received a certificate of Company signed by an Executive Officer of
Company in substantially the form of Exhibit 4.1 hereto, to the effect that,
among other things, (a) the representations and warranties contained in Section
3.1 and the other Note Documents are true on and as of the Closing Date and (b)
no Default or Event of Default exists on and as of the Closing Date.
4.2. Legal Opinions. Concurrently with the delivery of
Notes to Purchaser on the Closing Date, Purchaser shall have received from (i)
Dickinson, Wright, Moon, Van Dusen & Freeman, counsel to Company, and (ii) each
Special Local Counsel, their respective opinions, which opinions shall be (a)
dated the Closing Date, (b) addressed to XXXXXXXXXX, XXXXXXXXXX and the
Agent, (c) satisfactory in form and substance to XXXXXXXXXX and XXXXXXXXXX
and (d) in substantially the form and substance set forth in Exhibits
4.2A, 4.2B and 4.2C hereto, respectively.
4.3. Note Documents and Other Deliveries. Prior to or
concurrently with the issuance and sale of Notes to Purchaser on the Closing
Date, Company (and, any other necessary party under the Mortgages) shall have
executed and delivered the Mortgages, in substantially the form of Exhibits
1.3B and 1.3C hereto, the Agency Agreement, in substantially the form of
Exhibit 1.3A hereto, the Assignments of Leases and Rents, in substantially the
form of Exhibit 4.3A hereto, the Hazardous Materials Indemnity Agreement, in
substantially the form of Exhibit 4.3B hereto and all other Note Documents, and
Company shall have delivered evidence, in form and substance satisfactory to
the Purchaser, that the following requirements have been satisfied:
(i) Company shall have good and marketable fee simple
title, subject to the provisions of applicable ground leases, to the
Improvements and Personal Property (as defined in the Mortgages and
constituting real property) located at the Mortgaged Estates, and a good, valid
and subsisting leasehold interest in the Mortgaged Estates (where applicable),
free and clear of all liens and encumbrances except Permitted Encumbrances (as
defined in the applicable Mortgage);
(ii) Company shall have (i) caused the Mortgages and all
required Uniform Commercial Code financing statements to be duly recorded or
filed in the manner required by the laws of California and New York and (ii)
paid, or caused to be paid, all filing fees, mortgage recording taxes and
recording charges incurred in connection therewith, and such recordings and
filings shall be satisfactory to the Purchaser and Special Local Counsel;
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(iii) the Purchaser shall have received an A.L.T.A. Extended
Coverage Loan Policy of title insurance (or such other form of loan or
mortgagee policy as may be prescribed by law in the state where such Mortgaged
Estate is located) covering such Mortgaged Estate (or a valid, binding
unconditional commitment therefor), dated the Closing Date, in the current 1987
A.L.T.A. form and including mechanics' and materialmen's lien coverage, issued
by a title insurance company acceptable to the Purchaser and with such
reinsurance as may be required by the Purchaser. Such policy shall (i) insure
(a) each of the Mortgages as a first lien on the Mortgaged Estate, subject to
no other liens or encumbrances or restrictions except Permitted Encumbrances,
which shall be fully identified thereon, (b) that any restrictions or
easements affecting the Mortgaged Estates have not been violated and that a
future violation thereof will not result in a forfeiture or reversion of title,
and (c) that all streets adjoining the Mortgaged Estate have been completed,
dedicated and accepted for public maintenance and use by the appropriate
governmental authorities, (ii) be in the aggregate amount of $64,523,000 and
insure each Mortgaged Estate in the amount set forth on Exhibit 4.3C hereto,
and (iii) be satisfactory in all other respects to Purchaser. Company will
provide Purchaser with such endorsements to the title insurance policy as the
Purchaser may reasonably request;
(iv) Purchaser shall have received a copy of a final Class A
A.L.T.A. as-built survey of each of the Mortgaged Estates, including all
requirements set forth on Table 3, certified not more than 20 days before
Closing Date, such survey to be satisfactory in form and substance to Purchaser
and to include (i) a metes and bounds description (or an otherwise sufficient
and insurable legal description) of the Mortgaged Estate, (ii) all lot and
street lines, (iii) a statement of whether the Mortgaged Estate is located in a
flood plain or zone as designated by any governmental authority and (iv) the
location of improvements, easements and rights of way (identified by reference
to the recorded instrument creating the same, if any) and encroachments, if
any, prepared and duly certified to the title company, any other necessary
party to any Mortgage such as the trustee under any deed of trust and Purchaser
as an accurate survey by a surveyor duly licensed in the State where the
Mortgaged Estate is located;
(v) Purchaser shall have received a certificate of self-
insurance executed by Company;
(vi) Purchaser shall have received an appraisal of each of the
Mortgaged Estates satisfactory to the Purchaser by an appraisal company
acceptable to the Purchaser the cost of which shall be paid by XXXXXXXXXX.
(vii) Purchaser shall have received a Phase I environmental audit
report on each Mortgaged Estate (prepared not
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earlier than one (1) year from the date of this Agreement) satisfactory to
Purchaser by an environmental consulting company acceptable to Purchaser and a
Supplemental/Phase II environmental report on each of the Mortgaged Estates
located in XXXXXXXXXX, XXXXXXXXXX and XXXXXXXXXX, New York;
(viii) Purchaser shall have received a copy of all consents,
certificates, permits and licenses of governmental authorities or inspection
organizations as are required or are customarily procured in connection with
the use, occupancy or operation of each of the Mortgaged Estates other than for
XXXXXXXXXX, California, including, but not limited to, a certificate of
occupancy and each such certificate, permit and license shall be in full force
and effect;
(ix) Purchaser shall have received evidence satisfactory to it
that there does not exist any violation of any law, regulation or order
affecting the Mortgaged Estates, including, without limitation, laws,
regulations and orders relating to (i) zoning, subdivision and building
restrictions and (ii) Hazardous Materials;
(x) on the Closing Date, each of the Mortgaged Estates shall be
(i) undamaged by fire or other causes and (ii) unaffected by any pending or
threatened condemnation proceeding;
(xi) Purchaser shall have received evidence satisfactory to it
that the description of the tax lot or lots covering each of the Mortgaged
Estates does not include any lands or buildings other than those described in
the Mortgages; and
(xii) Purchaser shall have received all documents, certificates,
statements or other evidence relating to the Mortgaged Estates as Purchaser
may reasonably request in order to consummate the transactions contemplated
hereby and by the XXXXXXXXXX Assignment, including, without limitation, the
granting of the Mortgages on the Mortgaged Estates.
4.4. Ratings. The Notes shall have a National Association of
Insurance Commissioners rating of "1" and Purchaser shall have received written
evidence thereof.
4.5. Private Placement Number Application. An application for
issuance of a private placement number for the Notes shall have been made to
S&P.
4.6. Legality. The Notes shall qualify as a legal investment for
Purchaser under the laws and regulations of each jurisdiction to which
Purchaser is subject and Purchaser shall have received such information
concerning Company and its Subsidiaries as Purchaser shall reasonably request
to establish such fact.
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4.7. No Default or Event of Default. On the Closing Date, no
Default or Event of Default shall exist.
4.8. Satisfactory Proceedings. All proceedings taken in
connection with the transactions contemplated by this Agreement, and all
documents necessary for the consummation thereof, shall be satisfactory in form
and substance to Purchaser and its counsel, and Purchaser shall have received a
copy (executed or certified as may be appropriate) of all legal documents or
proceedings taken in connection with the consummation of such transactions.
4.9. Costs and Expenses. The Company shall have paid or provided
for the payment of all expenses that Company is obligated to pay pursuant to
Section 9.4. In addition, Purchaser shall have received reasonable assurance in
writing that all other fees and expenses incurred by any other Person in
connection with the transactions contemplated hereunder shall have been paid on
or prior to the Closing Date.
4.10. Charter Documents; Resolutions. Purchaser shall have
received copies of the articles of incorporation, appropriate excerpts of
bylaws and all of the charter documents of Company, certified as true, complete
and correct by the Secretary of Company and all such documents shall be in full
force and effect. Purchaser shall also have received an incumbency certificate
evidencing the signatures of the parties authorized and executing any of the
Note Documents.
4.11. Searches. Purchaser shall have received a current
building code search for the Mortgaged Estates.
If on the Closing Date Company fails to tender to Purchaser the Notes
to be issued on such date or if the conditions specified in this Section 4 have
not been fulfilled, Purchaser may thereupon elect to be relieved of all further
obligations under this Agreement. Without limiting the foregoing, if the
conditions specified in this Section 4 have not been fulfilled, Purchaser may
waive compliance by Company with any such condition to such extent as Purchaser
may in its own sole discretion, determine; provided, however, that no waivers
shall be given without the prior written approval of XXXXXXXXXX. Nothing
herein shall operate: (i) to relieve Company of any of its obligations
hereunder, including without limitation the payment of any expenses pursuant to
Section 9.4 or (ii) to waive any of Purchaser's rights against Company.
SECTION 5. PARTICULAR COVENANTS OF THE COMPANY.
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note or due or owing under any Note Document, the Company
covenants with the Purchaser as follows:
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5.1. Financial Reports. The Company will furnish to each holder of
the Notes:
(a) As soon as available and in any event within 60 days
after the end of each quarterly fiscal period (except the last) of each fiscal
year, copies of:
(i) a consolidated balance sheet of the Company and its
Subsidiaries as of the close of such period, and
(ii) consolidated statements of income, shareholders' equity
and cash flows of the Company and its Subsidiaries for the portion of the
fiscal year ending with such period;
in each case setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year, all in reasonable detail and
certified as complete and correct, subject to changes resulting from year-end
audit adjustments, by the chief accounting officer of the Company; provided
that the Company will have satisfied the requirements of this Section 3.1 by
delivery within the time period described hereinabove of its quarterly reports
on Form 10-Q as filed with the Securities and Exchange Commission so long as
such Form 10-Q contains quarterly statements reflecting the financial position
and result of operations of the Company and its consolidated Subsidiaries for
such quarter;
(b) As soon as available and in any event within 120 days
after the close of each fiscal year of the Company, copies of:
(i) a consolidated balance sheet of the Company and its
Subsidiaries as of the close of such fiscal year, and
(ii) consolidated statements of income, shareholders' equity
and cash flows of the Company and its Subsidiaries for such fiscal year;
(c) Promptly upon their becoming available and concurrent
with sending to stockholders or debenture holders, and the provision of
Sections 3.1(a) and (b) notwithstanding, copies of each financial statement,
report, notice of proxy statement sent by the Company to such stockholders or
debenture holders generally including, without limitation, all annual reports
of the Company filed on Form 10-K;
(d) Except at such times as the Company is a reporting
company under Section 13 or 15(d) of the Exchange Act, such financial or other
information as any holder of the Notes or any person designated by such holder
may reasonably determine is
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required to permit such holder to comply with the requirements of
Rule 144A promulgated under the Act in connection with the resale
by it of the Notes, in any such case promptly after the same is
requested;
(e) Within the period provided in paragraphs 3.1(a) and (b)
above, a certificate of an Executive Officer of the Company stating that such
officer has reviewed the provisions of this Agreement and the other Note
Documents and stating whether there existed as of the date of such financial
statements and whether, to the best of such officers' knowledge, there exists
at the time of the certificate or existed at any time during the period covered
by such financial statements any Default or Event of Default and, if any such
condition or event does exist on the date of the certificate, specifying the
nature and period of existence thereof and the action the Company is taking
and/or proposes to take with respect thereto; and
(f) Such additional financial information as any holder may
reasonably request with respect to Company and its Subsidiaries.
The annual and interim financial statements described in paragraphs (a)
through (d) above shall be prepared in accordance with GAAP.
5.2. Books and Records; Inspection. The Company will, and
will cause each of its Subsidiaries to, keep proper books of records and
account in accordance with GAAP or in accordance with the generally accepted
accounting practices of the country in which each such corporation is
organized. Purchaser (so long as it holds any Notes) its successors and assigns
and any Institutional Investor that, together with any Affiliates, holds at
least 10% of the aggregate principal amount of the Notes then outstanding shall
upon the occurrence and during the continuance of a Default or Event of Default
or from and after the occurrence of any event that causes (i) a Material
Adverse Effect or (ii) a Rating Decline so long as such Rating Decline
continues, at the expense of the Company, have the right for reasonable
purposes, during regular business hours, subject to reasonable notice and as
often as may be reasonably requested, to visit and inspect the Properties of
the Company and its Subsidiaries, to examine the corporate books and records
of the Company and its Subsidiaries and to discuss the affairs, finances and
accounts of the Company and its Subsidiaries with an employee of the Company
and appropriate advisors in the presence of the Company if it so elects.
Notwithstanding the foregoing, neither the Company nor any of its Subsidiaries
shall be obligated to disclose any information pursuant to this Section 3.2
which they are prohibited from disclosing by law or by any contract entered
into prior to the date hereof with any Person other than an Affiliate. Each
holder of the Notes by its acceptance thereof agrees that
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any information obtained by such Person pursuant to this Section 5.2 will be
treated as confidential; provided, however, that nothing herein contained
shall limit or impair the right or obligation of any holder of the Notes to
disclose such information: (1) to its auditors, attorneys, employees or
agents, (2) when required by any law, ordinance or governmental order,
regulation, rule, policy, investigation or any regulatory authority request,
(3) as may be required or appropriate in any report, statement or testimony
submitted to any municipal, state provincial or Federal regulatory body
having or claiming to have jurisdiction over such holder or to the United
States National Association of Insurance Commissioners or similar
organizations or their successors, (4) in connection with the enforcement of
the terms and conditions of this Agreement, the Notes or any of the other
Note Documents, (5) which is publicly available or readily ascertainable from
public sources, or which is received by any holder of the Notes from a third
Person who or which, to such holder's knowledge, is not bound to keep
the same confidential, (6) as required by legal process in connection with
any proceeding, case or matter pending (or on its face purported to be
pending) or threatened by any court, tribunal, arbitration board or any
governmental agency, commission, authority, board or similar entity, or (7)
to the extent necessary in connection with any contemplated transfer of any
Notes by any holder thereof (it being understood and agreed that any
transferee that purchases such Notes shall itself be bound by the terms and
provisions hereof).
5.3. Payments. The Company will duly and punctually pay the
principal of, premium (if any) and interest on the Notes in accordance with
their terms, this Agreement, and the other Note Documents, without any
deduction, withholding or setoff of any kind.
5.4. Corporate Existence; Compliance with Laws. The Company
will, and (except as permitted below) will cause each of its Subsidiaries to
(i) do or cause to be done all things necessary to preserve and keep in full
force and effect its Corporate Existence and comply with all applicable laws,
statutes, regulations, rules, orders, and all applicable restrictions imposed
by any governmental or regulatory body, including, without limitation, the
Occupational Safety and Health Act of 1970, ERISA and all Environmental Legal
Requirements, except those being contested in good faith by appropriate
proceedings and except where the failure so to comply would not have a Material
Adverse Effect, and (ii) maintain all licenses and permits necessary properly
to conduct its business or own its Properties, except where the failure so to
do would not have a Material Adverse Effect; provided, however, that the
foregoing shall not restrict (x) the Company from causing, permitting or
suffering the sale, merger or liquidation of such of its Subsidiaries (but not
the Company) as its Board of Directors
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shall determine to be in the best interests of the Company in the exercise
of its reasonable business judgment or (y) any transaction permitted by Section
5.7. "Corporate Existence" as used in this Section 5.4, means existence as a
corporation under the law of any jurisdiction within the United States.
5.5. Taxes. Without limiting the terms and provisions of
the Mortgages, the Company will, and will cause each of its Subsidiaries to,
pay and discharge, before they become delinquent, all applicable taxes,
assessments and governmental charges or levies imposed upon it or its Property;
and provided, however, the foregoing items need not be paid while being
contested by the Company or such Subsidiary in good faith and by appropriate
proceedings so long as the non-payment of such items would not have a Material
Adverse Effect.
5.6. Insurance. The Company will, and will cause its
Subsidiaries to, carry and maintain in full force and effect at all times with
fiscally sound and reputable insurers insurance with respect to its Properties
and business against such risks as is reasonable and prudent in the
circumstances (which insurance obligation may be fulfilled by a reasonable and
prudent selfinsurance program as described in the Mortgages) and in any event
as may be required by applicable laws, statutes, regulations, rules or orders
and, with respect to the Mortgaged Estates, any such insurance as is required
by the Mortgages.
5.7. Limitation on Consolidation or Merger. The Company
will not, directly or indirectly (a) consolidate or merge with or into, or
sell, lease or otherwise dispose of all or substantially all of its assets to,
any other Person or (b) engage in any deconsolidations, reorganization,
recapitalization, or substitution of debtors, or any other such action if
engaging in one or more of same will effect a novation of the Company's
obligations hereunder or under any of the other Note Documents unless (i) no
Default or Event of Default shall have occurred and be continuing both
immediately before and immediately after any such transaction, and (ii) the
Company is the survivor of such transaction, or, if the Company is not the
survivor, the survivor is a corporation organized under the laws of any State
of the United States which expressly assumes in writing the Company's
obligations under this Agreement, the Notes and the other Note Documents and
which shall own all or substantially all of the assets of the Company. In the
case of any such consolidation, merger or sale or other disposition of assets
in which the Company is not the surviving corporation, the surviving
corporation shall furnish to the holders of the Notes an unqualified opinion of
independent counsel to the effect that the instrument of assumption has been
duly authorized, executed and delivered and constitutes the legal, valid and
binding contract and agreement of the surviving corporation enforceable in
accordance with its terms, except as enforcement of such terms
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<PAGE> 22
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and by general
equitable principles and that the first priority lien or security interest
created by the Mortgages will not be affected by such consolidation, merger,
sale or other disposition. Without limiting the generality of the foregoing,
if immediately after giving affect to any such merger, consolidation or sale of
assets, any event described in paragraphs (a), (b) or (c) of the definition
herein of "Rating Decline" shall have occurred and be continuing with respect
to the surviving or continuing corporation, then the holders of Notes shall
have all the rights and remedies provided by Section 2.3 in the case of
Rating Decline.
5.8. Paying Agency. The Company will maintain an office in
the United States of America where notices, presentations and demands to or
upon the Company in respect of this Agreement, the Notes and the other Note
Documents may be given or made. As of the date of this Agreement, such office
is located at the Company's address set forth in Section 9.6 hereof. The
Company will give written notice to the holders of the Notes of any change of
location of such office within five Business Days after the date of any such
change. Notwithstanding the foregoing, in lieu of, or in addition to,
maintaining an office as herein contemplated, the Company may appoint and
maintain an agent for receiving notices, presentations or demands and/or making
payments on the Notes which shall be a state or national bank or trust company
organized under the laws of the United States of America or any State thereof
or the District of Columbia and having capital, surplus and undivided profits
aggregating at least U.S. $250,000,000 ("Paying Agent") for the Notes in the
Borough of Manhattan in the City of New York. In the event of a Rating
Decline, Company shall appoint a Paying Agent to accept delivery of any Note
or Notes to be redeemed by the Company pursuant to Section 2.3.
5.9. Repurchase of Notes. Neither the Company nor any
Subsidiary nor any Affiliate will, directly or indirectly, repurchase or make
any offer to repurchase any Notes unless the Company or such Subsidiary or
Affiliate has offered to repurchase such Notes, pro rata, from all holders of
the Notes and otherwise upon the terms and conditions set forth in Section 2
hereof. In case the Company or any Subsidiary or Affiliate repurchases any
Notes, such Notes shall thereafter be cancelled and no Notes shall be issued in
substitution therefor. Without limiting the foregoing, upon the purchase or
other acquisition of any Notes by the Company, any Subsidiary or any Affiliate,
such Notes shall no longer be outstanding for purposes of any section of this
Agreement or any of the Mortgages relating to the taking by the holders of the
Notes of any actions with respect thereto or hereto, including, without
limitation, Sections 6 or 7.
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Section 5A. Remediation; Substitution.
5A.l. For purposes of this Section 5A the following
terms shall have the meaning set forth below:
"Cleanup Standards" shall mean soil and groundwater
cleanup levels approved in writing by the Division of Spill Prevention,
Response and Remediation of the New York State Department of Environmental
Conservation or, if such approval cannot be obtained, background levels.
"Completion Date" shall mean August 16, 1993, as to
which date time shall be of the essence.
"Completion Report" shall have the meaning assigned
thereto in Section 5.A2(b).
"Contractor" shall mean an environmental contractor
or engineer reasonably acceptable to and approved by Purchaser.
"New York Mortgage", shall mean the Mortgage creating
the lien on the Mortgaged Estate relating to the Property.
"Program" shall mean, collectively, (i) all
environmental work necessary or recommended by the Contractor to remediate the
contamination revealed by the Testing, including, without limitation, soil
removal to levels equal to or below the Cleanup Standards, (ii) any subsequent
remediation or follow-up recommended by the Contractor in accordance with
Environmental Legal Requirements, and (iii) all work necessary to restore and
repair the Property to its condition prior to the environmental work, all
performed and completed in accordance with all Environmental Legal
Requirements.
"Property" shall mean the real property described in
Exhibit 5A.1 attached hereto.
"Release Conditions" shall mean that Purchaser shall
have received the following, all in form and substance satisfactory to
Purchaser:
(i) an endorsement to its mortgagee title
insurance policy evidencing a continuation of title to the date on which the
release is to occur and stating that the New York Mortgage continues to be a
first priority lien on the remainder of the Mortgaged Estates encumbered by the
New York Mortgage; and
(ii) an Officer's Certificate stating that (a)
Company has no actual knowledge that there are any Events of
Default under this Agreement or any other Note Document, and (b)
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all of the representations, warranties and covenants set forth herein and the
other Note Documents are true and correct and reaffirmed as of the date on
which the release is to occur.
"Removal" shall have the meaning assigned thereto in
Section 5A.2 hereof.
"Substitute Conditions" shall have the meaning assigned thereto
in Section 5A.3 hereof.
"Substitute Property" shall mean any real property or
properties substituted for the Property pursuant to Section 5A.2.
"Substitution" shall mean the substitution of the Property with
the Substitute Property such that the Property is released from the lien of the
New York Mortgage and the Substitute Property is encumbered by the New York
Mortgage or another mortgage in form and substance the same as the New York
Mortgage in the reasonable judgment of the holders of the Notes, all in
accordance with Section 5A.3 hereof.
"Substitution Completion Date" shall mean a date on which the
closing of a Substitution shall take place, which shall in no event be more
than sixty (60) days after an Unsuccessful Completion giving rise to the
Substitution.
"Successful Completion" shall mean the completion of the Program
on or before the Completion Date such that the levels of contamination at the
Property after such completion are equal to or below the Cleanup Standards.
"Testing" shall have the meaning assigned thereto in
Section 5A.2 hereof.
"Unsuccessful Completion" shall mean (i) a Successful Completion
has not occurred, (ii) the Removal has not been undertaken or property
completed, (iii) the Testing has not been undertaken or properly completed, or
(iv) any of the items set forth in the foregoing clauses (i), (ii) or (iii)
have not been completed within the specified time period or in accordance with
all Environmental Legal Requirements.
5A.2. (a) Company shall retain a Contractor to remove the
underground storage tank and any associated piping located at the Property
("Removal"), which Removal shall be done in accordance with all Environmental
Legal Requirements and completed no later than the Completion Date.
(b) The Company shall cause the Contractor to undertake
and complete the Program, which Program shall be performed in accordance with
all Environmental Legal Requirements and completed on or before the Completion
Date. The Company shall provide to Purchaser on the Completion Date a report
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("Completion Report") in form and substance reasonably satisfactory to
Purchaser stating that (i) the Program was completed in accordance with
all Environmental Legal Requirements, (ii) that all contamination has been
remediated to levels equal to or below the Cleanup Standards, and (iii) no
existing environmental condition is likely to adversely affect the operation of
the Property as a retail store.
(c) Purchaser shall have the right upon not less
than forty-eight (48) hours prior written notice to visit the Property and to
have its consultants or engineers audit or monitor the Removal, the Testing and
the Program, provided that none of the foregoing unreasonably delay or
interfere with timely Successful Completion. The Company shall provide
Purchaser with copies of all reports, filings or data provided to governmental
or regulatory agencies in connection with the tank, the Removal, the Testing
and the Program.
(d) The Company agrees and acknowledges that
Purchaser, in its judgment reasonably exercised, shall determine whether an
Unsuccessful Completion has occurred based upon the Completion Report. The
Company shall promptly pay, all costs, fees and expenses charged by the
Contractor and all costs, fees and expenses incurred by Purchaser to determine
whether there has been an Unsuccessful Completion.
(e) If an Unsuccessful Completion has occurred a
the Company shall fail to correct or cure the Unsuccessful Completion within
thirty (30) days' after written notice to the Company, Company shall make a
Substitution. If the Company fails to make the Substitution in accordance with
the terms of this Agreement and in the time periods provided therefor, such
failure shall constitute an Event of Default under the New York Mortgage
subject to cure in accordance with the provisions of Section 5.1 of the
Mortgage. If the Company is required to make a Substitution, such Substitution
shall be made in accordance with Section 5A.3 hereof.
(f) The Company acknowledges that Purchaser is
requiring it to take the actions set forth in this Section 5A.2 solely for the
purpose of protecting its collateral under the New York Mortgage and the
Purchaser assumes no liabilities or obligations of any kind whatsoever with
respect to the Company's handling or disposal practice with respect to
Hazardous Materials, the Removal, the Testing or the Program (including any
failure by the Company to fully or properly perform the same or to observe and
comply with all Environmental Legal Requirements) or Hazardous Materials which
may at any time exist on any Mortgaged Estate, including the Property or may
have been or may be released, discharged, or removed from any Mortgaged Estate.
The Company acknowledges that (i) it has engaged its own Contractor to perform
the Removal, the Testing and the Program
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and make recommendations regarding remediation and compliance with
Environmental Legal Requirements and to advise them with respect to the
Removal, the Testing and the Program and the presence, release, discharge and
removal of Hazardous Materials, and (ii) the reports, recommendations and
remedial actions so proposed may be reviewed and approved by Purchaser at its
election solely to protect the security and other interest of Purchaser. The
Company acknowledges and agrees that it has not relied and will not rely on
Purchaser or any of its agents in any regard with respect to the Removal, the
Testing or the Program.
5A.3. (a) If the Company is required to make a Substitution at
Purchaser's election, within fifteen (15) days after its receipt of notice to
that effect from Purchaser, the Company shall provide Purchaser with the
description of, and all due diligence materials described by Company or
reasonably requested by Purchaser with respect to, the proposed Substitute
Property. If the Substitute Conditions are satisfied on or before the
Substitution Completion Date, the Substitution shall take place on the
Substitution Completion Date and, as of such date, the Substitute Property
shall be one of the Mortgaged Estates encumbered by the New York Mortgage or
another Mortgage in form and substance the same as the New York Mortgage in the
reasonable judgment of the holders of the Notes and the Property shall no
longer be one of the Mortgaged Estates. Any due diligence materials submitted
to Purchaser shall be deemed approved by Purchaser unless Purchaser gives
written notice of any objections.
(b) The Company's right to complete a Substitution shall
be subject to the satisfaction of the following conditions on or before the
Substitution Completion Date, all in form and substance acceptable to
Purchaser (each, "Substitute Condition"; collectively, "Substitute Conditions"):
(1) The proposed Substitute Property must be a
"KMART" or Subsidiary retail facility which has a value, as evidenced by an
appraisal prepared by a MAI Appraiser acceptable to Purchaser, equal to or in
excess of the Release Amount specified in the New York Mortgage for the
Property, which determination of value shall be made by Purchaser in its sole
discretion reasonably exercised;
(2) All of the conditions set forth in Sections
4.3, 4.10 and 4.11 shall have been satisfied;
(3) The Release Conditions shall have been
satisfied;
(4) No Default or Event of Default shall exist
both before and after giving effect to the proposed Substitution;
(5) Purchaser shall have received an opinion
of counsel to the Company opining with respect to the
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Substitution and the Substitute Property as to those matters described on
Exhibits 4.2(A) and (B);
(6) The Company shall have executed and
delivered (i) at Purchaser's option, either an instrument spreading the lien of
the New York Mortgage to the Substitute Property or a new mortgage encumbering
the Substitute Property, together with any Uniform Commercial Code filings
deemed necessary by Purchaser, (ii) an amendment to the Assignment of Leases
and Rents covering the Property reflecting the Substitution, and (iii) such
affidavits, filings or other documents concerning payment of (or exemption
from) mortgage recording or other taxes or fees in connection with the
spreading the lien of the New York Mortgage or the new mortgage; and
(7) Purchaser shall have received such other
instruments and assurance as it may reasonably require.
(c) The Company shall pay or reimburse Purchaser
on demand for all costs, fees or expenses reasonably incurred in connection
with any Substitution and shall pay all title insurance premiums and charges,
charges of environmental consultants or engineers, survey or appraisal costs,
filing charges, mortgage recording or other taxes or other fees in connection
with the Substitution, including, without limitation, reasonable attorneys'
fees and expenses. In connection with the satisfaction of the conditions
precedent contained in Sections 4.3, 4.10 and 4.11, all references to "Closing
Date" shall mean the Substitution Completion Date and each reference to a
document required to be delivered shall be deemed, for purposes hereof, to
refer to the type of document described only insofar as it relates to the
Substitute Property.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
6.1. Events of Default. Any one or more of the following
shall constitute an "Event of Default" as the term is used herein or in the
other Note Documents:
(a) The Company shall fail to pay when due (i)
any payment of the principal of any Note or of any premium thereon; or (ii) any
payment of interest on any Note and such interest payment default shall
continue for more than 5 days; or
(b) the Company shall fail to observe or
perform any other obligation, covenant, undertaking, condition or provision in
respect of the Notes or contained in this Agreement or the other Note
Documents which is not remedied within 30 days after the earliest of: (i) the
furnishing of notice thereof by the Company to the holders of the Notes, (ii)
the Company's willful failure to provide any notice required under Section 6.2
hereof or (iii) receipt of written notice thereof from the holder of any Note
by the Company requiring the same to be remedied; provided that a default
under Section 6.09 of the Mortgage shall constitute an Event of Default
hereunder not subject to cure; or
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(c) any representation or warranty made by the
Company herein, or made by the Company in any other Note Document shall be
untrue or inaccurate in any material respect; or
(d) any of the Note Documents or any provision
thereof shall cease to be a legal, valid and binding agreement enforceable
against the Company in accordance with the respect of terms thereof or shall in
any way be terminated or become or be declared ineffective or inoperative or
shall in any way whatsoever cease to give or provide the respective perfected
first priority liens (subject to Permitted Encumbrances), perfected first
priority security interest, rights, titles, interest (subject to Permitted
Encumbrances), remedies, powers or privileges intended to be created thereby;
or
(e) a judgment shall be rendered against the
Company or any Principal Subsidiary for the payment of money in excess of $250
million individually or $250 million in the aggregate (as to such foregoing
amount, net of the portion thereof covered by insurance) and such judgment
shall not be discharged or dismissed, or execution thereof stayed pending
appeal, within 30 days after entry; or
(f) (i) the Company or any Principal Subsidiary
shall commence or consent to any case, proceeding or other action (1) under any
existing or future law of any jurisdiction 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 as bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution, composition or other relief with respect to it or its debts, or
(2) seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its assets (including the
Mortgaged Estates), or the Company shall make a general assignment for the
benefit of creditors or admit in writing that it is unable to pay its debts as
they become due; or
(ii) there shall be commenced against the
Company or any Principal Subsidiary any such case, proceeding or other action
referred to in subclause (i) of this clause (f) that (l) results in the entry
of an order for relief or any such adjudication or appointment or (2) is not
dismissed, discharged or stayed for a period of 30 days from the entry thereof;
or
(iii) there shall be commenced against the
Company or any Principal Subsidiary 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 its assets (or against the
Mortgaged Estates) that results in the entry of any order for any such relief
which shall not have been vacated, discharged or stayed within 30 days from the
entry thereof; or
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(iv) the Company shall have been dissolved or
terminated; or
(v) the Company or any Principal
Subsidiary shall take any action authorizing or in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth above in this clause (f).
6.2. Notice to Holders. Whenever the Company becomes aware
that any Default or Event of Default has occurred, or if the Company is aware
that the holder of any Note has either given any notice or taken any other
action with respect to a Default or Event of Default, or the Company receives
written notice from a third party concerning an event which constitutes a
Default or Event of Default, the Company will ensure that notice is given (or
such third party notice is forwarded) to all holders of the Notes then
outstanding, no later than the fifth day (or second day in the case of an Event
of Default or Default under Section 6.1(a)) after it becomes aware that such
Event of Default or Default has occurred, or that such notice has been given or
such other action has been taken with respect to such Default or Event of
Default, such notice to be in writing and sent in the manner provided in
Section 9.6.
6.3. Acceleration of Maturities; Other Remedies.
(a) Upon the occurrence of an Event of Default
under Section 6.1(a) above, the holder of each Note as to which such Event of
Default occurred may, by written notice to the Company, declare such Note to be
due and payable (without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Company) and such Note shall
thereupon become due and payable at the Redemption Price. Upon the occurrence
of an Event of Default under Section 6.1(f) above in respect of the Company
(but not of a Principal Subsidiary), all Notes shall immediately become due and
payable at the Redemption Price. Upon the occurrence of any other Event of
Default, holders of Notes representing at least 51% of the unpaid principal
amount of all Notes then outstanding, excluding any Notes held by the Company
or any Subsidiary or Affiliate ("Requisite Holders") may, by written notice to
the Company, declare all Notes to be due and payable (without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Company) and such Notes shall thereupon become due and payable at the
Redemption Price. No course of dealing on the part of any holder of any Note
nor any delay or failure on the part of any holder of any Note to exercise any
right shall operate as a waiver of such right or otherwise prejudice such
holder's rights, powers and remedies. The Company further agrees to pay to the
holder or holders of the Notes all costs and expenses incurred by them in the
collection of any Note upon any default hereunder or thereon, including all
costs,
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expenses, legal and other fees, charges and advances to protect the Mortgaged
Estates and the fees, disbursements and other charges of such holder's or
holders' attorneys for all services rendered in connection therewith together
with all other amounts due under this Agreement and the other Note Documents.
(b) THE COMPANY ACKNOWLEDGES THAT PURCHASER WOULD
NOT PURCHASE THE NOTE WITHOUT THE COMPANY'S AGREEMENT, AS SET FORTH ABOVE IN
THIS SECTION 6.3, TO PAY THE PURCHASER OR ANY OTHER HOLDERS OF THE NOTES THE
MAKE WHOLE PREMIUM INCLUDED WITHIN THE REDEMPTION PRICE UPON THE SATISFACTION
OF ALL OR ANY PORTION OF THE PRINCIPAL INDEBTEDNESS EVIDENCED BY THE NOTE
FOLLOWING THE ACCELERATION OF THE MATURITY DATE BY REASON OF AN EVENT OF
DEFAULT OCCURRING AND CONTINUING HEREUNDER, AND THE COMPANY HAS CAUSED THE
PERSON SIGNING THIS AGREEMENT ON THE COMPANY'S BEHALF SEPARATELY TO INITIAL THE
AGREEMENT CONTAINED IN THIS SECTION 6.3, IN COMPLIANCE WITH SECTION 2954.10 OF
THE CALIFORNIA CIVIL CODE, BY PLACING HIS OR HER INITIALS BELOW:
INITIALS : NWL
---
(c) The rights and remedies expressly provided
for in this Agreement are cumulative and not exclusive of any rights or
remedies which the Purchaser or any holder of a Note would otherwise have,
including, without limitation, the rights and remedies provided for in the
Mortgages.
6.4. Rescission of Acceleration. The provisions of
Section 6.3 are subject to the condition that if the principal of and accrued
interest on all or any outstanding Notes have been declared or have become
immediately due and payable by reason of the occurrence of any Event of Default
described in paragraphs (a) through (e), inclusive, of Section 6.1, then (i)
for any such declaration by a holder as the result of an Event of Default
described in paragraph (a) of Section 6.1, such holder or (ii) for any such
declaration as the result of the Event of Default described in paragraphs (b)
through (e) of Section 6.1, the holders of at least 51% of the unpaid principal
amount of all Notes then outstanding (other than any Notes held by the Company
or any Subsidiary or Affiliate), may by written instrument filed with the
Company, rescind and annul such declaration and the consequences thereof,
provided that at the time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the
payment of any monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all
other sums payable under the Notes and under this Agreement (except any
principal, interest or premium on the Notes which has become due and payable
solely by reason of such declaration under Section 6.3) shall have been duly
paid; and
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(c) each and every other Default and Event of Default
shall have been cured or waived pursuant to Section 7.1 and the Company shall
have paid all of Purchaser's costs and expenses as provided for in Section 9.4;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
7.1. Consent Required. Any term, covenant, agreement or
condition of this Agreement or the Notes or the other Note Documents may, with
the consent of Company (and, if required by applicable law, the Agent), be
amended or compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively), if Company
shall have obtained the consent in writing of the holders of at least 51% of
the unpaid principal amount of outstanding Notes (other than any Notes held or
agreed to be purchased by Company or any Subsidiary or Affiliate) provided that
no such waiver, modification, alteration or amendment shall (a) change the time
of payment of the principal of or the interest on any Note or reduce the
principal amount thereof or reduce the rate of interest thereon, (b) change any
of the provisions with respect to Section 2 hereof, including, without
limitation, the definition of the term "Make Whole Premium" or the term
"Redemption Price", (c) except as provided in applicable Mortgage, release from
the lien granted by such Mortgage all or any part of the Mortgaged Estates or
(d) change the percentage of holders of the Notes required to consent to any
such amendment, alteration or modification or any of the provisions of this
Section 7 without the consent of each holder of the Notes affected thereby.
Executed or true and correct copies of any waiver, modification, alteration or
amendment to this Agreement shall be delivered by Company to each holder of
outstanding Notes forthwith following the date on which the same shall have
been executed and delivered by the holder or holders of the requisite
percentage of outstanding Notes.
7.2. Solicitation of Holders. So long as there are any
Notes outstanding, Company will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes or the other Note Documents unless each holder of Notes
(irrespective of the amount of Notes then owned by it) shall be informed
thereof by Company and shall be afforded the opportunity of considering the
same and shall be supplied by Company with sufficient information to enable it
to make an informed decision with respect thereto. The Company will not,
directly or indirectly, pay or cause to be paid any remuneration, whether by
way of supplemental or additional interest, fee or otherwise, to any holder as
consideration for or as an inducement to entering into by any holder of any
consent, waiver or amendment of any of the terms and provisions of the
Agreements or the Notes or the other Note Documents unless such
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remuneration is concurrently offered, on the same terms, ratably to the
holders of all Notes then outstanding.
7.3. Effect of Amendment or Waiver. Any such amendment or
waiver shall apply equally to all of the holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon Company (and
the Agent), whether or not such Note shall have been marked to indicate such
amendment or waiver. No such amendment or waiver shall extend to or affect any
obligation not expressly amended or waived or impair any right consequent
thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS
8.1. Definitions. Unless the context otherwise requires,
the terms hereinafter set forth when used herein shall have the following
meanings and the following definitions shall be equally applicable to both the
singular and plural forms of any of the terms herein defined.
"Act" means the Securities Act of 1933, as amended.
"Adjusted Reinvestment Yield" shall have the meaning assigned
thereto in Section 2.3(d) hereof.
"Affiliate" means any Person which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, Company, as the case may be. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting stock, by contract or otherwise.
"Agency Agreement" shall have the meaning assigned thereto
in Section 1.3.
"Agent" means the agent named pursuant to the Agency Agreement.
"Agreement" means this Note Purchase Agreement.
"Asbestos" shall mean the asbestos from varieties of
chrysotile, crocidolite, amosite, anthophyllite, tremolite and actinolite.
"Assignment of Leases and Rents" shall mean those certain
Assignment of Leases and Rents, dated the date hereof, by and between Company
and XXXXXXXXXX.
"Audited Financials" shall have the meaning assigned
thereto in Section 3.1(d).
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"Business Day" means any day other than a Saturday, Sunday or
other day on which banks in New York are required by law to close or are
customarily closed.
"Closing Date" shall have the meaning assigned thereto
in Section 1.2 hereof.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time;
"Default" means any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both constitute an
Event of Default as defined in Section 6.1.
"Environmental Legal Requirement" shall mean any international,
Federal, state or local statute, law, regulation, order, consent decree,
judgment, permit license, code, covenant, deed restriction, common law, treaty,
convention, ordinance or other requirement relating to public health, safety or
the environment, including, without limitation, those relating to releases,
discharges or emissions to air, water, land or groundwater, to the withdrawal
or use of groundwater, to the use and handling of polychlorinated biphenyls or
Asbestos, to the disposal, treatment, storage or management of hazardous or
solid waste, or Hazardous Materials, or to exposure to toxic or Hazardous
Materials, to the handling transportation, discharge or release of gaseous or
liquid Hazardous Materials and any regulation, order, notice or demand issued
pursuant to such law, statute or ordinance, in each case applicable to Company
and its Subsidiaries, the property of Company and its Subsidiaries or the
operation, construction or modification of any thereof, including without
limitation the following: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, the Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid
Waste Amendments of 1984, the Hazardous Materials Transportation Act, as
amended, the Federal Water Pollution Control Act, as amended by the Clean Water
Act of 1977, the Safe Drinking Water Act, the Clean Air Act of 1966, as
amended, the Toxic Substances Control Act of 1977, the Occupational Safety and
Health Act of 1977, as amended, the Emergency Planning and Community
Right-to-Know Act of 1986, the National Environmental Policy Act of 1969, the
Oil Pollution Act of 1990, California Legislative Assembly Bill No. 1735, dated
March 8, 1991 and effective January 1, 1992 any any similar or implementing
state law, and any state statute and any further amendments to these laws
providing for financial responsibility for clean up or other actions with
respect to the release or threatened release of Hazardous Materials and all
rules, regulations, guidance documents and publications promulgated thereunder.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute of similar
import, together with regulations thereunder, in each case as in effect from
time to time. References to sections of ERISA shall be construed to also refer
to any successor sections.
"ERISA Affiliate" means any corporation, trade or business that
is, along with Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in Section 414(b) and
414(c), respectively, of the Code or Section 4001 of ERISA.
"Exchange Act" means the Securities Exchange Act of 1934, as
amend from time to time.
"Executive Officer" means the President, Vice President or
Treasurer of Company.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time, consistently applied.
"Hazardous Material" and "Hazardous Materials" shall
mean as follows:
(i) any "hazardous substance" as defined in, or
for purposes of, the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C.A. Sections 9601 & 9602, as may be amended from
time to time, or any other so-called "superfund" or "superlien" law and any
judicial interpretation of any of the foregoing;
(ii) any "regulated substance" as defined pursuant
to 40 C.F.R. Part 280;
(iii) any "pollutant or contaminant" as defined in
42 U.S.C.A. Section 9601(33);
(iv) any "hazardous waste" as defined in, or for
purposes of, the Resource Conservation and Recovery Act;
(v) any "hazardous chemical" as defined in 29
C.F.R. Part 1910.
(vi) any "hazardous material" as defined in, or for
purposes of, the Hazardous Materials Transportation Act; and/or
(vii) any other substance, regardless of physical
form, or form of energy or pathogenic agent that is subject to any other past,
present or future law or requirement of any Governmental Body regulating,
relating to, or imposing obligations, liability, or standards of conduct
concerning the
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protection of human health, plant life, animal life, natural resources,
property.
Without limiting the generality of the foregoing, the term
"Hazardous Materials" thus includes, but is not limited to, any material, waste
or substance that contains petroleum or any fraction thereof, Asbestos, or
polychlorinated biphenyls, or that is flammable, explosive or radioactive.
"Hazardous Materials Indemnity Agreement" shall mean that
certain Hazardous Materials Indemnity Agreement, dated the date hereof, by and
between Company and XXXXXXXXXX.
"Institutional Holder" means (i) Purchaser, (ii) any other
holder of Notes which is an insurance company, charitable foundation, fraternal
benefit society, pension, retirement or profit sharing trust or fund within the
meaning of Title I of the Employee Retirement Income Security Act of 1974, as
amended, or for which any bank, trust company, national banking association or
investment advisor registered under the Investment Advisers' Act of 1940, as
amended, is acting as a trustee or agent, any broker or dealer registered under
the Investment Advisers' Act of 1940, as amended, or any government, public
employees' pension retirement system, or any other governmental agency
supervising the investment of public funds and (iii) an affiliate of any Person
described in clause (i) or (ii) which holds any Notes.
"Make-Whole Premium" shall have the meaning assigned
thereto in Section 2.3(d) hereof.
"Material Adverse Effect" means:
(a) any event or condition which individually or in the
aggregate has a material adverse effect on the financial condition of Company,
or of Company and its Subsidiaries taken as a whole or on the condition, value
or use of any Mortgaged Estate or on the ability of Company to perform its
obligations under this Agreement, the Notes or any other Note Document; or
(b) a material adverse effect individually or in the
aggregate on the legality, validity or enforceability of Company's obligations
under this Agreement or the Notes or the other Note Documents or a material
impairment of the liens or security interest granted under the Note Documents.
"Minimum Investment Grade" shall have the meaning assigned
thereto in Section 2.3(d) hereof.
"Moodys" shall have the meaning assigned thereto in Section
2.3(d) hereof.
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"Mortgaged Estate" means the collateral described as
such in the mortgages and which secures the Notes.
"Mortgages" means the mortgages, deeds of trust, deed to secure
debt or other similar security instruments creating or granting first priority
liens and security interests in the collateral which secures the Notes and
Company's obligations under the Note Documents substantially in the forms of
Exhibits 1.3B and 1.3C, or which is hereafter executed and delivered in
connection with the substitution or replacement of any Mortgaged Estate, as any
thereof may from time to time be supplemented or amended.
"Multiemployer Plan" means a multiemployer plan as defined in
ERISA as to which Company has any outstanding liability.
"Note Documents" means this Agreement, the Notes, the
Mortgages, Agency Agreement, the Hazardous Materials Indemnity Agreement, the
Assignment of Leases and Rents, the UCC Financing Statements filed in
connection with the Mortgages (together with assignments or amendments thereto)
and any other agreements, documents and writings now or hereafter executed by,
on behalf of or for the benefit of Company, Purchaser, the Agent or other
holders of the Notes pursuant to or in connection with this Agreement or the
transactions contemplated hereby, together with all amendments, modifications
(including through the waiver of any provision thereof), supplements and/or
restatements thereto.
"New York Mortgage" shall have the meaning assigned thereto in
Section 5A.1.
"Overdue Rate" means a rate of interest of 10.2% per annum.
"Paying Agent" means an Agent appointed and maintained by the
Company for receiving notices, presentations or demands and/or making payments
on the Notes which shall be a state or national bank or trust company organized
under the laws of the United States of America or any state thereof or the
District of Columbia and having capital surplus and undivided profits
aggregating at least U.S. $250,000,000.00 for the Notes in the borough of
Manhattan in the City of New York.
"PBGC" means the Pension Benefit Guaranty Corporation;
"Permitted Encumbrances" shall have the meaning assigned
thereto in the Mortgages.
"Person" means an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political
subdivision thereof.
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"Plan" means any United States employee benefit plan
established, maintained or contributed to by Company or any ERISA Affiliate for
the benefit of Company or such ERISA Affiliate's respective employees.
"Principal Subsidiary" means (i) any Subsidiary of Company (a)
whose profits (before tax and extraordinary items) for its last financial year
as shown in its latest profit and loss account as prepared for the purposes of
the latest audited profit and loss account of Company are at least 10% of the
consolidated profits (before tax and extraordinary items) of Company for its
last fiscal year as shown in the latest audited consolidated profit and loss
account of Company or (b) whose total assets (excluding goodwill and other
intangible assets and deducting intercompany indebtedness and minority
interests) as shown by its latest balance sheet as prepared for the purposes of
the latest audited balance sheet of Company are at least 10% of the total
assets of Company as shown by the latest audited consolidated balance sheet of
Company. A report by the independent auditors of Company that in their opinion
a Subsidiary is or is not a Principal Subsidiary shall, in the absence of
manifest error, be conclusive and binding on Company and the holders of the
Notes.
"Property" shall have the meaning assigned thereto in Section
5A.1.
"Purchaser" and "Purchasers" shall have the meaning assigned
thereto in Section 1.1 hereof.
"Rating Agency" and "Rating Agencies" shall have the meanings
assigned thereto in Section 2.3(d) hereof.
"Rating Decline" shall have the meaning assigned thereto in
Section 2.3(d) hereof.
"Redemption Price" shall have the meaning assigned thereto in
Section 2.1 hereof.
"Reinvestment Yield" shall have the meaning specified in
Section 2.3(d) hereof.
"Reportable Event" shall have the same meaning as in ERISA but
shall not include any reportable event for which the 30-day notice period has
been waived under applicable regulations.
"Security" shall have the meaning assigned thereto in Section
2(1) of the Act.
"Special Local Counsel" means local counsel to XXXXXXXXXX: (i)
Squire, Sanders & Dempsey, located in New York, and (ii) Howard Rice Nemerovski
Canady Robertson & Falk, located in California.
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"Statistical Release" shall have the meaning assigned
thereto in Section 2.3(d) hereof.
"Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of
such corporation (assuming exercise or conversion solely of the securities held
by such Person) is at the time beneficially owned by such Person directly or
indirectly through Subsidiaries, and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% equity interest at the time or the power to
elect a majority of the Board of Directors or similar governing body.
"Superior Document" shall mean, with respect to each Mortgaged
Estate, any lease, mortgage, deed of trust, security agreement or other
agreement pursuant to which a Superior Party has an interest in such Mortgaged
Estate which is superior or prior to the interest of Purchaser (or Agent as the
case may be).
"Superior Party" shall mean, with respect to each Mortgaged
Estate, each Person having an interest in all or any portion of (i) such
Mortgaged Estate, (ii) the land on which any portion of the Mortgaged Estate is
located ("Land") or (iii) any lease, sublease or ground lease of the Land or
the Improvements (as defined in the applicable Mortgage), including, without
limitation, any lessor, sublessor, ground lessor or holder of a mortgage or
security interest of any type in any of the foregoing, which interest is
superior or prior to the interest of Purchaser or Agent in the Mortgaged
Estate.
" XXXXXXXXXX Assignment" shall meaning XXXXXXXXXX.
"S&P" shall have the meaning assigned thereto in Section
2.3(d) hereof.
" XXXXXXXXXX" shall mean XXXXXXXXXX.
"Weighted Average Life to Maturity" shall have the meaning
assigned thereto in Section 2.3(d) hereof.
8.2. Accounting Principles. Where the character or amount
of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in
accordance with GAAP.
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SECTION 9. MISCELLANEOUS
9.1. Registered Notes. The Company shall cause to be kept
a register for the registration and transfer of the Notes ("Note Register") at
the office of Company or the Paying Agent, and Company will cause to be
registered or transferred on the Note Register as hereinafter provided and
under such reasonable regulations as it may prescribe, any Note issued pursuant
to this Agreement.
At any time and from time to time the registered holder of any
Note which has been duly registered as hereinabove provided may, subject to
compliance with applicable securities laws and the provisions of Section
3.2, transfer such Note upon surrender thereof at Company or the principal
office of the Paying Agent (if one shall have been appointed) duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of such Note or its attorney duly authorized in writing; provided that
Company or the Paying Agent may decline to exchange or register the transfer of
any Note during the period of five Business Days preceding the due date for any
payment of principal or interest on the Notes.
The Person in whose name any registered Note shall be registered
shall be deemed and treated as the owner and holder thereof for all
purposes of this Agreement. Payment of or on account of the principal,
premium, if any, and interest on any registered Note shall be made to or upon
the written order of such registered holder.
9.2. Exchange of Notes. At any time and from time to
time, upon not less than three Business Days' notice to that effect given by
the holder of any Note initially delivered or of any Note substituted therefor
pursuant to Section 9.1, this Section 9.2, or Section 9.3 (except in the case
of a lost, stolen, or mutilated certificate sought to be exchanged pursuant to
Section 9.3, as soon as practicable), and, upon surrender of such Note at the
office of the Paying Agent, Company will cause the Paying Agent to deliver in
exchange therefor, without expense to the holder, except as set forth below,
Notes for the same aggregate principal amount as the then unpaid principal
amount of the Note so surrendered, in the denomination of U.S. $100,000 or any
amount in excess thereof as such holder shall specify, dated as of the date to
which interest has been paid on the Note so surrendered, or, if such surrender
is prior to the payment of any interest thereon, then dated as of the date of
issue, payable to such Person or Persons, or registered assigns, as may be
designated by such holder and otherwise permitted hereunder, and otherwise of
the same form and tenor as the Notes so surrendered for exchange. The Company
may require the payment of a sum sufficient to cover any stamp tax or
governmental charges imposed upon such exchange or transfer.
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9.3. Loss, Theft, etc. of Notes. Upon receipt of
evidence satisfactory to Company of the loss, theft, mutilation or destruction
of any Notes, and in the case of any such loss, theft or destruction upon
delivery of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to Company, or in the event of such mutilation upon surrender and
cancellation of the Note, Company will cause the Paying Agent to deliver
without expense to the holder thereof, a new Note, of like tenor, in lieu of
such lost, stolen, destroyed or mutilated Note. If any Institutional Holder is
the owner of any such lost, stolen or destroyed Note, then the affidavit of an
authorized officer of such owner, setting forth the fact of loss, theft or
destruction and of its ownership of the Note at the time of such loss, theft
or destruction shall be accepted as satisfactory evidence thereof and no
further indemnity shall be required as a condition to the execution and
delivery of a new Note other than the written agreement of such owner to
indemnify Company.
9.4. Expenses, Stamp Tax Indemnity. Whether or not the
transactions herein contemplated (including the XXXXXXXXXX Assignment) shall
be consummated, XXXXXXXXXX shall pay directly all of its and XXXXXXXXXX'
out-of-pocket expenses in connection with the preparation, execution and
delivery of this Agreement and the transactions contemplated or permitted
hereby, including but not limited to the reasonable fees, disbursements and
other charges of XXXXXXXXXX' special counsel, Sonnenschein, Nath & Rosenthal,
XXXXXXXXXX own counsel, any special local counsel, and all duplicating and
printing costs. XXXXXXXXXX shall provide a sum at closing to pay all annual
fees of the Agent pursuant to the Agency Agreement. Such sum shall be
deposited pursuant to the Agency Fee Deposit Agreement attached hereto as
Exhibit 9.4. Company shall pay all of its out-of-pocket expenses in connection
with the preparation, execution and delivery of this Agreement and the
transactions contemplated or permitted hereby, including but not limited to the
fees and expenses of Dickinson, Wright, Moon, Van Dusen & Freeman. The Company
shall also pay all expenses relating to the performance of any transactions
contemplated or permitted hereby, any title insurance premiums, filings,
recordings, search fees, survey costs and fees of environmental consultants or
other persons employed by or with the consent of the Company who performed
environmental work on any of the Mortgaged Estates or any action for the
enforcement or collection of the Notes, any of the Mortgages or this Agreement
and any amendment, waivers or consents pursuant to the provisions hereof or of
the Notes, any of the mortgages or the other Note Documents (whether or not the
same are actually executed and delivered), including, without limitation, the
fees, expenses and disbursements of the holders of the Notes and of legal
counsel to the holders of the Notes (i) following the occurrence of and during
the continuance of a Default or an Event of Default or (ii) incurred in
connection with any amendments, waivers or consents, any work-out,
restructuring or similar proceedings
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relating to the performance by Company of its obligations under this
Agreement, the Notes, any of the Mortgages and the other Note Documents.
Company also shall pay any fees and related expenses incurred or to be incurred
in connection with obtaining, maintaining or restoring any rating described in
Section 2.3 and will pay and save Purchaser, the holder of a Note and Agent
harmless against any and all liability with respect to stamp and other similar
taxes, if any, which may be payable or which may be determined to be payable in
connection with the execution, delivery or enforcement of this Agreement, the
Notes, any of the Mortgages or any other Note Documents, whether or not any
Notes are then outstanding. Company shall protect and indemnify Purchaser,
XXXXXXXXXX and the Agent against any liability for any and all brokerage fees
and commissions payable or claimed to be payable by Company to any Person in
connection with the transactions contemplated by this Agreement other than any
fees, commissions, costs and expenses of XXXXXXXXXX and its counsel and
financial advisors which are to be paid from the proceeds of the XXXXXXXXXX
Assignment. Without limiting the foregoing, Company shall pay the cost of
obtaining a Private Placement Number for the Notes and authorizes the
submission of such information as may be required by S&P for the purpose of
obtaining such number.
9.5. Powers and Rights Not Waived; Remedies Cumulative. No
delay or failure on the part of the holder of any Note in the exercise of any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to and are not exclusive of any rights or
remedies any such holder would otherwise have, and no waiver or consent, given
or extended pursuant to Section 7 hereof, shall extend to or affect any
obligation or right not expressly waived or consented to.
9.6. Notices. All communications provided for hereunder
shall be in writing and, if to XXXXXXXXXX, delivered or mailed by registered
or certified mail or by overnight courier or by facsimile communication
(confirmed in writing by registered or certified mail or by overnight courier),
in each case prepaid and addressed to XXXXXXXXXX at XXXXXXXXXX address
appearing above or such other address as XXXXXXXXXX or the subsequent holder
of any Note initially issued to XXXXXXXXXX may designate to Company in writing,
and if to Company delivered or mailed by registered or certified mail, return
receipt requested, or by overnight courier, or by facsimile communication
transmitted on a Business Day (confirmed in writing by registered or certified
mail, return receipt requested, or by overnight courier), in each case prepaid
and addressed to Kmart Corporation, 3100 West Big Beaver Road, Troy, MI
48084-3163 Attention: Michael Skiles or to such other address as Company or the
Agent may in writing designate to Purchaser or to a subsequent holder of the
Note initially issued to Purchaser,
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and if to XXXXXXXXXX, delivered or mailed by registered or certified
mail, return receipt requested, or by overnight courier, or by facsimile
communication transmitted on a Business Day (confirmed in writing by registered
or certified mail, return receipt requested, or by overnight courier), in each
case prepaid and addressed to XXXXXXXXXX at XXXXXXXXXX.
9.7. Successors and Assigns. This Agreement shall be
binding upon Company and its respective successors and assigns and
shall be binding upon and inure to Purchaser's benefit and to the benefit of
Purchaser's successors and assigns including each successive holder or holders
of any Notes. Each such successive holder or holders of any Notes, including
XXXXXXXXXX and any and all successors to XXXXXXXXXX shall have all rights and
privileges of the "Purchaser" hereunder. Company hereby acknowledges that,
simultaneously with the Closing, XXXXXXXXXX is assigning all of its right,
title and interest hereunder and under the Notes, the Mortgages and the other
Note Documents to XXXXXXXXXX pursuant to an Assignment Agreement in
substantially the form of Exhibit 9.7 attached hereto (" XXXXXXXXXX
Assignment"). Company further acknowledges and agrees that all Company's
representations, warranties, covenants, agreements and other obligations
hereunder and under the Notes, the Mortgages and the other Note Documents are
made for the benefit of XXXXXXXXXX and the Agent and XXXXXXXXXX is
accepting the XXXXXXXXXX Assignment in reliance thereon. In order to further
induce XXXXXXXXXX to enter into the XXXXXXXXXX Assignment, Company hereby
makes the following representations, warranties, covenants and agreements:
(i) To the best of its knowledge, Company
does not have any right, including any claim, counterclaim, right of setoff or
deduction or other defense of any kind, to withhold payment or performance
of any of its obligations hereunder or under any of the other Note Documents
(" XXXXXXXXXX Defenses");
(ii) Company hereby waives and agrees not to assert
the same against XXXXXXXXXX or any other holder of the Notes;
(iii) Company hereby acknowledges and agrees that,
upon consummation of the XXXXXXXXXX Assignment, XXXXXXXXXX will be
a bona fide purchaser of the Notes for value (to the extent provided in the
XXXXXXXXXX Assignment) and will be a holder of the Notes in due course and
Company hereby waives any right to challenge XXXXXXXXXX status as such;
(iv) Company acknowledges and agrees that
XXXXXXXXXX is a third party beneficiary of this Agreement and the other Note
Documents entered into between Company and XXXXXXXXXX; and
(v) Upon consummation of the XXXXXXXXXX
Assignment to XXXXXXXXXX, XXXXXXXXXX shall be deemed to be Purchaser
hereunder and shall succeed to all rights of Purchaser hereunder and shall be
subject to the terms and conditions hereof.
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9.8. Recapture. To the extent any holder of the Notes
receives any payment by or on behalf of Company, which payment or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to Company or its respective trustee,
receiver, custodian, liquidator or any other party under bankruptcy law, state
or Federal law, common law or equitable cause, then to the extent of such
payment or repayment, the obligation or part thereof which has been paid,
reduced or satisfied by the amount so repaid shall be reinstated and shall be
included within the liabilities of Company to the holders of the Notes as of
the date such initial payment, reduction or satisfaction occurred.
9.9. Survival of Covenants and Representations. All
covenants, representations and warranties made by Company herein and in any
other Note Documents and in any certificates delivered pursuant hereto or
thereto, whether or not in connection with the Closing Date, shall survive the
closing and the delivery of this Agreement and the Notes.
9.10. Severability. Should any provision of this Agreement
or any of the other Note Documents for any reason be declared unenforceable
by a court of competent jurisdiction (sustained on appeal, if any) such
unenforceability shall not affect the enforceability of any other provision
hereof or thereof, all of which shall remain in force and effect as if this
Agreement or such other Note Document had been executed with the unenforceable
provision thereof eliminated and it is hereby declared the intention of the
parties hereto that they would have executed the remaining provision of this
Agreement without including therein any such part, parts, or portion which may,
for any reason, be hereafter declared unenforceable; provided that, if any
provision of this Agreement or any of the other Note Documents shall be
unenforceable by reason of a final judgment of a court of competent
jurisdiction based upon a court's ruling (sustained on appeal, if any) that
such provision is unenforceable because of the excessive degree or magnitude of
the obligation imposed thereby on any company, that unenforceable obligation
shall be reduced in magnitude or degree by the minimum degree or magnitude
necessary in order to permit the provision to be enforceable by the Purchaser.
In the event the provisions of the immediately preceding sentence applies, the
parties shall make appropriate adjustment to the provisions of this Agreement
and the other Note Documents to give effect to the benefits intended to be
conferred upon the parties hereby.
9.11. Governing Law. This Agreement and the Notes issued
and sold hereunder shall be governed by and construed in accordance with the
law of the State of New York without giving effect to the choice of law
principles thereof.
42
<PAGE> 44
9.12. Submission to Jurisdiction. The Company hereby
consents to the jurisdiction of any state or federal court located within the
County of New York, State of New York, and irrevocably agrees that all actions
or proceedings relating to this Agreement the Notes and other Note Documents
may be litigated in such courts, and Company waives any objection which it may
have based on improper venue or forum non conveniens to the conduct of any
proceeding in any such court and waives personal service of any and all process
upon it, and consents that all such service of process be made by registered or
certified mail (return receipt requested) or messenger directed to it at its
address set forth in Section 9.6 above or to its agent referred to below at
such agent's address set forth below and that service so made shall be deemed
to be completed in accordance with Section 9.6 hereof. The Company hereby
irrevocably appoints CT Corporation System, with an office on the date hereof
at 1633 Broadway, New York, New York 10019, as its agent for the purpose of
accepting service of any process within the State of New York. Nothing
contained in this Section shall affect he right of any holder of Notes to serve
legal process in any other manner permitted by law or to bring any action or
proceeding in the courts of any jurisdiction against Company or to enforce a
judgment obtained in the courts of any other jurisdiction.
9.13. Captions. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
9.14. Savings Clause. It is the intention of the parties
hereto to comply with applicable usury laws (now or hereafter enacted);
accordingly, notwithstanding any provision to the contrary in this Agreement,
the Notes, or the other Note Documents executed pursuant to or in connection
with the execution of this Agreement and the other Note Documents, in no event
shall this Agreement, the Notes or any of the other Note Documents require or
be construed to require the payment or permit the collection of interest in
excess of the maximum amount permitted by such laws. If, from any
circumstances whatsoever, fulfillment of any provision of this Agreement, the
Notes or any of the other Note Documents shall involve transcending the limit
of validity prescribed by law for the collection or charging of interest, then,
ipso facto, the obligation to be fulfilled shall be reduced to the limit
of such validity, and, if from any such circumstances any holder of a Note
shall ever receive anything of value as interest or deemed interest by
applicable law under this Agreement, the Notes or any of the other Note
Documents or otherwise in an amount that would exceed the highest lawful rate,
such amount that would be excessive interest shall be applied to the reduction
of the principal amount owing under the Notes or on account of any other
indebtedness of Company to such holder of
43
<PAGE> 45
Notes and not to the payment of interest, or if such excessive interest exceeds
the unpaid balance of principal of such Indebtedness, such excess shall be
refunded to Company. In determining whether or not the interest paid or
payable with respect to any Note, under any specific contingency, exceeds the
highest lawful rate, Company and the holder of such Note shall, to the maximum
extent permitted by applicable law, (i) characterize any non-principal payment
as an expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effects thereof, (iii) amortize, prorate, allocate and
spread the total amount of interest throughout the full term of such obligation
so that the actual rate of interest on account of such obligation does not
exceed the maximum amount permitted by applicable law, and/or (iv) allocate
interest between portions of such obligation, to the end that no such portion
shall bear interest at a rate greater than that permitted by applicable law.
44
<PAGE> 46
[SIGNATURE PAGE: NOTE PURCHASE AGREEMENT DATED AS OF
JANUARY 21, 1993]
The execution hereof by you shall constitute a contract between
Company and Purchaser for the uses and purposes hereinabove set forth, and this
Agreement may be executed in any number of counterparts, each executed
counterpart constituting an original but all together only one agreement.
KMART CORPORATION
By M.L. Skiles
-----------------------------
Name: M.L. Skiles
Title: Senior Vice President
Accepted as of the date first above written.
XXXXXXXXXX
By XXXXXXXXXX
------------------------------
Name: XXXXXXXXXX
Title: Vice President
<PAGE> 1
EXHIBIT 99.18
Kmart Corporation
8.20% Kmart Collateralized
Promissory Notes Due 2018
Private Placement No. XXXXXXXXXX
Dated as of
No. A-2 January 21, 1993
U.S. $64,523,000
KMART CORPORATION, a Michigan corporation ("Company"), for value
received, hereby unconditionally promises to pay to the order of
XXXXXXXXXX
("Purchaser")
or registered assigns,
on the 22nd day of January, 2018
the principal amount of
SIXTY-FOUR MILLION FIVE HUNDRED TWENTY-THREE THOUSAND (U.S. $64,523,000)
and to pay interest (computed on the basis of a 360-day year of
twelve 30-day months) on the principal amount from time to time remaining
unpaid hereon at the rate of 8.20% per annum from January 22, 1993 until but
not including the date of repayment of such principal amount, payable on the
twenty-second day of each January and July in each year (commencing July 22,
1993), and at maturity. Principal on this Note shall be due and payable in
annual installments in the amounts set forth on Schedule 1 attached to this
Note commencing on January 22, 1994 and, thereafter, on the twenty-second day
of January in each succeeding year through and including January 22, 2018.
Except as otherwise provided in Section 2.5 of the Note Purchase Agreement (as
hereinafter defined), all principal payments shall be allocated as follows:
(i) XXXXXXXXXX, California - 7%; (ii) XXXXXXXXXX, New York - 21%; XXXXXXXXXX,
New York - 26% and XXXXXXXXXX, New York - 46%. The Company shall pay interest
on overdue principal (whether by acceleration or otherwise, and including any
overdue optional prepayment of principal) and premium, if any, and on any
overdue installment of interest, at the Overdue Rate (as hereinafter defined)
until paid. "Overdue Rate" means a rate of interest of 10.2% per annum.
1. Except as may be otherwise provided pursuant to Sections 1.1, 1.4,
5.3 or 5.8 of the Note Purchase Agreement (as hereinafter defined), both the
principal hereof, premium, if any, and interest hereon are payable at the
principal office of Purchaser, located at XXXXXXXXXX,
-1-
<PAGE> 2
in immediately available funds, in coin or currency of the United States
of America which at the time of payment shall be legal tender for the payment
of public and private debts. Such payments shall be applied first to accrued
interest, then to premium, if any, and then to principal. If any amount of
principal, premium, if any, or interest on or in respect of this Note
becomes due and payable on any date which is not a Business Day, such amount
shall be payable on the immediately preceding Business Day.
"Business Day" means any day other than Saturday, Sunday or other day
on which banks in New York are required by law to close or are customarily
closed.
2. This Note is one of the 8.20% Kmart Collateralized Promissory
Notes due 2018 ("Notes") of Company in the aggregate principal amount of U.S.
$64,523,000 issued pursuant to the terms and provisions of that certain Note
Purchase Agreement, dated as of January 21, 1993 ("Note Purchase Agreement"),
entered into by Company and XXXXXXXXXX (" XXXXXXXXXX")
and this Note and the holder hereof are entitled equally and ratably with the
holders of all other Notes outstanding under the Note Purchase Agreement,
other Note Documents and the Agency Agreement (as defined in the Note Purchase
Agreement) to all the benefits and security provided for thereby or referred
to therein, to which Note Purchase Agreement, other Note Documents and Agency
Agreement reference is hereby made for the statement thereof. A copy of the
Note Purchase Agreement may be obtained from Company.
3. This Note and the payment and performance of all of Company's
obligations hereunder and under the other Note Documents are secured by the
certain Mortgages described in the Note Purchase Agreement among Company and
XXXXXXXXXX and this Note and the holders hereof are entitled equally and
ratably with the holders of all other Notes outstanding under the Note Purchase
Agreement to all the benefits and security provided for under the other Note
Documents and the Agency Agreement as referred to therein, to which other Note
Documents and Agency Agreement reference is hereby made for the statement
thereof. A copy of the other Note Documents may be obtained from Company.
4. Any one or more of the "Events of Default" as the term is defined
in the Note Purchase Agreement shall be an Event of Default under this Note.
Upon the occurrence of an Event of Default, the holder of each Note as to which
such Event of Default occurred may exercise such rights and remedies as are
provided in the Note Purchase Agreement and any other Note Document.
-2-
<PAGE> 3
5. The Notes are not subject to prepayment, purchase or redemption at
the option of Company prior to their expressed maturity dates except on the
terms and conditions and in the amounts and with the Make-Whole Premium, if
any, all as set forth in Section 2 of the Note Purchase Agreement.
6. This Note is registered on the books of Company and is
transferable only by surrender thereof at the offices of Company (or of such
Paying Agent as may be appointed by Company pursuant to Section 5.8 of the Note
Purchase Agreement from time to time), duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of this
Note or its attorney duly authorized in writing. Payment of or on account of
principal, premium, if any, and interest on this Note shall be made only to or
upon the order in writing of the registered holder.
7. The Company and each surety, endorser, guarantor and other party
ever liable for payment of any sums of money payable upon this Note, jointly
and severally waive presentment, demand, protest, notice of protest and
nonpayment or other notice of default, notice of acceleration and intention to
accelerate or other notice of any kind, and agree that their liability under
this Note shall not be affected by any renewal or extension in the time of
payment hereof, or in any indulgences, or by any release or change in any
security for the payment of this Note, and hereby consent to any and all
renewals, extensions, indulgences, releases or changes, regardless of the
number of such renewals, extensions, indulgences, releases or changes.
No waiver by Purchaser of any of its rights or remedies hereunder or
under any other Note Document or otherwise, shall be considered a waiver of any
other subsequent right or remedy of Purchase; no delay or omission in the
exercise or enforcement by Purchaser of any rights or remedies shall ever be
construed as a waiver of any right or remedy of Purchaser; and no exercise or
enforcement of any such rights or remedies shall ever be held to exhaust any
right or remedy of Purchase.
-3-
<PAGE> 4
[SIGNATURE PAGE: PROMISSORY NOTE DATED AS OF JANUARY 21, 1993]
8. This Note and the Note Purchase Agreement shall be governed by and
shall be construed in accordance with the laws of the State of New York without
giving effect to the choice of law principles thereof.
KMART CORPORATION
By /s/ M. L. Skiles
------------------------------------
Name: M. L. SKILES
Title: Senior Vice President
<PAGE> 1
EXHIBIT 99.19
NOTE PURCHASE AGREEMENT
BETWEEN
KMART CORPORATION
AND
XXXXXXXXXX
Dated as of December 1, 1992
$13,060,532 8.794845 Collateralized
Promissory Notes Due June 1, 2013
<PAGE> 2
TABLE OF CONTENTS
Page
----
SECTION 1 DESCRIPTION OF NOTES AND COMMITMENT........................... 1
1.1 Description of Notes............................................ 1
1.2 Commitment; Closing Date........................................ 2
SECTION 2 PREPAYMENT OF NOTES........................................... 2
2.1 Certain Definitions............................................. 2
2.2 Optional Prepayment............................................. 5
2.3 Notice of Prepayments........................................... 5
2.4 Special Put Option of Holders Following a Rating
Decline........................................................ 5
2.5 Other Prepayment................................................ 6
2.6 Allocation of Prepayments....................................... 6
2.7 Payments........................................................ 7
SECTION 3 REPRESENTATIONS............................................... 7
3.1 Representations of the Company.................................. 7
3.2 Representations and Agreements of the Purchaser................. 10
SECTION 4 CLOSING CONDITIONS............................................ 10
4.1 Company's Closing Certificate................................... 11
4.2 Legal Opinions.................................................. 11
4.3 Related Transactions............................................ 11
4.4 Ratings......................................................... 13
4.5 Private Placement Number........................................ 13
4.6 Legality........................................................ 13
4.7 No Default or Event of Default.................................. 13
4.8 Satisfactory Proceedings........................................ 13
4.9 Costs and Expenses.............................................. 13
SECTION 5 COMPANY COVENANTS............................................. 14
5.1 Financial Reports and Books and Records......................... 14
5.2 Books and Records; Financial Information........................ 15
5.3 Payments........................................................ 16
5.4 Paying Agency................................................... 16
5.5 Corporate Existence, etc........................................ 17
5.6 Taxes........................................................... 17
5.7 Insurance....................................................... 17
5.8 Limitation on Consolidation or Merger........................... 17
5.9 Ratings......................................................... 18
5.10 Direct Payments................................................. 18
i
<PAGE> 3
SECTION 6 EVENTS OF DEFAULT AND REMEDIES THEREFOR....................... 19
6.1 Events of Default............................................... 19
6.2 Notice to Holders............................................... 20
6.3 Acceleration of Maturities; Other Remedies...................... 21
6.4 Rescission of Acceleration...................................... 21
SECTION 7 AMENDMENTS, WAIVERS AND CONSENTS.............................. 22
7.1 Consent Required................................................ 22
7.2 Solicitation of Holders......................................... 22
7.3 Effect of Amendment or waiver................................... 23
SECTION 8 INTERPRETATION OF AGREEMENT; DEFINITIONS...................... 23
8.1 Definitions..................................................... 23
8.2 Accounting Principles........................................... 27
SECTION 9 MISCELLANEOUS................................................. 27
9.1 Registered Notes................................................ 27
9.2 Exchange of Notes............................................... 28
9.3 Loss, Theft, etc. of Notes...................................... 28
9.4 Expenses, Stamp Tax Indemnity................................... 28
9.5 Powers and Rights Not Waived; Remedies Cumulative............... 29
9.6 Notices......................................................... 30
9.7 Successors and Assigns.......................................... 30
9.8 Survival of Covenants and Representations....................... 31
9.9 Severability.................................................... 31
9.10 Controlling Provision........................................... 32
9.11 Governing Law................................................... 33
9.12 Submission to Jurisdiction...................................... 33
9.13 Captions........................................................ 33
ii
<PAGE> 4
Kmart Corporation
3100 West Big Beaver Road
Troy, MI 48084-3163
NOTE PURCHASE AGREEMENT
$13,060,532 8.794845 Kmart Collateralized
Promissory Notes Due June 1, 2013
As of December 1, 1992
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Gentlemen:
The undersigned, Kmart Corporation, a Michigan corporation ("Company),
hereby agrees with XXXXXXXXXX (" XXXXXXXXXX") as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
1.1. Description of Notes. The Company has authorized the issuance and
sale of $13,060,532 aggregate principal amount of its 8.794845 Collateralized
Promissory Notes due June 1, 2013 ("Notes"), each to be dated the date of
issue, to bear interest from December 18, 1992 to but not including the date of
repayment of such principal amount at the rate of 8.794845 per annum,
respectively, payable on the 1st day of each June and December in each year
(commencing June 1, 1993) and at maturity, and to bear interest on overdue
principal, Yield Maintenance Amount (as defined hereafter), if any, and any
overdue installment of interest at the Overdue Rate, whether at scheduled
maturity, upon acceleration or otherwise, until paid, to mature on June 1, 2013
and to be substantially in the form attached hereto as Exhibit 1.1. Interest on
the Notes shall be computed on the basis of a 360-day year of twelve 30-day
months. Principal on the Notes shall be due and payable in annual installments
in the amounts set forth in Exhibit 1.1 attached to each Note commencing on
June 1, 1993 and, thereafter, on the first day of June in each succeeding year
through and including June 1, 2013. The Notes are not subject to prepayment,
purchase or redemption at the option of the Company prior to their expressed
maturity date except on the terms and conditions and in the amounts and with
the Yield Maintenance Amount, if any, set forth in the various paragraphs of
Section 2 of this Agreement and in the Notes. The term "Notes", as used herein
shall include each Note delivered pursuant to this Agreement ("Agreement"), and
each Note issued in exchange or replacement therefor. XXXXXXXXXX is
hereinafter sometimes referred to as the "Purchaser." Certain capitalized terms
used
1
<PAGE> 5
herein shall have the meanings set forth in Section 8.1, unless the context
shall otherwise require.
1.2. Commitment; Closing Date. Subject to the terms and conditions hereof
and on the basis of the representations and warranties hereinafter set forth,
the Company shall issue and sell to Purchaser, and Purchaser shall purchase
from the Company, $13,060,532 aggregate principal amount of 8.794845 Notes of
the Company at a price of 100% of the principal amount thereof for an aggregate
purchase price of $13,060,532 ("Purchase Price"), on the Closing Date
hereinafter mentioned.
Delivery of the Notes will be made at the offices of Squire, Sanders &
Dempsey, 520 Madison Avenue, 32nd Floor, New York, New York 10022, or such
other place as Purchaser shall designate, against payment therefor in the
amount of the Purchase Price at 11:00 A.M., New York time, on December 18, 1992
or such later date as shall be mutually agreed upon by the Company and the
Purchaser ("Closing Date"). Payment for the Notes shall be effected by wire
transfer of federal funds to the following bank account of the Company:
Bank: NBD Bank, N.A.
City: Detroit, Michigan
A.B.A. No. 072000326
Account No. 838853 (Kmart Corporation)
The Notes delivered to Purchaser on the Closing Date will be delivered to
Purchaser in the form of one or more registered Notes for the full amount of
the Purchase Price, registered in Purchaser's name or in the name of such
nominee(s) or assignee(s) as Purchaser shall have specified in writing.
SECTION 2. PREPAYMENT OF NOTES.
No prepayment of the Notes may be made except to the extent and in the
manner expressly provided in this Agreement and the Notes.
2.1 Certain Definitions. For purposes of this Section 2, the following
terms shall have the following meanings:
"Called Principal" means the principal of the Note that is to be paid or
prepaid or accelerated in any way pursuant to Sections 2.2, 2.4 or 2.5.
"Discounted Prepayment Value" means the amount obtained by discounting all
Remaining Scheduled Payments from their respective scheduled due dates to the
Settlement Date, in accordance with accepted financial practice and at a
discount factor (applied on a semiannual basis) equal to the Reinvestment
Yield.
2
<PAGE> 6
"Minimum Investment Grade" means a rating of at least Baa3, in the case of
a rating by Moody's, and a rating of at least BBB-, in the case of a rating by
S&P, or the then equivalent of such rating by Moody's or S&P or, to the extent
applicable, by another Rating Agency.
"Moody's" means Moody's Investors Service, Inc. or any successor thereto.
"Put" means exercise of the right to require Company to Redeem a Note in
accordance with Section 2.4.
"Rating Agency" and "Rating Agencies" mean Moody's and S&P and, if
either Moody's or S&P (but not both) ceases to rate the indebtedness of
corporations generally, or unsubordinated, senior, unsecured indebtedness of
the Company in particular, then another comparable rating agency of recognized
national standing in the United States.
"Rating Decline" means that:
(i) the rating assigned to unsubordinated, senior, unsecured
indebtedness of the Company on such date by either Moody's or S&P: (1) declines
to a rating below the Minimum Investment Grade, or (2) further declines, in the
event then rated below the Minimum Investment Grade; or
(ii) (1) unsubordinated, senior, unsecured indebtedness of the
Company ceases to be rated by either Moody's or S&P (other than by reason of
such Rating Agency ceasing to rate the indebtedness of corporations generally)
at such time as the rating then assigned by the remaining such Rating Agency
shall be below minimum Investment Grade or (2) unsubordinated, senior,
unsecured indebtedness of the Company ceases to be rated by either Moody's or
S&P at such time as the rating then assigned by the remaining such Rating
Agency shall be at least the Minimum Investment Grade and the the Company is
unable to have such debt rated by another Rating Agency within ninety (90) days
thereafter; or
(iii) unsubordinated, senior, unsecured indebtedness of the Company
ceases to be rated by both Moody's and S&P for any reason (except if, through
no fault of the Company, both Moody's and S&P are unable to provide a rating
due to a business failure or interruption affecting both Moody's and S&P).
For purposes of determining whether a Rating Decline shall have occurred
pursuant to clause (i), the rating initially assigned by any Rating Agency
engaged by the Company pursuant to clause (ii) to replace any rating withdrawn
or otherwise terminated by Moody's or S&P shall be compared to the last rating
assigned by
3
<PAGE> 7
Moody's or S&P, as the case may be, to determine if the
circumstances described in (i) (1) or (2) exist.
"Redemption Price" means the Yield Maintenance Amount.
"Reinvestment Yield" means with respect to the Called Principal, the
sum of (x) the yield to maturity implied by the following (i) the yields
reported, as of 10:00 a.m. (New York City time) on the third Business Day
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such other display
as may replace Page 678 on the Telerate Service) for actively traded U.S.
Treasury securities having a maturity equal (as near as practicable) to the
Remaining Average Life of the Called Principal being paid or prepaid as of such
Settlement Date, or (ii) if such yields shall not be reported as of such time
or the yields reported as of such time shall not be ascertainable, the Treasury
Constant Maturity Series yields reported, for the latest day for which such
yields shall have been so reported as of the third Business Day preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal (as
near as practicable) to the Remaining Average Life of the Called Principal
being paid or prepaid as of such Settlement Date, and (y) fifty basis points.
Such implied yield shall be determined, if necessary, by (a) converting U.S.
Treasury bill quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between reported yields.
"Remaining Average Life" means, with respect to any amount of Called
Principal of the Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled
Payment of such Called Principal (but not of interest thereon) by (b) the
number of years (calculated to the nearest one-twelfth year) which will elapse
between the Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means all payments of such Called
Principal and interest thereon that would be due on or after the Settlement
Date with respect to such Called Principal if no payment of such Called
Principal were made prior to its expressed maturity date.
"S&P" means Standard & Poor's Corporation or any successor
thereto.
"Settlement Date" means the Business Day (i) specified by Company
under any notice given pursuant to Section
4
<PAGE> 8
2.3, (ii) first occurring thirty (30) days after the holder of any Note gives
notice to Company of such holder's election to exercise the Put pursuant to
Section 2.4, or (iii) on which a prepayment is required pursuant to Section
2.5.
"Yield Maintenance Amount" means an amount equal to the sum of (x)
the excess (which shall in no event be less than zero), if any, of the
Discounted Prepayment Value of the Remaining Scheduled Payments over the sum of
(i) Called Principal plus (ii) interest accrued thereon as of the Settlement
Date with respect to such Called Principal and (y) an amount equal to the
product of the Called Principal amount and 106.5960%.
2.2. Optional Prepayment. Upon compliance with Section 2.3, the
Company shall have the option at any time and from time to time of prepaying
the outstanding Notes, either in whole or in part (but if in part, then in
units of U.S. $1,000,000 or an integral multiple of $100,000 in excess thereof)
by payment of the Redemption Price.
2.3. Notice of Prepayments. The Company shall give written notice
of any prepayment of the Notes pursuant to Section 2.2 to each holder thereof
not less than 30 days nor more than 60 days before the date fixed for such
prepayment. Notices required by this Section 2.3 shall specify (a) the
Settlement Date, and (b) the estimated Redemption Price. Notice of prepayment
having been so given, the Redemption Price shall become due and payable on the
Settlement Date set forth in such notice. The Company shall also give written
notice to each holder of the Notes, by telecopy or other same day written
communication, setting forth the computation and amount of the Redemption Price
payable in connection with a prepayment pursuant to Section 2.2 at least three
Business Days preceding the Settlement Date.
2.4. Special Put Option of Holders Following a Rating Decline.
(a) If a Rating Decline occurs, each holder of a Note will have
the right, at such holder's option, to require the Company to redeem such Note
in whole (but not in part) on the Settlement Date at the Redemption Price. The
obligations of the Company to give the notices required pursuant to paragraph
(b) of this Section 2.4 shall remain in effect so long as any Notes remain
outstanding. If a Rating Decline occurs and subsequent to such Rating Decline
another Rating Decline occurs, then each holder of a Note will again have the
rights, and the Company again will have the obligations, set forth in this
Section 2.4.
(b) Within seven days after each date on which a Rating Decline
has occurred, the Company will cause a notice to be mailed to each holder of
Notes, which notice shall (1) state that a Rating Decline has occurred, (2)
describe the action taken with respect to the rating that caused such Rating
Decline, and the date of the occurrence thereof, (3) set forth the Company's
offer
5
<PAGE> 9
to redeem all of the Notes as provided in paragraph (c) below, and (4) state
(i) the Settlement Date, (ii) the estimated Redemption Price and (iii) the
party to whom the holder of a Note electing redemption shall surrender such
Note on the Settlement Date.
(c) In connection with the redemption of any Note pursuant to this
Section 2.4, the holder thereof will be required to surrender, on the
Settlement Date, at the corporate trust office of the Trustee (as defined in
Section 9.7), such Note duly endorsed without recourse or assigned to the
Company or in blank without recourse, together with written notice of the
holder's election to have the Company redeem such Notes specified in such
notice. The Trustee shall hold the Notes in trust for the benefit of the
holders of the Notes electing redemption pursuant to this Section 2.4 until
payment in full of the Redemption Price to the holders on the Settlement Date
and shall then and thereupon surrender such Notes to the Company. Election of
redemption by a holder pursuant to this Section 2.4 shall (unless otherwise
provided by law) be irrevocable.
2.5. Other Prepayment. In the event that either (a) the Company
shall be required to prepay the Notes pursuant to Section 1.05 or 1.13 of the
mortgages (as defined hereafter) or (b) acceleration of the Notes pursuant to
Section 6.3, then, within the time provided in the Mortgages with respect to
clause (a) above, or not later than five Business Days following acceleration
of the Note, with respect to clause (b) above, (i) each holder of a Note shall
be required to surrender such Note, duly endorsed without recourse or assigned
to the Company in blank without recourse, at the corporate trust office of the
Trustee, and (ii) the Trustee shall hold the Notes in trust for the benefit of
the holders of the Notes until payment in full of the Redemption Price shall
have been made to such holders, and shall then and thereupon surrender such
Notes to the Company. If the provisions of clause (a) above shall apply, the
holders of the Notes shall apply the proceeds of any condemnation proceeding,
insurance or other award relating to all or a portion of the Mortgaged Estates
to the payment of the Redemption Price pursuant to Section 2.6.
2.6. Allocation of Prepayments. All partial prepayments shall be
applied ratably on all outstanding Notes prorata in the same proportion that
such prepaid amount bears to the aggregate unpaid principal balance of the
Notes, first to the Yield Maintenance Amount payable with respect thereto, and
the remainder to the remaining unpaid principal balance of the Notes. All
prepayments required pursuant to Section 1.05 or 1.13 of the Mortgages shall be
allocated to the Release Amount (as defined in the Granting Clause of each
Mortgage) specified in the Mortgage with respect to which such prepayment is
received.
6
<PAGE> 10
2.7. Payments. Any and all payments, pursuant to Section 2, shall
be made by electronic fund transfer of immediately available federal funds.
SECTION 3. REPRESENTATIONS.
3.1. Representations of the Company. The Company hereby
represents and warrants for the benefit of Purchaser that the representations
set forth as follows are true and correct as of the date hereof and shall be
true and correct as of the Closing Date:
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Michigan.
(b) The Company is duly qualified to do business as a foreign
corporation in California and North Carolina and in each other jurisdiction in
which the conduct of its business or the ownership of its properties would
require such qualification, except where the failure to so qualify would not
have a Material Adverse Effect.
(c) The execution, delivery and performance of this Agreement, the
Notes and the other Notes and the other Note Documents are within the corporate
powers of the Company and have been duly authorized by all necessary corporate
action on the part of the Company. On the Closing Date, this Agreement, the
Notes and the other Note Documents will have been duly executed by and will be
the legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
enforcement of creditors' rights generally and by general principles of equity.
(d) The audited consolidated financial statements of the Company
and its Subsidiaries for the Company's fiscal years ended January 29, 1991 and
January 28, 1992 ("Audited Financials") have been prepared in accordance with
generally accepted accounting principles, consistent with the principles and
practices used in the preparation of the Company's audited consolidated
financial statements for the immediately preceding fiscal year (except as
otherwise indicated in the Audited Financials, including the notes thereto) and
present fairly in all material respects the consolidated financial condition of
the Company at the end of each such financial year and the consolidated results
of operations and changes in financial position of the Company for each of such
periods.
(e) No consent, approval or authorization of, or declaration,
registration or filing with, or payment to, any governmental body or any
non-governmental Person is required to be obtained or made on or prior to the
Closing Date in connection
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with the execution, delivery and performance by the Company of this Agreement,
the Notes and the other Note Documents or the transactions contemplated hereby
or thereby or as a condition to the legality, validity or enforceability of the
Company's obligations under this Agreement, the Notes or the other Note
Documents, or the offer, issue, sale or delivery of the Notes to the Purchaser
or the fulfillment of or compliance with the terms and provisions of the Notes,
this Agreement or the other Note Documents, except for the recording of the
Mortgages and the filing of forms UCC-2 (or other appropriate equivalent form)
in the appropriate office in California, Michigan and North Carolina, the
filing of forms UCC-1 with the Secretary of State of the States of California,
Michigan and North Carolina and the payment of nominal filing fees.
(f) The Company and its Subsidiaries have paid all taxes that they
are required to have paid, except for (i) taxes that are presently payable but
not overdue, (ii) other taxes the payment of which is being contested in good
faith and by appropriate proceedings and (iii) other taxes the non-payment of
which would not have a Material Adverse Effect.
(g) Neither the execution and delivery of this Agreement, the
Notes or the other Note Documents by the Company nor the performance of the
terms and provisions hereof and thereof, nor the issuance and sale of the Notes
by the Company will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in any
violation of, any charter instrument, contract, agreement, mortgage, indenture,
lease, instrument or order, or of any statute, law, rule or regulation of the
United States of America or the States of California, Michigan and North
Carolina, to which the Company is subject.
(h) Neither the Company's annual report on Form 10-K for the
fiscal year ending January 28, 1992 (the "1992 10-K") nor the Company's
quarterly reports on Form 10-Q filed after the 1992 10-K contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements made therein, in light of the circumstances in
which they were made, not misleading.
(i) Since January 28, 1992, there has not been any material
adverse change in the financial condition or results of operations of the
Company or in the condition of the Mortgaged Estates.
(j) The net proceeds from the issuance and sale of the Notes will
be used for general corporate purposes of the Company. No part of the proceeds
of the sale of the Notes are intended to be used, directly or indirectly, for
the purpose of purchasing or carrying any "margin stock" within the meaning of
Regulations G, T or X of the Board of Governors of the Federal Reserve System.
The assets of the Company and its Subsidiaries do not include an amount of
"margin stock" that would cause the
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provisions of Rule 207.2(f)(2)(i) of Regulation G to be inapplicable and
neither the Company nor any of its Subsidiaries has any present intention of
purchasing such an amount of "margin stock".
(k) Neither the Company nor, to its knowledge, anyone acting on
its behalf has offered the Notes or any similar securities relating to the
Mortgaged Estates to, or solicited any offer to purchase the same from, any
Person other than the Purchaser and not more than 20 other institutional
investors, or has taken any other action which would require the registration
of the Notes under Section 5 of the Act.
(l) The consummation of the transactions contemplated by this
Agreement and compliance by the Company with the provisions hereof and the
Notes issued hereunder and the other Note Documents will not constitute a
prohibited transaction within the meaning of ERISA or Section 4975 of the Code.
Each Plan complies in all material respects with all applicable statutes and
governmental rules and regulations, and (1) no Reportable Event has occurred
and is continuing with respect to any Plan subject to Title IV of ERISA, (2)
neither the Company nor any ERISA Affiliate has withdrawn from any Plan subject
to Title IV of ERISA or any Multiemployer Plan or instituted steps to do so,
and (3) no steps have been instituted to terminate in a distress termination
any Plan subject to Title IV of ERISA. No condition exists or event or
transaction has occurred in connection with any Plan which could result in the
incurrence by the Company or any ERISA Affiliate of any material liability,
fine or penalty. No Plan maintained by the Company or any ERISA Affiliate and
no trust created thereunder have incurred any "accumulated funding deficiency",
as defined in Section 302 of ERISA, and the present value of all benefits
vested under all Plans subject to Title IV of ERISA does not exceed the value
of the assets of such Plans allocable to such vested benefits (such present
value to be determined as of, and based on, the most recent valuation of such
Plan for funding purposes). The Company has no material contingent liability
with respect to any post-retirement "welfare benefit plan" (as such term is
defined in ERISA), other than as required by Section 4980B of the Code.
(m) The Company is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, and the Company is not
directly or indirectly controlled by an investment Company. The Company is not
a "holding company" or a "subsidiary" or an "affiliate" of a "holding company"
or a "public utility" within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
(n) Except as disclosed in the 1992 10-K, there are no actions,
suits or proceedings pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries in any court or before any
governmental authority or
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arbitration board or tribunal which, if adversely determined, would have a
Material Adverse Effect.
(o) To the knowledge of the Company, the Company is not in
violation of, and is not subject to any liability under, any environmental laws
affecting it or its properties, except for such violations and liabilities as
would not in the aggregate have a Material Adverse Effect.
(p) The Company is not in violation of any federal, state, local
or foreign law, ordinance or regulation or any order, judgment, injunction,
award or decree or any other requirement of any government or regulatory body,
court or arbitrator applicable to the business or properties of the Company,
except for such violations as would not in the aggregate have a Material
Adverse Effect.
(q) Each of the representations and warranties made or to be made
by the Company in the other Note Documents shall be incorporated herein on the
Closing Date as if set forth herein in their entirety and shall be true and
correct as of such date.
3.2. Representations and Agreements of the Purchaser.
(a) The Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Nevada.
(b) The execution, delivery and performance of this Agreement is
within the corporate powers of the Purchaser and has been duly authorized by
all necessary corporate action on the part of the Purchaser.
(c) Purchaser represents that it is acquiring the Notes for its
own account subject to the XXXXXXXXXX Assignment (as defined in Section 9.7)
and not with a view to distribution (as such term is used under Section 2(11)
of the Act) thereof; provided that the disposition of Purchaser's property
shall at all times be and remain within its control.
(d) Purchaser represents and warrants that no part of such funds
constitutes assets allocated to any separate account maintained by it in which
any employee benefit plan (or its related trust) has any interest.
SECTION 4. CLOSING CONDITIONS.
Purchaser's obligation to purchase the Notes on the Closing Date shall
be subject to the performance by the Company of its agreements hereunder and
under the other Note Documents which by the terms hereof are to be performed at
or prior to the
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<PAGE> 14
time of delivery of the Notes and to the following further conditions precedent:
4.1. Company's Closing Certificate. Concurrently with the delivery
of Notes to Purchaser on the Closing Date, Purchaser shall have received a
certificate of the Company signed by an Executive Officer of the Company in
substantially the form of Exhibit 4.1, to the effect that, among other things,
(a) the representations and warranties contained in Section 3.1 and the other
Note Documents are true on and as of the Closing Date and (b) no Default or
Event of Default exists on and as of the Closing Date.
4.2. Legal opinions. Concurrently with the delivery of Notes to
Purchaser on the Closing Date, Purchaser shall have received from Dickinson,
Wright, Moon, Van Dusen & Freeman, counsel to the Company and A.N. Palizzi,
Esq., General Counsel to the Company, their respective opinions, dated the
Closing Date, in substantially the form and substance set forth in Exhibits
4.2A and 4.2B hereto, respectively.
4.3. Related Transactions. Prior to or concurrently with the
issuance and sale of Notes to Purchaser on the Closing Date, the
Company (and, any other necessary party under the Mortgages) shall have
executed and delivered the Mortgages, in substantially the form of Exhibit 4.3
attached hereto, and all other Note Documents, including all such Note
Documents as shall be requested to evidence and effect the XXXXXXXXXX
Assignment (as defined in Section 9.7), and:
(a) the Company shall have either good and marketable fee
simple title to, or a good and marketable leasehold interest in (where
applicable), the Mortgaged Estates, free and clear of all liens and
encumbrances except Permitted Encumbrances;
(b) the Company shall have (i) caused the Mortgages and all
required Uniform Commercial Code financing statements to be duly recorded or
filed in the manner required by the laws of California and North Carolina, as
appropriate, and (ii) paid, or caused to be paid, all filing fees and recording
charges incurred in connection therewith, and such recordings and filings shall
be satisfactory to the Purchaser and its special counsel;
(c) the Purchaser shall have received an A.L.T.A. Extended
Coverage Loan Policy of Title Insurance (or such other form of loan or
mortgagee policy as may be prescribed by law in the state where such Mortgaged
Estate is located) covering such Mortgage Estate (or a valid, binding
unconditional commitment therefor), dated the Closing Date, in the current 1990
A.L.T.A. form (modified to conform to the 1987 form by deleting the Creditor's
Right exclusion) and including mechanics' and materialmen's lien coverage,
issued by a title insurance company acceptable to the Purchaser and with such
reinsurance as may be required by the Purchaser. Such policies shall (i)
insure (A)
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each of the Mortgages as a first lien on the applicable Mortgaged Estates,
subject to no other liens or encumbrances or restrictions except Permitted
Encumbrances, which shall be fully identified thereon, (B) that any
restrictions or easements affecting the applicable Mortgaged Estate have not
been violated and that a future violation thereof will not result in a
forfeiture or reversion of title, and (C) that all streets adjoining the
Mortgaged Estate have been completed, dedicated and accepted for public
maintenance and use by the appropriate governmental authorities, (ii) be in the
aggregate amount of $14,000,000, and (iii) be satisfactory in all other
respects to the Purchaser; the Company will provide the Purchaser with such
endorsements to each title insurance policy as the Purchaser may reasonably
request;
(d) the Purchaser shall have received a copy of a final
A.L.T.A. as-built survey of each of the Mortgaged Estates certified not more
than 20 days before Closing Date, each such survey to be satisfactory in form
and substance to the Purchaser and to include (i) a metes and bounds description
(or an otherwise sufficient legal description) of the applicable Mortgaged
Estate, (ii) all lot and street lines, (iii) a statement of whether the
applicable Mortgaged Estate is located in a flood plain or zone as designated
by any governmental authority and (iv) the location of improvements, easements
and rights of way (identified by reference to the recorded instrument creating
the same, if any) and encroachments, if any, prepared and duly certified to the
title company, any other necessary party to any Mortgage such as the trustee
under any deed of trust and the Purchaser as an accurate survey by a surveyor
duly licensed in the State where the applicable Mortgaged Estate is located;
(e) the Purchaser shall have received a certificate of
self-insurance executed by the Company;
(f) the Purchaser shall have received an appraisal of each
of the Mortgaged Estates satisfactory to the Purchaser by an appraisal company
acceptable to the Purchaser the cost of which shall be paid by XXXXXXXXXX;
(g) the Purchaser shall have received a Phase I
environmental audit report on each of the Mortgaged Estates (prepared not
earlier than one (1) year from the date of this Agreement), satisfactory to the
Purchaser, by an environmental consulting company acceptable to the Purchaser;
(h) the Purchaser shall have received a copy of all
certificates, permits and licenses of governmental authorities or inspection
organizations as are required or are customarily procured in connection with
the use, occupancy or operation of each of the Mortgaged Estates, and each such
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certificate, permit and license shall be in full force and
effect;
(i) the Purchaser shall have received evidence
satisfactory to it that there does not exist any violation of any law,
regulation or order affecting each of the Mortgaged Estates, including, without
limitation, laws, regulations and orders relating to (i) zoning, subdivision
and building.restrictions and (ii) hazardous waste, asbestos or other
environmental conditions;
(j) on the Closing Date, each of the Mortgaged Estates
shall be (i) undamaged by fire or other causes and (ii) unaffected by any
pending or threatened condemnation proceeding; and
(k) the Purchaser shall have received evidence
satisfactory to it that the description of the tax lot or lots covering each of
the Mortgaged Estates does not include any lands or buildings other than those
described in the Mortgages.
4.4. Ratings. The Notes shall have a National Association of
Insurance Commissioners's rating of "1" and Purchaser shall have received
written evidence thereof.
4.5. Private Placement Number. A private placement number for the
Notes shall have been issued by S&P.
4.6. Legality. The Notes shall qualify as a legal investment for
Purchaser under the laws and regulations of each jurisdiction to which
Purchaser is subject and Purchaser shall have received such information
concerning the Company and its Subsidiaries as Purchaser shall reasonably
request to establish such fact.
4.7. No Default or Event of Default. On the Closing Date, no
Default or Event of Default shall exist.
4.8. Satisfactory Proceedings. All proceedings taken in connection
with the transactions contemplated by this Agreement, and all documents
necessary for the consummation thereof, shall be satisfactory in form and
substance to Purchaser and its counsel, and Purchaser shall have received a
copy (executed or certified as may be appropriate) of all legal documents or
proceedings taken in connection with the consummation of such transactions.
4.9. Costs and Expenses. The Company shall have paid or provided
for the payment of all expenses that the Company is obligated to pay pursuant
to Section 9.4. In addition, Purchaser shall have received reasonable assurance
in writing that all other fees and expenses incurred by any other Person in
connection with the transactions contemplated hereunder shall have been paid on
or prior to the Closing Date.
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If on the Closing Date the Company fails to tender to Purchaser the
Notes to be issued on such date or if the conditions specified in this Section
4 have not been fulfilled, Purchaser may thereupon elect to be relieved of all
further obligations under this Agreement. Without limiting the foregoing, if
the conditions specified in this Section 4 have not been fulfilled, Purchaser
may waive compliance by the Company with any such condition to such extent as
Purchaser may in its own sole discretion, determine. Nothing herein shall
operate to relieve the Company of any of its obligations hereunder, including
without limitation the payment of any expenses pursuant to Section 9.4 or to
waive any of Purchaser's rights against the Company.
SECTION 5. COMPANY COVENANTS.
Without limiting the obligations of the Company set forth in the
Mortgages or any of the other Note Documents, from and after the Closing Date
and continuing so long as any amount remains unpaid on any Note:
5.1. Financial Reports and Books and Records. The Company will
furnish to each of the Notes:
(a) As soon as available and in any event within 60 days
after the end of each quarterly fiscal period (except the last) of each fiscal
year, copies of;
(i) a consolidated balance sheet of the
Company and its Subsidiaries as of the close of such period, and
(ii) consolidated statements of income,
shareholders' equity and cash flows of the Company and its Subsidiaries for the
portion of the fiscal year ending with such period;
in each case setting forth in comparative form the figures for thy
corresponding period of the preceding fiscal year, all in reasonable detail and
certified as complete and correct, subject to changes resulting from year-end
audit adjustments, by the chief accounting officer of the Company; provided
that the Company will have satisfied the requirements of this Section 5.1 by
the delivery within the time period described hereinabove of its quarterly
reports on Form 10-Q as filed with the Securities and Exchange Commission so
long as such Form 10-Q contains quarterly statements reflecting the financial
position and results of operations of the Company and its consolidated
Subsidiaries for such quarter;
(b) As soon as available and in any event within 120 days
after the close of each fiscal year of the Company, copies of:
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(i) a consolidated balance sheet of the Company
and its Subsidiaries as of the close of such fiscal year, and
(ii) consolidated statements of income,
shareholders, equity and cash flows of the Company and its Subsidiaries for
such fiscal year;
(c) Promptly upon their becoming available and in any
event, the provisions of Sections 5.1(a) and (b) notwithstanding, within 30
days after sent by the Company to stockholders or debenture holders generally,
copies of each financial statement, report, notice or proxy statement;
(d) Except at such times as the Company is a reporting
company under Section 13 or 15(d) of the Exchange Act, such financial or other
information as any holder of the Notes or any Person designated by such holder
may reasonably determine is required to permit such holder to comply with the
requirements of Rule 144A promulgated under the Act in connection with the
resale by it of the Notes, in any such case promptly after the same is
requested; and
(e) within the period provided in paragraphs 5.1(a) and
(b), a certificate of an Executive Officer of the Company stating that such
officer has reviewed the provisions of this Agreement and the other Note
Documents and stating whether there existed as of the date of such financial
statements and whether, to the best of such officers' knowledge, there exists
at the time of the certificate or existed at any time during the period covered
by such financial statements any Default or Event of Default and, if any such
condition or event does exist on the date of the certificate, specifying the
nature and period of existence thereof and the action the Company is taking
and/or proposes to take with respect thereto.
The annual and interim financial statements described in paragraphs
(a) through (d) above shall be prepared in accordance with accounting
principles generally accepted in the United States, consistently applied.
5.2. Books and Records; Financial Information. The Company will,
and will cause each of its material Subsidiaries to, keep proper books of
record and account in accordance with generally accepted United States
accounting practices or in accordance with the generally accepted accounting
practices of the country in which each such corporation is organized.
Purchaser (so long as it holds any Notes) and any Institutional Holder (as
defined hereafter) that, together with any Affiliates, holds at least 10% of
the aggregate principal amount of Notes then outstanding shall, upon the
occurrence and during the continuance of a Default or from and after the
occurrence of either any event that has a material Adverse Effect or a Rating
Decline, at the expense of the Company, have the right for
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<PAGE> 19
reasonable purposes, during regular business hours, subject to reasonable
notice and as often as may be reasonably requested, to visit and inspect the
properties of the Company and its Subsidiaries, to examine the corporate books
and records of the Company and its Subsidiaries and to discuss the affairs,
finances and accounts of the Company and its Subsidiaries with the appropriate
officers of the Company and, in the presence of a representative of the
Company, their independent public accountants. Notwithstanding the foregoing,
neither the Company nor any of its Subsidiaries shall be obligated to disclose
any information pursuant to this Section 5.2 which they are prohibited from
disclosing by law or by any contract entered into with any Person other than an
Affiliate.
Each holder of the Notes by its acceptance thereof agrees that any
information obtained by such Person pursuant to this Section 5.2 will be
treated as confidential; provided, however, that nothing herein contained shall
limit or impair the right or obligation of any holder of the Notes to disclose
such information: (1) to its auditors, attorneys, employees or agents, (2) when
required by any law, ordinance or governmental order, regulation, rule, policy,
investigation or any regulatory authority request, (3) as may be required or
appropriate in any report, statement or testimony submitted to any municipal,
state, provincial or Federal regulatory body having or claiming to have
jurisdiction over such holder or to the United States National Association of
Insurance commissioners or similar organizations or their successors, (4) in
connection with the enforcement of the terms and conditions of this Agreement,
the Notes and any of the other Note Documents, (5) which is publicly available
or readily ascertainable from public sources, or which is received by any
holder of the Notes from a third Person who or which, to such holder's
knowledge, is not bound to keep the same confidential, (6) as required by legal
process in connection with any proceeding, case or matter pending (or on its
face purported to be pending) or threatened before any court, tribunal,
arbitration board or any governmental agency, commission, authority, board or
similar entity, or (7) to the extent necessary in connection with any
contemplated transfer of any Notes by any holder thereof including the Trustee
and the holders of the Certificates (as defined in Section 9.7). Any transferee
that purchases such Notes shall itself be bound by the terms and provisions
hereof.
5.3. Payments. The Company will duly and punctually pay the
principal of, Yield Maintenance Amount and interest on the Notes in accordance
with their terms and this Agreement, without any deduction, withholding or
setoff of any kind.
5.4. Paying Agency. The Company will maintain an office in the
United States of America where notices, presentations and demands to or upon
the Company in respect of this Agreement, the Notes and the other Note
Documents may be given or made. As of the date of this Agreement, such office
is
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located at the Company's address set forth in Section 9.6. The Company will
give written notice to the holders of the Notes of any change of location of
such office within five Business Days after the date of any such change.
Notwithstanding the foregoing, in lieu of, or in addition to, maintaining an
office as herein contemplated, the Company may appoint and maintain an agent
for receiving notices, presentations or demands and/or making payments on the
Notes which shall be a state or national bank or trust company organized under
the laws of the United States of America or any State thereof or the District
of Columbia and having capital, surplus and undivided profits aggregating at
least U.S. $250,000,000 (the "Paying Agent") for the Notes in the Borough of
Manhattan in The City of New York.
5.5. Corporate Existence, etc. The Company will, and (except as
permitted below) will cause each of its Principal Subsidiaries to, do or cause
to be done all things necessary to preserve and keep in full force and effect
its corporate existence and comply with ail applicable laws, statutes,
regulations, rules, orders, and all applicable restrictions imposed by any
governmental or regulatory body except those being contested in good faith by
appropriate proceedings and except where the failure so to comply would not
have a Material Adverse Effect, and maintain all licenses and permits necessary
properly to conduct its business or own its properties, except where the
failure so to do would not have a Material Adverse Effect; provided, that the
foregoing shall not restrict (x) the Company from causing, permitting or
suffering the sale, merger or liquidation of such of its Subsidiaries (but not
the Company) as its Board of Directors shall determine to be in the best
interests of the Company in the exercise of its reasonable business judgment or
(y) any transaction permitted by Section 5.8.
5.6. Taxes. The Company will, and will cause each of its
Subsidiaries to, pay all applicable taxes except for (i) taxes the payment of
which is being contested by the Company or such Subsidiary in good faith and by
appropriate proceedings and (ii) taxes the non-payment of which would not have
a Material Adverse Effect.
5.7. Insurance. The Company will, and will cause its Subsidiaries
to carry and maintain in full force and effect at all times with fiscally
sound and reputable insurers insurance against such risks as is reasonable and
prudent in the circumstances (which insurance obligation may be fulfilled by a
reasonable and prudent self-insurance program, except as provided in the
Mortgages) and in any event as may be required by applicable laws, statutes,
regulations, rules or orders and, with respect to the Mortgaged Estate, such
insurance as is required by the Mortgages.
5.8. Limitation on Consolidation or Merger. The Company will not,
directly or indirectly consolidate or merge
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with, or sell, lease or otherwise dispose of all or substantially all of its
assets to, any other Person unless (a) no Default or Event of Default shall
have occurred and be continuing immediately before or immediately after such
transaction and (b) the Company is the survivor of such transaction or, if the
Company is not the survivor, the survivor is a corporation organized under the
laws of any State of the United States which expressly assumes in writing the
Company's obligations under this Agreement, the Notes and the other Note
Documents and which shall own all or substantially all the assets of the
Company. In the case of any such consolidation, merger or sale or other
disposition of assets in which the Company is not the surviving corporation,
the surviving corporation shall furnish to the holders of the Notes an
unqualified opinion of independent counsel to the effect that the instrument of
assumption has been duly authorized, executed and delivered and constitutes the
legal, valid and binding contract and agreement of the surviving corporation
enforceable in accordance with its terms, except as enforcement of such terms
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting enforcement of creditors, rights generally and by general
equitable principles. Following a transaction of the kind described above, the
successor corporation shall use its reasonable best efforts to cause such
Rating Agencies that, immediately prior to the relevant transaction, shall have
rated the unsubordinated, unsecured debt of the Company to confirm that such
debt continues to be rated. No merger, consolidation, sale, lease or other
disposition prohibited or permitted hereunder shall in any manner limit or
reduce Purchaser's rights under Section 2.3.
5.9. Ratings. The Company will use its reasonable best efforts to
enable Moody's and S&P or a comparable rating agency to have in effect a rating
for its unsubordinated, senior, unsecured indebtedness.
5.10. Direct Payments. Notwithstanding anything to the contrary in
this Agreement or the Notes, in the case Purchaser or nominee or any other
Institutional Holder of the Notes (or its nominee(s)) has given written notice
to the Company and the Paying Agent requesting that the provisions of this
Section 5.10 shall apply, the Company will or will cause the Paying Agent, if
any, to promptly and punctually pay when due the principal of the Notes and
Yield Maintenance Amount, if any, and interest thereon, without any presentment
thereof directly to Purchaser or such Institutional Holder at the address of
Purchaser set forth above or at such other address as Purchaser or such
Institutional Holder may from time to time designate in writing to the Company
and the Paying Agent, if any, or, if a bank account is designated for Purchaser
or any Institutional Holder in any written notice to the Company and the Paying
Agent from such Purchaser or any such Institutional Holder, the Company will,
or will cause the Paying Agent to make such payments when due in current and
immediately available funds which at the time of payment shall be
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legal tender in the United States of America for the payment of public and
private debts to such bank account, marked for attention as indicated, or in
such other manner or to such other account of Purchaser or such institutional
Holder in any bank in the United States as the Purchaser or any such
Institutional Holder may from time to time direct in writing. With respect to
Notes to which this Section 5.10 applies, the Company and any Paying Agent
shall be entitled to presume conclusively that the original or such subsequent
Institutional Holder as shall have requested the provisions hereof to apply to
its Notes remains the holder of such Notes until such Notes shall have been
presented to the Company as evidence of the transfer.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
6.1. Events of Default. Any one or more of the following shall
constitute an "Event of Default" as the term is used herein or in the other
Note Documents:
(a) the Company shall fail to pay when due (i) any
payment of the principal of any Note or of any Yield Maintenance Amount; or
(ii) any payment of interest on any Note and such interest payment default
shall continue for more than 5 days; or
(b) the Company shall fail to observe or perform any
other obligation, covenant, undertaking, condition or provision in respect of
the Notes or contained in this Agreement or the other Note Documents which is
not remedied within 30 days after the earliest of: (i) the furnishing of notice
thereof by the Company to the holders of the Notes, (ii) the Company's willful
failure to provide any notice required under Section 6.2 or (iii) receipt of
written notice thereof from the holder of any Note by the Company requiring the
same to be remedied; provided that a default under Section 6.09 of the mortgage
shall constitute an Event of Default hereunder not subject to cure; or
(c) any representation or warranty made by the Company
herein, or made by the Company in any other Note Document, shall be untrue or
inaccurate in any material respect; or
(d) any of the Note Documents or any provision thereof
shall cease to be a legal, valid and binding agreement enforceable against the
Company in accordance with the respect of terms thereof or shall in any way be
terminated or become or be declared ineffective or inoperative or shall in any
way whatsoever cease to give or provide the respective liens, security
interest, rights, titles, interest, remedies, powers or privileges intended
to be created thereby; or
(e) a judgment shall be rendered against the Company or
any Principal Subsidiary for the payment of money in excess of $250 million
individually or $250 million in the aggregate (as to such foregoing amount, net
of the portion
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thereof covered by insurance) and such judgment shall not be discharged or
dismissed, or execution thereof stayed pending appeal, within 30 days after
entry; or
(f) (i) the Company or any Principal Subsidiary shall
commence or consent to any case, proceeding or other action (1) under any
existing or future law of any jurisdiction 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 as bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution, composition or other relief with respect to it or its debts, or
(2) seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its assets (including the
Mortgaged Estates), or the Company shall make a general assignment for the
benefit of creditors or admit in writing that it is unable to pay its debts as
they become due; or
(ii) there shall be commenced against the Company
or any Principal Subsidiary any such case, proceeding or other action referred
to in subclause (i) of this clause (f) that (1) results in the entry of an
order for relief or any such adjudication or appointment or (2) is not
dismissed, discharged or stayed for a period of 30 days from the entry thereof;
or
(iii) there shall be commenced against the Company
or any Principal Subsidiary 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 its assets (or against the Mortgaged
Estates) that results in the entry of any order for any such relief which shall
not have been vacated, discharged or stayed within 30 days from the entry
thereof; or
(iv) the Company shall have been dissolved or
terminated; or
(v) the Company or any Principal Subsidiary shall
take any action authorizing or in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth above in this clause
(f).
6.2. Notice to Holders. Whenever the Company becomes aware that
any Default or Event of Default has occurred, or if the Company is aware that
the holder of any Note has either given any notice or taken any other action
with respect to a Default or Event of Default, or the Company receives written
notice from a third party concerning an event which constitutes a Default or
Event of Default, the Company will ensure that notice is given (or such third
party notice is forwarded) to all holders of the Notes then outstanding, no
later than the fifth day (or second day in the case of an Event of Default or
Default under Section 6.1(a)) after it becomes aware that such Event of Default
or
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Default has occurred, or that such notice has been given or such other action
has been taken with respect to such Default or Event of Default, such notice to
be in writing and sent in the manner provided in Section 9.6.
6.3. Acceleration of Maturities; Other Remedies.
(a) Upon the occurrence of an Event of Default under
Section 6.1(a), the holder of each Note as to which such Event of Default
occurred may, by written notice to the Company, declare such Note to be due and
payable (without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Company) at the Redemption Price. Upon the
occurrence of an Event of Default under Section 6.1(f) above in respect of the
Company (but not of a Principal Subsidiary), all Notes shall immediately become
due and payable at the Redemption Price. Upon the occurrence of any other
Event of Default, holders of Notes representing at least 51% of the unpaid
principal amount of all Notes then outstanding, excluding any Notes held by the
Company or any Subsidiary or Affiliate ("Requisite Holders") may, by written
notice to the Company, declare all Notes to be due and payable (without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company) at the Redemption Price. No course of dealing on
the part of any holder of any Note nor any delay or failure on the part of any
holder of any Note to exercise any right shall operate as a waiver of such
right or otherwise prejudice such holder's rights, powers and remedies. The
Company further agrees to pay to the holder or holders of the Notes all costs
and expenses incurred by them in the collection of any Note upon any default
hereunder or thereon, including the fees, disbursements and other charges of
such holder's or holders, attorneys for all services rendered in connection
therewith.
(b) The rights and remedies expressly provided for in
this Agreement are cumulative and not exclusive of any rights or remedies which
the Purchaser or any holder of a Note would otherwise have, including, without
limitation, the rights and remedies provided for in the Mortgages.
6.4. Rescission of Acceleration. The provisions of Section 6.3 are
subject to the condition that if the principal of and accrued interest on all
or any outstanding Notes have been declared or have become immediately due and
payable by reason of the occurrence of any Event of Default described in
Sections 6.1 (a) through (e), inclusive, then (i) for any such declaration by a
holder as the result of an Event of Default described in Section 6.1(a), such
holder or (ii) for any such declaration as the result of the Event of Default
described in Sections 6.1 (b) through (e), the holders of at least 75% of the
unpaid principal amount of all Notes then outstanding (other than any Notes
held by the Company or any Subsidiary or Affiliate), may by written instrument
filed with the Company, rescind and annul such
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declaration and the consequences thereof, provided that at the time such
declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the
payment of any monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all
other sums payable under the Note and under this Agreement (except any
principal, interest or premium on the Notes which has become due and payable
solely by reason of such declaration under Section 6.3) shall have been duly
paid; and
(c) each and every other Default and Event of Default
shall have been cured or waived pursuant to Section 7.1 and the Company shall
have paid all of Purchaser's costs and expenses as provided for in Section 9.4;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
7.1. Consent Required. Any term, covenant, agreement or condition
of this Agreement or the Notes or the other Note Documents may, with the
consent of the Company and, if required by applicable law, in the case of any
Deed of Trust, the Trustee, be amended or compliance therewith may be waived
(either generally or in a particular instance and either retroactively or
prospectively), if the Company shall have obtained the consent in writing of
the holders of at least 51% of the unpaid principal amount of outstanding Notes
(other than any Notes held or agreed to be purchased by the Company or any
Subsidiary or Affiliate) provided that no such waiver, modification, alteration
or amendment shall (a) change the time of payment of the principal of or the
interest on any Note or reduce the principal amount thereof or reduce the rate
of interest thereon, (b) change any of the provisions of Section 2, or (c)
change the percentage of holders of the Notes required to consent to any such
amendment, alteration or modification or any of the other provisions of this
Section 7 without the consent of each holder of the Notes affected thereby.
Executed or true and correct copies of any waiver, modification, alteration or
amendment to this Agreement shall be delivered by the Company to each holder of
outstanding Notes forthwith following the date on which the same shall have
been executed and delivered by the holder or holders of the requisite
percentage of outstanding Notes.
7.2. Solicitation of Holders. So long as there are any Notes
outstanding, the Company will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes or the other Note Documents unless holder of Notes
(irrespective of the amount of Notes then owned by it) shall be informed
thereof by
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the Company and shall be afforded the opportunity of considering the same and
shall be supplied by the Company with sufficient information to enable it to
make an informed decision with respect thereto. The Company will not, directly
or indirectly through any subsidiary, affiliate or otherwise, pay or cause to
be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any holder as consideration for or as an
inducement to entering into by any holder of any waiver or amendment of any of
the terms and provisions of this Agreement or the Notes or the other Note
Documents unless such remuneration is concurrently offered, on the same terms,
ratably to the holders of all Notes then outstanding.
7.3. Effect of Amendment or Waiver. Any such amendment or waiver
shall apply equally to all of the holders of the Notes and shall be binding
upon them, upon each future holder of any Note and upon the Company (and in the
case of any Deed of Trust, the Trustee), whether or not such Note shall have
been marked to indicate such amendment or waiver. No such amendment or waiver
shall extend to or affect any obligation not expressly amended or waived or
impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS
8.1. Definitions. Unless the context otherwise requires, the terms
hereinafter set forth when used herein shall have the following meanings and
the following definitions shall be equally applicable to both the singular and
plural forms of any of the terms herein defined. Capitalized terms used but
not otherwise defined herein shall have the respective meanings ascribed
thereto in the other Note Documents.
"Act" means the Securities Act of 1933, as amended.
"Affiliate" means any Person which directly or indirectly through one
or more intermediaries controls, or is controlled by, or is under common
control with, the Company, as the case may be. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting stock, by contract or otherwise.
"Agreement" shall have the meaning assigned thereto in Section 1.1.
"Business Day" means any day other than (i) Saturday or Sunday, or
(ii) a day on which banks in New York are required by law to close or are
customarily closed.
"Called Principal" shall have the meaning assigned to it in Section
2.1.
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"Certificates" shall have the meaning assigned thereto in Section 9.7.
"Closing Date" shall have the meaning assigned thereto in Section 1.2.
"Code" means the Internal Revenue Code of 1986, as amended.
"Default" means any event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, constitute an Event of
Default as defined in Section 6.1.
"Discounted Prepayment Value" shall have the meaning assigned to it in
Section 2.1.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with regulations
thereunder, in each case as in effect from time to time. References to
sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" means any corporation, trade or business that is,
along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in Sections 414(b) and
414(c), respectively, of the Code or Section 4001 of ERISA.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means the President, Vice President or Treasurer
of the Company.
"Institutional Holder" means (i) Purchaser, (ii) any other holder of
Notes which is an insurance company, charitable foundation, fraternal benefit
society, pension, retirement or profit sharing trust or fund within the meaning
of ERISA, or for which any bank, trust company, national banking association or
investment advisor registered under the Investment Advisers' Act of 1940, as
amended, is acting as a trustee or agent, any broker or dealer registered under
the Investment Advisers' Act of 1940, as amended, or any government, public
employees' pension retirement system or other governmental agency supervising
the investment of public funds and (iii) any Affiliate of any Person described
in clause (i) or (ii) which holds any Notes.
"Material Adverse Effect" means:
(a) a material adverse effect on the financial condition
of the Company and its Subsidiaries taken as a whole or on the condition, value
or use of any of the Mortgaged Estates or
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on the ability of the Company to perform its obligations under this Agreement,
the Notes or any other Note Document; or
(b) a material adverse effect on the legality, validity
or enforceability of the Company's obligations under this Agreement or the
Notes or the other Note Documents or a material impairment of the liens or
security interests granted under the Note Documents.
"Minimum Investment Grade" shall have the meaning assigned thereto in
Section 2.1.
"Moody's" shall have the meaning assigned thereto in Section 2.1.
"Mortgaged Estate" means the collateral described in the Mortgage
which secures the Notes.
"Mortgages" means the mortgages, deeds of trust or other real estate
instruments creating or granting first priority liens and security interests in
the collateral which secures the Notes and the Company's obligations under the
Note Documents substantially in the forms of Exhibit 4.3.
"Multiemployer Plan" means a multiemployer plan as defined in ERISA as
to which the Company has any outstanding liability.
"Note Documents" means this Agreement, the Notes, the Mortgages,
Assignment of Leases and Rents, Hazardous Materials Indemnity Agreement,
Financing Statements, Assignment of Mortgage and Assignment of Leases and any
other agreements, documents and writings now or hereafter executed by, on
behalf or for the benefit of the Company, Purchaser, the Trustee or other
holders of the Notes pursuant to or in connection with this Agreement or the
transactions contemplated hereby, together with all amendments, modifications
(including through the waiver of any provision thereof), supplements or
restatements thereto.
"Overdue Rate" means the rate of interest then in effect plus 200
basis points.
"PBGC" means the Pension Benefit Guaranty Corporation;
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
"Plan" means any United States employee benefit plan established,
maintained or contributed to by the Company or any ERISA Affiliate for the
benefit of the Company or such ERISA Affiliate's respective employees as to
which the Company has any outstanding liability.
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"Principal Subsidiary" means (i) any Subsidiary of the Company (a)
whose profits (before tax and extraordinary items) for its last financial year
as shown in its latest profit and loss account as prepared for the purposes of
the latest audited profit and loss account of the Company are at least 10% of
the consolidated profits (before tax and extraordinary items) of the Company
for its last fiscal year as shown in the latest audited consolidated profit and
loss account of the Company or (b) whose total assets (excluding goodwill and
other intangible assets and deducting intercompany indebtedness and minority
interests) as shown by its latest balance sheet as prepared for the purposes of
the latest audited balance sheet of the Company are at least 10% of the total
assets of the Company as shown by the latest audited consolidated balance sheet
of the Company. A report by the independent auditors of the Company that in
their opinion a Subsidiary is or is not a Principal Subsidiary shall, in the
absence of manifest error, be conclusive and binding on the Company and the
holders of the Notes.
"Purchaser" shall have the meaning assigned thereto in Section 1.1.
"Put" shall have the meaning assigned thereto in Section 2.1.
"Rating Agency" and "Rating Agencies" shall have the meanings assigned
thereto in Section 2.1.
"Rating Decline" shall have the meaning assigned thereto in Section
2.1.
"Redemption Price" shall have the meaning assigned thereto in Section
2.1.
"Reinvestment Yield" shall have the meaning assigned thereto in
Section 2.1.
"Remaining Average Life" shall have the meaning assigned
thereto in Section 2.1.
"Remaining Scheduled Payments" shall have the meaning assigned thereto
in Section 2.1.
"Reportable Event" shall have the same meaning as in ERISA but shall
not include any reportable event for which the 30-day notice period has
been waived under applicable regulations.
"S&P" shall have the meaning assigned thereto in Section 2.1.
"Settlement Date" shall have the meaning assigned to it in Section 2.1.
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"Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (assuming exercise or conversion solely of the securities held by
such Person) is at the time beneficially owned by such Person directly or
indirectly through Subsidiaries, and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% equity interest at the time or the power to
elect a majority of the Board of Directors or similar governing body.
" XXXXXXXXXX Assignment" shall have the meaning assigned thereto in
Section 9.7.
" XXXXXXXXXX Defenses" shall have the meaning assigned thereto in
Section 9.7.
"Trustee" shall have the meaning assigned in Section 9.7.
"Yield Maintenance Amount" shall have the meaning assigned to it in
Section 2.1.
8.2. Accounting Principles. Where the character or amount of any
asset or liability or item of income or expense is required to be determined or
any consolidation or other accounting computation is required to be made for
the purposes of this Agreement, the same shall be done in accordance with
United States generally accepted accounting principles.
SECTION 9. MISCELLANEOUS.
9.1. Registered Notes. The Company shall cause to be kept a
register for the registration and transfer of the Notes ("Note Register") at
the office of the Company or the Paying Agent if any, and the Company will cause
to be registered or transferred on the Note Register as hereinafter provided
and under such reasonable regulations as it may prescribe, any Note issued
pursuant to this Agreement.
At any time and from time to time the registered holder of any Note
which has been duly registered as hereinabove provided may, subject to
compliance with applicable securities laws to the reasonable satisfaction of
Company and its legal counsel and the provisions of Section 3.2, transfer such
Note upon surrender thereof at the Company or the principal office of the
Paying Agent (if one shall have been appointed) duly endorsed or accompanied by
a written instrument of transfer duly executed by the registered holder of such
Note or its attorney duly authorized in writing; provided that the Company or
the Paying Agent may decline to exchange or register the transfer of any
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Note during the period of five Business Days preceding the due
date for any payment of principal or interest on the Notes.
The Person in whose name any registered Note shall be registered shall
be deemed and treated as the owner and holder thereof for all purposes of this
Agreement. Payment of or on account of the principal, Yield Maintenance
Amount, if any, and interest on any registered Note shall be made to or upon
the written order of such registered holder.
9.2. Exchange of Notes. At any time and from time to time, upon
not less than three Business Days' notice to that effect given by the holder of
any Note initially delivered or of any Note substituted therefor pursuant to
Section 9.1, this Section 9.2, or Section 9.3 (except in the case of a lost,
stolen or mutilated certificate sought to be exchanged pursuant to Section 9.3,
as soon as practicable), and, upon surrender of such Note at the office of the
Company or any Paying Agent, the Company will, or will cause, the Paying Agent
to, deliver in exchange therefor, without expense to the holder, except as set
forth below, Notes for the same aggregate principal amount as the then unpaid
principal amount of the Note so surrendered, in the denomination of U.S.
$100,000 or any amount in excess thereof as such holder shall specify, dated as
of the date to which interest has been paid on the Note so surrendered, or, if
such surrender is prior to the payment of any interest thereon, then dated as
of the date of issue, payable to such Person or Persons, or registered assigns,
as may be designated by such holder and otherwise permitted hereunder, and
otherwise of the same form and tenor as the Notes so surrendered for exchange.
The Company may require the payment of a sum sufficient to cover any stamp
tax or governmental charges imposed upon such exchange or transfer.
9.3. Loss, Theft, etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
any Notes, and in the case of any such loss, theft or destruction upon delivery
of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation upon surrender
and cancellation of the Note, the Company will, or will cause the Paying Agent
to, deliver without expense to the holder thereof, a new Note, of like tenor,
in lieu of such lost, stolen, destroyed or mutilated Note. If any
Institutional Holder is the owner of any such lost, stolen or destroyed Note,
then the affidavit of an authorized officer of such owner, setting forth the
fact of loss, theft or destruction and of its ownership of the Note at the time
of such loss, theft or destruction shall be accepted as satisfactory evidence
thereof and no further indemnity shall be required as a condition to the
execution and delivery of a new Note other than the written agreement of such
owner to indemnify the Company.
9.4. Expenses, Stamp Tax Indemnity. Whether or not the transactions
herein contemplated (including the XXXXXXXXXX Assignment)
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shall be consummated, XXXXXXXXXX shall pay directly all of its and the
holders of the Certificates out-of-pocket expenses in connection with the
preparation, execution and delivery of this Agreement and the transactions
contemplated or permitted hereby, including but not limited to the reasonable
fees, disbursements and other charges of XXXXXXXXXX's counsel, and all
duplicating and printing costs. The Company shall pay all of its out-of-pocket
expenses in connection with the preparation, execution and delivery of this
Agreement and the transactions contemplated or permitted hereby, including but
not limited to the fees and expenses of Dickinson, Wright, Moon, Van Dusen &
Freeman and of any special counsel. The Company also shall pay all expenses
relating to the performance of any transactions contemplated or permitted
hereby, any title insurance premiums, filings or recordings, any action for the
enforcement or collection of the Notes or this Agreement or any Note Document
and each amendment, waiver or consent pursuant to the provisions hereof or
thereof (whether or not the same are actually executed and delivered),
including, without limitation, any amendments, waivers or consents resulting
from any work-out, restructuring or similar proceedings relating to the
performance by the Company of its obligations under this Agreement, the Notes
and the other Note Documents. The Company also shall pay any fees and related
expenses incurred or to be incurred in connection with its cooperation with
Moody's and S&P as provided in Section 5.9 and all initial and ongoing fees and
all out-of-pocket expenses of the Paying Agent, if any, and will pay and save
Purchaser harmless against any and all liability with respect to stamp and
other similar taxes, if any, which may be payable or which may be determined to
be payable in connection with the execution, delivery or enforcement of this
Agreement or the Notes or any other Note Documents, whether or not any Notes
are then outstanding. The Company shall protect and indemnify Purchaser
against any liability for any and all brokerage fees and commissions payable or
claimed to be payable by the Company to any Person in connection with the
transactions contemplated by this Agreement other than the fees, commissions,
costs and expenses of XXXXXXXXXX and its counsel and financial advisors which
are to be paid from the proceeds of the XXXXXXXXXX Assignment. Without
limiting the foregoing, the Company shall pay the cost of obtaining a Private
Placement Number for the Notes and authorizes the submission of such
information as may be required by S&P for the purpose of obtaining such number.
9.5. Powers and Rights Not Waived; Remedies Cumulative. No delay
or failure on the part of the holder of any Note in the exercise of any power
or right shall operate as a waiver thereof; nor shall any single or partial
exercise of the same preclude any other or further exercise thereof, or the
exercise of any other power or right, and the rights and remedies of the holder
of any Note are cumulative to and are not exclusive of any rights or remedies
any such holder would otherwise have, and no waiver or consent, given or
extended pursuant to Section 7, shall extend to
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or affect any obligation or right not expressly waived or consented to.
9.6. Notices. All communications provided for hereunder shall be
in writing and, if to XXXXXXXXXX, delivered or mailed by registered or
certified mail or by overnight courier or by facsimile communication
(confirmed in writing by registered or certified mail or by overnight courier),
in each case prepaid and addressed to XXXXXXXXXX at XXXXXXXXXX's address
appearing above or such other address as XXXXXXXXXX or the subsequent holder
of any Note initially issued to XXXXXXXXXX may designate to the Company in
writing, and if to the Company delivered or mailed by registered or certified
mail, return receipt requested, or by overnight courier, or by facsimile
communication transmitted on a Business Day (confirmed in writing by registered
or certified mail, return receipt requested, or by overnight courier), in each
case prepaid and addressed to Kmart Corporation, 3100 West Big Beaver Road,
Troy, MI 48084-3163 Attention: M.L. Skiles or to such other address as the
Company or the Paying Agent, if any, may in writing designate to Purchaser or
to a subsequent holder of the Note initially issued to Purchaser. Any such
communication, if to Trustee (as defined below), shall be addressed to
XXXXXXXXXX.
9.7. Successors and Assigns. This Agreement shall be binding upon
the Company and its respective successors and assigns and shall be binding
upon, and inure to the benefit of, Purchaser and Purchaser's successors and
assigns including each successive holder or holders of any Notes. Each such
successive holder or holders of any Notes, including XXXXXXXXXX, a national
banking association ("Trustee") under that certain Trust Agreement dated as of
December 1, 1992 between Purchaser and Trustee shall have all rights and
privileges of the "Purchaser" hereunder. The Company hereby acknowledges that,
simultaneously with the Closing, XXXXXXXXXX is assigning (" XXXXXXXXXX
Assignment") all of its right, title and interest hereunder and under the
Notes, the Mortgages and the other Note Documents to Trustee pursuant to the
Trust Agreement as security for the payment of Mortgage Pass-Through
Certificates Kmart Facilities (XXXXXXXXXX) Series 1992 ("Certificates") and
payment and performance of the other obligations arising out of the Trust
Agreement. The Company further acknowledges and agrees that each successive
holder or holders of the Note, including, but not limited to Trustee, accepts
such assignment in reliance upon the Company's representations, warranties,
covenants, agreements and other obligations hereunder and under the Notes, the
Mortgages and the other Note Documents. In order to further induce each
successive holder or holders of the Note, including but not limited to Trustee,
to accept such assignment, the Company hereby makes the following
representations, warranties, covenants and agreements:
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(i) to the best of its knowledge, the Company does not
have any right, including any claim, counterclaim, right of set-off or
deduction or other defense of any kind, to withhold payment or performance of
any of its obligations hereunder or under any of the other Note Documents
(" XXXXXXXXXX Defenses");
(ii) in the event the Company becomes aware of any
XXXXXXXXXX Defenses, the Company hereby waives and agrees not to assert
the same against Trustee or any other holder of the Notes;
(iii) upon consummation of such assignment to Trustee,
Trustee will be a bona fide purchaser of the Notes for value and will be a
holder of the Notes in due course and the Company hereby waives any right to
challenge Trustee's status as such;
(iv) the Company acknowledges and agrees that Trustee is a
third party beneficiary of this Agreement and the other Note Documents entered
into between the Company and XXXXXXXXXX; and
(v) upon consummation of the assignment to Trustee,
Trustee shall be deemed to be Purchaser hereunder, and shall succeed to all of
the rights of Purchaser hereunder.
In addition, XXXXXXXXXX hereby acknowledges and agrees that Trustee is a
third party beneficiary of this Agreement and the other Note Documents
entered into between the Company and XXXXXXXXXX.
9.8. Survival of Covenants and Representations. All covenants,
representations and warranties made by the Company herein and in any other Note
Documents and in any certificates delivered pursuant hereto or thereto, whether
or not in connection with the Closing Date, shall survive the closing pursuant
to this Agreement and the delivery of this Agreement and the Notes.
9.9. Severability. Should any provision of this Agreement or any
of the other Note Documents for any reason be declared unenforceable by a court
of competent jurisdiction (sustained on appeal, if any) such unenforceability
shall not affect the enforceability of any other provision hereof or thereof,
all of which shall remain in force and effect as if this Agreement or such
other Note Document had been executed with the unenforceable provision thereof
eliminated and it is hereby declared the intention of the parties hereto that
they would have executed the remaining provisions of this Agreement without
including therein any such part, parts or portion which may, for any reason, be
hereafter declared unenforceable; provided that, if any provision of this
Agreement or any of the other Note Documents shall be unenforceable by reason
of a final judgment of a court of competent jurisdiction based upon a court's
ruling
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(sustained on appeal, if any) that such provision is unenforceable because of
the excessive degree or magnitude of the obligation imposed thereby on any
company, that unenforceable obligation shall be reduced in magnitude or degree
by the minimum degree or magnitude necessary in order to permit the provision
to be enforceable by the Purchaser. In the event the provisions of the
immediately preceding sentence apply, the parties shall make appropriate
adjustment to the provisions of this Agreement and the other Note Documents to
give effect to the benefits intended to be conferred upon the parties hereby.
9.10. Controlling Provision. All agreements between Company and
Purchaser are expressly limited so that, and Company and Purchaser intend and
agree that, in no contingency or event whatsoever, whether by reason of
advancement of the proceeds of the Notes, acceleration of maturity of the
unpaid principal balance thereof, or otherwise, shall the amount paid or agreed
to be paid to Purchaser for the use, forbearance or detention of the money to
be advanced hereunder exceed the lesser of the sums payable under the Notes or
the highest lawful rate permissible under applicable usury law. In the
determination of the rate of interest under this provision, any charges which
are determined to be interest shall be spread over the term of the Loan in
ascertaining whether the interest rate has exceeded the highest lawful rate
permissible under applicable law. If, from any circumstances whatsoever,
fulfillment of any provision of the Note or of the mortgages securing the
Notes, or any other agreement referred to therein or otherwise relating to the
Notes, at the time performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by law which a court of competent
jurisdiction may deem applicable thereto, then ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity, and if, from any
circumstance, Purchaser shall ever receive as interest an amount which would
exceed the sums payable under the Notes or the highest lawful rate, such amount
which would be excessive interest shall be applied to the reduction of the
unpaid principal balance due as of the date such amount is received or deemed
to be received by Purchaser and not to the payment of interest. This provision
shall control every other provision of all agreements between Company and
Purchaser. However, in the event an amount determined to be excessive interest
is applied against the unpaid principal balance, and thereafter the rate of
interest accruing under the Notes decrease, the Notes shall, in fact accrue
interest at the then sums payable under the Notes or the highest lawful rate
until such time that an amount accrues equal to the amount of excessive
interest previously applied against principal. Notwithstanding the foregoing,
if the provisions of any law or regulation of the United States or any agency
or instrumentality thereof, as amended, which validly superseded any
restriction of the State of New York, would permit Purchaser to charge or
receive a rate of interest with respect to the indebtedness evidenced by the
Note in excess of the maximum rate of interest (if any) permitted to be charged
or received by
32
<PAGE> 36
Purchaser under applicable law of the State of New York the less restrictive
provisions of any such United States law or regulation shall apply in
determining the rate of interest permitted to be charged or received.
9.11. Governing Law. This Agreement and the Notes issued and sold
hereunder shall be governed by and construed in accordance with the law of the
State of New York without giving effect to the choice of law principles
thereof.
9.12. Submission to Jurisdiction. The Company hereby consents to
the jurisdiction of any state or federal court located within the County of New
York, State of New York, and irrevocably agrees that all actions or
proceedings relating to this Agreement, the Notes and other Note Documents may
be litigated in such courts, and the Company waives any objection which it may
have based on improper venue or forum non conveniens to the conduct of any
proceeding in any such court and waives personal service of any and all process
upon it, and consents that all such service of process be made by registered or
certified mail (return receipt requested) or messenger directed to it at its
address set forth in Section 9.6 or to its agent referred to below at such
agent's address set forth below and that service so made shall be deemed to be
completed in accordance with Section 9.6. The Company hereby irrevocably
appoints The Prentice Hall Corporation System, Inc., with an office on the date
hereof at 15 Columbus Circle, New York, New York 10023, as its agent for the
purpose of accepting service of any process within the State of New York.
Nothing contained in this Section shall affect the right of any holder of Notes
to serve legal process in any other manner permitted by law or to bring any
action or proceeding in the courts of any jurisdiction against the Company or
to enforce a judgment obtained in the courts of any other jurisdiction.
9.13. Captions. The descriptive headings of the various Sections
or parts of this Agreement are for convenience only, and shall not affect the
meaning or construction of any of the provisions hereof.
The execution hereof by you shall constitute a contract between the
Company and Purchaser for the uses and purposes hereinabove set forth, and this
Agreement may be executed in any number of counterparts, each executed
counterpart constituting an original but all together only one agreement.
KMART CORPORATION, a Michigan
corporation
By /s/
-------------------------
Name:
Title:
<PAGE> 37
Accepted and agreed as of the date first above written.
XXXXXXXXXX, a
Nevada corporation
By /s/ XXXXXXXXXX
------------------------------
Name: XXXXXXXXXX
Title: Vice President
34
<PAGE> 38
[Exhibits Intentionally Omitted]
<PAGE> 1
EXHIBIT 99.20
Exhibit 1.1
FORM OF
Kmart Corporation
8.794845 Collateralized Promissory Note
Due June 1, 2013
Private Placement No.
No. A-1 As of December 1, 1992
U.S. $13,060,532
KMART CORPORATION, a Michigan corporation ("Company"), for
value received, hereby unconditionally promises to pay to the order
of XXXXXXXXXX, a national banking association ("Purchaser"), as
Trustee under that certain Trust Agreement dated as of December 1,
1992, between XXXXXXXXXX, a Nevada corporation, and Purchaser or
registered assigns, on the 1st day of June, 2013, the principal
amount of THIRTEEN MILLION SIXTY THOUSAND FIVE HUNDRED THIRTY-TWO
DOLLARS (U.S. $13,060,532) and to pay interest (computed on the basis
of a 360-day year of twelve 30-day months) on the principal amount
from time to time remaining unpaid hereon at the rate of 8.794845 per
annum from December 18, 1992 until and including the date of
repayment of such principal amount, payable on the first day of each
June and December in each year (commencing June 1, 1993), and at
maturity. Principal on this Note shall be due and payable in annual
installments in the amounts set forth on Exhibit A attached hereto)
commencing on June 1, 1993 and, thereafter, on the first day of June
in each succeeding year through and including June 1, 2013. Except
as otherwise provided in Section 2.6 of the Note Purchase Agreement
(as hereinafter defined), all principal payments shall be allocated
as follows: (i) XXXXXXXXXX, North Carolina - 29.7%; (ii) XXXXXXXXXX,
California - 45.5%; and (iii) XXXXXXXXXX, California - 24.8%. The
Company shall pay interest on overdue principal (whether by
acceleration or otherwise, and including any overdue optional
prepayment of principal) and Yield Maintenance Amount, if any, and on
any overdue installment of interest, at the Overdue Rate (as
hereinafter defined) until paid. "Overdue Rate" means the rate of
interest then in effect plus 2.00% per annum. Except as otherwise
defined herein, all capitalized terms shall have the meaning assigned
to them in the Note Purchase Agreement (as hereinafter defined).
1. Except as may be otherwise provided pursuant to Section
5.4 or 5.10 of the Note Purchase Agreement (as hereinafter
defined), the principal hereof, Yield Maintenance Amount, if any,
and interest hereon are payable at the principal office of the
Company, in immediately available funds, in coin or
1.1-1
<PAGE> 2
currency of the United States of America which at the time of
payment shall be legal tender for the payment of public and
private debts. Such payments shall be applied first to accrued
interest, then to Yield Maintenance Amount, if any, and then to
principal. If any amount of principal, Yield Maintenance Amount,
if any, or interest on or in respect of this Note becomes due and
payable on any date which is not a Business Day, such amount
shall be payable on the immediately preceding Business Day.
"Business Day" means any day other than Saturday, Sunday or other
day on which banks in New York are required by law to close or
are customarily closed.
2. This Note is one of the 8.794845 Collateralized Promissory
Notes due June 1, 2013 ("Notes") of the Company in the aggregate
principal amount of U.S. $13,060,532 issued pursuant to the terms and
provisions of that certain Note Purchase Agreement, dated as of
December 1, 1992 ("Note Purchase Agreement"), entered into by the
Company and XXXXXXXXXX (" XXXXXXXXXX") and this Note and the
holder hereof are entitled equally and ratably with the holders of
all other Notes outstanding under the Note Purchase Agreement to all
the benefits and security provided for thereby or referred to
therein, to which Note Purchase Agreement reference is hereby made
for the statement thereof. A copy of the Note Purchase Agreement may
be obtained from the Company.
3. This Note and the payment and performance of all of
the Company's obligations hereunder and under the other Note
Documents are secured by the Mortgages (as defined in the Note
Purchase Agreement) and the other Note Documents and this Note
and the holders hereof are entitled equally and ratably with the
holders of all other Notes outstanding under the Note Purchase
Agreement to all the benefits and security provided for pursuant
to the Mortgages or referred to therein, to which Mortgages
reference is hereby made for the statement thereof. A copy of
the Mortgages may be obtained from the Company.
4. This Note is not subject to prepayment, purchase or
redemption at the option of the Company prior to its expressed
maturity date, except on the terms and conditions and in the
amounts with the Yield Maintenance Amount, if any, all set forth
in Section 2 of the Note Purchase Agreement.
5. Any one or more of the following events shall
constitute an "Event of Default" as the term is used herein or in
the other Note Documents (as defined in the Note Purchase
Agreement):
(a) the Company shall fail to pay when due (i) any
payment of the principal of any Note or Yield Maintenance Amount,
if any; or (ii) any payment of interest on any Note and such
interest payment default shall continue for more than 5 days; or
1.1-2
<PAGE> 3
(b) the Company shall fail to observe or perform any
other obligation, covenant, undertaking, condition or provision
in respective of the Notes or contained in the Note Purchase
Agreement or the other Note Documents which is not remedied
within 30 days after the earlier of: (i) the furnishing of notice
thereof to the holders of the Notes, (ii) the Company's willful
failure to provide any notice required under Section 6.2 of the
Note Purchase Agreement or (iii) receipt by the Company of
written notice thereof from the holder of any Note requiring the
same to be remedied; provided that a default under Section 6.09
of the shall constitute an Event of Default hereunder not subject
to cure; or
(c) any representation or warranty made by the Company
in the Note Purchase Agreement or made by the Company in any
other Note Document shall be untrue or inaccurate in any material
respect; or
(d) any of the Note Documents or any provision thereof
shall cease to be a legal, valid and binding agreement
enforceable against the Company in accordance with the respective
terms thereof or shall in any way be terminated or become or be
declared ineffective or inoperative or shall in any way
whatsoever cease to give or provide the respective liens,
security interests, rights, titles, interests, remedies, powers
or privileges intended to be created thereby; or
(e) a judgment shall be rendered against the Company
or any Principal Subsidiary for the payment of money in excess of
$250 million individually or $250 million in the aggregate (as to
such foregoing amount, net of the portion thereof covered by
insurance) and such judgment shall not be discharged or
dismissed, or execution thereof stayed pending appeal, within 30
days after entry; or
(f) (i) the Company or any Principal Subsidiary (as
defined in the Note Purchase Agreement) shall commence or consent
to any case, proceeding or other action (1) under any existing or
future law of any jurisdiction 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 as bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation,
dissolution, composition or other relief with respect to it or
its debts, or (2) seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or any
substantial part of its assets (or against the Mortgaged Estates
(as defined in the respective Mortgages)), or the Company shall
make a general assignment for the benefit of creditors or admit
in writing that it is unable to pay its debts as they become due;
or
(ii) there shall be commenced against the Company
or any Principal Subsidiary any such case, proceeding or
1.1-3
<PAGE> 4
other action referred to in subclause (i) of this clause (f) that
(1) results in the entry of an order for relief or any such
adjudication or appointment or (2) is not dismissed, discharged
or stayed for a period of 30 days from the entry thereof; or
(iii) there shall be commenced against the
Company or any Principal Subsidiary 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 its assets (or against the mortgaged Estate) that results in
the entry of any order for any such relief which shall not have
been vacated, discharged or stayed within 30 days from the entry
thereof; or
(iv) the Company shall have been dissolved or
terminated; or
(v) the Company or any Principal Subsidiary shall
take any action authorizing, or in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts
set forth above in this clause (f).
Upon the occurrence of an Event of Default under Section 5(a),
the holder of each Note as to which such Event of Default
occurred may, by written notice to the Company, declare such Note
to be due and payable (without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the
Company) at the Redemption Price. Upon the occurrence of an
Event of Default under Section 5(f) in respect of the Company
(but not of a Principal Subsidiary), all Notes shall immediately
become due and payable at the Redemption Price. Upon the
occurrence of any other Event of Default, holders of Notes
representing at least 51% of the unpaid principal amount of all
Notes then outstanding, excluding any Notes held by the Company
or any Subsidiary or Affiliate ("Requisite Holders") may, by
written notice to the Company, declare all Notes to be due and
payable (without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Company) at the
Redemption Price. No course of dealing on the part of any holder
of any Note nor any delay or failure on the part of any holder of
any Note to exercise any right shall operate as a waiver of such
right or otherwise prejudice such holder's rights, powers and
remedies. The Company further agrees to pay to the holder or
holders of the Notes all costs and expenses incurred by them in
the collection of any Note upon any default hereunder or under
any of the other Note Documents, including the fees,
disbursements and other charges of such holder's or holders'
attorneys for all services rendered in connection therewith.
The rights and remedies expressly provided for in this Note
are cumulative and not exclusive of any rights or remedies which
any holder of a Note would otherwise have, including,
1.1-4
<PAGE> 5
without limitation, the rights and remedies provided for in
Mortgages.
6. This Note is registered on the books of the Company and
is transferable only by surrender thereof at the offices of the
Company (or of such Paving Agent as may be appointed by the
Company pursuant to Section 5.4 of the Note Purchase Agreement
from time to time), duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of
this Note or its attorney duly authorized in writing. Payment of
or on account of principal, Yield Maintenance Amount, if any, and
interest on this Note shall be made only to or upon the order in
writing of the registered holder.
7. The Company and each surety, endorser, guarantor and
other party ever liable for payment of any sums of money payable
upon this Note, jointly and severally waive presentment, demand,
protest, notice of protest and nonpayment or other notice of
default, notice of acceleration and intention to accelerate or
other notice of any kind, and agree that their liability under
this Note shall not be affected by any renewal or extension of
the time of payment hereof, or by any indulgence with respect to
this Note, or by any release or change in any security for the
payment of this Note, and hereby consent to any and all renewals,
extensions, indulgences, releases or changes, regardless of the
number of such renewals, extensions, indulgences, releases or
changes.
No waiver by Purchaser of any of its rights or remedies
hereunder or under any other Note Document or otherwise, shall be
considered a waiver of any other subsequent right or remedy of
Purchase; no delay or omission in the exercise or enforcement by
Purchaser of any rights or remedies shall ever be construed as a
waiver of any right or remedy of Purchaser; and no exercise or
enforcement of any such rights or remedies shall ever be held to
exhaust any right or remedy of Purchase.
8. This Note and the Note Purchase Agreement shall be
governed by and shall be construed in accordance with the law of
the State of New York, without giving effect to any conflicts or
choice of law principles thereof.
KMART CORPORATION
_____________________________
Name:
Title:
1.1-5
<PAGE> 1
EXHIBIT 99.21
NOTE PURCHASE AGREEMENT
BETWEEN
KMART CORPORATION
AND
XXXXXXXXXX
Dated as of December 1, 1992
$8,555,278 8.791612% Collateralized
Promissory Notes Due June 1, 2013
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT
1.1. Description of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Commitment; Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. PREPAYMENT OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2. Optional Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3. Notice of Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4. Special Put Option of Holders Following a Rating Decline . . . . . . . . . . . . . . . . . 5
2.5. Other Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6. Allocation of Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3. REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1. Representations of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2. Representations and Agreements of the Purchaser . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1. Company's Closing Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2. Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3. Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4. Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.5. Private Placement Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.6. Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.7. No Default or Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.8. Satisfactory Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.9. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5. COMPANY COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.1. Financial Reports and Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.2. Books and Records; Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4. Paying Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.5. Corporate Existence, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.7. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.8. Limitation on Consolidation or Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.9. Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.10. Direct Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS (continued)
<TABLE>
<CAPTION>
Section
- -------
<S> <C> <C>
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2. Notice to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.3. Acceleration of Maturities; Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . 21
6.4. Rescission of Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.1. Consent Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.2. Solicitation of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.3. Effect of Amendment or Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.2. Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.1. Registered Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.2. Exchange of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.3. Loss, Theft, etc. of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.4. Expenses, Stamp Tax Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.5. Powers and Rights Not Waived; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . 29
9.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.7. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.8. Survival of Covenants and Representations . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.9. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.10 Controlling Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.12. Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.13. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Exhibit 1.1 Note
Exhibit 4.1 Closing Certificate
Exhibit 4.2A Opinion of Dickenson, Wright, Moon, Van Dusen & Freeman
Exhibit 4.2B Opinion of A. N. Palizzi
Exhibit 4.3 Note Documents
</TABLE>
ii
<PAGE> 4
Kmart Corporation
3100 West Big Beaver Road
Troy, MI 48084-3163
NOTE PURCHASE AGREEMENT
$8,555,278 8.791612% Kmart Collateralized
Promissory Notes Due June 1, 2013
As of December 1, 1992
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Gentlemen:
The undersigned, Kmart Corporation, a Michigan corporation ("Company"),
hereby agrees with XXXXXXXXXX (" XXXXXXXXXX") as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
1.1. Description of Notes. The Company has authorized the issuance and
sale of $8,555,278 aggregate principal amount of its 8.791612% Collateralized
Promissory Notes due June 1, 2013 ("Notes"), each to be dated the date of issue,
to bear interest from such date to but not including the date of repayment of
such principal amount at the rate of 8.791612% per annum, respectively, payable
on the 1st day of each June and December in each year (commencing June 1, 1993)
and at maturity, and to bear interest on overdue principal, Yield Maintenance
Amount (as defined hereafter), if any, and any overdue installment of interest
at the Overdue Rate, whether at scheduled maturity, upon acceleration or
otherwise, until paid, to mature on June 1, 2013 and to be substantially in the
form attached hereto as Exhibit 1.1. Interest on the Notes shall be computed on
the basis of a 360-day year of twelve 30-day months. Principal on the Notes
shall be due and payable in annual installments in the amounts set forth in
Exhibit 1.1 attached to each Note commencing on June 1, 1993 and, thereafter, on
the first day of June in each succeeding year through and including June 1,
2013. The Notes are not subject to prepayment, purchase or redemption at the
option of the Company prior to their expressed maturity date except on the terms
and conditions and in the amounts and with the Yield Maintenance Amount, if any,
set forth in the various paragraphs of Section 2 of this Agreement and in the
Notes. The term "Notes", as used herein shall include each Note delivered
pursuant to this Agreement ("Agreement"), and each Note issued in exchange or
replacement therefor. XXXXXXXXXX is hereinafter sometimes
1
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referred to as the "Purchaser." Certain capitalized terms used herein shall
have the meanings set forth in Section 8.1, unless the context shall otherwise
require.
1.2. Commitment; Closing Date. Subject to the terms and conditions
hereof and on the basis of the representations and warranties hereinafter set
forth, the Company shall issue and sell to Purchaser, and Purchaser shall
purchase from the Company, $8,555,278 aggregate principal amount of 8.791612%
Notes of the Company at a price of 100% of the principal amount thereof for an
aggregate purchase price of $8,555,278 ("Purchase Price"), on the Closing Date
hereinafter mentioned.
Delivery of the Notes will be made at the offices of Squire, Sanders &
Dempsey, 520 Madison Avenue, 32nd Floor, New York, New York 10022, or such
other place as Purchaser shall designate, against payment therefor in the
amount of the Purchase Price at 11:00 A.M., New York time, on December 17, 1992
or such later date as shall be mutually agreed upon by the Company and the
Purchaser ("Closing Date"). Payment for the Notes shall be effected by wire
transfer of federal funds to the following bank account of the Company:
Bank: NBD Bank, N.A.
City: Detroit, Michigan
A.B.A. Routing No.: 072000326
Account No.: (Kmart Corporation) 838853
The Notes delivered to Purchaser on the Closing Date will be delivered to
Purchaser in the form of one or more registered Notes for the full amount of
the Purchase Price, registered in Purchaser's name or in the name of such
nominee(s) or assignee(s) as Purchaser shall have specified in writing.
SECTION 2. PREPAYMENT OF NOTES.
No prepayment of the Notes may be made except to the extent and in the
manner expressly provided in this Agreement and the Notes.
2.1 Certain Definitions. For purposes of this Section 2, the following
terms shall have the following meanings:
"Called Principal" means the principal of the Note that is to be
paid or prepaid or accelerated in any way pursuant to Sections 2.2, 2.4 or 2.5.
"Discounted Prepayment Value" means the amount obtained by
discounting all Remaining Scheduled Payments from their respective scheduled
due dates to the Settlement Date, in accordance with accepted financial
practice and at a discount factor (applied on a semiannual basis) equal to the
Reinvestment Yield.
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"Minimum Investment Grade" means a rating of at least Baa3, in the
case of a rating by Moody's, and a rating of at least BBB-, in the case of a
rating by S&P, or the then equivalent of such rating by Moody's or S&P or, to
the extent applicable, by another Rating Agency.
"Moody's" means Moody's Investors Service, Inc. or any successor
thereto.
"Put" means exercise of the right to require Company to Redeem a
Note in accordance with Section 2.4.
"Rating Agency" and "Rating Agencies" mean Moody's and S&P and, if
either Moody's or S&P (but not both) ceases to rate the indebtedness of
corporations generally, or unsubordinated, senior, unsecured indebtedness of
the Company in particular, then another comparable rating agency of recognized
national standing in the United States.
"Rating Decline" means that:
(i) the rating assigned to unsubordinated, senior,
unsecured indebtedness of the Company on such date by either Moody's or S&P:
(1) declines to a rating below the Minimum Investment Grade, or (2) further
declines, in the event then rated below the Minimum Investment Grade; or
(ii) (1) unsubordinated, senior, unsecured indebtedness of
the Company ceases to be rated by either Moody's or S&P (other than by reason
of such Rating Agency ceasing to rate the indebtedness of corporations
generally) at such time as the rating then assigned by the remaining such
Rating Agency shall be below Minimum Investment Grade or (2) unsubordinated,
senior, unsecured indebtedness of the Company ceases to be rated by either
Moody's or S&P at such time as the rating then assigned by the remaining such
Rating Agency shall be at least the Minimum Investment Grade and the the
Company is unable to have such debt rated by another Rating Agency within
ninety (90) days thereafter; or
(iii) unsubordinated, senior, unsecured indebtedness of the
Company ceases to be rated by both Moody's and S&P for any reason (except if,
through no fault of the Company, both Moody's and S&P are unable to provide a
rating due to a business failure or interruption affecting both Moody's and
S&P).
For purposes of determining whether a Rating Decline shall have occurred
pursuant to clause (i), the rating initially assigned by any Rating Agency
engaged by the Company pursuant to clause (ii) to replace any rating withdrawn
or otherwise terminated by Moody's or S&P shall be compared to the last rating
assigned by Moody's or S&P, as the case may be, to determine if the
circumstances described in (i) (1) or (2) exist.
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"Redemption Price" means the Yield Maintenance Amount.
"Reinvestment Yield" means with respect to the Called Principal, the
sum of (x) the yield to maturity implied by the following (i) the yields
reported, as of 10:00 a.m. (New York City time) on the third Business Day
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such other display
as may replace Page 678 on the Telerate Service) for actively traded U.S.
Treasury securities having a maturity equal (as near as practicable) to the
Remaining Average Life of the Called Principal being paid or prepaid as of such
Settlement Date, or (ii) if such yields shall not be reported as of such time
or the yields reported as of such time shall not be ascertainable, the Treasury
Constant Maturity Series yields reported, for the latest day for which such
yields shall have been so reported as of the third Business Day preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal (as
near as practicable) to the Remaining Average Life of the Called Principal
being paid or prepaid as of such Settlement Date, and (y) fifty basis points.
Such implied yield shall be determined, if necessary, by (a) converting U.S.
Treasury bill quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between reported yields.
"Remaining Average Life" means, with respect to any amount of Called
Principal of the Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled
Payment of such Called Principal (but not of interest thereon) by (b) the
number of years (calculated to the nearest one-twelfth year) which will elapse
between the Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means all payments of such Called
Principal and interest thereon that would be due on or after the Settlement
Date with respect to such Called Principal if no payment of such Called
Principal were made prior to its expressed maturity date.
"S&P" means Standard & Poor's Corporation or any successor thereto.
"Settlement Date" means the Business Day (i) specified by the Company
under any notice given pursuant to Section 2.3, (ii) first occurring thirty
(30) days after the holder of any Note gives notice to Company of such holder's
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election to exercise the Put pursuant to Section 2.4, or (iii) on which a
prepayment is required pursuant to Section 2.5.
"Yield Maintenance Amount" means an amount equal to the sum of (x) the
excess (which shall in no event be less than zero), if any, of the Discounted
Prepayment Value of the Remaining Scheduled Payments over the sum of (i) Called
Principal plus (ii) interest accrued thereon as of the Settlement Date with
respect to such Called Principal and (y) an amount equal to the product of the
Called Principal amount and 103.3631%.
2.2 Optional Prepayment. Upon compliance with Section 2.3, the
Company shall have the option at any time and from time to time of prepaying
the outstanding Notes, either in whole or in part (but if in part, then in
units of U.S. $1,000,000 or an integral multiple of $100,000 in excess thereof)
by payment of the Redemption Price.
2.3 Notice of Prepayments. The Company shall give written notice of
any prepayment of the Notes pursuant to Section 2.2 to each holder thereof not
less than 30 days nor more than 60 days before the date fixed for such
prepayment. Notices required by this Section 2.3 shall specify (a) the
Settlement Date, and (b) the estimated Redemption Price. Notice of prepayment
having been so given, the Redemption Price shall become due and payable on the
Settlement Date set forth in such notice. The Company shall also give written
notice to each holder of the Notes, by telecopy or other same day written
communication, setting forth the computation and amount of the Redemption Price
payable in connection with a prepayment pursuant to Section 2.2 at least three
Business Days preceding the Settlement Date.
2.4 Special Put Option of Holders Following a Rating Decline.
(a) If a Rating Decline occurs, each holder of a Note will have
the right, at such holder's option, to require the Company to redeem such
Note in whole (but not in part) on the Settlement Date at the Redemption
Price. The obligations of the Company to give the notices required pursuant to
paragraph (b) of this Section 2.4 shall remain in effect so long as any Notes
remain outstanding. If a Rating Decline occurs and subsequent to such Rating
Decline another Rating Decline occurs, then each holder of a Note will again
have the rights, and the Company again will have the obligations, set forth in
this Section 2.4.
(b) Within seven days after each date on which a Rating Decline
has occurred, the Company will cause a notice to be mailed to each holder of
Notes, which notice shall (1) state that a Rating Decline has occurred, (2)
describe the action taken with respect to the rating that caused such Rating
Decline, and the date of the occurrence thereof, (3) set forth the Company's
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offer to redeem all of the Notes as provided in paragraph (c) below, and (4)
state (i) the Settlement Date, (ii) the estimated Redemption Price and (iii)
the party to whom the holder of a Note electing redemption shall surrender such
Note on the Settlement Date.
(c) In connection with the redemption of any Note pursuant to this
Section 2.4, the holder thereof will be required to surrender, on the
Settlement Date, at the corporate trust office of the Trustee (as defined in
Section 9.7), such Note duly endorsed without recourse or assigned to the
Company or in blank without recourse, together with written notice of the
holder's election to have the Company redeem such Notes specified in such
notice. The Trustee shall hold the Notes in trust for the benefit of the
holders of the Notes electing redemption pursuant to this Section 2.4 until
payment in full of the Redemption Price to the holders on the Settlement Date
and shall then and thereupon surrender such Notes to the Company. Election of
redemption by a holder pursuant to this Section 2.4 shall (unless otherwise
provided by law) be irrevocable.
2.5. Other Prepayment. In the event that either (a) the Company shall be
required to prepay the Notes pursuant to Section 1.05 or 1.13 of the Mortgages
or (b) acceleration of the Notes pursuant to Section 6.3, then, within the time
provided in the Mortgages with respect to clause (a) above, or not later than
five Business Days following acceleration of the Note, with respect to clause
(b) above, (i) each holder of a Note shall be required to surrender such Note,
duly endorsed without recourse or assigned to the Company in blank without
recourse, at the corporate trust office of the Trustee, and (ii) the Trustee
shall hold the Notes in trust for the benefit of the holders of the Notes until
payment in full of the Redemption Price shall have been made to such holders,
and shall then and thereupon surrender such Notes to the Company. If the
provisions of clause (a) above shall apply, the holders of the Notes shall
apply the proceeds of any condemnation proceeding, insurance or other award
relating to all or a portion of the Mortgaged Estate to the payment of the
Redemption Price pursuant to Section 2.6.
2.6. Allocation of Prepayments. All partial prepavments shall be applied
ratably on ail outstanding Notes prorata in the same proportion that such
prepaid amount bears to the aggregate unpaid principal balance of the Notes,
first to the Yield Maintenance Amount payable with respect thereto, and the
remainder to the remaining unpaid principal balance of the Notes.
2.7. Payments. Any and all payments, pursuant to Section 2, shall be
made by electronic fund transfer of immediately available federal funds.
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SECTION 3. REPRESENTATIONS.
3.1. Representations of the Company. The Company
hereby represents and warrants for the benefit of Purchaser that
the representations set forth as follows are true and correct as
of the date hereof and shall be true and correct as of the
Closing Date:
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Michigan.
(b) The Company is duly qualified to do business as a foreign
corporation in each other jurisdiction in which the conduct of its business or
the ownership of its properties would require such qualification, except where
the failure to so qualify would not have a Material Adverse Effect.
(c) The execution, delivery and performance of this Agreement, the
Notes and the other Note Documents are within the corporate powers of the
Company and have been duly authorized by all necessary corporate action on the
part of the Company. On the Closing Date, this Agreement, the Notes and the
other Note Documents will have been duly executed by and will be the legal,
valid and binding obligations of the Company, enforceable against the Company
in accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the enforcement of creditors'
rights generally and by general principles of equity.
(d) The audited consolidated financial statements of the Company
and its Subsidiaries for the Company's fiscal years ended January 29, 1991 and
January 28, 1992 ("Audited Financials") have been prepared in accordance with
generally accepted accounting principles, consistent with the principles and
practices used in the preparation of the Company's audited consolidated
financial statements for the immediately preceding fiscal year (except as
otherwise indicated in the Audited Financials, including the notes thereto) and
present fairly in all material respects the consolidated financial condition of
the Company at the end of each such financial year and the consolidated results
of operations and changes in financial position of the Company for each of such
periods.
(e) No consent, approval or authorization of, or declaration,
registration or filing with, or payment to, any governmental body or any
non-governmental Person is required to be obtained or made on or prior to the
Closing Date in connection with the execution, delivery and performance by the
Company of this Agreement, the Notes and the other Note Documents or the
transactions contemplated hereby or thereby or as a condition to the legality,
validity or enforceability of the Company's obligations under this Agreement,
the Notes or the other Note
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Documents, or the offer, issue, sale or delivery of the Notes to the Purchaser
or the fulfillment of or compliance with the terms and provisions of the Notes,
this Agreement or the other Note Documents, except for the recording of the
Mortgage, and the filing of forms UCC-1A in the appropriate office in Michigan
the filing of forms UCC-1 with the Secretary of State of the State of Michigan
and the payment of nominal filing fees.
(f) The Company and its Subsidiaries have paid all taxes that they
are required to have paid, except for (i) taxes that are presently payable but
not overdue, (ii) other taxes the payment of which is being contested in good
faith and by appropriate proceedings and (iii) other taxes the non-payment of
which would not have a Material Adverse Effect.
(g) Neither the execution and delivery of this Agreement, the
Notes or the other Note Documents by the Company nor the performance of the
terms and provisions hereof and thereof, nor the issuance and sale of the Notes
by the Company will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in any
violation of, any charter instrument, contract, agreement, mortgage, indenture,
lease, instrument or order, or of any statute, law, rule or regulation of the
United States of America or the State of Michigan to which the Company is
subject.
(h) Neither the Company's annual report on Form 10-K for the
fiscal year ending January 28, 1992 (the "1992 10-K") nor the Company's
quarterly reports on Form 10-Q filed after the 1992 10-K contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements made therein, in light of the circumstances in
which they were made, not misleading.
(i) Since January 28, 1992, there has not been any
material adverse change in the financial condition or results of
operations of the Company or in the condition of the Mortgaged
Estate.
(j) The net proceeds from the issuance and sale of the Notes will
be used for general corporate purposes of the Company. No part of the proceeds
of the sale of the Notes are intended to be used, directly or indirectly, for
the purpose of purchasing or carrying any "margin stock" within the meaning of
Regulations G, T or X of the Board of Governors of the Federal Reserve System.
The assets of the Company and its Subsidiaries do not include an amount of
"margin stock" that would cause the provisions of Rule 207.2(f)(2)(i) of
Regulation G to be inapplicable and neither the Company nor any of its
Subsidiaries has any present intention of purchasing such an amount of "margin
stock".
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(k) Neither the Company nor, to its knowledge, anyone acting on
its behalf has offered the Notes or any similar securities relating to the
Mortgaged Estate to, or solicited any offer to purchase the same from, any
Person other than the Purchaser and not more than 20 other institutional
investors, or has taken any other action which would require the registration
of the Notes under Section 5 of the Act.
(l) The consummation of the transactions contemplated by this
Agreement and compliance by the Company with the provisions hereof and the
Notes issued hereunder and the other Note Documents will not constitute a
prohibited transaction within the meaning of ERISA or Section 4975 of the Code.
Each Plan complies in all material respects with all applicable statutes and
governmental rules and regulations, and (1) no Reportable Event has occurred
and is continuing with respect to any Plan subject to Title IV of ERISA, (2)
neither the Company nor any ERISA Affiliate has withdrawn from any Plan subject
to Title IV of ERISA or any Multiemployer Plan or instituted steps to do so,
and (3) no steps have been instituted to terminate in a distress termination
any Plan subject to Title IV of ERISA. No condition exists or event or
transaction has occurred in connection with any Plan which could result in the
incurrence by the Company or any ERISA Affiliate of any material liability,
fine or penalty. No Plan maintained by the Company or any ERISA Affiliate and
no trust created thereunder have incurred any "accumulated funding deficiency",
as defined in Section 302 of ERISA, and the present value of all benefits
vested under all Plans subject to Title IV of ERISA does not exceed the value
of the assets of such Plans allocable to such vested benefits (such present
value to be determined as of, and based on, the most recent valuation of such
Plan for funding purposes). The Company has no material contingent liability
with respect to any post-retirement "welfare benefit plan" (as such term is
defined in ERISA), other than as required by Section 4980B of the Code.
(m) The Company is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, and the Company is not
directly or indirectly controlled by an investment Company. The Company is not
a "holding company" or a "subsidiary" or an "affiliate" of a "holding company"
or a "public utility" within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
(n) Except as disclosed in the 1992 10-K, there are no actions,
suits or proceedings pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries in any court or before any
governmental authority or arbitration board or tribunal which, if adversely
determined, would have a Material Adverse Effect.
(o) To the knowledge of the Company, the Company is not in
violation of, and is not subject to any liability under, any environmental laws
affecting it or its properties,
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except for such violations and liabilities as would not in the
aggregate have a Material Adverse Effect.
(p) The Company is not in violation of any federal, state, local
or foreign law, ordinance or regulation or any order, judgment, injunction,
award or decree or any other requirement of any government or regulatory body,
court or arbitrator applicable to the business or properties of the Company,
except for such violations as would not in the aggregate have a Material
Adverse Effect.
(q) Each of the representations and warranties made or to be made
by the Company in the other Note Documents shall be incorporated herein on the
Closing Date as if set forth herein in their entirety and shall be true and
correct as of such date.
3.2. Representations and Agreements of the Purchaser.
(a) The Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Nevada.
(b) The execution, delivery and performance of this Agreement is
within the corporate powers of the Purchaser and has been duly authorized by
all necessary corporate action on the part of the Purchaser.
(c) Purchaser represents that it is acquiring the Notes for its
own account subject to the XXXXXXXXXX Assignment (as defined in Section 9.7)
and not with a view to distribution (as such term is used under Section
211 of the Act) thereof; provided that the disposition of Purchaser's
property shall at all times be and remain within its control.
(d) Purchaser represents and warrants that no part of such funds
constitutes assets allocated to any separate account maintained by it in which
any employee benefit plan (or its related trust) has any interest.
SECTION 4. CLOSING CONDITIONS.
Purchaser's obligation to purchase the Notes on the Closing Date shall
be subject to the performance by the Company of its agreements hereunder and
under the other Note Documents which by the terms hereof are to be performed at
or prior to the time of delivery of the Notes and to the following further
conditions precedent:
4.1. Company's Closing Certificate. Concurrently with the delivery
of Notes to Purchaser on the Closing Date, Purchaser shall have received a
certificate of the Company signed by an Executive Officer of the Company in
substantially the form of Exhibit 4.1, to the effect that, among other things,
(a) the
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representations and warranties contained in Section 3.1 and the
other Note Documents are true on and as of the Closing Date and
(b) no Default or Event of Default exists on and as of the
Closing Date.
4.2. Legal Opinions. Concurrently with the delivery of Notes to
Purchaser on the Closing Date, Purchaser shall have received from Dickinson,
Wright, Moon, Van Dusen & Freeman, counsel to the Company and A.N. Palizzi,
Esq., General Counsel to the Company, their respective opinions, dated the
Closing Date, in substantially the form and substance set forth in Exhibits
4.2A, 4.2B hereto, respectively.
4.3. Related Transactions. Prior to or concurrently with the
issuance and sale of Notes to Purchaser on the Closing Date, the Company (and,
any other necessary party under the Mortgages) shall have executed and
delivered the Mortgage, in substantially the form of Exhibit 4.3 attached
hereto, and all other Note Documents, including all such Note Documents as
shall be requested to evidence and effect the XXXXXXXXXX Assignment (as
defined in Section 9.7), and:
(a) the Company shall have either good and marketable fee simple
title to, or a good and marketable leasehold interest in (where applicable), the
Mortgaged Estates,free and clear of all liens and encumbrances except Permitted
Encumbrances;
(b) the Company shall have (i) caused the Mortgages and all
required Uniform Commercial Code financing statements to be duly recorded or
filed in the manner required by the laws of Michigan and (ii) paid, or caused
to be paid, all filing fees and recording charges incurred in connection
therewith, and such recordings and filings shall be satisfactory to the
Purchaser and its special counsel;
(c) the Purchaser shall have received an A.L.T.A. Extended
Coverage Loan Policy of Title Insurance (or such other form of loan or
mortgagee policy as may be prescribed by law in the state where such Mortgaged
Estate is located) covering such Mortgage Estate (or a valid, binding
unconditional commitment therefor), dated the Closing Date, in the current 1990
A.L.T.A. form (modified to conform to the 1987 form by deleting the Creditor's
Right exclusion) and including mechanics' and materialmen's lien coverage,
issued by a title insurance company acceptable to the Purchaser and with such
reinsurance as may be required by the Purchaser; which policy shall (i) insure
(A) the Mortgage as a first lien on the Mortgaged Estate, subject to no other
liens or encumbrances or restrictions except Permitted Encumbrances, which
shall be fully identified thereon, (B) that any restrictions or easements
affecting the Mortgaged Estate has not been violated and that a future
violation thereof will not result in a forfeiture or reversion of title, and
(C) that all streets adjoining the Mortgaged Estate have been completed,
dedicated and accepted for public maintenance and use by the
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appropriate governmental authorities, (ii) be in the aggregate amount of
$9,000,000, and (iii) be satisfactory in all other respects to the Purchaser;
and the Company will provide the Purchaser with such endorsements to the title
insurance policy as the Purchaser may reasonably request;
(d) the Purchaser shall have received a copy of a final A.L.T.A.
as-built survey of the Mortgaged Estate certified not more than 20 days before
Closing Date, such survey to be satisfactory in form and substance to the
Purchaser and to include (i) a metes and bounds description (or an otherwise
sufficient legal description) of the Mortgaged Estate, (ii) all lot and street
lines, (iii) a statement of whether the Mortgaged Estate is located in a flood
plain or zone as designated by any governmental authority and (iv) the location
of improvements, easements and rights of way (identified by reference to the
recorded instrument creating the same, if any) and encroachments, if any,
prepared and duly certified to the title company, any other necessary party to
the Mortgage such as the trustee under any deed of trust and the Purchaser as
an accurate survey by a surveyor duly licensed in the State where the Mortgaged
Estate is located;
(e) the Purchaser shall have received a certificate of
self-insurance executed by the Company;
(f) the Purchaser shall have received an appraisal of each of the
Mortgaged Estate satisfactory to the Purchaser by an appraisal company
acceptable to the Purchaser the cost of which shall be paid by XXXXXXXXXX;
(g) the Purchaser shall have received a Phase I environmental
audit report on the Mortgaged Estate (prepared not earlier than one (1) year
from the date of this Agreement), satisfactory to the Purchaser, by an
environmental consulting company acceptable to the Purchaser;
(h) the Purchaser shall have received a copy of all certificates,
permits and licenses of governmental authorities or inspection organizations as
are required or are customarily procured in connection with the use, occupancy
or operation of each of the Mortgaged Estate, and each such certificate, permit
and license shall be in full force and effect;
(i) the Purchaser shall have received evidence satisfactory to it
that there does not exist any violation of any law, regulation or order
affecting the Property, including, without limitation, laws, regulations and
orders relating to (i) zoning, subdivision and building restrictions and (ii)
hazardous waste, asbestos or other environmental conditions;
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(j) on the Closing Date, the Mortgaged Estate shall be (i)
undamaged by fire or other causes and (ii) unaffected by any pending or
threatened condemnation proceeding; and
(k) the Purchaser shall have received evidence satisfactory to it
that the description of the tax lot or lots covering each of the Mortgaged
Estate does not include any lands or buildings other than those described in
the Mortgage.
4.4. Ratings. The Notes shall have a National Association
of Insurance Commissioners's rating of "1" and Purchaser shall have received
written evidence thereof.
4.5. Private Placement Number. A private placement number for
the Notes shall have been issued by S&P.
4.6. Legality. The Notes shall qualify as a legal
investment for Purchaser under the laws and regulations of each jurisdiction
to which Purchaser is subject and Purchaser shall have received such information
concerning the Company and its Subsidiaries as Purchaser shall reasonably
request to establish such fact.
4.7. No Default or Event of Default. On the Closing
Date, no Default or Event of Default shall exist.
4.8. Satisfactory Proceedings. All proceedings taken
in connection with the transactions contemplated by this Agreement, and all
documents necessary for the consummation thereof, shall be satisfactory in form
and substance to Purchaser and its counsel, and Purchaser shall have received a
copy (executed or certified as may be appropriate) of all legal documents or
proceedings taken in connection with the consummation of such transactions.
4.9. Costs and Expenses. The Company shall have paid or
provided for the payment of all expenses that the Company is obligated to pay
pursuant to Section 9.4. In addition, Purchaser shall have received reasonable
assurance in writing that all other fees and expenses incurred by any other
Person in connection with the transactions contemplated hereunder shall have
been paid on or prior to the Closing Date.
If on the Closing Date the Company fails to tender to Purchaser the
Notes to be issued on such date or if the conditions specified in this Section
4 have not been fulfilled, Purchaser may thereupon elect to be relieved of all
further obligations under this Agreement. Without limiting the foregoing, if
the conditions specified in this Section 4 have not been fulfilled, Purchaser
may waive compliance by the Company with any such condition to such extent as
Purchaser may in its own sole discretion, determine. Nothing herein shall
operate to relieve the Company of any of its obligations hereunder,
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including without limitation the payment of any expenses pursuant to Section
9.4 or to waive any of Purchaser's rights against the Company.
SECTION 5. COMPANY COVENANTS.
without limiting the obligations of the Company set forth in the
Mortgages or any of the other Note Documents, from and after the Closing Date
and continuing so long as any amount remains unpaid on any Note:
5.1. Financial Reports and Books and Records. The
Company will furnish to each holder of the Notes:
(a) As soon as available and in any event within 60 days after the
end of each quarterly fiscal period (except the last) of each fiscal year,
copies of;
(i) a consolidated balance sheet of the
Company and its Subsidiaries as of the close of such period, and
(ii) consolidated statements of income, shareholders'
equity and cash flows of the Company and its Subsidiaries for the portion of
the fiscal year ending with such period;
in each case setting forth in comparative form the figures for they
corresponding period of the preceding fiscal year, all in reasonable detail and
certified as complete and correct, subject to changes resulting from year-end
audit adjustments, by the chief accounting officer of the Company; provided
that the Company will have satisfied the requirements of this Section 5.1 by
the delivery within the time period described hereinabove of its quarterly
reports on Form 10-Q as filed with the Securities and Exchange Commission so
long as such Form 10-Q contains quarterly statements reflecting the financial
position and results Of operations of the Company and its consolidated
Subsidiaries for such quarter;
(b) As soon as available and in any event within 120 days after
the close of each fiscal year of the Company, copies of:
(i) a consolidated balance sheet of the Company and its
Subsidiaries as of the close of such fiscal year, and
(ii) consolidated statements of income, shareholders' equity
and cash flows of the Company and its Subsidiaries for such fiscal year;
(c) Promptly upon their becoming available and in
any event, the provisions of Sections 5.1(a) and (b)
notwithstanding within 30 days after sent by the Company to
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stockholders or debenture holders generally, copies of each
financial statement, report, notice or proxy statement;
(d) Except at such times as the Company is a reporting company
under Section 13 or 15(d) of the Exchange Act, such financial or other
information as any holder of the Notes or any Person designated by such holder
may reasonably determine is required to permit such holder to comply with the
requirements of Rule 144A promulgated under the Act in connection with the
resale by it of the Notes, in any such case promptly after the same is
requested; and
(e) Within the period provided in paragraphs 5.1(a) and (b), a
certificate of an Executive Officer of the Company stating that such officer
has reviewed the provisions of this Agreement and the other Note Documents and
stating whether there existed as of the date of such financial statements and
whether, to the best of such officers' knowledge, there exists at the time of
the certificate or existed at any time during the period covered by such
financial statements any Default or Event of Default and, if any such condition
or event does exist on the date of the certificate, specifying the nature and
period of existence thereof and the action the Company is taking and/or
proposes to take with respect thereto.
The annual and interim financial statements described in paragraphs
(a) through (d) above shall be prepared in accordance with accounting
principles generally accepted in the United States, consistently applied.
5.2. Books and Records; Financial Information. The Company will,
and will cause each of its material Subsidiaries to, keep proper books of
record and account in accordance with generally accepted United States
accounting practices or in accordance with the generally accepted accounting
practices of the country in which each such corporation is organized.
Purchaser (so long as it holds any Notes) and any Institutional Holder (as
defined hereafter) that, together with any Affiliates, holds at least 10% of
the aggregate principal amount of Notes then outstanding shall, upon the
occurrence and during the continuance of a Default or from and after the
occurrence of either any event that has a Material Adverse Effect or a Rating
Decline, at the expense of the Company, have the right for reasonable purposes,
during regular business hours, subject to reasonable notice and as often as may
be reasonably requested, to visit and inspect the properties of the Company and
its Subsidiaries, to examine the corporate books and records of the Company and
its Subsidiaries and to discuss the affairs, finances and accounts of the
Company and its Subsidiaries with the appropriate officers of the Company and,
in the presence of a representative of the Company, their independent public
accountants. Notwithstanding the foregoing, neither the Company nor any of its
Subsidiaries shall be obligated to disclose any information pursuant to this
Section 5.2 which they are
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prohibited from disclosing by law or by any contract entered into
with any Person other than an Affiliate.
Each holder of the Notes by its acceptance thereof agrees that any
information obtained by such Person pursuant to this Section 5.2 will be
treated as confidential; provided, however, that nothing herein contained shall
limit or impair the right or obligation of any holder of the Notes to disclose
such information: (1) to its auditors, attorneys, employees or agents, (2)
when required by any law, ordinance or governmental order, regulation, rule,
policy, investigation or any regulatory authority request, (3) as may be
required or appropriate in any report, statement or testimony submitted to any
municipal, state, provincial or Federal regulatory body having or claiming to
have jurisdiction over such holder or to the United States National Association
of Insurance Commissioners or similar organizations or their successors, (4) in
connection with the enforcement of the terms and conditions of this Agreement,
the Notes and any of the other Note Documents, (5) which is publicly available
or readily ascertainable from public sources, or which is received by any
holder of the Notes from a third Person who or which, to such holder's
knowledge, is not bound to keep the same confidential, (6) as required by legal
process in connection with any proceeding, case or matter pending (or on its
face purported to be pending) or threatened before any court, tribunal,
arbitration board or any governmental agency, commission, authority, board or
similar entity, or (7) to the extent necessary in connection with any
contemplated transfer of any Notes by any holder thereof including the Trustee
and the holders of the Certificates (as defined in Section 9.7). Any transferee
that purchases such Notes shall itself be bound by the terms and provisions
hereof.
5.3. Payments. The Company will duly and punctually pay the
principal of, Yield Maintenance Amount and interest on the Notes in accordance
with their terms and this Agreement, without any deduction, withholding or
setoff of any kind.
5.4. Paying Agency. The Company will maintain an office in the
United States of America where notices, presentations and demands to or upon
the Company in respect of this Agreement, the Notes and the other Note
Documents may be given or made. As of the date of this Agreement, such office
is located at the Company's address set forth in Section 9.6. The Company will
give written notice to the holders of the Notes of any change of location of
such office within five Business Days after the date of any such change.
Notwithstanding the foregoing, in lieu of, or in addition to, maintaining an
office as herein contemplated, the Company may appoint and maintain an agent
for receiving notices, presentations or demands and/or making payments on the
Notes which shall be a state or national bank or trust company organized under
the laws of the United States of America or any State thereof or the District
of Columbia and having capital, surplus and undivided profits
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<PAGE> 20
aggregating at least U.S. $250,000,000 (the "Paying Agent") for
the Notes in the Borough of Manhattan in The City of New York.
5.5. Corporate Existence, etc. The Company will, and (except as
permitted below) will cause each of its Principal Subsidiaries to, do or cause
to be done all things necessary to preserve and keep in full force and effect
its corporate existence and comply with all applicable laws, statutes,
regulations, rules, orders, and all applicable restrictions imposed by any
governmental or regulatory body except those being contested in good faith by
appropriate proceedings and except where the failure so to comply would not
have a Material Adverse Effect, and maintain all licenses and permits necessary
properly to conduct its business or own its properties, except where the
failure so to do would not have a Material Adverse Effect; provided, that the
foregoing shall not restrict (x) the Company from causing, permitting or
suffering the sale, merger or liquidation of such of its Subsidiaries (but not
the Company) as its Board of Directors shall determine to be in the best
interests of the Company in the exercise of its reasonable
business judgment or (y) any transaction permitted by Section 5.8.
5.6. Taxes. The Company will, and will cause each of its
Subsidiaries to, pay all applicable taxes except for (i) taxes the payment of
which is being contested by the Company or such Subsidiary in good faith and by
appropriate proceedings and (ii) taxes the non-payment of which would not have
a Material Adverse Effect.
5.7. Insurance. The Company will, and will cause its Subsidiaries
to, carry and maintain in full force and effect at all times with fiscally
sound and reputable insurers insurance against such risks as is reasonable and
prudent in the circumstances (which insurance obligation may be fulfilled by a
reasonable and prudent self-insurance program, except as provided in the
Mortgage) and in any event as may be required by applicable laws, statutes,
regulations, rules or orders and, with respect to the Mortgaged Estate,
such insurance as is required by the Mortgages.
5.8. Limitation on Consolidation or Merger. The Company will not,
directly or indirectly consolidate or merge with, or sell, lease or otherwise
dispose of all or substantially all of its assets to, any other Person
unless (a) no Default or Event of Default shall have occurred and be
continuing immediately before or immediately after such transaction and (b)
the Company is the survivor of such transaction or, if the Company is not
the survivor, the survivor is a corporation organized under the laws
of any State of the United States which expressly assumes in writing
the Company's obligations under this Agreement, the Notes and the other Note
Documents and which shall own all or substantially all the assets of
the Company. In the case of any such consolidation, merger or sale or
other
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<PAGE> 21
disposition of assets in which the Company is not the surviving corporation,
the surviving corporation shall furnish to the holders of the Notes an
unqualified opinion of independent counsel to the effect that the instrument of
assumption has been duly authorized, executed and delivered and constitutes the
legal, valid and binding contract and agreement of the surviving corporation
enforceable in accordance with its terms, except as enforcement of such terms
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and by general
equitable principles. Following a transaction of the kind described above, the
successor corporation shall use its reasonable best efforts to cause such
Rating Agencies that, immediately prior to the relevant transaction, shall have
rated the unsubordinated, unsecured debt of the Company to confirm that such
debt continues to be rated. No merger, consolidation, sale, lease or other
disposition prohibited or permitted hereunder shall in any manner limit or
reduce Purchaser's rights under Section 2.3.
5.9. Ratinqs. The Company will use its reasonable best efforts to
enable Moody's and S&P or a comparable rating agency to have in effect a rating
for its unsubordinated, senior, unsecured indebtedness.
5.10. Direct Payments. Notwithstanding anything to the contrary in
this Agreement or the Notes, in the case Purchaser or its nominee or any other
Institutional Holder of the Notes (or its nominee(s)) has given written notice
to the Company and the Paying Agent requesting that the provisions of this
Section 5.10 shall apply, the Company will or will cause the Paying Agent, if
any, to promptly and punctually pay when due the principal of the Notes and
Yield Maintenance Amount, if any, and interest thereon, without any presentment
thereof directly to Purchaser or such Institutional Holder at the address of
Purchaser set forth above or at such other address as Purchaser or such
Institutional Holder may from time to time designate in writing to the Company
and the Paying Agent, if any, or, if a bank account is designated for Purchaser
or any Institutional Holder in any written notice to the Company and the Paying
Agent from such Purchaser or any such Institutional Holder, the Company will,
or will cause the Paying Agent to make such payments when due in current and
immediately available funds which at the time of payment shall be legal tender
in the United States of America for the payment of public and private debts to
such bank account, marked for attention as indicated, or in such other manner
or to such other account of Purchaser or such Institutional Holder in any bank
in the United States as the Purchaser or any such Institutional Holder may from
time to time direct in writing. With respect to Notes to which this Section
5.10 applies, the Company and any Paying Agent shall be entitled to presume
conclusively that the original or such subsequent Institutional Holder as shall
have requested the provisions hereof to apply to its Notes remains the holder
of such Notes until such Notes shall have been presented to the Company as
evidence of the transfer.
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SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
6.1. Events of Default. Any one or more of the following shall
constitute an "Event of Default" as the term is used herein or in the other
Note Documents:
(a) the Company shall fail to pay when due (i) any payment of the
principal of any Note or of any Yield Maintenance Amount; or (ii) any payment
of interest on any Note and such interest payment default shall continue for
more than 5 days; or
(b) the Company shall fail to observe or perform any other
obligation, covenant, undertaking, condition or provision in respect of the
Notes or contained in this Agreement or the other Note Documents which is not
remedied within 30 days after the earliest of: (i) the furnishing of notice
thereof by the Company to the holders of the Notes, (ii) the Company's willful
failure to provide any notice required under Section 6.2 or (iii) receipt of
written notice thereof from the holder of any Note by the Company requiring the
same to be remedied; provided that a default under Section 6.09 of the Mortgage
shall constitute an Event of Default hereunder not subject to cure; or
(c) any representation or warranty made by the Company herein, or
made by the Company in any other Note Document, shall be untrue or inaccurate
in any material respect; or
(d) any of the Note Documents or any provision thereof shall cease
to be a legal, valid and binding agreement enforceable against the Company in
accordance with the respect of terms thereof or shall in any way be terminated
or become or be declared ineffective or inoperative or shall in any way
whatsoever cease to give or provide the respective liens, security interest,
rights, titles, interest, remedies, powers or privileges intended to be created
thereby; or
(e) a judgment shall be rendered against the Company or any
Principal Subsidiary for the payment of money in excess of $250 million
individually or $250 million in the aggregate (as to such foregoing amount, net
of the portion thereof covered by insurance) and such judgment shall not be
discharged or dismissed, or execution thereof stayed pending appeal, within 30
days after entry; or
(f) (i) the Company or any Principal Subsidiary shall commence or
consent to any case, proceeding or other action (1) under any existing or
future law of any jurisdiction 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 as bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
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dissolution, composition or other relief with respect to it or its debts, or
(2) seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its assets (including
the Mortgaged Estates), or the Company shall make a general assignment for the
benefit of creditors or admit in writing that it is unable to pay its debts as
they become due; or
(ii) there shall be commenced against the Company or any Principal
Subsidiary any such case, proceeding or other action referred to in subclause
(i) of this clause (f) that (1) results in the entry of an order for relief or
any such adjudication or appointment or (2) is not dismissed, discharged or
stayed for a period of 30 days from the entry thereof; or
(iii) there shall be commenced against the Company or any Principal
subsidiary 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 its assets (or against the Mortgaged Estates) that results
in the entry of any order for any such relief which shall not have been
vacated, discharged or stayed within 30 days from the entry thereof; or
(iv) the Company shall have been dissolved or terminated; or
(v) the Company or any Principal Subsidiary shall take any action
authorizing or in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth above in this clause (f).
6.2. Notice to Holders. Whenever the Company becomes aware that
any Default or Event of Default has occurred, or if the Company is aware that
the holder of any Note has either given any notice or taken any other action
with respect to a Default or Event of Default, or the Company receives written
notice from a third party concerning an event which constitutes a Default or
Event of Default, the Company will ensure that notice is given (or such third
party notice is forwarded) to all holders of the Notes then outstanding, no
later than the fifth day (or second day in the case of an Event of Default or
Default under Section 6.1(a)) after it becomes aware that such Event of Default
or Default has occurred, or that such notice has been given or such other
action has been taken with respect to such Default or Event of Default, such
notice to be in writing and sent in the manner provided in Section 9.6.
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6.3. Acceleration of Maturities; Other Remedies.
(a) Upon the occurrence of an Event of Default under Section
6.1(a), the holder of each Note as to which such Event of Default occurred may,
by written notice to the Company, declare such Note to be due and payable
(without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Company) at the Redemption Price. Upon the occurrence
of an Event of Default under Section 6.1(f) above in respect of the Company
(but not of a Principal Subsidiary), all Notes shall immediately become due and
payable at the Redemption Price. Upon the occurrence of any other Event of
Default, holders of Notes representing at least 75% of the unpaid principal
amount of all Notes then outstanding, excluding any Notes held by the Company
or any Subsidiary or Affiliate ("Requisite Holders") may, by written notice to
the Company, declare all Notes to be due and payable (without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Company) at the Redemption Price. No course of dealing on the part of any
holder of any Note nor any delay or failure on the part of any holder of any
Note to exercise any right shall operate as a waiver of such right or otherwise
prejudice such holder's rights, powers and remedies. The Company further
agrees to pay to the holder or holders of the Notes all costs and expenses
incurred by them in the collection of any Note upon any default hereunder or
thereon, including the fees, disbursements and other charges of such holder's
or holders' attorneys for all services rendered in connection therewith.
(b) The rights and remedies expressly provided for in this
Agreement are cumulative and not exclusive of any rights or remedies which the
Purchaser or any holder of a Note would otherwise have, including, without
limitation, the rights and remedies provided for in the Mortgages.
6.4. Rescission of Acceleration. The provisions of Section 6.3 are
subject to the condition that if the principal of and accrued interest on all
or any outstanding Notes have been declared or have become immediately due and
payable by reason of the occurrence of any Event of Default described in
Sections 6.1 (a) through (e), inclusive, then (i) for any such declaration by a
holder as the result of an Event of Default described in Section 6.1(a), such
holder or (ii) for any such declaration as the result of the Event of Default
described in Sections 6.1 (b) through (e), the holders of at least 51% of the
unpaid principal amount of all Notes then outstanding (other than any Notes
held by the Company or any Subsidiary or Affiliate), may by written instrument
filed with the Company, rescind and annul such declaration and the consequences
thereof, provided that at the time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the payment
of any monies due pursuant to the Notes or this Agreement;
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(b) all arrears of interest upon all the Notes and all other
sums payable under the Note and under this Agreement (except any principal,
interest or premium on the Notes which has become due and payable solely by
reason of such declaration under Section 6.3) shall have been duly paid; and
(c) each and every other Default and Event of Default shall
have been cured or waived pursuant to Section 7.1 and the Company shall have
paid all of Purchaser's costs and expenses as provided for in Section 9.4;
and provided further, that no such rescission and annulment shall extend to
or affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
7.1. Consent Required. Any term, covenant, agreement or
condition of Agreement or the Notes or the other Note Documents may, with the
consent of the Company, be amended or compliance therewith may be waived
(either generally or in a particular instance and either retroactively or
prospectively), if the Company shall have obtained the consent in writing
of the holders of at least 51% of the unpaid principal amount of
outstanding Notes (other than any Notes held or agreed to be purchased by
the Company or any Subsidiary or Affiliate) provided that no such waiver,
modification, alteration or amendment shall (a) change the time of payment of
the principal of or the interest on any Note or reduce the principal amount
thereof or reduce the rate of interest thereon, (b) change any of the
provisions of Section 2f, or (c) change the percentage of holders of the
Notes required to consent to any such amendment, alteration or modification
or any of the other provisions of this Section 7 without the consent of each
holder of the Notes affected thereby. Executed or true and correct copies
of any waiver, modification, alteration or amendment to this Agreement shall
be delivered by the Company to each holder of outstanding Notes forthwith
following the date on which the same shall have been executed and delivered by
the holder or holders of the requisite percentage of outstanding Notes.
7.2. Solicitation of Holders. So long as there are
any Notes outstanding, the Company will not solicit, request or negotiate
for or with respect to any proposed waiver or amendment of any of the
provisions of this Agreement or the Notes or the other Note Documents unless
holder of Notes (irrespective of the amount of Notes then owned by it) shall
be informed thereof by the Company and shall be afforded the opportunity of
considering the same and shall be supplied by the Company with sufficient
information to enable it to make an informed decision with respect thereto.
The Company will not, directly or indirectly through any subsidiary,
affiliate or otherwise, pay or cause to be paid any remuneration, whether by
way of supplemental or additional interest, fee or otherwise, to any holder as
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consideration for or as an inducement to entering into by any holder of any
waiver or amendment of any of the terms and provisions of this Agreement or the
Notes or the other Note Documents unless such remuneration is concurrently
offered, on the same terms, ratably to the holders of all Notes then
outstanding.
7.3. Effect of Amendment or Waiver. Any such amendment or
waiver shall apply equally to all of the holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon the Company
(and in the case of the Mortgage, the Trustee), whether or not such Note shall
have been marked to indicate such amendment or waiver. No such amendment or
waiver shall extend to or affect any obligation not expressly amended or waived
or impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS
8.1. Definitions. Unless the context otherwise requires,
the terms hereinafter set forth when used herein shall have the following
meanings and the following definitions shall be equally applicable to both the
singular and plural forms of any of the terms herein defined. Capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the other Note Documents.
"Act" means the Securities Act of 1933, as amended.
"Affiliate" means any Person which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, the Company, as the case may be. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting stock, by contract or otherwise.
"Agreement" shall have the meaning assigned thereto in
Section 1.1.
"Business Day" means any day other than (i) Saturday or Sunday,
or (ii) a day on which banks in New York are required by law to close or are
customarily closed.
"Called Principal" shall have the meaning assigned to it
in Section 2.1.
"Certificates" shall have the meaning assigned thereto
in Section 9.7.
"Closing Date" shall have the meaning assigned thereto
in Section 1.2.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Default" means any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default as defined in Section 6.1.
"Discounted Prepayment Value" shall have the meaning
assigned to it in Section 2.1.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.
"ERISA Affiliate" means any corporation, trade or business that
is, along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in Sections 414(b) and
414(c), respectively, of the Code or Section 4001 of ERISA.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Executive Officer" means the President, Vice President
or Treasurer of the Company.
"Institutional Holder" means (i) Purchaser, (ii) any other
holder of Notes which is an insurance company, charitable foundation, fraternal
benefit society, pension, retirement or profit sharing trust or fund within the
meaning of ERISA, or for which any bank, trust company, national banking
association or investment advisor registered under the Investment Advisers' Act
of 1940, as amended, is acting as a trustee or agent, any broker or dealer
registered under the Investment Advisers' Act of 1940, as amended, or any
government, public employees' pension retirement system or other governmental
agency supervising the investment of public funds and (iii) any Affiliate of
any Person described in clause (i) or (ii) which holds any Notes.
"Material Adverse Effect" means:
(a) a material adverse effect on the financial condition
of the Company and its Subsidiaries taken as a whole or on the condition, value
or use of the Mortgaged Estate or on the ability of the Company to perform its
obligations under this Agreement, the Notes or any other Note Document; or
(b) a material adverse effect on the legality, validity
or enforceability of the Company's obligations under this Agreement or the
other Note Documents or a material impairment of the liens or security interest
granted under the Note Documents.
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"Moody's" shall have the meaning assigned thereto in
Section 2.1.
"Mortgaged Estate" means the collateral described in the
Mortgage which secures the Notes.
"Mortgage" means the mortgage creating or granting first
priority liens and security interests in the collateral which secures the Notes
and the Company's obligations under the Note Documents substantially in the
form of Exhibit 4.3.
"Multiemployer Plan" means a multiemployer plan as defined in
ERISA as to which the Company has any outstanding liability.
"Note Documents" means this Agreement, the Notes, the Mortgage,
Assignment of Leases and Rents, Hazardous Materials Indemnity Agreement,
Financing Statements, Assignment of Mortgages and Assignment of Leases and any
other agreements, documents and writings now or hereafter executed by, on
behalf or for the benefit of the Company, Purchaser, the Trustee or other
holders of the Notes pursuant to or in connection with this Agreement or the
transactions contemplated hereby, together with all amendments, modifications
(including through the waiver of any provision thereof), supplements or
restatements thereto.
"Overdue Rate" means the rate of interest assigned in the Note.
"PBGC" means the Pension Benefit Guaranty Corporation;
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
"Plan" means any United States employee benefit plan
established, maintained or contributed to by the Company or any ERISA Affiliate
for the benefit of the Company or such ERISA Affiliate's respective employees
as to which the Company has any outstanding liability.
"Principal Subsidiary" means (i) any Subsidiary of the Company
(a) whose profits (before tax and extraordinary items) for its last financial
year as shown in its latest profit and loss account as prepared for the
purposes of the latest audited profit and loss account of the Company are at
least 10% of the consolidated profits (before tax and extraordinary items) of
the Company for its last fiscal year as shown in the latest audited
consolidated profit and loss account of the Company or (b) whose total assets
(excluding goodwill and other intangible assets and deducting intercompany
indebtedness and minority interests) as shown by its latest balance sheet as
prepared for the purposes of the latest audited balance sheet of the Company
are at least 10% of the total assets of the Company as shown by the latest
audited consolidated balance sheet of the Company. A report by the independent
auditors of the Company that in their opinion a
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Subsidiary is or is not a Principal Subsidiary shall, in the absence of
manifest error, be conclusive and binding on the Company and the holders of the
Notes.
"Purchaser" shall have the meaning assigned thereto in
Section 1.1.
"Put" shall have the meaning assigned thereto in Section
2.1.
"Rating Agency" and "Rating Agencies" shall have the
meanings assigned thereto in Section 2.1.
"Redemption Price" shall have the meaning assigned
thereto in Section 2.1.
"Reinvestment Yield" shall have the meaning assigned
thereto in Section 2.1.
"Remaining Average Life" shall have the meaning assigned
thereto in Section 2.1.
"Remaining Scheduled Payments" shall have the meaning assigned
thereto in Section 2.1.
"Reportable Event" shall have the same meaning as in ERISA but
shall not include any reportable event for which the 30-day notice period has
been waived under applicable regulations.
"S&P" shall have the meaning assigned thereto in Section
2.1.
"Settlement Date" shall have the meaning assigned to it
in Section 2.1.
"Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of
such corporation (assuming exercise or conversion solely of the securities held
by such Person) is at the time beneficially owned by such Person directly or
indirectly through Subsidiaries, and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% equity interest at the time or the power to
elect a majority of the Board of Directors or similar governing body.
" XXXXXXXXXX Assignment" shall have the meaning assigned in
Section 9.7.
"Trustee" shall have the meaning assigned in Section 9.7.
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"Weighted Average Remaining Life" shall have the meaning
assigned to it in Section 2.1.
"Yield Maintenance Amount" shall have the meaning
assigned to it in Section 2.1.
8.2. Accounting Principles. Where the character or amount
of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in
accordance with United States generally accepted accounting principles.
SECTION 9. MISCELLANEOUS.
9.1. Registered Notes. The Company shall cause to be kept
a register for the registration and transfer of the Notes ("Note Register") at
the office of the Company or the Paying Agent, if any, and the Company will
cause to be registered or transferred on the Note Register as hereinafter
provided and under such reasonable regulations as it may prescribe, any Note
issued pursuant to this Agreement.
At any time and from time to time the registered holder of any
Note which has been duly registered as hereinabove provided may, subject to
compliance with applicable securities laws to the reasonable satisfaction of
Company and its legal counsel and the provisions of Section 3.2, transfer such
Note upon surrender thereof at the Company or the principal office of the
Paying Agent (if one shall have been appointed) duly endorsed or accompanied by
a written instrument of transfer duly executed by the registered holder of such
Note or its attorney duly authorized in writing; provided that the Company or
the Paying Agent may decline to exchange or register the transfer of any Note
during the period of five Business Days preceding the due date for any payment
of principal or interest on the Notes.
The Person in whose name any registered Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes of
this Agreement. Payment of or on account of the principal, Yield Maintenance
Amount, if any, and interest on any registered Note shall be made to or upon
the written order of such registered holder.
9.2. Exchange of Notes. At any time and from time to
time, upon not less than three Business Days' notice to that effect given by
the holder of any Note initially delivered or of any Note substituted therefor
pursuant to Section 9.1, this Section 9.2, or Section 9.3 (except in the case
of a lost, stolen or mutilated certificate sought to be exchanged pursuant to
Section 9.3, as soon as practicable), and, upon surrender of such Note at the
office of the Company or any Paying Agent, the Company will, or will cause, the
Paying Agent to, deliver in
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<PAGE> 31
exchange therefor, without expense to the holder, except as set forth below,
Notes for the same aggregate principal amount as the then unpaid principal
amount of the Note so surrendered, in the denomination of U.S. $100,000 or any
amount in excess thereof as such holder shall specify, dated as of the date to
which interest has been paid on the Note so surrendered, or, if such surrender
is prior to the payment of any interest thereon, then dated as of the date of
issue, payable to such Person or Persons, or registered assigns, as may be
designated by such holder and otherwise permitted hereunder, and otherwise of
the same form and tenor as the Notes so surrendered for exchange. The Company
may require the payment of a sum sufficient to cover any stamp tax or
governmental charges imposed upon such exchange or transfer.
9.3. Loss, Theft, etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
any Notes, and in the case of any such loss, theft or destruction upon delivery
of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation upon surrender
and cancellation of the Note, the Company will, or will cause the Paying Agent
to, deliver without expense to the holder thereof, a new Note, of like tenor,
in lieu of such lost, stolen, destroyed or mutilated Note. If any
Institutional Holder is the owner of any such lost, stolen or destroyed Note,
then the affidavit of an authorized officer of such owner, setting forth the
fact of loss, theft or destruction and of its ownership of the Note at the time
of such loss, theft or destruction shall be accepted as satisfactory evidence
thereof and no further indemnity shall be required as a condition to the
execution and delivery of a new Note other than the written agreement of such
owner to indemnify the Company.
9.4. Expenses, Stamp Tax Indemnity. whether or not the
transactions herein contemplated (including the XXXXXXXXXX Assignment) shall
be consummated, XXXXXXXXXX shall pay directly all of its and the holders
of the Certificates out-of-pocket expenses in connection with the preparation,
execution and delivery of this Agreement and the transactions contemplated or
permitted hereby, including but not limited to the reasonable fees,
disbursements and other charges of XXXXXXXXXX's counsel, and all duplicating
and printing costs. The Company shall pay all of its out-of-pocket expenses in
connection with the preparation, execution and delivery of this Agreement and
the transactions contemplated or permitted hereby, including but not limited to
the fees and expenses of Dickinson, Wright, Moon, Van Dusen & Freeman and of
any special counsel. The Company also shall pay all expenses relating to the
performance of any transactions contemplated or permitted hereby, any title
insurance premiums, filings or recordings, any action for the enforcement or
collection of the Notes or this Agreement or any Note Document and each
amendment, waiver or consent pursuant to the provisions hereof or thereof
(whether or not the same are actually executed and delivered), including,
without limitation, any amendments, waivers or consents resulting from
28
<PAGE> 32
any work-out, restructuring or similar proceedings relating to the performance
by the Company of its obligations under this Agreement, the Notes and the other
Note Documents. The Company also shall pay any fees and related expenses
incurred or to be incurred in connection with its cooperation with Moody's and
S&P as provided in Section 5.9 and all initial and ongoing fees and all
out-of-pocket expenses of the Paying Agent, if any, and will pay and save
Purchaser harmless against any and all liability with respect to stamp and
other similar taxes, if any, which may be payable or which may be determined to
be payable in connection with the execution, delivery or enforcement of this
Agreement or the Notes or any other Note Documents, whether or not any Notes
are then outstanding. The Company shall protect and indemnify Purchaser
against any liability for any and all brokerage fees and commissions payable or
claimed to be payable by the Company to any Person in connection with the
transactions contemplated by this Agreement other than the fees, commissions,
costs and expenses of XXXXXXXXXX and its counsel and financial advisors which
are to be paid from the proceeds of the XXXXXXXXXX Assignment. Without
limiting the foregoing, the Company shall pay the cost of obtaining a Private
Placement Number for the Notes and authorizes the submission of such
information as may be required by S&P for the purpose of obtaining such number.
9.5. Powers and Rights Not Waived; Remedies Cumulative.
No delay or failure on the part of the holder of any Note in the exercise of
any power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to and are not exclusive of any rights or
remedies any such holder would otherwise have, and no waiver or consent, given
or extended pursuant to Section 7, shall extend to or affect any obligation or
right not expressly waived or consented to.
9.6. Notices. All communications provided for hereunder
shall he in writing and, if to XXXXXXXXXX, delivered or mailed by registered
or certified mail or by overnight courier or by facsimile communication
(confirmed in writing by registered or certified mail or by overnight courier),
in each case prepaid and addressed to XXXXXXXXXX at XXXXXXXXXX's address
appearing above or such other address as XXXXXXXXXX or the subsequent holder
of any Note initially issued to XXXXXXXXXX may designate to the Company in
writing, and if to the Company delivered or mailed by registered or certified
mail, return receipt requested, or by overnight courier, or by facsimile
communication transmitted on a Business Day (confirmed in writing by registered
or certified mail, return receipt requested, or by overnight courier), in each
case prepaid and addressed to Kmart Corporation, 3100 West Big Beaver Road,
Troy, MI 48084-3163 Attention: M. L. Skiles or to such other address as the
Company or the Paying Agent, if any, may in writing designate to Purchaser or
to a subsequent holder of the
29
<PAGE> 33
Note initially issued to Purchaser. Any such communication, if to
Trustee (as defined below), shall be addressed to XXXXXXXXXX.
9.7. Successors and Assigns. This Agreement shall be binding
upon the Company and its respective successors and assigns and shall be binding
upon, and inure to the benefit of, Purchaser and Purchaser's successors and
assigns including each successive holder or holders of any Notes. Each such
successive holder or holders of any Notes, including XXXXXXXXXX, a national
banking association ("Trustee") under that certain Trust Agreement dated as of
December 1, 1992 between Purchaser and Trustee shall have all rights and
privileges of the "Purchaser" hereunder. The Company hereby acknowledges that,
simultaneously with the Closing, XXXXXXXXXX is assigning (" XXXXXXXXXX
Assignment") all of its right, title and interest hereunder and under the
Notes, the Mortgages and the other Note Documents to Trustee pursuant to the
Trust Agreement as security for the payment of Mortgage Pass-Through
Certificates Kmart Facility (XXXXXXXXXX) Series 1992 ("Certificates") and
payment and performance of the other obligations arising out of the Trust
Agreement. The Company further acknowledges and agrees that each successive
holder or holders of the Note, including, but not limited to Trustee, accepts
such assignment in reliance upon the Company's representations, warranties,
covenants, agreements and other obligations hereunder and under the Notes, the
Mortgages and the other Note Documents. In order to further induce each
successive holder or holders of the Note, including but not limited to Trustee,
to accept such assignment, the Company hereby makes the following
representations, warranties, covenants and agreements:
(i) to the best of its knowledge, the Company
does not have any right, including any claim, counterclaim, right of set-off or
deduction or other defense of any kind, to withhold payment or performance of
any of its obligations hereunder or under any of the other Note Documents
(" XXXXXXXXXX Defenses");
(ii) in the event the Company becomes aware of
any XXXXXXXXXX Defenses, the Company hereby waives and agrees not to
assert the same against Trustee or any other holder of the Notes;
(iii) upon consummation of such assignment to
Trustee, Trustee will be a bona fide purchaser of the Notes for value and will
be a holder of the Notes in due course and the Company hereby waives any right
to challenge Trustee's status as such;
(iv) the Company acknowledges and agrees that
Trustee is a third party beneficiary of this Agreement and the other Note
Documents entered into between the Company and XXXXXXXXXX; and
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<PAGE> 34
(v) upon consummation of the assignment
to Trustee, Trustee shall be deemed to be Purchaser hereunder, and shall
succeed to all of the rights of Purchaser hereunder.
In addition, XXXXXXXXXX hereby acknowledges and agrees that Trustee
is a third party beneficiary of this Agreement and the other Note Documents
entered into between the Company and XXXXXXXXXX.
9.8. Survival of Covenants and Representations. All
covenants, representations and warranties made by the Company herein and in
any other Note Documents and in any certificates delivered pursuant hereto or
thereto, whether or not in connection with the Closing Date, shall survive the
closing pursuant to this Agreement and the delivery of this Agreement and the
Notes.
9.9. Severability. Should any provision of this Agreement
or any of the other Note Documents for any reason be declared unenforceable by
a court of competent jurisdiction (sustained on appeal, if any) such
unenforceability shall not affect the enforceability of any other provision
hereof or thereof, all of which shall remain in force and effect as if this
Agreement or such other Note Document had been executed with the unenforceable
provision thereof eliminated and it is hereby declared the intention of the
parties hereto that they would have executed the remaining provisions of this
Agreement without including therein any such part, parts or portion which may,
for any reason, be hereafter declared unenforceable; provided that, if any
provision of this Agreement or any of the other Note Documents shall be
unenforceable by reason of a final judgment of a court of competent
jurisdiction based upon a court's ruling (sustained on appeal, if any) that
such provision is unenforceable because of the excessive degree or magnitude of
the obligation imposed thereby on any company, that unenforceable obligation
shall be reduced in magnitude or degree by the minimum degree or magnitude
necessary in order to permit the provision to be enforceable by the Purchaser.
In the event the provisions of the immediately preceding sentence apply, the
parties shall make appropriate adjustment to the provisions of this Agreement
and the other Note Documents to give effect to the benefits intended to be
conferred upon the parties hereby.
9.10 Controlling Provision. All agreements between
Company and Purchaser are expressly limited so that, and Company and Purchaser
intend and agree that, in no contingency or event whatsoever, whether by reason
of advancement of the proceeds of the Notes, acceleration of maturity of the
unpaid principal balance thereof, or otherwise, shall the amount paid or agreed
to be paid to Purchaser for the use, forbearance or detention of the money to
be advanced hereunder exceed the lesser of the sums payable under the Notes or
the highest lawful rate permissible under applicable usury law. In the
determination of the rate of interest under this provision, any charges which
are determined
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<PAGE> 35
to be interest shall be spread over the term of the Notes in ascertaining
whether the interest rate has exceeded the highest lawful rate permissible
under applicable law. If, from any circumstances whatsoever, fulfillment of
any provision of the Notes or of the Mortgages securing the Notes, or any other
agreement referred to therein or otherwise relating to the Notes, at the time
performance of such provision shall be due, shall involve transcending the
limit of validity prescribed by law which a court of competent jurisdiction may
deem applicable thereto, then ipso facto, the obligation to be fulfilled shall
be reduced to the limit of such validity, and if, from any circumstance,
Purchaser shall ever receive as interest an amount which would exceed the
lesser of the sums payable under the Notes or the highest lawful rate, such
amount which would be excessive interest shall be applied to the reduction of
the unpaid principal balance due as of the date such amount is received or
deemed to be received by Purchaser and not to the payment of interest. This
provision shall control every other provision of all agreements between Company
and Purchaser. However, in the event an amount determined to be excessive
interest is applied against the unpaid principal balance, and thereafter the
rate of interest accruing under the Notes decreases, the Notes shall in fact
accrue interest at the then lesser of the sums payable under the Notes or the
highest lawful rate permissible under applicable usury law, until such time
that an amount accrues equal to the amount of excessive interest previously
applied against principal. Notwithstanding the foregoing, if the provisions of
any law or regulation of the United States or any agency or instrumentality
thereof, as amended, which validly superseded any restriction of the State of
New York, would permit Purchaser to charge or receive a rate of interest with
respect to the indebtedness evidenced by the Notes in excess of the maximum
rate of interest (if any) permitted to be charged or received by Purchaser
under applicable law of the State of New York the less restrictive provisions
of any such United States law or regulation shall apply in determining the rate
of interest permitted to be charged or received.
9.11 Governing Law. This Agreement and the Notes issued and sold
hereunder shall be governed by and construed in accordance with the law of the
State of New York without giving effect to the choice of law principles
thereof.
9.12. Submission to Jurisdiction. The Company hereby consents to
the Jurisdiction of any state or federal court located within the County of New
York, State of New York, and irrevocably agrees that all actions or proceedings
relating to this Agreement, the Notes and other Note Documents may be litigated
in such courts, and the Company waives any objection which it may have based on
improper venue or forum non conveniens to the conduct of any proceeding in any
such court and waives personal service of any and all process upon it, and
consents that all such service of process be made by registered or certified
mail (return receipt requested) or messenger directed
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<PAGE> 36
to it at its address set forth in Section 9.6 or to its agent referred to below
at such agent's address set forth below and that service so made shall be
deemed to be completed in accordance with Section 9.6. The Company hereby
irrevocably appoints The Prentice Hall Corporation System, Inc., with an office
on the date hereof at 15 Columbus Circle, New York, New York 10023, as its
agent for the purpose of accepting service of any process within the State of
New York. Nothing contained in this Section shall affect the right of any
holder of Notes to serve legal process in any other manner permitted by law or
to bring any action or proceeding in the courts of any jurisdiction against the
Company or to enforce a judgment obtained in the courts of any other
jurisdiction.
9.13. Captions. The descriptive headings of the various Sections or
parts of this Agreement are for convenience only, and shall not affect the
meaning or construction of any of the provisions hereof.
The execution hereof by you shall constitute a contract between the
Company and Purchaser for the uses and purposes hereinabove set forth, and this
Agreement may be executed in any number of counterparts, each executed
counterpart constituting an original but all together only one agreement.
KMART CORPORATION, a Michigan
corporation
By /s/
-----------------------------
Name:
Title:
Accepted and agreed as of the date first above written.
XXXXXXXXXX, a
Nevada corporation
By XXXXXXXXXX
-----------------------------
Name: XXXXXXXXXX
Title: Vice President
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<PAGE> 37
[EXHIBITS INTENTIONALLY OMITTED]
<PAGE> 1
EXHIBIT 99.22
KMART CORPORATION
8.791612% COLLATERALIZED PROMISSORY NOTE
DUE JUNE 1, 2013
PRIVATE PLACEMENT NO.: XXXXXXXXXX
NO. A-1 AS OF DECEMBER 1, 1992
U.S. $8,555,278
KMART CORPORATION, a Michigan corporation ("Company"), for
value received, hereby unconditionally promises to pay to the order
of XXXXXXXXXX, a national banking association ("Purchaser"), as
Trustee under that certain Trust Agreement dated as of December 1,
1992, among XXXXXXXXXX, a Nevada corporation, Purchaser and
XXXXXXXXXX, as Individual Trustee, or registered assigns,on the 1st
day of June, 2013, the principal amount of EIGHT MILLION FIVE HUNDRED
FIFTY-FIVE THOUSAND TWO HUNDRED SEVENTY-EIGHT DOLLARS (U.S.
$8,555,278) and to pay interest (computed on the basis of a 360-day
year of twelve 30-day months) on the principal amount from time to
time remaining unpaid hereon at the rate of 8.791612% per annum from
December 18, 1992 until and including the date of repayment of such
principal amount, payable on the first day of each June and December
in each year (commencing June 1, 1993), and at maturity. Principal
on this Note shall be due and payable in annual installments in the
amounts set forth on Exhibit A attached hereto) commencing on June 1,
1993 and, thereafter, on the first day of June in each succeeding
year through and including June 1, 2013. The Company shall pay
interest on overdue principal (whether by acceleration or otherwise,
and including any overdue optional prepayment of principal) and Yield
Maintenance Amount, if any, and on any overdue installment of
interest, at the overdue Rate (as hereinafter defined) until paid.
"Overdue Rate" means the rate of interest then in effect plus 2.00%
per annum with respect to principal and 10% per annum with respect to
any overdue interest. Except as otherwise defined herein, all
capitalized terms shall have the meaning assigned to them in the Note
Purchase Agreement.
1. Except as may be otherwise provided pursuant to Section
5.4 or 5.10 of the Note Purchase Agreement (as hereinafter
defined), the principal hereof, Yield Maintenance Amount, if any,
and interest hereon are payable at the principal office of the
Company, in immediately available funds, in coin or currency of
the United States of America which at the time of payment shall
be legal tender for the payment of public and private debts.
Such payments shall be applied first to accrued interest, then to
Yield Maintenance Amount, if any, and then to
1
<PAGE> 2
principal. If any amount of principal, Yield Maintenance Amount,
if any, or interest on or in respect of this Note becomes due and
payable on any date which is not a Business Day, such amount
shall be payable on the immediately preceding Business Day.
"Business Day" means any day other than Saturday, Sunday or other
day on which banks in New York are required by law to close or
are customarily closed.
2. This Note is one of the 8.791612% Collateralized
Promissory Notes due June 1, 2013 ("Notes") of the Company in the
aggregate principal amount of U.S. $8,555,278 issued pursuant to the
terms and provisions of that certain Note Purchase Agreement, dated
as of December 1, 1992 (the "Note Purchase Agreement"), entered into
by the Company and XXXXXXXXXX (" XXXXXXXXXX") and the other Note
Documents, and this Note and the holder hereof are entitled equally
and ratably with the holders of all other Notes outstanding under the
Note Purchase Agreement to all the benefits and security provided for
thereby or referred to therein, to which Note Purchase Agreement
reference is hereby made for the statement thereof. A copy of the
Note Purchase Agreement may be obtained from the Company.
3. This Note and the payment and performance of all of the
Company's obligations hereunder and under the other Note
Documents are secured by the Mortgage (as defined in the Note
Purchase Agreement) and this Note and the holders hereof are
entitled equally and ratably with the holders of all other Notes
outstanding under the Note Purchase Agreement to all the benefits
and security provided for pursuant to the Mortgage or referred to
therein, to which Mortgage reference is hereby made for the
statement thereof. A copy of the Mortgage may be obtained from
the Company.
4. This Note is not subject to prepayment, purchase or
redemption at the option of the Company prior to its expressed
maturity date, except on the terms and conditions and in the
amounts with the Yield Maintenance Amount, if any, all set forth
in Section 2 of the Note Purchase Agreement.
5. Any one or more of the following events shall
constitute an "Event of Default" as the term is used herein or in
the other Note Documents (as defined in the Note Purchase
Agreement):
(a) the Company shall fail to pay when due (i) any payment
of the principal of any Note or Yield Maintenance Amount, if any;
or (ii) any payment of interest on any Note and such interest
payment default shall continue for more than 5 days; or
2
<PAGE> 3
(b) the Company shall fail to observe or perform any other
obligation, covenant, undertaking, condition or provision in
respective of the Notes or contained in the Note Purchase
Agreement or the other Note Documents which is not remedied
within 30 days after the earlier of: (i) the furnishing of notice
thereof to the holders of the Notes, (ii) the Company's willful
failure to provide any notice required under Section 6.2 of the
Note Purchase Agreement or (iii) receipt by the Company of
written notice thereof from the holder of any Note requiring the
same to be remedied; provided that a default under Section 6.09
of the shall constitute an Event of Default hereunder not subject
to cure; or
(C) any representation or warranty made by the Company in
the Note Purchase Agreement or made by the Company in any other
Note Document shall be untrue or inaccurate in any material
respect; or
(d) any of the Note Documents or any provision thereof
shall cease to be a legal, valid and binding agreement
enforceable against the Company in accordance with the respective
terms thereof or shall in any way be terminated or become or be
declared ineffective or inoperative or shall in any way
whatsoever cease to give or provide the respective liens,
security interests, rights, titles, interests, remedies, powers
or privileges intended to be created thereby; or
(e) a judgment shall be rendered against the Company or any
Principal Subsidiary for the payment of money in excess of $250
million individually or $250 million in the aggregate (as to such
foregoing amount, net of the portion thereof covered by
insurance) and such judgment shall not be discharged or
dismissed, or execution thereof stayed pending appeal, within 30
days after entry; or
(f) (i) the Company or any Principal Subsidiary (as defined
in the Note Purchase Agreement) shall commence or consent to any
case, proceeding or other action (1) under any existing or future
law of any jurisdiction 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 as
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution, composition or other relief
with respect to it or its debts, or (2) seeking appointment of a
receiver, trustee, custodian or other similar official for it or
for all or any substantial part of its assets (or against the
Mortgaged Estate (as defined in the Mortgage)), or the Company
shall make a general assignment for the benefit of creditors or
admit in writing that it is unable to pay its debts as they
become due; or
3
<PAGE> 4
(ii) there shall be commenced against the Company or
any Principal Subsidiary any such case, proceeding or other
action referred to in subclause (i) of this clause (f) that (1)
results in the entry of an order for relief or any such
adjudication or appointment or (2) is not dismissed, discharged
or stayed for a period of 30 days from the entry thereof; or
(iii) there shall be commenced against the Company
or any Principal Subsidiary 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 its
assets (or against the Mortgaged Estate) that results in the
entry of any order for any such relief which shall not have been
vacated, discharged or stayed within 30 days from the entry
thereof; or
(iv) the Company shall have been dissolved or
terminated; or
(v) the Company or any Principal Subsidiary shall take
any action authorizing, or in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set
forth above in this clause (f).
Upon the occurrence of an Event of Default under Section 5(a),
the holder of each Note as to which such Event of Default
occurred may, by written notice to the Company, declare such Note
to be due and payable (without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the
Company) at the Redemption Price. Upon the occurrence of an
Event of Default under Section 5(f) in respect of the Company
(but not of a Principal Subsidiary), all Notes shall immediately
become due and payable at the Redemption Price. Upon the
occurrence of any other Event of Default, holders of Notes
representing at least 51% of the unpaid principal amount of all
Notes then outstanding, excluding any Notes held by the Company
or any Subsidiary or Affiliate (the "Requisite Holders") may, by
written notice to the Company, declare all Notes to be due and
payable (without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Company) at the
Redemption Price. No course of dealing on the part of any holder
of any Note nor any delay or failure on the part of any holder of
any Note to exercise any right shall operate as a waiver of such
right or otherwise prejudice such holder's rights, powers and
remedies. The Company further agrees to pay to the holder or
holders of the Notes all costs and expenses incurred by them in
the collection of any Note upon any default hereunder or under
any of the other Note Documents, including the fees,
disbursements and other charges of such holder's or holders'
attorneys for all services rendered in connection therewith.
4
<PAGE> 5
The rights and remedies expressly provided for in this Note
are cumulative and not exclusive of any rights or remedies which
any holder of a Note would otherwise have, including, without
limitation, the rights and remedies provided for in the
Mortgages.
6. This Note is registered on the books of the Company and
is transferable only by surrender thereof at the offices of the
Company (or of such Paying Agent as may be appointed by the
Company pursuant to Section 5.4 of the Note Purchase Agreement
from time to time), duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of
this Note or its attorney duly authorized in writing. Payment of
or on account of principal, Yield Maintenance Amount, if any, and
interest on this Note shall be made only to or upon the order in
writing of the registered holder.
7. The Company and each surety, endorser, guarantor and
other party ever liable for payment of any sums of money payable
upon this Note, jointly and severally waive presentment, demand,
protest, notice of protest and nonpayment or other notice of
default, notice of acceleration and intention to accelerate or
other notice of any kind, and agree that their liability under
this Note shall not be affected by any renewal or extension of
the time of payment hereof, or by any indulgence with respect to
this Note, or by any release or change in any security for the
payment of this Note, and hereby consent to any and all renewals,
extensions, indulgences, releases or changes, regardless of the
number of such renewals, extensions, indulgences, releases or
changes.
No waiver by Purchaser of any of its rights or remedies
hereunder or under any other Note Document or otherwise, shall be
considered a waiver of any other subsequent right or remedy of
Purchase; no delay or omission in the exercise or enforcement by
Purchaser of any rights or remedies shall ever be construed as a
waiver of any right or remedy of Purchaser; and no exercise or
enforcement of any such rights or remedies shall ever be held to
exhaust any right or remedy of Purchase.
8. This Note and the Note Purchase Agreement shall be
governed by and shall be construed in accordance with the law of
the State of New York, without giving effect to any conflicts or
choice of law principles thereof.
KMART CORPORATION
By /s/
---------------------------------
Name:
Title:
5
<PAGE> 1
EXHIBIT 99.23
BOND PUT AGREEMENT
THIS BOND PUT AGREEMENT ("Agreement") is made as of the 22nd day of
December, 1992, by and between KMART CORPORATION ("Kmart"), a Michigan
corporation, and XXXXXXXXXX, as trustee under the Indenture referred to below
("Trustee"), each of which confirms and agrees as follows:
SECTION 1: RECITALS
1.1 Agreement for Sale of Real Estate. Pursuant to the Agreement
for Sale of Real Estate ("Purchase Agreement") dated as of December 15, 1992,
between Kmart and XXXXXXXXXX (the "Partnership"), the Partnership has agreed
to purchase from Kmart and Kmart has agreed to convey its fee interest in
certain properties of Kmart and some of its affiliates ("Properties"), and
Kmart and certain of its affiliates have agreed to lease back from the
Partnership the Properties. As a material inducement to the execution of the
Purchase Agreement and the Leases, Kmart has agreed to enter into this
Agreement with the Trustee.
1.2 Terms; Governing Document. All capitalized terms used herein,
unless otherwise expressly provided, shall have the meaning set forth in the
Indenture ("Indenture") dated as of December 1, 1992, by and between the
Partnership and XXXXXXXXXX ("Owner Trustee"). In the event of any conflict
between the terms and provisions of this Agreement and the Indenture, the
terms and conditions of this Agreement shall govern and prevail.
SECTION 2: PURCHASE OF BONDS
2.1 Certain Definitions. For purposes of this Section 2, the
following terms shall have the following meanings:
"Bond" or "Bonds" means any one or more of the $100,505,000
Collateralized Lease Revenue Bonds (Kmart Corporation Lease Facilities) Series
1992 A, Series 1992 B, Series 1992 C and Series 1992 D issued pursuant to the
Indenture.
"Business Day" means any day other than (i) Saturday or Sunday, or
(ii) a day on which banks in New York are required by law to be closed or
are customarily closed.
"Called Principal" means the principal of the Bonds that are to be
paid or prepaid or accelerated in any way pursuant to Sections 5.04, 5.05
or 5.06 of the Indenture.
"Discounted Prepayment Value" means, with respect to any amount of
Called Principal, the amount obtained by discounting all Remaining Scheduled
Payments with respect to Called Principal from their respective
<PAGE> 2
scheduled due dates to the Purchase Date with respect to such Called Principal,
in accordance with generally accepted financial practice and at a discount
factor (applied on a semiannual basis) equal to the Reinvestment yield.
"Facility" means a specific "Demised Premises" as that terms is
defined in a Lease.
"Failure of Occupancy" means with respect to the Facility located
in XXXXXXXXXX, New Jersey known as Builders Square No. XXXXXXXXXX which is in
the construction phase (as set forth on Exhibit D to the Indenture) a failure by
the lessee with respect to such Facility to open the Facility for business by
December 31, 1993.
"Lease Guaranties" means those certain Lease Guaranties, described
in Exhibit D to the Indenture, executed by Kmart Corporation which guarantee
the payment and performance of its subsidiary under a particular Lease.
"Lease/Lease Guaranty Default" means, with respect to any one or
more of the Leases and Lease Guaranties described in Exhibit D to the
Indenture, the failure of (i) the Lessee under any such Lease to pay any Annual
Rental or Additional Rent as defined in the Lease due under such Lease for a
period of fifteen (15) days after notice to Lessee of such default and (ii)
Kmart to pay any such Annual Rental or Additional Rent under the related Lease
Guaranty, if any, within fifteen (15) days after notice to Kmart of the
Lessee's failure to do so.
"Leases" means those certain leases described in Exhibit D to the
Indenture.
"Make-Whole Premium" means, with respect to any amount of Called
Principal, a premium equal to the sum of (x) the excess (which shall in no
event be less than zero), if any, of the Discounted Prepayment Value of the
Called Principal over the sum of (i) such Called Principal plus (ii) interest
accrued thereon as of the Purchase Date with respect to such Called Principal
and (y) an amount equal to the product of the Called Principal and 101.8%.
"Minimum Investment Grade" means a rating of at least Baa3, in the
case of a rating by Moody's, and a rating of at least BBB-, in the case of a
rating by S&P, or the then equivalent of such rating by Moody's or S&P or, to
the extent applicable, by another Rating Agency.
"Moody's" means Moody's Investors Service or any successor thereto.
"Purchase Date" means the Business Day first occurring thirty (30)
days after the Trustee or a Bondholder gives notice to Kmart of the Trustee's
or Bondholder's election to exercise the Put.
"Purchase Price" means the Make-Whole Premium.
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<PAGE> 3
"Put" means exercise of the right of the Trustee, on behalf of the
Bondholders, or the Bondholders to require Kmart to purchase Bonds whether from
the Trustee or the Bond owners thereof, in accordance with Section 2.2 of this
Agreement.
"Rating Agency" and "Rating Agencies" mean Moody's and S&P and, if
either Moody's or S&P (but not both) ceases to rate the indebtedness of
corporations generally, or unsubordinated, senior, unsecured indebtedness of
Kmart in particular, then another comparable rating agency of recognized
national standing in the United States.
"Rating Decline" means that:
(i) the ratings assigned to unsubordinated, senior,
unsecured indebtedness of Kmart on such date by either Moody's or S&P: (a)
declines to a rating below the Minimum Investment Grade, or (b) further
declines, in the event then rated below the Minimum Investment Grade; or
(ii) (a) unsubordinated, senior, unsecured indebtedness of
Kmart ceases to be rated by either Moody's or S&P (other than by reason of such
Rating Agency ceasing to rate the indebtedness of corporations generally) at
such time as the rating then assigned by the remaining such Rating Agency shall
be below Minimum Investment Grade or (b) unsubordinated, senior, unsecured
indebtedness of Kmart ceases to be rated by either Moody's or S&P at such time
as the rating then assigned by the remaining such Rating Agency shall be at
least the Minimum Investment Grade and Kmart is unable to have such debt rated
by another Rating Agency within ninety (90) days thereafter; or
(iii) unsubordinated, senior, unsecured indebtedness of
Kmart ceases to be rated by both Moody's and S&P for any reason (except if,
through no fault of Kmart, both Moody's and S&P are unable to provide a rating
due to a business failure or interruption affecting both Moody's and S&P).
For purposes of determining whether a Rating Decline shall have occurred
pursuant to clause (i), the rating initially assigned by any Rating Agency
engaged by Kmart pursuant to clause (ii) to replace any rating withdrawn or
otherwise terminated by Moody's or S&P shall be compared to the last rating
assigned by Moody's or S&P, as the case may be, to determine if the
circumstances described in (i)(a) or (b) exist.
"Reinvestment Yield" means with respect to the Called Principal,
the sum of (x) the yield to maturity implied by the following: (i) the yields
reported, as of 10:00 a.m. (New York City time) on the third Business Day
preceding the Purchase Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such other display
as may replace Page 678 on the Telerate Service) for actively traded U.S.
Treasury securities having a maturity equal (as near as practicable) to the
Remaining Average Life of the Called Principal being paid or prepaid as of such
Purchase Date, or (ii) if such yields shall not
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<PAGE> 4
be reported as of such time or the yields reported as of such time shall not be
ascertainable, the Treasury Constant Maturity Series yields reported, for the
latest day for which such yields shall have been so reported as of the third
Business Day preceding the Purchase Date with respect to such Called Principal,
in Federal Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a constant
maturity equal (as near as practicable) to the Remaining Average Life of the
Called Principal being paid or prepaid as of such Purchase Date and (y) fifty
(50) basis points. Such implied yield shall be determined, if necessary, by (a)
converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between reported yields.
"Remaining Average Life" means, with respect to any amount of
Called Principal of the Bonds, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled
Payment of such Called Principal (but not of interest thereon) by (b) the
number of years (calculated to the nearest one-twelfth year) which will elapse
between the Purchase Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to any amount of
the Called Principal, all payments of such Called Principal and interest
thereon that would be due on or after the Purchase Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
expressed maturity date.
"S&P" means Standard & Poor's Corporation, or any successor
thereto.
"Triggering Event" means (i) a Rating Decline has occurred, (ii) a
Lease/Lease Guaranty Default has occurred in respect of one or more Properties
and for which a portion of the Bonds will be required to be put and purchased
from funds provided by Kmart in accordance with Section 2.2 hereof and Section
5.05 of the Indenture, or (iii) there has been a Failure of Occupancy for which
a portion of the Bonds will be required to be put and purchased from funds
provided by Kmart in accordance with Section 2.2 hereof and Section 5.06 of the
Indenture.
2.2 Purchase of Bonds Following a Triggering Event.
(a) If a Triggering Event occurs, the Trustee, on behalf
of the Bondowners, and the Bondowners, will have the right to require Kmart to
purchase the Bonds in whole or in part in accordance with Section 2.2(f) hereof
and Sections 5.04, 5.05 and 5.06 of the Indenture on the Purchase Date at the
Purchase Price.
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<PAGE> 5
(b) If a Triggering Event occurs and subsequent to such
Triggering Event another Triggering Event occurs, the Trustee, on behalf of the
Bondowners, and the Bondowners, will again have the rights, and Kmart again
will have the obligations, as set forth in this Section 2.2.
(c) Within seven (7) business days after the first date
on which a Triggering Event has occurred, Kmart shall cause a notice to be
mailed to the Trustee. Such notice shall (1) state that a Triggering Event has
occurred, (2) describe any action that caused such Triggering Event and the
date of the occurrence thereof and (3) offer to Purchase Bonds in accordance
with this Agreement. Kmart's notice and other obligations shall continue so
long as any Bonds remain outstanding.
(d) In the event the Trustee, on behalf of the
Bondholders, or the Bondowners elect to exercise the Put with respect to all or
a portion of the Bonds, the Trustee, on behalf of the Bondholders, or the
Bondowners shall do so by causing a notice to be mailed to Kmart within thirty
(30) days after the first date on which notice of a Triggering Event has been
received in accordance with Section 2.2(c) hereof, which notice from the
Trustee or the Bondowners shall state (i) the occurrence of a Triggering Event,
(ii) the Purchase Date, (iii) the estimated Purchase Price, (iv) the manner in
which the Purchase Price has been determined, and (v) that the Trustee, on
behalf of the Bondholders, or the Bondowners elect to have Kmart purchase all
or a portion of the Bonds on the Purchase Date. Kmart shall not be excused
from any obligation it may have under this Agreement by reason of any notice
required hereunder not being timely given or being defective, provided,
however, Kmart's time for performance shall be extended by a period equal to
any period of delay in receiving such notice or caused by the correction of
such notice, if defective.
(e) In connection with the purchase of any Bonds pursuant
to this Section 2.2 ("Put Bonds"), (i) the Bondholders electing to exercise
their rights pursuant to Section 5.04 of the Indenture or required to put their
Bonds pursuant to Sections 5.05 or 5.06 of the Indenture will be required to
surrender, on or before the Purchase Date, at the principal office of the
Trustee, the Put Bonds duly endorsed without recourse or assigned to Kmart or
in blank without recourse and to assign without recourse all right, title and
interest of the Bondholders with respect to such Bonds under the Indenture; and
(ii) Kmart shall, on or before 10:00 a.m. (New York City time) on the Purchase
Date, pay the Purchase Price to the Trustee, by wire transfer of immediately
available funds in lawful currency of the United States of America at
XXXXXXXXXX for credit to Account Number XXXXXXXXXX (Kmart Collateralized Lease
Revenue Bonds). The Trustee shall hold the Put Bonds in trust for the benefit
of the surrendering Bondholders until payment in full of the Purchase Price to
the surrendering Bondholders on the Purchase Date and shall then and thereupon
cancel such Bonds, and the Owner Trustee shall execute and the Trustee shall
authenticate and deliver to Kmart in exchange therefor, a like principal amount
of definitive Bonds or Subordinate Bonds, in accordance with Section 2.2(g)
hereof having maturities similar to the Put Bonds.
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(f) With respect to a Triggering Event caused by either a
Lease/Lease Guaranty Default or the Failure of Occupancy with respect to a
particular Facility, Kmart will be obligated to purchase a portion of the then
outstanding Bonds (the "Called Principal") which is to be determined by
multiplying the aggregate principal amount of Bonds currently outstanding by
the Put Percentage which has been established for the Particular Facility that
is the subject of a Triggering Event. The Put Percentage is determined by
dividing the Annual Rental (as defined in Lease) for the particular Facility or
Facilities that are the subject of the current Triggering Event(s) by the sum
of the total aggregate Annual Rentals for the Facilities which are not then the
subject of a Triggering Event plus the Annual Rental for the Facility or
Facilities that are the subject of the current Triggering Event(s).
(g) Put Bonds purchased by Kmart because of a Triggering
Event described in (i) of the definition of Triggering Event will have all the
rights of outstanding Bonds.
Bonds purchased by Kmart because of a Triggering
Event described in (ii) or (iii) of the definition of Triggering Event (the
"Subordinate Bonds") shall be surrendered to the Trustee in accordance with
the terms of the Indenture and Section 2.2(e) hereof. In accordance with the
terms of the Indenture, any Subordinate Bonds shall in all respects be junior
and subordinate to the rights, liens and security interests granted to the
Bondholders of the Bonds.
In determining whether the registered owner of any
outstanding Bonds and Subordinate Bonds have concurred in any direction,
amendment, supplement, waiver or consent, contemplated under any provision of
the Indenture or any other Company Financing Documents, Bonds and Subordinate
Bonds owned by Kmart or any Affiliate of Kmart and their respective successors
and assigns shall be disregarded.
SECTION 3. SUCCESSORS AND ASSIGNS
3.1 General. This Agreement shall be binding upon Kmart
and its respective successors and assigns; provided that Kmart shall not assign
any of its obligations hereunder without the prior written consent of the
Trustee; and provided further that no assignment of any of its obligations
hereunder shall relieve Kmart thereof and Kmart shall remain primarily and
originally liable thereon. This Agreement shall be binding upon and inure to
the Trustee's benefit acting for the benefit of the Bondowners, and to the
benefit of the Trustee's successors and assigns, including the owners of the
Bonds. Each successive holder or holders of the Bonds shall have all rights
and privileges of the Trustee hereunder.
3.2 Consent to Assignment. Kmart hereby acknowledges and
consents to the assignment by the Owner Trustee of all of its right, title and
interest in the Leases, the Lease Guaranties and any other Company Financing
Documents (to which it is a party) to the Trustee, pursuant to the Company
Financing Documents as security for the payment of the Bonds,
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<PAGE> 7
and payment and performance of all obligations arising under the Indenture.
Kmart further acknowledges and agrees that each successive holder or holders of
the Bonds, including but not limited to the Trustee, accepts transfer of the
Bonds in reliance upon Kmart's representations, warranties, covenants,
agreements and other obligations hereunder. In order to further induce any
such successive holder or holders of the Bonds, including but not limited to,
the Trustee, to accept such assignment and its obligations under this Agreement
Kmart hereby makes the following representations, warranties, covenants and
agreements:
(i) Kmart does not have any right, including any claim,
counterclaim, right of setoff or deduction or other defense of any kind to
withhold performance of its obligations hereunder ("Kmart Defenses");
(ii) in the event Kmart becomes aware of any Kmart Defenses,
Kmart hereby waives and agrees not to assert the same against the Owner
Trustee, the Trustee or any other holder of the Bonds;
(iii) upon consummation of the assignment to the Trustee,
Kmart waives any right to challenge the Trustee's status as a bona fide
purchaser of the Properties for value and holder in due course;
(iv) each holder of the Bonds are and shall be third-party
beneficiaries of this Agreement;
(v) Kmart will not seek to amend, modify or supplement
any provision of any Company Financing Documents, or seek to obtain the consent
to any of the foregoing or to the assignment of any Company Financing Document
or seek to obtain any waiver of any such provision, other than with the
approval of the Bondowners required under the Indenture for such action by the
Owner Trustee or the Trustee; and
(vi) Kmart hereby acknowledges and agrees that any and all
rights hereunder granted to the Trustee may be exercised and enforced by the
Trustee, including pursuant to legal process, (and that any such exercise and
enforcement by Trustee shall be binding upon Kmart.)
SECTION 4. KMART'S REPRESENTATIONS AND WARRANTIES
Kmart represents and warrants that (i) it is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Michigan and is duly qualified and in good standing as a foreign corporation
authorized to do business wherever required to do so by applicable law, (ii) it
has full power, authority and legal right to execute and deliver, and to
perform and observe the provisions of, the Leases (to which it is a party), the
Lease Guaranties, this Agreement, the Purchase Agreement and each other Company
Financing Document (to which it is a party) and each of Kmart's affiliates
(collectively, "Affiliates") which is a party to one of the Leases similarly
has such full power, authority and legal right to execute and deliver and to
perform and observe the provisions of the Leases to which it is a party, (iii)
there has been
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<PAGE> 8
no material adverse change in the business or condition, financial or
otherwise, of Kmart or any of the Affiliates since the date of Kmart's last
audited financial report, (iv) there are no actions, proceedings or
investigations pending or threatened against or affecting Kmart or any of the
Affiliates (or any basis therefor known to Kmart) before any court, arbitrator,
administrative agency or other governmental authority, which if adversely
decided would materially and adversely affect the financial condition or
operations of Kmart or any of the Affiliates, or its ability to carry out any
of the terms, covenants and conditions of the Purchase Agreement, the Leases,
the Lease Guaranties, this Agreement or any of the other Company Financing
Documents (to which it is a party), (v) the execution and delivery by it of the
Purchase Agreement, the Leases, the Lease Guaranties, this Agreement, or any of
the other Company Financing Documents (to which it is a party), have been duly
authorized by all necessary corporate and stockholder action, (vi) neither the
execution and delivery of the Purchase Agreement, the Leases, the Lease
Guaranties, this Agreement or any of the other Company Financing Documents (to
which it is a party), nor compliance with the terms and provisions thereof,
conflicts or will conflict with or result in a breach of any of the terms,
conditions or provisions of the Certificate of Incorporation or Bylaws of Kmart
or any of its Affiliates, or of any law, rule, regulation, order, writ,
injunction, judgment or decree of any court, arbitration or administering
agency or governmental authority, or of any agreement or other instrument to
which Kmart is a party or by which it or its assets is bound or subject, or
constitutes or will constitute a default thereunder, and (vii) Kmart is not in
default under any judgment, order, decree, rule or regulation of any court,
arbitrator, administrative agency or other governmental authority to which it
may be subject.
SECTION 5. GENERAL
5.1 Counterparts. This Agreement may be executed in counterparts
by the parties but all such counterparts together shall constitute one and
the same document.
5.2 Notices. All notices, requests, demands or other
communications pursuant to this Agreement shall be in writing and shall be
addressed, in the case of Kmart, to Kmart, 3100 West Big Beaver Road, Troy,
Michigan 48084-3163, Attention: Senior Vice President, Real Estate Department;
in the case of the Trustee, which shall receive copies of all communications
hereunder, to XXXXXXXXXX; or to such other address as any party may
designate in writing. All notices hereunder shall be effective: (a) three (3)
days after deposit in the United States mail, postage prepaid, registered or
certified mail, return receipt requested; (b) upon delivery, if delivered in
person to the address set forth above; or (c) upon delivery, if sent by
overnight courier, such as Federal Express or Airborne Express.
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<PAGE> 9
5.3 Section Headings. Section headings are not to be considered a
part of this Agreement and are included solely for convenience of reference and
are not intended to be full or accurate descriptions of the contents thereof.
5.4 Applicable Law. This Agreement shall be construed and
enforced under the laws of the State of New York.
5.5 Severability. Should any provision of this Agreement for any
reason be declared unenforceable by a court of competent jurisdiction
(sustained on appeal, if any), such unenforceability shall not affect the
enforceability of any other provision hereof or thereof, all of which shall
remain in force and effect as if this Agreement had been executed with the
unenforceable provisions thereof eliminated and it is hereby declared the
intention of the parties hereto that they would have executed the remaining
provisions of this Agreement without including therein any such part, parts or
portion which may for any reason be hereafter declared unenforceable, provided
that, if any provision of this Agreement shall be unenforceable by reason of a
final judgment of a court of competent jurisdiction based upon a court's ruling
(sustained on appeal, if any) that such provision is unenforceable because of
the excessive degree or magnitude of the obligation imposed thereby on any
party, that unenforceable obligation shall be reduced in magnitude or degree by
the minimum degree or magnitude necessary in order to permit the provision to
be enforceable by the Trustee and the Bondholders. In the event the provisions
of the immediately preceding sentence apply, the parties shall make appropriate
adjustment to the provisions of this Agreement to give effect to the benefits
intended to be conferred upon the parties hereby.
5.6 Waiver. The Trustee may waive any requirement herein to the
extent permitted in the Indenture. No delay or omission by the Trustee in
exercising any right hereunder shall impair any right of the Trustee under this
Agreement or be construed as the Trustee's waiver of or acquiescence in any
breach. No such delay or omission by the Trustee shall be construed as a
variation or wavier of any of the terms, conditions or provisions of this
Agreement. No purported waiver of any right hereunder shall be effective
unless it is written and signed by an authorized representative of the Trustee,
and then, only if entered into as permitted in the Indenture. No waiver by the
Trustee of any breach shall constitute a waiver of any other prior or
subsequent breach or of the same breach after notice to Kmart demanding strict
performance. The Trustee shall not be estopped to take or from taking any
action with respect to any breach because of any delay by the Trustee in giving
notice of such breach or exercising any remedy based thereon.
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5.7 Modification of Indenture. The Trustee shall not amend or
consent to any amendment or modification of any provision of the Indenture or
other Company Financing Documents the affect of which amendment or modification
would be to adversely affect the rights of Kmart under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above set forth.
KMART CORPORATION, a Michigan corporation
By: /s/ M. L. Skiles
--------------------------------------
M. L. Skiles
Its: Senior Vice President
XXXXXXXXXX
By: /s/
--------------------------------------
Its: Assistant Vice President
---------------------------------
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<PAGE> 1
EXHIBIT 99.24
BOND PURCHASE AGREEMENT
AMONG
XXXXXXXXXX,
in its individual capacity and as Owner Participant
XXXXXXXXXX,
as Owner Trustee and
not in its individual capacity
AND
THE PURCHASER SIGNATORY HERETO
Dated as of December 28, 1992
$100,505,000 Collateralized Lease Revenue Bonds
<PAGE> 2
TABLE OF CONTENTS
(Not a Part of this Agreement)
Page
----
SECTION 1. COMMITMENT . . . . . . . . . . . . . . . . 2
1.1. Commitment; Closing Date . . . . . . . . . 2
1.2. Other Bond Purchase Agreements . . . . . . 2
SECTION 2. REPRESENTATIONS . . . . . . . . . . . . . 2
2.1. Representations and Warranties of the
Owner Trustee . . . . . . . . . . . . . . 2
2.2. Representations and Warranties of the
Owner Participant . . . . . . . . . . . . 3
2.3. Representations and Warranties of the
Purchaser . . . . . . . . . . . . . . . . 5
SECTION 3. CLOSING CONDITIONS . . . . . . . . . . . . 6
3.1. Owner Participant's Closing Certificate . 6
3.2. Owner Trustee's Closing Certificate . . . 6
3.3. Indenture Trustee's Closing Certificate . 6
3.4. Legal Opinions . . . . . . . . . . . . . . 6
3.5. Related Transactions . . . . . . . . . . . 7
3.6. Title . . . . . . . . . . . . . . . . . . 7
3.7. Filing of Mortgages and Financing
Statements . . . . . . . . . . . . . . . . 7
3.8. Title Insurance . . . . . . . . . . . . . 7
3.9. A.L.T.A. Survey . . . . . . . . . . . . . 8
3.10. Insurance . . . . . . . . . . . . . . . . 8
3.11. Appraisal of Facilities . . . . . . . . . 8
3.12. Phase I Environmental Audit Report . . . . 8
3.13. Government Licenses . . . . . . . . . . . 9
3.14. Legal Compliance . . . . . . . . . . . . . 9
3.15. Condition of Facilities . . . . . . . . . 9
3.16. Architects Certificate . . . . . . . . . . 9
3.17. Tax Lot Consistent with Mortgages . . . . 9
3.18. Certificate Evidencing Cost of
Construction . . . . . . . . . . . . . . . 9
3.19. Ratings . . . . . . . . . . . . . . . . . 10
3.20. Private Placement Number Application . . . 10
3.21. Legality . . . . . . . . . . . . . . . . . 10
3.22. No Default or Event of Default . . . . . . 10
3.23. Satisfactory Proceedings . . . . . . . . . 10
3.24. Costs and Expenses . . . . . . . . . . . . 10
3.25. Authentication Requests . . . . . . . . . 11
3.26. Representations and Warranties in Company
Financing Documents, etc. . . . . . . . . 11
3.27. Sale of Bonds to Each Purchaser . . . . . 11
SECTION 4. COVENANTS . . . . . . . . . . . . . . . . 12
4.1. Covenants of the Owner Participant . . . . 12
4.2. Covenants of the Owner Trustee . . . . . . 14
i
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Page
----
SECTION 5. EVENTS OF DEFAULT AND REMEDIES
THEREFOR . . . . . . . . . . . . . . . 14
5.1. Notice to Holders . . . . . . . . . . . . 14
5.2. Remedies . . . . . . . . . . . . . . . . . 15
SECTION 6. AMENDMENTS, WAIVERS AND CONSENTS . . . . . 15
6.1. Consent Required . . . . . . . . . . . . . 15
6.2. Solicitation of Holders . . . . . . . . . 15
6.3. Effect of Amendment or Waiver . . . . . . 16
SECTION 7. INTERPRETATION OF AGREEMENT; DEFINITIONS . 16
SECTION 8. MISCELLANEOUS . . . . . . . . . . . . . . 19
8.1. Registered Bonds . . . . . . . . . . . . . 19
8.2. Exchange of Bonds . . . . . . . . . . . . 19
8.3. Loss, Theft, etc. of Bonds . . . . . . . . 19
8.4. Direct Payments . . . . . . . . . . . . . 19
8.5. Expenses, Deed Tax, Transfer Tax,
Mortgage Recording Tax and Stamp Tax
Indemnity . . . . . . . . . . . . . . . . 19
8.6. Powers and Rights Not Waived; Remedies
Cumulative . . . . . . . . . . . . . . . . 21
8.7. Notices . . . . . . . . . . . . . . . . . 21
8.8. Successors and Assigns . . . . . . . . . . 21
8.9. Survival of Covenants and
Representations . . . . . . . . . . . . . 22
8.10. Severability . . . . . . . . . . . . . . . 22
8.11. Governing Law . . . . . . . . . . . . . . 22
8.12. Submission to Jurisdiction . . . . . . . . 22
8.13. Captions . . . . . . . . . . . . . . . . . 23
8.14. Counterparts . . . . . . . . . . . . . . . 23
Schedule I Schedule of Other Purchaser's Investments
Exhibit A Certificate of Owner Participant
Exhibit B Certificate of Owner Trustee
Exhibit C Certificate of Indenture Trustee
Exhibit D Individual Title Insurance Policies
ii
<PAGE> 4
BOND PURCHASE AGREEMENT
Bond Purchase Agreement (this "Agreement") dated as of
December 28, 1992 among XXXXXXXXXX, a Delaware limited partnership (the "Owner
Participant"), XXXXXXXXXX, as Owner Trustee under the Trust Agreement referred
to below (the "Owner Trustee"), and the Purchaser signatory hereto (the
"Purchaser"). Except as otherwise provided herein, all references to Owner
Trustee shall refer to Owner Trustee acting in its capacity as such on behalf
of the trust (the "Trust") created pursuant to the Trust Agreement (as defined
herein).
WHEREAS, the Owner Trustee has authorized the issuance and sale
of $11,067,000.00 aggregate principal amount of 6.25% Collateralized Lease
Revenue Bonds due December 15, 1998 ("Series 1998 Bonds"), $27,190,000.00
aggregate principal amount of 7.50% Collateralized Lease Revenue Bonds due
December 15, 2007 ("Series 2007 Bonds"), $19,206,000.00 aggregate principal
amount of 8.00% Collateralized Lease Revenue Bonds due December 15, 2011
("Series 2011 Bonds"), and $42,972,000.00 aggregate principal amount of its
8.40% Collateralized Lease Revenue Bonds due December 15, 2017 ("Series 2017
Bonds" and together with the Series 1998 Bonds, Series 2007 Bonds and Series
2011 Bonds, collectively, the "Bonds"), each to be dated the date of issue,
pursuant to the Indenture (the "Indenture") dated as of December 28, 1992
between the Owner Trustee and XXXXXXXXXX as trustee (the "Indenture
Trustee"). The term "Bonds" as used herein shall include each Bond delivered
pursuant to this Agreement, and each Bond issued in exchange or replacement
therefor but shall not include any Subordinate Bonds. Certain capitalized
terms used herein shall have the meanings set forth in Section 7. All
capitalized terms not defined herein shall have the same meaning given in the
Indenture.
NOW, THEREFORE, the parties hereto agree as follows:
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SECTION 1. COMMITMENT.
1.1 COMMITMENT; CLOSING DATE. Subject to the terms and
conditions hereof, the Owner Trustee shall issue and sell to the Purchaser, and
the Purchaser agrees to purchase from the Owner Trustee, the aggregate
principal amount of such Series of Bonds set forth beneath such Purchaser's
name on the signature pages hereof at the purchase price set forth beneath the
Purchaser's name on the signature pages hereof (the "Purchase Price"), on the
Closing Date (as defined below).
1.2. OTHER BOND PURCHASE AGREEMENTS. Simultaneously with the
execution and delivery of this Agreement, the Owner Trustee and the owner
Participant are entering into similar agreements with the purchaser signatory
thereto (collectively, the "Other Purchasers") under which each such Other
Purchaser agrees to purchase from the Owner Trustee the principal amount of
Bonds set forth opposite such Other Purchaser's name in Schedule I hereto, and
the Purchaser's obligation hereunder is subject to the execution and delivery
of the similar agreements by each such other Purchaser. The obligations of the
Purchaser and the Other Purchasers shall be several and not joint and the
Purchaser shall not be liable or responsible for the acts of any Other
Purchaser.
Delivery of the Bonds will be made at the offices of Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New York
10019-6064 against payment therefor in the amount of the Purchase Price at
10:00 A.M., New York City time, on December 29, 1992 or such later date as
shall be mutually agreed upon by the parties (the "Closing Date"). Payment for
the Bonds shall be effected by wire transfer of federal funds to such bank
account of the Indenture Trustee as may be specified in writing at least two
business days prior to the Closing Date. The Bonds delivered to each Purchaser
on the Closing Date will be delivered to such Purchaser in the form of one or
more registered Bonds for the full amount of such Purchaser's purchase,
registered in the Purchaser's name or in the name of such nominee(s) or
assignee(s) as the Purchaser shall have specified in writing.
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SECTION 2. REPRESENTATIONS.
2.1. REPRESENTATIONS AND WARRANTIES OF THE OWNER TRUSTEE. Each of
the representations and warranties made or to be made by the Owner Trustee in
the Indenture and the other Company Financing Documents are hereby incorporated
herein as if set forth herein in their entirety on which the Purchaser relies
in purchasing the Bonds in accordance with this Agreement.
2.2 REPRESENTATIONS AND WARRANTIES OF THE OWNER PARTICIPANT. The
Owner Participant hereby makes the following representations and warranties on
which the Purchaser relies in purchasing the Bonds in accordance with this
Agreement:
(a) The Owner Participant has been duly organized and is
validly existing as a limited partnership in good standing under the laws of the
State of Delaware with full power and authority to own its properties and to
conduct its business as such properties are presently owned and such business is
presently or proposed to be conducted.
(b) The Owner Participant has full power and authority to
execute and deliver this Agreement and the other Company Financing Documents to
which it is a party and to perform its obligations under this Agreement and
such other Company Financing Documents; and the execution, delivery and
performance by the Owner Participant of the Company Financing Documents to which
it is a party are authorized by the Owner Participant's Partnership Agreement or
have been duly authorized by the Owner Participant by all necessary partnership
action.
(c) The Company Financing Documents to which the Owner
Participant is a party have been duly executed by, and constitute the legal,
valid and binding obligations of, the Owner Participant, enforceable
against the Owner Participant in accordance with their respective terms, except
as enforceability may be limited by bankruptcy, insolvency, fraudulent
transfers, reorganization or other similar laws affecting the enforcement of
creditors' rights generally.
(d) The Owner Participant is duly qualified to do business
in each jurisdiction in which the conduct of its business or the ownership of
its properties would require such qualification.
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(e) The Owner Participant was formed pursuant to the
Partnership Agreement for the sole purpose of consummating the transactions
contemplated by the Company Financing Documents. The Owner Participant has no
Indebtedness and has conducted no business whatsoever since its formation other
than business incidental to its organization and to its execution, delivery
and performance of the Company Financing Documents. The Owner Participant has
entered into no contracts or agreements, arrangements or understandings (whether
written or oral) other than the Company Financing Documents, has no liabilities,
contingent, fixed, mature, liquidated or otherwise, other than such as may arise
in connection with the transactions contemplated by the Company Financing
Documents. The Owner Participant has no assets other than contractual rights
under the Company Financing Documents, including the Trust Estate. The
Partnership Agreement sets forth the capital structure of the Owner Participant
and the relative interests of the General Partner and the Limited Partners.
(f) No consent, approval or authorization of, or declaration,
registration or filing with, or payment to, any governmental body or any non-
governmental Person is required to be obtained or made in connection with the
execution, delivery and performance by the Owner Participant of the Company
Financing Documents or the transactions contemplated thereby, or as a condition
to the legality, validity or enforceability of the Owner Participant's
obligations under the Company Financing Documents, or the offer, issue, sale or
delivery of the Bonds to the Purchaser of the fulfillment of or compliance with
the terms and provisions of the Company Financing Documents, except for the
recording of the Mortgages, filing of forms UCC-1 and payment of nominal filing
fees in the appropriate offices.
(g) The Owner Participant is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, and the
Owner Participant is not directly or indirectly controlled by an investment
company. The Owner Participant is not a "holding company" or a "subsidiary" or
an "affiliate" of a "holding company" or a "public utility" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
(h) The Owner Participant is not in violation of, and is
not subject to any liability under, any environmental laws affecting it or the
Facilities.
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(i) The Owner Participant is not in violation of (x), to the
best of its knowledge, any federal, state, local or foreign law, ordinance or
regulation or (y) any order, judgement, injunction, award or decree or any other
requirement of any government or regulatory body, court or arbitrator
applicable to the business of the Owner Participant or the Facilities.
(j) The consummation of the transactions contemplated by the
Company Financing Documents and the fulfillment of the terms hereof and thereof
as they relate to the Owner Participant, will not violate any material provision
of existing law or regulation, order, judgment, decree or contravene any
provision of the organizational documents of the Owner Participant and
will not conflict with or result in any breach of any of the terms and
provisions of, or constitute a default under, or result in the creation or
imposition of any Owner Trustee Lien or any Lien upon any property of the Owner
Participant pursuant to the provisions of any indenture, mortgage, contract,
agreement or other instrument or documentation to which the Owner Participant is
a party or by which it or its assets are bound.
(k) There are no proceedings or investigations pending or
threatened, before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality in any way relating to the Owner
Participant, its General or Limited Partners, or the consummation of the
transactions contemplated by the Company Financing Documents.
(l) The representations and warranties of the Owner
Participant in each of the other Company Financing Documents are true and
correct on the date of the execution and delivery of this Agreement and will
be true and correct on the Closing Date.
(m) No event has occurred and is continuing which is, or
after notice of lapse of time or both would become, a default or Event of
Default under this Agreement or any Company Financing Document.
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2.3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
(a) The Purchaser represents that it is acquiring the Bonds for
its own account and not with a view to the distribution (as such term is used
under Section 2(11) of the Act) thereof; provided that the disposition of the
Purchaser's property shall at all times be and remain within its control.
(b) The Purchaser represents and warrants that no part of the
funds used to purchase the Bonds constitute assets allocated to any separate
account maintained by it in which any plan (or its related trust) has any
interest.
SECTION 3. CLOSING CONDITIONS.
The Purchaser's obligation to purchase the Bonds on the Closing Date
shall be subject to the performance by the Owner Participant and the Owner
Trustee of their respective agreements hereunder and under the other Company
Financing Documents which by the terms hereof or thereof are to be performed at
or prior to the time of delivery of the Bonds and to the following further
conditions precedent:
3.1. OWNER PARTICIPANT'S CLOSING CERTIFICATE. Concurrently with the
delivery of Bonds to the Purchaser on the Closing Date, the Purchaser shall
have received a certificate of the Owner Participant signed by the General
Partner of the Owner Participant in substantially the form of Exhibit A.
3.2. OWNER TRUSTEE'S CLOSING CERTIFICATE. Concurrently with the
delivery of the Bonds to the Purchaser on the Closing Date, the Purchaser shall
have received a certificate of the Owner Trustee signed by an authorized
officer of the Owner Trustee in substantially the form of Exhibit B.
3.3. INDENTURE TRUSTEE'S CLOSING CERTIFICATE. Concurrently with the
delivery of Bonds to the Purchaser on the Closing Date, the Purchaser shall
have received a certificate of the Indenture Trustee signed by an authorized
officer of the Indenture Trustee in substantially the form of Exhibit C.
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3.4. LEGAL OPINIONS. Concurrently with the delivery of Bonds to the
Purchaser on the Closing Date, the Purchaser shall have received from Kutak
Rock, special counsel to the Owner Participant, Squire, Sanders & Dempsey,
special counsel to XXXXXXXXXX, as placement agent, Day Berry & Howard, special
counsel to the Owner Trustee, Brown & Wood, special counsel to the Indenture
Trustee, Anthony N. Palizzi, Executive Vice President, General Counsel of Kmart
Corporation, Burr, Pease & Kurtz, special counsel to the Owner Trustee in
Alaska, Kutak Rock, special counsel to the Owner Trustee in California, Cohen
and Wolf, P.C., special counsel to the Owner Trustee in Connecticut, Pitney,
Hardin, Kipp & Szuch, special counsel to the Owner Trustee in New Jersey,
Cohan, Simpson, Cowlishaw, Aranza & Wulff, special counsel to the Owner Trustee
in Texas, and Paul, Weiss, Rifkind, Wharton & Garrison, special counsel to the
Purchasers, their respective favorable opinions, dated the Closing Date, in
form and substance satisfactory to the Purchaser.
3.5. RELATED TRANSACTIONS. Prior to or concurrently with the
issuance and sale of Bonds to the Purchaser on the Closing Date, each party
thereto shall have executed and delivered the Indenture, the Mortgages and all
other Company Financing Documents in form and substance satisfactory to the
Purchaser.
3.6. TITLE. The Owner Trustee shall have good and marketable,
indefeasible, fee simple title to the Facilities, free and clear of all liens
and encumbrances except Permitted Encumbrances.
3.7. FILING OF MORTGAGES AND FINANCING STATEMENTS. The Owner Trustee
shall have (i) caused the Mortgages and all required Uniform Commercial Code
financing statements and all other documents and instruments requested by the
Purchaser to be duly recorded or filed in the manner required by the laws of
relevant jurisdictions in which the Facilities are located and (ii) paid, or
caused to be paid, all filing fees and recording charges and mortgage taxes
incurred in connection therewith, and such recordings and filings shall be
satisfactory to the Purchaser and its special counsel.
3.8. TITLE INSURANCE. The Indenture Trustee shall have received
A.L.T.A. Standard Loan Policies of title insurance covering each of the
Facilities (or valid, binding unconditional commitments therefor), dated the
Closing Date,
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in the 1970 A.L.T.A. form where available and including mechanics' and
materialmen's lien coverage, issued by a title insurance company satisfactory
to the Purchaser and with such reinsurance as may be required by the
Purchaser. Such policy shall (i) insure (a) the Mortgages described therein as
a first lien on the Facility described therein subject to no other liens or
encumbrances or restrictions except Permitted Encumbrances, which shall be
fully identified thereon, (b) that any restrictions or easements affecting such
Facility have not been violated and that a future violation thereof will not
result in a forfeiture or reversion of title, and (c) that all streets
adjoining such Facility have been completed, dedicated and accepted for public
maintenance and use by the appropriate governmental authorities, (ii) be in an
aggregate amount of not less than $100,505,000 and in individual amounts per
Facility not less than those set forth on Exhibit D [to the extent that
insurance coverage are available under State insurance regulation] and (iii) be
satisfactory in all other respects to the Purchaser. The Owner Trustee will
provide the Purchaser with such endorsements to the title insurance policies as
the Purchaser may reasonably request.
3.9. A.L.T.A. SURVEY. The Purchaser shall have received a copy of
a final A.L.T.A. as-built survey of each of the Facilities, certified not more
than 20 days before the Closing Date, each such survey to be satisfactory in
form and substance to the Purchaser, and to include (i) a metes and bounds
description (or an otherwise sufficient legal description) of such Facility,
(ii) all lot and street lines, (iii) a statement of whether such Facility is
located in a flood plain or zone as designated by any governmental authority
and (iv) the location of improvements, easements and rights of way (identified
by reference to the recorded instrument creating the same, if any) and
encroachments, if any, prepared and duly certified by the title company, the
Indenture Trustee under the Mortgages and the Purchaser as an accurate survey
by a surveyor duly licensed in the State in which such Facility is located.
3.10. INSURANCE. The Purchaser shall have received satisfactory
evidence of self insurance by Kmart as contemplated by the Leases and the
Indenture.
3.11. APPRAISAL OF FACILITIES. The Purchaser shall have received
an appraisal of each of the Facilities satisfactory to the Purchaser by an
appraisal company acceptable to the Purchaser and cost of which shall be paid
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by the Owner Participant or Kmart indicating an aggregate market value of all
Facilities of not less then 106.4% of the aggregate principal amount of the
Bonds.
3.12. PHASE I ENVIRONMENTAL AUDIT REPORT. The Purchaser shall
have received, at the Owner Participant's expense, a Phase I environmental
audit report on each of the Facilities, by an environmental consulting company
acceptable to the Purchaser and such additional information as may be requested
with respect thereto, in each case satisfactory in form and substance to the
Purchaser.
3.13. GOVERNMENT LICENSES. The Purchaser shall have received a
copy of all certificates, permits and licenses of governmental authorities
or inspection organizations as are required or are customarily procured in
connection with the construction, use, occupancy and operation of each of the
Facilities, and each such certificate, permit and license shall be in full
force and effect as of the Closing Date.
3.14. LEGAL COMPLIANCE. The Purchaser shall have received
evidence satisfactory to it that there does not exist any material violation of
any law, regulation or order affecting any of the Facilities, including,
without limitation, laws, regulations and orders relating to (i) zoning,
subdivision and building restrictions and (ii) hazardous waste, asbestos or
other environmental conditions.
3.15. CONDITION OF FACILITIES. On the Closing Date, each of the
Facilities shall be (i) undamaged by fire or other causes and (ii) unaffected
by any pending or threatened condemnation proceeding.
3.16. ARCHITECTS CERTIFICATE. The Purchaser shall have received
one or more architect's certificates certifying, among other things, that the
Improvements have been constructed in a good and workmanlike manner and in
compliance with all applicable laws, that all roads, easements, utilities and
other services necessary for access to the Improvements and the full
utilization of the Improvements have been constructed, entered into or are
available.
3.17. TAX LOT CONSISTENT WITH MORTGAGES. The Purchaser shall have
received evidence satisfactory to it that the description of the tax lot or
lots covering each of
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the Facilities does not include any lands or buildings other than those
described in the Mortgages.
3.18. CERTIFICATE EVIDENCING COST OF CONSTRUCTION. The
Purchaser shall have received a certificate in form and substance satisfactory
to it evidencing the cost to Kmart of construction of each Facility (including
the cost of the Facilities, the cost of constructing the Facilities and the
cost of any Improvements thereto).
3.19. RATINGS. The Bonds shall have a National Association of
Insurance Commissioner's ("NAIC") rating of "1" and the Purchaser shall have
received written evidence thereof.
3.20. PRIVATE PLACEMENT NUMBER APPLICATION. A private
placement number for the Bonds shall have been received from Standard & Poor's
Corporation.
3.21. LEGALITY. The Bonds shall qualify as a legal
investment for the Purchaser under the laws and regulations of the jurisdiction
to which the Purchaser is subject and the Purchaser shall have received such
information concerning the Owner Participant, Owner Trustee, the Trust, Kmart
and the Facilities as the Purchaser shall reasonably request to establish such
fact.
3.22. NO DEFAULT OF EVENT OF DEFAULT. On the Closing Date,
no event shall have theretofore occurred which is, or after notice or lapse of
time or both would become, a default or Event of Default under any Company
Financing Document.
3.23. SATISFACTORY PROCEEDINGS. All proceedings taken in
connection with the transactions contemplated by this Agreement, and all
documents necessary for the consummation thereof, shall be satisfactory in form
and substance to the Purchaser and Paul, Weiss, Rifkind, Wharton & Garrison,
and the Purchaser shall have received a copy (executed or certified as may be
appropriate) of all legal documents or proceedings taken in connection with the
consummation of such transactions.
3.24. COSTS AND EXPENSES. The Owner Participant shall have
paid or provided for the payment of all expenses that the Owner Participant is
obligated to pay pursuant to Section 8.5. In addition, the Purchaser shall
have received reasonable assurance in writing that all other fees and
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expenses incurred by any other Person in connection with the Owner Trustee's
acquisition of the Facilities and the transactions contemplated hereunder shall
have been paid on or prior to the Closing Date.
3.25. AUTHENTICATION REQUESTS. The Owner Trustee shall have
delivered to the Indenture Trustee a request in writing, dated as of the
Closing Date, authorizing and requesting the Indenture Trustee to authenticate
and, upon further instructions of the Owner Trustee (which may be oral
instructions), to deliver the Bonds in the principal amount of $100,505,000.
3.26. REPRESENTATIONS AND WARRANTIES IN COMPANY FINANCING
DOCUMENTS, ETC.
(a) All representations and warranties of the Owner
Participant, Owner Trustee, Indenture Trustee, Kmart and the Lessees set forth
(or incorporated) herein and in any of the other Company Financing Documents
shall have been true and correct in all material respects as of the time at
which such representations and warranties were made and shall be true and
correct in all respects on the Closing Date (except to the extent that such
representations and warranties expressly relate to an earlier date) as if such
representations and warranties were made on and as of such dates, and all
covenants herein and therein of the Owner Participant, Owner Trustee and each
other party thereto have been, and on the Closing Date will be, complied with in
all respects.
(b) If the Closing Date the Owner Trustee fails to
cause the Indenture Trustee to tender to any purchaser of Bonds to be issued on
such date pursuant to the other Bond Purchase Agreements entered into as of the
date hereof among the Owner Trustee, the Owner Participant and other purchasers
of Bonds or if the conditions specified in this Section 3 have not been
fulfilled, the Purchaser may thereupon elect to be relieved of all further
obligations under this Agreement and the other Company Financing Documents.
Without limiting the foregoing, if the conditions specified in this Section 3
have not been fulfilled, the Purchaser may waive compliance with any such
condition to such extent as the Purchaser may, in its sole discretion,
determine. Nothing herein shall operate to relieve the Owner Participant or
Owner Trustee of any of its obligations hereunder, including without limitation
the payment of any expenses pursuant to Section 8.5 or to waive any of the
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Purchaser's rights against the Owner Participant or the Owner Trustee.
3.27. SALE OF BONDS TO EACH PURCHASER. On the Closing Date
each Other Purchaser shall have purchased the principal amount of Bonds set
forth opposite such Other Purchaser's name in Schedule I hereto.
SECTION 4. COVENANTS.
4.1. COVENANTS OF THE OWNER PARTICIPANT. The Owner
Participant hereby unconditionally covenants and agrees with each of the other
parties hereto as follows, on which the Purchaser relies in purchasing the
Bonds in accordance with this Agreement:
(a) The Owner Participant shall not directly or
indirectly create, incur, assume or suffer to exist any Owner Trustee Liens
attributable to it or any of its Affiliates (excluding for purposes hereof the
Owner Trustee in both its fiduciary and trust capacities) on or against any of
the Facilities, the Owner Trustee's interest in the Leases, the Mortgages or
any other interest in the Facilities, and the Owner Participant agrees that it
will, at its own cost and expense (without right to indemnity), take such
action as may be necessary to duly discharge and satisfy in full any such Owner
Trustee Lien, except for any Owner Trustee Lien attributable to the Lessee that
is being contested by the Lessee in good faith and by appropriate proceedings
diligently conducted, so long as such proceedings do not (i) involve any danger
of the sale, forfeiture or loss of any of the Facilities, (ii) interfere with
the use, possession or disposition of any of the Facilities, (iii) interfere
with the payment of Annual Rental or Additional Rent under (and as defined in)
any of the Leases, or (iv) impair the validity, perfection or priority of the
Lien of the Indenture or the Mortgages. After the indefeasible Payment in
full of all Bond Obligations, the Owner Participant may create, incur, assume
or suffer to exist any Owner Trustee Liens attributable to it or any of its
Affiliates on or against any of the Facilities. The Owner Participant agrees
to reimburse the Purchasers and the Indenture Trustee for all reasonable legal
fees and expenses that may be incurred by the Purchasers and the Indenture
Trustee as a result of the failure of the Owner Participant to discharge and
satisfy any such Owner Trustee Lien.
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(b) The Owner Participant shall not take any action
to interrupt the Owner Trustee's, any Registered Owner's, or any Lessee's
peaceable possession, use and enjoyment of the Facilities.
(c) The Owner Participant shall comply with all of
the terms of the Trust Agreement applicable to it and, while any of the Bonds
are outstanding or any Bond Obligations remain unpaid or the Lien of the
Mortgages or the Indenture has not been satisfied and discharged, it shall not,
without the prior written consent of Registered Owners of Outstanding Bonds
representing 100% of the principal amount of Outstanding Bonds, take any action
to (i) adversely affect the validity, perfection or priority of the Lien of the
Indenture or the Mortgages, or any rights of the Indenture Trustee under the
Indenture or the Mortgages or (ii) terminate or revoke the Trust Agreement or
the trusts thereby created or cause, suffer or permit the Owner Trustee to
transfer any interest in the Facilities.
(d) The Owner Participant shall, at its expense,
cause to be promptly and duly taken, executed, acknowledged, delivered and
recorded all such further acts, documents and assurances as the Owner Trustee,
Indenture Trustee or the Required Bondowners from time to time may reasonably
request in order to carry out more effectively the intent and purposes of this
Agreement and the other Company Financing Documents and the transactions
contemplated hereby and thereby provided that any amounts payable under this
subsection (d) shall be limited to the amounts paid or payable to the Owner
Participant from the Trust Estate.
(e) The Owner Participant shall comply with all
laws, statutes, regulations, rules and orders and all restrictions imposed by
any governmental or regulatory body, in each case to which it is subject. The
Owner Participant shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent (i) all taxes, assessments and
governmental charges levied or imposed upon it or upon its income, profits or
property and (ii) all claims for labor, material and supplies which, if unpaid
might by law or otherwise become a Lien upon any of its property.
(f) Upon becoming aware of any event which is, or
with notice or lapse of time or both would become, a default or Event of
Default in the performance of any
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covenant, agreement or condition contained in any Company Financing Document,
the Owner Participant shall promptly deliver an Officer's Certificate to the
Owner Trustee identifying the event, its status and what action the Owner
Participant is taking or proposes to take with respect thereto.
(g) Neither the Owner Participant nor any of its
General or Limited Partners, shall take any steps to procure or obtain the
commencement of any voluntary, involuntary bankruptcy or insolvency proceeding
against the Owner Trustee or the Trust.
(h) Without the prior consent of the Required
Bondowners, neither the Owner Participant, nor any of its General or Limited
Partners, shall be a party to, or acquiesce in, any amendment, supplement or
modification to any of the Company Financing Documents to which the Owner
Participant is a party.
4.2 COVENANTS OF THE OWNER TRUSTEE. Each of the covenants of
the Owner Trustee made or to be made by the Owner Trustee in the Indenture and
the other Company Financing Documents shall be incorporated herein as if set
forth in their entirety on which the Purchaser relies in purchasing the Bonds
in accordance with this Agreement.
SECTION 5. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
5.1. NOTICE TO HOLDERS. Whenever the Owner Trustee or Owner
Participant becomes aware that any event has occurred that is, or after notice
or lapse of time or both would become, a default or Event of Default under any
Company Financing Document, or if the Owner Trustee or Owner Participant is
aware that Kmart, any Lessee, the Indenture Trustee or any Bondholder has
either given any notice or taken any other action with respect to any such
event, or the Owner Trustee or Owner Participant receives written notice from a
third party concerning any such event, the Owner Trustee or Owner Participant,
as the case may be, will give notice (or forward such third party notice) to
the Indenture Trustee and all Registered Bondowners, no later than the earlier
of the day that such notice has been given or such other action has been taken
with respect to such event,
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such notice to be in writing and sent in the manner provided in the Indenture.
5.2. REMEDIES. The Owner Trustee shall pay to the Registered
Owner or Owners of the Bonds all costs and expenses incurred by them in the
collection of any Bond upon any default or Event of Default hereunder or
thereon, including all fees, disbursements and other charges of each such
holder's or holders' attorneys for all services rendered in connection
therewith.
The rights and remedies expressly provided for in this
Agreement and the other Company Financing Documents are cumulative and not
exclusive of any rights or remedies which the Purchaser or any Bondholder would
have at law, in equity or otherwise, including, without limitation, the rights
and remedies provided for in the Indenture and the Mortgages.
SECTION 6. AMENDMENTS, WAIVERS AND CONSENTS
6.1. CONSENT REQUIRED. No term, covenant, agreement or
condition of this Agreement may be amended or compliance therewith waived
(either generally or in a particular instance and either retroactively or
prospectively), without consent in writing of the Required Bondowners, other
than with respect to provisions requiring the approval of the Bondholders of a
greater percentage of principal amount of Outstanding Bonds.
6.2. SOLICITATION OF HOLDERS. So long as there are any Bonds
outstanding, neither the Owner Participant nor Owner Trustee will, directly or
indirectly, solicit, request or negotiate for or with respect to any proposed
waiver or amendment of any of the provisions of this Agreement or the Bonds or
the other Company Financing Documents unless each Bondholder (irrespective of
the amount of Bonds then owned by it) shall be informed thereof by the Owner
Trustee, shall be afforded the opportunity to consider the same and shall be
supplied with sufficient information to enable it to make an informed decision
with respect thereto. Neither the Owner Participant nor the Owner Trustee
will, directly or indirectly, pay or cause to be paid any remuneration, whether
by way of supplemental or additional interest, fee or otherwise, to any
Bondholder as consideration for or as an inducement to entering into by any
Bondholder of any waiver or amendment of any of the terms and provisions of
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this Agreement or the Bonds or the other Company Financing Documents unless
such remuneration is concurrently offered, on the same terms, ratably to all
Registered Owners.
6.3. EFFECT OF AMENDMENT OR WAIVER. Any such amendment or
waiver shall apply equally to all of the Bondholders and shall be binding upon
them, upon each future Bondholder and upon the Owner Participant and the Owner
Trustee (and in the case of the Mortgages and the Indenture, the Indenture
Trustee), whether or not such Bond shall have been marked to indicate such
amendment or waiver. No such amendment or waiver shall extend to or affect any
obligation not expressly amended or waived or impair any right consequent
thereon.
SECTION 7. INTERPRETATION OF AGREEMENT; DEFINITIONS
Unless the context otherwise requires, the capitalized terms
hereinafter set forth when used herein shall have the following meanings and
the following definitions shall be equally applicable to both the singular and
plural forms of any of the terms herein defined. Capitalized terms used but
not otherwise defined herein shall have the respective meanings ascribed
thereto in the Indenture.
"ACT" means the Securities Act of 1933, as amended.
"AFFILIATES" shall have the meaning assigned thereto in the
Indenture.
"AGREEMENT" refers to this Bond Purchase Agreement among the
Purchaser, the Owner Trustee and the Owner Participant dated the date hereof,
as from time to time in effect.
"BONDHOLDER" means the Purchaser and each other Registered
Owner (as defined in the Indenture).
"CLOSING DATE" shall have the meaning assigned thereto in
Section 1.1.
"COMPANY FINANCING DOCUMENTS" means the Leases, the Lease
Guaranties, the Indenture, the Bonds, the Mortgages, the Assignments of Leases
and Rents, the Bond Put Agreement, the Real Estate Transfer Documents, this
16
<PAGE> 20
Agreement, the Trust Agreement and all other documents delivered upon the
Closing Date and all amendments, modifications and supplements thereto and such
other documents and instruments as are entered into after the date hereof and
for the benefit of the Trustee or the Registered Owners.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.
"EVENT OF DEFAULT" means an Event of Default as defined in
Section 7.01 of the Indenture and/or Section 5.01 of the Mortgages.
"FACILITY" and "FACILITIES" shall have the meaning assigned
thereto in the Indenture.
"GENERAL PARTNER" means XXXXXXXXXX, a Michigan Corporation.
"IMPROVEMENTS" shall have the meaning assigned thereto in the
Mortgages.
"INDEMNIFIED LIABILITIES" shall have the meaning assigned
thereto in Section 8.5.
"INDEMNITEES" shall have the meaning assigned thereto in
Section 8.5.
"INDENTURE" shall have the meaning assigned thereto in the
WHEREAS clause.
"KMART" shall have the meaning assigned thereto in the
Indenture.
"LIMITED PARTNERS" means XXXXXXXXXX and XXXXXXXXXX.
"MORTGAGES" means, collectively, the mortgage/deed of trust,
security agreement, assignment of leases and rents and fixture filing relating
to each Facility, executed by the Owner Trustee and granting to the Indenture
Trustee a valid first priority lien on such Facility to secure, among other
things, the Bonds.
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"OTHER PURCHASERS" shall have the meaning assigned thereto in
Section 1.2.
"OWNER PARTICIPANT" means XXXXXXXXXX, its successors and
assigns.
"OWNER TRUSTEE" means XXXXXXXXXX, not in its individual
capacity, except as otherwise specifically set forth herein, but solely as
trustee under the Trust Agreement.
"OWNER TRUSTEE LIEN" shall have the meaning assigned thereto
in the Indenture.
"PARTNERSHIP AGREEMENT" means the Agreement of Limited
Partnership dated as of December 1, 1992, between the Limited Partners and the
General Partner.
"PERMITTED ENCUMBRANCES" means those permitted encumbrances
listed on Exhibit B to the Mortgages.
"PERSON" means an individual, partnership, corporation, trust
or unincorporated organization, and a government or agency or political
subdivision thereof.
"PLAN" means any United States "employee benefit plan," as
defined in Section 3(3) of ERISA, or "plan," as defined in Section 4975 of the
Internal Revenue Code of 1986, as amended.
"PURCHASE PRICE" shall have the meaning assigned thereto in
Section 1.1.
"PURCHASER" shall have the meaning assigned thereto in the
first Paragraph hereof.
"REQUIRED BONDOWNERS" shall have the meaning assigned thereto
in the Indenture.
"TRANSACTIONS" means the transactions contemplated by the
Company Financing Documents.
"TRUST AGREEMENT" means that certain Trust Agreement, dated as
of the date hereof, between the Owner Participant and the Owner Trustee.
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<PAGE> 22
"TRUST ESTATE" shall have the meaning assigned thereto in the
Indenture.
SECTION 8. MISCELLANEOUS
8.1. REGISTERED BONDS. The Bonds are not transferable except
as provided in the Section 2.05 of the Indenture.
8.2. EXCHANGE OF BONDS. Bonds may be exchanged by the
Registered Owners thereof as provided in Section 2.06 of the Indenture.
8.3. LOSS, THEFT, ETC. OF BONDS. Mutilated, destroyed, lost
or stolen Bonds may be replaced as provided in Section 2.07 of the Indenture.
8.4. DIRECT PAYMENTS. Direct payments of the Bonds shall be
made in accordance with Section 2.03 of the Indenture.
8.5. EXPENSES, DEED TAX, TRANSFER TAX, MORTGAGE RECORDING TAX
AND STAMP TAX INDEMNITY. Whether or not the transactions herein contemplated
shall be consummated, the Owner Participant shall pay directly all of its and
the Purchaser's out-of-pocket expenses in connection with the preparation,
execution and delivery of this Agreement and the other Company Financing
Documents, including but not limited to the fees, disbursements and other
charges of Paul, Weiss, Rifkind, Wharton & Garrison, the Purchaser's special
counsel, duplicating and printing costs and charges for shipping the Bonds,
adequately insured to the Purchaser at the Purchaser's home office or at such
other place as the Purchaser may designate on the signature pages hereof. The
Owner Participant shall pay all of its out-of-pocket expenses in connection
with the preparation, execution and delivery of this Agreement and the other
Company Financing Documents, including but not limited to the fees and expenses
of Kutak Rock, XXXXXXXXXX and XXXXXXXXXX. The Owner Participant also shall
pay or cause to be paid all expenses relating to the performance of the
Transactions, any title insurance premiums, mortgage recording taxes, filing
or other recording fees, any action for the enforcement or collection of the
Bonds or this Agreement and any amendments, waivers or consents pursuant to
the provisions hereof (whether or not the same are actually executed and
delivered), including,
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without limitation, any amendments, waivers or consents resulting from any
workout, restructuring or similar proceedings relating to the performance by
the Owner Participant and Owner Trustee of their obligations under this
Agreement, the Bonds and the other Company Financing Documents. The Owner
Participant shall pay, from amounts paid or payable to the Owner Participant
from the Trust Estate, all initial and ongoing fees and all out-of-pocket
expenses of the Owner Trustee, if any, and will pay and save the Purchaser
harmless against any and all liability with respect to stamp, deed, transfer,
mortgage recording and other similar taxes, if any, which may be payable or
which may be determined to be payable in connection with the Owner Trustee's
acquisition of the Facilities or the execution, delivery or enforcement of
this Agreement or the Bonds or any other Company Financing Documents,
whether or not any Bonds are then Outstanding. The Owner Participant shall
protect and indemnify the Purchaser against any liability for any and all
brokerage fees and commissions payable or claimed to be payable to any Person
in connection with the transactions contemplated by this Agreement,
provided that any amounts payable under this sentence shall be limited to
amounts paid or payable to the Owner Participant from the Trust Estate. Without
limiting the foregoing, the Owner Participant shall pay the cost of obtaining a
private placement number for the Bonds and authorizes the submission of such
information to Standard & Poor's Corporation as may be necessary for the
purpose of obtaining such number. In addition to the payment of expenses as
aforesaid, whether or not the Transactions shall be consummated, the Owner
Participant shall, to the fullest extent permitted by law, indemnify, pay and
hold the Purchaser, and the officers, directors, agents and Affiliates of the
Purchaser (collectively, the "Indemnitees") harmless from and against any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, all fees and disbursements of
counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
such Indemnitee shall be designated a party thereto), which may be imposed on,
incurred by or asserted against that Indemnitee, in any manner relating to or
arising out of this Agreement, the Transactions, the Company Financing
Documents or any transactions contemplated hereby or thereby or the use or
intended use of the proceeds of any portion of the Bonds (including such as may
result from the occurrence of a
20
<PAGE> 24
default or Event of Default) (all of the foregoing being collectively referred
to as the "Indemnified Liabilities") other than to the extent that such
Indemnified Liabilities are determined by a court of competent
jurisdiction by final and non-appealable judgment to have resulted from the
gross negligence or willful misconduct of such Indemnitee; provided, however,
that the "Indemnified Liabilities" shall not include a deficiency in the
payment of principal, interest or Make-Whole Premium, if any, on the Bonds (it
being agreed that the foregoing limitation shall not limit any rights of the
Indemnitees against the Trust Estate or amounts paid or payable to the Owner
Participant therefrom). To the extent that the undertaking to indemnify, pay
and hold harmless set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, the Owner Participant will
contribute the maximum portion which it is permitted to pay and satisfy under
applicable law, subject to the limitation provided for herein, to the payment
and satisfaction of all Indemnified Liabilities incurred by the Indemnitees or
any of them.
8.6. POWERS AND RIGHTS NOT WAIVED; REMEDIES CUMULATIVE. No
delay or failure on the part of any Bondholder in the exercise of any power or
right shall operate as a waiver thereof; nor shall any single or partial
exercise of the same preclude any other or further exercise thereof, or the
exercise of any other power or right. The rights and remedies of the Purchaser
pursuant to this Agreement and the other Company Financing Documents are
cumulative to, and are not exclusive of, any rights or remedies any such
Purchaser would otherwise have, and no waiver or consent, given or extended
pursuant to Section 6, shall extend to or affect any obligation or right not
expressly waived or consented to.
8.7. NOTICES. All communications provided for hereunder
shall be given in accordance with the provisions of Sections 13.04 and 13.05 of
the Indenture and the instructions on the signature pages hereof.
8.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Owner Participant and the Owner Trustee and their respective
successors and assigns and shall be binding upon and inure to the benefit of
the Purchaser and its successors and assigns, including each successive
Bondholder or Bondholders. Each such successive Bondholder or Bondholders
shall have all rights and privileges of the Purchaser hereunder.
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8.9. SURVIVAL OF COVENANTS AND REPRESENTATIONS. All
covenants, representations and warranties made by the Owner Participant or the
Owner Trustee herein and in any other Company Financing Document and in any
certificates delivered pursuant hereto or thereto, whether or not in connection
with the Closing Date, shall survive the closing and the delivery of this
Agreement and the Bonds.
8.10. SEVERABILITY. Should any provision or provisions of
this Agreement or any of the other Company Financing Documents for any reason
be declared unenforceable by a court of competent jurisdiction (sustained on
appeal, if any), such unenforceability shall not affect the enforceability of
any other provision hereof or thereof, all of which shall remain in full force
and effect as if this Agreement or such other Company Financing Document had
been executed with the unenforceable provision thereof eliminated. It is
hereby declared the intention of the parties hereto that they would have
executed the remaining provisions of this Agreement and such other Company
Financing Documents without including therein any such provision or provisions
which may, for any reason, be hereafter declared unenforceable; provided that,
if any provision of this Agreement or any of the other Company Financing
Documents shall be unenforceable by reason of a final judgment of a court of
competent jurisdiction based upon a court's ruling (sustained on appeal, if
any) that such provision is unenforceable because of the excessive degree or
magnitude of the obligation imposed thereby on the Owner Participant or Owner
Trustee, that unenforceable obligation shall be reduced in magnitude or degree
by the minimum degree or magnitude necessary in order to permit the provision
to be enforceable by any Purchaser. In the event that the provisions of the
immediately preceding sentence apply, the parties shall make appropriate
adjustment to the provisions of this Agreement and the other Company Financing
Documents to give effect to the benefits intended to be conferred upon the
parties hereby.
8.11. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, other than
conflicts of law principles
8.12. SUBMISSION TO JURISDICTION. The Owner Participant and
the Owner Trustee hereby consent to the jurisdiction of any state or federal
court located within the County of New York, State of New York, and irrevocably
agree that all actions or proceedings (except that actions
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<PAGE> 26
and proceedings for the enforcement of the Mortgages and other Real Estate
Transfer Documents may be brought in the jurisdiction in which the relevant
Facility is located) relating to this Agreement, the Bonds and other Company
Financing Documents may be litigated in such courts, and each of the
Owner Participant and the Owner Trustee waive any objection which either
such entity may have based on improper venue or forum non conveniens to
the conduct of any proceeding in any such court, and waive personal service of
any and all process upon it, and consent that all such service of process be
made by registered or certified mail (return receipt requested) or messenger
directed to it at its address set forth in the Indenture or to its agent
referred to below at such agent's address set forth below and that service
so made shall be deemed to be completed in accordance with Section 8.7
hereof. The Owner Participant and the Owner Trustee hereby irrevocably
appoint [The Prentice Hall Corporation System, Inc., with an office on the
date hereof at 15 Columbus Circle, New York, New York 10023 or CT Corporation
System, 1633 Broadway, New York, New York 10019], as the agent for the
purpose of accepting service of any process within the State of New York.
Nothing contained in this Section shall affect the right of any Bondholder to
serve legal process in any other manner permitted by law or to bring any
action or proceeding in the courts of any jurisdiction against the Owner
Participant or the Owner Trustee or to enforce a judgment obtained in the
courts of any other jurisdiction.
8.13 CAPTIONS. The descriptive headings of the various Sections
or parts of this Agreement are for convenience only, and shall not affect the
meaning or construction of any of the provisions hereof.
8.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together only one agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
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Owner Trustee:
XXXXXXXXXX
By: /s/
--------------------------------
Name: XXXXXXXXXX
Title: ASSISTANT VICE PRESIDENT
<PAGE> 28
Owner Participant:
XXXXXXXXXX
By: XXXXXXXXXX,
its General Partner
By: /s/
----------------------------
Name:
Title:
<PAGE> 29
[PURCHASER SIGNATURE PAGES INTENTIONALLY OMITTED]
<PAGE> 30
[EXHIBITS AND SCHEDULES INTENTIONALLY OMITTED]
<PAGE> 1
EXHIBIT 99.25
XXXXXXXXXX
as Owner Trustee
AND
XXXXXXXXXX
as Trustee
INDENTURE
Dated as of December 28, 1992
Providing for execution and delivery of
$100,505,000
Collateralized Lease Revenue Bonds
(Kmart Corporation Leased Facilities)
Series 1992 A, Series 1992 B,
Series 1992 C and Series 1992 D
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
<S> <C>
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE II
THE BONDS
Section 2.01. Authorized Amount of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.02. Bond Form Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.03. General Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.04. Temporary Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.05. Restrictions on Transfer of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 2.06. Registration; Registration of Transfer
and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 2.07. Mutilated, Destroyed, Lost or Stolen
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 2.08. Cancellation and Destruction of
Surrendered Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.09. Delivery of the Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.10. Equal Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.11. Subordinate Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE III
REVENUES AND FUNDS
Section 3.01. Source of Payment of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.02. Creation of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.03. Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.04. Deposit of Revenues in Revenue Account . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.05. Application of Revenues in the Revenue
Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.06. Bond Proceeds Disbursement Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 3.07. Insurance and Condemnation Proceeds
Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 3.08. Administrative Expense Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 3.09. Extraordinary Expense Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
Section 3.10. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 3.11. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 3.12. Final Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 3.13. Payment Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 3.14. Subordinate Bond Payment Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 3.15. Investments of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 3.16. Security of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 3.17. Receipt of Lease Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE IV
REVENUES AND APPLICATION
Section 4.01. Revenues to be Held for All Registered
Owners; Certain Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE V
REDEMPTION OF BONDS AND SUBORDINATE BONDS BEFORE MATURITY
Section 5.01. Limitation on Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.02. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.03. Optional Prepayment Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.04. Rating Decline Put . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.05. Lease/Lease Guaranty Default Optional
Put . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.06. Failure of Occupancy Mandatory Put . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.07. Extraordinary Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 5.08. Mandatory Sinking Fund Redemption for
Bonds and Subordinate Bonds, If Any . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 5.09. Partial Redemption or Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 5.10. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 5.11. Payment Upon Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE VI
DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.03. Rights and Remedies of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
section 7,04. Trustee May Enforce Claims Without
Possession of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.05. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.06. Limitation on Registered Owners'
Right to Institute Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>
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<TABLE>
<CAPTION>
Page
<S> <C>
Section 7.07. Rights of Owners to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.08. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.09. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.10. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.11. Control by Registered Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.12. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.13. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE VIII
THE TRUSTEE; THE OWNER TRUSTEE
Section 8.01. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 8.02. Maintenance of Office or Agency; Paying
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 8.03. Neither Indenture Trustee nor Owner
Trustee May Become Registered Owner
of a Bond or Subordinate Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 8.04. Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 8.05. Certain Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 8.06. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 8.07. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 8.08. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 8.09. Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 8.10. Corporate Trustee; Trustee's Capital
and Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 8.11. Resignation and Removal; Appointment of
Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 8.12. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.13. Merger, Conversion, Consolidation or
Succession to Business of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 8.14. Co-Trustees and Separate Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 8.15. Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 8.16. Limitation on Liability of Owner Trustee
and Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 8.17. Dissolution or Termination of Trust
Agreement Not to Terminate Indenture . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 8.18. Concerning the Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 8.19. Appointment of Agent by Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE IX
REGISTERED OWNERS' LISTS AND REPORTS BY
TRUSTEE
Section 9.01. Preservation of Information; Communications
to Registered Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 9.02. Reports to Internal Revenue Service . . . . . . . . . . . . . . . . . . . . . . . . . . 83
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
Page
ARTICLE X
SUPPLEMENTS TO THIS INDENTURE
AND AMENDMENTS TO OTHER DOCUMENTS
<S> <C>
Section 10.01. Supplements to this Indenture Without
Consent of Registered Owners . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.02. Supplements to this Indenture With
Consent of Registered Owners . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.03. Execution of Supplements to This
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 10.04. Effect of Supplements to This Indenture . . . . . . . . . . . . . . . . . . 85
ARTICLE XI
REGISTERED OWNERS' MEETINGS
Section 11.01. Purposes for Which Meetings May be
Called . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 11.02. Manner of Calling Meetings . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 11.03. Call of Meeting by Trustee or Registered
Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 11.04. Required Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 11.05. Regulations May be Made by Trustee . . . . . . . . . . . . . . . . . . . . 87
Section 11.06. Manner of Voting at Meetings and Records
to be Kept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 11.07. Exercise of Rights of Trustee and
Registered Owners Not to be Hindered or
Delayed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 11.08. Unanimous Written Consent and Conference
Call Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
ARTICLE XII
COVENANTS AND WARRANTIES OF THE OWNER TRUSTEE
Section 12.01. Representations and Warranties of the
Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 12.02. Certain Covenants and Agreements of the
Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 12.03. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 12.04. Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 12.05. Restriction of Owner Trustee Activities . . . . . . . . . . . . . . . . . . 97
Section 12.06. Limitations on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 12.07. Recording . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 12.08. Termination of the Leases . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 12.09. Owner Trustee May Not Transfer any
Facility except under certain
circumstances, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
Page
<S> <C>
Section 12.10. Liability Under Other Basic Agreements . . . . . . . . . . . . . . . . . . . . 99
Section 12.11. No Other Liens on Mortgaged Property . . . . . . . . . . . . . . . . . . . . . 99
Section 12.12. Payment of Moneys to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 12.13. Appointment of Trustee as Attorney . . . . . . . . . . . . . . . . . . . . . . 100
Section 12.14. Further Assurances; Financing Statements . . . . . . . . . . . . . . . . . . . 100
Section 12.15. Limitations on Representations and
Warranties of Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 12.16. Owner Trustee Not Acting in
Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . . . 101
Section 13.02. Acts of Registered Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 13.03. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 13.04. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 13.05. Notices and Reports to Registered Owners;
Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 13.06. Notice Given to NAIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 13.07. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . 105
Section 13.08. Parties Bound; Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 105
Section 13.09. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 13.10. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 13.11. Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 13.12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 13.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 13.14. Recording of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 13.15. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 13.16. Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
SIGNATURE AND SEALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
EXHIBIT A--[Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B--Form of Requisition of Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C--Pending Proceedings and Investigations . . . . . . . . . . . . . . . . . . . . . . . . . C-1
EXHIBIT D--List of Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
</TABLE>
<PAGE> 7
INDENTURE
THIS INDENTURE, dated as of December 28, 1992 (herein, with all
supplements and amendments hereto, referred together to as this "Indenture"),
between XXXXXXXXXX, a national banking association duly organized under the
laws of the United States of America, not in its individual capacity, except as
otherwise specifically set forth herein, but solely as trustee (herein together
with its permitted successors in trust, the "Owner Trustee") on behalf of the
owner trust created under the Trust Agreement, dated as of December 28, 1992
between XXXXXXXXXX (the "Company") and the Owner Trustee, and XXXXXXXXXX, a
national banking association organized under the laws of the United States of
America and duly authorized to accept and execute trusts of the character
herein set forth, as Trustee (herein together with its successors in trust
permitted hereunder, referred to as the "Trustee"). Capitalized terms used
herein and not otherwise defined shall have the meanings set forth in Article I
hereof.
W I T N E S S E T H:
WHEREAS, the Owner Trustee and the Trustee are executing and
delivering this Indenture in connection with the issuance of the Collateralized
Lease Revenue Bonds (Kmart Corporation Leased Facilities), Series 1992 A,
Series 1992 B, Series 1992 C and Series 1992 D (herein referred to collectively
as the "Bonds" and individually as a "Bond") under the terms and provisions set
forth herein; and
WHEREAS, the proceeds derived from the sale and delivery of the Bonds
will be used to provide financing for the acquisition by the Owner Trustee of
ten (10) Kmart Corporation ("Kmart") and Kmart subsidiary (individually a
"Kmart Subsidiary," collectively, the "Kmart Subsidiaries") retail stores
described in Exhibit D (individually a "Facility," and collectively, the
"Facilities"); and
WHEREAS, the Owner Trustee will in turn lease back the
Facilities to Kmart and the Kmart Subsidiaries; and
WHEREAS, in order to secure the obligation of the Owner Trustee to
make payments with respect to the Bonds and the
<PAGE> 8
Subordinate Bonds, if any, the Owner Trustee is mortgaging, assigning and
pledging to the Trustee (i) all right, title and interest of the Owner Trustee
in the Leases, including the right to receive lease payments and other rights
under the Leases relating to the Facilities, and (ii) certain other rights and
properties, all pursuant to the Mortgages (as defined herein), and (iii) all
right, title and interest of the Owner Trustee under the other Company
Financing Documents, and is entering into certain other security documents and
agreements and any related financing statements, and all supplements and
amendments thereto; and
WHEREAS, the Owner Trustee will execute and will cause the Trustee to
authenticate, as provided herein, the Bonds designated as "Collateralized Lease
Revenue Bonds (Kmart Corporation Lease Facilities), Series 1992 A, Series 1992
B, Series 1992 C and Series 1992 D", which Bonds will be secured by the Trust
Estate and which will be initially privately placed by XXXXXXXXXX (the
"Placement Agent") to the Registered Owners (the "Registered Owners") in order
to finance the acquisition of the Facilities; and
WHEREAS, under certain circumstances, Registered Owners of Bonds will
be entitled to put their Bonds for purchase and the purchaser of such Bonds
will receive, in exchange for such purchased Bonds, either Bonds or Subordinate
Bonds under the terms provided for herein; and
WHEREAS, the Bonds, the Subordinate Bonds, if any, the Trustee's
certificate of authentication to be endorsed thereon and the form of assignment
to be endorsed on such Bonds or Subordinate Bonds, if any, are to be in
substantially the following forms, with necessary and appropriate variations,
omissions and insertions as permitted or required by this Indenture, to wit:
-2-
<PAGE> 9
[FORM OF FRONT OF BOND/SUBORDINATE BOND]
NO, R- __ $__________
COLLATERALIZED LEASE REVENUE (BONDS/SUBORDINATE BONDS]
(KMART CORPORATION LEASED FACILITIES)
SERIES 1992 [SERIES DESIGNATION)
<TABLE>
<CAPTION>
Interest Original
Rate Maturity Date Issue Date PPN
- ------------ ------------- ----------- ---
<S> <C> <C> <C>
% per annum ___________, _____ ___________, 1992
REGISTERED OWNER: ____________________________________________________
PRINCIPAL AMOUNT: _____________________________________________ Dollars
</TABLE>
THIS CERTIFIES THAT XXXXXXXXXX, not in its individual capacity but
solely as Owner Trustee (in such capacity, the Owner Trustee"), on behalf of
the owner trust created under the Trust Agreement dated as of December 28, 1992
between XXXXXXXXXX (the "Company") and the Owner Trustee (the "Trust
Agreement"), for value received, hereby promises to pay to the Registered Owner
named above, or registered assigns, the Principal Amount stated above, and, in
like manner to pay interest on said sum from the most recent date to which
interest has been paid or Provided for, or if no interest has been paid or
provided for, from the Original Issue Date at the Interest Rate per annum
stated above, based on a 360-day year and twelve 30-day months, semiannually on
each June 15 and December 15 to the Maturity Date stated above or earlier
redemption or purchase as described on the reverse side of this
[Bond/Subordinate Bond], commencing June 15, 1993 (each a "Payment Date"), and
to make all other Bond Payments (as hereinafter defined). If any payment of
principal of or Make-Whole Premium, if any, or interest on this
(Bond/Subordinate Bond] is not paid when due, such overdue principal,
Make-Whole Premium, if any, and (to the extent permitted by applicable law)
interest shall bear interest (calculated on the basis set forth above) payable
on demand, from the due date of such overdue payment until paid at a rate per
annum equal to 200 basis points plus the interest rate then in effect with
respect to this [Bond/Subordinate Bond]. The (Bonds/Subordinate Bonds) are
secured by, among other things, (i) the Accounts created by the Indenture dated
as of December 28, 1992 (the "Indenture") between the Owner Trustee and
XXXXXXXXXX, as trustee (the "Trustee") and held by the
-3-
<PAGE> 10
Trustee, (ii) the Mortgages (as defined in the Indenture) and Assignments of
Leases and Rents relating to each Lease (as defined in the Indenture) and (iii)
the revenues and other proceeds generated from the Company Financing Documents
or related thereto (the "Revenues"), all as provided in the Indenture.
THE SALE OF THE [BONDS/SUBORDINATE BONDS] HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR QUALIFIED UNDER
THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION ("BLUE SKY" LAWS) AND
THE [BONDS/SUBORDINATE BONDS] ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE
144, 17 C.F.R. Section 230.144 ("RULE 144"), PROMULGATED PURSUANT TO THE ACT.
NO [BOND/SUBORDINATE BOND] MAY BE SOLD, ASSIGNED OR OTHERWISE TRANSFERRED
UNLESS SUCH TRANSFER IS SO REGISTERED AND QUALIFIED OR UNLESS AN EXEMPTION FROM
SUCH REGISTRATION AND QUALIFICATION IS AVAILABLE. PURCHASER(S) OR
TRANSFEREE(S) OF THE BONDS SHALL BE DEEMED TO HAVE REPRESENTED AND WARRANTED
THAT IT OR THEY ARE AN "ACCREDITED INVESTOR," AS DEFINED IN RULE 501(a)(1), (2)
or (3) UNDER REGULATION D OF THE ACT.
The Mortgages, the Assignments of Leases and Rents and other Company
Financing Documents represent, among other things, the Owner Trustee's present
assignment to the Trustee of the Owner Trustee's rights to receive rent
payments and certain other payments under the Leases (as defined in the
Indenture). Each Lease, and the obligations thereunder, entered into by a
Kmart Subsidiary is guaranteed by Kmart Corporation pursuant to a Lease
Guaranty Agreement dated as of December 28, 1992 (collectively, the "Lease
Guaranties").
A summary of certain provisions of the Indenture and the right of the
Registered Owner of this [Bond/Subordinate Bond] to receive amounts
corresponding to principal and interest, Make-Whole Premium, if any, and all
other amounts payable with respect to the [Bonds/Subordinate Bonds] (each a
"Bond Payment" and, collectively, the "Bond Payments") are set forth below. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Indenture and any inconsistency between
the provisions of this [Bond/Subordinate Bond] and the Indenture shall be
governed by the provisions of the Indenture.
[This Bond is one bond of an authorized $100,505,000 total original
principal amount of Bonds executed and delivered pursuant to the Indenture and
designated collectively as "Collateralized Lease Revenue Bonds (Kmart
Corporation Leased Facilities), Series 1992 A, Series 1992 B, Series 1992 C and
Series 1992 D" (herein referred to
-4-
<PAGE> 11
collectively as the "Bonds" and individually as a "Bond"). Under some
circumstances described in the Indenture, Bonds which are put to Kmart
Corporation ("Kmart") for purchase pursuant to the Bond Put Agreement, dated as
of December 28, 1992 between Kmart and the Trustee, will be exchanged for Bonds
or Subordinate Bonds having rights under the Indenture and to the Trust Estate
subordinate to the Bonds.]
[Pursuant to the terms of the Indenture, there were previously
executed and delivered [$100,505,000] total original principal amount of senior
Bonds designated collectively as "Collateralized Lease Revenue Bonds (Kmart
corporation Leased Facilities), Series 1992 A, Series 1992 B, Series 1992 C and
Series 1992 D" (herein referred to collectively as the "Bonds" and
individually as a "Bond").
This Subordinate Bond is subordinate to the lien on and security
interest granted in the Trust Estate to the Bonds. The payment of principal,
Make-Whole Premium, if any, and interest on the Subordinate Bonds is
subordinated to the prior indefeasible payment of principal, Make-Whole
Premium, if any and interest on the Bonds. Payment of the principal of,
Make-Whole Premium, if any, and interest on the Subordinate Bonds shall be
permitted under the Indenture, provided that all payments required to be made
to the Trustee to be used to pay Bond Obligations in respect of the Bonds are
then current.]
This [Bond/Subordinate Bond] and all Bond Payments evidenced hereby
are subject to the terms, provisions and conditions of the Indenture, to which
terms, provisions and conditions the Registered Owner of this [Bond/Subordinate
Bond] by virtue of the acceptance hereof assents and by which such Registered
Owner is bound.
As used herein, the term "Business Day" means any day (i) other than a
Saturday or Sunday or legal holiday or (ii) on which banking institutions in
the city in which the principal corporate trust offices of the Trustee are
located are not required or authorized to be closed. If the Payment Date shall
not be a Business Day, then the Bond Payments to the Registered Owners shall be
made on the next succeeding Business Day without additional interest and with
the same force and effect as if made on the nominal date for such payment.
THIS [BOND/SUBORDINATE BOND] DOES NOT REPRESENT A RECOURSE DEBT OR
OBLIGATION OF ANY KIND OF, OR AN INTEREST IN, THE OWNER TRUSTEE OR THE TRUSTEE.
-5-
<PAGE> 12
Reference is made to the further provisions of this [Bond/Subordinate
Bond] set forth on the reverse hereof, which shall have the same effect as
though fully set forth at this place.
This [Bond/Subordinate Bond] shall not be valid or become obligatory
for any purpose or be entitled to payments from the assets of the Trust Estate
until it shall have been duly executed by the Owner Trustee and authenticated
by the Trustee.
THE TRUSTEE HAS NO OBLIGATION OR LIABILITY TO THE REGISTERED OWNERS TO
MAKE PAYMENTS OF AMOUNTS REPRESENTING THE PRINCIPAL, MAKE-WHOLE PREMIUM, OR
INTEREST WITH RESPECT TO THE [BONDS/SUBORDINATE BONDS] OTHER THAN FROM THE
TRUST ESTATE. THE TRUSTEE IS OBLIGATED SOLELY TO PERFORM ITS DUTIES AS SET
FORTH IN THE INDENTURE. THE TRUSTEE MAKES NO REPRESENTATIONS OR WARRANTIES AS
TO ANY OF THE STATEMENTS CONTAINED HEREIN WITH RESPECT TO ANY PERSON OTHER THAN
THE TRUSTEE OR THE VALIDITY, SUFFICIENCY OR ENFORCEABILITY OF THE
[BONDS/SUBORDINATE BONDS] OR THE MORTGAGES.
This [Bond/Subordinate Bond] shall be governed and construed in
accordance with the laws of the State of New York, other than principles of
conflict of laws.
IN WITNESS WHEREOF, the Owner Trustee has caused this
[Bond/Subordinate Bond] to be executed and the Trustee has caused this
[Bond/Subordinate Bond] to be authenticated in the manner set forth in the
Indenture.
XXXXXXXXXX, not in its
individual capacity but solely
as Owner Trustee under the Trust
Agreement
By:_____________________________
Title: _________________________
By: _____________________________
Title: __________________________
-6-
<PAGE> 13
This [Bond/Subordinate Bond] has been authenticated by XXXXXXXXXX,
as Trustee, pursuant to the within-mentioned Indenture.
XXXXXXXXXX, as Trustee
Date of Authentication: By _____________________________
Authorized Signatory
_______________________
-7-
<PAGE> 14
[FORM OF REVERSE OF [BONDS/SUBORDINATE BONDS]
This [Bond/Subordinate Bond] shall mature as to principal on the
dateset forth on the front of this [Bond/Subordinate Bonds], subject to
redemption [and mandatory tender] as set forth below. Interest on the
[Bonds/Subordinate Bonds] shall be paid to the Registered Owners of the Bonds
appearing on the books of the Trustee at the close of business on the "Record
Date" with respect to such interest. As used herein, "Record Date" means (i)
with respect to any Payment Date, the tenth day preceding the date on which a
Payment Date is scheduled to occur, and (ii) with respect to any Settlement
Date, the fifteenth day preceding the date on which such Settlement Date is
scheduled to occur. Payment of principal, Make-Whole Premium, if any, and
interest on each [Bond/Subordinate Bond] shall be made to the Registered Owner
thereof on such Record Date, and shall be paid by check or draft mailed by
first-class mail to the Registered Owner at his address as is set forth on the
registration books maintained by the Trustee. Upon the request of a Registered
Owner of at least $1,000,000 in principal amount of [Bonds/Subordinate Bonds],
payment of principal, Make-Whole Premium, if any, and interest shall be made by
wire transfer in immediately available funds to an account designated by such
Registered Owner in writing, which writing must be received by the Trustee at
least 15 days prior to the applicable Record Date. Any reduction in the
principal amount of Bonds and Subordinate Bonds Outstanding due to payments on
account of redemptions shall be so noted on the books of the Trustee.
The Bonds are issued for the purpose of obtaining financing for the
acquisition of ten (10) Kmart Corporation and Kmart Subsidiary stores
(consisting of land, completed building, site improvements and all licenses,
rights, privileges and easements, appurtenant thereto) (the "Facilities"), all
of which are leased by the Owner Trustee to Kmart Corporation and the Kmart
Subsidiaries, as set forth more fully in the Indenture (collectively, the
"Leases"). Nine (9) of the Facilities are open for business and the tenth
facility is expected to be completed and open for business prior to December
31, 1993.
The Bonds are subject to: (i) an Optional Prepayment Redemption, at a
Make-whole Premium plus accrued interest on the Called Principal to the
Settlement Date, (ii) a Rating Decline Put, at a Make-Whole Premium plus
accrued interest on the Called Principal to the Settlement Date, (iii) a
Lease/Lease Guaranty Default Optional Put, at a Make-Whole Premium plus accrued
interest on the Called Principal to the
-8-
<PAGE> 15
Settlement Date, (iv) a Failure of Occupancy Mandatory Put, at a Make-
Whole Premium and (v) Extraordinary Mandatory Redemption, at a Make-Whole
Premium, the terms and conditions of which are described in the Indenture.
The Subordinate Bonds are subject to: (i) an Optional Prepayment
Redemption, at a Make-Whole Premium plus accrued interest on the Called
Principal to the Settlement Date, and (ii) Extraordinary Mandatory Redemption,
at par plus accrued interest, the terms and conditions of which are described
in the Indenture.
Subordinate Bonds shall have the same maturities, principal amounts
and mandatory sinking fund repayment provisions (but not priority) as the Bonds
which were required to be mandatorily tendered for purchase pursuant to the
terms of the Indenture.
As and for a sinking fund for the mandatory sinking fund redemption of
the Series 1992 [ ] Bonds and Series 1992 [ ] Subordinate Bonds, if any, the
Owner Trustee shall deposit or cause to be deposited in the Payment Account, on
or before December 15,________, and on each December 15 to and including
December 15,________, a sum in immediately available funds which, together with
other moneys available therefor in the Payment Account, is sufficient to redeem
(after credit as provided below) the following principal amounts of Bonds and
Subordinate Bonds, if any, on the following sinking fund redemption dates:
Sinking Fund Redemption Date Principal Amount
- ---------------------------- ----------------
December 15, [ ] $[ ]
December 15, [ ] [ ]
December 15, [ ] [ ]
December 15, [ ]* [ ]
____________
*Final Maturity.
On or before the 45th day prior to each such sinking fund payment
date, the Trustee shall proceed to select for redemption pro rata based upon
the stated principal amount of Bonds and Subordinate Bonds within this Series
from all of the Registered Owners of Outstanding [Bonds/Subordinate Bonds]
subject to sinking fund redemption on such date, a principal amount of such
Bonds and Subordinate Bonds
-9-
<PAGE> 16
redeemable with the required sinking fund payment, and shall call such
principal amount of Bonds and Subordinate Bonds or portions thereof for
redemption from such sinking fund on the next December 15 and give notice of
such redemption.
Any partial redemption or partial prepayment other than at the option
of the Owners shall be effected pro rata (i) among each Series of Bonds and
Subordinate Bonds based upon the aggregate Outstanding stated principal amount
of each Series of Bonds and Subordinate Bonds and (ii) among the Registered
Owners of Bonds and Subordinate Bonds of a particular Series based upon the
aggregate Outstanding principal amount of Bonds and Subordinate Bonds of such
Series owned by each Registered Owner. Any partial redemption or partial
prepayment of any Bonds and Subordinate Bonds pursuant to the Indenture shall
be applied in satisfaction of required prepayments or payments of principal on
the Bonds and Subordinate Bonds of each Series in inverse order of their
scheduled due dates.
Payment of the principal of, Make-Whole Premium, if any, and interest
on the Subordinate Bonds called for redemption shall be permitted under the
Indenture, provided that all payments required to be made by the Trustee in
respect of Bond obligations on the Outstanding Bonds are then current.
Notice of each such redemption shall be given by sending such notice,
by first-class mail, postage prepaid, not less than 30 days prior to the
Settlement Date fixed for redemption. All notices of redemption shall be
mailed to all Registered Owners of Bonds or Subordinate Bonds, if any, at the
address shown on the registration books maintained by the Trustee. With regard
to Registered Owners holding an aggregate principal amount of $10,000,000 or
more, telephonic notice must also be given by the Trustee. Neither the failure
of any Registered Owner to receive a notice so mailed nor any defect in any
notice so mailed shall affect the validity of the proceedings for such
redemption. All Bonds or Subordinate Bonds, if any, so called for redemption
will cease to accrue interest on the specified Settlement Date provided
immediately available funds for their redemption are on deposit at the
principal corporate trust office of the Trustee at that time.
Except for the initial Registered Owners, the Bonds and Subordinate
Bonds, if any, are issuable in the denomination of $100,000 and any $5,000
integral multiple in excess of $100,000, subject to certain restrictions
contained in the Indenture; provided, however, that the Owner Trustee shall be
authorized to execute and the Trustee will be authorized to
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<PAGE> 17
authenticate and deliver single Bonds or Subordinate Bonds, if any, in
nonconforming principal amounts as directed in writing by the Owner Trustee.
Bonds and Subordinate Bonds, if any, may be exchanged for a like aggregate
principal amount of Bonds and Subordinate Bonds, if any, of authorized
denominations of the same priority and maturity.
The Registered Owner of this [Bond/Subordinate Bond] hereby
acknowledges that the [Bonds/Subordinate Bonds] are registration-required
obligations, notwithstanding the provisions of Section 163(f) of the Internal
Revenue Code of 1986, as amended, and consents to the implementation of any
system of transfer of the [Bonds/Subordinate Bonds] necessary to satisfy the
requirements of the foregoing provisions.
The [Bonds/Subordinate Bonds] may be exchanged, and their transfer may
be registered, by the Registered Owners in person or by their attorneys duly
authorized in writing at the principal corporate trust office of the Trustee
only in the manner, subject to the limitations and upon payment of the charges
provided in the Indenture, and upon surrender and cancellation of the
[Bonds/Subordinate Bonds]. Upon exchange or registration of such transfer, a
new registered [Bond/Subordinate Bond] or [Bonds/Subordinate Bonds] evidencing
the same outstanding principal amount of [Bonds/Subordinate Bonds] will be
executed in exchange therefor.
Reference is hereby made to the Indenture, the Leases, the Lease
Guaranties, the Bond Put Agreement, the Mortgages, the Assignments of Leases
and Rents and the other Company Financing Documents, copies of which are on
file with the Trustee, for the provisions, among others, with respect to (i)
the nature and extent of the rights, duties and obligations of the Trustee,
the Company, the Owner Trustee and the Registered Owners; (ii) the terms upon
which the [Bonds/Subordinate Bonds] are executed and delivered; (iii) the
collection and disposition of the Revenues; (iv) a description of the Trust
Estate; (v) the modification or amendment of the Indenture, the Mortgages and
the other Company Financing Documents; and (vi) other matters; to all of which
the Registered Owners of the [Bonds/Subordinate Bonds] assent by the acceptance
of the [Bonds/Subordinate Bonds].
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[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto
- -------------------------------------------------------------------------------
(Name, Address and Tax Identification or
Social Security Number of Assignee)
this [Bond/Subordinate Bond] and does hereby irrevocably constitute and appoint
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to transfer this [Bond/Subordinate Bond) on the books kept for such purpose by
the Trustee with full power of substitution in the premises. The undersigned
represents and warrants that such assignment is made in full compliance
with the provisions of the Indenture referred to within the
[Bonds/Subordinate Bonds].
Dated:
--------------------- ---------------------------------------
Signature
Signature guaranteed by ; and
------------------------------------------------
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<PAGE> 19
WHEREAS, all things necessary to make the Bonds and the Subordinate
Bonds, if any, when executed by the Owner Trustee and authenticated by the
Trustee, valid and binding instruments which are enforceable in accordance with
their terms and to make this Indenture a valid and binding legal instrument for
the security of the Bonds and the Subordinate Bonds, if any, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
GRANTING CLAUSE:
The Owner Trustee, in consideration of the premises, the acceptance by
the Trustee of the terms and provisions of this Indenture, the purchase and
acceptance of the Bonds and the Subordinate Bonds, if any, by the purchasers
thereof, and other good and valuable consideration, the receipt of which is
hereby acknowledged, and in order to secure (a) the prompt payment by Owner
Trustee when and as due and payment of the principal of, Make-Whole Premium, if
any, and interest on all the Bonds and the Subordinate Bonds from time to time
outstanding hereunder and of all other amounts payable by it to any Registered
Owner hereunder, under the Bond Purchase Agreement or under the Bonds and the
Subordinate Bonds, and (b) the performance and observance for the benefit of
Trustee, the Registered Owners from time to time of the Bonds and Subordinate
Bonds (i) by Lessees of their covenants and agreements contained in the Leases,
(ii) by Owner Trustee, of its covenants and agreements contained herein and in
the Bonds and the Bond Purchase Agreement, (iii) by Company of its covenants
and agreements contained in the Bond Purchase Agreement and (iv) by Kmart of
its covenants and agreements contained in the Lease Guaranties and Bond Put
Agreement (collectively, the "Secured Obligations"), Owner Trustee does hereby
grant, convey, assign, create a security interest in, bargain, sell, pledge,
give, transfer, mortgage and set over unto the Trustee and to its successors in
said trust and to their assigns, for the benefit of the holders from time to
time of the Bonds and Subordinate Bonds, all estate, right, title and interest
of Owner Trustee (as trustee and not in its individual capacity), now owned or
hereafter acquired, in and to the following assets and properties, except for
its rights with respect to Administrative Expenses and Extraordinary Expenses
(collectively, the "Trust Estate"):
1. the Real Estate Transfer Documents, all rights and
privileges of Owner Trustee thereunder and the right to receive all
payments of any kind to or for the account of Owner Trustee pursuant
thereto, and all other property of every kind and description, real,
personal
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<PAGE> 20
and mixed, and interests therein, wheresoever located, now owned or
hereafter acquired by Owner Trustee pursuant to the Real Estate
Transfer Documents and used or intended for use in or in connection
with the Facilities;
2. each Facility and each part and component thereof,
whether affixed thereto or separated therefrom, all replacements,
alterations, additions and improvements thereto, all warranties and
rights to know-how relating to the Facilities, and, to the extent
permitted by law, all licenses and permits, if any, relating to the
construction, ownership and operation of each Facility;
3. each Lease, together with all modifications,
extensions, consolidations and renewals thereof, and all rights and
privileges of Owner Trustee as lessor thereunder including, without
limitation, the right to receive all payments of Annual Rental and
Additional Rent (each as defined in the relevant Lease), and all other
payments of any kind thereunder required to be made to or for the
account of Owner Trustee;
4. the Lease Guaranties, all rights and privileges of
Owner Trustee thereunder and the right to receive all payments of any
kind to or for the account of Owner Trustee pursuant thereto;
5. all rights, powers, privileges and remedies of Owner
Trustee relating to or arising under or in connection with any of the
foregoing, including without limitation all rights to exercise any
election or option, to make any decision or determination, to give any
notice, consent, waiver or approval under or in respect of any
agreement or instrument, or to exercise any of the rights, powers and
remedies of Owner Trustee thereunder;
6. all insurance and condemnation proceeds net of
expenses provided for in the Mortgages, and other payments of any kind
from third parties for or with respect to each Facility, or any other
portion of the Mortgaged Estates, from whatever source received;
7. all moneys and securities deposited or required to be
deposited with Trustee pursuant to any term hereof, of the Leases, the
Lease Guaranties, the Assignments of Leases and Rents, the Bond
Purchase Agreements, or any other Company Financing Document or
otherwise;
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<PAGE> 21
8. all the tolls, rents, issues, profits, products,
revenues and other income of all property from time to time on or
after the date hereof subjected or required to be subjected to the
lien and security interest hereof or of the Security Documents; and
9. all proceeds of any of the foregoing.
The foregoing grant shall constitute an immediate and present
assignment by Owner Trustee to Trustee of (i) all rights of Owner Trustee to
exercise any election or option, or make any decision or determination, to give
any notice, consent, waiver or approval under or in respect of the Real Estate
Transfer Documents, the Leases, the Lease Guaranties and (ii) all rights of
Owner Trustee to receive and to enforce the payment of the full amount of each
installment of Annual Rental, Additional Rent and other amounts payable under
the Leases, all amounts payable on account of any actual or constructive loss
or damage to any Facility or any part thereof, all payments under the Lease
Guaranties and all insurance proceeds, condemnation or requisition payments or
other payments of any kind for or with respect to any Facility or any part
thereof, except for its rights with respect to Administrative Expenses and
Extraordinary Expenses. Trustee shall exercise such rights and apply such
payments in accordance with the terms hereof.
TO HAVE AND TO HOLD all and singular the Trust Estate unto the Trustee
and its respective successors in said trusts, with the power of sale and the
right of entry upon the terms and conditions herein set forth and with a
priority first for the equal and proportionate benefit of all present and
future Registered Owners of the Bonds, from time to time executed and
authenticated under this Indenture, without privilege, priority or distinction
of any of the Bonds over any of the other Bonds, and second for the equal and
proportionate benefit of all present and future Registered Owners of
Subordinate Bonds, from time to time executed and authenticated under this
Indenture, without privilege, priority or distinction of any of the Subordinate
Bonds over any of the other Subordinate Bonds.
PROVIDED, HOWEVER, that if payments of principal of, interest on,
Make-Whole Premium, if any, and all other amounts payable with respect to the
Bonds and the Subordinate Bonds, if any, whether or not then due and owing,
shall be paid in full in the manner mentioned in this Indenture, according to
the true intent and meaning thereof, then this Indenture and the rights hereby
granted shall cease, determine and be void, otherwise this Indenture is to be
and remain in full force and effect except as otherwise provided herein.
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<PAGE> 22
THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that
all Bonds and Subordinate Bonds are to be authenticated and delivered and the
Trust Estate is to be dealt with and disposed of under, upon and subject to the
terms, conditions, stipulations, covenants, agreements, trusts, uses and
purposes as hereinafter expressed, and the Owner Trustee has agreed and
covenanted, and does hereby agree and covenant, with the Trustee for the
benefit of the respective Registered Owners from time to time of the Bonds and
Subordinate Bonds, as follows:
ARTICLE I
DEFINITIONS
(A) For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) "This Indenture" means this instrument as originally
executed or as it may from time to time be supplemented or amended by
one or more agreements supplemental hereto entered into pursuant to
the applicable provisions hereof.
(2) All references in this Indenture to designated
"Articles," "Sections" and other subdivisions are to the designated
Articles, Sections and other subdivisions of this Indenture. The
words "herein," "hereof," "hereto," "hereby," "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
(3) The terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as
the singular.
(4) Every "request," "order," "demand," " application,"
"appointment," "notice (including notice of redemption)," "statement,"
"certificate," "consent" or similar action in connection herewith by
the Trustee or the Owner Trustee or Company shall, unless the form
thereof is specifically provided, be in writing signed by a duly
authorized officer or agent of the Trustee or the Owner Trustee or
Company with a duly authorized signature.
(B) For all purposes of this Indenture, except as otherwise expressly
provided:
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<PAGE> 23
"Account" or "Accounts" means any one or more of the separate trust
accounts created by Article III, and shall include any subaccount or
subaccounts included in such Account.
"Acquisition Account" means the account by that name created pursuant
to Section 3.02.
"Administrative Expense Account" means the account by that name
created pursuant to Section 3.02.
"Administrative Expenses" means all Ordinary Services and Ordinary
Expenses payable to the Owner Trustee, the Trustee and the Bond Registrar
pursuant to this Indenture, which (i) for the remainder of calendar year 1992
and all of calendar year 1993 shall not exceed the sum of $6,000 for the Owner
Trustee and $30,000 for the Trustee and the Bond Registrar, which amounts shall
constitute Costs of Issuance and be paid from amounts in the Bond Proceeds
Disbursement Account and (ii) for any subsequent calendar year shall not exceed
the sum of $3,000 for the Owner Trustee and $7,500 for the Trustee and the Bond
Registrar, which sums will be paid from amounts in the Administrative Expense
Account.
"Affiliate", with respect to any Person, shall mean any other Person
directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such Person. For purposes of this definition,
the term "control" (including the correlative meanings of the terms "controlled
by" and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"Agreement for Sale of Real Estate" means the Agreement for Sale of
Real Estate dated as of December 15, 1992 between Kmart and the Company.
"Annual Minimum Rental" means the Annual Rentals and Additional Rent
(each as defined in the Leases) required to be paid by each of the Lessees.
"Assignment and Assumption Agreement" means the agreement by and
between the Owner Trustee and the Company dated as of December 28, 1992.
"Assignment of Leases and Rents" means each Assignment of Leases and
Rents, dated as of December 28, 1992, between the Owner Trustee and the Trustee
relating to each Lease.
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<PAGE> 24
"Assignment of Rights Under Purchase Agreement" means the Assignment
of Rights Under Purchase Agreement between the Company and the Owner Trustee
dated as of December 28, 1992.
"Bond" or "Bonds" means any one or more of the $100,505,000
Collateralized Lease Revenue Bonds (Kmart Corporation Lease Facilities), Series
1992 A, Series 1992 B, Series 1992 C and Series 1992 D, but excluding all
Subordinate Bonds, if any.
"Bondholder" means the same definition as "Registered Owner."
"Bond Obligations" means, with respect to any date of calculation, the
aggregate of the principal amount, accrued interest, premium, if any, and all
other amounts payable with respect to all Bonds and Subordinate Bonds
Outstanding.
"Bondowner" means the same definition as "Registered Owner."
"Bond Payments" means any payments due or required to be made in
respect of any Bond Obligations.
"Bond Proceeds Disbursement Account" means the account by that name
created pursuant to Section 3.02.
"Bond Purchase Agreement" means each Bond Purchase Agreement, dated as
of December 28, 1992, among the Company, the Owner Trustee and the respective
purchasers named therein.
"Bond Put Agreement" means the Bond Put Agreement dated as of December
28, 1992, between Kmart and the Trustee.
"Bond Registrar" means the Trustee in its capacity as registrar for
the Bonds and each successor in such capacity.
"Business Day" means a day (i) other than a Saturday or Sunday or
legal holiday or (ii) on which banking institutions in the city in which the
principal corporate trust offices of the Trustee are located are not required
or authorized to be closed.
"Called Principal" means, with respect to the Bonds and the
Subordinate Bonds, if applicable, the principal of the Bonds and the
Subordinate Bonds, if applicable, that is due and payable pursuant to Article V
or VII.
"Closing Date" means December 29, 1992.
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<PAGE> 25
"Code" means the Internal Revenue Code of 1986, as amended, and any
Department of the Treasury Regulations promulgated thereunder.
"Company" means XXXXXXXXXX, a Delaware limited partnership, and
its successors and permitted assigns as beneficiary of the Trust created
under the Trust Agreement.
"Company Financing Documents" means the Leases, the Lease Guaranties,
this Indenture, the Bonds, the Mortgages, the Assignment and Assumption
Agreement, Assignment of Rights Under Purchase Agreement, the Bond Put
Agreement, the Real Estate Transfer Documents, the Bond Purchase Agreements,
the Trust Agreement and all other documents delivered in connection with the
transactions contemplated by the foregoing and all amendments, modifications
and supplements thereto and such other documents and instruments as are entered
into after the date hereof for the benefit of the Trustee or the Registered
Owners.
"Costs of Issuance" means those costs which are directly or indirectly
payable by the owner Trustee and related to the authorization, issuance, sale
and delivery of the Bonds, including, but not limited to, advertising and
printing costs, costs of preparation and reproduction of documents, filing and
recording fees, initial fees and charges of the Owner Trustee, initial fees and
charges of the Trustee in its capacity as such and as Paying Agent and Bond
Registrar, legal fees and charges, fees and disbursements of consultants and
professionals, rating agency fees and expenses, fees and charges for
preparation, execution, transportation and safekeeping of Bonds, and any other
cost, charge or fee in connection with the issuance of the Bonds.
"Counsel" means an attorney at law or a firm of attorneys (who may be
counsel to the Owner Trustee or the Trustee) duly admitted to the practice of
law before the highest court of any relevant state of the United States of
America or of the District of Columbia.
"Discounted Prepayment Value" means, with respect to any amount of
Called Principal, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective scheduled
due dates to the Settlement Date with respect to such Called Principal, in
accordance with generally accepted financial practice and at a discount factor
(applied on a semiannual basis) equal to the Reinvestment Yield. Each Owner
shall be provided prior to the Settlement Date with a certificate
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<PAGE> 26
evidencing the calculation of such amount by the Owner Trustee, who shall be
entitled to rely upon an accountant's verification of the calculated amount.
"Eligible Investments" means the following investments, with an
appropriate market value and of an appropriate maturity:
(a) Obligations of, or guaranteed as to principal and
interest by, the United States of America, or by any agency or
instrumentality thereof hereinafter designated when such obligations
are backed by the full faith and credit of the United States of
America, but limited to: (i) all direct or fully guaranteed United
States Treasury obligations and (ii) bonds issued by any governmental
entity, such bonds having a rating of "AA" by S&P or Moody's and "1"
by NAIC (if rated by NAIC); provided, however, that book entry
securities must be held in a trust account with the Federal Reserve
Bank or with a clearing corporation or chain of clearing corporations
which has an account with the Federal Reserve Bank;
(b) Commercial paper, payable in the United States of
America, having original maturities of not more than 92 days and which
are rated in the highest rating category by S&P or Moody's and NAIC
(if rated by NAIC) at the time of purchase;
(c) Interest-bearing demand or time deposits issued by
state banks or trust companies or any national banking associations of
recognized standing whose accounts are insured by the Bank Insurance
Fund ("BIF") of the Federal Deposit Insurance Corporation ("FDIC")
with capital and surplus aggregating in excess of $500,000,000;
provided, however, that these deposits: (i) must be continuously and
fully insured by FDIC, or (ii) must have maturities of less than 366
days and be deposited with banks the short term unsecured obligations
of which are rated "A-1+" by S&P or "A3" by Moody's and "1" by NAIC
(if rated by NAIC) at the time of purchase; and
(d) Money market mutual funds or portfolios of an
investment company registered under the Investment Company Act of
1940, as amended, rated "AAA" by S&P or "Aaa" by Moody's and "1" by
NAIC (if rated by NAIC) at the time of purchase investing in
short-term U.S. Treasury securities permitted under clause (a) above.
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<PAGE> 27
Otherwise Eligible Investments that impose substantial breakage fees
will not be deemed an Eligible Investment.
"Event of Default" means an event of default as specified in Section
7.01.
"Extraordinary Expense Account" means the account by that name created
by Section 3.02.
"Extraordinary Expense Amount" means $40,000.
"Extraordinary Services" and "Extraordinary Expenses" mean all fees
for services rendered by the Owner Trustee and the Trustee and all expenses
incurred under this Indenture and the Trust Agreement other than ordinary
Services and ordinary Expenses.
"Facility" means a specific "Demised Premises," as that term is
defined in a Lease; and "Facilities" means the Demised Premises under all of
the Leases, collectively.
"Failure of Occupancy" means with respect to the Facility located in
XXXXXXXXXX, New Jersey known as Builders Square number XXXXXXXXXX which is a
construction property (as set forth in Exhibit D), a failure by the Lessee with
respect to such Facility to open the Facility for business by December 31,
1993.
"Failure of Occupancy Mandatory Put" means the put described in
Section 5.06.
"General Partner" means XXXXXXXXXX, a Michigan corporation, having
its principal office at XXXXXXXXXX, and any successor thereof or any substitute
therefor as provided by the constituent documents of the Company.
"Guaranty" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing or in effect
guaranteeing any Indebtedness or other obligation of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation (whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay or to maintain financial statement conditions or otherwise), or
(ii) entered into for the purpose of assuring in any other manner the
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<PAGE> 28
obligee of such Indebtedness or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part).
The term "Guarantee" used as a verb has a corresponding meaning.
"Improvements" shall mean the same herein as that term is defined in
the Mortgages.
"Indebtedness" of any Person means (i) any liability, continent or
otherwise, of any Person (a) in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to
a portion thereof), or (b) evidenced by a bond, note, debenture or similar
instrument; (ii) all obligations of such Person to pay the deferred and unpaid
purchase price of any property, assets or services; (iii) capitalized lease
obligations of such Person; (iv) Indebtedness secured by a Lien to which the
property or assets owned or held by such Person is subject, whether or not the
obligation secured thereby shall have been assumed; (v) any liability of others
described in the preceding clauses (i) through (iv) which such Person has
Guaranteed or which otherwise is its legal liability; and (vi) any amendment,
renewal, extension or refunding of any liability of the types referred to in
clauses (i) through (v) above.
"Insurance and Condemnation Proceeds Account" means the account by
that name created by Section 3. 02.
"Kmart" means Kmart Corporation, a Michigan corporation, having its
principal office at 3100 West Big Beaver, Troy, Michigan 48084 and its
successors and permitted assigns.
"Kmart Subsidiaries" means, collectively, each Kmart Subsidiary that
enters into an Agreement to Lease with the owner Trustee, as set forth more
fully in Exhibit D.
"Kmart Subsidiary" means a specific Kmart subsidiary, as the context
shall require.
"Lease" means the Leases between the Owner Trustee and the respective
Lessees set forth in Exhibit D.
"Lease Guaranties" means, collectively, the agreements executed by
Kmart guaranteeing the payment and performance of the obligations of each Kmart
Subsidiary, as Lessee, under a Lease.
"Lease/Lease Guaranty Default" means, with respect to any one or more
of the Leases and Lease Guaranties the
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<PAGE> 29
failure (i) of the Lessee under any such Lease to pay any Annual Rental or
Additional Rent, both as defined in the Lease, due under such Lease for a
period of fifteen (15) days after notice to Lessee of such default, or (ii)
Kmart to pay any such Annual Rental or Additional Rental under the related
Lease Guaranty, if any, within fifteen (15) days after notice to Kmart of the
Lessee's failure to do so.
"Leases" means the Agreements to Lease.
"Lessee" or "Lessees" means the lessees listed in Exhibit D.
"Lessor" means the Owner Trustee.
"Lease/Lease Guaranty Default Optional Put" means the put of Bonds
described in Section 5.05.
"Lien" means, with respect to any asset, any mortgage, deed of trust,
lien, pledge, charge, security interest or encumbrance of any kind in respect
of such asset, whether or not filed, recorded or otherwise protected under
applicable law (including, without limitation, any conditional sale or other
title retention agreement, any lease in the nature thereof, any option or other
agreement to sell and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statute) of any
jurisdiction).
"Limited Partners" means the limited partners of the Company.
"Make-Whole Premium" means, with respect to any amount of Called
Principal, an amount equal to the sum of (x) the excess (which shall in no even
be less than zero), if any, of the Discounted Prepayment Value of the Called
Principal over the sum of (i) such Called Principal plus (ii) interest accrued
thereon as of the Settlement Date with respect to such Called Principal, and
(y) an amount equal to the product of the Called Principal and 101.8%. The
Make-Whole Premium shall in no event be less than zero. Each Owner shall be
provided prior to the Settlement Date with a certificate evidencing the
calculation of such amount by the Owner Trustee, who shall be entitled to rely
on an accountant's verification of the calculated amount.
"Maturity Date" means the final maturity date of each Bond and
Subordinate Bond as indicated on the face of each Bond and Subordinate Bond.
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<PAGE> 30
"Minimum Investment Grade" means a rating of at least "Baa3," in the
case of a rating by Moody's, and a rating of at least "BBB-, " in the case of a
rating by S&P, or the then equivalent of such rating by Moody's or S&P or, to
the extent applicable, by another Rating Agency.
"Monthly Basis" means the first business day of every month.
"Moody's" means Moody's Investors Service, a corporation organized and
existing under the laws of the State of Delaware, and its successors and
assigns.
"Mortgages" means, collectively, each mortgage/deed of trust and
security agreement, assignment of leases and rents and fixture filing relating
to each Facility, executed by the Owner Trustee and granting to the Trustee a
first Lien and security interest on such Facility to secure, among other
things, payments with respect to the Bonds and the Subordinate Bonds, if any.
"Mortgaged Estate" shall have the same meaning herein as in the
Mortgages.
"NAIC" means the National Association of Insurance Commissioners, and
its successors and assigns or the Securities Valuation Office (SVO) thereof,
and its successors and assigns, which provides insurers with uniform prices and
quality ratings.
"Officer's Certificate" means a certificate signed by the Chairman of
the Board of Directors, the Vice Chairman of the Board of Directors, the
President or a vice President and by the Treasurer, the Secretary or one of the
assistant treasurers or assistant secretaries of an entity or signed by such
persons of a general partner of an entity and delivered as specified herein.
"Opinion of Counsel" means a written opinion of Counsel, who may,
except as otherwise expressly provided in this Indenture, be Counsel for the
Owner Trustee or the Company and who shall be satisfactory to the Trustee.
"Optional Prepayment Redemption" means the redemption described in
Section 5.03.
"Ordinary Services" and "Ordinary Expenses" mean those fees for
services to be rendered and those expenses, including fees of Counsel, to be
owed to or incurred by the Owner Trustee, and the Trustee in its capacity as
such and as
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<PAGE> 31
Bond Registrar and Paying Agent, for which the Owner Trustee
and Trustee will be compensated as described herein.
"Original Issue Date" means December 29, 1992.
"Outstanding" or "Bonds Outstanding" or " Subordinate Bonds
Outstanding," in connection with the Bonds and Subordinate Bonds, means,
subject to Section 11.04 as of the time in question, all Bonds and Subordinate
Bonds executed, authenticated and delivered pursuant to this Indenture, except:
(a) Bonds and Subordinate Bonds theretofore cancelled by the Bond
Registrar or delivered for cancellation;
(b) Bonds and Subordinate Bonds for which payment of money
in the necessary amount (in accordance with Article VI) has been
theretofore deposited with the Trustee in trust for the Registered
Owners of the Bonds and Subordinate Bonds; provided, that in the case
of any redemption of such Outstanding Bond, notice of such redemption
shall also have been duly given pursuant to this Indenture or provision
therefor, satisfactory to the Trustee, shall have been made; and
(c) Bonds and Subordinate Bonds in exchange for or in lieu
of which other Bonds and Subordinate Bonds have been executed and
delivered pursuant to this Indenture.
"Owners" means the same definition as Registered Owner.
"Owner Trustee" means XXXXXXXXXX, in its capacity as Owner Trustee
under the Trust Agreement and not in its individual capacity except as otherwise
expressly provided herein having an address at XXXXXXXXXX, and its successors
and assigns.
"Owner Trustee Liens" shall mean any Lien upon all or any portion of
the Trust Estate or the Trust arising as a result of (i) claims against or
affecting the Owner Trustee (in its individual capacity or as Owner Trustee),
the Company or any Affiliate of either thereof not related to the transactions
contemplated by the Company Financing Documents; (ii) any act or omission of
the Owner Trustee (in its individual capacity or as Owner Trustee), the Company
or any Affiliate of either thereof that is not related to the transactions
contemplated by the Company Financing Documents or that is in breach of any
covenant or agreement of such
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<PAGE> 32
Person set forth in any of the Company Financing Documents; and (iii) Taxes
imposed against the Owner Trustee (in its individual capacity or as Owner
Trustee), the Company or any Affiliate or the Trust Estate.
"Paying Agent" means any bank or trust company designated pursuant to
this Indenture to serve as a paying agent or place of payment for the Bonds and
Subordinate Bonds and shall be initially the Trustee or its successors or
assigns.
"Payment Account" means the account by that name created by Section
3.02.
"Payment Date" means either an interest payment date of June 15, 1993
and each December 15 and June 15 thereafter, or a principal payment date of
December 15, 1993 and each December 15 thereafter, during which Bonds or
Subordinate Bonds are Outstanding.
"Permitted Encumbrances" shall mean the same herein as that term is
defined in the Mortgages.
"Person" means any natural person, firm, partnership, association,
corporation, trust or public body.
"Property" means the same herein as that term is defined in the
Mortgages.
"Put" means exercise of the right or the obligation to tender Bonds to
the Owner Trustee for purchase in accordance with Article V of this Indenture.
"Rating Agency" means Moody's or S&P.
"Rating Decline" means (i) the ratings assigned to unsubordinated,
senior, unsecured indebtedness of Kmart on such date by either Moody's or S&P:
(a) declines to a rating below the Minimum Investment Grade, or (b) further
declines, in the event then rated below the Minimum Investment Grade; or
(ii) (a) Unsubordinated, senior, unsecured indebtedness of
Kmart ceases to be rated by either Moody's or S&P (other than by reason
of such Rating Agency ceasing to rate the indebtedness of corporations
generally) at such time as the rating then assigned by the remaining
such Rating Agency shall be below Minimum Investment Grade or (b)
unsubordinated, senior, unsecured indebtedness of Kmart ceases to be
rated by either Moody's or S&P at such time as the rating then
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assigned by the remaining such Rating Agency shall be at least
the Minimum Investment Grade and Kmart is unable to have such debt
rated by another Rating Agency within 90 days thereafter; or
(iii) unsubordinated, senior, unsecured indebtedness of
Kmart ceases to be rated by both Moody's and S&P for any reason except
if, through no fault of Kmart, both Moody's and S&P are unable to
provide a rating due to a business failure or interruption affecting
both Moody's and S&P.
For purposes of determining whether a Rating Decline shall have occurred under
clause (i) of this definition, the rating initially assigned by any Rating
Agency engaged by Kmart pursuant to clause (ii) to replace any rating withdrawn
or otherwise terminated by Moody's or S&P shall be compared to the last rating
assigned by Moody's or S&P, as the case may be, to determine if the
circumstances described in (i)(a) or (b) exist.
"Rating Decline Put" means the right of a Bondholder to tender his
Bonds for purchase in the event there has been a Rating Decline, as provided
for in Section 5.04 hereof.
"Real Estate Transfer Documents" means, collectively, the "Security
Documents," as such term is defined in a particular Mortgage with respect to
each Facility and the Agreement for Sale of Real Estate.
"Record Date" means (i) with respect to any Payment Date, the tenth day
preceding the date on which such Payment Date is scheduled to occur, and (ii)
with respect to any Settlement Date, the fifteenth day preceding the date on
which such Settlement Date is scheduled to occur.
"Redemption Price" means, with respect to the applicable Settlement
Date for the redemption or repurchase of any Bonds or Subordinate Bonds, if
applicable, (i) with respect to the Bonds, the Make-Whole Premium plus accrued
interest on the Called Principal to such Settlement Date or (ii) with respect
to the Subordinate Bonds, the principal of, Make-Whole Premium, if any, and
accrued interest with respect to such Subordinate Bonds to such Settlement
Date.
"Registered Owners" or "Owners" or "Bondholders" or "Bondowners" means
the person or persons in whose name or names the Bonds and the Subordinate
Bonds are registered on the Record Date on the books of the Trustee as Bond
Registrar kept for that purpose in accordance with the terms of this
Indenture.
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"Reinvestment Yield" means, with respect to the Called Principal of the
Bonds, the sum of (x) the yield to maturity implied by the following: (i) the
yields reported, as of l0:00 a.m. (New York City time) on the third Business
Day preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such other display
as may replace Page 678 on the Telerate Service) for actively traded U.S.
Treasury securities having a maturity equal (as near as practicable) to the
Remaining Average Life of the Called Principal being paid or prepaid as of such
Settlement Date or (ii) if such yields shall not be reported as of such time or
the yields reported as of such time shall not be ascertainable, the Treasury
Constant Maturity Series yields reported, for the latest day for which such
yields shall have been so reported as of the third Business Day preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal (as
near as practicable) to the Remaining Average Life of the Called Principal
being paid or prepaid as of such Settlement Date; and (y) fifty (50) basis
points. Such implied yield shall be determined, if necessary, by (a)
converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between reported yields. Each Owner shall be provided two days prior to any
Settlement Date with a certificate evidencing the calculation of Reinvestment
Yield by the Owner Trustee, who shall be entitled to rely on an accountant's
verification of the calculation.
"Remaining Average Life" means, with respect to any amount of Called
Principal, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the
products obtained by multiplying (a) each Remaining Scheduled Payment of such
Called Principal (but not of interest thereon) by (b) the number of years
(calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due
date of such Remaining Scheduled Payment. The Owner Trustee shall calculate
the Remaining Average Life two days prior to any prepayment, but shall be
entitled to rely on an accountant's verification of the calculation.
"Remaining Scheduled Payments" means, with respect to any amount of
Called Principal, all payments of such Called Principal and interest thereon
that would be due on or after the Settlement Date with respect to such Called
Principal if
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no payment of such Called Principal were made prior to its
expressed maturity date. The Trustee shall prepare a
schedule setting forth the Remaining Scheduled Payments two
days prior to any prepayment.
"Required Bondowners" means the Registered Owners of Outstanding Bonds
representing a majority in principal amount of Outstanding Bonds.
"Required Subordinate Bondowners" means Registered Owners of
Outstanding Subordinate Bonds representing a majority in principal amount of
Outstanding Subordinate Bonds.
"Revenue Account" means the account by that name created pursuant to
Section 3.02.
"Revenues" means all income, rents, revenues, proceeds and other
amounts which are received by the Trustee or the Owner Trustee from or in
connection with the Company Financing Documents or otherwise in connection with
the Facilities or otherwise received by the Trustee or the Owner Trustee
(except for those amounts which are to be used to pay Administrative Expenses
and Extraordinary Expenses), including, without limitation, (i) amounts
received from the Lessees under the Leases or other entity under the Leases or
from the Lease Guaranties or from the Bond Put Agreement or as a result of the
Owner Trustee's or Trustee's ownership of the Facilities and amounts awarded to
or received by the Owner Trustee or Trustee as insurance proceeds, damages,
compensation or otherwise, by reason of rental interruption or damage to or
destruction of the Facilities or any part thereof or the taking of the
Facilities or any part thereof as a result of or in anticipation of the
exercise of the right of condemnation or eminent domain, (ii) amounts obtained
through the exercise of the remedies provided hereunder or in the other Company
Financing Documents upon the occurrence of an Event of Default hereunder or
thereunder, and (iii) all other amounts required to be deposited into the
Revenue Account hereunder; provided, however, notwithstanding any other
provision of this Indenture, that Revenues shall not be deemed to include
proceeds derived from the sale of the General Partner's or Limited Partners'
partnership interest or their beneficial interests in the Trust Agreement. Such
Revenues will commence on the Original Issue Date.
"S&P" means Standard & Poor's Corporation, its successors and assigns.
"Secured Obligations" shall have the meaning set forth in the Granting
Clause hereof.
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"Securities Act" means the Securities Act of 1933, as amended.
"Series" means, collectively, the Series A Bonds, Series B Bonds,
Series C Bonds and Series D Bonds.
"Series A Bonds" means those Bonds designated as such maturing December
15, 1998 and bearing interest at a rate per annum of 6.25%.
"Series B Bonds" means those Bonds designated as such maturing December
15, 2007 and bearing interest at a rate per annum of 7.50%.
"Series C Bonds" means those Bonds designated as such maturing December
15, 2011 and bearing interest at a rate per annum of 8.00%.
"Series D Bonds" means those Bonds designated as such maturing December
15, 2017 and bearing interest at a rate per annum of 8.40%.
"Settlement Date" means, with respect to the Called Principal, the date
on which such Called Principal is declared to be due or becomes due and payable
pursuant to Article V or Article VII, as the context requires.
"Stipulated Fraction" is determined by dividing the Annual Rental (as
defined in the Lease) for a particular Facility by the sum of the total
aggregate Annual Rentals for the Facilities which are not then the subject of a
Put, redemption or default, plus the Annual Rental for the Facility or
Facilities that are the subject of the current put, redemption or default.
"Subordinate Bonds" shall mean the subordinate bonds executed and
delivered pursuant to Section 2.11 which rank junior and subordinate to the
Bonds and which may be paid from moneys constituting the Trust Estate only if
all amounts of principal, premium, if any, and interest which have become due
and payable on the Bonds whether by maturity, redemption, purchase or
acceleration have been paid in full.
"Subordinate Bond Payment Account" means the account by that name
created in Section 3.02.
"Subordination, Non-Disturbance and Attornment Agreements" means the
agreement so named among each Lessee, Trustee and the Owner Trustee dated as of
December 28, 1992.
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"Supplemental Indenture" means any agreement hereafter authorized and
entered into between the Owner Trustee and the Trustee (in accordance with
Article X) which amends, modifies or supplements and forms a part of this
Indenture,
"Trust" means the trust created under the Trust Agreement.
"Trust Agreement" means that certain Trust Agreement, dated as of the
date hereof, between the Company and the Owner Trustee.
"Trustee" means XXXXXXXXXX, located at XXXXXXXXXX, or any successor
trustee appointed in accordance with the terms of this Indenture.
"Trust Estate" shall have the meaning set forth in the Granting Clause
hereof.
ARTICLE II
THE BONDS
Section 2.01. Authorized Amount of Bonds. No Bonds or Subordinate
Bonds may be executed and authenticated under the provisions of this Indenture
except in accordance with this Article. The total original principal amount of
Bonds and Subordinate Bonds which may be executed, authenticated and delivered
and to be Outstanding at any time is hereby expressly limited to $100,505,000.
Section 2.02. Bond Form Generally. The Bonds and Subordinate Bonds
shall be in substantially the form set forth in the seventh WHEREAS clause,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture to comply, or facilitate
compliance, with applicable laws or regulations, and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any securities
exchange on which the Bonds or Subordinate Bonds may be listed. Any provision
of the text of any Bond or Subordinate Bond may be set forth on the reverse
thereof with an appropriate reference on the face of the Bonds and Subordinate
Bonds.
The definitive Bonds and Subordinate Bonds shall be typewritten,
printed, lithographed or engraved or produced by any combination of these
methods. The Bonds and Subordinate
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Bonds shall be executed by an authorized signatory of the Owner Trustee by
manual or facsimile signature and, prior to delivery thereof, shall be
authenticated by the Trustee by a manual signature of an authorized signatory
of the Trustee.
Section 2.03. General Terms. The Owner Trustee shall execute and, upon
written request and authorization to the Trustee by the Owner Trustee, the
Trustee shall authenticate the Bonds and deliver them as specified in the Bond
Purchase Agreements. The Bonds shall be designated "Collateralized Lease
Revenue Bonds (Kmart Corporation Leased Facilities), Series 1992 [A, B, C or
D]." For CUSIP and private placement number registration purposes, the "Issuer"
of the Bonds shall be the Owner Trustee on behalf of the Trust. Except for the
Bonds which were delivered to the initial Registered Owners thereof, the Bonds
shall be issued, executed and delivered as fully registered Bonds without
coupons in denominations of $l00,000 principal amount or any integral multiple
of $5,000 in excess of $100,000 thereof; provided that the Owner Trustee shall
be authorized to execute and the Trustee shall be authorized to authenticate
and deliver single Bonds in nonconforming principal amounts as provided for to
effect a partial prepayment, redemption or Put as described in Article V. The
Bonds shall be numbered as determined by the Trustee.
The Bonds shall mature on the applicable Maturity Date(s). The Trustee
shall authenticate and deliver the Bonds in the aggregate original principal
amount of $l00,505,000. The Trustee shall insert the date of authentication of
the Bonds in the place provided for such purpose in the form of Trustee's
certificate of authentication to be printed on the Bonds.
The Bonds shall be dated as of the Original Issue Date.
The Bonds shall bear interest from the most recent date in respect of
which accrued interest has been paid or provided for, or if no interest has
been paid or provided for, from the Original Issue Date payable semiannually on
June 15 and December 15 of each year until such Bonds are paid at maturity or
to any earlier redemption date, commencing June 15, 1993.
Interest on the Bonds shall be calculated on the basis of a 360-day
year consisting of twelve 30-day months.
If any payment of principal of or premium, if any, or interest on a
Bond is not paid when due, such overdue principal, premium, if any, and (to the
extent permitted by applicable law) interest shall bear interest (calculated on
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the basis set forth above), payable on demand, from the due date of such
overdue payment until paid at a rate per annum equal to 200 basis points plus
the interest rate then in effect with respect to such Bond.
The Bonds are categorized into four Series (Series A Bonds, Series B
Bonds, Series C Bonds and Series D Bonds), each such Series having a different
maturity and per annum interest rate. THE BONDS ARE SUBJECT TO OPTIONAL
PREPAYMENT REDEMPTION, A RATING DECLINE PUT, A FAILURE OF OCCUPANCY MANDATORY
PUT, A LEASE/LEASE GUARANTY DEFAULT OPTIONAL PUT AND EXTRAORDINARY MANDATORY
REDEMPTION, ALL AS SET FORTH HEREIN.
The principal of the Bonds shall be payable in lawful money of the
United States of America at the principal corporate trust office of the
Trustee. Payment of interest on the Bonds shall be made to the Owner thereof
and shall be paid by check or draft mailed to the Owner at such address as is
set forth on the registration books maintained by the Trustee as of the
applicable Record Date. Upon the request of a Registered Owner of at least
$1,000,000 in principal amount of Bonds, all Bond Payments shall be made by
wire transfer in immediately available funds to an account designated by such
Registered Owner in writing, which writing must be received by the Trustee at
least 15 days prior to the applicable Record Date. Any reduction in the
principal amount of Bonds Outstanding due to payments on account of redemptions
shall be so noted on the books of the Trustee.
The Trustee, with respect to the initial purchasers of the Bonds, shall
enter in its registration books the notification and payment instructions for
each initial purchaser contained in the Bond Purchase Agreements and the
signature pages thereof, and which shall be deemed to satisfy the requirements
in the previous paragraph relating to the advance notification of wire
instructions.
Section 2.04. Temporary Bonds. Pending the preparation of definitive
Bonds, the Owner Trustee may execute and upon a written request and
authorization to the Trustee by the Owner Trustee the Trustee shall
authenticate and deliver temporary Bonds which are printed, lithographed,
typewritten, mimeographed or otherwise produced, substantially of the tenor of
the definitive Bonds in lieu of which they are issued.
If temporary Bonds are issued, the Owner Trustee will cause definitive
Bonds to be prepared without unreasonable delay. After the preparation of
definitive Bonds, the
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temporary Bonds shall be exchangeable, without cost, for definitive Bonds upon
surrender of the temporary Bonds at the corporate trust office of the Trustee,
without charge to the Registered Owners. Upon surrender for cancellation of
any one or more temporary Bonds, the Owner Trustee shall execute and the
Trustee shall authenticate and deliver in exchange therefor, a like principal
amount of definitive Bonds. Until so exchanged, the temporary Bonds shall in
all respects be entitled to the same benefits under this Indenture as
definitive Bonds.
Section 2.05. Restrictions on Transfer of Bonds. The sale of the Bonds
has not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or qualified under the securities laws of any State or other
jurisdiction ("blue sky" laws) and the Bonds will be "restricted securities" as
defined in Rule 144, 17 C.F.R. Section 230.144 ("Rule 144"), promulgated
pursuant to the Securities Act. No Bond may be sold, assigned or otherwise
transferred unless it is so registered and qualified or unless an exemption
from such registration and qualification is available. Purchaser(s) or
transferee(s) of the Bonds shall be deemed to have represented and warranted
that it or they are an "Accredited Investor," as defined in Rule 501(a)(1), (2)
or (3) under Regulation D of the Act. The Bonds shall bear a legend describing
the foregoing restrictions on transfer, and appropriate stop transfer
instructions shall be given to the Bond Registrar.
Section 2.06. Registration; Registration of Transfer and Exchange. The
Bond Registrar shall cause to be kept a Bond Register on which, subject to such
reasonable regulations as it may prescribe, the Bond Registrar shall provide
for the registration of Bonds and the registration of transfers or exchanges of
Bonds. The Trustee is hereby appointed "Bond Registrar" for the purpose of
registering Bonds and transfers or exchanges of Bonds as herein provided.
Upon surrender for registration of transfer of any Bond at the
corporate trust office of the Trustee, the Trustee, as the case may be, shall
authenticate and promptly deliver, in the name of the designated transferee or
transferees, one or more new Bonds in the same aggregate principal amount.
At the option of the Registered Owners, the Bonds upon transfer may be
exchanged for other Bonds of the same aggregate principal amount and of the
same maturity, upon surrender of the Bonds to be exchanged at the corporate
trust office of the Trustee. Whenever any Bond is so surrendered for exchange,
the Owner Trustee shall execute and the Trustee
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shall authenticate and deliver the Bonds which the Registered Owner
making the exchange is entitled to receive. Every Bond presented or
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer in form attached to the Bond
duly executed, by the Registered Owner thereof or his attorney duly authorized
in writing. All Bonds issued upon any registration of transfer or exchange of
Bonds shall be entitled to the same benefits and subject to the same provisions
of this Indenture as the Bonds surrendered upon such registration of transfer
or exchange. The Trustee shall not be required to transfer or exchange any
Bonds during the period established by the Trustee for selection of Bonds for
redemption or to transfer or exchange any Bond that has been selected for
redemption. No service charge shall be made to a Registered Owner for any
registration of transfer or exchange of Bonds; provided, however, that the
Trustee shall require the payment by the Registered Owner requesting transfer
or exchange of any transfer tax or other similar governmental charge required
to be paid with respect to such transfer.
Section 2.07. Mutilated, Destroyed, Lost or Stolen Bonds. In the event
any Bond or temporary Bond is mutilated, lost, stolen or destroyed, the Owner
Trustee shall execute and upon written request from the Owner Trustee the
Trustee shall authenticate a new Bond of like date, maturity, interest rate and
denomination as that mutilated, lost, stolen or destroyed; provided that, in
the case of any mutilated Bond, such mutilated Bond shall first be surrendered
to the Trustee, and in the case of any lost, stolen or destroyed Bond, there
shall be first furnished to the Trustee and the Owner Trustee evidence of such
loss, theft or destruction satisfactory to the Trustee and the Owner Trustee,
together with indemnity; provided, however, that if any "Accredited Investor,"
as defined in Rule 501(a)(1), (2) or (3) under Regulation D of the Securities
Act, is the Registered Owner of any mutilated, lost, stolen or destroyed Bond,
then the affidavit of an authorized officer of such Registered Owner setting
forth the fact of such mutilation, loss, theft or destruction and its ownership
of the Bond at the time thereof, shall be accepted as satisfactory evidence
thereof and no further indemnity shall be required as a condition to the
execution, authentication and delivery of a new Bond. Bondowners who deliver
an affidavit setting forth the fact of such mutilation, loss, theft or
destruction will be required to indemnify the Trustee and the Owner Trustee if
any statement in such affidavit proves to be false against liability (other
than liability caused by or arising from the gross negligence or
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misconduct of the Trustee or the Owner Trustee), or payment or
reimbursement of expenses. In the event any such Bond shall have matured,
instead of issuing a replacement Bond as provided above, the Trustee may pay
the same.
Every replacement Bond executed pursuant to this Section shall
constitute an additional contractual obligation of the Owner Trustee, whether
or not the Bond alleged to have been mutilated, destroyed, lost or stolen shall
be at any time enforceable by anyone, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all other Bonds duly
executed hereunder.
The Bonds shall be held and owned upon the express condition that the
foregoing provisions are, to the extent permitted by law, exclusive with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Bonds, and preclude any and all other rights or remedies of the Registered
Owners with respect to such Bonds.
Section 2.08. Cancellation and Destruction of Surrendered Bonds.
Whenever any Bonds shall be delivered to the Trustee for cancellation pursuant
to this Indenture or for the payment in full of the Bond Obligations
represented thereby, or the exchange thereof, such Bonds shall be promptly
cancelled, cremated or otherwise destroyed by the Trustee, and counterparts of
a certificate of destruction evidencing such cremation or other destruction
shall be furnished by the Trustee to the Owner Trustee.
Section 2.09. Delivery of the Bonds. Upon the execution and delivery
of this Indenture, the Owner Trustee shall execute and the Trustee shall
authenticate the Bonds as provided in Section 2.03 and deliver them to the
initial Registered Owners. Prior to or simultaneously with the delivery by the
Trustee of the Bonds on the Original Issue Date, there shall have been filed
with the Trustee:
(1) Original executed counterparts of this Indenture, the
Bond Put Agreement, the Mortgages and the Real Estate Transfer
Documents and the Leases and the Lease Guaranties and other Company
Financing Documents; and
(2) A written request and authorization to the Trustee by
the Owner Trustee to authenticate and deliver the Bonds to the
purchaser therein identified.
Section 2.10. Equal Benefits. The Trust Estate and the provisions,
covenants and agreements herein set forth to be
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performed by the Owner Trustee and the Trustee shall be with a priority first
for the equal and proportionate benefit, protection and security of the
Bondowners of any and all of the Outstanding Bonds, all of which, regardless of
the time or times of their issuance or maturity, shall be of equal rank without
preference, priority or distinction of any of the Bonds over any other thereof,
and second for the equal and proportionate benefit, protection and security of
the Bondowners of any and all of the Outstanding Subordinate Bonds, all of
which, regardless of the time or times of their issuance or maturity, shall be
of equal rank without preference, priority or distinction of any of the
Subordinate Bonds over any other thereof. Each of the Bonds ranks pari passu
with each of the other Bonds in priority of payment and in all other respects.
Each of the Subordinate Bonds ranks pari passu with each of the other
Subordinate Bonds in priority of payment and in all other respects.
Section 2.11. Subordinate Bonds. In the event that Bonds have been Put
to the Trustee pursuant to Section 5.04, 5.05 or 5.06, then the Trustee shall
deliver to Kmart, as consideration for Kmart purchasing the Bonds in accordance
with the terms of the Bond Put Agreement, new Subordinate Bonds which are
subordinate to the Outstanding Bonds. Except as provided below, the
Subordinate Bonds shall have the same maturities, principal amounts, mandatory
sinking fund repayment provisions and interest rates as the Bonds which were
delivered to the Trustee as a result of a Put pursuant to Section 5.04, 5.05 or
5.06 hereof.
Subordinate Bonds are subordinate to the Lien on and security interest
granted in the Trust Estate to the Bonds. The payment of principal, Make-Whole
Premium, if any, and interest on the Subordinate Bonds is subordinated to the
prior indefeasible payment in full of principal, Make-Whole Premium, if any and
interest on the Bonds; provided that payment of the principal of, Make-Whole
Premium, if any, and interest on the Subordinate Bonds shall be permitted under
this Indenture, only if all payments required to be made by the Trustee in
respect of Bond Obligations on the Outstanding Bonds are then current.
The Subordinate Bonds shall be designated "Collateralized Lease Revenue
Subordinate Bonds (Kmart Corporation Lease Facilities), Series 1992 [A, B, C or
D]." For CUSIP registration purposes, the "Issuer" of the Bonds shall be the
Owner Trustee. The Subordinate Bonds shall be issued, executed and delivered
as fully registered Subordinate Bonds without coupons in denominations of
$100,000 principal amount or any integral multiple of $5,000
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in excess of $100,000 thereof; provided that the Owner Trustee shall be
authorized to execute and the Trustee shall be authorized to authenticate and
deliver single Bonds in nonconforming principal amounts as Provided for to
effect a partial redemption as described in Section 5.09. The Subordinate
Bonds shall be numbered as determined by the Trustee.
The Subordinate Bonds shall mature on the applicable Maturity Date(s).
The Trustee shall insert the date of authentication of the Subordinate Bonds in
the place provided for such purpose in the form of Trustee's certificate of
authentication to be printed on the Subordinate Bonds.
The Subordinate Bonds shall be dated as of the Settlement Date for
which such Subordinate Bonds were issued in exchange for the Put of Bonds
pursuant to Section 5.04, 5.05 or 5.06 (the "Issue Date").
The Subordinate Bonds shall bear interest from the most recent date in
respect of which accrued interest has been paid or provided for or, if no
interest has been paid or provided for, from the Issue Date payable
semiannually on December 15 and June 15 of each year until such Subordinate
Bonds are paid at maturity or to any earlier redemption date, commencing June
15, 1993.
Interest on the Subordinate Bonds shall be calculated on the basis of a
360-day year consisting of twelve 30-day months.
The Subordinate Bonds are categorized into four Series (Series A
Subordinate Bonds, Series B Subordinate Bonds, Series C Subordinate Bonds and
Series D Subordinate Bonds), each such Series having a different maturity and
per annum interest rate. THE SUBORDINATE BONDS ARE SUBJECT TO OPTIONAL
PREPAYMENT REDEMPTION AND EXTRAORDINARY MANDATORY REDEMPTION, ALL AS SET FORTH
HEREIN.
The principal of the Subordinate Bonds shall be payable in lawful money
of the United States of America at the principal corporate trust office of the
Trustee, upon presentation and surrender of the Subordinate Bonds. Payment of
interest on the Subordinate Bonds shall be made to the Owner thereof and shall
be paid by check or draft mailed to the Owner at such address as is set forth
on the registration books maintained by the Trustee as of the applicable Record
Date. Upon the Request of a Registered Owner of at least $1,000,000 in
principal amount of Subordinate Bonds, all Bond Payments shall be made by wire
transfer in immediately
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available funds to an account designated by such Registered Owner in writing,
which writing must be received by the Trustee at least 15 days prior to the
applicable Record Date. Any reduction in the principal amount of Subordinate
Bonds outstanding due to payments on account of redemptions shall be so noted
on the books of the Trustee.
The provisions of Sections 2.02, 2.04, 2.05, 2.06, 2.07 and 2.08 shall
apply to the Owners of the Subordinate Bonds as if such Subordinate Bonds were
the Bonds.
ARTICLE III
REVENUES AND FUNDS
Section 3.01. Source of Payment of Bonds. The Trust Estate shall be
used for no other purpose than for making the Bond Payments, except as may be
otherwise expressly authorized in this Indenture.
Section 3.02. Creation of Accounts. The following Accounts are hereby
created and established with the Trustee: the Acquisition Account, Revenue
Account, the Payment Account, the Subordinate Bond Payment Account, the Bond
Proceeds Disbursement Account, the Administrative Expense Account, the
Extraordinary Expense Account and the Insurance and Condemnation Proceeds
Account. Each Account shall be maintained by the Trustee as a separate and
distinct trust fund or account to be held, managed, invested, disbursed and
administered as provided in this Indenture. All moneys deposited in the
Accounts shall be used solely for the purposes set forth in this Indenture. The
Trustee shall keep and maintain adequate records pertaining to each Account,
and all disbursements therefrom.
All amounts credited to any Account shall be held in trust for the
equal and proportionate benefit of the Registered Owners in accordance with
Section 2.10 only for the uses and purposes set forth in this Indenture until
payment or application of any such amounts is made for such uses and purposes
and in the manner set forth in this Indenture. The Owner Trustee shall not
have any legal, equitable or beneficial right, title or interest in any money
so deposited except in accordance with the provisions of this Indenture.
All funds or deposits in any Account which are available to the Trustee
shall be invested and reinvested by the Trustee in one or more Eligible
Investments selected in writing by the Owner Trustee, but only if the Owner
Trustee
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has received directions from the General Partner. If the Trustee does not
receive written directions from the Owner Trustee then the Trustee shall
invest such funds in Eligible Investments which meet the criteria set forth
in subparagraph (d) of the definition thereof. No such investment or
reinvestment shall mature later than the Business Day immediately preceding
the next Payment Date or an earlier date to the extent such moneys will be
needed. Otherwise Eligible Investments that impose substantial breakage fees
will not be deemed an Eligible Investment.
Section 3.03. Disbursements. On the Closing Date, from the
proceeds of the Bonds, including accrued interest from the Original Issue Date,
the Trustee shall deposit the proceeds of the Bonds into the Bond Proceeds
Disbursement Account to be disbursed in accordance with Section 3.06(b) and (c).
Section 3.04. Deposit of Revenues in Revenue Account. The Owner
Trustee shall cause the Trustee to receive and the Trustee shall, on the date
of its receipt thereof, deposit in and credit to the Revenue Account, the
following amounts:
(i) All amounts constituting Revenues payable pursuant to
the Leases, the Lease Guaranties, the Mortgages, the Bond Put
Agreement and other amounts transferred from other Accounts hereunder;
(ii) Amounts constituting accrued interest received from the
initial purchasers of the Bonds; and
(iii) All amounts received by the Trustee to redeem Bonds
pursuant to Article V.
Notwithstanding the above, any amounts received representing insurance
or condemnation proceeds shall be immediately credited to the Insurance and
Condemnation Proceeds Account as set forth in Section 3.07 hereof.
Section 3.05. Application of Revenues in the Revenue Account.
(a) Until all Bond Obligations shall have been paid in
full or provisions for their payment made in the manner set forth in
Article VI, the Trustee shall, on a Monthly Basis, make deposits from
the Revenue Account into the various accounts in the order of priority
set forth below:
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first, for deposit in the Payment Account, any amount
of interest, principal, Make-whole Premium, if any, and Administrative
Expenses required to be deposited under this Article III with respect
to prior periods, but only to the extent such amount has not
previously been paid;
second, for deposit in the Payment Account, commencing January
1, 1993, an amount equal to one-sixth (1/6) of the interest coming due
on the Bonds on the next Payment Date;
third, for deposit in the Payment Account, commencing January
1, 1993, an amount equal to one-twelfth (1/12) of the principal coming
due on the Bonds on the next Payment Date;
fourth, for deposit in the Administrative Expense Account, an
amount equal to one-twelfth (1/12) of the annual Administrative
Expenses estimated or identified by the Trustee to be due over the
next 12-month period as calculated on the next preceding Payment Date
(with appropriate pro-rata amounts for the period from the Closing
Date to the first Payment Date);
fifth, for deposit in the Subordinate Bond Payment Account, an
amount equal to one-sixth (1/6) of the interest coming due on the
Subordinate Bonds on the next Payment Date;
sixth, for deposit in the Subordinate Bond Payment Account, an
amount equal to one-twelfth (1/12) of the principal coming due on the
Subordinate Bonds on the next Payment Date; and
seventh, any funds or amounts remaining in the Revenue Account
after payment or credit, as specified above, and after deducting any
amounts previously due on or prior to a Payment Date or due from the
previous periods, as specified above, but not paid, or required to be
on deposit pursuant to Section 3.05(b), shall be deposited by the
Trustee in the Extraordinary Expense Account; provided that if the
amounts on deposit in the Extraordinary Expense Account exceed the
Extraordinary Expense Amount, and no default or Event of Default
hereunder or under any Company Financing Document has occurred and is
continuing, then such excess shall be remitted to the Owner Trustee.
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(b) On or prior to any date on which notice of redemption
of Bonds and Subordinate Bonds in whole or in part is to be given
pursuant to Article V, the Trustee shall withdraw from the Revenue
Account and/or the Insurance and Condemnation Proceeds Account and
deposit into the Payment Account and Subordinate Bond Payment Account
an amount sufficient to make payments specified in the following
clauses first, second, third and fourth with respect to the Bonds and
Subordinate Bonds to be redeemed:
first, for deposit into the Payment Account, an amount which,
when added to other amounts already on deposit therein, is
equal to the sum of the interest on the Called Principal of
Bonds which will accrue to the relevant Settlement Date, which
amount shall be paid to the Registered Owners; and
second, for deposit in the Payment Account, an amount which,
when added to other amounts already on deposit therein, is
equal, after giving effect to clause first, to the Redemption
Price on the Bonds which will be due and payable on the
relevant Settlement Date, which amount shall be paid to the
Registered Owners; and
third, for deposit in the Subordinate Bond Payment Account, an
amount which, when added to other amounts already on deposit
therein, is equal, after giving effect to clauses first and
second, to the sum of the interest on the Called Principal of
Subordinate Bonds which will be accrued to the relevant
Settlement Date, which amount shall be paid to the Registered
Owners; and
fourth, for deposit in the Subordinate Bond Payment Account,
an amount which, when added to other amounts already on
deposit therein, is equal, after giving effect to clauses
first, second and third, to the Redemption Price on the
Subordinate Bonds which will be due and payable on the
relevant Settlement Date, which amount shall be paid to the
Registered Owners.
Section 3.06. Bond Proceeds Disbursement Account.
(a) The Trustee shall credit to the Bond Proceeds
Disbursement Account on the Closing Date the proceeds from the
issuance of the Bonds, including accrued interest from the Original
Issue Date, as set forth in Section 3.03.
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(b) On the Closing Date, the Trustee shall disburse
moneys in the Bond Proceeds Disbursement Account (i) to pay
$96,915,857.61 to the Acquisition Account for the acquisition of the
Facilities; (ii) to pay up to $2,332,260.89 as Costs of Issuance upon
receipt of one or more requisitions signed by an authorized officer of
XXXXXXXXXX and certifying the amount thereby requisitioned, the
person to whom payment is to be made and the reason for the payment;
and (iii) to deposit in the Revenue Account $21,892.89 representing
the accrued interest received from the initial purchasers of the Bonds
and $859,983.39 representing amounts which would have otherwise been
paid to Kmart as part of the acquisition price for the Facilities,
but for which Kmart has requested that such amount be used to pay its
lease payment obligations for December and January with respect to
the Facilities.
(c) Subsequent to the disbursements to the Acquisition
Account, the Revenue Account and the payment of the Costs of Issuance,
the balance of such proceeds in the Bond Proceeds Disbursement Account
shall be deposited by the Trustee in the Extraordinary Expense
Account; provided that if the amount on deposit in the Extraordinary
Expense Account exceeds the Extraordinary Expense Amount, and no
default or Event of Default hereunder or under any Company Financing
Document has occurred and is continuing, then such excess, if any,
shall be remitted by the Trustee to the Owner Trustee, if permitted
hereunder.
Section 3.07. Insurance and Condemnation Proceeds Account.
(a) The Owner Trustee shall cause the Trustee to receive,
and the Trustee shall credit to the Insurance and Condemnation
Proceeds Account (i) amounts representing insurance (or self-insurance
by a Lessee permitted under any Lease relating to the Facilities)
proceeds, net of the costs and expenses of the Trustee permitted under
the Mortgage, which in all events shall be paid directly to the
Trustee as a named insured, from any insured event, whether
contemplated by the Leases or the Mortgages or otherwise, (ii)
amounts, net of the costs and expenses of the Trustee permitted under
the Mortgage representing a payment with respect to a condemnation of
all or any portion of the Facilities; (iii) all other amounts received
in connection with the loss, damage, destruction or taking of any of
the Facilities or title thereto, and (iv) all amounts
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received as earnings on or income from any investments or
reinvestments of funds in Eligible Investments in the Insurance and
Condemnation Proceeds Account. For further guidance as to amounts
receivable under such insurance policies, see Articles 16 and 17 of
the Leases and Section 1.30 of the Mortgages.
(b) The Trustee shall transfer or pay any funds deposited
in the Insurance and Condemnation Proceeds Account to the Payment
Account as required by Section 3.05(b) and necessary for the Mandatory
Extraordinary Redemption of Bonds and Subordinate Bonds pursuant to
Section 5.07.
Section 3.08. Administrative Expense Account.
(a) The Owner Trustee shall cause the Trustee to receive,
and the Trustee shall credit to the Administrative Expense Account (i)
all amounts transferred from the Revenue Account pursuant to clause
first and fourth of Section 3.05(a) and (ii) all amounts necessary to
pay Administrative Expenses. All amounts received as earnings on or
income from any investments or reinvestments of amounts in Eligible
Investments in the Administrative Expense Account shall be credited to
the Revenue Account.
(b) The Trustee shall use funds in the Administrative
Expense Account to pay when due Administrative Expenses.
Section 3.09. Extraordinary Expense Account.
(a) The Owner Trustee shall cause the Trustee to receive,
and the Trustee shall credit to the Extraordinary Expense Account all
amounts transferred from the Revenue Account pursuant to clause
seventh of Section 3.05(a) and amounts, if any, transferred from the
Bond Proceeds Disbursement Account pursuant to Section 3.06(c) hereof
plus any additional amounts necessary to cause the balance of the
Extraordinary Expense Account to equal to the Extraordinary Expense
Amount.
(b) The Trustee shall use the funds in the Extraordinary
Expense Account for the following purposes and in the following order
of priority:
(i) to pay the Extraordinary Services and
Extraordinary Expenses of the Trustee and Owner Trustee;
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(ii) to the extent insufficient amounts are
available for Administrative Expenses, the Trustee may draw
upon the Extraordinary Expense Account. Written notice of
such a draw shall be made to the Owners of the Bonds and the
Owner Trustee within five (5) Business Days after such draw.
Such written notice shall set forth the amount of the draw,
its use and the balance remaining in the Extraordinary Expense
Account; and
(iii) to the extent that amounts in the
Extraordinary Expense Account are in excess of the
Extraordinary Expense Amount, such excess shall be disbursed
to the Owner Trustee without requisition provided no default
or Event of Default hereunder or under any of the other
Company Financing Documents has occurred and is continuing.
Section 3.10. [Reserved].
Section 3.11. [Reserved].
Section 3.12. Final Balances. Upon the deposit with the Trustee of
moneys sufficient to pay in full all required Bond Payments with respect to the
Bonds, all reasonable fees, charges and other expenses, such as attorneys' fees
of the owner Trustee and the Trustee which are properly due and payable
hereunder, or upon the making of adequate provisions for the payment of such
amounts as permitted by Article VI, including payment of all Bond Obligations,
all moneys remaining in all Accounts, except moneys necessary to pay in full
such Bond Payments and other charges and expenses, which moneys shall be held
and disbursed by the Trustee pursuant to this Article III, shall be remitted to
the Owner Trustee, subject to the provisions of Article VI.
Section 3.13. Payment Account. Moneys in the Payment Account shall
be used solely to pay principal, Make-Whole Premium, if any, and interest on
the Bonds whether on a Payment Date, at maturity, by reason of prior redemption
or otherwise. Any funds or amounts remaining in the Payment Account, after a
Payment Date (in which both principal and interest are paid in full) or after a
Settlement Date (on which the Redemption Price is paid in full), shall be
credited to the Revenue Account.
Section 3.14. Subordinate Bond Payment Account. Moneys in the
Subordinate Bond Payment Account shall be used solely to pay principal,
Make-Whole Premium, if any, and interest on the Subordinate Bonds whether on a
Payment Date, at
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maturity, by reason of prior redemption or otherwise. Any funds or amounts
remaining in the Subordinate Bond Payment Account, after a Payment Date (on
which both principal and interest are paid in full) or after a Settlement Date
(on which the Redemption Price is paid in full), shall be credited to the
Revenue Account.
Section 3.15. Investments of Accounts. All funds or deposits in
the Accounts which are available to the Trustee shall be invested and
reinvested by the Trustee in one or more Eligible Investments selected in
writing by the Company. The Trustee is not liable for investment losses in
Eligible Investments in the Accounts. If the Trustee does not receive written
direction from the Owner Trustee, then the Trustee shall invest such funds in
Eligible Investments which meet the criteria set forth in subparagraph (d) of
the definition thereof.
Section 3.16. Security of Funds. All moneys deposited with the
Trustee under this Indenture shall be held by the Trustee in trust, constitute
part of the Trust Estate and be subject to this Indenture for the equal and
proportionate benefit of the Registered Owners of all Outstanding Bonds, and to
the extent the Bonds are currently paid in full, then for the equal and
proportionate benefit of the Registered Owners of the Subordinate Bonds in
accordance with Section 2.10.
Section 3.17. Receipt of Lease Payments.
(a) The Real Estate Transfer Documents provide that, on
the Closing Date and on the first day of each month (or, if such day
is not a Business Day, then on the next succeeding Business Day)
thereafter, beginning on the Closing Date, each Lessee shall send to
the Trustee at the notice address indicated in Section 13.04, by means
of a wire transfer acceptable to the Trustee, an amount equal to the
amount of monthly rent then due under its Lease (Annual Minimum Rental
divided by twelve (12)). If the Trustee has not received such
payment by 3:00 p.m., Pacific time, on the date the payment is due
(or, if such day is not a Business Day, then on the next succeeding
Business Day), the Trustee shall immediately give notice to the
applicable Lessee and to Kmart of the failure to receive payment with
respect to that particular Lease and shall investigate the reason for
its failure to receive payments by communicating telephonically or by
facsimile transmission with the General Partner, and take such action
as is appropriate under the circumstances to
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secure its receipt of payments before the close of business on the
tenth (10th) day following the giving of such notice, or, if it is not
possible to receive payments by such time, then as soon thereafter as
possible and in no event later than the fifteenth (15th) day of the
month (or, if such day is not a Business Day, then on the next
preceding Business Day).
(b) If the amount of Annual Minimum Rental payable under
any Lease increases during the term of such Lease, due to provisions
relating to increases in taxes and insurance or otherwise, the Owner
Trustee will take or cause to be taken such actions as are necessary
to effect an appropriate increase in the amount of the monthly payment
referred to in paragraph (a) of this Section 3.17, and will provide or
cause to be provided to the Trustee timely written notice of the same.
ARTICLE IV
REVENUES AND APPLICATION
Section 4.01. Revenues to be Held for All Registered owners;
Certain Exceptions. The Revenues shall, until applied as provided in this
Indenture, be held by the Trustee first for the equal and proportionate benefit
of the Registered Owners of the Outstanding Bonds, except that any portion of
the Revenues representing principal, Make-Whole Premium, if any, and interest
with respect to any Bonds previously called for redemption or purchase in
accordance with Article V of this Indenture or for Bonds matured but not yet
presented shall be held for the equal and proportionate benefit of the
Registered owners of the Bonds to be so redeemed or purchased. If payment of
the Bond Obligations on all Outstanding Bonds are current, the Revenues shall,
until applied as provided in this Indenture, be held for the equal and
proportionate benefit of the Registered Owners of the Subordinate Bonds.
ARTICLE V
REDEMPTION OF BONDS AND SUBORDINATE BONDS BEFORE MATURITY
Section 5.01. Limitation on Redemption. The Bonds and Subordinate
Bonds shall be subject to redemption prior to maturity only as provided in this
Article V.
Section 5.02. (Reserved].
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Section 5.03. Optional Prepayment Redemption. The Owner Trustee may
prepay the Bonds and the Subordinate Bonds at any time either in whole
or in part (but if in part then in units of $1,000,000 or an integral multiple
of $100,000 in excess thereof) by the payment of the Redemption Price
determined as of the third Business Day prior to the Settlement Date. Sixty
(60) days prior written notice of the Owner Trustee's intent to prepay under
this section must be given to the Trustee, or its successor; which notice shall
state (i) the principal amount to be prepaid, (ii) the Settlement Date, (iii)
the estimated Redemption Price and (iv) the manner in which the Redemption
Price has been determined.
Section 5.04. Rating Decline Put.
(a) If a Rating Decline occurs each Bondholder of record
on the relevant Record Date will have the right to require the Owner
Trustee to purchase such Bondholder's Bonds in whole or in part on the
Settlement Date, which for purposes of this Section shall be the
Business Day selected by the Trustee not earlier than thirty (30) nor
later than forty-five (45) days after a Rating Decline, at the
Redemption Price. In the event a Rating Decline has occurred, Kmart
is required, under the terms of the Bond Put Agreement, to cause a
notice thereof to be mailed to the Trustee. The obligations of the
Trustee to give the notices required pursuant to section 5.04(b) shall
remain in effect so long as any Bonds remain outstanding. If a Rating
Decline occurs and subsequent to such Rating Decline another Rating
Decline occurs, then the Bondholder will again have the rights, and
the Owner Trustee again will have the obligations, set forth in this
Section.
(b) Within seven days after a Rating Decline has
occurred, the Trustee will cause a notice to be mailed to the
Bondholders and Kmart, which notice shall (1) state that a Rating
Decline has occurred, (2) describe any action that caused such Rating
Decline, and the date of the occurrence thereof, (3) set forth the
Owner Trustee's offer to purchase the Bonds as provided in paragraph
(c) below, and (4) state (i) the Settlement Date, (ii) the estimated
Redemption Price, (iii) the manner in which the Redemption Price has
been determined, (iv) the date by which the Bondholder has to provide
written notification to the Trustee of its election to tender Bonds,
(v) the party to whom the Bondholder electing purchase shall surrender
the Bonds on or before the Settlement Date, (5) state that the
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Trustee elects to have Kmart purchase all or a portion of the Bonds on
the Settlement Date and (6) include the tender notification election
form required to be delivered by electing Bondholders under Section
5.04(c).
(c) In connection with the purchase of Bonds pursuant to
this Section, each Bondholder electing to exercise the right to tender
Bonds shall deliver to Trustee at least fifteen (15) days prior to the
Settlement Date written notification of such Bondholder's election to
tender Bonds, which notice shall also set forth the aggregate
principal amount of Bonds to be tendered. Any notice delivered to the
Trustee is irrevocable.
(d) In connection with the purchase of Bonds pursuant to
this Section, Bondholders who have elected to tender their Bonds shall
be required to surrender, on or promptly after the Settlement Date, at
the principal office of the Trustee, the principal amount of the Bonds
set forth in the notice of tender. The Trustee shall hold the Bonds
in trust for the benefit of the Bondholder electing to tender Bonds
pursuant to this section until payment in full of the Redemption Price
to the holder on the Settlement Date and shall then and thereupon
authenticate and deliver, in the name of Kmart, one or more new Bonds,
in exchange for the tendered Bonds, having the same aggregate
principal amount, interest rate and the same maturity as the Bonds
which were tendered.
Section 5.05. Lease/Lease Guaranty Default Optional Put.
(a) If a Lease/Lease Guaranty Default occurs, each
Bondholder of record on the relevant Record Date will have the right
to require the Owner Trustee to purchase such Bondholder's Bonds in
whole or in part (as more fully set forth in paragraph (d) below) on
the Settlement Date, which for purposes of this Section shall be the
Business Day selected by the Trustee not earlier than thirty (30) nor
later than forty-five (45) days after a Lease/Lease Guaranty Default,
at the Redemption Price. In the event a Lease/Lease Guaranty Default
occurs, Kmart is required, under the terms of the Bond Put Agreement,
to cause notice thereof to be mailed to the Trustee. The obligations
of the Trustee to give the notices required pursuant to Section
5.05(b) shall remain in effect so long as any Bonds remain
outstanding. If a Lease/Lease Guaranty Default
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occurs and subsequent to such Lease/Lease Guaranty Default another
Lease/Lease Guaranty Default occurs, then the Bondholder will again
have the rights, and the Owner Trustee will again have the
obligations, set forth in this Section.
(b) Within seven days after such Lease/Lease Guaranty
Default, the Trustee will cause a notice to be mailed to the
Bondholders and Kmart, which notice shall (1) state that a Lease/Lease
Guaranty Default has occurred and the location of the Facility
affected, (2) describe any action that caused such Lease/Lease
Guaranty Default, and the date of the occurrence thereof, (3) set
forth the Owner Trustee's offer to purchase Bonds as provided in
paragraph (c) below, (4) state (i) the Settlement Date, (ii) the
estimated Redemption Price, (iii) the manner in which the Redemption
Price has been determined, (iv) the date by which the Bondholder has
to provide notification to the Trustee of its election to tender
Bonds, (v) the party to whom the Bondholder electing purchase shall
surrender the Bonds on or before the Settlement Date, (vi) state that
the Trustee elects to have Kmart purchase all or a portion of the
Bonds on the Settlement Date, and (5) include the tender notification
election form required to be delivered by electing Bondholders under
Section 5.05 (c).
(c) In connection with the purchase of Bonds pursuant to
this Section, each Bondholder electing to exercise the right to tender
Bonds is required to deliver to the Trustee at least fifteen (15) days
prior to the Settlement Date written notification of such Bondholder's
election to tender Bonds up to the maximum set forth in Section
5.05(e), which notice shall also set forth the aggregate principal
amount of Bonds to be tendered. Any notice delivered to the Trustee
is irrevocable.
(d) In connection with the purchase of Bonds pursuant to
this Section, the Bondholders who have elected to tender their Bonds
shall be required to surrender, on or promptly after the Settlement
Date, at the principal office of the Trustee, the principal amount of
the Bonds set forth in the notice of Tender, provided that the
Principal amount of Bonds to be tendered cannot exceed the amount
established in Section 5.05(e). The Trustee shall hold the Bonds in
trust for the benefit of the Bondholder electing to tender Bonds
pursuant to this Section until payment in full of the
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Redemption Price to the Owner on the Settlement Date and shall then
and thereupon authenticate and deliver in the name of Kmart, one or
more new Subordinate Bonds, in exchange for the tendered Bonds, having
the same maturity, the same interest rate and the same aggregate
principal amount as the Bonds which were tendered.
(e) If a Lease/Lease Guaranty Default occurs with respect
to a particular Facility, then the maximum portion of the principal
amount of Outstanding Bonds which a Bondholder is entitled to Put is
to be determined by multiplying the aggregate principal amount of the
Bonds then Outstanding on the relevant Record Date by the Stipulated
Fraction.
Section 5.06. Failure of Occupancy Mandatory Put.
(a) If a Failure of Occupancy occurs, each Bondholder of
record on the relevant Record Date will be required to Put back to the
Owner Trustee a portion of such Bondholder's Bonds for purchase (as
more fully set forth in paragraph (d) below) on the Settlement Date,
which for purposes of this section shall be the Business Day selected
by the Trustee not earlier than thirty (30) nor later than forty-five
(45) days after a Failure of Occupancy, at the Redemption Price. In
the event of a Failure of Occupancy, Kmart is required, under the
terms of the Bond Put Agreement, to cause notice thereof to be mailed
to the Trustee. The obligations of the Trustee to give the notices
required pursuant to this Section shall remain in effect so long as
any Bonds remain outstanding.
(b) Within seven days after notice from Kmart of such
Failure of Occupancy, the Trustee will cause a notice to be mailed to
the Bondholders and Kmart, which notice shall (1) state that a Failure
of Occupancy has occurred, (2) describe any action that caused such
Failure of Occupancy, and the date of the occurrence thereof, (3) set
forth the Owner Trustee's obligation to purchase a portion (as more
fully set forth in paragraph (d) below) of the Bonds, (4) state (i)
the Settlement Date, (ii) the estimated Redemption Price, (iii) the
manner in which the Redemption Price has been determined, (iv) the
party to whom the Bondholder shall surrender the Bonds on or before
the Settlement Date, and (v) the Called Principal; and (5) state that
the Bondholder is required to mandatorily tender a portion of his
Bonds determined in accordance with paragraph (d) below for purchase
on the Settlement Date.
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(c) In connection with the mandatory purchase of the
Bonds, pursuant to this Section 5.06, the Bondholder shall surrender,
on or promptly after the Settlement Date, at the principal office of
the Trustee the Bonds required to be Put, determined in accordance
with paragraph (d) below. The Trustee shall hold the Bonds in trust
for the benefit of the Bondholders required to put their Bonds
pursuant to this Section until payment in full of the Redemption Price
to the Owner on the Settlement Date and shall then and thereupon
authenticate and deliver, in the name of Kmart, one or more new
Subordinate Bonds in exchange for the Bonds having the same maturity,
the same interest rate and the same aggregate principal amount as the
Bonds which were tendered.
(d) If a Failure of Occupancy occurs, then the portion of
the Bonds then Outstanding held which is required to be Put is to be
determined by multiplying the aggregate principal amount of the Bonds
then Outstanding on the relevant Record Date by the Stipulated
Fraction.
Section 5.07. Extraordinary Mandatory Redemption. The Bonds and
the Subordinate Bonds shall be subject to Extraordinary Mandatory Redemption as
follows (in each case at the Redemption Price for such Bonds and Subordinate
Bonds which Redemption Price shall be paid to the Registered Owners of each
Bond and Subordinate Bond as of the Record Date):
(a) if pursuant to Article 16 of any Lease (entitled
"Damage to Demised Premises"), the Lessee terminates such Lease as a
result of the damage or destruction to a Facility after December 29,
2015, in accordance with the terms thereof, the Owner Trustee shall
redeem the Stipulated Fraction of the principal amount of all Bonds
and Subordinate Bonds Outstanding on the relevant Record Date. The
Owner Trustee shall provide prompt notice of such Extraordinary
Mandatory Redemption to the Trustee who shall in turn notify the
Registered Owners in order to redeem Bonds and Subordinate Bonds on
the earliest Settlement Date permitted under Section 5.10; or
(b) if pursuant to Article 17 of any Lease (entitled
"Eminent Domain"), the Lessee terminates such Lease as a result of the
condemnation or taking of property in accordance with the terms
thereof, the Owner Trustee shall redeem the Stipulated Fraction of the
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principal amount of all Bonds and Subordinate Bonds Outstanding on the
Relevant Record Date, If a condemnation or taking occurs that does not
result in the termination of the relevant Lease, the Owner Trustee
shall redeem a principal amount of Bonds Outstanding on the relevant
Record Date in respect of which the Redemption Price would equal the
proceeds of such condemnation or taking. The Owner Trustee shall
provide prompt notice of such Extraordinary Mandatory Redemption to
the Trustee who shall in turn notify the Registered Owners in order to
redeem Bonds on the earliest Settlement Date permitted under Section
5.10; or
(c) if at any time (i) the Owner Trustee does not have
good and marketable indefeasible fee simple title with respect to any
Facility, (ii) any Mortgage is not a valid, perfected mortgage lien
with respect to the covered Facility, (iii) the Owner Trustee or the
Trustee receives any other amount not otherwise referred to in this
Article V relating to the damage, loss, destruction or failure of
title with respect to any Facility, or (iv) the Owner Trustee or the
Trustee receives (x) a final judgment (not subject to appeal or to
which the time for appeal has expired) and a damage award, or (y) an
amount under its title insurance policy, then the Owner Trustee shall
provide notice of such Extraordinary Mandatory Redemption to the
Trustee who shall in turn notify the Registered Owners in order to
redeem the Stipulated Fraction of the principal amount of all Bonds
and Subordinate Bonds Outstanding on the relevant Record Date.
Section 5.08. Mandatory Sinking Fund Redemption for Bonds and
Subordinate Bonds, if any.
(a) As and for a sinking fund for the mandatory sinking
fund redemption of the Series A Bonds and the Series A Subordinate
Bonds, if any, the Owner Trustee shall deposit or cause to be
deposited in the Payment Account, on or before December 15, 1993, and
on each December 15 to and including December 15, 1998, a sum which,
together with other moneys available therefor in the Payment Account,
is sufficient to redeem (after credit as provided below) the following
aggregate principal amounts of Series A Bonds and the Series A
Subordinate Bonds, if any, on the following sinking fund redemption
dates:
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<TABLE>
<CAPTION>
Sinking Fun Redemption Date Principal Amount
- --------------------------- ----------------
<S> <C>
December 15, 1993 $1,834,000
December 15, 1994 1,642,000
December 15, 1995 1,745,000
December 15, 1996 1,854,000
December 15, 1997 1,969,000
December 15, 1998* 2,093,000
</TABLE>
- ------------------------
* Final Maturity.
(b) As and for a sinking fund for the mandatory sinking
fund redemption of the Series B Bonds and the Series B Subordinate
Bonds, if any, the Owner Trustee shall deposit or cause to be
deposited in the Payment Account, on or before December 15, 1999, and
on each December 15, to and including December 15, 2007, a sum which,
together with other moneys available therefor in the Payment Account,
is sufficient to redeem (after credit as provided below) the following
aggregate principal amounts of Series B Bonds and the Series B
Subordinate Bonds, if any, on the following sinking fund redemption
dates:
<TABLE>
<CAPTION>
Sinking Fun Redemption Date Principal Amount
- --------------------------- ----------------
<S> <C>
December 15, 1999 $2,223,000
December 15, 2000 2,390,000
December 15, 2001 2,569,000
December 15, 2002 2,762,000
December 15, 2003 2,969,000
December 15, 2004 3,192,000
December 15, 2005 3,431,000
December 15, 2006 3,689,000
December 15, 2007* 3,965,000
</TABLE>
- ----------------------
*Final Maturity.
(c) As and for a sinking fund for the mandatory sinking
fund redemption of the Series C Bonds and the Series C Subordinate
Bonds, if any, the Owner Trustee shall deposit or cause to be
deposited in the Payment Account, on or before December 15, 2008, and
on each December 15, to and including December 15, 2011, a sum which,
together with other moneys available therefor in the Payment Account,
is sufficient to redeem (after credit as provided below) the following
aggregate principal amounts of Series C Bonds and the Series C
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<PAGE> 61
Subordinate Bonds, if any, on the following sinking fund redemption dates:
<TABLE>
<CAPTION>
Sinking Fund Redemption Date Principal Amount
- ---------------------------- ----------------
<S> <C>
December 15, 2008 $4,262,000
December 15, 2009 4,603,000
December 15, 2010 4,972,000
December 15, 2011* 5,369,000
</TABLE>
- -------------------------
* Final Maturity.
(d) As and for a sinking fund for the mandatory sinking
fund redemption of the Series D Bonds and the Series D Subordinate
Bonds, if any, the Owner Trustee shall deposit or cause to be
deposited in the Payment Account, or before December 15, 2012 and on
each December 15 to and including December 15, 2017, a sum which,
together with other moneys available therefor in Payment Account, is
sufficient to redeem (after credit as provided below) the following
aggregate principal amounts of Series D Bonds and the Series D
Subordinate Bonds, if any, on the following sinking fund redemption
dates:
<TABLE>
<CAPTION>
Sinking Fund Redemption Date Principal Amount
- ---------------------------- ----------------
<S> <C>
December 15, 2012 $5,799,000
December 15, 2013 6,286,000
December 15, 2014 6,814,000
December 15, 2015 7,386,000
December 15, 2016 8,007,000
December 15, 2017* 8,680,000
</TABLE>
- -----------------------
* Final Maturity.
(e) Subordinate Bonds executed and delivered in exchange
for Bonds Put pursuant to Sections 5.05 and 5.06 shall have the same
maturity, interest rate and principal amount as the Bonds which were
put, however, such Subordinate Bonds will only be redeemed pursuant to
this Section 5.08 if all sinking fund redemption payments theretofor
required to have been made on the Bonds shall have been made currently
in full to the Registered Owners of the Bonds.
Section 5.09. Partial Redemption or Purchase. Any partial
redemption, partial purchase or partial prepayment
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hereunder, other than at the option of the Owners, shall be effected pro rata
(i) among each Series of Bonds and each Series of Subordinate Bonds, based upon
the aggregate stated principal amount of each Series of Bonds and each Series
of Subordinate Bonds, respectively, and (ii) among the Registered Owners of
Bonds of a particular Series and Subordinate Bonds of a particular Series,
based upon the aggregate stated principal amount of Bonds and Subordinate
Bonds, respectively, of such Series owned by each Registered Owner. Any
partial redemption or partial prepayment of any Bonds and Subordinate Bonds
pursuant to this Article V shall be applied in satisfaction of required
prepayments or payments of principal on the Bonds of each Series in inverse
order of their scheduled due dates. All payments to Subordinate Bondowners are
subject to the provisions of Sections 2.10 and 2.11.
Section 5.10. Notice of Redemption. The Trustee shall give notice
of any redemption or repurchase pursuant to Article V by sending such notice by
first class mail, postage prepaid, not less than 30 days prior to the date
fixed as the Settlement Date. All notices of redemption or repurchase shall be
given to all Registered Owners of Bonds and Subordinate Bonds to be redeemed or
purchased in whole or in part at the address shown on the registration books
maintained by the Trustee as of the applicable Record Date in the manner
provided in Section 13.04. With regard to Registered Owners holding an
aggregate principal amount of $l0,000,000 or more of Bonds or Subordinate
Bonds, telephonic notice must also be given by the Trustee. Such notice shall
state the Settlement Date, the Redemption Price, and, if less than all of the
Bonds and Subordinate Bonds Outstanding are to be redeemed or repurchased, the
percentage of Bonds and Subordinate Bonds Outstanding to be redeemed or
repurchased. All Bonds and Subordinate Bonds so called for redemption or
repurchase will cease to accrue interest on the specified Settlement Date;
provided that immediately available funds for their redemption or repurchase
are on deposit at the principal corporate trust office of the Trustee at that
time.
If any Bondholder receiving notice of mandatory purchase pursuant to
Section 5.06 hereof or electing to tender pursuant to Sections 5.04 or 5.05
does not tender the Bonds for which such Bondholder has received notice of
purchase or delivered notice of tender on the Settlement Date and for which
there has been irrevocably deposited in trust with the Trustee an amount
sufficient to pay the Redemption Price of the untendered bonds, then such Bonds
shall be deemed to have been tendered to the Trustee. IN THE EVENT OF A
FAILURE BY ANY REGISTERED OWNER TO TENDER BONDS, ON THE SETTLEMENT
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DATE, SAID REGISTERED OWNER SHALL NOT BE ENTITLED TO ANY PAYMENT (INCLUDING ANY
INTEREST TO ACCRUE SUBSEQUENT TO THE SETTLEMENT DATE) OTHER THAN THE REDEMPTION
PRICE FOR SUCH UNTENDERED CALLED PRINCIPAL OF BONDS, AND ANy UNTENDERED CALLED
PRINCIPAL OF BONDS SHALL NO LONGER BE ENTITLED TO THE BENEFITS OF THE
INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF THE REDEMPTION PRICE THEREFOR.
Section 5.11. Payment Upon Redemption. Prior to each Settlement
Date, the Owner Trustee shall deposit or cause to have deposited with the
Trustee in the mariner required by this Indenture from the sources referred to
herein amounts together with all other funds in the Payment Account or the
Subordinate Bond Payment Account, as the case may be, sufficient for such
purpose and the Trustee shall make provisions for the making of payments on the
Bonds or the Subordinate Bonds to be redeemed or repurchased or prepaid on such
date by setting aside and holding such amounts in trust.
ARTICLE VI
DEFEASANCE
If the Owner Trustee shall cause to be paid in full, to the Registered
Owners of the Bonds and the Subordinate Bonds, the Bond obligations due or to
become due thereon at the times and in the manner stipulated therein and
herein, and if the Owner Trustee shall keep, perform and observe all and
singular the covenants and promises in the Bonds and the Subordinate Bonds and
in this Indenture expressed as to be kept, performed and observed by it or on
its part, and shall cause to be paid to the Trustee all sums of money due or to
become due according to the provisions hereof, then on such date as is 91 days
following such date of payment in full and so long as no Event of Default of
the type set forth in Section 7.01(h) shall have occurred during such 91-day
period (an "Intervening Bankruptcy") (or immediately upon such payment in full
if an opinion of nationally recognized bankruptcy counsel which counsel and
opinion shall be acceptable to Trustee and the Bondholders in their sole
discretion, is provided concluding that no claim of a preference will be
successfully honored against the Owner Trustee or the Bondholders under the
Bankruptcy Code U.S.C. Title 11), this Indenture and the Lien, rights and
interest created hereby shall cease, terminate and become null and void (except
as to any surviving rights of payment, registration, transfer or exchange of
Bonds and the Subordinate Bonds herein provided for). In such event the
Trustee upon written request of the Owner Trustee shall cancel and discharge
this Indenture, and execute and deliver
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<PAGE> 64
to the Owner Trustee such instruments in writing as shall be reqested by the
Owner Trustee and requisite to discharge this Indenture, and release, assign
and deliver unto the Owner Trustee any and all the estate, right, title and
interest in and to any and all rights assigned or pledged to the Trustee or
otherwise subject to this Indenture, except amounts in the Revenue Account
required to be paid to the Owner Trustee pursuant to clause seventh of Section
3.05(a) under Article III hereof and except moneys or securities held by the
Trustee for the payment of the Bond Obligations; provided, however, that
notwithstanding anything to the contrary contained in this Indenture, in the
event that all or any portion of the Bond Payments theretofore made are
rescinded or recovered, directly or indirectly, whether by the Owner Trustee,
Trustee, any Lessee, Kmart or any other Person from any Bondowner, the Trustee
or any predecessor or successor in interest to either, as a preference,
fraudulent transfer or otherwise, all such Bond Payments which are so rescinded
or recovered shall constitute Bond Obligations which, along with this Indenture
and the other Company Financing Documents, and the rights, preferences,
privileges and security evidenced hereby and thereby, shall be reinstated and
continue and remain in full force and effect until the payment in full of such
Bond Obligations.
Except as provided below, and subject to the proviso contained in the
preceding paragraph, all Bonds and the Subordinate Bonds shall be deemed to be
paid within the meaning of this Indenture when (a) payment of the principal,
Make-Whole Premium, if any, and interest on such Bonds and the Subordinate
Bonds to the due date thereof (whether such due date is by reason of maturity
or upon redemption or other payment in full as provided herein) either (i)
shall have been made or caused to be made in accordance with the terms hereof,
or (ii) shall have been provided for by irrevocably depositing with the Trustee
in trust and the Trustee irrevocably setting aside exclusively for such payment
or payments, as appropriate, (1) immediately available funds sufficient to make
such payment and/or (2) non-callable Eligible Investments issued by (and backed
by the full faith and credit of) the United States, United States Treasury
bills, notes and bonds, as traded on the open market and/or zero coupon United
States Treasury Bonds ("Defeasance Obligations") maturing as to principal and
interest in such amount and at such time as will insure the availability of
sufficient moneys to make such payment or payments, as appropriate, without any
assumption as to reinvestment of any securities which may mature prior to the
date on which all Registered Owners are to be paid in full (further
substitutions of securities shall not be permitted),
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<PAGE> 65
(b) all necessary and proper fees, compensation and expenses and all advances,
made pursuant to the Company Financing Documennts, of the Trustee pertaining to
any such deposit or otherwise shall have been paid or the payment thereof
provided for to the satisfaction of the Trustee, and (c) all existing claims
arising with respect to the hazardous material indemnity contained in the
Leases have been satisfied and the Trustee has determined that no additional
claims exist or are reasonably anticipated. On the 91st day and so long as no
Intervening Bankruptcy shall have accrued (or immediately upon such payment in
full if an opinion of nationally recognized bankruptcy counsel which counsel
and opinion shall be acceptable to Trustee and the Bondholders in their sole
discretion, is provided concluding that no claim of a preference will be
successfully honored against the Owner Trustee or the Bondholders under the
Bankruptcy Code U.S.C. Title 11) shall have occurred after such date the Bonds
and the Subordinate Bonds shall be deemed to be paid hereunder, as aforesaid,
and such Bonds and the Subordinate Bonds shall no longer be secured by or
entitled to the benefits of this Indenture (other than pursuant to Sections
2.05 and 2.06), except for. the purposes of any such payment from such moneys
or Defeasance Obligations.
Notwithstanding the foregoing paragraph, no deposit under clause
(a)(ii) of the immediately preceding paragraph shall be deemed a payment of the
Bonds and the Subordinate Bonds as aforesaid until: (A)(1) proper notice of
redemption of the Bonds and the Subordinate Bonds shall have been previously
given in accordance with Article V, or (2) the Owner Trustee shall have given
the Trustee, in form satisfactory to the Trustee, irrevocable instructions to
notify, as soon as practicable, the Registered Owners of the Bonds and the
Subordinate Bonds in substantially the same manner as provided in Article V,
that the deposit required by clause (a)(ii) of the immediately preceding
paragraph has been made with the Trustee and that the Bonds and the Subordinate
Bonds are deemed to have been paid in accordance with this Article and stating
the maturity or Settlement Date upon which moneys are to be available for the
payment of the principal of, Make-Whole Premium, if any, and interest on the
Bonds and the Subordinate Bonds; provided that notwithstanding clauses (A)(1)
or (2), interest shall continue to accrue until the earlier of (A) the
Settlement Date or (B) the maturity of the Bonds and the Subordinate Bonds.
Notwithstanding any provision of any other Article of this Indenture
which may be contrary to the provisions of this Article, all moneys or
Defeasance Obligations set aside
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<PAGE> 66
and held in trust pursuant to the provisions of this Article for the payment of
Bonds and the Subordinate Bonds (including the Redemption Price, if applicable)
shall be applied to and used solely for the payment of the particular Bonds and
the Subordinate Bonds (including the Redemption Price, if applicable) with
respect to which such moneys and Defeasance Obligations have been so set aside
in trust.
Notwithstanding anything in Article X to the contrary, if moneys or
Defeasance Obligations have been deposited or set aside with the Trustee
pursuant to this Article for the payment of Bonds and the Subordinate Bonds
(including the Redemption Price if applicable) and such payment shall not have
in fact been actually paid in full, no amendment to the provisions of this
Article shall be made without the consent of the Registered Owner of each of
the Bonds and the Subordinate Bonds affected thereby.
Notwithstanding anything in this Article VI to the contrary, the Bonds
and the Subordinate Bonds shall not be defeased hereunder unless the Trustee
shall first have received (a) an Opinion of Counsel satisfactory to the Trustee
to the effect that (i) the Bonds and the Subordinate Bonds upon such defeasance
in accordance with the terms hereof shall not be required to be registered
under the Securities Act, (ii) the creation of the defeasance trust
contemplated hereby will not violate the Investment Company Act Of 1940, as
amended, (iii) after the passage of ninety-one (91) days (or immediately if an
opinion of nationally recognized bankruptcy counsel, which counsel and opinion
shall be acceptable to the Trustee and the Bondholders in their sole
discretion, is provided concluding that no claim of a preference will be
successfully honored against the Owner Trustee or the Bondholders under the
Bankruptcy Code U.S.C. Title 11) following the deposit thereof the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally; provided
that if a court were to rule under any such law in any case or proceeding that
the trust funds remain property of the Owner Trustee no opinion need be given
as to the effect of such laws or the trust funds except the following (x)
assuming such trust funds remained in the Trustee's possession prior to such
court ruling to the extent not paid to Bondowners, the Trustee will hold, for
the benefit of the Bondowners, a valid and perfected security interest in such
trust funds that is not avoidable in bankruptcy or otherwise, (y) the
Bondowners will be entitled to receive adequate protection of their interests
in such trust funds if such trust funds are used and (z) no property, rights of
property
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<PAGE> 67
or other interests granted to the Trustee or the Bondowners in exchange for or
with respect to any such trust funds will be subject to any prior rights of any
Person; (iv) the trust funds will not be subject to any rights of any other
Person except fees and expenses payable to the Trustee hereunder, and (v) a
calculation from an independent certified public accountant acceptable to the
Trustee and the Bondholders, verifying that the moneys and Defeasance
Obligations deposited hereunder have scheduled cash flows in sufficient amounts
so as to pay when due all Bond Payments relating to the Bonds and the
Subordinate Bonds.
Upon a full and complete defeasance of the Bonds and the Subordinate
Bonds in accordance with provisions of this Article VI and receipt by the
Trustee and the Bondholders of an opinion of Counsel to the effect that all
conditions to the defeasance are satisfied, the Trustee is authorized to
release its interests in and to the Mortgages and other security it may have
under provisions of this Indenture (save and except for any and all moneys,
Defeasance Obligations or other security being held by the Trustee for payment
of the Bonds and the Subordinate Bonds in connection with such defeasance).
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default. If any one of the following
events occurs, it is hereby declared to constitute an "Event of Default":
(a) Default in the due and punctual payment of interest
on any Bond (or on any Subordinate Bond, but only if there are no
Outstanding Bonds);
(b) Default in the due and punctual payment of principal
or premium of any Bond (or on any Subordinate Bond, but only if there
are no Outstanding Bonds), whether at the stated maturity thereof, or
upon the acceleration thereof or other proceedings for the full or
partial redemption or repurchase thereof, whether at the option of the
Owner Trustee, the Trustee or any Owner;
(c) Default (i) under the Bond Put Agreement or (ii) in
the due and punctual payment of any amount under (x) any of the Leases
(provided that with respect to any Lease that is the subject of a
Lease Guaranty, no Event of Default shall be deemed to occur under
this
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<PAGE> 68
Section 7.01(c)(ii)(x) if such amount is paid under the Lease Guaranty
within the applicable period of grace, if any, set forth in such
Lease) or (y) any Lease Guaranty;
(d) Termination of any Lease for any reason;
(e) Default (other than a default of the type referred to
in Sections 7.01(c) or (d)) in the performance or observance of any
covenant, contract or provision contained in a Lease, a Mortgage or
other Real Estate Transfer Document on the part of the Owner Trustee
or any other party thereto, and such default shall continue beyond the
applicable period of grace, if any;
(f) Default (other than a default of the type referred to
in Sections 7.01(a), (b), (c), (d) or (e)) in the performance or
observance of any covenant, contract or provision contained herein or
in any other Company Financing Document on the part of the Owner
Trustee or any other party thereto (other than the Owners), and such
default shall continue beyond the applicable period of grace, if any;
(g) Any of the Company Financing Documents or any
provision thereof shall cease to be a legal, valid and binding
agreement enforceable against any party thereto in accordance with the
respective terms thereof or shall in any way be terminated or become
or be declared ineffective or inoperative or shall in any way
whatsoever cease to give or provide the respective liens, security
interest, rights, titles, interest, remedies, powers or privileges
intended to be created thereby;
(h) If the Owner Trustee, on behalf of the Trust Estate
or the Trust, shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of its
creditors, or any proceedings, whether voluntary or involuntary, shall
be instituted by or against such Person seeking to adjudicate it
bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee
or other similar official for it, or such Person shall take any action
to authorize any event described in this clause (h);
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<PAGE> 69
(i) Any representation or warranty by the Owner Trustee
or any other party (other than Owners) in this indenture, the
Mortgages or the Leases or any other Company Financing Documents shall
prove to have been false, incorrect or misleading in any material
respect as of the date made;
(j) A final judgment or decree for monetary damages or a
monetary fine or penalty (not subject to appeal or as to which the
time for appeal has expired) is entered against the Owner Trustee or
the Trust Estate by any Person or governmental authority, which
together with the aggregate amount of all other such judgments and
decrees against the Owner Trustee or the Trust Estate that remain
unpaid or that have not been discharged or stayed, exceeds Fifty
Thousand Dollars ($50,000), is not paid and discharged or stayed
within thirty (30) days after the entry thereof;
(k) Commencement of any action or proceeding which seeks
as one of its remedies the dissolution of the Trust created under the
Trust Agreement, whether or not pursuant to the terms of the Trust
Agreement, and such action or proceeding is not dismissed with
prejudice within sixty (60) days of the filing or institution thereof;
or
(l) Legal process to attach, seize or levy upon all or
any part of any Facility is commenced, and such process is not
quashed, stayed or released within twenty (20) days of the date
thereof or, if earlier, 5 days prior to any sale of such Facility.
Section 7.02. Acceleration. Subject to Sections 7.11 and 7.12,
during the continuation of an Event of Default as described in subsections (a)
or (b) or (c)(i) (if, in the case of subsection (c)(i), such Event of Default
related to a default under the Bond Put Agreement with respect to a Ratings
Decline) of Section 7.01, the Trustee may at any time and the Trustee shall,
upon the written request of Registered Owners of Outstanding Bonds representing
15% of the principal amount of all Outstanding Bonds (or if no Bonds are
Outstanding hereunder at such time then upon the written request of Required
Subordinate Bondowners) by notice in writing delivered to the Owner Trustee,
declare the principal of all Outstanding Bonds and Subordinate Bonds and the
interest accrued thereon and all other amounts payable in respect thereof, to
be immediately due and payable. Thereupon the Owners of the Bonds shall be
paid the Make-Whole Premium, plus accrued interest to the date of
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<PAGE> 70
payment with respect to the Bonds, and the Bonds shall, without further
action, become and be immediately due and payable, anything in this Indenture
or in the Bonds to the contrary notwithstanding. Following the indefeasible
payment in full of all amounts under the preceding sentence, the principal of
the Subordinate Bonds thereby coming due and the interest accrued to the date
of payment shall without further action become and be immediately due and
payable, anything in this Indenture or in the Subordinate Bonds to the contrary
notwithstanding.
Subject to Sections 7.11 and 7.12 hereof, during the continuation of
an Event of Default as described in subsections (c) (other than Subsection
(c)(i) in the case referred to in the preceding paragraph) through (e) of
Section 7.01, the Trustee may at any time and the Trustee shall upon the
written request of the Required Bondowners (or If no Bonds are Outstanding
hereunder at such time then upon the written request of the Required
Subordinate Bondowners) by notice in writing delivered to the Owner Trustee,
declare the principal amount of Outstanding Bonds and Subordinate Bonds, equal
to the Stipulated Fraction of the principal amount of Bonds and Subordinate
Bonds Outstanding on the date of declaration, and the interest accrued thereon
and all other amounts payable in respect thereof and premium, to be
immediately due and payable. Thereupon the Owners of the Bonds shall be paid
the Make-Whole Premium plus accrued interest to the date of payment with
respect to such Bonds, and such Bonds shall, without further action, become and
be immediately due and payable, anything in this Indenture or in the Bonds to
the contrary notwithstanding. Following the indefeasible payment in full of
all amounts under the preceding sentence, the principal of the Subordinate
Bonds thereby coming due and the interest accrued to the date of payment shall
without further action become and be immediately due and payable, anything in
this Indenture or in the Subordinate Bonds to the contrary notwithstanding.
Notwithstanding the acceleration provided for in this paragraph, if the event
which causes the Event of Default described in (c)(ii)(x) or (c)(ii)(y) of
Section 7.01 is an event in respect of which Bondholders elect to Put Bonds
under Section 5.05 or are required to tender Bonds under Section 5.06, then
such acceleration shall not occur until thirty-one (31) days after the notice
to Kmart of the election to exercise the right to Put Bonds in accordance with
Sections 5.05 or of the Failure of Occupancy in the case of Section 5.06
hereof, and then only if prior to the end of such 31-day period the Bondholders
have not been paid the amounts required under Section 5.05 or Section 5.06
hereof; provided that the foregoing shall not impair any other rights or
remedies provided to the Bondholders in this Section 7.02.
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<PAGE> 71
Notwithstanding the above, the Trustee shall not be charged with
knowledge of an Event of Default described in subsections (e) through (l) of
Section 7.01 unless it receives notice, as set forth in Section 13.04, from the
Owner Trustee, Kmart, the Lessee or a Bondowner.
During the continuation of an Event of Default as described in
subsections (f), (g), (i), (i) and (l) of Section 7.01, the Trustee may with
the consent of the Required Bondowners (or if no Bonds are Outstanding
hereunder at such time then with the consent of the Required Subordinate
Bondowners) by notice in writing delivered to the Owner Trustee, declare the
principal of all Outstanding Bonds or Subordinate Bonds and the interest
accrued thereon, and all other amounts payable in respect thereof, to be
immediately due and payable. Thereupon the Owners of the Bonds shall be paid
the Make-Whole Premium plus accrued interest to the date of payment with
respect to such Bonds, and such Bonds shall, without further action, become and
be immediately due and payable, anything in this Indenture or the Bonds to the
contrary notwithstanding. Following the indefeasible payment in full of all
amounts under the preceding sentence, the principal of the Subordinate Bonds
thereby coming due and the interest accrued to the date of payment shall,
without further action, become and be immediately due and payable, anything in
this Indenture or in the Subordinate Bonds to the contrary notwithstanding.
Upon the occurrence of an Event of Default as described in subsections
(h) or (k) of Section 7.01, the principal of all Outstanding Bonds and
Subordinate Bonds and the interest accrued thereon and all other amounts
payable in respect thereof, shall be and become immediately due and payable.
Thereupon, the Owners of the Bonds shall be paid the Make-Whole Premium plus
accrued interest to the date of payment with respect to such Bonds, and such
Bonds shall, without further action, become and be immediately due and payable,
anything in this Indenture or the Bonds to the contrary notwithstanding.
Following the indefeasible payment in full of all amounts under the preceding
sentence, the principal of the Subordinate Bonds thereby coming due and the
interest accrued to the date of payment shall, without further action, become
and be immediately due and payable, anything in this Indenture or in the
Subordinate Bonds to the contrary notwithstanding.
Section 7.03. Rights and Remedies of Trustee. If any Event of
Default occurs and is continuing, then the Trustee, for the equal and
proportional benefit of the Registered Owners, except as otherwise provided in
Section 2.10 and
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<PAGE> 72
Section 2.11, and subject to Sections 7.11 and 7.12, shall enforce its rights
as may be available to it hereunder or otherwise. In addition, the Trustee
shall be entitled to take any action, whether at law or in equity, including
acceleration, as it may deem necessary to enforce any covenant of the Owner
Trustee which is contained herein, after notice and expiration of the cure
period associated with such Event of Default it being recognized by the parties
hereto that each covenant of the Owner Trustee as contained herein is for the
benefit of the Registered Owners of the Bonds and the Subordinate Bonds.
Section 7.04. Trustee May Enforce Claims Without Possession of
Bonds. Subject to Section 7.03, subsequent to an Event of Default, all rights
of action and claims under this Indenture by the Trustee on behalf of the
Registered Owners may be prosecuted and enforced by the Trustee without the
possession of any of the Bonds or the Subordinate Bonds or the production
thereof (unless otherwise required by law) in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
benefit of the Registered Owners in respect of which such judgment has been
recovered.
Section 7.05. Application of Money Collected. Any money collected
by the Trustee pursuant to this Article VII shall be applied promptly in the
following order unless and until this Indenture shall be terminated in
accordance with its terms and the funds or other property comprising the Trust
Estate distributed to the Registered Owners as provided in Article III:
FIRST, To the payment of amounts due the Trustee under Section
8.08(c);
SECOND, To the payment of the Bonds in the following manner:
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All such moneys shall be applied pro rata (i) among each
Series of Bonds, based upon the aggregate Principal amount of Bonds of
such Series then Outstanding and (ii) among the Registered Owners of
Bonds of a particular Series, based upon the aggregate principal
amount of Bonds of such Series then Outstanding owned by each
Registered Owner:
FIRST--To the payment to the Persons entitled thereto
of all interest accrued to such date of distribution on the
Bonds, in the inverse order of the maturity of such interest;
and
SECOND--To the payment to the Persons entitled
thereto of the unpaid principal of any of the Bonds which
shall have become due, together with such other amounts which
would make the aggregate amount distributed to each Owner
equal to the Make-Whole Premium thereon plus the accrued
interest provided for in the immediately preceding clause
FIRST, other than Bonds matured or called for redemption for
the payment of which sufficient moneys are already held
pursuant to the provisions of this Indenture, in the inverse
order of their due dates, with interest on such Bonds from the
respective dates upon which they became due at the rate
provided herein;
THIRD--To the payment of the Subordinate Bonds in the
following manner:
All such moneys shall be applied pro rata (i) among each
Series of Subordinate Bonds, based upon the aggregate principal of
Subordinate Bonds of such Series then Outstanding and (ii) among the
Registered Owners of Subordinate Bonds of a particular Series, based
upon the aggregate principal amount of Subordinate Bonds of such
Series then outstanding owned by each Registered Owner:
FIRST--To the payment to the Persons entitled thereto
of all interest accrued to such date of distribution on the
Subordinate Bonds, in the inverse order of the maturity of
such interest; and
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SECOND--To the payment to the Persons entitled
thereto of the unpaid principal of any of the Subordinate
Bonds which shall have become due, other than Subordinate
Bonds matured or called for redemption for the payment of
which sufficient moneys are already held pursuant to the
provisions of this Indenture, in the inverse order of their
due dates, with interest on such Subordinate Bonds from the
respective dates upon which they became due at the rate
provided herein;
FOURTH, To the payment of any other Bond Obligations;
FIFTH, To the payment of any other amounts required to be paid
to or on behalf of the Registered Owners under any Company Financing
Documents; and
SIXTH, Any surplus amount to the Owner Trustee.
The Trustee shall give notice of the availability of such moneys and
shall apply such moneys, in accordance with provisions of this Indenture.
Section 7.06. Limitation on Registered Owners' Right to Institute
Proceedings. Except as otherwise provided herein, no Registered Owner, in its
capacity as such, shall have any right to institute any suit, action or
proceeding in equity or at law for the execution of any trust or power
hereunder, or any other remedy hereunder or on the Bonds or Subordinate Bonds,
unless (i) such Registered Owner previously shall have given to the Trustee
written notice of an Event of Default as hereinabove provided, (ii) Registered
Owners of Outstanding Bonds representing not less than 15% of the principal
amount of Outstanding Bonds shall have made written request of the Trustee to
such effect (or if no Bonds are Outstanding hereunder at such time then upon
the written request of 15% of the Outstanding Subordinate Bonds), after the
right to institute said suit, action or proceeding shall have accrued, and
shall have afforded the Trustee a reasonable opportunity to proceed to
institute the same in either its or their name and the Trustee shall not have
complied with such request within a reasonable time, and (iii) there shall have
been offered to the Trustee reasonable security and indemnity against the
costs, expenses and liabilities to be incurred therein or thereby; and such
notification, request and offer of indemnity are hereby declared in every such
case, at the option of the Trustee, to be conditions precedent to the
institution of said suit, action or proceeding; it being
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understood and intended that no one or more of the Registered Owners shall have
any right in any manner whatever by his or their action to affect, disturb or
prejudice the security of this Indenture, or to enforce any right hereunder or
under the Bonds and the Subordinate Bonds, except in the manner herein
provided, and that all suits, actions and proceedings at law or in equity shall
be instituted, had and maintained in the manner herein provided and for the
equal and proportional benefit of all Registered Owners taking into account
the priority of payment given to the Owners of the Bonds as provided in
Sections 2.10 and 2.11 hereof.
Notwithstanding any provision in this Indenture to the contrary, if
Kmart or any Affiliate thereof owns any Outstanding Bonds or Subordinate Bonds,
as an Owner of such Bonds or Subordinate Bonds, it shall not be allowed to
initiate any suit, action or proceeding in equity or at law for the execution
of any trust or power hereunder if Kmart or any Affiliate thereof is presently
in default under any Company Financing Documents.
Section 7.07. Rights of Owners to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Registered Owner to
receive Bond Payments, on or after the respective due dates expressed in this
Indenture, the Bonds and the Subordinate Bonds, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Registered Owner.
Section 7.08. Restoration of Rights and Remedies. If the Trustee or
the Registered Owners have instituted any proceeding to enforce any right or
remedy under this Indenture, and such proceeding has been discontinued or
abandoned for any reason, then and in every such case the Owner Trustee, the
Trustee and the Registered Owners shall, subject to any determination in such
proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Owner Trustee, the
Trustee and the Registered Owners shall, subject to any determination in such
proceeding, continue as though no such proceeding had been instituted.
Section 7.09. Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Trustee or to the Registered Owners is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The
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assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 7.10, Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any Registered Owner to exercise any right or remedy accruing
upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right
and remedy given hereunder or by law to the Trustee or to the Registered Owners
may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by such Registered owners, as the case may be.
Section 7.11. Control by Registered Owners. In the event an Event of
Default exists hereunder, unless the Registered Owners of a lower percentage of
principal amount is provided for, the Required Bondowners (or if no Bonds are
outstanding hereunder at such time, then upon the Required Subordinate
Bondowners) at the time of the giving of direction shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee with respect to exercising any trust or power
conferred on the Trustee with respect thereto; provided that:
(a) such direction shall not be in conflict with any applicable
law or with this Indenture, and
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 7.12. Waiver of Past Defaults. Unless the Registered Owners of
a lower percentage or principal amount is provided for, the Required Bondowners
(or if no Bonds are outstanding hereunder at such time, then the Required
Subordinate Bondowners) may waive a past Event of Default. Upon such waiver,
the Event of Default will be deemed to have been cured for every purpose of
this Indenture, but no such waiver will extend to any subsequent or other Event
of Default or impair any right consequent thereon.
Section 7.13. Undertaking for Costs. The Owner Trustee shall pay all
costs and expenses (including attorneys' fees and expenses) incurred by the
Trustee and the Bondowners in connection with any default under this Indenture.
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ARTICLE VIII
THE TRUSTEE; THE COMPANY
Section 8.01. Certain Duties and Responsibilities
(a) The Trustee is entering into this Indenture solely as trustee
under this Indenture, and not in its individual capacity.
(i) Prior to an Event of Default, the Trustee shall perform
only those duties as are specifically set forth in this Indenture, and
no implied covenants or obligations of the Trustee shall be read into this
Indenture; and
(ii) in the absence of negligence, willful misconduct or bad
faith on its part, the Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed herein,
upon certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture; provided, however, that the Trustee
shall examine such certificates and opinions to determine whether they
conform to the requirements of this Indenture.
(b) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(c) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(i) this Section 8.01(c) shall not be construed to limit the
effect of Section 8.01(a);
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by an authorized officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any action taken
or omitted to be taken
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by it in good faith in accordance with the direction received
by it pursuant to Section 7.11; and
(iv) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers;
provided that nothing in this Section 8.01(c)(iv) shall be construed
to limit the exercise by the Trustee of any right or remedy
permitted under this Indenture.
(d) Whether or not herein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the
liability of, or affording protection to, the Trustee shall be subject to
the provisions of Sections 8.01(a), (b), (c) and (e).
(e) Whether before or after an Event of Default, the rights,
powers and duties of the Trustee with respect to the Trust Estate (or the
proceeds thereof) and the Registered Owners and the rights of Registered
Owners shall continue to be governed by the terms of this Indenture.
(f) The recitals, statements and representations by the Company
contained in this Indenture, the Mortgages, in the Bonds or the
Subordinate Bonds shall be taken and construed as made by and on the part
of the Owner Trustee, and not by the Trustee and the Trustee does not
assume, and shall not have, any responsibility or obligations for the
correctness of any thereof.
(g) The Trustee makes no representation or warranty, express or
implied, as to the title, value, design, compliance with specifications
or legal requirements, quality, durability, operation, condition,
merchantability or fitness for any particular purpose or fitness for the
use contemplated by the Owner Trustee of the Facilities. In no event
shall the Trustee be liable for incidental, indirect, special or
consequential damages in connection with or arising from this Indenture or
any other documents for the existence, furnishing or use of the
Facilities.
Section 8.02. Maintenance of Office or Agency; Paying Agent. The
Trustee will maintain a corporate trust office where the Bonds and the
Subordinate Bonds may be presented or
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surrendered for registration of transfer or exchange, and where notices and
demands to or upon the Trustee in respect of the Bonds and the Subordinate
Bonds and this Indenture may be served. The Trustee will give prompt written
notice to each Registered Owner and the Owner Trustee of the location, and any
change in the location, of such office or agency.
The Trustee also may, from time to time, designate, in addition to its
corporate trust office, one or more other offices or agencies; provided,
however, that no such designation shall in any manner relieve the Trustee of
its obligation to maintain a corporate trust office for the purposes set forth
in the preceding paragraph.
Whenever a Paying Agent is appointed in addition to the Trustee to act
in such capacity, on or before the Business Day next preceding each Payment
Date, the Trustee will deposit with such Paying Agent an aggregate sum
sufficient to make the Bond Payments then becoming due (but only to the extent
funds are then available for such purpose), such sum to be held in trust for
the benefit of the Registered Owners entitled thereto.
Any Paying Agent shall be appointed by the Owner Trustee with the
consent of the Trustee and shall meet the qualification and eligibility
standards for successor trustees set forth in Section 8.10. The Owner Trustee
will cause each Paying Agent other than the Trustee to execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee (and, in its capacity as Paying Agent, Trustee so agrees), subject to
the provisions of this Section 8.02, that such Paying Agent will:
(a) hold all sums held by it for the payment of Bond
Payments in trust for the benefit of the Registered Owners entitled
thereto until such sums shall be paid to such Persons and pay such sums
to such Registered Owners as herein provided; and
(b) if it is no longer eligible to be a Paying Agent
hereunder, it will immediately resign as Paying Agent and forthwith pay
to the Trustee all sums held by it in trust for the payment of Bond
Payments to the Registered Owners.
When there shall be a Paying Agent that is not also the Bond Registrar,
the Trustee shall furnish, or cause the Bond Registrar to furnish, to such
Paying Agent on each Record Date for such Bonds a list, in such form as such
Paying Agent may reasonably require, of the names and addresses of the
Registered Owners.
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Section 8.03. Neither Indenture Trustee nor Owner Trustee May Become
Registered Owner of a Bond or Subordinate Bond Notwithstanding any provision
to the contrary herein or in any other company Financing Documents, neither
Owner Trustee, as trustee or in its individual capacity, nor the Trustee
(except in a fiduciary capacity) may become a Registered Owner of any Bond or
Subordinate Bond.
Section 8.04. Performance of Obligations. The Trustee shall not take
any action, or permit any action to be taken by others of which it has actual
knowledge, which would release any Person from any of its covenants or
obligations hereunder or under any instrument included in the Trust Estate, or
which would result in the amendment, hypothecation, subordination, termination
or discharge of, or impair the validity or effectiveness of, any instrument,
except as expressly provided in this Indenture.
Section 8.05. Certain Liens. Trustee, in its individual capacity and
at its own cost and expense (but without any right of indemnity in respect of
any such cost or expense under this Indenture), will promptly take such action
as may be necessary duly to discharge all Liens on any part of the Trust Estate
which result from claims against it, as trustee hereunder or in its individual
capacity, or any of its Affiliates, arising out of events or conditions not
related to its interest in any Facility or the administration of the Trust
Estate.
Section 8.06. Certain Rights of Trustee. Except as otherwise provided
in Section 8.01:
(a) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, note or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Owner Trustee mentioned
herein shall be sufficiently evidenced by a certificate of a duly
authorized officer of the Owner Trustee confirming that such request or
direction has been duly authorized and is being given in conformity to
the applicable provisions of this Indenture which shall be set out
therein;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a
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matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be herein specifically
prescribed may, in the absence of bad faith on its part, rely upon a
certificate of an authorized representative of the Owner Trustee;
(d) the Trustee may consult with Counsel and the written advice of
such Counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon. Such written advice or
Opinion of Counsel shall also be addressed to the Owner Trustee and made
available for the Owner Trustee's and Bondowners' inspection;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Registered Owners pursuant to this Indenture, unless such Registered
Owners shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) except as limited herein, the Trustee is under certain
fiduciary duties to pursue remedies in the best interest of the Bondowners;
therefore, the Trustee may not be obligated to take possession of, foreclose or
otherwise take title to the Mortgaged Estate of any Facility, if in its
reasonable judgment, the Trustee determines that such possession, foreclosure
or taking of title would be adverse to Bondowners. In such a situation, the
Trustee shall request that the Owner Trustee provide to the Trustee, at the
Owner Trustee's expense, a phase I environmental assessment or similar
assurances acceptable to the Trustee. If the Owner Trustee fails to cause such
assessment or such assurances, then the Trustee may, but shall not be obligated
to, cause such audit or audits to be performed and the cost thereof shall
become a recourse obligation of the Owner Trustee, but not against the Owner
Trustee in its individual capacity;
(g) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other proper document believed by it to be genuine, but the Trustee, in
its discretion, may make
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such further inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled, at the Owner Trustee's
expense, to examine the books, records and premises of the Owner Trustee,
personally or by agent or attorney; and
(h) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents,
attorneys or receivers and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent, attorney or receiver
appointed with due care by it hereunder.
Section 8.07. Money Held in Trust. Money held by the Trustee in trust
hereunder shall be segregated from other funds.
Section 8.08. Compensation and Reimbursement.
(a) The Owner Trustee agrees to pay the Trustee from time to time
its Administrative Expenses (which compensation shall be limited by the
provisions set forth in the definition of Administrative Expenses) and its
Extraordinary Expenses (which compensation shall not be limited by any
provision of law in regard to compensation of the Trustee of an express
trust).
(b) The Owner Trustee agrees to indemnify the Trustee, Bond
Registrar and Paying Agent and their agents for, and to hold them harmless
against, any loss, liability or expense incurred without willful
misconduct or bad faith on their part arising out of, or in connection
with, the acceptance or administration of the Trust Estate, including the
costs and expenses of defending themselves against any claim in connection
with the exercise or performance of any other powers or duties hereunder.
Such indemnity shall survive the termination, discharge or payment of the
Indenture and the Bonds. Notwithstanding the above, the Owner Trustee may,
but shall not be obligated to, defend the Trustee with counsel of Owner
Trustee's choice and acceptable to the Trustee. The Trustee shall give
the Owner Trustee timely notice (in a mariner set forth in Section 13.04)
if any claim initiated against the Trustee as such claim arises out of, or
in connection with, the acceptance or administration of the Trust Estate;
provided that Trustee's failure to give such notice shall not reduce Owner
Trustee's obligation hereunder.
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(c) Upon the occurrence of an Event of Default and during its
continuance, the Trustee and any other Paying Agent shall have a prior
claim and Lien upon any moneys derived from the exercise of any remedies
hereunder for its fees, expenses, disbursements and advances prior to the
deposit thereof in the Revenue Fund.
(d) Nothing in this Section 8.08 shall be construed to limit the
exercise by the Trustee of any right or remedy permitted under this
Indenture.
Section 8.09. Eligibility. Any successor Trustee hereunder shall
satisfy the requirements of Section 8.10. The Trustee shall have the legal
power to exercise all of the rights, powers and privileges as contemplated
hereunder.
Section 8.10. Corporate Trustee; Trustee's Capital and Surplus. There
shall at all times be a Trustee hereunder which shall be a bank or trust company
organized and doing business under the laws of the United States of America or
of any state or the District of Columbia, and with an office in New York City,
authorized under such laws to exercise corporate trust powers, subject to
supervision and examination of federal or state authority and having an office
within the United States of America. The Trustee shall at all times have a
combined capital and surplus of at least $50,000,000. Any successor Trustee
shall at all times have a combined capital and surplus of at least
$l00,000,000. If the then Trustee publishes annual reports of condition, its
combined capital and surplus for purposes of this Section 8.10 shall be as set
forth in the latest such report. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 8.10, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article VIII. Any Paying Agent also shall meet the requirements of this
Section 8.10.
Section 8.11. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article VIII shall become effective
until the acceptance of appointment by the successor Trustee has been
complied with.
(b) The Trustee may resign at any time by giving written notice
thereof to the Owner Trustee, effective upon the designation and
acceptance of a successor
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Trustee. For purposes of this subsection only, the Owner Trustee,
subject to Section 8.09, has the sole and absolute discretion in
designation of a successor Trustee. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee within 180
days after the giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(c) The Trustee may be removed and replaced at any time during the
continuance of any Event of Default by the Required Bondowners (or if no
Bonds are Outstanding, then the Required Subordinate Bondowners) with
notice thereof delivered to the Trustee and the Owner Trustee.
(d) If at any time: (i) the Trustee shall cease to be eligible
under Section 8.09, or (ii) the Trustee shall become incapable of acting
or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee
or of its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then, in any such
case, the Required Bondholders may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
(e) Except as otherwise provided herein, if the Trustee shall resign,
be removed or become incapable of acting, or if a vacancy shall occur in
the office of the Trustee for any cause, the Required Bondholders shall
appoint a successor Trustee. If no successor Trustee shall have been
appointed and shall have accepted appointment in the manner hereinabove
provided on or before thirty (30) days after such resignation, removal,
incapacity or vacancy, any Registered Owner who has been a bona fide
Registered Owner for at least six months may, on behalf of himself and all
others similarly situated, can petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) Upon the substitution of a successor Trustee, Registered Owners
shall promptly be notified by such successor Trustee of its appointment as
Trustee under this Indenture.
Section 8.12. Acceptance of Appointment by Successor. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the Owner
Trustee and the retiring
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Trustee an instrument accepting such appointment and shall take all other action
necessary to succeed to the rights of the retiring Trustee and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Owner Trustee or the successor Trustee, such
retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee, and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder, subject nevertheless to its Lien, if any, provided for in Section
8.08.
No successor Trustee shall accept its appointment unless, at the time
of such acceptance, such successor Trustee shall be qualified and eligible
under this Article VIII.
Section 8.13. Merger, Conversion, Consolidation or Succession to
Business of Trustee.
(a) Subject to Section 8.13(b), the Trustee will keep in full
effect its existence, rights and franchises as a corporation or
association under the laws of its state of organization, the United States
of America or any state thereof.
(b) Any corporation (i) into which the Trustee is merged or
converted or with which it is consolidated, or (ii) resulting from any
merger, conversion or consolidation to which the Trustee shall be a party,
or (iii) succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder;
provided that corporation shall be otherwise qualified and eligible to act
as Trustee under this Article VIII, without the execution or filing of any
paper or any further act on the part of any of the parties hereto. In
case any Bonds or Subordinate Bonds have been executed, but not delivered,
by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Bonds or Subordinate Bonds so executed with the same effect as if such
successor Trustee had itself executed such Bonds or Subordinate Bonds.
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Section 8.14. Co-Trustees and Separate Trustees. At any time or
times, for the purpose of meeting the legal requirements of any jurisdiction
in which all or any part of the Trust Estate may be located at the time, the
Trustee shall have power to appoint one or more Persons approved by the
Trustee either to act as co-trustee, jointly with the Trustee, of all or any
part of the Trust Estate, or to act as separate trustee of any such property,
in either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons, in the capacity aforesaid,
any property, title, right or power deemed necessary or desirable, subject to
the other provisions of this Section 8.14.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(a) the Bonds and the Subordinate Bonds shall be executed,
authenticated and delivered only by the Trustee and all rights, powers,
duties and obligations hereunder in respect of the custody of securities,
cash and other personal property held by, or required to be deposited
with, the Trustee hereunder, shall be exercised solely by the Trustee;
(b) the rights, powers, duties and obligations hereby conferred or
imposed upon the Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed
by the Trustee or by the Trustee and such co-trustee or separate trustee
jointly, as shall be provided in the instrument appointing such co-trustee
or separate trustee, except to the extent that, under any law of any
jurisdiction in which any particular act is to be performed, the Trustee
shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such co-trustee or separate trustee;
(c) the Trustee at any time, by an instrument in writing executed
by it, may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section 8.14. Upon the written request of the
Trustee, the Owner Trustee shall join with the Trustee in the execution,
delivery and performance of all instruments and agreements necessary or
proper to effectuate such resignation or removal. A successor to any
co-trustee or separate trustee so resigned or
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removed may be appointed in the manner provided in this Section 8.14;
(d) no co-trustee or separate trustee (including the Trustee)
hereunder shall be personally liable by reason of any act or omission of
the Trustee, or any other such co-trustee or separate trustee hereunder;
and
(e) any instrument or instruments delivered by or on behalf of the
Registered Owners to the Trustee shall be deemed to have been delivered to
each such co-trustee and separate trustee.
No separate trustee shall accept its appointment unless at the time of
such acceptance such separate trustee shall be qualified and eligible under
this Article VIII.
Section 8.15. Withholding Taxes. The Trustee and the Paying Agent
shall comply with all requirements of the Code applicable to them with respect
to the withholding from any payments made on such Bonds or Subordinate Bonds of
any withholding taxes imposed thereon, including any withholding upon Bonds or
Subordinate Bonds the Registered Owners of which are foreign persons.
Section 8.16. Limitation on Liability of Owner Trustee and Others.
Notwithstanding anything herein or in the Company Financing Documents to the
contrary, the Registered Owners and the Trustee agree not to enforce any
judgment for any deficiency against the Owner Trustee in its individual
capacity or its directors or its officers, shareholders or partners in the
event of foreclosure of any Mortgage by power of sale or judicial action.
Neither the Owner Trustee nor any of its officers, directors or shareholders
shall have any personal liability under this Indenture or the Company Financing
Documents on account of any representations, warranties or covenants thereunder
other than those made expressly in its individual capacity and for its gross
negligence and willful misconduct.
In addition, nothing contained in the preceding paragraph shall (i) be,
or be deemed to be, a release, waiver or impairment of any of the Bond
Obligations or any Liens created by the Company Financing Documents or
otherwise or (ii) waive, release, limit or otherwise prejudice or affect the
rights of any Registered Owner to enforce any of its rights or remedies with
respect to collateral given for such Bond Obligations.
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The Owner Trustee and any director or officer or employee, partner or
agent of the Owner Trustee may rely in good faith on any document of any kind
that in its reasonable judgment has been properly executed and submitted by
any Person respecting any matters arising hereunder.
Section 8.17. Dissolution or Termination of Trust Agreement Not to
Terminate Indenture. The dissolution or termination of the Trust or the Trust
Agreement prior to the defeasance of the Bonds and the Subordinate Bonds from
or for any cause whatsoever shall not operate to terminate this Indenture
insofar as the rights, duties and obligations of the Trustee and the interests
and rights of Registered Owners are concerned.
Section 8.18. Concerning the Leases. The Trustee shall immediately
give notice to the Owner Trustee and Kmart in the event that any rent or other
payments pursuant to the Leases are not received as set forth in Section 3.17
herein or in the Leases or in the event that it receives notice from any party
that any Lessee intends to terminate or intends to fail to make payments under
the applicable Lease. In the event of any such occurrence, and if no Event of
Default has occurred, the Trustee agrees to cooperate, at the expense of the
Owner Trustee, with the Owner Trustee with respect to any action to be taken by
the Owner Trustee under the Leases and the Lease Guaranties.
Section 8.19. Appointment of Agent by Owner Trustee. In the
administration of the trusts created under the Trust Agreement, the Owner
Trustee has appointed XXXXXXXXXX, to hold title to the Facilities located in
XXXXXXXXXX, California and XXXXXXXXXX, California, known as Kmart stores
number 3653 and number 3639, respectively (as set forth in Exhibit D hereto),
and to exercise on its behalf all necessary powers and to perform all duties
with respect to such Facilities.
ARTICLE IX
REGISTERED OWNERS' LISTS AND REPORTS BY
TRUSTEE
Section 9.01. Preservation of Information; Communications to Registered
Owners.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Registered Owners
received by the
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Trustee in its capacity as Bond Registrar, as well as an accurate
record of payments made to the Registered Owner of each Bond and
Subordinate Bond Outstanding.
(b) Registered Owners may communicate in accordance with the
federal securities laws with other Registered Owners with respect to their
rights under this Indenture and under the Bonds and the Subordinate Bonds.
Section 9.02. Reports to Internal Revenue Service. The Trustee shall
comply with any reporting requirements of the Code applicable to it, including,
without limitation, compliance with respect to the required withholding of any
taxes imposed on the Registered Owners of any Bonds or the Subordinate Bonds
pursuant to the Code.
ARTICLE X
SUPPLEMENTS TO THIS INDENTURE
AND AMENDMENTS TO OTHER DOCUMENTS
Section 10.01. Supplements to this Indenture Without Consent of
Registered Owners. Without the consent of the Registered Owners, the Owner
Trustee and the Trustee, at any time and from time to time, may enter into one
or more supplements to this Indenture, in form satisfactory to the Trustee, for
any of the following purposes:
(a) to correct or amplify the description of any property
constituting or to constitute the Trust Estate;
(b) to add to the covenants of the Owner Trustee or the Trustee, or to
surrender any right or power herein conferred upon the Owner Trustee,
which in either case is for the benefit of or is not prejudicial to the
rights of the Registered Owners;
(c) to cure any ambiguity, or to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein; or
(d) to preserve the rating of "1" by NAIC.
Section 10.02. Supplements to this Indenture With Consent of Registered
Owners. With the consent of the Required Bondowners (or if no Bonds are
Outstanding, then the Required Subordinate Bondowners) by an instrument or
instruments delivered by, or on behalf of, the Registered Owners to the
Trustee, the Owner Trustee and the Trustee may
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enter into one or more supplements hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Registered
Owners under this Indenture; provided, however, that no such supplement to
this Indenture shall, without the consent of the Registered Owners of all
(100%) of the Outstanding Bonds affected thereby, be made which would:
(a) reduce the amount of any Bond Payment to be made hereunder,
change the provisions of this Indenture relating to the application of
Revenues to Bond Payments, or the coin or currency in which any Bond
Payment is to be made, or impair the right to institute suit for the
enforcement of the provisions of this Indenture requiring the application
of funds available therefor to the payment in respect of any such Bond
Payment on such Bonds or Subordinate Bonds;
(b) reduce the principal amount evidenced by any Bond or
Subordinate Bond or modify the maturity (or redemption provisions)
thereof, change the time for payment of principal or interest on any Bonds
or Subordinate Bonds, the consent of the Registered Owners of which is
required for any such supplement to this Indenture, or the consent of the
Registered Owners of which is required for any waiver of compliance with
certain provisions of this Indenture or certain Events of Default
hereunder and their consequences provided for in this Indenture;
(c) modify any of the provisions of this Section 10.02 or
Sections 7.07, 7.11 or 7.12, except to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Registered Owner of each Outstanding Bond and Subordinate
Bond affected thereby; or
(d) permit the creation of any Lien on any part of the Trust Estate
or release or terminate this Indenture with respect to any part of the
Trust Estate or deprive the Registered Owner of any Bond or Subordinate
Bond of the rights and benefits afforded by this Indenture, except as
expressly provided herein; or
(e) change any defined term in such a manner as to cause an effect
prohibited by Section 10.02(a), (b), (c) or (d).
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It shall not be necessary for any instrument or instruments delivered by,
or on behalf of, the Registered Owners to the Trustee under this Section 10.02
to approve the particular form of any proposed supplement to this Indenture,
but it shall be sufficient if the Registered Owners of outstanding Bonds or
Subordinate Bonds, as the case may be, representing not less than the necessary
amount of the Bond obligations shall approve the substance thereof.
Promptly after the execution by the Owner Trustee and the Trustee of any
supplement to this Indenture pursuant to this Section 10.02, the Trustee shall
mail to the Registered owners of the Bonds or the Subordinate Bonds to which
such supplement relates a notice setting forth, in general terms, the substance
of such supplement. Any failure of the Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any supplement to this Indenture.
Section 10.03. Execution of Supplements to This Indenture. In executing
or accepting the additional trusts created by any supplement to this Indenture
permitted by this Article X or the modifications thereby of the trusts created
by this Indenture, the Trustee shall be entitled to receive and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplement is authorized or permitted by this Indenture. In connection
with any supplement, modification or amendment to this Indenture, the Trustee
may require an Opinion of Counsel that this Indenture as supplemented, modified
or amended will not cause the Bonds or the Subordinate Bonds to be required to
be registered under the Securities Act. The Trustee may, but shall not be
obligated to, enter into any such supplement which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
Section 10.04. Effect of Supplements to This Indenture. Upon the
execution of any supplement to this Indenture under this Article X, this
Indenture shall be modified in accordance therewith, and such supplement shall
form a part of this Indenture for all purposes; and every Registered Owner of
Bonds and Subordinate Bonds to which such supplement relates which have
theretofore been or thereafter are executed and delivered hereunder shall be
bound thereby.
ARTICLE XI
REGISTERED OWNERS' MEETINGS
Section 11.01. Purposes for Which Meetings May be Called. A meeting
of all Registered Owners may be called at
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any time and from time to time pursuant to the provisions of this Article XI
for any of the following purposes:
(a) to give any notice to the Trustee, or to give any directions to
the Trustee, or to consent to the waiver of any Event of Default and its
consequences, or to take any other action authorized to be taken by
Registered Owners pursuant to any of the provisions of Article VII;
(b) to remove the Trustee and appoint a successor Trustee pursuant
to the provisions of Article VIII;
(c) to consent to the execution of a supplement to this Indenture
pursuant to the provisions of Article X; or
(d) to take any other action authorized to be taken by or on behalf
of the Registered Owners of any specified percentage of Bonds or
Subordinate Bonds outstanding under any provision of this Indenture or
under applicable law.
Section 11.02. Manner of Calling Meetings. The Trustee may at any time
call a meeting of Registered Owners to take any action specified in Section
11.01, to be held at such date or time and at such place in the United States
of America as the Trustee shall determine or is otherwise determined under
Section 11.03. Notice of every meeting of all Registered Owners, setting forth
the time and the place of such meeting and in general terms the action proposed
to be taken at such meeting, shall be mailed not less than 30 nor more than 60
days prior to the date fixed for the meeting, to such Registered Owners and the
Owner Trustee. The Trustee may fix, in advance, a date as the Record Date for
determining the Registered Owners entitled to notice of or to vote at any such
meeting; provided, that such Record Date shall be not less than 45 nor more
than 75 days prior to the date fixed for such meeting.
Section 11.03. Call of Meeting by Trustee or Registered owners. In any
case at any time the Trustee or the Registered Owners of the Bonds Outstanding
representing at least 25% in principal amount of the Outstanding Bonds (or if
no Bonds are outstanding, then Registered Owners of at least 25% of the
principal amount of the Subordinate Bonds) shall have requested the Trustee to
call a meeting of Registered Owners to take any action authorized in Section
11.01 by
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written request setting forth in reasonable detail the action proposed to be
taken at the meeting, the date (determined in accordance with Section 11.02),
time and location thereof, the Trustee shall mail notice of such meeting within
15 days after the determination to hold the meeting has been made by the
Trustee or after receipt from the Registered Owners of such request, indicating
the time and place for such meeting.
Section 11.04. Required Consent. In determining whether the Registered
Owners of the required Outstanding Bonds or Subordinate Bonds representing the
required Outstanding Bond Obligations have concurred in any direction,
amendment, supplement, waiver, consent or other action contemplated under any
provision of this Indenture or any other Company Financing Document, Bonds and
Subordinate Bonds owned by the Company, the Owner Trustee, the Trust, Kmart and
any Affiliate of any thereof and their respective successors and assigns shall
be disregarded and not be deemed to be outstanding for such purpose, and Bonds
and Subordinate Bonds held by any other Person who shall (i) be a Registered
Owner of one or more Bonds or Subordinate Bonds or (ii) be a Person appointed
by an instrument in writing as proxy by a Registered Owner of one or more such
Bonds or Subordinate Bonds shall be regarded. The only Persons who shall be
entitled to speak at any meeting of Registered Owners shall be the Persons
entitled to vote at such meeting and their counsel, any representatives of the
Trustee and the Owner Trustee and their respective counsel.
Section 11.05. Regulations May be Made by Trustee. Notwithstanding any
other provisions of this Indenture, the Trustee may make such reasonable
regulations (which the Required Bondowners (or if no Bonds are Outstanding,
then the Required Subordinate Bondowners) may modify, overrule or supplement)
as it may deem advisable for any meeting of Registered Owners in regard to
proof of the holding of Bonds and Subordinate Bonds and of the appointment of
proxies, and in regard to the appointment and duties of inspectors of votes,
the submission and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of the meeting
as it shall deem appropriate.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting unless the meeting shall have been called by the
Registered Owners as provided in Section 11.03, in which case the Registered
Owners calling the meeting shall in like manner appoint a temporary chairman.
A permanent chairman and a permanent secretary of the meeting shall be elected
by vote of the Required
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Bondowners (or if no Bonds are Outstanding, then the Required Subordinate
Bondowners) represented at the meeting.
At any meeting, each Registered Owner or proxy shall be entitled to that
number of votes for the Outstanding Bonds or Subordinate Bonds held by him or
by the Registered Owner represented by him as is equal to the dollar amount of
the outstanding Bond Obligations which such Bonds or Subordinate Bonds
represent; provided, however, that no vote shall be cast or counted at any
meeting in respect of any Bond or Subordinate Bond challenged as not
Outstanding and ruled by the chairman of the meeting not to be Outstanding.
The chairman of the meeting shall have no right to vote other than by virtue of
Bonds or Subordinate Bonds held by him or instruments in writing as aforesaid
duly designating him as the Person to vote an behalf of other Registered
Owners. Any meeting of Registered Owners duly called pursuant to the
provisions of Section 11.02 or 11.03 may be adjourned from time to time to be
reconvened at a later date or time, and the meeting may be reconvened without
further notice.
At any meeting of Registered Owners, the presence of Persons holding or
representing the Registered Owners of the Bonds or Subordinate Bonds
representing Outstanding Bond obligations sufficient to take action on the
business for the transaction of which such meeting was called shall constitute
a quorum, but, if less than a quorum is present, the Required Bondowners or
Persons representing the Required Bondowners (or if no Bonds are Outstanding,
then the Required Subordinate Bondowners) represented at the meeting may
adjourn such meeting to be reconvened at a later date or time with the same
effect, for all intents and purposes, as though a quorum had been present, and
the meeting may be reconvened without further notice.
Section 11.06. Manner of Voting at Meetings and Records to be kept. The
vote upon any matter submitted to any meeting of Registered Owners shall be by
written ballots on which shall be subscribed the signatures of the Registered
owners of the Bonds and the Subordinate Bonds or of their representatives by
proxy and the serial number or numbers of the Bonds and the Subordinate Bonds
held or represented by them. The permanent chairman of the meeting shall
appoint two inspectors of votes who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with the secretary of
the meeting their verified written reports in duplicate of all votes cast at
the meeting. A record in duplicate of the proceedings of each meeting of
Registered Owners shall be prepared by the secretary of the meeting and there
shall be attached to said record the
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original reports of the inspectors of votes on any vote by ballot taken thereat
and affidavits by one or more Persons having knowledge of the facts setting
forth a copy of the notice of the meeting and showing that said notice was
mailed as provided in Section 11.02. The record shall be signed and verified by
the affidavits of the permanent chairman and secretary of the meeting and one
of the duplicates shall be delivered to the Trustee to be preserved by the
Trustee. Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 11.07. Exercise of Rights of Trustee and Registered Owners Not to
be Hindered or Delayed. Nothing contained in this Article XI shall be deemed
or construed to authorize or permit, by reason of any call of a meeting of
Registered Owners or any rights expressly or by implication conferred hereunder
to make such call, any hindrance or delay in the exercise of any right or
rights conferred upon or reserved to the Trustee or to any Registered Owners
under any of the provisions of this Indenture, the Bonds or the Subordinate
Bonds. Such meetings may be conducted by conference call or unanimous written
consent may be given in lieu of such meeting.
Section 11.08. Unanimous Written Consent and Conference Call Meetings.
Unanimous written consent in lieu of a meeting and conference call meetings are
allowed under this Article XI so long as prudent procedural safeguards are
provided by the Trustee (through regulations established under Section 11-05).
ARTICLE XII
COVENANTS AND WARRANTIES OF THE OWNER TRUSTEE
Section 12.01. Representations and Warranties of the Owner Trustee. The
Owner Trustee, as Owner Trustee and, with respect to the representations and
warranties set forth in paragraphs (a) and (b), the first sentence of paragraph
(c), paragraph (d), the second sentence of paragraph (f), and paragraph (g)
below, in its individual capacity, represents and warrants for the benefit of
the Trustee and the Registered Owners as follows:
(a) The Owner Trustee is a national banking association duly
organized, validly existing and in good standing under the federal banking
laws of the United States, and has the corporate power and authority to
enter into and perform its obligations (i) under the Trust Agreement as
Owner Trustee and to the extent it is
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a party expressly in its individual capacity and (ii) to the extent it is
a party expressly in its individual capacity and in its capacity as Owner
Trustee, under this Indenture, the Bond Purchase Agreements, the Leases,
the Lease Guaranties, the other Company Financing Documents to which the
Owner Trustee is or is to become a party, and the Bonds.
(b) The execution, delivery and performance by the Owner Trustee of
the Trust Agreement have been duly authorized by all necessary corporate
action on the part of the Owner Trustee in its individual capacity and the
Trust Agreement has been duly executed and delivered by the Owner Trustee
in its individual capacity. Assuming the due authorization, execution and
delivery of the Trust Agreement by the Company, the execution, delivery
and performance by the Trustee of this Indenture, the Bond Purchase
Agreements, the Leases, the Lease Guaranties and each of the other Company
Financing Documents to which the Owner Trustee is or is to become a party
have been, or on the Closing Date will have been, duly authorized,
executed and delivered by the Owner Trustee. The execution, delivery and
performance by the Owner Trustee in its individual capacity of the Trust
Agreement, and the execution, delivery and performance by the Owner
Trustee of this Indenture, the Bond Purchase Agreements, the Leases, the
Lease Guaranties and the other Company Financing Documents to which it is
or is to become a party and the Bonds, do not, and on each Closing Date
will not, (i) require any approval of the stockholders of the Owner
Trustee or any approval or consent of any trustee or holders of any of the
indebtedness or obligations of the Owner Trustee, (ii) contravene any
applicable law of the United States or the State of Connecticut governing
the banking, trust or fiduciary powers of the Owner Trustee or any order
or judgment applicable to or binding on it, or (iii) contravene or result
in any breach of or constitute any default under the charter or by-laws of
the Owner Trustee or any material indenture, mortgage, loan agreement,
lease or other agreement or instrument to which the Owner Trustee is a
party or by which the Owner Trustee or any of its properties is bound.
(c) The Trust Agreement constitutes the legal, valid and binding
obligation of the Owner Trustee in its individual capacity enforceable
against the Owner Trustee in its individual capacity in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or
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other similar laws affecting the enforcement of creditors', mortgagees' or
lessors' rights in general and by general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or
at law). This Indenture, the Bond Purchase Agreements, the Leases, the
Lease Guaranties and each of the other Company Financing Documents to
which the Owner Trustee is or is to become a party constitute, or when
executed and delivered by the Owner Trustee will constitute, the legal,
valid and binding obligations of the Owner Trustee, enforceable against
the Owner Trustee in accordance with the terms thereof, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors',
mortgagees' or lessors' rights in general and by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
(d) There is no action, suit or proceeding pending or, to the
knowledge of the Owner Trustee, threatened against the Owner Trustee (as
the Owner Trustee or in its individual capacity) before or by any
governmental authority that questions the validity or enforceability of
this Indenture, the Bond Purchase Agreements, the Leases, the Lease
Guaranties, the Trust Agreement or any other Company Financing Document to
which the Owner Trustee (as the Owner Trustee or in its individual
capacity) is or is to become a party or that would, if adversely
determined, have a material adverse effect on the ability of the Owner
Trustee to perform its obligations under the Company Financing Documents
to which the Owner Trustee (as the Owner Trustee or in its individual
capacity) is or is to become a party.
(e) Upon execution of any Bonds to be issued by the Owner Trustee
under this Indenture, authentication thereof by the Trustee pursuant to
this Indenture and delivery thereof against payment therefor in accordance
with this Indenture, such Bonds will be the legal, valid and binding
obligation of the Owner Trustee, enforceable against the Owner Trustee in
accordance with the terms thereof, except as enforceability may be limited
by bankruptcy, receivership, insolvency, reorganization, moratorium and
other similar laws affecting the enforcement of creditors' rights
generally.
(f) No Owner Trustee Lien attributable to the Owner Trustee in its
trust capacity is in existence. No
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Owner Trustee Lien attributable to XXXXXXXXXX, in its individual capacity
is in existence. The execution, delivery and performance by the Owner
Trustee of the Company Financing Documents to which it is or is to become
a party will not subject the Trust Estate, or any portion thereof, to any
Owner Trustee Lien.
(g) The chief executive office and principal place of business of
the Owner Trustee and the office where it keeps its records
concerning the Facilities and the transactions contemplated hereby is
located in XXXXXXXXXX.
(h) The Owner Trustee is duly qualified to do business in each
jurisdiction in which the conduct of its business or the ownership of its
properties would require such qualification.
(i) No consent, approval or authorization of, or declaration,
registration or filing with, or payment to, any governmental body or any
non-governmental Person is required to be obtained or made in connection
with the execution, delivery and performance by the Owner Trustee of
this Indenture, the Bonds or the other Company Financing Documents or the
transactions contemplated thereby or as a condition to the legality,
validity or enforceability of the Owner Trustee's obligations under this
Indenture, the Bonds or the other Company Financing Documents, or the
offer, issue, sale or delivery of the Bonds to the purchasers or the
fulfillment of or compliance with the terms and provisions of the Bonds,
this Indenture or the other Company Financing Documents, except for the
recording of the Mortgages, the payment of a Mortgage recording tax, if
any, filing of forms UCC-1 and payment of nominal filing fees in the
appropriate offices.
(j) The net proceeds from the issuance and sale of the Bonds will
be used for the sole purpose of purchasing the Properties from Kmart
pursuant to the Company Financing Documents for a cash purchase price of
$97,775,841 and the payment of related fees and expenses constituting
costs of issuance.
(k) Neither the Owner Trustee nor anyone acting on its behalf has
offered the Bonds or any similar securities relating to the Properties to,
or solicited any offer to purchase the same from, any Person other
than the Purchasers and not more than 20 other
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institutional investors, or has taken any other action which would require
the registration of the Bonds under Section 5 of the Securities
Act.
(l) The Owner Trustee is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, and the
Owner Trustee is not directly or indirectly controlled by an investment
company. The Owner Trustee is not a "holding company" or a "subsidiary"
or an "affiliate" of a "holding company" or a "public utility" within the
meaning of the Public Utility Holding Company Act of 1935, as amended,
(m) The Owner Trustee is not in violation of, and is not subject
to any liability under, any environmental laws affecting it or its
properties.
(n) The Owner Trustee is not in violation of any federal, state,
local or foreign law, ordinance or regulation or any order, judgment,
injunction, award or decree or any other requirement of any government or
regulatory body, court or arbitrator applicable to the business or
properties of the Owner Trustee.
(o) The consummation of the transactions contemplated by this
Indenture, the Bonds, the Mortgages and the Leases and the Company
Financing Documents and the fulfillment of the terms hereof and thereof as
they relate to the Owner Trustee, will not constitute a default under, or
result in the creation or imposition of any Lien upon any property of the
Owner Trustee pursuant to, the provisions of any indenture, mortgage,
contract, agreement or other instrument or documentation by which the
Owner Trustee is a party or by which it or its assets are bound.
(p) Except as disclosed in Exhibit C, there are no proceedings or
investigations pending or threatened, before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality in
any way relating to the Owner Trustee or the consummation of the
transactions contemplated by the Company Financing Documents.
(q) The representations and warranties of the Owner Trustee herein
and in each of the other Company Financing Documents are true and
correct on the date of the execution and delivery of this Indenture.
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(r) No event has occurred and is continuing which is, or after
notice or lapse of time or both would become, an event of default under
any Leases, this Indenture or any other Company Financing Document.
Section 12.02. Certain Covenants and Agreements of the Owner Trustee.
The Owner Trustee, in its individual capacity as to paragraphs (a) (to the
extent set forth therein), (b) and (d) below, and as the Owner Trustee, as to
paragraphs (a) (to the extent set forth therein), (c) and (e) through (n),
covenants and agrees with the Trustee for the benefit of the Registered Owners
as follows:
(a) The Owner Trustee, in its trust capacity with respect to any
Owner Trustee Liens attributable to it in its trust capacity, and in its
individual capacity with respect to any Owner Trustee Liens attributable
to it in its individual capacity, hereby unconditionally agrees that the
Owner Trustee will not directly or indirectly create, incur, assume or
suffer to exist any Owner Trustee Liens attributable to it on or against
any part of the Trust Estate or any of the Facilities, and the Owner
Trustee, in its trust capacity with respect to any Owner Trustee Liens
attributable to it in its trust capacity, and in its individual capacity
with respect to any Owner Trustee Liens attributable to it in its
individual capacity, agrees that it will at its own cost and expense
(without right to indemnity under this Indenture) promptly take such
action as may be necessary to duly discharge and satisfy in full all such
Owner Trustee Liens attributable to the Owner Trustee. The Owner Trustee,
in its trust capacity with respect to any Owner Trustee Liens attributable
to it in its trust capacity, and its individual capacity with respect to
any Owner Trustee Liens attributable to it in its individual capacity,
hereby indemnifies and holds harmless the Trustee and the Owners from and
against any loss, cost or expense (including legal fees and expenses)
which may be suffered or incurred by any of them as the result of the
failure of the Owner Trustee to discharge and satisfy any such Owner
Trustee Lien.
(b) The Owner Trustee agrees that it shall comply with all of the
terms of the Trust Agreement applicable to it.
(c) The Owner Trustee shall notify the Trustee promptly after any
change in its chief executive office and place of business or the office
where it keeps its records concerning its accounts relating to the
transactions contemplated hereby.
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(d) The Owner Trustee, in its trust capacity and not in its
individual capacity, shall cause to be promptly and duly taken, executed,
acknowledged, delivered and recorded all such further acts, documents and
assurances as the Lessees and the Trustee from time to time may reasonably
request in order to carry out more effectively the intent and purposes of
this Indenture, the other Company Financing Documents to which it is a
party, and the transactions contemplated hereby and thereby.
(e) The Owner Trustee will duly and punctually pay or cause to be
paid, the principal of, Make-Whole Premium (if any) and interest on the
Bonds, and the Subordinate Bonds, on the dates and in the manner provided
herein and in the Bonds, and the Subordinate Bonds, without any deduction,
withholding or setoff of any kind. Any such payment shall be considered
paid on the date due if the Trustee holds on or prior to 10:00 a.m. (New
York City time) on the relevant Payment Date money, in immediately
available funds, designated for and sufficient to pay the installment and
is not prohibited from paying such money to the Bondowners pursuant to the
terms of this Indenture.
The Owner Trustee shall pay interest (including any post-petition
interest in any proceeding under any bankruptcy law) on overdue principal,
Make-Whole Premium, if any, and interest at the rate of two hundred (200)
basis points above the rate of interest then in effect with respect to a
particular Bond or Subordinate Bond.
(f) The Owner Trustee shall comply with all laws, statutes,
regulations, rules, orders and all restrictions imposed by any
governmental or regulatory body, in each case to which it is subject. The
Owner Trustee shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, all taxes, assessments and
governmental charges levied or imposed upon it or upon its income, profits
or property and (ii) all claims for labor, material and supplies which, if
unpaid, might by law become a Lien upon any of its property.
(g) Upon becoming aware of any default or Event of Default or
default in the performance of any covenant, agreement or condition
contained in this Indenture or any other Company Financing Document, the
Owner Trustee shall promptly deliver an Officer's Certificate to the
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Trustee identifying the default, Event of Default or other default, its
status and what action the Owner Trustee is taking or proposes to take
with respect thereto.
(h) The Owner Trustee shall maintain insurance with responsible and
reputable insurance companies or associations (or cause such insurance to
be maintained, including through self-insurance contemplated under the
Mortgages and the Leases), in such amounts, with such deductibles and
covering such risks as are customarily insured against by Persons
similarly situated and owning like properties; provided, however, that if
a Lessee complies with the insurance requirements set forth in its Lease,
such compliance will satisfy the Owner Trustee's covenant to insure under
this subsection.
(i) The Owner Trustee shall not take any steps to procure or obtain
the commencement of any involuntary bankruptcy or insolvency proceeding
against the Trust or Trust Estate, nor shall Owner Trustee take or suffer
or permit any Person under its direct or indirect ownership or control to
take, any steps to procure or obtain the commencement of a voluntary
bankruptcy or insolvency proceeding with respect to the Trust or Trust
Estate.
(j) Without the prior written consent of the Required Bondowners,
the Owner Trustee shall not be a party to, or acquiesce in, any amendment,
supplement or modification to, or grant any waiver of any provision of, or
express consent with respect to any action proposed to be taken under, or
make any determination required or permitted under any of the Company
Financing Documents to which the Owner Trustee is a party, including the
Trust Agreement. In addition, no such amendment, supplement,
modification, waiver, consent or termination shall be made with respect to
any Lease that is the subject of a Lease Guaranty without the written
acknowledgement of Kmart, as guarantor, under such Lease Guaranty, that
its obligations under such Lease Guaranty shall not be reduced or released
as a result thereof.
(k) The Owner Trustee will not make, or commit to make, any
purchase of any assets except as required to comply with any of its other
obligations contained herein, in the Mortgages or under the Leases.
(l) The Owner Trustee shall not take, and shall not permit to be
taken, any action that could cause any representation or warranty
contained herein to be untrue as of any date.
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(m) The Owner Trustee shall not enter into any agreement,
arrangement or understanding, whether written or oral, with any Person,
other than those necessary for owning and leasing the Facilities
(including any addition or alteration thereto provided for in any of the
Leases or otherwise specifically permitted hereunder) and complying with
applicable law.
(n) The Owner Trustee shall not issue any securities except the
Bonds and the Subordinate Bonds. The Owner Trustee will not acquire any
securities other than Eligible Investments.
Section 12.03. Maintenance of Properties. The Owner Trustee will cause
the Trust Estate to be maintained and kept in good condition, repair and
working order, normal wear and tear, casualty loss and acts of God excepted,
and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof, all as may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.
Section 12.04. Statement as to Compliance. The Owner Trustee will
deliver to the Trustee, within 120 days after the end of each calendar year,
certificate stating, on behalf of the Owner Trustee, that to its actual
knowledge, based on such review, (i) the Owner Trustee has fulfilled all its
obligations under this Indenture throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to it and the nature and status thereof, and (ii) no event has occurred
and is continuing which is, or after notice or lapse of time or both would
become, an Event of Default hereunder or a default under any of the Leases, or,
if such an event has occurred and is continuing, specifying each such event
known to it and the nature and status thereof.
Section 12.05. Restriction of Owner Trustee Activities. Until the later
of (x) the date that is 91 days after the payment by the Owner Trustee in full
of all Bond Payments (including payments contemplated by Article VI) and (y)
such date as the Bonds are indefeasibly paid in full following an Intervening
Bankruptcy, the Owner Trustee will not, on or after the date of execution of
this Indenture, without the prior written consent of the Required Bondowners
(i) engage in any business or investment activities other than those necessary
for owning and leasing the Facilities (including any additions or alterations
thereto provided for in the Leases), or (ii) except as may be provided herein
or
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contemplated hereby or in the Company Financing Documents, create, incur,
assume, guarantee or otherwise be or become liable with respect to, or become
responsible for the payment of, or permit to exist, any Indebtedness (other
than the Indebtedness evidenced by the Bonds and Subordinate Bonds) except
Permitted Encumbrances.
Section 12.06. Limitations on Liens. The Owner Trustee will not create
or incur, or suffer or permit to be created or incurred or to exist, on any
asset now owned or hereafter acquired by it (if permitted hereunder) that
constitutes part of the Trust Estate, any Lien except for the Permitted
Encumbrances.
Section 12.07. Recording. The Owner Trustee will, upon the execution and
delivery hereof and thereafter from time to time, cause the Mortgages and such
other instruments as may be required or appropriate and financing statements
with respect thereto (collectively called the "Recordable Documents"), to be
filed, registered and recorded as may be requested by Trustee or required or
appropriate by present or future law to publish notice hereof and create,
perfect and protect the Lien hereof upon the Facilities and the Leases and to
publish notice of and protect the validity of this Indenture, the Leases and
the Mortgages.
The Owner Trustee will, from time to time, perform or cause to be
performed any other act as requested by Trustee or required or appropriate by
law and will execute or cause to be executed any and all further instruments
(including financing statements, continuation statements and similar statements
with respect to any of said documents) reasonably requested by the Trustee for
such creation, perfection, publication and protection. The Owner Trustee shall
pay, or shall cause to be paid, all filing, registration and recording taxes
and fees incident thereto, and all expenses, taxes and other governmental
charges incident to or in connection with the preparation, execution, delivery
or acknowledgment of the Recordable Documents, all instruments contemplated by
Section 12.14 or otherwise and the Bonds.
Section 12.08. Termination of the Leases. The Owner Trustee covenants
and warrants that it has no present right to terminate (and the Owner Trustee
hereby covenants not to exercise any such right hereafter required by it) any
Company Financing Document so long as this Indenture and the Mortgages and the
Assignments of Leases and Rents have not been terminated pursuant to their
respective terms. The Owner Trustee shall not exercise any termination
permitted by the express provisions of such documents without the prior
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written consent, unless Registered Owners of a greater percentage of the
principal amount of the Bonds is otherwise required hereunder, of the Required
Bondowners (or if no Bonds are Outstanding, then the Required Subordinate
Bondowners).
Section 12.09. Owner Trustee May Not Transfer any Facility except under
certain circumstances, etc. The Owner Trustee shall not convey, assign,
transfer or sell any right, title or interest in any of its assets that
constitute part of the Trust Estate except that the following conveyances,
transfers, assignments or sales are permitted: (i) the transfer and conveyance
to the Trustee under the Company Financing Documents, (ii) an assignment of its
right, title and interest in the Trust Estate to a successor or co-owner
trustee pursuant to the terms of this Indenture or the Trust Agreement or (iii)
any transfer, sale, assignment or conveyance of its right, title or interest in
any of its assets which constitute the Trust Estate for which it has received
the prior written consent of Registered Owners representing 100% of the
principal amount of all Outstanding Bonds.
Section 12.10. Liability Under Other Basic Agreements. Owner Trustee
shall take no action with respect to any part of the Trust Estate or any
Company Financing Document pledged or assigned to Trustee hereunder other than
upon the instructions of Trustee, except that Owner Trustee shall remain liable
under each such Company Financing Document to perform, and shall perform, all
of the non-discretionary obligations, if any, undertaken or assumed by it
thereunder and cure any of its defaults thereunder.
Section 12.11. No Other Liens on Mortgaged Property. Owner Trustee, in
its individual capacity, warrants and represents that it has not assigned or
pledged, and hereby covenants that it will not assign or pledge, so long as
this Indenture shall remain in effect, any of its estate, right, title or
interest in the Trust Estate pledged and assigned or intended to be pledged or
assigned by this Indenture and the Mortgages or the Assignments of Leases and
Rents to anyone other than Trustee. Owner Trustee will, in its individual
capacity and at its own cost and expense, promptly take such action as may be
necessary to discharge any Owner Trustee Lien attributable to it in its
individual capacity and its Affiliates on any of the estate, right, title or
interest in the Trust Estate so pledged or assigned or intended to be pledged
or assigned under this Indenture and the Mortgages or the Assignments of Leases
and Rents.
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Section 12.12. Payment of Moneys to Trustee. Promptly on receipt
thereof, Owner Trustee will transfer to Trustee any and all moneys from time to
time received by it and constituting part of the Trust Estate or otherwise
assigned or pledged to Trustee hereunder and under the Mortgages, in each case
for application by Trustee pursuant to this Indenture.
Section 12.13. Appointment of Trustee as Attorney. Owner Trustee
hereby constitutes Trustee the true and lawful attorney of Owner Trustee,
irrevocably, so long as any Bonds or Subordinate Bonds are Outstanding and so
long as there are any other amounts due hereunder or under the Bonds and the
Subordinate Bonds, with full power (in the name of such Owner Trustee or
otherwise) to ask, require, demand, receive, compound and give acquittance for
any and all moneys and claims for moneys due and to become due to Owner Trustee
under or arising out of any Company Financing Document, to endorse any checks
or other instruments or orders in connection therewith and to file any claims
or take any action or institute any proceedings which Trustee may deem to be
necessary or advisable. Such irrevocable power of attorney is a power coupled
with an interest.
Section 12.14. Further Assurances; Financing Statements. At any
time and from time to time, upon the written request of Trustee, Owner Trustee
shall promptly and duly execute and deliver any and all such further
instruments and documents as may be specified in such request and as are
necessary or reasonably desirable to perfect, preserve or protect the Lien,
security interests and assignments and other rights and remedies created or
intended to be created hereby and by the other Company Financing Documents, or
to obtain for Trustee the full benefit of the specific rights and powers herein
granted, including, without limitation, the execution and delivery of Uniform
Commercial Code financing statements and continuation statements with respect
thereto, or similar instruments relating to the perfection of the Lien,
security interests or assignments created or intended to be created hereby and
by the other Company Financing Documents.
Section 12.15. Limitations on Representations and Warranties of
Owner Trustee. OWNER TRUSTEE MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY
OR FITNESS FOR USE OF THE FACILITIES, OR ANY OTHER REPRESENTATION OR WARRANTY
WITH RESPECT TO THE FACILITIES.
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Owner Trustee may resign as Owner Trustee, appoint a successor
Owner Trustee and take all necessary and proper action to constitute
one or more Persons as co-trustee(s) jointly with Owner Trustee or as
separate trustee(s), all in accordance with the provisions of Article
IX of the Trust Agreement. In the case of any appointment of a
successor to Owner Trustee pursuant to the Trust Agreement or any
merger, conversion, consolidation or transfer of substantially all of
the corporate trust business of Owner Trustee pursuant to the Trust
Agreement, as a result of which another Person shall replace the Owner
Trustee, successor Owner Trustee shall give prompt notice thereof to
Trustee and each Bondowner.
Section 12.16. Owner Trustee Not Acting in Individual Capacity.
Owner Trustee is entering into this Indenture solely as trustee on behalf of
the Trust created under the Trust Agreement and not in its individual capacity,
except as expressly provided herein, and in no case shall Owner Trustee be
personally liable on, or for any loss in respect of, any of the statements,
representations, warranties, agreements or obligations of Owner Trustee
hereunder, under any other Company Financing Document, the Bonds or the
Subordinate Bonds as to all of which all interested parties shall look solely
to the Trust Estate; provided that Owner Trustee shall be responsible in its
individual capacity to Trustee and the holders of the Bonds and Subordinate
Bonds for its representations, warranties and covenants made expressly in its
individual capacity set forth in this Article XII hereof and for its own gross
negligence or willful misconduct.
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an Opinion
of Counsel or an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer or representative of the
Owner Trustee or the Trustee may be
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based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, Counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or authorized representative of
the Owner Trustee or the Trustee or other party acceptable to the Trustee
stating that the information with respect to such factual matters is in the
possession of the Owner Trustee or the Trustee unless such Counsel knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous. Any Opinion of
Counsel may be based on the written opinion of other counsel, in which event
such Opinion of Counsel shall be accompanied by a copy of such other counsel's
opinion and shall include a statement to the effect that such Counsel believes
such Counsel and the Trustee may reasonably rely upon the opinion of such other
counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Wherever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Owner Trustee
should deliver any document as a condition of the granting of such application,
or as evidence of compliance with any term hereof, the Trustee shall have no
duty to determine independently the truth or accuracy of any statement or
opinion contained therein and shall be entitled, in the absence of negligence,
willful misconduct or bad faith on its part, to rely thereon as provided in
Section 8.01(a)(ii).
Section 13.02. Acts of Registered Owners.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to
be given or taken by Registered Owners may be embodied in and
evidenced by one or more instruments of substantially similar tenor
signed by such Registered Owners entitled to act with respect thereto
in accordance with Section 11.04 in person or by an agent duly
appointed in writing; and, except as herein
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otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee, and,
where it is expressly required, to the Owner Trustee. Proof of
execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and
conclusive in favor of the Trustee and the Owner Trustee, if made in
the manner provided in this Section 13.02.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved by the attestation of a
witness of such execution or by the certificate of any notary public
or other officer, authorized by law to take acknowledgments of deeds,
certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof. Whenever such execution is
by an officer of a corporation or a member of a partnership on behalf
of such corporation or partnership, such certificate or attestation
shall also constitute sufficient proof of his authority.
(c) The ownership of Bonds and Subordinate Bonds and
right to receive Bond Payments shall be provided by the Bond Register.
(d) Any request, demand, authorization, direction,
notice, consent, waiver or other action by the Registered Owner of any
Bond shall bind the Registered Owner of every Bond issued upon the
registration thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the
Trustee or the Owner Trustee in reliance thereon, whether or not
notation of such action is made upon such Bond.
Section 13.03. (Reserved].
Section 13.04. Notices. Unless and except to the extent provided
otherwise herein, all notices, certificates, demands or other communications
hereunder shall be sufficiently given and shall be deemed given if and when
personally delivered. If any notice, certificate, demand or other
communication hereunder shall be mailed by United States registered or
certified mail, postage prepaid and return receipt requested, it shall be
deemed given on the date received, if sent by private courier service, it shall
be deemed given if and when received (unless the addressee refuses to accept
delivery, in which case it shall be deemed
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to have been given when first presented to the addressee for acceptance) or if
sent by telex, fax or similar writing, it shall be deemed given on the date
sent. Any such notice, certificate, demand or other communication shall be
addressed to the Persons named below at the addresses set forth below or to
such other address of any Person named below as such person shall have
designated to all other Persons named below by notice in accordance herewith:
If to the Owner Trustee: XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Telephone: XXXXXXXXXX
Telecopier: XXXXXXXXXX
If to the Trustee: XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Attention: Corporate Trust Division
Telephone: XXXXXXXXXX
Telecopier: XXXXXXXXXX
If to the Guarantor Then in accordance with paragraph 8 of
of Kmart subsidiary the respective Lease Guaranty
Leases: associated with a particular Lease
If to the Lessees: Sent in accordance with paragraph 30 of the
Lease for the respective Lessee
If to NAIC: National Association of Insurance
Commissioners
195 Broadway
New York, New York 10007
Attention: Securities Valuation Office
Telephone: (212) 285-0100
Telecopier: (212) 285-0073
Notwithstanding anything herein to the contrary, any notices required
hereunder to the Owner Trustee or Kmart will be forwarded to the Trustee,
unless such notice originated from the Trustee.
Section 13.05. Notices and Reports to Registered Owners; Waiver.
Where this Indenture provides for any notice or report to Registered Owners of
any event, such notice or
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report shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and sent, first-class, United States mail, postage prepaid, to
each Registered Owner affected by such event, at his address as it appears on
the Bond Register, not later than the latest date, and not earlier than the
earliest date, prescribed herein for the giving of such notice or report. In
any case where notice to Registered Owners is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Registered Owner shall affect the sufficiency of such notice with
respect to other Registered Owners, and any notice which is mailed in the
manner herein provided shall conclusively be presumed to have been duly given
on the third Business Day following the deposit thereof in the mail.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Registered Owners shall be filed with the Trustee
but such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
Section 13.06. Notice Given to NAIC. The Trustee shall give notice
to NAIC of (i) any material change to this Indenture of which change the
Trustee has actual knowledge, (ii) the expiration or termination of this
Indenture, (iii) the date upon which all payments required to be made to
Registered Owners pursuant to this Indenture have been made, and (iv) the
resignation or removal of the Trustee. The Trustee shall make available to
NAIC any information available to the Trustee relating to the Bonds required in
connection with the maintenance of ratings by such rating agencies.
Section 13.07. Effect of Headings and Table of Contents. The
Article and Section headings herein and in the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 13.08. Parties Bound; Successors and Assigns. All covenants
and agreements in this Indenture by the Trustee and the Owner Trustee shall
bind their respective successors and assigns, whether so expressed or not.
Section 13.09. Separability. In case any provision in this
Indenture or in the Bonds or the Subordinate Bonds shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
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Section 13.10. Benefits of Indenture. Nothing in this Indenture or
in the Bonds and the Subordinate Bonds, express or implied, shall give to any
Person, other than the parties hereto and their successors hereunder, and
the Registered Owners and their legal representatives, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
Section 13.11. Business Days. In any case where any Payment Date,
or any other date on which a payment on any Bond or Subordinate Bond is to be
made, is not a Business Day, then (notwithstanding any other provision of the
Bonds or the Subordinate Bonds) payment need not be made on such date, but may
be made on the next succeeding Business Day with the same force and effect as
if made on the nominal date of any such Payment Date or other date on which a
payment on any Bond or Subordinate Bond is to be made, and no interest shall
accrue for the period from and after such nominal date.
Section 13.12. Governing Law. This Indenture, each Bond and each
Subordinate Bond shall be construed in accordance with and governed by the laws
of the State of New York, other than principles of conflicts of law.
Section 13.13. Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Indenture.
Section 13.14. Recording of Indenture. This Indenture is subject to
recording in any appropriate public recording offices, such recording to be
effected by the Trustee payable as a Cost of Issuance from the Trust Estate.
Section 13.15. Inspection. The Trustee and the Owner Trustee each
agree that, on reasonable prior notice, it will permit any representative of
the other of them, or any Registered Owner, during their normal business hours,
to examine all of the books of account, records, reports and other papers in
their possession pertaining to the Trust Estate, to make copies and extracts
therefrom, to cause such books to be audited by certified public accountants at
the sole cost and expense of the requesting party (or the Owner Trustee
following a default) and to discuss the affairs and finances and accounts of
the Trust and the Trust Estate with its officers, employees and certified
public accountants (and by this provision the Trustee and the Owner Trustee
each hereby authorizes its certified public accountants to discuss with such
representatives such affairs, finances and
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accounts), all at such reasonable times and as often as may be reasonably
requested.
Section 13.16. Consent to Jurisdiction.
(a) ANY ACTION OR PROCEEDING AGAINST THE OWNER TRUSTEE
RELATING IN ANY WAY TO THIS INDENTURE MAY BE BROUGHT AND ENFORCED IN
THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND THE OWNER TRUSTEE IRREVOCABLY
CONSENTS TO THE JURISDICTION OF EACH SUCH COURT IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING. THE OWNER TRUSTEE IRREVOCABLY APPOINTS
XXXXXXXXXX, WHICH CURRENTLY MAINTAINS AN OFFICE SITUATED AT
XXXXXXXXXX, AS ITS AGENT TO RECEIVE SERVICE OF PROCESS OR
OTHER LEGAL SUMMONS FOR PURPOSES OF ANY SUCH ACTION OR PROCEEDING.
THE OWNER TRUSTEE FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
RETURN RECEIPT REQUESTED, TO THE OWNER TRUSTEE AT ITS ADDRESS AS
PROVIDED FOR NOTICES HEREUNDER. THE FOREGOING SHALL NOT LIMIT THE
RIGHT OF THE BONDOWNERS OR THE TRUSTEE TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR PROCEEDING, OR TO
OBTAIN EXECUTION OF ANY JUDGMENT, IN ANY OTHER JURISDICTION.
(b) THE OWNER TRUSTEE HEREBY IRREVOCABLY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY ACTION OR PROCEEDING ARISING UNDER OR RELATING TO THIS INDENTURE
IN ANY COURT LOCATED IN THE BOROUGH OF MANHATTAN, CITY AND STATE OF
NEW YORK, OR LOCATED IN ANY OTHER JURISDICTION CHOSEN BY THE TRUSTEE
OR THE BONDOWNERS IN ACCORDANCE WITH CLAUSE (a) OF THIS SECTION, AND
HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT A COURT LOCATED IN
THE BOROUGH OF MANHATTAN, CITY AND STATE OF NEW YORK IS NOT A
CONVENIENT FORUM FOR ANY SUCH ACTION OR PROCEEDING.
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<PAGE> 114
IN WITNESS WHEREOF, the Trustee and the Owner Trustee have caused this
Indenture to be duly executed by the officer indicated below with respect to
the Trustee and by the Owner Trustee, thereunto duly authorized, all as of the
day and year first written above.
XXXXXXXXXX, as Trustee
By /s/
---------------------------------
XXXXXXXXXX
Title: VICE PRESIDENT
XXXXXXXXXX, not in its individual capacity
but solely as Owner Trustee
By ---------------------------------
Title: -----------------------------
<PAGE> 115
IN WITNESS WHEREOF, the Trustee and the Owner Trustee have caused this
Indenture to be duly executed by the officer indicated below with respect to
the Trustee and by the Owner Trustee, thereinto duly authorized, all as of
the day and year first written above.
XXXXXXXXXX, as Trustee
By -----------------------------------
Title: -------------------------------
XXXXXXXXXX, not in its individual capacity but
solely as Owner Trustee
By /s/
-----------------------------------
Title: Vice President
<PAGE> 116
[EXHIBITS INTENTIONALLY OMITTED]
<PAGE> 1
EXHIBIT 99.26
TRUST AGREEMENT
between
XXXXXXXXXX
as Seller
and
XXXXXXXXXX
and
XXXXXXXXXX
as Trustees
Dated as of July 1, 1992
$31,900,000
Mortgage Pass-Through Certificates
(Kmart Corporation Power Center - Utica, Michigan Project)
Series 1992
<PAGE> 2
TRUST AGREEMENT
THIS TRUST AGREEMENT dated as of July 1, 1992, is executed by and
between XXXXXXXXXX, a Nevada corporation, as seller (together with its
permitted successors, in such capacity, "Seller"), and XXXXXXXXXX, a national
banking association validly organized and existing under the laws of the United
States, as trustee (together with its permitted successors and assigns in such
capacity, "Trustee"), and XXXXXXXXXX, as trustee (together with permitted
successors and assigns in such capacity, the "Individual Trustee")(the Trustee
and the Individual Trustee, collectively, the "Trustees").
PREFACE
Each Certificate evidences a beneficial ownership interest in the
Trust Fund, the assets of which include, among other things, a Mortgage Loan,
and the Certificates are equally and ratably secured by and paid in accordance
with the Mortgage and Mortgage Note, respectively (as such term is defined
herein).
Each Certificate is paid principal and/or interest, as set forth on
the Debt Service schedule on such Certificate (collectively, part of the
Certificate Distribution), on a semiannual basis referred to herein as the
Remittance Dates (being the same dates as the Due Dates). Payments under the
Mortgage Note are received semiannually on the Due Date. The Certificate
Distribution is calculated on the 10th day (or if such 10th day is not a
Business Day, the Business Day immediately following such 10th day) of the
month of the related Remittance Date (as each such term is defined herein).
In consideration of the premises and the mutual agreements hereinafter
set forth, the Seller and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
"Agreement": This Trust Agreement and all amendments hereof and
supplements hereto.
"Appraisal": An appraisal or certification as to value made by the
Seller. If an appraisal is done on the Mortgaged Property, it shall be signed
prior to the approval of the Mortgage Loan by a qualified appraiser (a
certified MAI appraiser
1
<PAGE> 3
or member of Society of Real Estate Appraisers (SRA)), duly appointed by the
Seller, who at the time of such appraisal had no interest, direct or indirect,
in the Mortgaged Property or in any loan made on the security thereof, and
whose compensation was not affected by the approval or disapproval of the
Mortgage Loan.
"Assignment" or "Assignment of Mortgage": An assignment of the
Mortgage, notice of transfer or equivalent instrument, in recordable form,
sufficient under the laws of the jurisdiction where the Mortgaged Property is
located to reflect of record the assignment of the Mortgage to the Trustees.
"Borrower": XXXXXXXXXX, a special purpose
limited partnership formed under the laws of the State of Michigan, its
successors and assigns.
"Business Day": Any day other than (i) Saturday or Sunday, or (ii) a
day on which banking institutions in the city in which the principal corporate
trust offices of the Trustee are located are authorized or obligated by law or
executive order to be closed, or (b) for purposes of Section 4,01(e), a day on
which banks in New York are required by law to be closed or are customarily
closed.
"Called Principal": With respect to the Mortgage Loan, the principal
of the Mortgage Loan that is to be paid or prepaid or accelerated in any way
pursuant to Section 2 of the Loan Agreement or is declared to be immediately
due and payable pursuant to Section 9.2 of the Loan Agreement, as the context
requires.
"Cash Liquidation": Recovery of all cash proceeds by the Trustee with
respect to the termination of the Mortgage Loan following an Event of Default,
including Insurance Proceeds, condemnation awards and other payments or
recoveries (whether made at one time or over a period of time) which the
Trustees deem to be finally recoverable, in connection with the sale or
assignment of the Mortgage Loan, trustee's sale, foreclosure sale or otherwise,
but only if title to the Mortgaged Property was not acquired by foreclosure or
deed in lieu of foreclosure by the Trustees pursuant to Section 5.07.
"Certificate": Any one of the Certificates evidencing a beneficial
ownership interest in the Mortgage Loan, executed by the Seller and
authenticated by the Trustee, substantially in the form set forth in Exhibit
4.01(a)1. hereto. Each Certificate is equally and ratably secured by and paid
in accordance with the Mortgage, Mortgage Note and the Security (as defined in
the Loan Agreement), respectively.
"Certificate Account": The trust account or accounts created and
maintained pursuant to Section 5.03.
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"Certificate Balance": The initial aggregate principal amount of the
Certificates less all Certificate Distributions in excess of the payments of
interest thereon at the Remittance Rate, or, with respect to any particular
Certificate, the balance thereof determined by multiplying the applicable
Certificateholder's Percentage Interest by the aggregate Certificate Balance.
"Certificate Distribution": On any Remittance Date, the aggregate
amount of Debt Service required to be distributed on such date with respect to
the Certificates, such amount being equal to the sum of (A) for the Mortgage
Loan as of the related Due Date, the amount actually received before the
Determination Date by the Trustee from the Mortgagor with respect to the
Mortgage Payment (including amounts described in Section 5.03(vii)), plus any
amount provided therefor in the Debt Service Reserve Account, (B) any Principal
Prepayment received during the related Principal Prepayment Period on the
Mortgage Loan if the Mortgage Loan was the subject of a Principal Prepayment
during such Principal Prepayment Period, (C) if the Mortgage Loan became a
Liquidated Mortgage Loan during the related Principal Prepayment Period, the
lesser of (a) the principal balance of the Mortgage Loan as of the first day of
such Prepayment Period, before giving effect to any scheduled payment of
principal due on such day or (b) the aggregate Net Liquidation Proceeds
received with respect to the Mortgage Loan, and (D) if there has been any
shortfall in the payment of the Certificate Distribution to a Certificateholder
for any reason, the amount of any such shortfall remaining unpaid as of the
applicable remittance Date and any amounts in the nature of late payment
charges received with respect to the Mortgage Loan.
"Certificate Register": The register maintained pursuant to Section
4.02.
"Certificate Schedule": The Certificate Schedule attached hereto as
Exhibit D.2. setting forth the following information for each Certificate: (i)
Certificate Number; (ii) the Certificate Balance as of the date of the
Certificate Schedule; (iii) the Debt Service on such Certificate: (iv) the
maturity date; (v) Remittance Rate; and (vi) the Percentage Interest.
"Certificateholder" or "Holder": The person in whose name a
Certificate is registered in the Certificate Register, except that, solely for
the purposes of giving any consent, direction, waiver, request or demand
pursuant to this Agreement, any Certificate registered in the name of Kmart,
the Borrower or Seller or any affiliate of any such party shall be deemed not
to be outstanding and the undivided Percentage Interest evidenced thereby shall
not be taken into account in determining whether the requisite amount of
Percentage Interests necessary to effect any such consent, direction, waiver,
request or demand has been obtained. The Trustees shall be able to conclusively
rely on a
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certificate of the Seller, Kmart or Borrower, as the case may be, in
determining which Certificates are registered to an affiliate thereof.
"Closing Date": July 24, 1992.
"Code": The Internal Revenue Code of 1986, as amended.
"Conversion Date": The date on which the Borrower shall satisfy the
preconditions set forth in Section 5.2 of the Loan Agreement to the
commencement of the Occupancy Term of the Loan (as defined in the Loan
Agreement), as determined by the Holders of not less than 66 2/3% of the
Percentage Interests of the Certificates. Trustee shall make available to the
Certificateholders, at Borrower's expense as provided in the Loan Agreement,
any materials evidencing satisfaction of the conditions in such Section 5.2
that may be provided by Borrower to the Trustee.
"Corporate Trust Office": The principal office of the Trustee in the
State of California at which at any particular time its corporate trust
business shall be administered, which office at the date of execution of this
instrument is located at XXXXXXXXXX.
"Debt Service": The interest and/or principal paid on the Remittance
Dates.
"Debt Service Reserve Account": An account by that name created by
Section 5.05 hereof.
"Determination Date": The 10th day (or if such 10th day is not a
Business Day, the Business Day immediately following such 10th day) of the
month of the related Remittance Date.
"Discounted Prepayment Value": With respect to any amount of Called
Principal of the Mortgage Loan, the amount obtained by discounting all
remaining Scheduled Payments with respect to such Called Principal from their
respective scheduled due dates to the Settlement Date (or Purchase Date in the
circumstances described in Section 4.01(e) hereof) with respect to such Called
Principal, in accordance with accepted financial practice and at a discount
factor (applied on a semiannual basis) equal to the Reinvestment Yield. The
Trustee shall be provided with a certificate evidencing the calculation of such
amount by either the Seller or Holders of Certificates evidencing Percentage
Interests in the aggregate not less than 66 2/3% at any time requested by the
Trustee.
"Due Date": With respect to the Mortgage Loan, the 15th day of the
month on which each Mortgage Payment is due on the Mortgage Loan, exclusive of
any days of grace.
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"Due Period": With respect to any remittance Date, the period
commencing on the day immediately following the previous Due Date and ending on
the current Due Date.
"Eligible Investments": One or more of the following:
(i) obligations of the United States or any agency or
instrumentality thereof, provided such obligations are backed by the
full faith and credit of the United States;
(ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the
highest long-term debt rating of Standard & Poor's or Moody's, or such
lower rating as will not result in the downgrading or withdrawal of
the rating then assigned to any security evidencing a beneficial
ownership interest in the Certificates by the Rating Agency;
(iii) commercial or finance company paper which is then rated
in the highest commercial or finance company paper rating category of
Standard & Poor's and Moody's, or such lower category as will not
result in the downgrading or withdrawal of the rating then assigned to
any security evidencing a beneficial ownership interest in the
Certificates by the Rating Agency;
(iv) certificates of deposit, demand or time deposits,
federal funds or bankers' acceptances issued by any depository
institution or trust company incorporated under the laws of the United
States or of any state thereof (including the Trustee) and subject to
supervision and examination by federal or state banking authorities,
provided that the commercial paper or long-term unsecured debt
obligations of such depository institution or trust company (or in the
case of the principal depository institution in a holding company
system, the commercial paper or long-term unsecured debt obligations
of such holding company) are then rated in the highest rating category
for such securities by Standard & Poor's and Moody's, or such lower
category as will not result in the downgrading or withdrawal of the
rating then assigned to any security evidencing a beneficial ownership
interest in the Certificates by the Rating Agency;
(v) demand or time deposits or certificates of deposit issued
by any foreign or domestic bank or trust company (including the
Trustee), savings and loan association or savings bank and fully
insured;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation the
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<PAGE> 7
commercial paper or long-term unsecured debt obligations of which are
then rated in the highest rating category for such securities by
Standard & Poor's and Moody's or such lower category as will not
result in the downgrading or withdrawal of the rating then assigned to
the Certificates by the Rating Agency;
(vii) repurchase obligations with respect to any security
described in (i) and (ii), above, or any other security issued or
guaranteed by an agency or instrumentality of the United States, in
either case entered into with a depository institution of trust
company (acting as principal) described in (iv) above;
(viii) securities (other than stripped bonds or stripped
coupons) bearing the interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any
state thereof which, at the time of such investment, are then rated in
the highest rating category of Standard & Poor's and Moody's, or in
such lower rating category as will not result in the downgrading or
withdrawal of the rating then assigned to any security evidencing a
beneficial ownership interest in the Certificates by the Rating
Agency;
(ix) FNMA or FHLMC Guaranteed Mortgage Pass-Through
Certificates,
(x) taxable government money market portfolios restricted to
obligations with maturities of one year or less, issued or guaranteed
by the full faith and credit of the United States which, at the time
of such investment, are then rated in the highest rating category of
Standard & Poor's and Moody's; and
(xi) such other investments bearing interest or sold at a
discount acceptable to the Rating Agency as will not result in the
downgrading or withdrawal of the rating then assigned to any security
evidencing a beneficial ownership interest in the Certificates by the
Rating Agency as confirmed in writing by the Rating Agency, provided,
however, that no instrument shall be an Eligible Investment if such
instrument evidences a right to receive only interest payments with
respect to the obligations underlying such instrument and, provided
further, that no eligible Investment shall be an instrument entitled
to receive interest only payments or principal only payments and
provided further, that the "highest rating category" as used in this
definition shall mean (A) a rating which would be assigned by Standard
& Poor's, as of the date first above written, equivalent to or higher
than a (i) "AA" rating with respect to long- term Eligible
Investments, (ii) "A1+" with respect to short-term Eligible
Investments, and
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<PAGE> 8
(iii) "AAm" or "AAmG" with respect to money-market securities; and
(B) a rating which would be assigned by Moody's, as of the date first
above written, equivalent to or higher than an (i) "Aa2" rating with
respect to long-term Eligible Investments, and (ii) "P1" with respect
to short-term Eligible Investments, and (iii) "Am" with respect to
money-market securities.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default": Any event of default described in Section 8.01.
"Extraordinary Expense Advances": All reasonable and necessary "out
of pocket" costs and expenses incurred in the performance by the Trustees
(including the reasonable fees and disbursements of counsel) or either of them
of their obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the Mortgaged Property if the Mortgaged Property
is acquired in satisfaction of the Mortgage, and (iv) compliance with the
obligations under Section 5.07.
"FDIC": The Federal Deposit Insurance Corporation or any successor
organization.
"Individual Trustee": means XXXXXXXXXX and permitted successor
hereunder.
"Insurance Proceeds": Proceeds paid by any insurer pursuant to any
insurance policy, including self-insurance proceeds paid by Kmart or any of its
subsidiaries, covering the Mortgaged Property.
"Kmart": Kmart Corporation, a Michigan corporation.
"Landlord": The Borrower as the Landlord under the terms of the
Leases.
"Late Collections": With respect to the Mortgage Loan, all amounts
received during any Due Period, whether as payments of Mortgage Payments or
otherwise, which represent payments or collection of Mortgage Payments due but
delinquent for a previous Due Period and not previously recovered or recovered
as Liquidation Proceeds, condemnation proceeds or Insurance Proceeds.
"Lease Guaranties": The Lease Guaranties by Kmart of the Leases dated
as of July 1, 1992 and attached as exhibits to the Loan Agreement.
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<PAGE> 9
"Lease Guaranty Default": With respect to any one or more of the
Leases and Lease Guaranties, the failure of (i) the Tenant under any such Lease
to pay any rental due under such Lease, and (ii) Kmart to pay any such rental
under the related Lease Guaranty within thirty (30) days after notice to Kmart
by Seller of the Tenant's failure to do so.
"Leases": Collectively, the Leases pursuant to which the Landlord
leased the Mortgaged Property to the Tenants as identified in the Loan
Agreement.
"Liquidated Mortgage Loan": The Mortgage Loan after an Event of
Default when the Trustees have reasonably determined that all amounts which
they expect to recover from or on account of the Mortgage Loan have been
recovered.
"Liquidation Expenses": Expenses which are incurred by the Trustees
in connection with the liquidation of the Mortgage Loan after an event of
Default, such expenses including, without limitation, legal fees and expenses,
any unreimbursed amount expended by the Trustees pursuant to Section 5.07 (to
the extent such amount is reimbursable under the terms of Section 5.07)
respecting the Mortgage Loan and any related and unreimbursed expenditures for
real estate property taxes or for property restoration or preservation.
"Liquidation Proceeds": Cash Liquidation received by the trustees in
connection with the liquidation of the Mortgage Loan, if defaulted, whether
through the sale or assignment of the Mortgage Loan, trustee's sale,
foreclosure sale or otherwise, or the sale of the Mortgaged Property if the
Mortgaged Property is acquired in satisfaction of the mortgage Loan other than
amounts required to be paid to the mortgagor pursuant to law or the terms of
the Mortgage Note.
"Loan Agreement": The Loan agreement dated as of July 1, 1992, by and
between Seller and Borrower pursuant to the terms and conditions of which the
Mortgage Loan shall be made.
"Make-Whole Premium": With respect to any amount of Called Principal
of the Mortgage Loan, a premium equal to the sum of (x) the excess (which shall
in no event be less than zero), if any, of the Discounted Prepayment Value of
the Called Principal of such Mortgage Loan over the sum of (i) such Called
Principal plus (ii) interest accrued thereon as of the Settlement Date (or in
the circumstances described in Section 4.01(e) hereof, the Purchase Date) with
respect to such Called Principal, and (y) an amount equal to the product of the
Called Principal and 104.402%. The Make-Whole Premium shall in no event be less
than zero. The Trustee shall be provided with a certificate evidencing the
calculation of such amount by the Seller or Holders of Certificates evidencing
Percentage Interests in the aggregate not less than 66 2/3% at any time
requested by the Trustee.
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"Minimum Investment Grade": A rating of at least Baa3, in the case of
a rating by Moody's, and a rating of at least BBB-, in the case of a rating by
S&P, or the then equivalent of such rating by Moody's or S&P or, to the extent
applicable, by another Rating Agency.
"Moody's": Moody's Investors Service, Inc. or successors thereto.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien or a first priority ownership interest in an estate in fee simple in
real property and a first priority security interest in personal property
included therewith securing the Mortgage Note.
"Mortgage File": The items referred to in Exhibit D.3. annexed hereto
pertaining to the Mortgage Loan.
"Mortgage File Documents": All of the documents contained in the
Mortgage File.
"Mortgage Loan": The loan evidenced by the Loan Agreement, Mortgage
Note and the Mortgage, sold and assigned by the Seller to the Trustee and which
is the subject of this Agreement, is included in the Trust and is identified on
the Mortgage Loan Schedule annexed hereto as Exhibit D.1..
"Mortgage Loan Schedule": The schedule attached hereto as Exhibit D.1.
setting forth the following information for the Mortgage Loan: (i) the
Mortgagor's name; (ii) the street address of the Mortgaged Property including
county and zip code; (iii) the maturity date; (iv) the mortgage rate; (v) the
first Due Date; (vi) a schedule setting forth the Mortgage Payment; and (vii)
the original principal balance of the Mortgage Loan.
"Mortgage Note": The Collateralized Promissory Note or other evidence
of the indebtedness of Mortgagor secured by the Mortgage.
"Mortgage Payment": The scheduled payment of principal and/or interest
on the Mortgage Loan. Specifically with respect to interest, the amounts due on
each June 15 and December 15, commencing December 15, 1992, and with respect to
principal, the amounts due on each June 15, commencing June 15, 1993 (before
any adjustment to such payment by reason of any bankruptcy or similar
proceeding or any moratorium or similar waiver or grace period).
"Mortgaged Property": The real and personal property securing the
Mortgage Note and the improvements to be constructed with the proceeds of the
Mortgage Loan.
"Mortgagor": The Borrower, as obligor on the Mortgage Note.
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"NAIC": National Association of Insurance Commissioners, its
successors and assigns or the Securities Valuation Office (SVO) thereof which
provides insurance companies with uniform prices and quality ratings.
"Net Liquidation Proceeds": As to the Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses.
"Note Put Agreement": The Note Put Agreement dated as of July 1, 1992,
by and between Kmart and Seller.
"Officer's Certificate": A certificate signed by the Chairman of the
Board, the Chief Executive Officer, the President or a Vice President, the
Treasurer or the Secretary or one of the Assistant Treasurers or Assistant
Secretaries or any other duly authorized officer of the Seller and delivered to
the Trustees as required by this Agreement.
"Opinion of Counsel": A written opinion of an attorney at law admitted
to practice in any state of the United States or the District of Columbia, or a
law firm (such attorney or law firm herein referred to as "Counsel"), who may,
except as otherwise expressly provided in this Agreement, be in-house counsel
for the Seller, which counsel shall be reasonably acceptable to the Trustee.
"Paying Agent": The Person designated as the Paying Agent pursuant to
Section 4.05.
"Percentage Interest": The percentage interest (which may be expressed
as a fraction) evidenced by one or more Certificates in the aggregate
distributions required to be made in respect of the Certificates.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Placement Agent": XXXXXXXXXX.
"Principal Prepayment": Any payment or other recovery of principal on
the Mortgage Loan including Insurance Proceeds and condemnation awards to the
extent required to be deposited in the Certificate Account (other than
Liquidation Proceeds and monthly receipts of amounts referred to in Section
5.02(a)) which is received in advance of its scheduled Due Date, and which is
not accompanied by an amount of interest representing scheduled interest due.
"Principal Prepayment Period": With respect to any Remittance Date,
the preceding Due Period.
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"Project": The Power Center to be constructed by the Borrower in
Utica, Michigan with the proceeds of the Mortgage Loan.
"Project Completion": The "date of occupancy by Tenant" as defined
in Article 10 of each Lease.
"Purchase Agreement for Certificates": The agreements so named
between the Placement Agent and the applicants to purchase Certificates.
"Purchase Date": The Business Day first occurring thirty (30)
days after notice is given to Kmart of the election to exercise the Put.
"Purchase Price": The Make-Whole Premium calculated with respect to
the Purchase Date.
"Put": Exercise of the right to require Kmart to purchase the
Mortgage Note in accordance with Section 2.3 of the Note Put Agreement.
"Rating Agency":
(i) With respect to the Certificates shall mean NAIC; if NAIC or
a successor is no longer in existence, "Rating Agency" shall be such
statistical credit rating agency, or other comparable Person, designated by the
Seller, notice of which designation shall be given to the Trustee; references
herein to the two highest rating categories of a Rating Agency shall mean AA
or better, in the case of Standard & Poor's and in the case of any other
Rating Agency shall mean such ratings without any plus or minus; and
(ii) With respect to the redemption provisions of Section 4.01,
shall mean Moody's and S&P and, if either Moody's or S&P (but not both)
ceases to rate the indebtedness or corporations generally, or unsubordinated,
senior, unsecured indebtedness of Kmart in particular, then another comparable
rating agency of recognized national standing in the United States designated
by notice in writing to the Trustee from the Seller or Holders of
Certificates evidencing Percentage Interests aggregating not less than 66 2/3%.
A "Rating Decline":
(i) The ratings assigned to unsubordinated,
senior, unsecured indebtedness of Kmart on such date by
either Moody's or S&P: (a) declines to a rating below the
Minimum Investment Grade, or (b) further declines, in the
event then rated below the Minimum Investment Grade; or
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(ii) (a) Unsubordinated, senior, unsecured indebtedness of
Kmart ceases to be rated by either Moody's or S&P (other than by
reason of such Rating Agency ceasing to rate the indebtedness of
corporations generally) at such time as the rating then assigned by
the remaining such Rating Agency shall be below Minimum Investment
Grade or (b) unsubordinated, senior, unsecured indebtedness of Kmart
ceases to be rated by either Moody's or S&P at such time as the
rating then assigned by the remaining such Rating Agency shall be at
least the Minimum Investment Grade and the Kmart is unable to have
such debt rated by another Rating Agency within 90 days thereafter; or
(iii) Unsubordinated, senior, unsecured indebtedness of
Kmart ceases to be rated by both Moody's and S&P for any reason
(except if, through no fault of Kmart, both Moody's and S&P are
unable to provide a rating due to a business failure or interruption
affecting both Moody's and S&P).
For purposes of determining whether a Rating Decline shall have occurred under
clause (i) of this definition, the rating initially assigned by any Rating
Agency engaged by Kmart pursuant to clause (ii) to replace any rating
withdrawn or otherwise terminated by Moody's or S&P shall be compared to the
last rating assigned by Moody's or S&P, as the case may be, to determine if
the circumstances described in (i)(a) or (b) exist.
"Record Date": The close of business on the first (1st) day of the
month of the related Remittance Date.
"Redemption Price": The Make-Whole Premium calculated with respect to
the Settlement Date.
"Regulations": The Treasury Regulations, including temporary and
final regulations promulgated under the provisions of the Internal Revenue
Code of 1986, as amended.
"Reinvestment Yield": Means, with respect to the Called Principal
of the Mortgage Loan, the sum of (x) the yield to maturity implied by the
following: (i) the yields reported, as of 10:00 a.m. (New York City time) on
the third Business Day preceding the Settlement Date (or Purchase Date in the
circumstances described in Section 4.01(e)) with respect to such Called
Principal, on the display designated as "Page 678" on the Telerate Service (or
such other display as may replace Page 678 on the Telerate Service) for
actively traded U.S. Treasury securities having a maturity equal (as near as
practicable) to the Remaining Average Life of the Called Principal being
paid or prepaid as of such Settlement Date (or Purchase Date in the
circumstances described in Section 4.01(e)), or (ii) if such yields shall not
be reported as of such time or the yields reported as of such time shall not
be ascertainable, the Treasury
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Constant Maturity Series yields reported, for the latest day for which such
yields shall have been so reported as of the third Business Day preceding the
Settlement Date (or Purchase Date in the circumstances described in Section
4.01(e)) with respect to such Called Principal, in Federal Reserve Statistical
Release H.15 (519) (or any comparable successor publication) for actively
traded U.S. Treasury securities having a constant maturity equal (as near as
practicable) to the Remaining Average Life of the Called Principal being
paid or prepaid as of such Settlement Date (or Purchase Date in the
circumstances described in Section 4.01(e)); such implied yield shall be
determined, if necessary, by (a) converting U.S. Treasury bill quotations to
bond-equivalent yields in accordance with accepted financial practice and (b)
interpolating linearly between reported yields; and (y) fifty (50) basis
points. The Trustee shall be provided with a certificate evidencing the
calculation of Reinvestment Yield by the Seller or Holders of Certificates
evidencing Percentage Interests aggregating not less than 66 2/3% at any time
requested by the Trustee.
"Remaining Average Life": Means, with respect to any amount of Called
Principal of the Mortgage Loan, the number of years (calculated to the
nearest one-twelfth year) obtained by dividing (i) such Called Principal into
(ii) the sum of the products obtained by multiplying (a) each Remaining
Scheduled Payment of such Called Principal (but not of interest thereon) by
(b) the number of years (calculated to the nearest one-twelfth year) which
will elapse between the Settlement Date (or Purchase Date in the
circumstances provided in Section 4.01(e)) with respect to such Called
Principal and the scheduled due date of such Remaining Scheduled Payment.
The Trustee shall be provided with a certificate evidencing the calculation
of Remaining Dollar-Years by the Seller or Holders of Certificates
evidencing Percentage Interests aggregating not less than 66 2/3% at any time
requested by the Trustee.
"Remaining Scheduled Payments": With respect to any amount of
Called Principal of the Mortgage Loan, all payments of such Called
Principal and interest thereon that would be due on or after the Settlement
Date (or Purchase Date in the circumstances described in Section 4.01(e))
with respect to such Called Principal if no payment of such Called Principal
were made prior to its expressed maturity date. The Trustee shall be
provided with a schedule setting forth Remaining Scheduled Payments by the
Seller or Holders of Certificates evidencing Percentage Interests
aggregating not less than 66 2/3% at any time requested by the Trustee.
"Remittance Date": With respect to the Certificates, an interest
payment date of December 15, 1992, and each December 15 and June 15
thereafter until June 15, 2013, or the payment of the unpaid principal balance
in full.
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"Remittance Rate": The annual fixed rate of interest payable to a
Certificateholder. The Remittance Rate shall equal the rate per annum set forth
in the Certificate Schedule. Any remittance of interest at such rate shall be
based upon the applicable Certificate Balance and twelve calendar months of 30
days and a year of 360 days.
"Responsible Officer": When used with respect to the Trustee,
includes the Chairman of the Board of Directors, the President, Vice
President, every Assistant Vice President, the Cashier, every Assistant
Cashier, every Trust Officer or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above designated officers and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"Seller": XXXXXXXXXX or its successors in interest.
"Settlement Date": Means, with respect to the Called Principal, the
date on which such Called Principal is to be paid or prepaid in any way
pursuant to Section 2 of the Loan Agreement or is declared to be immediately
due and payable pursuant to Section 9.2 of the Loan Agreement, as the context
requires.
"Standard & Poor's" or "S&P": Standard & Poor's Corporation or any
successor thereto.
"Subordination Agreements": The several Consent and Agreements each
dated as of July 1, 1992, entered into by the Seller, as lender, the Landlord
and each Tenant, respectively.
"Tenants": The Tenants identified in the Loan Agreement which will
occupy the Mortgaged Premises in accordance with the Leases.
"Transfer Affidavit": A Transfer Affidavit required pursuant to
Section 4.02(d)(i).
"Triggering Event": The exercise by Seller or its successors or
assigns of the Put following (i) a Rating Decline provided in Section 2.4 of
the Loan Agreement and the failure of Borrower to redeem the Mortgage Note,
in strict accordance with the terms of such Section 2.4 of the Loan
Agreement, or (ii) a failure of Project Completion to occur prior to the
expiration of the Pre-Occupancy Term of the Loan, or (iii) a Lease Guaranty
Default. A Triggering Event entitles Seller and its successors and assigns to
require Kmart thereupon to purchase the Mortgage Note.
"Trust": The trust created pursuant to this Agreement.
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"Trust Fund": The corpus of the trust created by this Agreement, to
the extent described herein, consisting of the Mortgage Loan and all Mortgage
File Documents assigned to the Trust by Seller, such assets as shall from
time to time be indentified as deposited in the Certificate Account
(including the investment of funds therein), the Debt Service Reserve Account,
property which secured the Mortgage Loan and which has been acquired by
foreclosure or deed in lieu of foreclosure, the proceeds of insurance,
condemnation awards and all other amounts receivable under the Mortgage and
all proceeds of the foregoing.
"Trustee": XXXXXXXXXX, and its permitted successors hereunder.
"Trustee's Fee": The amount of the annual fee paid to the Trustee
pursuant to this Agreement, as set forth in the fee agreement to be delivered
by the Trustee, in substantially the form attached hereto as an Exhibit,
payable (except as otherwise provided herein) from the interest earnings on
amounts held by the Trustee in the Certificate Account hereunder. Such fee
shall be payable annually on the Closing Date from proceeds of the
Certificates and thereafter on each June 15 commencing June 15, 1994, during
the term of this Agreement. Such fee shall constitute all compensation due
for the services rendered under this Agreement, except for the payment of
certain additional amounts for extraordinary services by the
Certificateholders as otherwise provided in this Agreement.
[End of Article I]
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ARTICLE II
CONVEYANCE OF MORTGAGE LOAN; TRUST FUND
Section 2.01. Conveyance of Mortgage Loan. The Seller, as grantor,
does hereby sell, transfer, assign, set over and convey to the Trustees without
recourse (except as provided herein), in trust intending to establish the
Trust, all the right, title and interest of the Seller in and to the Mortgage
Loan, including all interest and principal received by the Seller on or with
respect to the Mortgage Loan.
In connection with such sale and assignment, the Seller does hereby
deliver to, and deposit with, the Trustee the documents constituting the
Mortgage File.
If the Seller cannot deliver the Mortgage for the Mortgage Loan with
evidence of recording thereon concurrently with the execution and delivery of
this Agreement solely because of a delay caused by the public recording office
where the Mortgage has been delivered for recordation, the Seller shall deliver
or cause to be delivered to the Trustee an Officer's Certificate, with a
photocopy of the Mortgage attached thereto, stating that the Mortgage has been
delivered to the appropriate public recording official for recordation. The
Seller shall promptly deliver or cause to be delivered to the Trustee, within
90 days of the Closing Date, the Mortgage with evidence of recording indicated
thereon upon receipt thereof from the public recording official.
The seller shall promptly cause to be recorded in the appropriate
public office for real property records the Assignment. Seller shall also cause
any publication of notice thereof or other filing thereof as may be required.
While the Assignment is being recorded, the Seller shall leave with the Trustee
a photocopy of the Assignment. If the Assignment is returned unrecorded to the
Seller because of any defect therein, the Seller shall cause such defect to be
cured and the Assignment to be recorded in accordance with this paragraph.
Within 90 days of the Closing Date, the Seller shall deliver or cause to be
delivered to the Trustee an Officer's Certificate stating that the Assignment
has been duly recorded in the appropriate public offices for real property
records and shall deliver or cause to be delivered the Assignment with evidence
of recording thereon. Seller shall pay or caused to be paid all filing,
registration and recording taxes and fees incident thereto and all expenses,
taxes and other governmental charges incident to or in connection with the
preparation, execution, delivery or acknowledgment of such instruments.
Any document constituting part of the Mortgage File held by the Seller
or on its behalf by any third party shall be held as custodian for the Trustee
and the Certificateholders. The parties hereto intend that the conveyance of
the Seller's right,
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title and interest in and to the Mortgage Loan and other items of the Trust
Estate pursuant to this Agreement shall constitute a purchase and sale and not
a pledge of security for a loan. In the event that such conveyance is deemed to
be a loan, the parties hereto intend that the Seller shall be deemed to have
granted the Trustee a first priority security interest in all of the Seller's
right, title and interest in, to and under the Mortgage Loan and other items of
the Trust Estate. If the trust created by this Agreement terminates prior to
the satisfaction of the claims of any Person in any Certificates, the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such Person.
Section 2.02. Acceptance by Trustee. The Trustee acknowledges
receipt of the documents referred to in Section 2.01, subject to any exceptions
noted in a certificate of the Seller delivered on the Closing Date, and
declares that it holds and will hold such documents and any other documents
constituting a part of the Mortgage File delivered to it in trust for the use
and benefit of all present and future certificateholders. The Trustee agrees,
for the benefit of Certificateholders, to review each of the documents
described in Section 2.01 delivered to it within 45 days after the Closing Date
to ascertain that all required documents have been executed and received, and
that such documents relate to the Mortgage Loan identified in the Mortgage Loan
Schedule, as supplemented, that have been conveyed to it. If the Trustee finds
any document or documents constituting a part of the documents described in
Section 2.01 to be missing, mutilated, damaged, defaced, incomplete, improperly
dated, clearly forged, otherwise physically altered or otherwise defective in
any material respect, the Trustee shall promptly (and in any event within no
more than five Business Days after such discovery) so notify the Seller. In
addition, the Trustee shall also notify the Seller, if in examining such
documents, or through any other means, the trustee had notice or knowledge (a)
of any adverse claim, lien or encumbrance against the Mortgage Loan or
Mortgaged Property, (b) that the Mortgage Note was overdue or had been
dishonored, (c) of evidence on the face of the Mortgage Note or Mortgage of any
security interest or other right or interest therein, or (d) of any defence
against or claim to the Mortgage Note by any party. The Seller shall use its
best efforts to correct such omission or other irregularity referred to above
within 90 days from the date of the Closing Date. The Trustee shall review the
documents referred to in section 2.01 only for the purpose set forth in this
Section 2.02, and the Trustee shall be under no duty or obligation to inspect,
review or examine any such documents, instruments, certificates or other papers
to determine that they are genuine, enforceable or appropriate for the
represented purpose or that they have actually been recorded or that they are
other than what they purport to be on their face.
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Within 90 days of the Closing Date, the Trustee shall deliver to the
Seller and the Certificateholders the Trustee's certification attached hereto
as Exhibit 2.02.1.
Section 2.03. Trust Fund. The Trustee acknowledges that it holds the
Trust Fund created pursuant to this Agreement in trust for the use and benefit
of all present and future Certificateholders.
Section 2.04. Execution and Authentication of Certificates. The
Trustees acknowledge the assignment to them of the Mortgage Loan and the
delivery of the documents specified in Section 2.01 to Trustee, and,
concurrently with such delivery, the Trustee has caused to be authenticated and
delivered to or upon the order of the Seller, in exchange for the proceeds paid
therefor by the Certificateholders, Certificates in authorized denominations
evidencing ownership of the entire Trust Fund.
[End of Article II]
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.01. Representations and Warranties of Seller. The Seller
represents and warrants to, and covenants with, the Trustee and the
Certificateholders that as of the Closing Date:
(i) Seller is duly organized, validly existing and in good standing
as a corporation under the laws of the State of Nevada and is qualified to
transact business in and is in good standing under the laws of the state
in which the Mortgaged Property is located or is otherwise exempt under
applicable law from such qualification and no demand for such
qualification has been made upon Seller by any such state;
(ii) Seller has the full power and authority to execute, deliver
and perform, and to enter into and consummate all transactions
contemplated by this Agreement, has duly authorized the execution,
delivery and performance of this Agreement, has duly executed and
delivered this Agreement, and this Agreement constitutes a legal, valid
and binding obligation of Seller, enforceable against it in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights in general;
(iii) The Certificates have been duly authorized by all necessary
action on the part of Seller and, when duly executed and delivered by
authorized officers of Seller and duly authenticated by the Trustee, will
be validly issued and outstanding, entitled to the benefits of this
Agreement, enforceable in accordance with their terms, and evidence the
entire ownership interest in the Trust Fund;
(iv) Neither the execution and delivery of this Agreement or the
Certificates, the consummation of the transactions contemplated hereby,
nor the fulfillment of or compliance with the terms and conditions of this
Agreement will conflict with or result in a breach of any of the terms,
conditions or provisions of Seller's articles of incorporation or bylaws
or any legal restriction or any agreement or instrument to which Seller is
now a party or by which it is bound, or constitute a default or result in
an acceleration under any of the foregoing, or result in the violation of
any law, rule, regulation, order, judgment or decree to which Seller or
its property is subject;
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(v) At the date hereof, Seller does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every
covenant and agreement of or by Seller contained in this Agreement;
(vi) There is no litigation pending or, to Seller's knowledge,
threatened, which, if determined adversely to Seller, would adversely
affect the execution, delivery or enforceability of this Agreement or the
Certificates, or, in Seller's reasonable judgment, which is likely to have
a material adverse effect on the financial condition of Seller;
(vii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of or compliance by Seller with this Agreement, the
issuance of the Certificates, or the consummation of the transactions
contemplated by this Agreement;
(viii) The transfer, assignment and conveyance of the Mortgage Note
and the Mortgage by Seller pursuant to this Agreement are not subject to
the bulk transfer or any similar statutory provisions in effect in any
applicable jurisdiction;
(ix) Neither this Agreement nor any written statement, report or
other document furnished or to be furnished by Seller pursuant to this
Agreement or in connection with the transactions contemplated hereby,
including the sale or placement of the Certificates, contains any untrue
statement of material fact or omits to state a material fact necessary to
make the statements contains therein not misleading;
(x) With respect to the Mortgage Loan:
(a) The information set forth in the Mortgage Loan
Schedule is true and correct in all material respects;
(b) As of the Closing Date, the Mortgage Loan is not
delinquent in payment; Seller has not advanced funds, or actively
induced, solicited or knowingly received any advance of funds from a
party other than the owner of the Mortgaged Property or a Tenant
under the Leases or Kmart under the Lease Guaranties subject to the
Mortgage, directly or indirectly, for the payment of any amount
required by the Mortgage Loan; there is no requirement for future
advances; and all costs, expenses and fees in connection with the
making, closing or recording of the Mortgage Loan have been paid;
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(c) There are no delinquent taxes or, to the best of Seller's
knowledge, other outstanding charges affecting the Mortgaged
Property;
(d) The terms of the Mortgage File Documents have not been
impaired, waived, altered or modified in any respect, except by
written instruments; the substance of such waiver, alteration or
modification is reflected on the Mortgage Loan Schedule. No
instrument of waiver, alteration or modification has been executed,
and no Mortgagor has been released, in whole or in part;
(e) To the best of Seller's knowledge, the Mortgage Note and
the Mortgage are not subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, nor will
the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the
Mortgage unenforceable, in whole or in part, or subject to any right
of rescission, set-off, counterclaim or defense, including the
defense of usury and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto;
(f) The Mortgaged Property is not located in a flood plain.
All buildings upon the Mortgaged Property are insured by a
reasonably acceptable insurer (or self-insured as permitted under
the Mortgage) against loss by fire and hazards of extended coverage.
All such Standard Hazard Policies contain a standard mortgagee
clause naming Trustees their successors and assigns as mortgagee and
all premiums due thereon have been paid. The Mortgage obligates the
Mortgagor thereunder or the Tenants to maintain all such insurance
at Mortgagor's cost and expense (or be self-insured as permitted
under the Mortgage), and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to maintain such insurance at
Mortgagor's cost and expense and to seek reimbursement therefor from
the Mortgagor;
(g) To the best of Seller's knowledge, any and all
requirements of any federal, state or local law applicable to the
Mortgage Loan have been complied with;
(h) The Mortgage has not been satisfied, cancelled or
subordinated, in whole, or rescinded, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in
part, nor has any instrument been executed that would
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effect any such release, cancellation, subordination or rescission;
(i) The Mortgaged Property is located in the State of Michigan
as indicated on the Mortgage Loan Schedule;
(j) The Mortgage lien is insured by a lenders extended
coverage policy of title insurance as a first lien on the Mortgaged
Property, and the improvements to be constructed thereon, including
all buildings to be constructed on the Mortgaged Property and all
installations and mechanical, electrical, plumbing, heating and air
conditioning systems to be affixed to such buildings, and all
additions, alterations and replacements made at any time with
respect to the foregoing, securing the Mortgage Note's original
principal balance of the Mortgage Loan. Such lien is subject only
to (1) the Leases, (2) the lien of current real property taxes and
assessments which are not delinquent, (3) covenants, conditions and
restrictions, rights of way, easements and other matters of the
public record as of the date of recording which are acceptable to
mortgage lending institutions generally, which are specifically
referred to in the lender's title insurance policy delivered to the
originator of the Mortgage Loan and either (A) which are referred to
or otherwise considered in the appraisal made for the originator of
the Mortgage Loan or the certification of the Seller as to value,
or (B) which do not adversely affect the appraised value of the
Mortgaged Property as set forth in such appraisal, and (4) other
matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to
be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property. Any security
agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and
creates a valid, subsisting and enforceable first lien and first
priority security interest on the property described therein;
(k) The Mortgage Note and the Mortgage are genuine and each is
the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms subject to bankruptcy,
insolvency and other laws of general application affecting the
rights of creditors generally;
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(l) All parties which have had any interest in the Mortgage,
whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest,
were) (1) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property
is located, and (2)(A) organized under the laws of such state, or
(B) qualified to do business in such state or (C) federal savings
banks, federal savings and loan associations, national banks or a
Federal Home Loan Bank having principal offices in such state, or
(D) not doing business in such state or (E) not required to qualify
to do business in such state;
(m) The Mortgage Loan is covered by an ALTA extended coverage
lender's title insurance policy or other generally acceptable form
of policy or insurance, issued by a title insurer qualified to do
business in the jurisdiction where the Mortgaged Property is
located, insuring (subject to the exceptions contained in (j)(1)
and (2) above) Seller, its successors and assigns, as to the first
priority lien of the Mortgage in the original principal amount of
the Mortgage Loan. After the transfer of the Mortgage Loan to the
Trustees pursuant to Section 2.01, the Trustees will be the sole
insured of such lender's title insurance policy, and such lender's
title insurance policy is in full force and effect. No claims have
been made under such lender's title insurance policy, and no prior
holder of the Mortgage, including the Trustees, has done, by act or
omission, anything which would impair the coverage of such lender's
title insurance policy;
(n) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note or any
other Mortgage File Documents, and no event which, with the passage
of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event
permitting acceleration of the Mortgage Loan; and Seller has not
waived any default, breach, violation or event permitting
acceleration;
(o) There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and, to the best of
Seller's knowledge, no rights are outstanding that under law could
give rise to such lien not insured over by lender's title insurance
policy) affecting the Mortgaged
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Property which are or may be liens prior to, or equal or coordinate
with, the lien of the Mortgage;
(p) All improvements which were considered in determining the
Appraisal of the Mortgaged Property lay wholly within the boundaries
and building restriction lines of the Mortgaged Property and, to the
best of Seller's knowledge, no improvements on adjoining properties
encroach upon the Mortgaged Property;
(q) The Mortgage Loan was originated by Seller. The Mortgage
Note is payable in semiannual installments of interest and
commencing June 15, 1993 is payable in annual installments of
principal and requires a Mortgage Payment which is sufficient to
amortize the original principal balance over a term to June 15, 2013
and to pay interest at the interest rate specified in the Mortgage
Note; provided, that Mortgage Payments due under the Mortgage Note
are due and payable on the first day of the month in which a Due
Date occurs;
(r) The Mortgage contains provisions for the acceleration of
the payment of the unpaid principal balance of the Mortgage Loan in
the event the related Mortgaged Property is sold without the prior
consent of the mortgagee thereunder but provides that the Mortgage
may be assumed or taken subject to by the buyer of the Mortgaged
Property without consent in certain conditions;
(s) The Mortgaged property is free of damage and waste and
there is no proceeding pending or, to the best of Seller's
knowledge, threatened for the total or partial condemnation thereof;
(t) The Mortgage contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby, including by judicial
foreclosure. To the best of Seller's knowledge, there is no
exemption available to the Mortgagor which would interfere with the
right to sell the Mortgaged Property at a trustee's sale or the
right to foreclose the Mortgage subject, in each case, to applicable
federal and state laws and judicial precedents with respect to
bankruptcy and rights of redemption;
(u) All parties to the Mortgage Note and the Mortgage had the
legal capacity to enter into the Mortgage Loan and to execute and
deliver the
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Mortgage Note and the Mortgage. The Mortgage Note and the Mortgage
have been duly and properly executed by such parties;
(v) The proceeds of the Mortgage Loan will be disbursed in
accordance with the Loan Agreement;
(w) Immediately before the transfer to the Trustees, the
Mortgage Note and the Mortgage were not subject to an assignment or
pledge, and Seller had good title thereto and was the sole owner
thereof and had full right to transfer and sell the Mortgage Loan to
the Trustees free and clear of any encumbrance, equity, lien,
pledge, charge, claim or security interest. Immediately upon the
transfer thereof pursuant to Section 2.01, the Trustees, on behalf
of the Certificateholders, will have good indefeasible title to, and
will be sole owner of, the Mortgage Loan, free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security; and
(x) The Mortgage File contains an Appraisal of the Mortgaged
Property.
[End of Article III]
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ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates.
(a) Form and Terms. The Certificates shall be substantially in the
form annexed hereto as Exhibit 4.01.a.1 with such changes as the Seller deems
appropriate, and shall, on original issuance, be executed by the Seller and
authenticated by the Trustee upon receipt by the Trustee of the documents
specified in Section 2.01, delivered to or upon the order of the Seller. Each
Certificate shall be issuable in the respective principal amounts (aggregating
$31,900,000), bearing interest and having the other terms as are set forth in
the Certificate Schedule.
Certificates shall not be subject to redemption except as provided
herein.
(b) Optional Prepayment Redemption. Upon compliance with Section 2.3
of the Loan Agreement, the Borrower shall have the option at any time and from
time to time of prepaying the Mortgage note, either in whole or in part (but if
in part, then in units of U.S. $1,000,000 or integral multiples of $100,000 in
excess thereof). The Certificates shall be subject to redemption from the
proceeds of such prepayment irrevocably deposited with the Trustee on the
related Settlement Date, in whole or in part, pro rata, at a price equal to the
Redemption Price.
(c) Rating Decline Redemption. Under the circumstances set forth in
Section 2.4 of the Loan Agreement, the Borrower may be required to prepay the
Mortgage Note, in whole but not in part, at the Redemption Price. As provided
in the Loan Agreement, within seven days after the first date on which any
Rating Decline has occurred, the Borrower is required to mail notice to the
Trustee and to Kmart, which notice shall: (1) state that a Rating Decline has
occurred, (2) describe any action that caused such a Rating Decline, and the
date of the occurrence thereof, (3) set forth the Borrower's offer to redeem
the Mortgage Note, (4) state the Settlement Date (which shall be not more than
thirty (30) days from the date such notice is required to be mailed), the
Redemption Price and manner of calculation thereof; and (5) state the party to
whom the Mortgage Note shall be surrendered on or before the Settlement Date.
The Certificates shall be subject to redemption in whole on the Settlement Date
with respect thereto at a price equal to the Redemption Price from the proceeds
of the Mortgage Note prepayment.
(d) Other Redemption. The Certificates may be redeemed in whole or
in part at the Redemption Price from and to the extent of other Principal
Prepayments of the Mortgage Note, (i) in the event of failure of the Borrower
to satisfy the conditions
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to the Conversion Date under the Loan Agreement, not later than five (5)
Business Days following expiration of the Pre-Occupancy Term (as it may have
been extended pursuant to the Loan Agreement) (the related Settlement Date),
and (ii) in the event of receipt of proceeds of insurance, condemnation or
other award relating to all or a portion of the Mortgaged Property, in which
event the Trustee shall apply such amounts to the payment of the Redemption
Price on a Settlement Date which shall be no later than 45 days from the
occurrence of the casualty or 15 days from receipt by Trustee of the proceeds
of condemnation.
As provided in the Loan Agreement, the Borrower may request an
extension of up to one year of the Pre-Occupancy Term by providing copies of
all materials required under the Loan Agreement for such extension to the
Trustee shall promptly, upon receipt of such materials, send notice of such
request to the Certificateholders and make such materials available to the
Certificateholders (at the expense of Borrower as provided in the Loan
Agreement). If Holders of Certificates evidencing not less than 66 2/3% of
Percentage Interests shall so direct, the Trustee shall give notice to the
Borrower of any permitted extension of the Conversion Date.
(e) Redemption Following Triggering Event. Pursuant to the Note Put
Agreement, in the event of any Triggering Event the Trustee, as holder of the
Mortgage Note, shall have the right to exercise the Put as directed herein,
which requires Kmart to purchase the Mortgage Note in whole (but not in part)
on the Purchase Date at the Purchase Price. Upon receipt by the Trustee of
notice of any Triggering Event, the Trustee shall notify the
Certificateholders, and upon the direction of the Holders of not less than 66
2/3% of Percentage Interests and receipt of indemnification satisfactory to it
in accordance with Section 9.02(iii), the Trustee shall exercise the Put right.
In the event the Holders shall so direct the Trustee to exercise the Put, the
Trustee shall cause a notice to be mailed to Kmart, which notice shall state:
(1) the occurrence of a Triggering Event, (2) the Purchase Date, (3) the
estimated Purchase Price, (4) the manner in which the Purchase Price has been
determined, and (5) that, upon the direction of the Holders of the requisite
Percentage Interests, the holder of the Mortgage Note elects to have Kmart
purchase the Mortgage Note on the Purchase Date. The Certificates shall be
subject to redemption from the proceeds of the Mortgage Note Purchase Price, at
such Purchase Price, on the Purchase Date. In the event the Holders do not so
direct the Trustee to exercise the Put right, the Trustee shall not exercise
the Put right.
Notwithstanding any provision of this Agreement, the failure to redeem
Certificates pursuant to Sections 4.01(c) or (d) due to the failure of the
Borrower to prepay the Mortgage Note so as to cause a Triggering Event will not
constitute an
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Event of Default as long as a redemption of the Certificates shall take place
in accordance with this Section 4.01(e).
(f) Notice of Redemption. Notice of redemption pursuant to Section
4.01(b) shall be given by sending such notice, by first-class mail, postage
prepaid, not less than 30 days nor more than 60 days prior to the applicable
Settlement Date. Notice of redemption pursuant to any other provision hereof
shall be given within one Business Day following receipt of notice of the facts
giving rise to such redemption by the Trustee. All notices of redemption shall
be mailed to the registered owners of each Certificate to be redeemed at the
address shown on the Certificate Register. Neither the failure of any
registered owner to receive a notice mailed nor any defect in any notice so
mailed shall affect the validity of the proceedings for such redemption. All
Certificates or units thereof so called for redemption will cease to accrue
interest on the specified Settlement Date provided funds for their redemption
are on deposit at the principal corporate trust office of the Trustee at that
time.
(g) Execution and Authentication. The Certificates shall be executed
on behalf of the Seller by the manual or facsimile signature of an authorized
officer of the Seller. The Certificates shall be authenticated by manual
signature on behalf of the Trustee by a Responsible Officer. Certificates
bearing the manual or facsimile signatures of individuals who were at any time
the proper authorized officers of the Seller shall bind the Seller,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificate or did not
hold such offices at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a manual authentication by a
Responsible Officer of the Trustee and such authentication upon any Certificate
shall be conclusive evidence, and the only evidence, that such Certificate has
been duly authenticated and delivered hereunder. All Certificates shall be
dated the date of their authentication.
(h) Rights of Holders to Payments. The rights of the
Certificateholders to receive payments with respect to the Trust Fund in
respect of the Certificates, and all ownership interests of the
Certificateholders in such payments, shall be as set forth in this Agreement.
Section 4.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at its Corporate Trust Office,
or at the office of its designated agent, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe which shall not
conflict with the provisions of this Agreement, the Trustee shall provide for
the
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registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Trustee shall be the Certificate Registrar.
(b) Upon surrender for registration of transfer of any Certificate at
any office or agency of the Trustee maintained for such purpose, the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, a Certificate or Certificates of a like tenor and dated the date
of authentication by the Trustee.
(c) Trustee shall not be required to register any attempted transfer
of a Certificate unless, prior to said transfer, Trustee and Seller have been
provided with evidence reasonably satisfactory to them as to compliance with
(or an exemption from) the registration requirements of the Securities Act of
1933, as amended (the "Securities Act"), and with registration (or exemption
therefrom) and any other applicable provisions of state securities laws. So
long as the Certificates are not registered under the Securities Act, each
Certificate shall contain a statement to the following effect:
THIS CERTIFICATE MAY NOT BE SOLD, PLEDGED, ASSIGNED, TRANSFERRED,
FRACTIONALIZED OR HYPOTHECATED UNLESS IN COMPLIANCE WITH THE PROVISIONS OF
SECTION 4.02 OF THE AGREEMENT.
Trustee has no obligation to any Holder to register the Certificates
under, or to effect compliance with any exemption under, the Act.
The Holder of a Certificate desiring to effect transfer shall, and
does hereby agree to, indemnify the Trustee and the Seller against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws. The system of transfer of
Certificates established hereunder is intended to satisfy the requirements of
Section 163(f) of the Code and the Regulations promulgated thereunder.
(d) No transfer of a Certificate shall be made unless the Trustee
shall have received either (i) a Transfer Affidavit from the transferee of such
Certificate, reasonably acceptable to and in form and substance reasonably
satisfactory to the Trustee and the Seller, to the effect that such transferee
is not an employee benefit plan subject to Section 406 of ERISA, nor a person
acting on behalf of any such plan, which Transfer Affidavit shall not be an
expense of the Trustee or the Seller, or (ii) in the case of any such
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA and Section 4975 of the Code (or comparable provisions of any
subsequent enactments), or a trustee of any such plan, an Opinion of Counsel
reasonably satisfactory to the Trustee and the Seller to the effect that the
purchase or holding of such Certificate will not result in the assets of the
Trust Fund being deemed to be "plan assets" and subject to the prohibited
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transaction provisions of ERISA and the Code and will not subject the Trustee
or the Seller to any obligation in addition to those undertaken in this
Agreement, which Opinion of Counsel shall not be an expense of the Trustee or
the Seller.
(e) At the option of the Certificateholder, a Certificate may be
exchanged for another Certificate or Certificates of a like tenor, upon
surrender of the Certificate to be exchanged at any office or agency of the
Trustee maintained for such purpose. Whenever the Certificate is so
surrendered for exchange, the Seller shall execute, and the Trustee shall
authenticate and deliver, the Certificate which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or
surrendered for transfer or exchange shall (if so required by the Trustee) be
duly endorsed by, or be accompanied by a written instrument of transfer in the
form reasonably satisfactory to the Trustee duly executed, by the Holder
thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to the Holder for, or in
connection with, any transfer or exchange of the Certificate, but the Trustee
may require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of the
Certificate.
(g) All Certificates surrendered for transfer and exchange shall be
destroyed by the Trustee.
(h) Notwithstanding any other provision of this Agreement, no
transfer of a Certificate may be made to Kmart, Borrower or Seller, or any
affiliate of any such party, without the prior written consent of all
Certificateholders.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates. If
(i) any mutilated Certificate is surrendered to the Trustee or the Trustee
receives evidence to its reasonable satisfaction of the destruction, loss or
theft of any Certificate, and (ii) there is delivered to the Trustee such
security or indemnity as may be required by it to save it harmless, then, in
the absence of notice to the Trustee that such Certificate has been acquired by
a bona fide purchaser, the Trustee shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a
new Certificate of like tenor. Upon the issuance of any new Certificate under
this Section, the Trustee may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto
and any other expenses connected therewith. Any replacement Certificate issued
pursuant to this Section shall constitute complete and indefeasible evidence of
ownership of the undivided interest of the Certificateholder in the Trust Fund,
as if originally issued, whether or not the mutilated, destroyed, lost or
stolen Certificate shall be found at any time.
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Section 4.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Seller and the Trustee may treat
the Person in whose name any Certificate is registered as the owner of such
Certificate and the undivided interest in the Trust Fund evidenced thereby for
the purpose of receiving remittances pursuant to Section 6.01 and for all other
purposes whatsoever, and neither the Seller nor the Trustee shall be affected
by notice to the contrary.
Section 4.05. Appointment of Paying Agent. The Trustee shall serve
as Paying Agent for the purpose of making distributions to Certificateholders
pursuant to Section 6.01.
[End of Article IV]
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ARTICLE V
TRUSTEE'S DUTIES WITH RESPECT TO MORTGAGE LOAN;
ESTABLISHMENT OF ACCOUNTS
Section 5.01. Calculation of Distributions. The Trustee shall
calculate the Certificate Distributions, make distributions on each Remittance
Date as set forth in Section 6.01 and have full power and authority to do any
and all things which it may deem necessary or desirable in connection with such
duties.
Section 5.02. Receipt of Lease Payments; Collection of Mortgage Loan
Payments.
(a) The Trustee acknowledges that, pursuant to the Subordination
Agreements, unless and until otherwise notified by Seller, the Trustee will be
paid directly by the Tenants all annual rental and other amounts payable by
Tenants under the Leases, to be deposited by the Trustee in the Certificate
Account as described below and invested in Eligible Investments as directed in
writing by Borrower and applied, together with such investment earnings, as a
credit to the Mortgage Loan Payments when due. In the event the Trustee shall
not have received at least twenty-four hours' notice as to any such investment
direction upon the maturity of an existing investment, the Trustee shall be
authorized to invest maturing amounts in Eligible Investments described in
subparagraph (x) of the definition thereof until further directed in writing as
to investments of such amounts. Investment earnings and losses shall be
charged to the moneys in the Certificate Account, and the Trustee shall have no
responsibility for any loss on any Eligible Investments.
(b) Continuously from the date hereof until the principal and
interest on the Mortgage Loan are paid in full, the Trustee will use reasonable
best efforts to collect all payments due under the Mortgage Loan when the same
shall become due and payable. On each June 15 during the term of this
Agreement, the Mortgagor shall provide the Trustee with a certificate to the
effect that Mortgagor shall provide the Trustee with a certificate to the
effect that Mortgagor is in compliance with the terms of the Loan Agreement and
the Mortgage Note.
Section 5.03. Establishment of Certificate Account; Deposits in
Certificate Account. With respect to the Mortgage Loan, the Trustee shall
cause to be segregated and held all funds collected and received pursuant to
the Mortgage Loan separate and apart from any of its own funds and general
assets and shall cause to be established and maintained a Certificate Account
for the benefit of the Certificateholders, in the form of a trust account
titled "Mortgage Pass-Through Certificates, (Kmart Corporation Power Center -
Utica, Michigan Project) Series 1992 in trust for the benefit of the
Certificateholders." The Trustee
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from time to time, at the direction of the Borrower, shall invest moneys in the
Certificate Account in Eligible Investments, which shall mature not later than
the Remittance Date next following the date of such investment and shall not be
sold or disposed of prior to its maturity. All such Eligible Investments shall
be made in the name of the Trustee. In the event the Trustee shall not have
received at least twenty-four hours' notice as to any such investment direction
upon the maturity of an existing investment, the Trustee shall be authorized to
invest maturing amounts in Eligible Investments described in subparagraph (x)
of the definition thereof until further directed in writing as to investments
of such amounts. Investment earnings and losses shall be charged to the moneys
in the Certificate Account, and the Trustee shall have no responsibility for
any loss on any Eligible Investments.
The Trustee shall cause to be deposited in the Certificate Account on
a daily basis and maintained and administered hereunder:
(i) All scheduled payments due on account of principal on the
Mortgage Loan, and all Principal Prepayments collected and any amounts
in the nature of late payment charges with respect thereto;
(ii) All payments on account of interest on the Mortgage Loan
(minus any Trustee Fees to which the Trustee is entitled);
(iii) All Net Liquidation Proceeds;
(iv) All Insurance Proceeds received by the Trustee under any
title, hazard or other insurance policy;
(v) All awards or settlements in respect of condemnation
proceedings affecting the Mortgaged Property which are not released to
the Borrower in accordance with the terms of the documents contained
in the Mortgage File;
(vi) All Extraordinary Expense Advances made by the Trustee;
(vii) All revenues from the Mortgaged Property acquired by
the Trustee by foreclosure or deed in lieu of foreclosure net of any
Extraordinary Expense Advances with respect to the Mortgaged Property;
(viii) All payments under the Leases and Lease Guaranties as
described in Section 5.02(a);
(ix) The initial deposit on the date of issuance of the
Certificates of $7,000 from the proceeds of the Certificates; and
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<PAGE> 35
(x) Any amounts required to be deposited therein in
accordance with any other provisions of this Agreement.
The foregoing requirements for deposit in the Certificate Account shall be
exclusive. However, the Trustee may, but is not required to, deposit in the
Certificate Account the Trustee Fee.
Section 5.04. Permitted Withdrawals From the Certificate Account.
The Trustee may, from time to time, cause the withdrawal of funds from the
Certificate Account for the following purposes:
(i) to make payments to the Certificateholders in the amounts
and in the manner provided for in Section 6.01;
(ii) (a) to pay the fees and expenses incurred by the entity
retained pursuant to Section 6.02 to prepare tax returns and reports;
and (b) to reimburse the Trustee for unpaid Trustee Fees and
unreimbursed Extraordinary Expense Advances and to reimburse itself or
the Seller for any expenses, costs and liabilities for which it is
entitled to reimbursement under Section 6.03 or 7.03; prior to an
Event of Default the Trustee's right to reimburse itself (other than
with respect to the Trustee Fees) or make payments to the Seller
pursuant to this clause (ii) with respect to the Mortgage Loan is
limited to reimbursement or payments from related Liquidation
Proceeds, condemnation proceeds and amounts representing insurance
proceeds; however, subsequent to an Event of Default the Trustee shall
have a prior lien on all moneys in the Certificate Account for payment
or reimbursement of its Trustee Fees and Extraordinary Expense
Advances and other amounts owed it under any provision of this Trust
Agreement;
(iii) to disburse to Borrower: (a) any amounts in the
Certificate Account which represent rental and other amounts paid by
Tenants under the Leases prior to August 1, 1993, in excess of the
amounts, if any, needed to provide for the payment of amounts
described in clause (ii), upon requisition therefor by Borrower but
not more frequently than monthly; and (b) without requisition, any
amounts remaining in the Certificate Account immediately following
each Remittance Date on which principal payments are made (i.e. each
June 15) after paying or providing for the payment or withdrawal of
amounts described in clauses (i), (ii) and (iv);
(iv) if there shall be deposited in the Certificate Account
any amount not required to be deposited therein, to withdraw such
amount from the
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Certificate Account, any provision herein to the contrary
notwithstanding; and
(v) to clear and terminate the Certificate Account upon the
termination of this Agreement.
Section 5.05. Debt Service Reserve Account. The Debt Service Reserve
Account is hereby created and established with the Trustee. This Account shall
be maintained by the Trustee as a separate and distinct trust fund or account
pledged to the Certificateholders to be held, managed, invested, disbursed and
administered as provided below.
The Trustee shall credit to the Debt Service Reserve Account on the
Closing Date from amounts transferred to it by the Seller the amount indicated
on Exhibit 6.1 of the Loan Agreement. All amounts received as earnings on or
income from any investments or reinvestments of amounts in Eligible Investments
(made at the direction of the Seller in the same manner provided in Section
5.03 with respect to the Certificate Account) in the Debt Service Reserve
Account shall be credited to the Certificate Account once the applicable Debt
Service Reserve Account requirement of $3,423,000.00 (or after December 15,
1992, $2,367,242.92) is met.
The Trustee shall draw upon the Debt Service Reserve Account on each
Remittance Date to fund the interest and principal components of the Mortgage
Payments made or accrued on and prior to June 15, 1993 in accordance with the
following schedule:
<TABLE>
<CAPTION>
Interest Principal
-------- ---------
<S> <C> <C>
December 15, 1992 $1,055,757.08 - 0 -
June 15, 1993 $1,347,775.00 $840,000
</TABLE>
The Trustee shall not be required to maintain the Debt Service Account
subsequent to June 15, 1993, and notwithstanding any other provision of this
Agreement any amounts remaining on deposit therein on such date shall be
transferred to the Certificate Account and retained therein for application to
the Mortgage Payment due on December 15, 1993.
Section 5.06. Enforcement of Due-on-Sale Clause, Assumption
Agreements.
(a) If the Mortgaged Property shall be conveyed by the Borrower, the
Trustees shall enforce any due-on-sale clause contained in the Mortgage Note or
Mortgage, to the extent permitted therein and by applicable law and
governmental regulations and upon receipt of an Opinion of Counsel delivered to
the Trustee in connection with such conveyance that the due-on-sale clause is
enforceable.
(b) In any case in which the Mortgaged Property is to be conveyed to
a Person by the Mortgagor, and such Person is to
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enter into an assumption agreement or modification agreement or
supplement to the Mortgage Note or Mortgage which requires the signature of the
Trustees, or if an instrument of release signed by the Trustees is required
releasing the Mortgagor from liability on the Mortgage Loan, the Seller shall
deliver or cause to be delivered to the Trustees for signature the assumption
agreement with the Person to whom the Mortgaged Property is to be conveyed and
such modification agreement or supplement to the Mortgage Note or Mortgage or
any other Mortgage File Documents or other instruments as are reasonable or
necessary to carry out the terms of the Mortgage Note or Mortgage or any other
Mortgage File Documents or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Mortgaged Property to such Person.
The Seller shall also deliver or cause to be delivered to the Trustees with the
foregoing documents a letter explaining the nature of such documents and the
reason or reasons why the Trustees' signatures are required. With such letter
the Seller shall deliver to the Trustees an Officer's Certificate, together
with an Opinion of Counsel as to the legal matters described below, certifying
that: (i) a Responsible Officer has examined and approved such documents as to
form and substance, (ii) the Trustees' execution and delivery thereof will not
conflict with or violate any terms of this Agreement or cause the unpaid
balance and interest on the Mortgage Loan to be uncollectible in whole or in
part, (iii) any required consents of insurers under any insurance policies
required by the Mortgage have been obtained and (iv) subsequent to the closing
of the transaction involving the assumption or transfer (A) the Mortgage Loan
will continue to be secured by a first mortgage lien pursuant to the terms of
the Mortgage, (B) such transaction will not adversely affect the coverage under
any required insurance policies required under the Mortgage, (C) the Mortgage
Loan will fully amortize over the remaining term thereof, (D) the determination
of the interest rate on the Mortgage Loan will not be altered nor will the term
of the Mortgage Loan be increased and (E) if the seller/transferor of the
Mortgaged Property is to be released from liability on the Mortgage Loan, such
release will not (based on the Seller's good faith determination) adversely
affect the collectibility of the Mortgage Loan or the rating on the
Certificates issued by the Rating Agency and that all taxes have been paid and
that there are no adverse tax consequences of the transfer. Upon receipt of
such certificate, the Trustees shall execute any necessary instruments for such
assumption or substitution of liability. Upon the closing of the transactions
contemplated by such documents, the Seller shall cause the originals of the
assumption agreement, the release (if any), or the modification or supplement
to the Mortgage Note or Mortgage or any other Mortgage File Documents to be
delivered to the Trustees and deposited with the Mortgage File for the Mortgage
Loan. Any fee collected by the Seller for entering into an assumption or
substitution of liability agreement with respect to the Mortgage Loan will be
retained by the Seller.
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Section 5.07. Realization Upon Defaulted Mortgage Loan. On behalf of
the Trust, the Trustees shall use their best efforts to foreclose upon or
otherwise comparably convert the ownership of the Mortgaged Property securing
the Mortgage Loan as comes into and continues in default and as to which no
satisfactory arrangement can be made for collection of delinquent payments
pursuant to Section 5.02; shall manage, conserve, protect and operate the
Mortgaged Property for the purposes of its prompt disposition and sale; and
shall dispose of the Mortgaged Property on such terms and conditions as they
deem in the best interests of the Certificateholders after the Trustees have
received indemnity for their costs, expenses and liabilities with respect
thereto to their reasonable satisfaction from the Certificateholders in
accordance with Section 9.02(iii). Notwithstanding the foregoing, if either
Trustee has actual knowledge or reasonably believes that all or any part of the
Mortgaged Property is affected by hazardous or toxic wastes or substances, the
Trustees need not cause the Trust to acquire title to the Mortgaged Property in
a foreclosure or similar proceeding. In connection with such activities, the
Trustees shall follow such practices and procedures as they shall deem
necessary or advisable, as shall be normal and usual in their trustee
activities, and, in particular, the Trustees shall be furnished with such
certificates of appropriate public officials and agencies, a history of the
Mortgaged Property and its uses, other evidence reasonably satisfactory to the
Trustees showing that the Mortgaged Property conforms to existing environmental
laws, regulations, and rules and that no conditions exist in, on or beneath the
surface of the Mortgaged Property that are or might become hazardous materials,
and including but not limited to a Phase I environmental report from a company
reasonably satisfactory to Trustees, showing that there has been no storage,
disposal, or release of any oil, fuels, gases, chemicals, trash, garbage, or
other solid wastes or hazardous materials which report shall be based upon a
complete and thorough on-site inspection of the Mortgaged Property, including
but not limited to investigations of the soil, surface water and groundwater,
to confirm the absence of any hazardous materials on or beneath the surface of
the Mortgaged Property or adjacent lands. The foregoing is subject to the
proviso that the Trustees shall not be required to expend their own funds in
connection with any foreclosure or towards the restoration of the Mortgaged
Property unless they shall determine that such (i) restoration or foreclosure
will increase the proceeds of liquidation of the Mortgage Loan to
Certificateholders after reimbursement to themselves for such expenses and (ii)
expenses will be recoverable to them either through Liquidation Proceeds
(respecting which they shall have priority for purposes of withdrawals from the
Certificate Account pursuant to Section 5.04) or revenues from the Mortgaged
Property.
Section 5.08. Trustee Compensation. The Trustee, as compensation for
its activities hereunder, shall be entitled to receive on the Closing Date and
each June 15 (commencing June 15,
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1994) during the term of this Agreement the amounts provided for as the Trustee
Fee and the Trustees shall be entitled to receive reimbursement for
Extraordinary Expense Advances and reimbursement for certain expenses, all as
specified by clause (ii) of Section 5.04. As so specified, from and after the
occurrence of any Event of Default, the Trustees shall have a prior lien on the
Trust Fund for such amounts.
The Trustees shall be required to pay all expenses incurred by them in
connection with their activities hereunder, and shall not be entitled to
reimbursement therefor except as specifically provided in Section 5.04.
Section 5.09. Rights of the Seller. The Trustees shall afford the
Seller, upon reasonable notice and during normal business hours, access to all
records maintained by the Trustees in respect of their rights and obligations
hereunder and access to officers of the Trustees responsible for such
obligations. Upon request and at the expense of the Seller, the Trustee shall
furnish the Seller with its most recent financial statements and such other
information as the Trustee possesses regarding its business, property and
condition, financial or otherwise.
[End of Article V]
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ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01. Distributions.
(a) On each Remittance Date, the Trustee shall cause to be
distributed from funds in the Certificate Account, the following amounts:
(i) to the Trustee, the Trustee Fee and any other amounts
owed to the Trustee under this Agreement and to the entity retained
pursuant to Section 6.02 to prepare tax returns and reports amounts
owed to it; and
(ii) to each Certificateholders, the Certificate
Distribution.
(b) All distributions made to Certificateholders on each Remittance
Date shall be made to the Certificateholders of record on the Record Date
(other than as provided in this Agreement or in the form of Certificate
respecting the final distribution), by wire transfer in immediately available
funds to the account of such Holder at a bank or other financial or depository
institution having appropriate facilities therefor, notice of which shall have
been given to the Trustee in writing by the Record Date prior to such
Remittance Date. Following final distribution in retirement of the
Certificates, Certificateholders shall promptly surrender the Certificates at
the Corporate Trust Office or such other agency of the Trustee specified in the
final distribution notice to the Certificateholders. If on any Determination
Date, the Trustee determines that the Mortgage Loan is not outstanding and
there are no other funds or assets in the Trust Fund other than the funds in
the Certificate Account, the Trustee shall promptly send the final distribution
notice to each Certificateholder and make the final distribution in accordance
with Section 10.02.
Section 6.02. Statements to the Certificateholders. Not later than
each Remittance Date, the Trustee will cause to be sent to each
Certificateholder and the Seller a statement setting forth the following
information with respect to each Certificate (which information may be
aggregated for all Certificates held by the same Holder), after giving effect
to the distributions to be made pursuant to Section 6.01 on or as of such
Remittance Date:
(i) the amount of such distribution allocable to
principal, separately identifying the aggregate amount of any
Principal Prepayments and Net Liquidation Proceeds included therein;
(ii) the amount of such distribution allocable to
interest and any other amounts in the nature of late payment charges;
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(iii) the amount of any payment by the Trustee pursuant to
Section 7.03;
(iv) the amount of Extraordinary Expense Advances paid by the
Trustee; and
(v) if applicable, whether the Mortgage Loan is delinquent.
The Seller (or Holders of Certificates evidencing Percentage Interests
aggregating not less than 66 2/3%) shall appoint an organization which
regularly engages in the preparation and filing of such documents on a
continuous basis for profit and which represents itself to be expert in such
matters), as required by applicable law, which shall cause to be prepared and
which shall file, any and all tax returns, information statements or other
filings required to be delivered to any governmental taxing authority or to the
Certificateholders pursuant to any applicable law with respect to the Trust
Fund and the transactions contemplated hereby; provided, however, (i) that any
reasonable fees of the organization appointed as provided above shall be paid
from the Certificate Account and (ii) the Trustee shall cooperate in good faith
in providing any necessary information which it possesses regarding the Trust
Fund and the Certificates to such organization. Notice of any such appointment
shall be given to the Trustee by the party making such appointment at the time
of such appointment.
Section 6.03. Advances by the Trustee.
(a) Trustee may from time to time make such Extraordinary Expense
Advances as Trustee in its sole discretion deems advisable, provided, however,
that it is satisfied as to the availability to it of direct and immediate
reimbursement and that the repayment thereof to Trustee shall not impair the
payment of any Certificate Distribution.
(b) In order to make an Extraordinary Expense Advance the Trustee
shall deposit in the Certificate Account an amount equal to the Advance. Any
moneys being held for future distribution to Certificateholders in the
Certificate Account shall not be so used.
[End of Article VI]
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ARTICLE VII
THE SELLER
Section 7.01. Indemnification; Third Party Claims. Subject to the
limitations of Section 9.01 with respect to the Trustees, the Seller agrees to
indemnify the Trustees and hold the Trustees harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustees may sustain
in any way related to their failure to perform their duties in strict
compliance with the terms of this Agreement, other than any failure arising
from the gross negligence or willful misconduct of the Trustee. The Seller
shall immediately notify the Trustees if a claim is made by a third party with
respect to this Agreement or the Mortgage Loan, assume (with the consent of
the Trustees) the defense of any such claim and pay all expenses in connection
therewith, including counsel fees and expenses, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or the Trustees
in respect of such claim.
Section 7.02. Maintaining Corporate Existence of the Seller. The
Seller will keep in full effect its existence, rights and franchises as a
corporation, and will obtain and preserve its qualification to do business as a
foreign corporation in the jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of this Agreement, the
Certificates or the Mortgage Loan and to perform its duties under this
Agreement.
Section 7.03. Limitation on Liability of the Seller. Neither the
Seller nor any of the directors, officers, employees or agents of the Seller
shall be under any liability to the Trustees or the Certificateholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Seller or any such person against any
breach of warranties or representations made herein, or failure to perform its
obligations in strict compliance with any standard of care set forth in this
Agreement, or any liability which would otherwise be imposed by reason of any
willful misfeasance, bad faith or negligence in the performance of its duties
or by reason of reckless disregard of obligations and duties hereunder. The
Seller and any director, officer, employee or agent of the Seller may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder.
The Seller shall not be under any obligation to appear in, prosecute
or defend any legal action which is not incidental to its duties in accordance
with this Agreement and which in its opinion may involve it in any expense or
liability; provided, however, that the Seller may in its discretion undertake
any such
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action which it may deem necessary or desirable in respect to this Agreement
and the rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and
liabilities payable from the Certificate Account and the Seller shall be
entitled to be reimbursed therefor out of the Certificate Account as provided
by Section 5.04(ii).
Section 7.04. Seller May Resign. The Seller may resign from the
obligations and duties hereby impose on it with respect to its role as Seller;
provided that such resignation shall not be effective unless and until a
successor shall be appointed, which successor shall be a wholly-owned
subsidiary of Seller which shall assume all duties of the Seller hereunder; and
provided, further, that this provision shall not relieve the Seller from any
breach of its warrants and representations made in Section 3.01 herein;
however, such liability shall be limited as set forth in Section 7.03. The
indemnity of the Trustees provided by Seller pursuant to Section 7.01 hereof
shall survive Seller's resignation and the appointment of any successor
wholly-owned subsidiary pursuant to this Section.
[End of Article VII]
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ARTICLE VIII
DEFAULT
Section 8.01. Events of Default. The (a) nonpayment to any
Certificateholder of any payment required to be made under the terms of this
Agreement, which continues unremedied for a period of five days, or (b)
occurrence of any event constituting an Event of Default under the Loan
Agreement or any other Mortgage File Documents, shall constitute an Event of
Default under this Agreement. If an Event of Default shall occur and be
continuing, then, and in each and every case, so long as the Event of Default
shall not have been remedied, the Trustees may, and at the written direction of
the Holders of Certificates of Percentage Interests aggregating not less than 66
2/3%, the Trustees shall exercise any rights and remedies that they may have at
law or equity to damages, including injunctive relief and specific performance.
The Trustees will have no obligation to take any action or institute, conduct
or defend any litigation under this Agreement at the request, order or
direction of any of the holders of Certificates unless such Certificateholders
have offered to the Trustees reasonable security or indemnity against the
costs, expenses and liabilities which the Trustees may incur. Following any
Event of Default under this Agreement, the Trustees shall have a first priority
lien for payment or reimbursement from the Trust Fund of their fees and
expenses incurred in the performance of their duties hereunder. After making
provision for payment of such amounts, the Trustees shall apply the proceeds
recovered in the enforcement of the rights and remedies under this Agreement in
accordance with the terms of this Agreement, including, but not limited to, the
definition of Certificate Distribution and Section 10.01.
Section 8.02. Waiver of Defaults. The Trustees may, and at the
direction of the Holders of Certificates of Percentage Interests aggregating
not less than 66 2/3% the Trustee shall, waive any default hereunder and its
consequences, except that a default in the making of any required distribution
on any of the Certificates may only be waived by the affected
Certificateholders. Upon any such waiver of a past default, such default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereon except to the extent expressly so waived.
Section 8.03. Notification to Certificateholders. Within 30 days
after acquiring actual knowledge of the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such Event of Default hereunder known to the Trustee unless such Event of
Default shall have been cured or waived.
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Section 8.04. Rights of Certificateholders to Direct Proceedings.
Anything in this Agreement to the contrary notwithstanding, the Holders of
Percentage Interests aggregating not less than 66 2/3% shall have the right, at
any time during the continuance of an Event of Default, by an instrument or
instruments in writing executed and delivered to the Trustee, to direct the
time, place and method of conducting all proceedings to be taken in connection
with the enforcement of the terms and conditions of this Agreement; provided,
however that such direction shall not be otherwise than in accordance with the
provisions of law and this Agreement and provided that such Holders shall have
provided to the Trustees the reasonable security or indemnity pursuant to
Section 9.02(iii) against the costs, expenses and liabilities which the
Trustees may incur in connection with such proceedings.
[End of Article VIII]
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ARTICLE XI
CONCERNING THE TRUSTEES
Section 9.01. Duties of Trustees. The Trustees, prior to the
occurrence of an Event of Default and after the curing of all Events of Default
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement, including without limitation
the duties set forth in Sections 5.01 and 6.02. The Trustees shall act in all
instances in accordance with the requirements set forth in the Mortgage Loan
documents and shall employ procedures (including collection procedures) and
exercise that degree of prudence and care that a prudent and reasonable trustee
would apply. In case an Event of Default has occurred (which has not been
cured), the Trustees shall exercise such of the rights and powers vested in
them by this Agreement, and use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the
conduct of such man's own affairs. No permissive rights of the Trustees shall
be construed as a mandatory duty of the Trustees.
The Trustees, upon receipt of any resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustees which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement and if they are deemed to be
deficient, Trustee shall request cure of any such deficiency within a
reasonable period of time for such cure. If such deficiency is not cured to
the satisfaction of Trustee, the Trustee may treat the requirement pursuant to
which such instrument is furnished as not having been satisfied.
No provision of this Agreement shall be construed to relieve the
Trustees from liability for their own negligent action, their own negligent
failure to act or their own misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after
the curing of all such Events of Default which may have occurred, the
duties and obligations of the Trustees shall be determined solely by
the express provisions of this Agreement, the Trustees shall not be
liable except for the performance of such duties and obligations as
are specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustees
and, in the absence of bad faith on the part of the Trustees, the
Trustees may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustees and conforming to
the requirements of this Agreement;
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(ii) The Trustees shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustees
were negligent in ascertaining the pertinent facts; and
(iii) The Trustees shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by them
in good faith in accordance with the direction of holders of
Certificates evidencing Percentage Interests aggregating not less than
66 2/3% as to the time, method and place of conducting any proceeding
for any remedy available to the Trustees, or exercising any trust or
power conferred upon the Trustees, under this Agreement.
The Trustees shall not be required to expend or risk their own funds
or otherwise incur financial liability in the performance of any of their
duties hereunder, or in the exercise of any of their rights or powers, if there
is reasonable grounds for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
them.
Section 9.02. Certain Matters Affecting the Trustees. Except as
otherwise provided in Section 9.01:
(i) The Trustees may rely, and shall be protected in acting
or refraining from acting, upon any resolution, Officers' Certificate,
certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document reasonably believed by them
to be genuine and to have been signed or presented by the proper party
or parties;
(ii) The Trustees may consult with counsel and any advice
obtained from counsel or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered or omitted by them hereunder in good faith and in accordance
with such advice or Opinion of Counsel;
(iii) The Trustees shall be under no obligation to exercise
any of the trusts or powers vested in them by this Agreement or to
institute, conduct or defend any litigation hereunder or in relation
hereto at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustees
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; the right of
46
<PAGE> 48
the Trustees to perform any discretionary act enumerated in this
Agreement shall not be construed as a duty, and the Trustees shall not
be answerable for other than their negligence or willful misconduct in
the performance of any such act; nothing contained herein shall,
however, relieve the Trustees of the obligation, upon the occurrence
of an Event of Default known to a Responsible Officer of the Trustee
(which has not been cured), to exercise such of the rights and powers
vested in them by this Agreement, and to use the same degree of care
and skill in their exercise as a prudent man would exercise or use
under the circumstances in the conduct of such man's own affairs;
(iv) The Trustees shall not be personally liable for any
action taken, suffered or omitted by them in good faith and believed
by them to be authorized or within the discretion or rights or powers
conferred upon them by this Agreement;
(v) Except with respect to notice of deficient or missing
documents or of breaches of representations and warranties of the
Trustee described in Section 2.02, prior to the occurrence of an Event
of Default hereunder and after the curing of all Events of Default
which may have occurred, the Trustees shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document, unless
requested in writing so to do by Holders of Certificates evidencing
Percentage Interests aggregating not less than 66 2/3%; provided,
however, that if the payment within a reasonable time to the Trustees
of the costs, expenses or liabilities likely to be incurred by them in
the making of such investigation is, in the opinion of the Trustees,
not reasonably assured to the Trustees by the security afforded to
them by the terms of this Agreement, the Trustees may require
reasonable indemnity against such expense or liability as a condition
to such proceeding. The reasonable expense of every such examination
shall be paid from the Certificate Account pursuant to Section 5.04,
if an Event of Default shall have occurred and is continuing, and
otherwise by the Certificateholder requesting the investigation; and
(vi) The Trustees may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys.
Section 9.03. Trustees Not Liable for Certificates or Mortgage Loan.
The recitals contained herein and in the Certificates (other than the Trustee's
authentication of the
47
<PAGE> 49
Certificates) shall be taken as the statements of the Seller, and the Trustees
assume no responsibility for their correctness. The Trustees make no
representations or warranties as to the validity or sufficiency of this
Agreement or of the Certificates (except that the Certificates shall be duly
and validly authenticated by the Trustee) or of the Mortgage Loan or related
document. The Trustees shall not be accountable for the use or application by
the Seller of any of the Certificates or of the proceeds of such Certificates,
or for the use or application of any funds paid to the Seller with respect to
the Mortgage Loan or deposited in or withdrawn from the Certificate Account by
the Seller.
Section 9.04. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not Trustee.
Section 9.05. Seller to Pay Trustees' Fees and Expenses. The Seller
covenants and agrees to pay to the Trustees from time to time, and the Trustees
shall be entitled to, reasonable compensation (which shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust) for all services rendered by them in the execution of the trust hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustees, and the Seller will indemnify, pay or reimburse the
Trustees upon their request for all reasonable expenses, disbursements and
advances incurred or made by the Trustees in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of their counsel and of all persons not regularly in
their employ) except any such expense, disbursement or advance as may arise from
their negligence or bad faith.
Section 9.06. Action by Individual Trustee. The Individual Trustee
shall act as and be such upon the following terms and conditions:
(a) Subject to the provisions of Section 9.14, all rights,
powers, duties and obligations conferred or imposed upon the Trustees
shall be conferred or imposed solely upon and solely exercised and
performed by the Trustee except as expressly provided otherwise in
this Agreement and except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations shall
be exercised and performed by the Individual Trustee;
(b) No power granted by this Agreement to, or which this
Agreement provides may be exercised by, the Individual Trustee shall
be exercised by the Individual Trustee except jointly with, or with
the consent in
48
<PAGE> 50
writing of, the Trustee, anything contained to the contrary
notwithstanding; and
(c) The Individual Trustee may at any time by an instrument
in writing, constitute the Trustee or its successor in trust hereunder
his agent or attorney-in-fact, with full power and authority, to the
extent which may be permitted by law, to do any and all acts and
things and exercise any and all discretion which he is authorized or
permitted to do or exercise, for and in his behalf and in his name.
Section 9.07. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation having its principal
office in a state and city acceptable to the Holders of Certificates evidencing
Percentage Interests aggregating not less than 66 2/3% and organized and doing
business under the laws of such state or the United States of America,
authorized under such laws to exercise corporate trust powers, having (or, in
the case of a corporation included in a bank holding company system, the
related banking holding company shall have) a combined capital and surplus of
at least $50,000,000 in the case of XXXXXXXXXX and of at least $100,000,000
in the case of any successor trustee and subject to supervision or examination
by federal or state authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 9.08.
Section 9.08. Resignation and Removal of the Trustee. The Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Seller and the Certificateholders. Upon
receiving such notice of resignation, the Holders of Certificates evidencing
Percentage Interests aggregating not less than 66 2/3% shall promptly appoint a
successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time, the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.07 and shall fail to resign after written
request therefor by the Holders of
49
<PAGE> 51
Certificates evidencing Percentage Interests aggregating not less than 66 2/3%,
or if at any time the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Holders of Certificates evidencing
Percentage Interests aggregating not less than 66 2/3% may remove the Trustee
and appoint a successor trustee by written instrument, in duplicate, one copy
of which instrument shall be delivered to the Trustee so removed and one copy
to the successor trustee.
The Holders of Certificates evidencing Percentage Interests
aggregating not less than 66 2/3% may at any time remove the Trustee and
appoint a successor trustee by written instrument or instruments, in
triplicate, signed by such Holders or their attorneys-in-fact duly authorized,
one complete set of which instruments shall be delivered to the Seller, one
complete set to the Trustee so removed and one complete set to the successor
trustee so appointed.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall
become effective only upon acceptance of appointment by the successor trustee
as provided in Section 9.09.
Section 9.09. Successor Trustee. Any successor trustee appointed as
provided in Section 9.08 shall execute, acknowledge and deliver to the Seller,
the Certificateholders and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee shall
become effective and such trustee, without any further act, deed or conveyance,
shall become fully vested with all rights, powers, duties and obligations of
its predecessor trustee hereunder, with like effect as if originally named as
trustee herein. The predecessor trustee shall deliver to the successor trustee
the Mortgage File and related documents and statements held by it hereunder,
and the Seller and the predecessor trustee shall execute and deliver such
instruments and do such other things as may be reasonably be required for more
fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 9.07.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the successor trustee shall mail notice
50
<PAGE> 52
of the succession of such trustee hereunder to all Holders of Certificates at
their addresses as shown in the Certificate Register.
Section 9.10. Merger or Consolidation of Trustee. Any corporation
into which the Trustee may be merged or converted or with which it may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the
Trustee hereunder, provided that such corporation shall be eligible under the
provisions of Section 9.07, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 9.11. Resignation of Individual Trustee. The Individual
Trustee or any of his successors may resign, and may be discharged of the
trusts created by this Agreement by giving written notice thereof to the Seller
and to the Trustee.
Such resignation shall take effect immediately upon the acceptance of
appointment by a Person succeeding to the office of the Individual Trustee
appointed by the resigning Trustee or by the Holders of Certificates evidencing
Percentage Interests aggregating not less than 66 2/3%, as provided in Section
9.13.
Section 9.12. Removal of Individual Trustee. The Individual Trustee
or any of his successors may be removed at any time by the Holders of
Certificates evidencing Percentage Interests aggregating not less than 66 2/3%
or by the Trustee, by delivery of a notice of such removal to the Individual
Trustee, to the Seller, and in the case of removal by the Certificateholders,
to the Trustee, signed by such holders or the Trustee, as the case may be, and
such removal shall be effective upon the date specified in such notice, and the
Individual Trustee's duties and obligations hereunder shall thereupon cease,
except as specified in Section 9.14 hereof.
Section 9.13. Appointment of Successor to Individual Trustee. If at
any time the Individual Trustee or any of his successors shall die, resign or
be removed or otherwise become incapable of acting, or if for any reason the
office of Individual Trustee shall become vacant, a successor to the Individual
Trustee shall forthwith be appointed by the Trustee or, in the event that the
Trustee shall fail to make such appointment within 60 days after the
occurrence of such death, resignation, removal, incapacity or vacancy, by the
Holders of Certificates evidencing Percentage Interests aggregating not less
than 66-2/3% by an instrument signed by the Trustee or by such
Certificateholders.
Section 9.14. Succession of Successor to Individual Trustee. Any
Person appointed as a successor to the Individual Trustee shall execute,
acknowledge and deliver to his
51
<PAGE> 53
predecessor, to the Trustee and to the Seller, an instrument accepting such
appointment hereunder, and thereupon such Person without any further act, deed
or conveyance shall become vested with all estates, properties, rights, powers,
duties and trusts of his predecessor in the trusts hereunder with like effect
as if originally named as Individual Trustee herein; but nevertheless, on the
written request of the Seller or Holders of Certificates evidencing Percentage
Interests aggregating not less than 66 2/3% or of the Trustee or of the
Individual Trustee, the predecessor shall execute and deliver an instrument
transferring to the Individual Trustee, upon the trusts expressed in this
Agreement, all the estates, properties, rights, powers and trusts granted to
him by this Agreement and shall duly assign, transfer, deliver and pay over to
the Individual Trustee any property and money subject to the lien of this
Agreement held by such predecessor. Should any instrument in writing from the
Seller or from Holders of Certificates evidencing Percentage Interests
aggregating not less than 66 2/3% or from the Trustee be required by any Person
who becomes the Individual Trustee for more fully and certainly vesting in and
confirming to such Individual Trustee such estates, properties, rights, powers
and trusts, then, on request, any and all such instruments in writing shall be
made, executed, acknowledged and delivered by the Seller and/or the Trustee.
Any Individual Trustee which has resigned or been removed shall
nevertheless retain all rights of indemnity, including any lien upon the
Mortgaged Property afforded to him for fees and expenses under Section 9.05.
[End of Article IX]
52
<PAGE> 54
ARTICLE X
TERMINATION
Section 10.01. Termination. The respective obligations and
responsibilities of the Seller and the Trustees under this Agreement (except
the duty to pay the Trustees' fees and expenses and to provide indemnification
under the terms of this Agreement) shall, so long as such termination does not
result in the imposition of a tax on the Trust Fund, terminate upon the first
to occur of the final payment, prepayment in full or other liquidation (or any
advance with respect thereto) of the Mortgage Loan or the disposition of all
property acquired upon foreclosure or deed in lieu of foreclosure of the
Mortgage Loan or the disposition of the Mortgage Loan and the remittance of all
funds due hereunder; provided, however, that in no event shall the trust
created hereby continue beyond the expiration of 21 years from the death of the
last survivor of the descendants of Joseph P. Kennedy, the late ambassador of
the United States to the Court of St. James, living on the date hereof.
Section 10.02. Notice; Final Distribution.
(a) Notice of any termination pursuant to Section 10.01
(except prepayment or other disposition in accordance with Section 4.01 for
which 15 days notice cannot be given), specifying the Remittance Date upon
which all Certificateholders may surrender their Certificates to the Trustee
for payment and cancellation, shall be given promptly by the Trustee by letter
to Certificateholders mailed no later than 15 days prior to such Remittance
Date specifying (i) the Remittance Date upon which final payment on the
Certificates will be made, and (ii) the amount of any such final payment.
After giving such notice, the Trustee shall not register the transfer or
exchange of any Certificates. The Trustee shall cause to be distributed to
Certificateholders an amount equal to the amount otherwise distributable on
such Remittance Date.
(b) If all of the Certificateholders shall not surrender
their Certificates for cancellation within three months after the time
specified in the above-mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation.
[End of Article X]
53
<PAGE> 55
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement, and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
Section 11.02. Limitation on Rights of Certificateholders. The
death or incapacity of any Certificateholder shall not operate to terminate
this Agreement or the Trust Fund, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
No Certificateholder shall have any right to vote (except as
expressly provided herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustees a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates evidencing in the aggregate not less than 66 2/3% of
the Percentage Interests shall have made written request upon the Trustees to
institute such action, suit or proceeding in the Trustees' own name as Trustees
hereunder and shall have offered to the Trustees such reasonable indemnity as
they may require against the costs, expenses and liabilities to be incurred
therein or thereby, and the Trustees, for 60 days after their receipt of such
notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and
intended, and being expressly covenanted by each Certificateholder with every
other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such
54
<PAGE> 56
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner herein provided and for the common benefit of Certificateholders, as the
case may be. For the protection and enforcement of the provisions of this
Section, each and every Certificateholder and the Trustees shall be entitled to
such relief as can be given either at law or in equity.
Section 11.03. Amendment. This Agreement may be amended from
time to time by the Seller and the Trustees with the consent of the Holders of
Certificates evidencing in the aggregate not less than 66 2/3% of the
Percentage Interests for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment shall (i) reduce in any manner the amount of,
or delay the timing of, payments received on the Mortgage Loan which are
required to be distributed on any Certificate without the consent of the Holder
of such Certificate or (ii) reduce the aforesaid percentage of Certificates the
Holders of which are required to consent to any such amendment, without the
consent of the Holders of all Certificates then outstanding.
Promptly after the execution of any such amendment the Trustee
shall furnish written notification of the substance of such amendment to each
Certificateholder.
The manner of obtaining the consents of Certificateholders and of
evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable regulations as the Trustee may prescribe,
which shall not conflict with the provisions of this Agreement.
Section 11.04. Solicitation of Certificateholders. The Trustee
will not solicit, request or negotiate for or with respect to any direction or
proposed waiver or amendment of any of the provisions of this Agreement or the
Certificates, unless each Holder of the Certificates (irrespective of the
amount of Certificates then owned by it) shall be informed thereof by the
Trustee and shall be afforded the opportunity of considering the same and shall
be supplied by the Trustee with sufficient information to enable it to make an
informed decision with respect thereto. Executed or true and correct copies of
any waiver effected pursuant to the provisions of this Section shall be
delivered by the Trustee to each Holder of outstanding Certificates forthwith
following the date on which the same shall have been executed and delivered by
the Holder or Holders of the requisite percentage of outstanding Certificates.
The Trustee will not, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest, fee or
otherwise, to any Holder of the Certificates as consideration for or as an
inducement to the entering into by any
55
<PAGE> 57
Holder of the Certificates of any waiver or amendment of any of the terms
and provisions of this Agreement unless such remuneration is concurrently paid,
on the same terms, ratably to the Holders of all of the Certificates then
outstanding.
Under any provisions of this Agreement that relate to consent,
waiver, direction, request or demand of or by Certificateholders, each and
every Certificateholder shall be entitled to give or make any such consent,
waiver, direction, request or demand without request or demand for such action
by the Trustee.
In the event any such direction or similar action is so received
by the Trustee under any provision hereof from the Certificateholders of
requisite Percentage Interests, the Trustee shall follow the direction of such
Certificateholders and shall ignore any direction as to such matter that
Trustee may receive from Seller.
Section 11.05. Duration of Agreement. This Agreement shall
continue in existence and effect until terminated as herein provided.
Section 11.06. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAW, OTHER THAN WITH RESPECT TO CONFLICTS OF LAWS, OF
THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.07. Notices. All demands, notices and communications
under this Agreement shall be in writing and shall be deemed to have been duly
given if personally delivered at or mailed by first class or registered mail,
postage prepaid, to (i) in the case of the Seller, XXXXXXXXXX, XXXXXXXXXX,
Attention: XXXXXXXXXX, and (ii) in the case of the Trustee, XXXXXXXXXX,
XXXXXXXXXX, Attention: Corporate Trust, and in the case of the Individual
Trustee, XXXXXXXXXX, or (iii) in the case of any of the foregoing Persons, such
other addresses as such Persons furnish to the other Persons. Any notice
required or permitted to be mailed to a Certificateholder shall be given by
registered mail, postage prepaid, or by express delivery service, at the
address of such Certificateholder as shown in the Certificate Register.
Section 11.08. Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original but all of which together
shall constitute one and the same agreement.
[End of Article XI]
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<PAGE> 58
IN WITNESS WHEREOF, Seller and the Trustees have caused their
names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
XXXXXXXXXX, as Seller
By XXXXXXXXXX
-------------------------
Name XXXXXXXXXX
-------------------------
Title Vice President
-------------------------
XXXXXXXXXX, as Trustee
By /s/
-------------------------
Name XXXXXXXXXX
-------------------------
Title Assistant Vice President
-------------------------
XXXXXXXXXX, as
Individual Trustee
By XXXXXXXXXX
-------------------------
Name XXXXXXXXXX
-------------------------
Title
-------------------------
57
<PAGE> 59
STATE OF CALIFORNIA
---------------------- ss.
CITY OF LOS ANGELES
----------------------
On the 24th day of July 1992 before me, a Notary Public in and for
said State, personally appeared XXXXXXXXXX, known to me (or proved to me
on the basis of satisfactory evidence) to be the person who executed the within
instrument as V.P. on behalf of XXXXXXXXXX, and acknowledged to me that such
corporation executed the within instrument pursuant to its ByLaws' or a
resolution of the Board of Directors.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
(NOTARIAL SEAL] XXXXXXXXXX
My commission expires: ------------------------------
2-27-95 Notary Public
---------
OFFICIAL SEAL
XXXXXXXXXX
Notary Public-California
LOS ANGELES COUNTY
My Commisslon Expires
February 27, 1995
STATE OF CALIFORNIA
----------- ss.
CITY OF Los Angeles
-----------
On the 24th day of July 1992 before me, a Notary Public in and for said
State, personally appeared XXXXXXXXXX, known to me (or proved to me on the
basis of satisfactory evidence) to be the person who executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
(NOTARIAL SEAL] XXXXXXXXXX
My commission expires: -----------------
2-27-95 Notary Public
-------
OFFICIAL SEAL
XXXXXXXXXX
Notary Public-California
LOS ANGELES COUNTY
My Commisslon Expires
February 27, 1995
58
<PAGE> 60
STATE OF CALIFORNIA )
-------------- ) ss.
CITY OF LOS ANGELES )
-----------
On the 24th day of July 1992 before me, a Notary Public in and for
said State, personally appeared XXXXXXXXXX personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person who executed the
within instrument as to be an A.V.P. on behalf of XXXXXXXXXX, and acknowledged
to me that such corporation executed the within instrument pursuant to its
ByLaws or a resolution of the Board of Directors.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
(NOTARIAL SEAL] AGNES P. OBANDO
My commission expires: -----------------------------
2-27-95 Notary Public
-------
OFFICIAL SEAL
XXXXXXXXXX
Notary Public-California
LOS ANGELES COUNTY
My Commisslon Expires
February 27. 1995
59
<PAGE> 61
[Exhibits Intentionally Omitted]
<PAGE> 1
EXHIBIT 99.27
July 1, 1992
Farmington Hills, Michigan
XXXXXXXXXX
Collateralized Promissory Note
(Utica, Michigan - Power Center)
FOR VALUE RECEIVED, the undersigned, XXXXXXXXXX, a Michigan limited
partnership ("Maker"), hereby unconditionally promises to pay to the order of
XXXXXXXXXX ("Payee"), a Nevada corporation, at XXXXXXXXXX, or such other
address given to maker by Payee from time to time, the principal sum of THIRTY
MILLION FIVE HUNDRED FIFTY-FIVE THOUSAND AND NO/100THS DOLLARS ($30,555,000) in
lawful money of the United States of America, together with interest
(calculated on the basis of a 360-day (of 12 30-day months) year on the unpaid
principal balance from day-to-day remaining, computed from the date hereof
until Maturity (as defined below) at a rate per annum equal to the lesser of
(a) the Maximum Rate, or (b) NINE AND 035/1000THS percent (9.035%).
Section 1. Definitions. When used in this Note, the following
terms shall have the respective meanings specified herein or in the section
referred to:
"Business Day" shall mean any day other than (i) a Saturday or Sunday,
or (ii) a day on which banks in New York are required by law to close or are
customarily closed.
"Conversion Date" shall have the meaning ascribed to it in Section
3(a) hereof.
"Default" or "Event of Default" shall have the meaning ascribed to it
in Section 5 hereof.
"Holder" shall mean Payee, its successors and assigns and any
subsequent holder hereof.
"Kmart" shall mean Kmart Corporation, a Michigan corporation.
"Lease" or "Leases" shall mean the Lease or Leases on Exhibit 1.1C to
the Loan Agreement.
"Lease Guaranty shall mean each Lease Guaranty described on Exhibit
1.1C to the Loan Agreement.
"Loan Agreement" shall mean that certain Loan Agreement dated as of
even date herewith, pursuant to which the Loan, as defined in the Loan
Agreement, evidenced by this Note is governed.
<PAGE> 2
"Loan Documents" shall mean the Mortgage as hereinafter defined,
together with all financing statements and other security documents executed by
Maker and Payee and described in Section 1.2 of the Loan Agreement.
"Make-Whole Premium" shall have the meaning ascribed to it in Section
2 of the Loan Agreement.
"Maturity" shall mean the earlier of the Maturity Date (as defined in
Section 3(a) hereof) or the date on which the outstanding principal balance,
accrued unpaid interest , and Make-Whole Premium to the extent it exceeds such
principal and interest become due and payable by acceleration on Default,
prepayment in accordance with the Loan Agreement or otherwise.
"Maturity Date" shall have the meaning ascribed to it in Section 3(a)
hereof.
"Maximum Rate" shall mean, as of any day, with respect to the holder
hereof, the lesser of twenty-four and 95/100ths percent (24.95%) or the highest
nonusurious rate of interest, if any, permitted by applicable law on such day.
"Mortgage" shall mean that certain mortgage Security Agreement,
Assignment of Leases and Rents and Fixtures Filing, dated as of even date
herewith, from Maker to Payee, encumbering the real and personal property more
particularly described therein located in the City of Utica, Macomb County,
Michigan.
"Mortgaged Property" shall mean the property encumbered by the
Mortgage and more particularly described therein.
"Obligation" shall mean all indebtedness, liabilities and obligations,
of every kind and character, of Maker, now or hereafter existing in favor of
Payee, regardless of whether they are direct, indirect, primary, secondary,
joint, several, joint and several, liquidated, unliquidated, fixed or
contingent, and regardless of whether the same may, prior to their acquisition
by Payee, be or have been payable to some other person or entity, including,
but not limited to, all indebtedness, liabilities and obligations arising under
this Note and under the Loan Documents.
"Overdue Rate" shall mean a rate of interest equal to ten percent
(10%) per annum on overdue interest and fifteen percent (15%) on any other
overdue amounts due hereunder.
"Redemption Price" shall have the meaning ascribed to it in Section 5
hereof.
Section 2. Loan Agreement; Security.
(a) This Note is executed and delivered by the Maker pursuant to the
terms and conditions of the Loan Agreement.
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<PAGE> 3
(b) This Note and the payment and performance of the Maker's
obligations hereunder and under the other Loan Documents are secured by the
mortgage and certain of the other Loan Documents.
Section 3. Maturity.
(a) This Note shall include a Pre-Occupancy Term and an Occupancy
Term. The Pre-Occupancy Term shall commence on the date hereof and expire on
the earlier of the day before the first anniversary of this Note unless
extended pursuant to Section 3.1(b) of the Loan Agreement or the date on which
Borrower shall satisfy the preconditions set forth in Section 5.2 of the Loan
Agreement (such later date the "Conversion Date"). The Occupancy Term shall be
a period of time which commences on the Conversion Date and expires on the
earlier of June 15, 2013 (the "Maturity Date") or acceleration thereof
pursuant to Section 5(b).
(b) Upon the Maturity Date, this Note shall be due and payable in
full and at such time the Redemption Price shall be due and payable in full.
Section 4. Payment.
(a) The Principal of and interest upon this Note shall be due and
payable as follows:
(i) Interest in the amounts set forth on Exhibit A
attached hereto shall be due and payable semiannually in arrears,
commencing December 15, 1992, and thereafter, on the fifteenth (15th)
day of each succeeding June and December during the term of this Note
and on Maturity; and
(ii) The principal of this Note shall be due and payable
in the amounts set forth on Exhibit A attached hereto, commencing on
June 15, 1993, and thereafter, on the fifteenth (15th) day of June of
each succeeding year through and including June 15, 2013 in the amount
of the then unpaid principal balance.
(b) Should any amount payable under this Note become due and
payable on any day other than a Business Day, such amount shall be payable on
the immediately preceding Business Day. All payments of any amount due and
payable under this Note shall be made by Maker to Payee in immediately
available federal funds. Payments made to Payee by Maker hereunder shall be
applied first to accrued interest, then, if applicable, to any other component
of the Make-Whole Premium other than interest or principal, and then to
principal.
(c) All past due amounts payable under this Note other than interest
and, to the extent permitted by applicable law,
3
<PAGE> 4
interest upon this Note shall bear interest at the lesser of (a) the Maximum
Rate, or (b) the Overdue Rate.
(d) This Note is not subject to prepayment, purchase or redemption
at the option of Maker prior to its expressed Maturity Date except on the terms
and conditions and in the amounts, if any, set forth in Section 2 of the Loan
Agreement.
Section 5. Events of Default and Remedies.
(a) An "Event of Default" shall exist hereunder if any one or more
of the following events shall occur and be continuing:
(i) Maker shall fail to pay when due any amount payable
hereunder; or
(ii) an Event of Default occurs under the Loan Agreement;
or
(iii) Maker shall fail to observe or perform any other
obligation, covenant, undertaking, condition or provision in respect
of this Note; or;
(iv) any of the Loan Documents shall cease to be legal,
valid, binding agreements enforceable against any party executing the
same in accordance with the respective terms thereof or shall in any
way be terminated or become or be declared ineffective or inoperative
or shall in any way whatsoever cease to give or provide the respective
liens, security interests, rights, titles, interests, remedies, powers
or privileges intended to be created thereby; or
(v) (1) Maker shall commence or consent to any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction 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 as bankrupt or insolvent or
seeking reorganization, arrangement, adjustment, liquidation,
dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of
its assets (or against the Mortgaged Property) or Maker shall make a
general assignment for the benefit of creditors or admit in writing
that it is unable to pay its debts as they become due; or
(2) there shall be commenced against Maker any
such case, proceeding or other action referred to in subclause
(1) of this clause (v) that (A)
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<PAGE> 5
results in the entry of an order for relief or any such
adjudication or appointment or (B) is not dismissed,
discharged or stayed for a period of thirty (30) days from the
entry thereof; or
(3) there shall be commenced against the Maker
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 its assets (or against
the Mortgaged Property) that results in the entry of any order
for any such relief which shall not have been vacated,
discharged or stayed within thirty (30) days from the entry
thereof; or
(4) Maker shall have been dissolved or
terminated, or
(5) Maker shall take any action authorizing or in
furtherance of or indicating its consent to approval of or
acquiescence in any of the acts set forth above in this clause
(v); or
(vi) a judgment or judgments shall be rendered against Maker
for the payment of money in excess of $50,000 individually or in the
aggregate (as to such foregoing amount net of the portion thereof
covered by insurance) and such judgement or judgments shall not be
discharged or dismissed or execution thereof stayed pending appeal
within thirty (30) days after entry.
(b) Upon the occurrence of an Event of Default under each section
other than Section 5(a)(v), Holder may, by written notice to the Maker, declare
this Note to be due and payable (without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Maker) at the
Redemption Price. As used herein, the "Redemption Price" shall equal the sum
of (i) the then outstanding principal amount of this Note, (ii) accrued
interest thereon to and including the date of such payment, and (iii) the
amount by which the Make-Whole Premium payable, if any, pursuant to Section 2 of
the Loan Agreement exceeds the amount set forth in (i) and (ii). Upon the
occurrence of an Event of Default under Section 5(a)(v) above in respect of the
Maker, this Note shall immediately become due and payable at the Redemption
Price.
Section 6. Waiver.
(a) Maker and each surety, endorser, guarantor and other party
ever liable for payment of any sums of money payable upon this Note, jointly
and severally waive presentment, demand, protest, notice of protest and
nonpayment or other notice of default, notice of acceleration and intention to
accelerate or other notice of any kind, and agree that their liability under
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<PAGE> 6
this Note shall not be affected by any renewal or extension in the time of
payment hereof, or in any indulgences, or by any release or change in any
security for the payment of this Note, and hereby consent to any and all
renewals, extensions, indulgences, releases or changes, regardless of the
number of such renewals, extensions, indulgences, releases or changes.
(b) No course of dealing on the part of any Holder of this Note
nor any delay or failure on the part of any Holder of this Note to exercise any
right shall operate as a waiver of such right or otherwise prejudice such
Holder's rights, powers and remedies. No exercise or enforcement of any such
rights or remedies shall ever be held to exhaust any other right or remedy of
such Holder. The rights and remedies expressly provided for in this Note are
cumulative and not exclusive of any rights or remedies which any Holder of this
Note would otherwise have, including, without limitation, the rights and
remedies provided for in the Mortgage.
Section 7. Notice. Whenever this Note requires or permits any
notice, approval, request or demand from one party to another, the notice,
approval, request or demand shall be given in accordance with the provisions of
the Loan Agreement.
Section 8. Collection Expense. Maker shall pay Holder all costs
and expenses incurred by it in the collection of this Note upon any default
hereunder or under any of the other Loan Documents, including the fees,
disbursements and other charges of Holder's attorneys for all services rendered
in connection therewith.
Section 9. Registered Note. This Note is registered on the
books of Maker and is transferrable only by surrender thereof at the offices of
Maker, duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered Holder or its attorney, duly authorized in writing.
Payment of or on account of any amount due and payable on this Note shall be
made only to or upon the order in writing of the registered Holder.
Section 10. Limited Recourse. Recourse under this Note is
governed by the provisions of Section 10 of the Loan Agreement.
Section 11. Applicable law. This Note is being executed and
delivered, and is intended to be performed, in the State of New York. Except
to the extent that the laws of the United States may apply to the terms hereof,
the substantive laws of the State of New York shall govern the validity,
construction, enforcement and interpretation of this Note.
6
<PAGE> 7
Dated as of the date first above-written.
XXXXXXXXXX,
a Michigan limited partnership
By: XXXXXXXXXX a
Michigan corporation, its
sole General Partner
By /s/
--------------------------
Its President
7
<PAGE> 8
ALLONGE ENDORSEMENT
XXXXXXXXXX, as Payee in the foregoing Collateralized Promissory Note
("Note") dated July 1, 1992 in the original principal amount of $30,555,000.00
made by XXXXXXXXXX, hereby endorses said Note as follows:
"Pay to the order of XXXXXXXXXX, a national banking association, as
trustee, for the benefit of the owners from time to time of Mortgage
Pass-Through Certificates (Kmart Corporation Power Center - Utica,
Michigan Project) Series 1992 under the Trust Agreement dated as of
July 1, 1992, by and among XXXXXXXXXX, as Seller and XXXXXXXXXX, and
XXXXXXXXXX as Trustees without recourse, representation or warranty."
XXXXXXXXXX, a Nevada corporation
By XXXXXXXXXX
--------------------------------
Its Vice President
1
<PAGE> 1
EXHIBIT 99.28
NOTE PUT AGREEMENT
This Agreement ("Agreement") is made as of the 1st day of July, 1992,
by and between Kmart Corporation ("Kmart"), a Michigan corporation, and
XXXXXXXXXX ("Lender"), a Nevada corporation, each of which confirms and
agrees as follows:
SECTION 1. RECITALS.
1.1 Loan. Pursuant to the Loan Agreement ("Loan Agreement")
dated as of July 1, 1992 between Lender, and XXXXXXXXXX ("Borrower"), as
Borrower, Lender has agreed to make Borrower, a Michigan limited partnership,
a Loan to acquire certain Property and to pay certain of the costs of
construction thereon of the Improvements to be incorporated in a Kmart
Corporation Power Center to be located in Utica, Macomb County, Michigan to be
occupied by Kmart and certain Kmart-related entities pursuant to the Leases.
As a material inducement to the making of the Loan, Kmart has agreed to enter
into this Agreement with Lender.
1.2 Terms; Governing Document. All capitalized terms used
herein, unless otherwise expressly provided, shall have the meaning set forth
in the Loan Agreement. In the event of any conflict between the terms and
provisions of this Agreement and the Loan Agreement, the terms and conditions
of this Agreement shall govern and prevail.
SECTION 2. PURCHASE OF NOTE.
2.1 Certain Definitions. For purposes of this Section 2, the
following terms shall have the following meanings:
"Business Day" means any day other than (i) Saturday or Sunday,
or (ii) a day on which banks in New York are required by law to be closed or
are customarily closed.
"Called Principal" means the principal of the Note that is to
be paid or prepaid or accelerated in any way pursuant to Section 2.4 of the
Loan Agreement or the unpaid principal balance of the Note, if the exercise of
the Put arises out of expiration of the Pre-Occupancy Term of the Loan prior to
Project Completion.
"Discounted Prepayment Value" means, with respect to any amount
of Called Principal, the amount obtained by discounting all Remaining Scheduled
Payments with respect to Called Principal from their respective scheduled due
dates to the Purchase Date with respect to such Called Principal, in
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<PAGE> 2
accordance with accepted financial practice and at a discount factor (applied
on a semiannual basis) equal to the Reinvestment Yield.
"Lease Guaranty Default" means, with respect to any one or
more of the Leases and Lease Guaranties described on Exhibit A attached hereto
the failure of (i) the Tenant under any such Lease to pay any rental due under
such Lease and (ii) Kmart to pay any such rental under the related Lease
Guaranty within thirty (30) days after notice to Kmart by Lender of the
Tenant's failure to do so.
"Make-Whole Premium" means, with respect to any amount of
Called Principal, a premium equal to the sum of (x) the excess (which shall in
no event be less than zero), if any, of the Discounted Prepayment Value of the
Called Principal of Note over the sigma of (i) such Called Principal plus (ii)
interest accrued thereon as of the Purchase Date with respect to such Called
Principal and (y) an amount equal to the product of the Called Principal and
104.402%.
"Minimum Investment Grade" means a rating of at least Baa3,
in the case of a rating by Moody's, and a rating of at lease BBB-, in the case
of a rating by S&P, or the then equivalent of such rating by Moody's or S&P or,
to the extent applicable, by another Rating Agency.
"Moody's" means Moody's Investors Service, Inc. or any
successor thereto.
"Project Completion" means the "date of occupancy by Tenant"
as defined in Article 10(a) and (b) under each Lease.
"Purchase Date" means the Business Day first occurring thirty
(30) days after Lender gives notice to Kmart of Lender's election to exercise
the Put.
"Purchase Price" means the Make-Whole Premium.
"Put" means exercise of the right to require Kmart to purchase
the Note in accordance with Section 2.3 of this Agreement.
"Rating Agency" and "Rating Agencies" mean Moody's and S&P
and, if either Moody's or S&P (but not both) ceases to rate the indebtedness of
corporations generally, or unsubordinated, senior, unsecured indebtedness of
Kmart in particular, then another comparable rating agency of recognized
national standing in the United States.
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<PAGE> 3
"Rating Decline" means that:
(i) the ratings assigned to unsubordinated, senior,
unsecured indebtedness of Kmart on such date by either Moody's or S&P:
(1) declines to a rating below the Minimum Investment Grade, or (2) further
declines, in the event then rated below the Minimum Investment Grade; or
(ii) (1) unsubordinated, senior, unsecured
indebtedness of Kmart ceases to be rated by either Moody's or S&P (other than
by reason of such Rating Agency ceasing to rate the indebtedness of
corporations generally) at such time as the rating then assigned by the
remaining such Rating Agency shall be below Minimum Investment Grade or (2)
unsubordinated, senior, unsecured indebtedness of Kmart ceases to be rated by
either Moody's or S&P at such time as the rating then assigned by the remaining
such Rating Agency shall be at least the Minimum Investment Grade and the
Kmart is unable to have such debt rated by another Rating Agency within
ninety (90) days thereafter; or
(iii) unsubordinated, senior, unsecured indebtedness
of Kmart ceases to be rated by both Moody's and S&P for any reason (except if,
through no fault of Kmart, both Moody's and S&P are unable to provide a rating
due to a business failure or interruption affecting both Moody's and S&P).
For purposes of determining whether a Rating Decline shall have occurred
pursuant to clause (i), the rating initially assigned by any Rating Agency
engaged by Kmart pursuant to clause (ii) to replace any rating withdrawn or
otherwise terminated by Moody's or S&P shall be compared to the last rating
assigned by Moody's or S&P, as the case may be to determine if the
circumstances described in (i) (1) or (2) exist.
"Reinvestment Yield" means with respect to the Called
Principal, the sum of (x), the yield to maturity implied by the following (i)
the yields reported, as of 10:00 a.m. (New York City time) on the third
Business Day preceding the Purchase Date with respect to such Called Principal,
on the display designated as "Page 678, on the Telerate Service (or such other
display as may replace Page 678 on the Telerate Service) for actively traded
U.S. Treasury securities having a maturity equal (as near as practicable) to
the Remaining Average Life of the Called Principal being paid or prepaid as of
such Purchase Date, or (ii) if such yields shall not be reported as of such time
or the yields reported as of such time shall not be ascertainable, the Treasury
Constant Maturity Series yields reported, for the latest day for which such
yields shall have been so reported as of the third Business Day preceding the
Purchase Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
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<PAGE> 4
actively traded U.S. Treasury securities having a constant maturity equal (as
near as practicable) to the Remaining Average Life of the Called Principal
being paid or prepaid as of such Purchase Date. Such implied yield shall be
determined, if necessary, by (a) converting U.S. Treasury bill quotations to
bond-equivalent yields in accordance with accepted financial practice and (b)
interpolating linearly between reported yields, and (y) fifty (50) basis
points.
"Remaining Average Life" means, with respect to any amount of
Called Principal of the Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled
Payment of such Called Principal (but not of interest thereon) by (b) the
number of years (calculated to the nearest one-twelfth year) which will elapse
between the Purchase Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to any
amount of the Called Principal, all payments of such Called Principal and
interest thereon that would be due on or after the Purchase Date with respect
to such Called Principal if no payment of such Called Principal were made prior
to its expressed maturity date.
"S&P" means Standard & Poor's Corporation or any successor
thereto.
"Triggering Event" means (i) Lender has exercised the Special
Put Option following a Rating Decline provided in Section 2.4 of the Loan
Agreement and Borrower fails to redeem the Note in strict accordance with the
terms of Section 2.4 of the Loan Agreement, (ii) Project Completion does not
occur prior to the expiration of the Pre-Occupancy Term of the Loan, or (iii) a
Lease Guaranty Default occurs.
2.2 Purchase of Note Following Exercise of Put.
(a) If a Triggering Event occurs, Lender will have the right
to require Kmart to purchase the Note in whole (but not in part) on the
Purchase Date at the Purchase Price.
(b) If a Rating Decline occurs and subsequent to such Rating
Decline another Rating Decline occurs, then Lender will again have the rights,
and Kmart again will have the obligations, as set forth in this Section 2.3.
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<PAGE> 5
(c) Within seven days after the first date on which a Rating
Decline has occurred, the Borrower pursuant to the Loan Agreement, shall cause
a notice to be mailed to Lender. Such notice shall (1) state that a Rating
Decline has occurred and (2) describe any action that caused such Rating
Decline and the date of the occurrence thereof.
(d) In the event Lender elects to exercise its Put, Lender
shall cause a notice to be mailed to Kmart, which notice shall state (i) the
occurrence of a Triggering Event, (ii) the Purchase Date, (iii) the estimated
Purchase Price, (iv) the manner in which the Purchase Price has been
determined, and (v) that Lender elects to have Kmart purchase the Note on the
Purchase Date. Kmart shall not be excused from any obligation it may have
under this Agreement by reason of any notice required hereunder not being
timely given or being defective, provided, however, Kmart's time for
performance shall be extended by a period equal to any period of delay in
receiving such notice or caused by the correction of such notice, if defective.
(e) In connection with the purchase of the Note pursuant to
this Section 2.3, Lender will be required to surrender, on or before the
Purchase Date, at the principal office of the Trustee, the Note duly endorsed
without recourse or assigned to Kmart or in blank without recourse and to
assign without recourse all right, title and interest of Lender under the Loan
Documents. The Trustee shall hold the Note in trust for the benefit of Lender
until payment in full of the Purchase Price to Lender on the Purchase Date and
shall then and thereupon surrender the Note to Kmart.
SECTION 3. SUCCESSORS AND ASSIGNS.
3.1 General. This Agreement shall be binding upon Kmart and
its respective successors and assigns and shall be binding upon and inure to
Lender's benefit and to the benefit of Lender's successors and assigns,
including each successive holder or holders of the Note. Each successive
holder or holders of the Note, including the Trustee (as defined in Section
3.2), shall have all rights and privileges of Lender hereunder.
3.2 Consent to Assignment. Kmart hereby acknowledges and
consents to the assignment by Lender of all of its right, title and interest
herein and in the Note and any other Loan Documents to XXXXXXXXXX ("Trustee")
as Trustee, pursuant to the Trust Agreement as security for the payment of
Mortgage Pass-Through Certificates (Kmart Corporation Power Center - Utica,
Michigan), Series 1992 (the "Certificates") and payment and performance of all
obligations arising under the Trust Agreement. Kmart further acknowledges and
agrees that such successive holder or holders of
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<PAGE> 6
the Note, including but not limited to the Trustee, accepts transfer of the
Note in reliance upon Kmart's representations, warranties, covenants,
agreements and other obligations hereunder. In order to further induce any
such successive holder or holders of the Note, including but not limited to the
Trustee, to accept such assignment Kmart hereby makes the following
representations, warranties, covenants and agreements:
(i) Kmart does not have any right, including any claim,
counterclaim, right of setoff or deduction or other defense of any kind to
withhold performance of its obligations hereunder ("Kmart Defenses");
(ii) in the event Kmart becomes aware of any Kmart Defenses,
Kmart hereby waives and agrees not to assert the same against the Trustee or
any other holder of the Note;
(iii) upon consummation of the assignment to the Trustee, the
Trustee will be a bona fide purchaser of the Note for value and holder in due
course and Kmart hereby waives any right to challenge Trustee's status as such;
and
(iv) the Trustee and each holder of the Note are and shall be
third party beneficiaries of this Agreement.
SECTION 4. KMART'S REPRESENTATIONS AND WARRANTIES. Kmart represents and
warrants that (i) it is a corporation duly organized, validly existing and in
good standing under the laws of the State of Michigan and is duly qualified and
in good standing as a foreign corporation authorized to do business wherever
required to do so by applicable law, (ii) it has full power, authority and
legal right to execute and deliver, and to perform and observe the provisions
of, the Lease (to which it is a party), the Lease Guaranties and this Agreement
and each of Kmart's affiliates (collectively, "Affiliates") which is a party to
one of the Leases similarly has such full power, authority and legal right to
execute and deliver and to perform and observe the provisions of the Lease to
which it is a party, (iii) there has been no material adverse change in the
business or condition, financial or otherwise, of Kmart or any of the
Affiliates since the date of Kmart's last audited financial report, (iv) there
are no actions, proceedings or investigations pending or threatened against or
affecting Kmart or any of the Affiliates (or any basis therefor actually known
to Kmart) before any court, arbitrator, administrative agency or other
governmental authority, which if adversely decided would materially and
adversely affect the financial condition or operations of Kmart or any of the
Affiliates, or its ability to carry out any of the terms, covenants and
conditions of the Lease, the Lease Guaranties and this Agreement, (v) the
execution and delivery by it of the Lease, the Lease Guaranties, this Agreement
have been duly
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<PAGE> 7
authorized by all necessary corporate action, (vi) neither the execution and
delivery of the Lease, the Lease Guaranties, this Agreement, the Consent and
Agreement or the Subordination Agreement nor compliance with the terms and
provisions thereof, conflicts or will conflict with or result in a breach of
any of the terms, conditions or provisions of the Certificate of Incorporation
or By-Laws of Kmart, or of any law, order, writ, injunction or decree of any
court or governmental authority, or of any agreement or other instrument to
which Kmart is a party or by which it is bound, or constitutes or will
constitute a default thereunder, and (vii) Kmart is not in default under any
judgment, order, decree, rule or regulation of any court, arbitrator,
administrative agency or other governmental authority to which it may be
subject.
SECTION 5. GENERAL.
5.1 Counterparts. This Agreement may be executed in counterparts
by the parties but all such counterparts together shall constitute
one and same document.
5.2 Notices. All notices, requests, demands or other communications
pursuant to this Agreement shall be in writing and shall be addressed, in the
case of Kmart to Kmart, 3100 West Big Beaver Road, Troy, Michigan 48084-3163,
Attention: Vice President, Real Estate Department; in the case of Lender, to
XXXXXXXXXX, XXXXXXXXXX, Attention: XXXXXXXXXX; and, after the assignment of
Lender's interest in the Note to the Trustee to XXXXXXXXXX, XXXXXXXXXX,
XXXXXXXXXX, XXXXXXXXXX, Attention: XXXXXXXXXX, Corporate Trust
Department; or to such other address as any party may designate in writing.
All notices hereunder shall be effective: (a) three (3) days after deposit in
the U.S. Mail, postage prepaid, registered or certified mail, return receipt
requested; (b) upon delivery, if delivered in person to the address set forth
above; or (c) upon delivery, if sent by overnight courier, such as Federal
Express or Airborne Express.
5.3 Section Headings. Section headings are not to be considered
a part of this Agreement and are included solely for convenience of
reference and are not intended to be full or accurate descriptions of the
contents hereof.
5.4 Applicable Law. This Agreement shall be construed and
enforced under the laws of the State of Michigan.
5.5 Severability. Should any provision of this Agreement for any
reason be declared unenforceable by a court of competent jurisdiction
(sustained on appeal, if any), such
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<PAGE> 8
unenforceability shall not affect the enforceability of any other provision
hereof or thereof, all of which shall remain in force and effect as if this
Agreement had been executed with the unenforceable provisions thereof
eliminated and it is hereby declared the intention of the parties hereto that
they would have executed the remaining provision of this Agreement without
including therein any such part, parts or portion which may for any reason be
hereafter declared unenforceable, provided that, if any provision of this
Agreement shall be unenforceable by reason of a final judgment of a court of
competent jurisdiction based upon a court's ruling (sustained on appeal, if
any) that such provision is unenforceable because of the excessive degree or
magnitude of the obligation imposed thereby on any party, that unenforceable
obligation shall be reduced in magnitude or degree by the minimum degree or
magnitude necessary in order to permit the provision to be enforceable by
Lender. In the event the provisions of the immediately preceding sentence
apply, the parties shall make appropriate adjustment to the provisions of this
Agreement to give effect to the benefits intended to be conferred upon the
parties hereby.
5.6 Waiver. Lender may waive any requirement herein. No delay or
omission by Lender in exercising any right hereunder shall impair any right of
Lender under this Agreement or be construed as Lender's waiver of or
acquiescence in any breach. No such delay or omission by Lender shall be
construed as a variation or waiver of any of the terms, conditions or
provisions of this Agreement. No purported waiver of any right hereunder shall
be effective unless it is written and signed by an authorized representative of
Lender. No waiver by Lender of any breach shall constitute a waiver of any
other prior or subsequent breach or of the same breach after notice to Kmart
demanding strict performance. Lender shall not be estopped to take or from
taking any action with respect to any breach because of any delay by Lender in
giving notice of such breach or exercising any remedy based thereon.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above set forth.
KMART CORPORATION, a Michigan
corporation
By /s/
---------------------------
Its Senior Vice President
(KMART)
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XXXXXXXXXX,
a Nevada corporation
By /s/
------------------------------
Its Vice President
( XXXXXXXXXX)
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<PAGE> 1
EXHIBIT 99.29
TRUST AGREEMENT
between
XXXXXXXXXX,
as Seller
and
XXXXXXXXXX
as Trustee
and
XXXXXXXXXX
as Individual Trustee
Dated as of June 11, 1993
$5,415,300
Mortgage Pass-Through Certificates
(BORDERS BOOKS, UTICA, MICHIGAN)
Series 1993
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PREFACE..................................................................... 1
ARTICLE I
DEFINITIONS................................................................. 1
ARTICLE II
CONVEYANCE OF MORTGAGE LOAN; TRUST FUND
Section 2.01 Conveyance of Mortgage Loan...................... 10
Section 2.02 Acceptance by Trustee............................ 11
Section 2.03 Trust Fund....................................... 12
Section 2.04 Execution and Authentication of
Certificates..................................... 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.01 Representations and Warranties of Seller.................... 12
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates................................. 16
Section 4.02 Registration of Transfer and Exchange of
Certificates..................................... 17
Section 4.03 Mutilated, Destroyed, Lost or Stolen
Certificates..................................... 19
Section 4.04 Persons Deemed Owners............................ 19
Section 4.05 Appointment of Paying Agent...................... 19
ARTICLE V
TRUSTEE'S DUTIES WITH RESPECT TO MORTGAGE LOAN;
ESTABLISHMENT OF ACCOUNTS
Section 5.01 Calculation of Distributions .................... 20
Section 5.02 Receipt of Lease Payments; Collection of
Lease and Lease Guaranty Payments;
Collection of Mortgage Loan Payments;
Investment Direction............................. 20
Section 5.03 Establishment of Certificate Account;
Deposits in Certificate Account ................. 21
Section 5.04 Permitted withdrawals From the Certificate
Account.......................................... 22
Section 5.05 Excess Revenue Account........................... 23
Section 5.06 Permitted withdrawals from the Excess
Revenue Account.................................. 23
Section 5.07 Extraordinary Expense Reserve Account............ 24
Section 5.08 Permitted Withdrawals from the
Extraordinary Expense Reserve Account............ 24
</TABLE>
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<TABLE>
<S> <C>
Section 5.09 Capitalized Debt Service Account................. 26
Section 5.10 Realization Upon Defaulted Mortgage Loan......... 26
Section 5.11 Trustee Compensation............................. 27
Section 5.12 Rights of the Certificateholders................. 28
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01 Distributions.................................... 28
Section 6.02 Statements to Certificateholders................. 29
Section 6.03 Advances by Trustee.............................. 30
ARTICLE VII
THE SELLER
Section 7.01 Indemnification; Third Party Claims.............. 30
Section 7.02 Maintaining Corporate Existence of the
Seller........................................... 30
Section 7.03 Limitation on Liability of the Seller............ 31
Section 7.04 Seller May Resign................................ 31
ARTICLE VIII
DEFAULT
Section 8.01 Events of Default................................ 32
Section 8.02 Waiver of Defaults............................... 32
Section 8.03 Notification to Certificateholders............... 33
Section 8.04 Rights of Certificateholders to Direct
Proceedings...................................... 33
ARTICLE IX
CONCERNING THE TRUSTEES
Section 9.01 Duties of Trustees............................... 33
Section 9.02 Certain Matters Affecting Trustees............... 35
Section 9.03 Trustee Not Liable for Certificates or
Mortgage Loan.................................... 46
Section 9.04 Trustee May Own Certificates..................... 36
Section 9.05 Trustee's Fee and Expenses....................... 36
Section 9.06 Action by Individual Trustee..................... 37
Section 9.07 Eligibility Requirements for Trustee............. 37
Section 9.08 Resignation and Removal of Trustee............... 38
Section 9.09 Successor Trustee................................ 38
Section 9.10 Merger or Consolidation of Trustee............... 38
Section 9.11 Resignation of Individual Trustee................ 39
Section 9.12 Removal of Individual Trustee.................... 39
Section 9.13 Appointment of Successor to
Individual Trustee............................... 40
Section 9.14 Succession of Successor to Individual
Trustee.......................................... 40
</TABLE>
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ARTICLE X
TERMINATION
<TABLE>
<S> <C> <C>
Section 10.01 Termination....................................... 40
Section 10.02 Notice; Final Distribution........................ 41
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Severability of Provisions........................ 41
Section 11.02 Limitation on Rights of Certificateholders........ 42
Section 11.03 Amendment......................................... 43
Section 11.04 Solicitation of Certificateholders................ 43
Section 11.05 Recordation of Agreement.......................... 44
Section 11.06 Duration of Agreement............................. 44
Section 11.07 Governing Law..................................... 44
Section 11.08 Notices........................................... 44
Section 11.09 Counterparts...................................... 45
Section 11.10 Jurisdiction...................................... 45
Section 11.11 Gender; Number.................................... 45
TESTIMONIUM ............................................................... 45
EXHIBIT A-1--Mortgage Loan Schedule........................................ A-1-1
EXHIBIT A-2--Mortgage Certificate Schedule................................. A-2-1
EXHIBIT A-3--Contents of Mortgage File..................................... A-3-1
EXHIBIT B--Form of Certificate............................................. B-1
EXHIBIT C--Form of Trustee Certification................................... C-1
</TABLE>
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TRUST AGREEMENT
THIS TRUST AGREEMENT, dated as of June 11, 1993, is executed by and
among XXXXXXXXXX, as seller (together with its permitted successors, in such
capacity, "Seller"), and XXXXXXXXXX, a New York banking corporation, as
trustee (together with its permitted successors and assigns, "Trustee") and
XXXXXXXXXX, as Individual Trustee (together with permitted successors and
assigns in such capacity "Individual Trustee" and collectively with Trustee,
"Trustees").
In consideration of the premises and the mutual agreements hereinafter
set forth, the Seller and the Trustees agree as follows:
PREFACE
Each Certificate evidences a beneficial ownership interest in the Trust
Fund, the assets of which include, among other things, a Mortgage Loan. The
Certificates are equally and ratably secured by and payable from the proceeds of
the Mortgage and Mortgage Note, respectively (as each such term is defined
herein).
Each Certificate is paid principal and/or interest, as set forth on the
Debt Service schedule on such Certificate, on a semiannual basis referred to
herein as the Remittance Dates, (the fifteenth day of the month of each Due
Date). Payments under the Mortgage Note are payable semiannually on the Due
Dates, (the fifteenth day of each month in which payment on the Mortgage Note is
due). The Available Distribution Amount is calculated on the Determination
Date.
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
"Administrative Expenses": The ordinary and necessary expenses incurred
in the course of administrating the affairs of the Trust, excluding any
Liquidation Expenses.
"Agreement": This Trust Agreement and all amendments hereof and
supplements hereto.
"Annual Rental": Has the meaning assigned in Article 4 of the Lease.
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"Appraisal": An appraisal or certification as to value made or caused
to be made by the Seller. Such appraisal shall be signed prior to the funding
of the Mortgage Loan by a qualified appraiser, duly appointed or approved by the
Seller, who at the time of such appraisal had no interest, direct or indirect,
in the Mortgaged Estate or in any loan made on the security thereof, and whose
compensation was not affected by the approval or disapproval of the Mortgage
Loan.
"Assignment of Mortgage": The Assignment of the Mortgage dated as of
June 11, 1993 between Seller and Trustee, the Assignment of Lease Assignment
dated as of June 11, 1993, between Seller and Trustee, and any other notice of
transfer or equivalent instrument, in recordable form, sufficient under the laws
of the jurisdiction where the Mortgaged Estate is located to reflect of record
the sale, conveyance, transfer and absolute assignment of the Mortgage to the
Trustee.
"Available Distribution Amount": As to any Remittance Date, an amount
equal to the amount on deposit in the Certificate Account as of the close of
business on the related Determination Date.
"Borrower": XXXXXXXXXX, formed under the laws of the State of
Michigan, and its successors and assigns, having its principal office at
XXXXXXXXXX.
"Business Day": Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking or savings and loan institutions in the city in which the
principal corporate trust offices of the Trustee are located are authorized or
obligated by law or executive order to be closed.
"Capitalized Debt Service Account": The trust account described in
Section 5.09.
"Capitalized Debt Service Reserve": Has the meaning assigned thereto in
Section 2 of the Loan Agreement.
"Cash Liquidation": Recovery of all cash proceeds by the Trustee with
respect to the termination of the defaulted Mortgage Loan following an Event of
Default, including Insurance Proceeds, condemnation awards and other payments or
recoveries (whether made at one time or over a period of time) which the
Trustees deem to be finally recoverable, in connection with the sale or
assignment of the Mortgage Loan, or a trustee's sale, foreclosure sale or other
disposition of the Mortgaged Estate, but only if title to the related Mortgaged
Estate was not acquired by foreclosure or deed in lieu of foreclosure by the
Trustees pursuant to Section 5.10 of this Agreement.
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"Certificate" or "Certificates": The Certificate or Certificates
evidencing a beneficial ownership interest in the Mortgage Loan executed by the
Trustee substantially in the form set forth in Exhibit B hereto.
"Certificate Account": The trust account described in Section 5.03.
"Certificate Balance": With respect to all the Certificates, the
original principal amount of the Certificates less all payments, prepayments
and redemptions of principal thereof, including without limitation any payments
of principal comprising Debt Service; and with respect to any Certificate, the
original principal amount of such Certificate less all payments, prepayments
and redemptions of principal thereof, including without limitation any payments
of principal comprising Debt Service on such Certificate.
"Certificate Differential": Has the meaning assigned to it in Section 2
of the Loan Agreement and Section 2.1 of the Note Put Agreement.
"Certificateholder", "Certificateholders", "Holder" or "Holders": The
person or persons in whose name a Certificate is registered in the Certificate
Register, except that, solely for the purposes of giving any consent, waiver,
request or demand pursuant to this Agreement, any Certificate registered in the
name of the Seller or any affiliate thereof shall be deemed not to be
outstanding and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
necessary to effect any such consent, waiver, request or demand has been
obtained. The Trustees shall be able to conclusively rely on a certificate of
the Seller in determining which Certificates are registered to an affiliate.
"Certificate Register": The register maintained pursuant to Section
4.02.
"Certificate Schedule": The Certificate Schedule attached hereto as
Exhibit A-2 setting forth the following information for each Certificate issued
as of the Closing Date: (i) Certificate Number; (ii) the Certificate Balance as
of the Closing Date; and (iii) the Debt Service on such Certificate.
"Closing Costs": An amount equal to $231,760.00 which shall be
disbursed to Placement Agent on the Closing Date.
"Closing Date": July 1, 1993 .
"Code": The Internal Revenue Code of 1986, as amended.
"Consent and Agreement": The Consent and Agreement dated as of June
11, 1993 among Kmart, Seller, Borrower, Tenant
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and Trustee relating to the Lease, the Lease Guaranty, the Note Put
Agreement and certain other related matters.
"Corporate Trust Office": The office of the Trustee in the State of
California at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this instrument is
located at XXXXXXXXXX.
"Debt Service": The interest and/or principal payable semiannually on
the Remittance Date as stated on a specific Certificate.
"Determination Date": The 5th day (or if such 5th day is not a Business
Day, the Business Day immediately following such 5th day) of the month of the
related Remittance Date.
"Due Date": With respect to the Mortgage Loan, the fifteenth day of the
month on which each Mortgage Payment is due on the Mortgage Loan, exclusive of
any days of grace.
"Due Period": With respect to any Remittance Date, the period ending on
the Due Date for the month of such Remittance Date and commencing on the Due
Date preceding such Remittance Date.
"Eligible Investments": One or more of the following:
(i) direct obligations of the United States of America,
(ii) obligations fully guaranteed, both as to principal and
interest, by the United States of America;
(iii) certificates of deposit issued by, or bankers' acceptances
of, or time deposits with, a bank or trust company organized under the laws of
the United States or any state thereof, having capital, surplus and undivided
profits aggregating at least $100,000,000 and whose long-term certificates of
deposit are, at the time of acquisition thereof, rated in the highest rating
category for such securities by S&P and Moodys'; and
(iv) taxable government money market portfolios restricted to
obligations with maturities of one year or less, issued or guaranteed by the
full faith and credit of the United States which, at the time of such
investment, are then rated in the highest rating category of S&P and Moody's
(the "highest rating category" as used in this definition shall mean (A) a
rating which would be assigned by S&P, as of the date first above written,
equivalent to or higher than "AAAm" or "AAAmG" with respect to money-market
securities; and (B) a rating which would
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<PAGE> 9
be assigned by Moody's as of the date first above written, equivalent to or
higher than "Am" with respect to money-market securities).
provided that any such obligations of the types described in clauses (i)
through (iv) above shall not have a maturity later than the earlier of 90 days
and the Due Date immediately following the acquisition thereof; provided
further, that any such obligations of the types described in clauses (i) and
(ii) above may be made through a repurchase agreement in commercially
reasonable form with a bank or other financial institution (which may be the
Trustee) the senior unsecured debt of which is then assigned an A rating or
better by S&P or Moody's, so long as title to the underlying obligations shall
pass to the Trustee and that such underlying obligations shall be segregated in
a custodial or trust account of or for the benefit of the Trustee.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default": Any event of default described in Section 8.01.
"Excess Revenue Account": The trust account described in Section
5.05.
"Extraordinary Expense Advances": All reasonable and necessary
"out-of-pocket" costs and expenses of the Trustee in enforcing the Note
Documents or otherwise reimbursable pursuant to the provisions thereof, and in
compliance with the obligations under Section 5.10.
"Extraordinary Expense Reserve Account": The account or accounts
described in Section 5.07.
"FDIC": Federal Deposit Insurance Corporation or any successor
organization.
"Individual Trustee": Means XXXXXXXXXX and permitted successors or
assigns.
"Insurance Proceeds": Proceeds paid by any insurer pursuant to any
insurance policy including self-insurance proceeds paid by Kmart or any of its
subsidiaries, covering the Mortgaged Estate.
"Kmart": Means Kmart Corporation, a Michigan corporation, and its
successors and assigns.
"Lease": Has the meaning assigned thereto in Section 1.1 of the Loan
Agreement.
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<PAGE> 10
"Lease Guaranty": Has the meaning assigned thereto in Section 1.1 of the
Loan Agreement.
"Liquidated Mortgage Loan": The Mortgage Loan after an Event of Default
when the Trustee has reasonably determined that all amounts which they expect to
recover from or on account of the Mortgage Loan have been recovered.
"Liquidation Expenses": Expenses which are incurred by the Trustee in
connection with the liquidation of the defaulted Mortgage Loan, such expenses
including, without limitation, legal fees and expenses, any unreimbursed amount
expended by the Trustee pursuant to Section 5.10 (to the extent such amount is
reimbursable under the terms of Section 5.10) respecting the Mortgage Loan and
any related and unreimbursed expenditures for real estate property taxes or for
property restoration or preservation.
"Liquidation Proceeds": Cash (including Insurance Proceeds) received by
the Trustees in connection with the liquidation of the Mortgage Loan, if
defaulted, whether through the sale of the Mortgage Loan, the sale of the
Mortgaged Estate pursuant to foreclosure sale or otherwise, or the sale of the
Mortgaged Estate if the Mortgaged Estate is acquired in satisfaction of the
Mortgage Loan other than amounts required to be paid to the Mortgagor pursuant
to law or the terms of the Mortgage Note.
"Loan Agreement": The Loan Agreement dated as of June 11, 1993, between
Seller and Borrower, pursuant to the terms and conditions of which the
Mortgage Loan was made.
"Make-Whole Premium": Has the meaning assigned to it in Section 2 of
the Loan Agreement and Section 2.1 of the Note Put Agreement. The Trustee shall
be provided with a certificate evidencing the calculation of such amount by
the Holders of Certificates evidencing Percentage Interests in the aggregate
not less than 66-2/3% at any time requested by the Trustee, or in the event of
their failure to provide such certificate, it shall be provided by Seller.
"Moody's": Moody's Investors Service, Inc., a corporation
organized and existing under the laws of the State of Delaware, its successors
and assigns.
"Mortgage": Has the meaning assigned thereto in Section 1.2 of the Loan
Agreement.
"Mortgage File": The items referred to in Exhibit A-3 annexed hereto
pertaining to the Mortgage Loan.
"Mortgage Loan": The loan pursuant to the Loan Agreement together with
all right, title and interest of Seller relating thereto, evidenced by the
Mortgage Note and secured by
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<PAGE> 11
the Mortgage, sold, conveyed, transferred and absolutely assigned by the Seller
to the Trustee and which is the subject of this Agreement and included in the
Trust Fund. The Mortgage Loan is identified on the Mortgage Loan Schedule
annexed hereto as Exhibit A-1.
"Mortgage Loan Schedule": The schedule attached hereto as Exhibit A-1
setting forth the following information for the Mortgage Loan: (i) the
Mortgagor's name; (ii) the Mortgaged Estate; (iii) the maturity date; (iv) the
Mortgage Note rate; (v) the First Due Date; (vi) a schedule setting forth the
Mortgage Payments; and (vii) the original Principal Balance of the Mortgage
Loan.
"Mortgage Note": The 8.45% Collateralized Promissory Note executed by
the Mortgagor or other evidence of the indebtedness of the Mortgagor secured by
the Mortgage.
"Mortgage Payment": The scheduled payment set forth in Exhibit A-1 of
principal and interest on the Mortgage Loan. Specifically, with respect to
interest, each June 15 and December 15, commencing December 15, 1993 and
to and including June 15, 2014, and with respect to principal, each June 15,
commencing June 15, 1994 and to and including June 15, 2014 (before any
adjustment to such payments by reason of any bankruptcy or similar proceeding
or any moratorium or similar waiver or grace period).
"Mortgaged Estate": The real and personal property securing the
Mortgage Note and the improvements constructed with the proceeds of the Mortgage
Loan, if any.
"Mortgagor": The Borrower, as obligor on the Mortgage Note.
"NAIC": The National Association of Insurance Commissioners, its
successors and assigns or the Securities Valuation Office (SVO) thereof which
provides insurance companies with uniform prices and quality ratings.
"Net Liquidation Proceeds": Liquidation Proceeds net of Liquidation
Expenses.
"Note Documents": The Loan Agreement, the Mortgage Note, the Mortgage
and each other document which constitutes a Loan Document pursuant to the terms
and provisions of the Loan Agreement.
"Note Put Agreement": The Note Put Agreement, dated as of June 11,
1993, by and between Seller and Kmart pursuant to the terms and
conditions of which a put of the Mortgage Loan may be made on the occurrence of
certain events specified therein.
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<PAGE> 12
"Officer's Certificate": A certificate signed by the Chairman of the
Board, the Chief Executive Officer, the President or a Vice President, the
Treasurer or the Secretary or one of the Assistant Treasurers or Assistant
Secretaries or any other duly authorized officer of the Seller and delivered
to the Trustee as required by this Agreement.
"Opinion of Counsel": A written opinion of an attorney at law admitted
to practice in any state of the United States or the District of Columbia, or a
written opinion of a law firm (such attorney or law firm herein referred to as
"Counsel"), who may, in the case of an attorney, except as otherwise expressly
provided in this Agreement, be in-house counsel for the Seller and reasonably
acceptable to the Trustee.
"Paying Agent": The Person designated as the Paying Agent pursuant to
Section 4.05.
"Percentage Interest": The percentage of the whole undivided
beneficial interest in the Trust Fund held by a Holder, to be evidenced by a
Certificate which shall state the percentage interest therein.
"Permitted Encumbrances": The Permitted Encumbrances as defined in the
Mortgage.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Placement Agent": XXXXXXXXXX and its successors and assigns.
"Pledge Agreement": Has the meaning assigned thereto in Section 1.2 of
the Loan Agreement.
"Principal Balance": The principal balance of the Mortgage Loan as of
any Due Date (before any adjustment to such amortization schedule by reason of
any delay caused by any bankruptcy or similar proceeding or any moratorium or
similar waiver or grace period) which for purposes hereof is initially
$5,187,000.
"Principal Prepayment": Any payment or other recovery of principal on
the Mortgage Loan, including any prepayment of principal pursuant to Section 3
of the Loan Agreement, Insurance Proceeds and condemnation awards to the extent
required to be deposited in the Certificate Account (other than Liquidation
Proceeds and monthly receipts of amounts referred to in Section 5.02(a)), which
is received in advance of its scheduled Due Date, and excluding any amount of
interest representing scheduled interest due.
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<PAGE> 13
"Project": The facility comprised of a retail store constructed by
Borrower and Tenant for lease by the Tenant on real property which will be
acquired by Borrower and which such facility will be constructed on behalf of
Borrower using the proceeds of the Mortgage Loan.
"Purchase Agreement": The agreement between the Seller and XXXXXXXXXX,
as purchaser, to sell and purchase Certificates.
"Purchase Price": Has the meaning assigned thereto in Section 2.1 of the
Note Put Agreement.
"Put": The right to require purchase of the Mortgage Note by Kmart
pursuant to the Note Put Agreement.
"Rating Agency": With respect to the Certificates shall mean NAIC; if
NAIC or a successor is no longer in existence, "Rating Agency" shall be such
nationally recognized statistical credit rating agency, or other comparable
Person, designated by Holders of Certificates evidencing Percentage Interests
in the aggregate of not less than 66-2/3% at any time requested by Trustee,
notice of which designation shall be given to the Trustee; references herein to
the two highest rating categories of a Rating Agency shall mean AA or better,
in the case of S&P and in the case of any other Rating Agency shall mean such
ratings without any plus or minus.
"Record Date": The close of business on the first Business Day of the
month of the related Remittance Date.
"Redemption": The redemption (or prepayment) of the Certificates, in
whole or in part, as provided in this Agreement.
"Redemption Date": The date determined in accordance with the
provisions of this Agreement for Redemption of the Certificates.
"Regulations": The Treasury Regulations, including proposed, temporary
and final regulations promulgated under the provisions of the Code.
"Remittance Date": With respect to the Certificates, an interest payment
date of December 15, 1993, and each December 15, and June 15, thereafter until
June 15, 2014, or the payment of the unpaid principal balance in full.
"Responsible Officer": When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors of Trustee, the Chairman or
Vice Chairman of the Executive or Standing Committee of the Board of Directors
of Trustee, the President, the Chairman of the Committee on Trust Matters, any
Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, the Treasurer, any Assistant Treasurer, the
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Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer,
the Controller and any Assistant Controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
"Seller": XXXXXXXXXX and its successors in interest.
"S & P": Standard & Poor's Corporation and its successor in interest.
"Tenant": Borders, Inc., which is a subsidiary of Kmart and has entered
into the Lease with Borrower to occupy a facility comprised of a retail store in
the Project.
"Transfer Assurance": A Transfer Assurance required pursuant to
Section 4.02(d).
"Trust": The grantor trust created pursuant to this Agreement.
"Trustee": XXXXXXXXXX, and its permitted
successors hereunder.
"Trustee's Fee": The amount of the annual fee paid to the Trustee for
its ordinary fees and expenses arising under this Agreement, equal to $3,000,
payable by Borrower pursuant to Section 9.13 of the Loan Agreement. Such fee
shall constitute all compensation payable under this Agreement, except for the
payment of certain additional amounts (which shall not be payable by Borrower)
for such extraordinary services and as otherwise provided in this Agreement.
"Trust Fund": The corpus of the Trust, to the extent described herein,
consisting of the Mortgage Loan, including all rights which secure the
obligation of the Borrower thereunder, all Note Documents, such assets as shall
from time to time be identified as deposited in the Certificate Account
(including the investment income thereon), property which secures the Mortgage
Loan and which has been acquired by foreclosure or deed in lieu of foreclosure
and the proceeds of insurance, condemnation awards and any other amounts
receivable under the Note Documents, and all funds advanced by the
Certificateholders to Trustee or otherwise held by Trustee (including without
limitation funds held in the Certificate Account, the Excess Revenue Account and
the Extraordinary Expense Reserve Account) in accordance with the provisions
hereof.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOAN; TRUST FUND
Section 2.01. Conveyance of Mortgage Loan. As grantor of the Trust,
the Seller, concurrently with the execution and delivery hereof, does hereby
sell, transfer, set over, convey and absolutely assign to the Trustees without
recourse (except as provided herein) in trust intending to establish the Trust,
all right, title and interest of the Seller in and to the Mortgage Loan,
including all interest, Make-Whole Premium and principal due or to become due
from the Borrower on or with respect to the Mortgage Loan.
In connection with such sale, conveyance, transfer and absolute
assignment, the Seller does hereby sell, transfer, convey and absolutely assign
and deliver to, and deposit with, the Trustees the documents constituting the
Mortgage File.
The ownership of the Mortgage Note, the Mortgage and the contents of
the Mortgage File is vested in the Trustees without reservation of any right,
title or interest whatsoever in the Seller. The Seller intends that the sale,
conveyance, transfer and absolute assignment of the Seller's right, title and
interest in and to the Mortgage Loan pursuant to this Agreement shall
constitute a purchase and sale and not a pledge of security for a loan.
However, if for any reason such conveyance is deemed not to be a sale, the
Seller intends that the rights and obligations of the parties shall
nevertheless be established pursuant to the terms of this Agreement and that
the Seller shall be deemed to have granted to the Trustee a first priority
security interest in all of the Seller's right, title and interest in, to and
under the Mortgage Loan, all payments of principal of or interest on the
Mortgage Loan, all other payments made in respect of the Mortgage Loan
(including, without limitation, Make-whole Premium), and all proceeds of any
thereof, and any other assets of the Trust Fund, and that this Agreement shall
constitute a security agreement under applicable law. If the Trust terminates
prior to the satisfaction of all claims of any Person in any Certificates, the
security interest created hereby shall continue in full force and effect and
the Trustee shall be deemed to be the collateral agent for the benefit of such
Person.
Section 2.02. Acceptance by Trustee. The Trustee acknowledges receipt
of the documents referred to in Section 2.01, subject to any exceptions noted
in a certificate of the Trustee delivered within 30 days after the Closing
Date, and declares that it holds and will hold such documents and any other
documents constituting a part of the Mortgage File delivered to it in trust for
the use and benefit of all present and future Certificateholders. At the
Closing Date the Trustee agrees, for the benefit of Certificateholders, to
review within 30 days after the Closing Date each of the documents described in
Section 2.01 delivered to it to ascertain that all required documents have
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been executed and received, and that such documents relate to the Mortgage Loan
identified in the Mortgage Loan Schedule, as supplemented, that have been sold,
conveyed, transferred and absolutely assigned to it. If the Trustee finds any
document or documents constituting a part of the documents described in Section
2.01 to be missing, mutilated, damaged, defaced, incomplete, improperly dated,
clearly forged or otherwise physically altered in any material respect, the
Trustee shall promptly (and in any event within no more than five Business Days
after such discovery so) notify the Seller. At the Closing Date the Trustee
shall also notify the Seller, if in examining such documents, or through any
other means, the Trustee had notice or knowledge (a) of any adverse claim, lien
or encumbrance against the Mortgage Loan or Mortgaged Estate, (b) that the
Mortgage Note was overdue or had been dishonored, (c) of evidence on the face
of the Mortgage Note or Mortgage of any security interest or other right or
interest therein, or (d) any defense against or claim to the Mortgage Note by
any party. The Seller shall correct such omission or other irregularity
referred to above within 90 days from the Closing Date. The Trustee shall
review the documents referred to in Section 2.01 only for the purpose set forth
above in this Section 2.02 and the Trustee shall be under no duty or obligation
to inspect, review or examine any such documents, instruments, certificates or
other papers to determine that they are genuine, enforceable, or appropriate
for the represented purpose or that they have actually been recorded or that
they are other than what they purport to be on their face.
Within thirty (30) days of the Closing Date, the Trustee shall deliver
to the Seller and the Certificateholders the Trustee's Certification attached
hereto as Exhibit C.
Section 2.03. Trust Fund. The Trustees acknowledge that they hold the
Trust Fund created pursuant to this Agreement in trust for the use and benefit
of all present and future Certificateholders.
Section 2.04. Execution of Certificates. The Trustees acknowledge the
sale, conveyance, transfer and absolute assignment to them of the Mortgage Loan
and the delivery of the documents specified in Section 2.01 to them, and,
concurrently with such delivery, the Trustee has caused to be executed and
delivered Certificates in authorized denominations evidencing ownership of the
entire Trust Fund.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.01. Representations and Warranties of Seller. The Seller
represents and warrants to, and covenants with, the Trustee and the
Certificateholders that as of the Closing Date:
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(i) Seller is duly organized, validly existing and in good standing as
a corporation under the laws of the State of Nevada and is qualified to
transact business in and is in good standing under the laws of the States of
Michigan and Arizona or is otherwise exempt under applicable law from such
qualification and no demand for such qualification has been made upon Seller.
The principal place of business and chief executive office of the Seller is
located in the State of Arizona;
(ii) Seller has the full power and authority to execute, deliver
and perform, and to enter into and consummate all transactions contemplated by
this Agreement, has duly authorized the execution, delivery and performance of
this Agreement, has duly executed and delivered this Agreement, and this
Agreement constitutes the legal, valid and binding obligation of Seller,
enforceable against it in accordance with its terms;
(iii) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement will conflict with
or result in a breach of any of the terms, conditions or provisions of Seller's
articles of incorporation or bylaws or any legal restriction or any agreement
or instrument to which Seller is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing,
or result in the violation of any law, rule, regulation, order, judgment or
decree to which Seller or its property is subject;
(iv) At the date hereof, Seller does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant and
agreement of or by Seller contained in this Agreement;
(v) There is no litigation pending or, to Seller's knowledge,
threatened, which, if determined adversely to Seller, would adversely affect
the execution, delivery or enforceability of this Agreement or the Certificates
or would impair the ability of Seller to perform its obligations under this
Agreement, or, in Seller's reasonable judgment, which is likely to have a
material adverse effect on the financial condition of Seller;
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of or compliance by Seller with this Agreement, the
issuance of the Certificates, or the consummation of the transactions
contemplated by this Agreement;
(vii) The sale, transfer, assignment and conveyance of the Mortgage
Loan by Seller pursuant to this Agreement is not subject to the bulk transfer
or any similar statutory provisions in effect in any applicable jurisdiction;
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(viii) Seller (a) has not engaged, and as of the date hereof, does not
engage in any business or investment activities other than those necessary for,
incident to, connected with or arising out of the Mortgage Loan, and (b) has
not incurred, and as of the date hereof, does not have, any indebtedness;
(ix) With respect to the Mortgage Loan:
(a) The information set forth in the Mortgage Loan Schedule is
true and correct in all respects;
(b) As of the Closing Date, the Mortgage Loan is not delinquent
in payment; Seller has not advanced funds, or actively induced, solicited or
knowingly received any advance of funds from a party other than the owner of
the Mortgaged Estate subject to the Mortgage, directly or indirectly, for the
payment of any amount required by the Mortgage Loan; there is no requirement
for future advances; and all costs, expenses and fees in connection with the
making, closing or recording of the Mortgage Loan have been paid;
(c) The terms of the Note Documents have not been impaired,
waived, altered or modified in any respect; each such impairment, waiver,
alteration or modification is reflected on the Mortgage Loan Schedule; no
instrument of waiver, alteration or modification has been executed, and
Mortgagor has not been released, in whole or in part;
(d) The Mortgage has not been satisfied, cancelled, subordinated
or rescinded, and the Mortgaged Estate has not been released from the lien of
the Mortgage, in whole or in part, nor has any instrument been executed that
would effect any such release, cancellation, subordination or rescission;
(e) The lien of the Mortgage is insured by an ALTA lender's title
insurance policy or other generally acceptable form of policy of title
insurance, issued by a title insurer qualified to do business in the
jurisdiction where the Mortgaged Estate is located, insuring the first priority
lien of the Mortgage in the original principal amount of the Certificates
subject only to Permitted Encumbrances. After the transfer of the Mortgage
Loan to the Trustee pursuant to Section 2.01, the Trustee will be the named
insured of such lender's title insurance policy. To the best of Seller's
knowledge, no claims have been made under such lender's title insurance policy
and to the best of Seller's knowledge, no prior holder of the Mortgage,
including the Trustee has done, by act or omission, anything which would impair
the coverage of such policy;
(f) The Mortgaged Estate is located in the State of Michigan as
indicated on the Mortgage Loan Schedule;
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(g) To the best of Seller's knowledge, there is no default,
breach, violation or event of acceleration existing under the Note Documents
and no event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach, violation or
event permitting acceleration of the Mortgage Loan; and Seller has not waived
any default, breach, violation or event permitting acceleration;
(h) The Mortgage contains provisions for the acceleration of the
payment of the unpaid principal balance of the Mortgage Loan in the event the
related Mortgaged Estate is sold without satisfaction of certain conditions
precedent contained in the Mortgage;
(i) To the best of Seller's knowledge, the Mortgaged Estate is
free of damage and waste and to the best of Seller's knowledge, there is no
proceeding pending or, to the best of Seller's knowledge, threatened for the
total or partial condemnation thereof;
(j) Seller has not obtained any collateral for the Mortgage
Note other than the Mortgaged Estate;
(k) Seller had the legal capacity to enter into the Mortgage
Loan and to execute and deliver any and all documents relating to the Mortgage
Loan;
(l) The proceeds of the Mortgage Loan have been fully disbursed
to or for the benefit of the Borrower;
(m) Immediately before the sale, transfer, conveyance and
absolute assignment to the Trustee, the Mortgage Note and the Mortgage were not
subject to an assignment or pledge, and Seller had good title thereto and was
the sole owner thereof and had full right to sell, transfer, convey and
absolutely assign the Mortgage Loan to the Trustee free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security interest;
immediately upon the sale, transfer, conveyance and absolute assignment thereof
pursuant to Section 2.01, the Trustee, on behalf of the Certificateholders,
will have indefeasible title to, and will be the sole owner of the Mortgage
Loan, free and clear of any encumbrance, equity, lien, pledge, charge, claim or
security, except for Permitted Encumbrances;
(n) The Mortgage File contains the Appraisal of the Mortgaged
Estate; and
(o) Each of the parties to the Note Documents has the full power
and authority to execute, deliver and perform the respective Note Documents to
which it is a party, and such party has duly executed and delivered each such
Note Document, and each such Note Document constitutes the legal, valid and
binding obligation of such party, enforceable against it in accordance with its
terms.
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ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates.
(a) Form and Terms. The Certificates shall be substantially in the
form annexed hereto as Exhibit B and shall be executed by Trustee. Each
Certificate shall bear interest and have the other terms as are set forth in
the Certificate Schedule and the Certificates.
Certificates shall not be subject to optional redemption except as
provided herein.
On the Closing Date, Trustee shall issue the Certificates indicated on
the Certificate Schedule. The principal amount of the Certificates to be
issued hereunder shall not exceed $5,415,300, except as provided in Section
4.02(b) and 4.02(c) or 4.03.
(b) Optional Prepayment Redemption. In the event of a prepayment of the
Mortgage Note pursuant to Section 3 of the Loan Agreement, upon receipt by
Trustee of the amount of such prepayment, Trustee shall promptly (but in any
event not later than the next Business Day following such receipt) redeem the
Certificates, in whole or in part, in a principal amount equal to the sum of
(i) the principal amount prepaid on the Mortgage Note, and (ii) the Certificate
Differential, by payment of such sum together with accrued interest thereon
plus a premium equal to the difference, if any, between the Make-Whole Premium
paid in respect of the Mortgage Note so prepaid and the amount set forth in
clause (ii) above (provided that such premium shall in no event be less than
zero).
(c) Note Put Redemption. Upon the direction in writing of the Holders
of Certificates evidencing Percentage Interests in the aggregate of not less
than 66-2/3%, Trustee shall exercise the Put in accordance with the terms and
provisions of the Note Put Agreement, Trustee shall designate the Purchase Date
under the Note Put Agreement (which Purchase Date shall be not more than ten
(10) Business Days after receipt of such direction and upon receipt of the
Purchase Price from Kmart, Trustee shall promptly (but in any event not later
than the next Business Day following such receipt) redeem the Certificates by
payment of the entire unpaid principal balance thereof, together with accrued
interest thereon plus a premium equal to the difference, if any, between the
Make-Whole Premium paid as part of the Purchase Price and the Certificate
Differential (provided that such premium shall in no event be less than zero).
(d) Notice of Redemption. Notice of Redemption pursuant to Section
4.01(b) shall be given by sending such
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notice, by first-class mail, postage prepaid, not less than 30 days nor more
than 60 days prior to the date fixed for Redemption. Notice of Redemption
pursuant to any other provision hereof shall be given as soon as reasonably
practicable following notice of the facts giving rise to such Redemption by the
Trustee. All notices of Redemption shall be mailed to the Certificateholder of
each Certificate to be prepaid in whole or in part at the address shown on the
registration books maintained by the Trustee. Neither the failure of any
Certificateholder to receive a notice mailed nor any defect in any notice so
mailed shall affect the validity of the proceedings for such Redemption. All
Certificates or portions thereof so called for Redemption will cease to accrue
interest on the specified Redemption Date provided funds for their Redemption
are on deposit at the Corporate Trust Office of the Trustee at that time.
(e) Rights of Holders to Payments. The rights of the
Certificateholders to receive payments with respect to the Trust Fund in
respect of the Certificates, and all ownership interests of the
Certificateholders in such payments, shall be as set forth in this Agreement.
(f) Application of Partial Prepayments. All partial prepayments of the
Certificates shall be applied on all outstanding Certificates ratably in
accordance with the unpaid principal amounts thereof.
Section 4.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at its Corporate Trust Office or
at the office of its designated agent, a Certificate Register in which, subject
to such reasonable regulations as it may prescribe, the Trustee shall provide
for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee shall be the Certificate
Registrar. In preparing the Certificate Register, the Trustee shall initially
use the information regarding the Certificateholders provided in the Purchase
Agreement.
(b) Upon surrender for registration of transfer of any Certificate at
the Corporate Trust Office or at the office of any designated agent of the
Trustee maintained for such purpose, the Trustee shall execute and deliver, in
the name of the designated transferee or transferees, a new Certificate of a
like tenor and dated the date of such execution by the Trustee.
(c) No transfer of a Certificate shall be made (and the Trustee shall
have no obligation to register any attempted transfer) unless such transfer is
made pursuant to an effective registration statement or otherwise in accordance
with the requirements under the Securities Act of 1933, as amended ("Securities
Act"), and effective registration or qualification under applicable state
securities laws or is made in a
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transaction which does not require such registration or qualification under
state law. So long as the Certificates are not registered under the Securities
Act, each Certificate shall contain a legend to the following effect:
THIS CERTIFICATE MAY BE SOLD, PLEDGED, ASSIGNED, TRANSFERRED OR
HYPOTHECATED ONLY IN COMPLIANCE WITH THE PROVISIONS OF SECTION 4.02 OF THE
AGREEMENT.
The Trustee has no obligation to any Holder to register the
Certificates under, or to effect compliance with any exemption under, the
Securities Act. The Holder of a Certificate desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee and the Seller against
any liability that may result if the transfer is not so exempt or is not made
in accordance with such federal and state laws. The system of transfer of
Certificates established hereunder is intended to satisfy the requirements of
Section 163(f) of the Code and the Regulations promulgated thereunder.
(d) No transfer of a Certificate shall be made unless the Trustee shall
have received a Transfer Assurance consisting of either (i) a representation
letter from the transferee of such Certificate, reasonably acceptable to the
Trustee and Seller, to the effect that such transferee is not an employee
benefit plan subject to Section 406 of ERISA, nor a person acting on behalf of
any such plan, which representation letter shall not be an expense of the
Trustee or the Seller, or (ii) in the case of any such Certificate presented
for registration in the name of an employee benefit plan subject to ERISA and
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan, an Opinion of Counsel reasonably
satisfactory to the Trustee and Seller to the effect that the purchase or
holding of such Certificate will not result in the assets of the Trust Fund
being deemed to be "plan assets" and subject to the prohibited transaction
provisions of ERISA and the Code and will not subject the Trustee or the Seller
to any obligation in addition to those undertaken in this Agreement, which
Opinion of Counsel shall not be an expense of the Trustee or the Seller.
(e) At the option of the Certificateholder, a Certificate may be
exchanged for another Certificate or Certificates of a like tenor, upon
surrender of the Certificate to be exchanged at the Corporate Trust Office or
at the office of any designated agent of the Trustee maintained for such
purpose. Whenever the Certificate is so surrendered for exchange, the Trustee
shall execute and deliver, a new Certificate which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or
surrendered for transfer or exchange shall (if so required by the Trustee) be
duly endorsed by, or be accompanied by a written instrument of transfer in the
form reasonably satisfactory to the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing.
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(f) No service charge shall be made to the Holder for any transfer or
exchange of the Certificate, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of the Certificate.
(g) All Certificates surrendered for transfer and exchange shall be
destroyed by the Trustee.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates. If
(i) any mutilated Certificate is surrendered to the Trustee or the Trustee
receives evidence to its reasonable satisfaction of the destruction, loss or
theft of any Certificate, and (ii) there is delivered to the Trustee such
reasonable security or indemnity as may be required by it to save it harmless,
then, in the absence of notice to the Trustee that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor. For purposes of satisfaction of
clause (ii) of this Section, a written indemnity from XXXXXXXXXX need not be
secured. Upon the issuance of any new Certificate under this Section, the
Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. Any replacement Certificate issued pursuant to
this Section shall constitute complete and indefeasible evidence of ownership
of the undivided interest of the Certificateholder in the Trust Fund, as if
originally issued, whether or not the mutilated, destroyed, lost or stolen
Certificate shall be found at any time.
Section 4.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Trustee may treat the Person in
whose name any Certificate is registered as the owner of such Certificate and
the undivided interest in the Trust Fund evidenced thereby for the purpose of
receiving remittances pursuant to Section 6.01 and for all other purposes
whatsoever, and the Trustee shall not be affected by notice to the contrary.
Section 4.05. Appointment of Paying Agent. The Trustee shall serve as
Paying Agent for the purposes of making distributions to Certificateholders
pursuant to Section 6.01.
ARTICLE V
TRUSTEE'S DUTIES WITH RESPECT TO MORTGAGE LOAN;
ESTABLISHMENT OF ACCOUNTS
Section 5.01. Calculation of Distributions. The Trustee shall
calculate the Available Distribution Amount, make
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distributions on each Remittance Date as set forth in Section 6.01 and have
full power and authority to do any and all things which it may deem necessary
or desirable in connection with such duties.
Section 5.02. Receipt of Lease Payments; Collection of Lease and Lease
Guaranty Payments; Collection of Mortgage Loan Payments; Investment Direction.
(a) The Trustee acknowledges that, pursuant to the Consent and
Agreement, the Trustee will be paid directly by Tenant under the Lease. All
Annual Rental payable by Tenant under the Lease and received by Trustee shall
be deposited by the Trustee in the Certificate Account as described in Section
5.03 hereof, and invested in Eligible Investments in accordance with Section
5.02(d) of this Agreement, and applied to the payment of principal, interest,
and premium, if any, due, or to become due, on the Mortgage Note.
(b) In the event the Trustee does not receive any monthly
installment of Annual Rental on the date set forth in the Lease, the Trustee is
hereby directed to and the Trustee shall notify the Borrower (as landlord), the
Tenant and Kmart in writing regarding the Tenant's failure to make such timely
payment. In the event the Trustee does not receive the monthly installment of
Annual Rental within five Business Days of giving such written notice, the
Trustee shall use its best efforts to enforce the provisions of the Lease and
Lease Guaranty by exercise of all of the remedies available to it at law and in
equity, including, but not limited to, the remedies available under the Lease
and the Lease Guaranty, provided however, the Trustee shall, in no event, give
notice of intent to terminate or take action to terminate the Lease without the
prior consent of Holders of Certificates evidencing Percentage Interests
aggregating not less than 66 and 2/3rds percent.
(c) Continuously from the date hereof until the principal and
interest on the Mortgage Loan are paid in full, the Trustee will use reasonable
best efforts to collect all payments due under the Mortgage Loan when the
same shall become due and payable. The Trustee shall also review any official
receipts from any taxing authority provided to it pursuant to Section 1.08(c)
of the Mortgage to monitor payment of Impositions (as defined in the Mortgage).
(d)(i) Prior to the Due Date of the corresponding payment on the
Mortgage Note for each Due Period, funds in the Certificate Account shall be
invested in Eligible Investments at the written direction of the Borrower
provided that such instruments shall mature on or prior to the Due Date and in
no event shall be invested in obligations maturing later than ninety days from
the investment date. The risk of investment loss during this period shall be
borne by the Borrower. Subsequent to such Due Date and prior to distribution
to the
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Certificateholders, funds in the Certificate Account shall be invested by the
Trustee in Eligible Investments as directed in writing by the
Certificateholders with a Maturity Date not less than two Business Days prior
to the anticipated date of distribution to the Certificateholders. The risk of
investment loss during this period shall be borne by the Certificateholders. On
or after the Due Date and prior to the Remittance Date for each Due Period, the
Trustee shall be prohibited from selling or transferring Eligible Investments
prior to maturity unless and until a default shall have occurred under the
Mortgage Note. In the event (i) the Trustee shall not have received at least
twenty-four hours' written notice as to any such investment direction upon the
maturity of an existing investment, or (ii) the Trustee shall have received no
investment direction by the Certificateholders as described in this Section
5.02(d), the Trustee shall be authorized to invest maturing amounts in Eligible
Investments described in subparagraph (iv) of the definition thereof (or in the
further proviso at the end of such definition) until further directed in
writing as to investments of such amounts. Investment earnings and losses
shall be deposited to or charged to a specific account as more fully set forth
in Sections 5.03(j), 5.05 and 5.07. The Trustee shall have no responsibility
for any loss on any Eligible Investments. No such investment or reinvestment
shall mature later than the two Business Days immediately preceding the next
Remittance Date or an earlier date to the extent such monies will be needed for
other payments set forth herein. Otherwise, Eligible Investments that impose
substantial breakage fees will not be deemed an Eligible Investment.
(ii) If an Event of Default occurs under the Note Documents, the
Borrower shall be prohibited from directing investments as contemplated above
and the Trustee shall invest in Eligible Investments described in subparagraph
(i), (ii) or (iv) of the definition thereof (or in the further proviso at the
end of such definition) until such Event of Default is cured.
Section 5.03. Establishment of Certificate Account; Deposits in
Certificate Account. with respect to the Mortgage Loan, the Trustee shall cause
to be segregated and held all funds collected and received pursuant to the
Mortgage Loan separate and apart from any of its own funds and general assets
and shall cause to be established and maintained a Certificate Account in the
form of a trust account titled "Mortgage Pass-Through Certificates (Borders
Books, Utica, Michigan) Series 1993, Certificate Account" in trust for the
benefit of the Certificateholders.
The Trustee shall cause to be deposited in the Certificate Account on a
daily basis, and retained therein:
(a) All scheduled payments due on account of principal on the
Mortgage Loan, and all Principal Prepayments collected;
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(b) All payments on account of interest on the Mortgage Loan;
(c) Net Liquidation Proceeds;
(d) All Insurance Proceeds received by the Trustee under any
title, hazard or other insurance policy;
(e) All awards or settlements in respect of condemnation
proceedings affecting the Mortgaged Estate which are not released to the
Mortgagor in accordance with the terms of the documents contained in the
Mortgage File;
(f) All proceeds paid to Trustee by Kmart following an exercise
of the Put pursuant to the Note Put Agreement;
(g) All Extraordinary Expense Advances made by the Trustee;
(h) All revenues from the Mortgaged Estate acquired by the
Trustee by foreclosure or deed in lieu of foreclosure net of any
Extraordinary Expense Advances with respect to the Mortgaged Estate;
(i) All payments received pursuant to the terms of the Lease
(except those amounts described in Section 5.06(d)(i) which shall be deposited
in the Excess Revenue Account), and Lease Guaranty;
(j) All earnings (or losses) on funds held in the Certificate
Account derived from Eligible Investments with respect to which the
Certificateholders or the Trustee had the power to direct investments, under
Section 5.02; and
(k) All amounts required to be deposited therein in accordance
with any other provisions of this Agreement.
The foregoing requirements for deposit in the Certificate Account shall be
exclusive.
Section 5.04. Permitted Withdrawals From the Certificate Account. The
Trustee shall, from time to time, cause the withdrawal of funds from the
Certificate Account for the following purposes:
(a) to make payments to the Certificateholders in the amounts
and in the manner provided for in Section 6.01; and
(b) on each Due Date, any excess Annual Rental payments and
earnings thereon remaining after the satisfaction of the Borrower's obligations
under the Mortgage Loan shall be transferred to the Excess Revenue Account;
and
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(c) to make any payments to clear and terminate the Certificate
Account upon the termination of this Agreement.
Notwithstanding the foregoing, on each Remittance Date, the Trustee
shall retain in the Certificate Account until the next succeeding Remittance
Date, and shall not permit the withdrawal of the amount equal to the excess, if
any, of (i) all scheduled principal payments and interest payments received in
respect of the Mortgage Loan on the Due Date for the month of such initial
Remittance Date, over (ii) the amount equal to the Debt Service due on such
initial Remittance Date on the Certificates.
Section 5.05. Excess Revenue Account. The Seller (on behalf of the
Borrower) hereby establishes the Excess Revenue Account with the Trustee. This
account shall be maintained as a fund separate and distinct from other accounts
created under this Agreement. The Excess Revenue Account shall remain the
property of the Borrower, subject to the rights of the Trustee under Sections
5.06(b) and 5.06(c) and the Pledge Agreement. Funds in the Excess Revenue
Account shall be invested in Eligible Investments at the written direction of
the Borrower provided that such instruments shall mature on or prior to each
Remittance Date. The risk of loss shall be borne by the Borrower. Upon
satisfaction of the Borrower's obligations under the Mortgage Loan, amounts
remaining in the Excess Revenue Account shall be remitted to the Borrower as
set forth below.
The Trustee shall credit to the Excess Revenue Account (i) the amounts
deposited pursuant to Section 5.04(b) and (ii) all amounts received on earnings
on or income from (or losses due from) any investments or reinvestments of
amounts in Eligible Investments in the Excess Revenue Account.
Section 5.06. Permitted Withdrawals From the Excess Revenue Account.
The Trustee shall cause the withdrawal of funds from the Excess Revenue Account
for the following purposes and in the following order of priority:
(a) to pay to the Certificate Account any amounts needed to
satisfy the Borrower's obligation with respect to the Mortgage Loan to the
extent not previously satisfied from amounts in the Certificate Account;
(b) to pay the Trustee for unpaid annual Trustee Fees payable by
Borrower pursuant to the Loan Agreement;
(c) to pay the Trustee for any unreimbursed Extraordinary Expense
Advances required by Borrower's default pursuant to the Note Documents and to
reimburse Trustee for any expenses, costs and liabilities for which it is
entitled to reimbursement under the Note Documents; prior to an Event of
Default the Trustee's right to reimburse itself (other than with
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respect to the Trustee Fees) pursuant to this clause (c) with respect
to the Mortgage Loan is limited to reimbursement or payments from related
Liquidation Proceeds, condemnation proceeds and amounts representing Insurance
Proceeds; however, subsequent to an Event of Default the Trustee shall have a
prior lien on all moneys in the Excess Revenue Account for payment or
reimbursement of its Trustee Fees payable by Borrower and Extraordinary Expense
Advances and other amounts owed it and payable by Borrower under any provision
of the Note Documents;
(d) to disburse to Borrower, without requisition, (i) on or
before the fifteenth day of each calendar month any monthly installment of
Annual Rental received by Trustee for any calendar month commencing June 1,
1993 to and including May 1, 1994, and (ii) any amounts remaining in the Excess
Revenue Account promptly following each Remittance Date on which principal
payments are made after paying or providing for the payment or withdrawal of
amounts described in clauses (a), (b) and (c) above.
Section 5.07. Extraordinary Expense Reserve Account. The Seller (on
behalf of the Borrower) hereby establishes the Extraordinary Expense Reserve
Account with the Trustee in the initial amount of Five Thousand Dollars
($5,000). This account shall be maintained as a fund separate and distinct
from all other accounts created under this Agreement. The Extraordinary
Expense Reserve Account shall remain the property of the Seller subject to the
rights of the Trustee under the terms of this Agreement and the Pledge
Agreement. Upon satisfaction of the Borrower's obligations under the Mortgage
Loan and under this Agreement, amounts remaining in the Extraordinary Expense
Reserve Account shall be remitted to the Seller.
Funds in the Extraordinary Expense Reserve Account shall be invested in
Eligible Investments at the written direction of the Seller provided that such
instruments shall mature on or prior to each Remittance Date. The risk of loss
shall be borne by Seller. The Trustee shall credit to the Extraordinary
Expense Reserve Account all amounts received as earnings on or income from (or
losses due from) any investments or reinvestments of amounts in Eligible
Investments in the Extraordinary Expense Reserve Account.
Section 5.08. Permitted withdrawals from the Extraordinary Expense
Reserve Account. The Trustee shall cause the withdrawal of funds from the
Extraordinary Expense Reserve Account for the following purposes and in the
following order of priority:
(a) to pay to the Certificate Account any amounts needed to
satisfy the Borrower's obligations under the Mortgage Loan;
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(b) to pay the Administrative Expenses of the Trust, including
but not limited to the expenses incurred by the entity retained pursuant to
Section 6.02 to prepare tax returns and reports;
(c) to pay the Trustee for unpaid Trustee's Fees payable by
Borrower pursuant to the Loan Agreement;
(d) to pay the Trustee for any unreimbursed Extraordinary Expense
Advances required by Borrower's default pursuant to the Note Documents for any
expenses, costs and liabilities for which it is entitled to reimbursement under
Section 6.03 or 7.03; provided, however, that (i) prior to an Event of Default
the Trustee's right to reimburse itself (other than with respect to the
Trustee's Fee) pursuant to this clause (d) with respect to the Mortgage Loan is
limited to reimbursement or payments from related Liquidation Proceeds,
condemnation proceeds and amounts representing Insurance Proceeds; and (ii)
subsequent to an Event of Default the Trustee shall have a prior lien on all
moneys in the Extraordinary Expense Reserve Account for payment or
reimbursement of its Trustee's Fee payable by Borrower and Extraordinary
Expense Advances and other amounts owed it and payable by Borrower under any
provision of the Note Documents;
(e) to the extent insufficient amounts are available from the
Trustee's Fee to fund all customary, reasonable and necessary costs and
expenses incurred in the performance by the Trustee of its obligations
hereunder, the Trustee may draw upon the Extraordinary Expense Reserve Account;
written notice of such a draw shall be made to the Certificateholders within
thirty (30) days after such draw; such written notice shall set forth the
amount of the draw, its use and the balance remaining in the Extraordinary
Expense Reserve Account; and
(f) to disburse to Borrower, without requisition, any amounts
remaining in the Extraordinary Expense Reserve Account promptly following
termination of the Trust provided, however, prior to the distribution of such
excess amounts the Trustee shall ensure that there remains, set aside in the
Extraordinary Expense Reserve Account amounts sufficient to pay for the
Administrative Expenses related to terminating the Trust, including, but not
limited to, the filing of any final tax returns.
Section 5.09. Capitalized Debt Service Account. The Seller (on behalf
of the Borrower) hereby establishes the Capitalized Debt Service Account with
the Trustee. This account shall be maintained as a fund separate and distinct
from other accounts created under this Agreement. The Capitalized Debt Service
Account shall remain the property of the Borrower subject to the rights of the
Trustee under the terms of this Agreement and the pledge thereof by Borrower
pursuant to the Pledge
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Agreement to secure the Mortgage Loan. Funds in the Capitalized Debt Service
Account shall be invested in Eligible Investments at the written direction of
Borrower provided that such instruments shall mature on or prior to each
Remittance Date. The risk of loss shall be borne by the Borrower. The Trustee
shall cause to be deposited into the Capitalized Debt Service Account (i) the
amount of the Capitalized Debt Service Reserve received on the Closing Date and
(ii) all amounts received on earnings on or income from (or losses due from)
any investments or reinvestments of the Capitalized Debt Service Reserve in
Eligible Investments.
On each Remittance Date through and including June 15, 1994, the
Trustee shall cause the transfer of funds from the Capitalized Debt Service
Account to the Certificate Account in an amount necessary to satisfy Debt
Service on the Certificates on such Remittance Date.
After June 15, 1994 and upon the payment of all Debt Service on the
Certificates prior to and including such date, and upon the transfer to the
Certificate Account of the annual Trustee Fee for the period commencing June
15, 1994 through June 15, 1995, and provided that no default or Event of
Default shall have occurred and be continuing under any one or more of the Note
Documents, Trustee shall disburse to the Borrower without requisition any
amounts remaining in the Capitalized Debt Service Account.
Section 5.10. Realization Upon Defaulted Mortgage Loan.
(a) If an Event of Default has occurred and is continuing and if
Certificateholders holding Percentage Interests aggregating not less than
66-2/3% direct, the Trustee shall use its best efforts to foreclose upon or
otherwise comparably convert the ownership of the Mortgaged Estate securing the
Mortgage Loan; shall manage, conserve and protect the Mortgaged Estate for the
purposes of its prompt disposition and sale; and shall dispose of the Mortgaged
Estate on such terms and conditions as the Certificateholders deem to be in
their best interests after the Trustee has received indemnity for its
reasonable costs, expenses and liabilities with respect thereto to its
reasonable satisfaction from the Certificateholders in accordance with Section
9.02 (iii). A written agreement from XXXXXXXXXX to pay such costs, expenses
and liabilities shall be deemed as satisfactory.
(b) Notwithstanding the foregoing, if the Trustee has actual
knowledge or reasonably believes that all or any part of the Mortgaged Estate
is affected by hazardous or toxic wastes or substances, the Trustee need
not cause the Trust to acquire title to the Mortgaged Estate in a foreclosure
or similar proceeding. In connection with such activities, the Trustee shall
follow such practices and procedures as it shall
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deem necessary or advisable, as shall be normal and usual in its trustee
activities, and, in particular, the Trustee shall be furnished with such
certificates of appropriate public officials and agencies, if any, a history of
the Mortgaged Estate and its uses, other evidence reasonably satisfactory to
the Trustee showing that the Mortgaged Estate conforms to existing
environmental laws, regulations and rules, and that no conditions exist in, on
or beneath the surface of the Mortgaged Estate that are or might become
hazardous materials, and including but not limited to an environmental report
or reports from a company reasonably satisfactory to Trustee, showing that
there has been no storage, disposal or release of any oil, fuels, gases,
chemicals, trash, garbage or other solid wastes or hazardous materials which
report or reports shall be based upon complete and thorough on-site inspections
of the Mortgaged Estate, including but not limited to investigations of the
soil, surface water and groundwater, to confirm the absence of any hazardous
materials on or beneath the surface of the Mortgaged Estate or adjacent lands.
(c) The activities set forth in Section 5.10(a) are also subject
to the proviso that the Trustee shall not be required to expend its own funds
in connection with any foreclosure or towards the restoration of the Mortgaged
Estate unless it shall determine that (i) such restoration or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan to Certificateholders
after reimbursement for such expenses and (ii) such expenses will be
recoverable either through Liquidation Proceeds, or revenues from the Mortgaged
Estate. The Trustee shall have no power under this Section 5.10 to perform any
act which, if consummated, would cause the entity created hereunder to fail to
be characterized as a trust for federal income tax purposes. The Trustee may
rely upon an Opinion of Counsel, as set forth in Section 9.02, if it reasonably
believes that such an act may cause the Trust to fail to be characterized as a
trust for federal income tax purposes.
Section 5.11. Trustee Compensation. The Trustee, as compensation for
its activities hereunder, shall be entitled to receive (a) on the Closing Date
and each Remittance Date on which a principal payment is made the amounts
provided for as the Trustee's Fee and (b) amounts representing reimbursement
for Extraordinary Expense Advances and reimbursement for certain expenses, as
specified by Sections 5.06(c) and 5.08(d). As so specified, from and after the
occurrence of an Event of Default, the Trustee will have a prior lien on the
Trust Fund for all such amounts.
The Trustee shall be required to pay all expenses incurred by it in
connection with its activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided in Section 5.06(c) and
(d) and Section 5.08(c), (d) and (e).
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Section 5.12. Rights of the Certificateholders. The Trustee shall
afford the Certificateholders, upon reasonable notice and during normal
business hours, access to all records maintained by the Trustee in respect of
its rights and obligations hereunder and access to officers of the Trustee
responsible for such obligations. Upon request, the Trustee shall furnish the
Certificateholders with its most recent financial statements and such other
information as the Trustee possesses regarding its business, property and
condition, financial or otherwise.
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01. Distributions.
(a) The Trustee shall cause to be distributed, from funds in the
Certificate Account, the following amounts:
(i) an amount equal to the Debt Service due on such
Remittance Date on the Certificate or Certificates held by such
Certificateholder; and
(ii) on the date provided for redemption of Certificates
pursuant to Section 4.01(b) or (c), to each Certificateholder an amount equal
to the amount payable on the Certificate or Certificates held by such
Certificateholder pursuant to Section 4.01(b) or (c), as the case may be; and
(iii) upon the termination of the Trust pursuant to
Section 10.01 hereunder, to each Certificateholder an amount equal to the
product of (a) all amounts remaining in the Certificate Account after giving
effect to the distributions provided for in clauses (i) and (ii) hereof, and
(b) the Percentage Interest of such Certificateholder.
(b) All distributions made to Certificateholders on each
Remittance Date shall be made to the Certificateholders of record on the Record
Date (other than as provided in this Agreement or in the form of Certificate
respecting the final distribution), (i) by wire transfer in immediately
available funds to the account of such Holder at a bank or other Financial or
depository institution having appropriate facilities therefor, if such Holder
has so notified the Trustee in writing by the Record Date at least 10 Business
Days prior to such Remittance Date and such Holders hold Certificates in the
aggregate principal amount of $1,000,000 or more or (ii) for all other Holders
of Certificates, by check mailed to the address of the Person entitled thereto
as it appears on the Certificate Register. All distributions in respect of the
Certificates shall be made without presentation or surrender, except that the
final distribution in Redemption of the Certificates will be made only upon
presentation and surrender of the Certificates at the
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Corporate Trust Office or such other agency of the Trustee specified in the
final distribution notice to Certificateholders. If on any Determination Date,
the Trustee reasonably determines that the Mortgage Loan is not outstanding and
there are no other funds or assets in the Trust Fund other than the funds in
the Certificate Account, the Trustee shall send the final distribution notice
to each Certificateholder and make provision for the final distribution in
accordance with Section 10.02.
Section 6.02. Statements to Certificateholders. Not later than each
Remittance Date, Trustee will cause to be sent to each Certificateholder a
statement setting forth the following information with respect to each
Certificate (which information may be aggregated for all Certificates held by
the same Holder), after giving effect to the distributions to be made pursuant
to Section 6.01 on or as of such Remittance Date:
(i) the amount of such distribution allocable to
principal;
(ii) the amount of such distribution allocable to interest;
(iii) the amount of any Extraordinary Expense Advance by
the Trustee pursuant to Section 6.03; and
(iv) If applicable, whether the Mortgage Loan is
delinquent.
In addition, not more than 90 days after the end of each calendar year
or by such earlier time as may be required under the Code, the Trustee will
furnish a report to each holder of a Certificate at any time during such
calendar year, an annual statement of interest paid in accordance with the
requirements of applicable federal income tax law listing the Principal Balance
of the Mortgage Loan outstanding at the end of such calendar year.
Concurrent with execution of this Agreement, Seller shall appoint
Coopers & Lybrand or a similar organization which regularly engages in the
preparation and filing of such documents on a continuous basis for profit and
which represents itself to be expert in such matters, as required by applicable
law, which shall cause to be prepared and which shall file, any and all tax
returns, information statements or other filings required to be delivered to
(a) any governmental taxing authorities or (b) the Certificateholders pursuant
to any applicable law with respect to the Trust Fund and the transactions
contemplated hereby; provided, however, that (i) any reasonable fees of the
organization appointed as provided above shall be paid from the Extraordinary
Expense Reserve Account and (ii) the Trustee shall cooperate in good faith in
providing any necessary information which it possesses regarding the Trust Fund
and the Certificates to such organization. Notice of any such appointment
shall be
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given to the Trustee by the party making such appointment at the time of such
appointment.
Section 6.03. Advances by Trustee.
(a) The Trustee may from time to time make such Extraordinary
Expense Advances as Trustee in its sole discretion deems advisable, provided,
however, that (i) it is satisfied as to the availability of immediate
and direct reimbursement and (ii) the payment thereof to Trustee shall not
impair the payment of any distribution on the Certificates pursuant to Section
6.01.
(b) In order to make an Extraordinary Expense Advance, the
Trustee shall deposit in the Certificate Account an amount equal to such
Advance. Any moneys being held for future distribution to Certificateholders
in the Certificate Account shall not be so used.
ARTICLE VII
THE SELLER
Section 7.01. Indemnification; Third Party Claims. Subject to the
limitations of Section 9.01 with respect to the Trustees, the Seller shall
indemnify the Trustees and hold the Trustees harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustees may sustain
in any way related to their failure to perform their duties in strict
compliance with the terms of this Agreement, other than any failure arising
from the gross negligence or willful misconduct of the Trustees. The Seller
shall immediately notify the Trustees if a claim is made by a third party with
respect to this Agreement or the Mortgage Loan, assume (with the consent of the
Trustee) the defense of any such claim and pay all expenses in connection
therewith, including counsel fees and expenses, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or the Trustees
in respect of such claim.
Section 7.02. Maintaining Corporate Existence of the Seller. The
Seller will keep in full effect its existence, rights and franchises as a
corporation, and will obtain and preserve its qualification to do business as a
foreign corporation in the jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of this Agreement, the
Certificates or the Mortgage Loan and to perform its duties under this
Agreement.
The Seller will not, on or after the date of execution of this
Agreement (i) engage in any business or investment activities other than those
necessary for, incident to, connected with or arising out of the Mortgage Loan,
(ii) incur any indebtedness, or (iii) amend, or propose to its
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shareholders for their consent any amendment of, its Articles of Incorporation
or Bylaws without giving notice thereof in writing not less than 30 days nor
more than 90 days prior to the date on which such amendment is to become
effective to Trustee and without first obtaining the written Consent of
Trustee.
Section 7.03. Limitation on Liability of the Seller. Neither the
Seller nor any of the directors, officers, employees or agents of the Seller
shall be under any liability to the Trustee or the Certificateholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Seller or any such person against any
breach of any warranty or representation made herein, or failure to perform its
obligations in strict compliance with any standard of care set forth in this
Agreement, or any liability which would otherwise be imposed by reason of any
willful misfeasance, bad faith or negligence in the performance of its duties
or by reason of reckless disregard of obligations and duties hereunder. The
Seller and any director, officer, employee or agent of the Seller may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder.
The Seller shall not be under any obligation to appear in, prosecute or
defend any legal action which is not incidental to its duties in accordance
with this Agreement and which in its opinion may involve it in any expense or
liability; provided, however, that the Seller may in its discretion undertake
any such action which it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In such event, the legal expenses and costs
of such action and any liability resulting therefrom shall be expenses, costs
and liabilities which the Seller shall be entitled to be reimbursed for out of
the Extraordinary Expense Reserve Account as provided by Section 5.06(b).
Section 7.04. Seller May Resign. The Seller may resign from the
obligations and duties hereby imposed on it with respect to its role as Seller;
provided that such resignation shall not be effective unless and until a
successor shall be appointed, which successor shall be a wholly-owned
subsidiary of Seller which shall assume all duties of the Seller hereunder; and
provided, further, that this provision shall not relieve the Seller from any
breach of its representations and warranties made in Article III; however, such
liability shall be limited as set forth in Section 7.03.
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ARTICLE VIII
DEFAULT
Section 8.01. Events of Default. The (a) nonpayment to any
Certificateholder of any payment required to be made under the terms of this
Agreement, which continues unremedied for a period of five days, (b) default in
the performance or observance of any covenant, contract or provision contained
herein, or (c) occurrence of any event constituting an Event of Default under
the Note Documents or any other document in the Mortgage File shall constitute
an Event of Default under this Agreement. If an Event of Default shall occur
and be continuing, then, and in each and every such case, so long as the Event
of Default shall not have been remedied, the Trustee may, and at the written
direction of the Holders of Certificates of Percentage Interests aggregating
not less than 66-2/3%, the Trustees shall, exercise any rights and remedies
that they may have pursuant to the Note Documents or at law or equity to
damages, including injunctive relief and specific performance, provided that
the Trustees shall have no such power which, if exercised, would cause the
Trust to fail to be characterized as a trust for federal income tax purposes.
The Trustees may rely upon an Opinion of Counsel, as set forth in Section 9.02,
if they reasonably believe that such an act may cause the Trust to fail to be
characterized as a trust for federal income tax purposes. The Trustees will
have no obligation to take any action or institute, conduct or defend any
litigation under this Agreement at the request, order or direction of any of
the Certificateholders, unless such Certificateholders have offered to the
Trustees reasonable indemnity against the costs, expenses and liabilities which
the Trustees may incur. A written agreement from XXXXXXXXXX to pay such costs,
expenses and liabilities shall be deemed as satisfactory. The Trustees shall
apply the proceeds recovered in the enforcement of the rights and remedies
under this Agreement in accordance with the terms of this Agreement.
Section 8.02. Waiver of Defaults. The Trustees may, and at the
direction of Holders of Certificates of Percentage Interests aggregating not
less than 66-2/3%, the Trustees shall, waive any default hereunder and its
consequences, except that a default in the making of any required distribution
on the Certificates may only be waived by the affected Certificateholders. The
Trustees shall have no authority to exercise the right of waiver if, as a
result thereof, this Trust would fail to be characterized as a trust for
federal income tax purposes. The Trustees may rely upon an Opinion of Counsel
as set forth in Section 9.02 if they reasonably believe that such an act may
cause the Trust to fail to be characterized as a trust for federal income tax
purposes. Upon any such waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied
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for every purpose of this Agreement. No such waiver shall extend to any
subsequent Event of Default or impair any right consequent thereon except to
the extent expressly so waived.
Section 8.03. Notification to Certificateholders. Within 30 days after
acquiring actual knowledge of the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
Section 8.04. Rights of Certificateholders to Direct Proceedings.
Anything in this Agreement to the contrary notwithstanding, the Holders of
Percentage Interests aggregating not less than 66-2/3% shall have the right, at
any time during the continuance of an Event of Default, by an instrument or
instruments in writing executed and delivered to the Trustee, to direct the
time, place and method of conducting all proceedings to be taken in connection
with the enforcement of the terms and conditions of this Agreement; provided,
however that such direction shall not be otherwise than in accordance with the
provisions of law and this Agreement and provided that such Holders shall have
provided to the Trustee the reasonable indemnity pursuant to Section 9.02 (iii)
against the costs, expenses and liabilities which the Trustee may incur in
connection with such proceedings. A written agreement from XXXXXXXXXX to pay
such costs, expenses and liabilities shall be deemed to be satisfactory.
ARTICLE IX
CONCERNING THE TRUSTEES
Section 9.01. Duties of Trustees. The Trustees, prior to the
occurrence of an Event of Default and after the curing of all Events of Default
which may have occurred, undertake to perform such duties and only such duties
as are specifically set forth in this Agreement, including without limitation
the duties set forth in Sections 5.01 and 6.02. In case an Event of Default has
occurred (which has not been cured), the Trustees shall exercise such of the
rights and powers vested in them by this Agreement, and use the same degree of
care and skill in their exercise as a prudent man would exercise or use under
the circumstances in the conduct of such man's own affairs. No permissive
rights of the Trustees shall be construed as a mandatory duty of the Trustees.
The Trustees, upon receipt of any resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustees which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement and if they are deemed to be
deficient, Trustees shall request cure of any such
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deficiency within a reasonable period of time for such cure. If such deficiency
is not cured to the satisfaction of Trustees, the Trustees may treat the
requirement pursuant to which such instrument is furnished as not having been
satisfied.
No provision of this Agreement shall be construed to relieve the
Trustees from liability for their own negligent action, their own negligent
failure to act or their own misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and
after the curing of all such Events of Default which may have occurred, the
duties and obligations of the Trustees shall be determined solely by the
express provisions of this Agreement, the Trustees shall not be liable except
for the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be read into
this Agreement against the Trustees and, in the absence of bad faith on the
part of the Trustees, the Trustees may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustees and conforming to the
requirements of this Agreement;
(ii) The Trustees shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustees were
negligent in ascertaining the pertinent facts;
(iii) The Trustees shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by them in good
faith in accordance with the direction of holders of Certificates evidencing
Percentage Interests aggregating not less than 66-2/3% as to the time, method
and place of conducting any proceeding for any remedy available to the
Trustees, or exercising any trust or power conferred upon the Trustees, under
this Agreement; and
(iv) The Trustees shall have no authority to perform any
act which, if consummated, would cause the entity created hereunder to fail to
be characterized as a trust for federal income tax purposes. The Trustees may
rely upon an Opinion of Counsel, as set forth in Section 9.02, if they
reasonably believe that such an act may cause the Trust to fail to be
characterized as a trust for federal income tax purposes.
The Trustees shall not be required to expend or risk their own funds
or otherwise incur financial liability in the performance of any of their
duties hereunder, or in the exercise of any rights or powers, if there is
reasonable grounds for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to them.
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Section 9.02. Certain Matters Affecting Trustees. Except as otherwise
provided in Section 9.01:
(i) The Trustees may rely and shall be protected in
acting or refraining from acting upon any resolution, Officers' Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other
paper or document reasonably believed by it or them to be genuine and to have
been signed or presented by the proper party or parties;
(ii) The Trustees may consult with counsel, and any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by them hereunder in good
faith and in accordance with such Opinion of Counsel (costs associated
therewith shall be chargeable to the Extraordinary Expense Reserve Account);
(iii) The Trustees shall be under no obligation to exercise
any of the trusts or powers vested in it by this Agreement or to institute,
conduct or defend any litigation hereunder or in relation hereto at the
request, order or direction of any of the Certificateholders, pursuant to the
provisions of this Agreement, unless such Certificateholders shall have offered
to the Trustees reasonable indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby (the written agreement of
XXXXXXXXXX to pay such costs, expenses and liabilities shall be deemed as
satisfactory); the right of the Trustees to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustees
shall not be answerable for other than negligence or willful misconduct in
performance of such act. Nothing contained herein shall, however, relieve the
Trustees of the obligation, upon the occurrence of an Event of Default (which
has not been cured), to exercise such of the rights and powers vested in them
by this Agreement, and to use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the
conduct of such man's own affairs;
(iv) The Trustees shall not be personally liable for any
action taken, suffered or omitted by them in good faith and believed by them to
be authorized or within the discretion or rights or powers conferred upon them
by this Agreement;
(v) Except with respect to notice of deficient or missing
documents described in Section 2.02, prior to the occurrence of an Event of
Default hereunder and after the curing of all Events of Default which may have
occurred, the Trustees shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in
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writing so to do by Holders of Certificates evidencing Percentage
Interests aggregating not less than 66-2/3%; provided, however, that if the
payment within a reasonable time to the Trustees of the costs, expenses or
liabilities likely to be incurred by them in the making of such investigation
is, in the opinion of the Trustees, not reasonably assured to the Trustees by
the security afforded to it by the terms of this Agreement, the Trustees may
require reasonable indemnity against such expense or liability as a condition
to such proceeding. A written agreement of XXXXXXXXXX to pay such costs,
expenses and liabilities shall be deemed as satisfactory. The reasonable
expense of every such examination shall be paid from the Extraordinary Expense
Reserve Account, if an Event of Default shall have occurred and is continuing,
and otherwise by the Certificateholder requesting the investigation; and
(vi) The Trustees may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys.
Section 9.03. Trustees Not Liable for Certificates or Mortgage Loan.
The recitals contained herein and in the Certificates shall be taken as the
statements of the Seller and the Trustees assume no responsibility for
its correctness. The Trustees make no representations or warranties as to the
validity or sufficiency of this Agreement or of the Certificates (except that
the Certificates shall be duly and validly authenticated by the Trustee) or of
the Mortgage Loan or related documents. The Trustees shall not be accountable
for the use or application by the Seller of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Seller with respect to the Mortgage Loan.
Section 9.04. Trustee May Own Certificates. The Trustee in its
corporate or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Trustee.
Section 9.05. Trustee's Fee and Expenses. The Trustee shall be
entitled to, reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust) for all services rendered by it in the execution of the trust hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee, and the Trustee shall be reimbursed for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and
of all persons not regularly in its employ), but solely from amounts available
in the Extraordinary Expense Reserve Account and Excess Revenue Account as
provided herein. Notwithstanding the above, no such expense, disbursement or
advance shall be reimbursable as may arise from its negligence or bad faith.
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Section 9.06. Action by Individual Trustee. The Individual
Trustee shall act as and be such upon the following terms and conditions:
(a) Subject to the provisions of Section 9.14, all
rights, powers, duties and obligations conferred or imposed upon the Trustees
shall be conferred or imposed solely upon and solely exercised and performed by
the Trustee except as expressly provided otherwise in this Agreement and except
to the extent that under any law or any jurisdiction in which any particular
act or acts are to be performed, the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations shall be exercised and performed by the Individual
Trustee;
(b) No power granted by this Agreement to, or which this
Agreement provides may be exercised by, the Individual Trustee shall be
exercised by the Individual Trustee except jointly with, or with the consent in
writing of, the Trustee, anything contained to the contrary notwithstanding;
and
(c) The Individual Trustee may at any time by an
instrument in writing, constitute the Trustee or its successor in trust
hereunder his agent or attorney-in-fact, with full power and authority, to the
extent which may be permitted by law, to do any and all acts and things and
exercise any and all discretion which he is authorized or permitted to do or
exercise, for and in his behalf and in his name.
Section 9.07. Eligibility Requirements for Trustee. The Trustee
hereunder shall at ail times be a corporation having its principal office in a
state and city acceptable to the Holders of Certificates evidencing Percentage
Interests aggregating not less than 66-2/3%, and organized and doing business
under the laws of such state or the United States of America, authorized under
such laws to exercise corporate trust powers, having (or, in the case of a
corporation included in a bank holding company system, the related bank holding
company shall have) a combined capital and surplus of at least $50,000,000 in
the case of XXXXXXXXXX and of at least $100,000,000 in the case of any
successor trustee and subject to supervision or examination by federal or state
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising
or examining authority, then for the purposes of this Section the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect specified in Section 9.08.
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Section 9.08. Resignation and Removal of Trustee. The Trustee may
at any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Certificateholders. Upon receiving such notice
of resignation, the Certificateholders evidencing Percentage Interests
aggregating not less than 66-2/3% shall promptly appoint a successor trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee. If
no successor trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee.
If at any time, the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.07 and shall fail to resign after written
request therefor by Certificateholders evidencing Percentage Interests
aggregating not less than 66-2/3%, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation then the
Certificateholders evidencing Percentage Interests aggregating not less than
66-2/3% may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the Trustee so removed and one copy to the successor trustee.
The Certificateholders evidencing Percentage Interests aggregating not
less than 66-2/3% may at any time remove the Trustee and appoint a successor
trustee by written instrument or instruments, in triplicate, signed by such
Holders or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered to the Trustee so removed and one complete set
to the successor so appointed.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall
become effective only upon acceptance of appointment by the successor trustee
as provided in Section 9.09.
Section 9.09. Successor Trustee. Any successor trustee appointed as
provided in Section 9.07 or 9.08 shall execute, acknowledge and deliver to the
Certificateholders and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee shall
become effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
38
<PAGE> 43
named as trustee herein. The predecessor trustee shall deliver to the
successor trustee the Mortgage File and related documents and statements held
by it hereunder, and the Seller and the predecessor trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for more fully and certainly vesting and confirming in the successor trustee
all such rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 9.07.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Seller shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Seller fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Seller.
Section 9.10. Merger or Consolidation of Trustee. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 9.07, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 9.11. Resignation of Individual Trustee. The Individual
Trustee or any of his successors may resign, and may be discharged of the
trusts created by this Agreement by giving written notice thereof to the
Certificateholders and to the Trustee.
Such resignation shall take effect immediately upon the acceptance of
appointment by a Person succeeding to the office of the Individual Trustee
appointed by the Holders of Certificates evidencing Percentage Interests
aggregating not less than 66 2/3%, as provided in Section 9.13.
Section 9.12. Removal of Individual Trustee. The Individual Trustee or any of
his successors may be removed at any time by the Holders of Certificates
evidencing Percentage Interests aggregating not less than 66 2/3%, by delivery
of a notice of such removal to the Individual Trustee, to the Seller, and to
the Trustee, signed by such holders, and such removal shall be effective upon
the date specified in such notice, and the Individual Trustee's duties and
obligations hereunder shall thereupon cease, except as specified in Section
9.14.
39
<PAGE> 44
Section 9.13. Appointment of Successor to Individual Trustee. If at
any time the Individual Trustee or any of his successors shall die, resign or
be removed or otherwise become incapable of acting, or if for any reason the
office of Individual Trustee shall become vacant, a successor to the Individual
Trustee shall forthwith be appointed by the Holders of Certificates evidencing
Percentage Interests aggregating not less than 66 2/3% by an instrument signed
by such Certificateholders.
Section 9.14. Succession of Successor to Individual Trustee. Any
Person appointed as a successor to the Individual Trustee shall execute,
acknowledge and deliver to the Certificateholders, his predecessor, to the
Trustee and to the Seller, an instrument accepting such appointment hereunder,
and thereupon such Person without any further act, deed or conveyance shall
become vested with all estates, properties, rights, powers, duties and trusts
of his predecessor in the trusts hereunder with like effect as if originally
named as Individual Trustee herein; but nevertheless, on the written request of
the Seller or Holders of Certificates evidencing Percentage Interests
aggregating not less than 66 2/3% or of the Trustee or of the new Individual
Trustee, the predecessor shall execute and deliver an instrument transferring
to the new Individual Trustee, upon the trusts expressed in this Agreement, all
the estates, properties, rights, powers and trusts granted to him by this
Agreement and shall duly assign, transfer, deliver and pay over to the new
Individual Trustee any property and money subject to the lien of this Agreement
held by such predecessor. Should any instrument in writing from the Seller or
from Holders of Certificates evidencing Percentage Interests aggregating not
less than 66 2/3% or from the Trustee be required by any person who becomes the
Individual Trustee for more fully and certainly vesting in and confirming to
such Individual Trustee such estates, properties, rights, powers and trusts,
then, on request, any and all such instruments in writing shall be made,
executed, acknowledged and delivered by the Seller and/or the Trustee.
Any Individual Trustee which has resigned or been removed shall
nevertheless retain all rights of indemnity.
ARTICLE X
TERMINATION
Section 10.01. Termination. The respective obligations and
responsibilities of the Seller and the Trustees under this Agreement (except
the duty to pay the Trustee's Fee and to provide indemnification under the
terms of this Agreement) shall, so long as such termination does not result in
the imposition of a tax on the Trust Fund, terminate upon the first to occur of
the final payment, prepayment in full or other liquidation (or any advance with
respect thereto) of the Mortgage Loan or the
40
<PAGE> 45
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of the Mortgage Loan and the remittance of all funds due hereunder;
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James, living on the date hereof.
Section 10.02. Notice; Final Distribution.
(a) Notice of any termination pursuant to Section 10.01,
specifying the Remittance Date after which all Certificateholders shall
surrender their Certificates to the Trustee for payment and cancellation, shall
be given promptly by the Trustee by letter to Certificateholders mailed no
later than 15 days prior to such final distribution specifying (i) the
Remittance Date upon which final payment on the Certificates will be made and
following which the Certificateholders shall present and surrender their
Certificates at the Corporate Trust Office or the office of any designated
agent of the Trustee therein designated, and (ii) the amount of any such final
payment, and (iii) payments will be made only upon presentation and surrender
of the Certificates at the office or agency of the Trustee therein specified.
After giving such notice, the Trustee shall not register the transfer or
exchange of any Certificates. On the Remittance Date upon presentation and
surrender of the Certificates, the Trustee shall cause to be distributed to
Certificateholders an amount equal to the amount distributable on such
Remittance Date.
(b) If all of the Certificateholders shall not surrender
their Certificates for cancellation within three months after the time
specified in the above-mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within three months after the second notice all the Certificates
shall not have been surrendered for cancellation, the Trustee may take
appropriate steps, or may appoint an agent to take appropriate and reasonable
steps, to contact the remaining Certificateholders concerning surrender of
their Certificates, and the cost thereof shall be paid out of the funds and
other assets which remain in the Trust.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or
41
<PAGE> 46
terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Section 11.02. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust Fund, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
No Certificateholder shall have any right to vote (except as expressly
provided herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity
or at law upon or under or with respect to this Agreement, unless such Holder
previously shall have given to the Trustees a written notice of the occurrence
of an Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of Certificates evidencing in the
aggregate not less than 66-2/3% of the related Percentage Interest shall have
made written request upon the Trustees to institute such action, suit or
proceeding in their own name as Trustees hereunder and shall have offered to
the Trustees such reasonable indemnity as they may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Trustees,
for 60 days after their receipt of such notice, request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Certificateholder with every other Certificateholder and the Trustees,
that no one or more Holders of Certificates shall have any right in any manner
whatever by virtue of any provision of this Agreement to affect, disturb or
prejudice the rights of the Holders of any other of such Certificates, or to
obtain or seek to obtain priority over or preference to any other such Holder,
or to enforce any right under this Agreement, except in the manner herein
provided and for the common benefit of Certificateholders. A written agreement
of XXXXXXXXXX to pay such costs, expenses and liabilities shall be deemed as
satisfactory. For the protection and enforcement of the provisions of this
Section, each and every Certificateholder and the Trustees shall be entitled to
such relief as can be given either at law or in equity.
42
<PAGE> 47
Section 11.03 Amendment. This Agreement may be amended from time to
time by the Seller and the Trustees with the consent of the Holders of
Certificates evidencing in the aggregate not less than 66-2/3% of the
Percentage Interest for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment shall (i) reduce in any manner the amount of,
or delay the timing of, payments on the Mortgage Loan or distributions required
to be made hereunder on any Certificate without the consent of the Holder of
such Certificate or (ii) reduce the aforesaid percentage of Certificates the
Holders of which are required to consent to any such amendment, without the
consent of all Certificateholders.
Promptly after the execution of any such amendment the Trustee shall
furnish written notification of the substance of such amendment to each
Certificateholder.
The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable regulations as the Trustee may prescribe.
No such amendment shall be effective, notwithstanding anything in this
Agreement to the contrary, unless the Trustee and Counsel shall have received
an Opinion of Counsel, in form and substance reasonably acceptable to each of
them, to the effect that such amendment, if consummated would not cause the
Trust to fail to be characterized as a trust for federal income tax purposes.
Section 11.04. Solicitation of Certificateholders. The Trustee will
not solicit, request or negotiate for or with respect to any direction or
proposed waiver or amendment of any of the provisions of this Agreement or the
Certificates, unless each Holder of the Certificates (irrespective of the
amount of Certificates then owned by it) shall be informed thereof by the
Trustee and shall be afforded the opportunity of considering the same and shall
be supplied by the Trustee with sufficient information to enable it to make an
informed decision with respect thereto. Executed or true and correct copies of
any waiver effected pursuant to the provisions of this Section shall be
delivered by the Trustee to each Holder of outstanding Certificates forthwith
following the date on which the same shall have been executed and delivered by
the Holder or Holders of the requisite percentage of outstanding Certificates.
Neither the Seller nor the Trustee nor any Affiliate thereof will, directly or
indirectly, pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, to any
Certificateholders as consideration for or as an inducement to the entering
into by any Certificateholders of any waiver or amendment of any of the terms
and provisions of this
43
<PAGE> 48
Agreement unless such remuneration is concurrently paid, on the same terms,
ratably to all Certificateholders.
Under any provisions of this Agreement that relate to consent, waiver,
direction, request or demand of or by Certificateholders, each and every
Certificateholder shall be entitled to give or make any such consent, waiver,
direction, request or demand without request or demand for such action by the
Trustee.
In the event any such direction or similar action is so received by
the Trustee under any provision hereof from the Certificateholders of requisite
Percentage Interests, the Trustee shall follow the direction of such
Certificateholders.
Section 11.05. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement is subject to recordation in appropriate public
offices for real property records in the county or other comparable
jurisdiction in which the Mortgaged Estate is situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Trustee accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of the
Certificateholders or is necessary in connection with the Mortgage Loan.
Section 11.06. Duration of Agreement. This Agreement shall continue in
existence and effect until terminated as herein provided.
Section 11.07. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
CHOICE OF LAW PRINCIPLES THEREOF AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.08. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by first class or registered mail, postage
prepaid, to (i) in the case of the Seller, XXXXXXXXXX, XXXXXXXXXX, Attention:
XXXXXXXXXX, and (ii) in the case of the Trustee, XXXXXXXXXX, c/o XXXXXXXXXX,
Attention: Corporate Trust Division, and in the case of the Individual Trustee,
XXXXXXXXXX, or (iii) in the case of any of the foregoing Persons, such other
addresses as such Persons furnish to the other Persons. Any notice required or
permitted to be mailed to a Certificateholder shall be given by registered
mail, postage prepaid, or by express delivery service, at the address of such
Certificateholder as shown in the Certificate Register.
44
<PAGE> 49
Section 11.09. Counterparts. For the purpose of facilitating the
recordation of this Agreement as herein provided and for other purposes, this
Agreement may be executed simultaneously in any number of counterparts, each of
which counterparts shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
Section 11.10. Submission to Jurisdiction. Each party hereto hereby
consents to the jurisdiction of any state or federal court located within the
County of New York, State of New York and irrevocably agrees that all actions
or proceedings relating to this Agreement may be litigated in such courts and
each such party waives any objection which it may have based on improper venue
or forum non conveniens to the conduct of any proceeding in any such court,
waives personal service of any and all process upon it and consents that all
such service or process be made by registered or certified mail (return receipt
requested) or messengered to it at its address set forth in Section 11.08 or to
its Agent referred to below at such Agent's address set forth below and that
service so made shall be deemed to be completed in accordance with Section
11.08. Each party hereto hereby appoints the Prentice Hall Corporation System,
Inc., with an office on the date hereof at 15 Columbus Circle, New York, New
York 10023 as its Agent for the purpose of accepting service of any process
within the State of New York and shall execute any confirmation thereof
requested by the other party hereto. Nothing in this Section shall effect the
right of any party hereto to serve legal process in any other manner permitted
by law to bring any action or proceeding in the courts of any jurisdiction
against the other party or to enforce a judgment obtained in the courts of any
other jurisdiction.
Section 11.11. Gender; Number. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or
plural, as the context shall require.
THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK.
45
<PAGE> 50
IN WITNESS WHEREOF, the Seller and the Trustees have caused their
names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
XXXXXXXXXX, a
Nevada corporation
By /s/
--------------------------
Name
------------------------
Title Assistant Secretary
-----------------------
XXXXXXXXXX, a New York banking
corporation
By /s/
---------------------------
Name
-------------------------
Title
------------------------
XXXXXXXXXX, as Individual
Trustee
By XXXXXXXXXX
XXXXXXXXXX
STATE OF Arizona ]
-----------
] ss.
CITY OF Phoenix ]
-----------
On the 10th day of June, 1993 before me, a Notary Public in and for
said State, personally appeared /s/______________ known to me (or proved to me
on the basis of satisfactory evidence) to be the person who executed the within
instrument as Assistant Secretary on behalf of XXXXXXXXXX, a Nevada
corporation, and acknowledged to me that such Corporation executed the within
instrument pursuant to its Bylaws or a resolution of its Board of Directors.
46
<PAGE> 51
IN WITNESS WHEREOF, the Seller and the Trustees have caused their
names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
XXXXXXXXXX, a
Nevada corporation
By
--------------------------
Name
------------------------
Title
-----------------------
XXXXXXXXXX, a New York banking
corporation
By XXXXXXXXXX
--------------------------
Name XXXXXXXXXX
------------------------
Title Authorized Signer
-----------------------
XXXXXXXXXX, as Individual
Trustee
By XXXXXXXXXX
--------------------
XXXXXXXXXX
STATE OF Arizona ]
-----------
] ss.
CITY OF Phoenix ]
-----------
On the 10th day of June, 1993 before me, a Notary Public in and for
said State, personally appeared ________________, known to me (or proved to me
on the basis of satisfactory evidence) to be the person who executed the within
instrument as Assistant Secretary on behalf of XXXXXXXXXX, a Nevada
corporation, and acknowledged to me that such Corporation executed the within
instrument pursuant to its Bylaws or a resolution of its Board of Directors.
46
<PAGE> 52
IN WITNESS WHEREOF, I have hereunto set my hand and my official seal
the day and year first above written.
/s/
_______________________
Notary Public
[NOTARIAL SEAL]
_______________
STATE OF CALIFORNIA ]
] SS.
CITY OF LOS ANGELES ]
On the 24th day of July, 1993 before me, a Notary Public in and for
said State, personally appeared XXXXXXXXXX, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person who executed the
within instrument as to be a ___________ on behalf of XXXXXXXXXX, a New York
banking corporation, and acknowledged to me that such association executed the
within instrument pursuant to its Bylaws or a resolution of its Board of
Directors.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
[NOTARIAL SEAL]
_______________________
Notary Public
My Commission Expires:
___________________________
47
<PAGE> 53
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
(NOTARIAL SEAL] _______________________________
Notary Public
MY Commission Expires:
_____________________________
STATE OF CALIFORNIA ]
] SS.
CITY OF LOS ANGELES ]
On the 25th day of June, 1993 before me, a Notary Public in and for
said State, personally appeared XXXXXXXXXX, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person who
executed the within instrument as to be an authorized signer on behalf of
XXXXXXXXXX, a New York banking corporation, and acknowledged to me that such
association executed the within instrument pursuant to its Bylaws or a
resolution of its Board of Directors.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year first above written.
[NOTARIAL SEAL] AGNES P. OBANDO
_________________________
Notary Public
OFFICIAL SEAL
AGNES P. OBANDO
Notary Public-California
LOS ANGELES COUNTY
My Commission Expires:
2-27-95
47
<PAGE> 54
STATE OF CALIFORNIA ]
] SS.
CITY OF LOS ANGELES ]
On the 25th day of June of 1993 before me, a Notary Public in and for
said State, personally appeared XXXXXXXXXX, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person who
executed the within instrument on behalf of XXXXXXXXXX, as Individual
Trustee.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
[NOTARIAL SEAL] AGNES P. OBANDO
_______________________
Notary Public
OFFICIAL SEAL
AGNES P. OBANDO
Notary Public-California
LOS ANGELES COUNTY
My Commission Expires:
2-27-95
48
<PAGE> 55
[EXHIBITS INTENTIONALLY OMITTED]
<PAGE> 1
EXHIBIT 99.30
FIRST AMENDMENT TO TRUST AGREEMENT
This First Amendment to Trust Agreement ("Amendment") is entered into
as of this 14th day of April, 1994, by and among XXXXXXXXXX, a Nevada
corporation, as Seller, XXXXXXXXXX, a New York banking corporation, as
trustee, and XXXXXXXXXX, as individual trustee, for the purpose of amending
that certain Trust Agreement ("Trust Agreement") dated as of June 11, 1993 by
and among the undersigned with respect to $5,415,300 Mortgage Pass-Through
Certificates (Borders Books, Utica, Michigan) Series 1993 as follows:
1. Amendment of Section 5.03(i) of the Trust Agreement. Section
5.03(i) is hereby amended by deleting the parenthetical "(except those amounts
described in Section 5.06(d)(i) which shall be deposited in the Excess
Revenue Account)," appearing therein.
2. Amendment of Section 5.06(d) of the Trust Agreement. Section
5.06(d) is hereby amended by deleting the phrase "(i) on or before the
fifteenth day of each calendar month any monthly installment of Annual Rental
received by Trustee for any calendar month commencing June 1, 1993 to and
including May 1, 1994, and (ii)" appearing therein.
3. Amendment of Section 5.09 of the Trust Agreement. Section 5.09
is hereby amended by deleting the second paragraph thereof in its entirety and
substituting the following in lieu thereof:
"On December 15, 1993, the Trustee shall cause the transfer of
funds from the Capitalized Debt Service Account to the
Certificate Account in an amount necessary to satisfy Debt
Service on the Certificates on such date. On June 15, 1994,
the Trustee shall cause the transfer of funds from the
Capitalized Debt Service Account to the Certificate Account in
an amount necessary to satisfy Debt Service on the
Certificates on such date to the extent Debt Service is not
previously satisfied from amounts in the Certificate Account."
4. Effect of this Amendment. Except as otherwise expressly
amended herein, the Trust Agreement shall remain in full force and effect as
originally executed.
5. Capitalized Terms. Capitalized terms used herein and not
otherwise defined herein shall have the meanings specified in the Trust
Agreement.
6. Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
CHOICE OF LAW PRINCIPLES THEREOF AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
1
<PAGE> 2
7. Counterparts. This Amendment may be executed simultaneously in
any number of counterparts, each of which counterparts shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
XXXXXXXXXX, a
Nevada corporation
/s/
By: ____________________________________
Name: __________________________________
Its: ___________________________________
XXXXXXXXXX, a New York banking
corporation, as trustee
By: ____________________________________
Name: __________________________________
Its: ___________________________________
XXXXXXXXXX, as individual
Trustee
By: ____________________________________
XXXXXXXXXX
<PAGE> 3
7. Counterparts. This Amendment may be executed simultaneously in
any number of counterparts, each of which counterparts shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
XXXXXXXXXX, a Nevada corporation
By: _______________________________________
Name: _____________________________________
Its: ______________________________________
XXXXXXXXXX,
a New York banking corporation, as trustee
/s/
By: _______________________________________
Name: _____________________________________
Its: ______________________________________
XXXXXXXXXX, as individual Trustee
By: /s/ XXXXXXXXXX
----------------------------------------
XXXXXXXXXX
2
<PAGE> 4
ACKNOWLEDGEMENT AND CONSENT BY BORROWER
XXXXXXXXXX, a Michigan limited partnership, (i) hereby acknowledges
receipt of the First Amendment to Trust Agreement ("Trust Agreement Amendment")
to which this Acknowledgement and Consent is attached, entered into as of the
14th day of April, 1994 by and among XXXXXXXXXX, a Nevada corporation, as
Seller, XXXXXXXXXX, a New York banking corporation, as trustee, and XXXXXXXXXX,
as individual trustee, for the purpose of amending that certain Trust Agreement
("Trust Agreement") dated as of June 11, 1993 by and among the above mentioned
parties with respect to $5,415,300 Mortgage Pass-Through Certificates (Borders
Books, Utica, Michigan) Series 1993, (ii) hereby acknowledges and consents to
the execution and delivery of the Trust Agreement Amendment, it being agreed
that such consent shall not be construed to require the consent of the
undersigned to any future supplement to, or amendment, waiver, or modification
of the terms of the Trust Agreement, and, (iii) hereby represents and warrants
to each of the parties to the Trust Agreement and to the Certificateholders
that as of the date hereof there is no default or Event of Default which has
occurred and is continuing under any one or more of the Note Documents.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings specified in the Trust Agreement.
Dated April 14 , 1994.
XXXXXXXXXX,
a Michigan limited partnership
By: XXXXXXXXXX, a Michigan
corporation, its sole General Partner
By: /s/ XXXXXXXXXX
-----------------------------------
XXXXXXXXXX
President
(BORROWER)
3
<PAGE> 1
EXHIBIT 99.31
U.S. $5,187,000 July 1, 1993
BORDERS BOOKS, UTICA, MICHIGAN
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned, XXXXXXXXXX, a Michigan limited
partnership ("Maker"), hereby unconditionally promises to pay to the order of
XXXXXXXXXX ("Payee"), a New York banking corporation, c/o XXXXXXXXXX,
XXXXXXXXXX, or such other address given to Maker by Payee from time to time,
the principal sum of FIVE MILLION ONE HUNDRED EIGHTY-SEVEN THOUSAND and
NO/100THS DOLLARS ($5,187,000) in lawful money of the United States of America,
together with interest (calculated on the basis of a 360-day year of twelve
30-day months), on the unpaid principal balance from day-to-day outstanding,
computed from July 1, 1993, until Maturity (as defined below) at a rate per
annum equal to the lesser of (a) the Maximum Rate, or (b) eight and 45/100
percent (8.45%).
Section 1. Definitions. When used in this Note, the following terms
shall have the respective meanings specified herein or in the Section referred
to:
"Business Day" shall mean any day other than (i) a Saturday or Sunday,
or (ii) a day on which banks in New York or California are required by law to
close or are customarily closed.
"Event of Default" shall have the meaning assigned to it in Section 5.
"Holder" shall mean Payee, its successors and assigns and any
subsequent holder hereof.
"Lease Assignment" shall have the meaning assigned to it in Section 2
of the Loan Agreement.
"Loan Agreement" shall mean that certain Loan Agreement dated as of
June 11, 1993 between Maker and Payee, pursuant to which the Loan, as defined
in the Loan Agreement, evidenced by this Note is governed.
"Loan Documents" shall mean the Mortgage, as hereinafter defined,
together with all financing statements and other documents executed by Maker,
Payee and others, as described in Section 1.2 of the Loan Agreement.
"Make-Whole Premium" shall have the meaning assigned to it in Section
2 of the Loan Agreement.
1
<PAGE> 2
"Maturity" shall mean the earlier of the Maturity Date (as defined in
Section 3(a)) or the date on which the entire outstanding principal balance,
accrued unpaid interest and Make-Whole Premium become due and payable pursuant
to the provisions of any Loan Document by acceleration, upon the occurrence of
an Event of Default, by any prepayment or otherwise.
"Maturity Date" shall mean June 15, 2014.
"Maximum Rate" shall mean, as of any day, with respect to the Holder,
the highest nonusurious rate of interest, if any, permitted by applicable law
on such day.
"Mortgage" shall mean the Mortgage, Security Agreement, Assignment of
Leases and Rents and Fixture Filing, dated as of June 11, 1993, from Maker to
Payee, encumbering the Mortgaged Estate more particularly described therein
located in XXXXXXXXXX.
"Mortgaged Estate" shall mean the real and personal property encumbered
by the Mortgage and more particularly described therein.
"Pledge Agreement" shall have the meaning assigned to it in Section 2
of the Loan Agreement.
"Overdue Rate" shall mean a rate of interest equal to ten percent (10%)
on overdue interest and ten and 45/100 percent (10.45%) per annum on any other
overdue amounts due hereunder following an Event of Default.
"Redemption Price" shall have the meaning assigned to it in the Loan
Agreement.
"Trustee" shall mean XXXXXXXXXX, together with its successors and
assigns.
Section 2. Loan Agreement; Security.
(a) This Note is executed and delivered by the Maker pursuant to the
terms and conditions of the Loan Agreement.
(b) This Note and the payment and performance of the Maker's
obligations hereunder and pursuant to the other Loan Documents are secured by
the Mortgage, the Lease Assignment, the Pledge Agreement and certain of the
other Loan Documents.
Section 3. Maturity.
(a) This Note shall mature on the earlier of the Maturity Date or the
date on which the entire outstanding principal balance, accrued unpaid interest
and Make-Whole Premium become due and payable pursuant to the provisions of any
Loan
2
<PAGE> 3
Document by acceleration, upon the occurrence of an Event of Default, by any
required prepayment or otherwise.
(b) Upon Maturity this Note shall be due and payable in full in the
amount of the entire outstanding principal balance, accrued unpaid interest and
Make-Whole Premium, if any.
Section 4. Payment.
(a) The principal of and interest upon this Note shall be due and
payable as follows:
(i) Interest shall be due and payable semiannually in arrears
in the amounts set forth on Exhibit A attached hereto, commencing
December 15, 1993, and thereafter, on the fifteenth (15th) day of each
succeeding June and December during the term of this Note and on
Maturity; and
(ii) The principal of this Note shall be due and payable in the
amounts set forth on Exhibit A attached hereto, commencing on June 15,
1994, and thereafter, on the fifteenth (15th) day of June of each
succeeding year through and including the Maturity Date in the amount
of the then unpaid principal balance.
(b) Should any amount payable pursuant to this Note become due and
payable on any day other than a Business Day, such amount shall be payable on
the immediately preceding Business Day. All payments of any amount due and
payable pursuant to this Note shall be made by Maker to Payee in immediately
available federal reserve funds. Payments made to Payee by Maker hereunder
shall be applied first to accrued interest, then, if applicable, to the
Make-Whole Premium, and then to principal.
(c) All past due amounts payable pursuant to this Note other than
interest and, to the extent permitted by applicable law, past due interest upon
this Note shall bear interest at the lesser of (i) the Maximum Rate or (ii) the
Overdue Rate.
(d) This Note is not subject to prepayment, purchase or redemption at
the option of Maker prior to its expressed Maturity Date except on the terms
and conditions and in the amounts, if any, set forth in Section 3 of the Loan
Agreement. In the event that Maker shall be required to prepay this Note in
full pursuant to any Loan Document, then within the time provided in such Loan
Document the Holder of this Note shall be required to surrender this Note, duly
endorsed and assigned to Maker or in blank, at the Corporate Trust Office of
the Trustee.
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<PAGE> 4
Section 5. Events of Default and Remedies.
(a) Each of the "Events of Default" as defined in the Loan Agreement
shall be an Event of Default pursuant to this Note.
(b) Upon the occurrence of an Event of Default the holder of the Note
may exercise such rights and remedies as are provided in the Loan Agreement and
any other Loan Document.
Section 6. Waiver.
(a) Maker and each surety, endorser, guarantor and other party ever
liable for payment of any sums of money payable upon this Note, jointly and
severally waive presentment, demand, protest, notice of protest and nonpayment
or other notice of default, notice of acceleration and intention to accelerate
or other notice of any kind, and agree that their liability under this Note
shall not be affected by any renewal or extension of the time of payment
hereof, or by any indulgences, or by any release or change in any security for
the payment of this Note; and hereby consent to any and all such renewals,
extensions, indulgences, releases or changes, regardless of the number of such
renewals, extensions, indulgences, releases or changes.
(b) No course of dealing on the part of any Holder of this Note nor
any delay or failure on the part of any Holder of this Note to exercise any
right shall operate as a waiver of such right or otherwise prejudice such
Holder's rights, powers and remedies. No exercise or enforcement of any such
rights or remedies shall ever be held to exhaust any other right or remedy of
such Holder. The rights and remedies expressly provided for in this Note are
cumulative, and are not exclusive of any rights or remedies which any Holder of
this Note would otherwise have, including, without limitation, the rights and
remedies provided for in the Mortgage.
Section 7. Notice. Whenever this Note requires or permits any notice,
approval, request or demand from one party to another, the notice, approval,
request or demand shall be given in accordance with the provisions of the Loan
Agreement.
Section 8. Collection Expense. Promptly after Holder's demand
therefor, Maker shall pay Holder all costs and expenses incurred by it in the
collection of this Note in connection with each Event of Default hereunder or
pursuant to any of the other Loan Documents, including reasonable attorney's
fees, disbursements and other charges of Holder's attorneys actually incurred
for all services rendered in connection therewith.
Section 9. Registered Note. This Note is registered on the books of
Maker and is transferable only by surrender thereof at the offices of Maker,
duly endorsed or accompanied by
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<PAGE> 5
a written instrument of transfer duly executed by the registered Holder or its
attorney, duly authorized in writing. Payment of or on account of any amount
due and payable on this Note shall be made only to or upon the order in writing
of the registered Holder.
Section 10. Limited Recourse. Recourse under this Note is governed
by the provisions of Section 11 of the Loan Agreement.
Section 11. Applicable law. The law of the State of New York
(without giving effect to the choice of law principles thereof) shall govern
the validity, construction, enforcement and interpretation of this Note.
Dated as of the date first above written.
XXXXXXXXXX, a Michigan
limited partnership
By: XXXXXXXXXX,
a Michigan corporation,
its sole General Partner
By /s/
----------------------
Its President
5
<PAGE> 6
[Exhibit A Intentionally Omitted]
<PAGE> 1
EXHIBIT 99.32
NOTE PUT AGREEMENT
THIS NOTE PUT AGREEMENT ("Agreement") is made as of the 11th day of
June, 1993, by and between KMART CORPORATION ("Kmart"), a Michigan
corporation, and XXXXXXXXXX ("Lender"), a Nevada corporation, each of which
confirms and agrees as follows:
SECTION 1: RECITALS
1.1 Loan. Pursuant to the Loan Agreement ("Loan Agreement") dated
as of June 11, 1993, between Lender and XXXXXXXXXX ("Borrower"), a Michigan
limited partnership, Borrower has executed the Note in favor of Trustee (as
hereinafter defined) evidencing a loan to Borrower in the principal amount of
$5,187,000 ("Loan"). The proceeds of the Loan will be used to acquire, develop
and construct the Project which is located in Utica, Michigan, and will be
leased by Borders Inc., a Delaware corporation, which is a subsidiary of Kmart
("Subsidiary") pursuant to that certain Lease described in Exhibit 1.1C to the
Loan Agreement. As a material inducement to Lender to make the Loan Kmart has
agreed to enter into this Agreement with Lender.
1.2 Terms; Governing Document. All capitalized terms used herein,
unless otherwise expressly provided, shall have the meaning set forth in the
Loan Agreement. In the event of any conflict between the terms and provisions
of this Agreement and the Loan Agreement, the terms and conditions of this
Agreement shall govern and prevail.
SECTION 2; PURCHASE OF NOTE
2.1 Certain Definitions. For purposes of this Section 2, the
following terms shall have the following meanings:
"Business Day" means any day other than (i) Saturday or Sunday, or
(ii) a day on which banks in New York or California are required by law to
be closed or are customarily closed.
"Called Principal" means the unpaid principal balance of the Note
to be paid as part of the Purchase Price upon exercise of the Put.
"Certificates" shall have the meaning assigned to it in
Section 3.2.
"Certificate Differential" means the excess of the outstanding
principal amount of the Certificates over the outstanding principal amount of
the Note after taking into effect all prepayments or payments of principal in
respect thereof which have been made prior to the date of calculation.
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<PAGE> 2
"Completion of Construction" means completion of the Construction
in accordance with the Plans and Specifications referred to in the Loan
Agreement and the Lease.
"Consent and Agreement" means the Consent and Agreement dated as
of June 11, 1993 among Kmart, Lender, Borrower, Subsidiary and Trustee relating
to the Lease, Lease Guaranty, this Agreement and certain other related matters.
"Discounted Prepayment Value" means, with respect to any amount of
Called Principal, the amount obtained by discounting all Remaining Scheduled
Payments with respect to Called Principal from their respective scheduled due
dates to the Purchase Date with respect to such Called Principal, in accordance
with generally accepted financial practice and at a discount factor (applied on
a semiannual basis) equal to the Reinvestment Yield.
"Facility" means the specific "Improvements" as that term is
defined in the Lease pursuant to which the Subsidiary is a Tenant.
"Failure of Completion:" means Completion of Construction of the
Facility does not occur by December 30, 1994.
"Lease Guaranty" means that certain Lease Guaranty, described in
Exhibit 1.1C to the Loan Agreement, executed by Kmart Corporation which
guarantees the payment and performance of its Subsidiary under the Lease.
"Lease/Lease Guaranty Default" means, with respect to the Lease
and Lease Guaranty described in Exhibit 1.1C to the Loan Agreement, the failure
of (i) the Subsidiary under the Lease to pay any Annual Rental or Additional
Rent as defined in the Lease due under such Lease for a period of fifteen
(15) days after notice to Subsidiary of such default and (ii) Kmart to pay any
such Annual Rental or Additional Rent under the related Lease Guaranty, if any,
within fifteen (15) days after notice to Kmart of the Subsidiary's failure to
do so; provided that, no notice referred to in the foregoing clause (i) or
clause (ii) shall be required in the event that Landlord or Trustee shall be
stayed or prohibited by operation of law or otherwise from the giving of such
notice.
"Lease" means that certain Lease described in Exhibit 1.1C to the
Loan Agreement.
"Lender" means XXXXXXXXXX, a Nevada corporation, and any of its
successors and assigns.
"Make-Whole Premium" means, with respect to any amount of Called
Principal, an amount equal to the sum of (x) the excess (which shall in no
event be less than zero) , if any, of
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<PAGE> 3
Investment Grade and Kmart is unable to have such debt rated by another Rating
Agency within ninety (90) days thereafter; or
(iii) unsubordinated, senior, unsecured indebtedness of Kmart
ceases to be rated by both Moody's and S&P for any reason (except if, through
no fault of Kmart, both Moody's and S&P are unable to provide a rating due to a
business failure or interruption affecting both Moody's and S&P).
For purposes of determining whether a Rating Decline shall have occurred
pursuant to clause (i), the rating initially assigned by any Rating Agency
engaged by Kmart pursuant to clause (ii) to replace any rating withdrawn or
otherwise terminated by Moody's or S&P shall be compared to the last rating
assigned by Moody's or S&P, as the case may be, to determine if the
circumstances described in (i)(a) or (b) exist.
"Reinvestment Yield" means with respect to the Called Principal,
the lesser of 8.45% and the sum of (x) the yield to maturity implied by the
following: (i) the yields reported, as of 10:00 a.m. (New York City time) on
the third Business Day preceding the Purchase Date with respect to such Called
Principal, on the display designated as "Page 678" on the Telerate Service (or
such other display as may replace Page 678 on the Telerate Service) for
actively traded U.S. Treasury securities having a maturity equal (as near as
practicable) to the Remaining Average Life of the Called Principal being paid
or prepaid as of such Purchase Date, or (ii) if such yields shall not be
reported as of such time or the yields reported as of such time shall not be
ascertainable, the Treasury Constant Maturity Series yields reported, for the
latest day for which such yields shall have been so reported as of the third
Business Day preceding the Purchase Date with respect to such Called Principal,
in Federal Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a constant
maturity equal (as near as practicable) to the Remaining Average Life of the
Called Principal being paid or prepaid as of such Purchase Date, and (y) fifty
(50) basis points. Such implied yield shall be determined, if necessary, by
(a) converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between reported yields.
"Remaining Average Life" means, with respect to any amount of
Called Principal of the Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled
Payment of such Called Principal (but not of the interest thereon) by (b) the
number of years (calculated to the nearest one-twelfth year) which will elapse
between the Purchase Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
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<PAGE> 4
"Remaining Scheduled Payments" means, with respect to any amount
of the Called Principal, all payments of such Called Principal and interest
thereon that would be due on or after the Purchase Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
expressed maturity date.
"S&P" means Standard & Poor's Corporation, or any successor
thereto.
"Triggering Event" means (i) a Rating Decline, (ii) a Lease/Lease
Guaranty Default, or (iii) a Failure of Completion.
2.2 Purchase of Note Following a Triggering Event.
(a) If a Triggering Event occurs, Lender will have the
right to require Kmart to purchase the Note in whole but not in part on the
Purchase Date at the Purchase Price.
(b) If a Triggering Event occurs and subsequent to such
Triggering Event another Triggering Event occurs, Lender will again have the
rights, and Kmart again will have the obligations, set forth in this Section
2.2.
(c) Within seven (7) Business Days after the first date
on which a Triggering Event has occurred, Kmart shall cause notice thereof to
be mailed to Lender. Such notice shall (i) state that a Triggering Event has
occurred, (ii) describe any action that caused such Triggering Event and the
date of the occurrence thereof and (iii) offer to purchase the Note in
accordance with this Agreement. Kmart's notice and other obligations shall
continue so long as the Note remains outstanding. Any failure of Kmart to give
such notice or to make such offer to purchase the Note shall not affect the
obligations of Kmart under this Section 2.2.
(d) In the event Lender elects to exercise the Put,
Lender shall do so by causing a notice to be mailed to Kmart within thirty (30)
days after the first date on which notice of a Triggering Event has been
received in accordance with Section 2.2(c) (or if Kmart fails to give the
notice required by Section 2.2(c), at any time after the occurrence of such
Triggering Event), which notice shall state (i) the occurrence of a Triggering
Event, (ii) the Purchase Date, (iii) the estimated Purchase Price, (iv) the
manner in which the Purchase Price has been determined, and (v) that Lender
elects to have Kmart purchase the Note on the Purchase Date. Kmart shall not
be excused from any obligation it may have under this Agreement by reason of
any notice required hereunder not being timely given or being defective,
provided, however, Kmart's time for performance shall be extended by a period
equal to any period of delay in receiving such notice or caused by the
correction of such notice, if defective.
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<PAGE> 5
(e) In connection with the purchase of the Note pursuant to this
Section 2.2, (i) in the event Trustee does not have physical possession of the
Note, Lender will be required to surrender on or before the Purchase Date, at
the principal office of the Trustee, duly endorsed without recourse or assigned
to Kmart or in blank without recourse and to assign without recourse all right,
title and interest of Lender under the Loan Documents; and (ii) Kmart shall, on
or before 10:00 a.m. (New York City time) on the Purchase Date, pay the
Purchase Price to Trustee, by wire transfer or immediately available funds in
lawful currency of the United States of America at XXXXXXXXXX for credit to
Account Number XXXXXXXXXX (Mortgage Pass-Through Certificates (Borders Books,
Utica, Michigan) Series 1993). The Trustee shall hold the Note until payment
in full of the Purchase Price to the Trustee on the Purchase Date and shall
then and thereupon surrender the Note to Kmart.
SECTION 3. SUCCESSORS AND ASSIGNS
3.1 General. This Agreement shall be binding upon Kmart and its
respective successors and assigns; provided that Kmart shall not assign any of
its obligations hereunder without the prior written consent of Trustee; and
provided further that no assignment of any of its obligations hereunder shall
relieve Kmart thereof and Kmart shall remain primarily and originally liable
thereon. Each successive holder or holders of the Note shall have all rights
and privileges of Trustee hereunder.
3.2 Consent to Assignment. Kmart hereby acknowledges and consents to
the sale, conveyance, transfer and absolute assignment by Lender of all of its
right, title and interest under this Agreement and in the Note and any and all
other Loan Documents to XXXXXXXXXX ("Trustee") as Trustee, pursuant to the
Trust Agreement under which the Mortgage Pass-Through Certificates (Borders
Books, Utica, Michigan) Series 1993 ("Certificates") will be issued. Trustee
shall have the sole right to exercise all rights, privileges and remedies
(either in its own name or in the name of the Lender for the use and benefit of
Trustee) which by the terms of this Agreement or by applicable law are
permitted or provided to be exercised by the Lender. Kmart further
acknowledges and agrees that each successive holder or holders of the Note,
including but not limited to Lender, accepts transfer of the Note in reliance
upon Kmart's representations, warranties, covenants, agreements and other
obligations hereunder. In order to further induce any such successive holder
or holders of the Note, including but not limited to, Lender, to accept such
assignment and its obligations under this Agreement, Kmart hereby makes the
following representations, warranties, covenants and agreements:
(i) Kmart does not have any right, including any claim,
counterclaim, right of setoff or deduction or other
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<PAGE> 6
defense of any kind to withhold performance of its obligations hereunder
(collectively, "Kmart Defenses");
(ii) in the event Kmart becomes aware of any Kmart Defenses,
Kmart hereby waives and agrees not to assert the same against the Trustee or any
other holder of the Note;
(iii) upon consummation of the sale, conveyance, transfer and
absolute assignment to Trustee, Kmart waives any right to challenge Trustee's
status as a bona fide purchaser of the Note for value and holder in due course;
(iv) the Trustee and each holder of the Note are and shall be
third-party beneficiaries of this Agreement;
(v) upon consummation of the sale, conveyance, transfer and
absolute assignment to Trustee, Trustee and its successors and assigns shall be
deemed to be the Lender hereunder, and shall succeed to all rights of Lender
hereunder; and
(vi) Kmart hereby acknowledges and agrees that any and all
rights hereunder granted to Trustee may be exercised and enforced by Trustee,
including pursuant to legal process (and that any such exercise and enforcement
by Trustee shall have the same force and effect as the exercise and enforcement
by Lender).
SECTION 4. KMART'S REPRESENTATIONS AND WARRANTIES.
Kmart represents and warrants that (i) it is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Michigan and is duly qualified and in good standing as a foreign corporation
authorized to do business wherever required to do so by applicable law, (ii) it
has full power, authority and legal right to execute and deliver, and to
perform and observe the provisions of the Lease Guaranty, the Consent and
Agreement, and this Agreement and the Subsidiary similarly has such full power,
authority and legal right to execute and deliver and to perform and observe the
provisions of the Lease and the Consent and Agreement, (iii) there has been no
material adverse change in the business or condition, financial or otherwise,
of Kmart or the Subsidiary since the date of Kmart's last audited financial
report, (iv) there are no actions, proceedings or investigations pending or
threatened against or affecting Kmart or the Subsidiary (or any basis therefor
known to Kmart) before any court, arbitrator, administrative agency or other
governmental authority, which if adversely decided would materially and
adversely affect the financial condition or operations of Kmart or the
Subsidiary, or their respective ability to carry out any of the terms,
covenants and conditions of the Lease, the Lease Guaranty, the Consent and
Agreement, this Agreement or any other document relating to the Loan or the
Lease, (v) the execution and delivery by Kmart and the Subsidiary
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<PAGE> 7
respectively of the Lease, the Lease Guaranty, the Consent and Agreement, this
Agreement, or any of the other documents relating to the Loan or the Lease (to
which it is a party) have been duly authorized by all necessary corporate
action and each is enforceable in accordance with its terms, (vi) neither the
execution and delivery of the Lease, the Lease Guaranty, the Consent and
Agreement, this Agreement or any other document relating to the Loan or the
Lease (to which it is a party), nor compliance with the terms and provisions
thereof, conflicts or will conflict with or result in a breach of any of the
terms, conditions or provisions of the Certificate of Incorporation or Bylaws
of Kmart or the Subsidiary, or of any law, rule, regulation, order, writ,
injunction, judgment or decree of any court, arbitration or administering
agency or governmental authority, or of any agreement or other instrument to
which Kmart or Subsidiary is a party or by which it or its assets is bound or
subject, or constitutes or will constitute a default thereunder, and (vii)
neither Kmart nor Subsidiary is in default under any judgment, order, decree,
rule or regulation of any court, arbitrator, administrative agency or other
governmental authority to which it may be subject.
SECTION 5. GENERAL
5.1 Counterparts. This Agreement may be executed in counterparts
by the parties but all such counterparts together shall constitute one and the
same document.
5.2 Notices. All notices, requests, demands or other communications
pursuant to this Agreement shall be in writing and shall be addressed, in the
case of Kmart, to Kmart, 3100 West Big Beaver Road, Troy, Michigan 48084-3163,
Attention: Senior Vice President, Real Estate Department; in the case of
Lender, to XXXXXXXXXX, XXXXXXXXXX, Attention: XXXXXXXXXX; in the case of
Trustee, which shall receive copies of all communications hereunder, to
XXXXXXXXXX, c/o XXXXXXXXXX, XXXXXXXXXX, Attention: XXXXXXXXXX, Corporate Trust
Division; or to such other address as any party may designate in writing. All
notices hereunder shall be effective: (a) three (3) days after deposit in the
United States mail, postage prepaid, registered or certified mail, return
receipt requested; (b) upon delivery, if delivered in person, to the address
set forth above; or (c) upon delivery, if sent by overnight courier, such as
Federal Express or Airborne Express.
5.3 Section Headings. Section headings are not to be considered a
part of this Agreement and are included solely for convenience of reference and
are not intended to be full or accurate descriptions of the contents thereof.
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5.4 Applicable Law. This Agreement shall be construed and
enforced under the laws of the State of New York without giving effect to the
choice of law principles thereof.
5.5 Severability. Should any provision of this Agreement for any
reason be declared unenforceable by a court of competent jurisdiction
(sustained on appeal, if any), such unenforceability shall not affect the
enforceability of any other provision hereof or thereof, all of which shall
remain in force and effect as if this Agreement had been executed with the
unenforceable provisions thereof eliminated and it is hereby declared the
intention of the parties hereto that they would have executed the remaining
provision of this Agreement without including therein any such part, parts or
portion which may for any reason be hereafter declared unenforceable, provided
that, if any provision of this Agreement shall be unenforceable by reason of a
final judgment of a court of competent jurisdiction based on a court's ruling
(sustained on appeal, if any) that such provision is unenforceable because of
the excessive degree of magnitude of the obligation imposed thereby on any
party, that unenforceable obligation shall be reduced in magnitude or degree by
the minimum degree or magnitude necessary in order to permit the provision to
be enforceable by Lender. In the event the provisions of the immediately
preceding sentence apply, the parties shall make appropriate adjustment to the
provisions of this Agreement to give effect to the benefits intended to be
conferred upon the parties hereby.
5.6 Waiver. Lender may waive any requirement herein. No delay or
omission by Lender in exercising any right hereunder shall impair any right of
Lender under this Agreement or be construed as Lender's waiver of or
acquiescence in any breach. No such delay or omission by Lender shall be
construed as a variation or waiver of any of the terms, conditions or
provisions of this Agreement. No purported waiver of any right hereunder shall
be effective unless it is written and signed by an authorized representative of
Lender. No waiver by Lender of any breach shall constitute a waiver of any
other prior or subsequent breach or of the same breach after notice to Kmart
demanding strict performance. Lender shall not be estopped to take or from
taking any action with respect to any breach because of any delay by Lender in
giving notice of such breach or exercising any remedy based thereon.
5.7 Submission to Jurisdiction. Kmart hereby consents to the
jurisdiction of any state or federal court located within the County of New
York, State of New York and irrevocably agrees that all actions or proceedings
relating to this Agreement may be litigated in such courts and Kmart waives any
objection which it may have based on improper venue or forum nonconveniens to
the conduct of any proceeding in any such court, waives personal service of any
and all process upon it, and consents that all such service or process be made
by registered or certified mail (return receipt requested) or messengered to it
at its address
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<PAGE> 9
set forth in Section 5.2 or to its Agent referred to below at such Agent's
address set forth below, and, that service so made shall be deemed to be
completed in accordance with Section 5.2. Kmart hereby appoints Prentice Hall
Corporation System, Inc. with an office on the date hereof at 15 Columbus
Circle, New York, New York 10023 as its Agent for the purpose of accepting
service of any process within the State of New York and shall execute any
confirmation thereof requested by Lender. Nothing contained in this Section
shall affect the right of Lender to serve legal process in any other manner
permitted by law, to bring any action or proceeding in the courts of any
jurisdiction against Kmart, or to enforce a judgment obtained in the courts of
any other jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above set forth.
KMART CORPORATION, a Michigan corporation
By: /s/
------------------------------
M. L. Skiles
Senior Vice President
XXXXXXXXXX, a
Nevada corporation
By: /s/
------------------------------
Its: Vice President
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<PAGE> 1
EXHIBIT 99.33
- --------------------------------------------------------------------------------
---------------
TRUST AGREEMENT
---------------
between
XXXXXXXXXX,
as Seller
and
XXXXXXXXXX
as Trustee
------------------------
Dated as of May 14, 1993
------------------------
$16,332,700
Mortgage Pass-Through Certificates
(The Crossroads at Buckland Hills, Manchester, Connecticut)
Series 1993
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
----
PREFACE........................................................ 1
ARTICLE I
DEFINITIONS.................................................... 1
ARTICLE II
CONVEYANCE OF MORTGAGE LOAN; TRUST FUND
Section 2.01 Conveyance of Mortgage Loan.................... 10
Section 2.02 Acceptance by Trustee.......................... 11
Section 2.03 Trust Fund..................................... 12
Section 2.04 Execution and Authentication of
Certificates................................... 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.01 Representations and Warranties of Seller....... 12
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates............................... 16
Section 4.02 Registration of Transfer and Exchange of
Certificates................................... 17
Section 4.03 Mutilated, Destroyed, Lost or Stolen
Certificates................................... 19
Section 4.04 Persons Deemed Owners.......................... 19
Section 4.05 Appointment of Paying Agent.................... 19
ARTICLE V
TRUSTEE'S DUTIES WITH RESPECT TO MORTGAGE LOAN;
ESTABLISHMENT OF ACCOUNTS
Section 5.01 Calculation of Distributions................... 20
Section 5.02 Receipt of Lease Payments; Collection of
Lease and Lease Guaranty Payments;
Collection of Mortgage Loan Payments;
Investment Direction........................... 20
Section 5.03 Establishment of Certificate Account;
Deposits in Certificate Account................ 21
Section 5.04 Permitted Withdrawals From the Certificate
Account........................................ 22
Section 5.05 Excess Revenue Account......................... 23
Section 5.06 Permitted Withdrawals from the Excess
Revenue Account................................ 23
Section 5.07 Extraordinary Expense Reserve Account.......... 24
Section 5.08 Permitted Withdrawals from the
Extraordinary Expense Reserve Account.......... 24
i
<PAGE> 3
Section 5.09 Capitalized Debt Service Account................. 26
Section 5.10 Realization Upon Defaulted Mortgage Loan......... 26
Section 5.11 Trustee Compensation............................. 27
Section 5.12 Rights of the Certificateholders................. 28
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01 Distributions.................................... 28
Section 6.02 Statements to Certificateholders................. 29
Section 6.03 Advances by Trustee.............................. 30
ARTICLE VII
THE SELLER
Section 7.01 Indemnification; Third Party Claims.............. 30
Section 7.02 Maintaining Corporate Existence of the
Seller........................................... 30
Section 7.03 Limitation on Liability of the Seller............ 31
Section 7.04 Seller May Resign................................ 31
ARTICLE VIII
DEFAULT
Section 8.01 Events of Default................................ 32
Section 8.02 Waiver of Defaults............................... 32
Section 8.03 Notification to Certificateholders............... 33
Section 8.04 Rights of Certificateholders to Direct
Proceedings....................................... 33
ARTICLE IX
CONCERNING THE TRUSTEES
Section 9.01 Duties of Trustee................................. 33
Section 9.02 Certain Matters Affecting Trustee................. 35
Section 9.03 Trustee Not Liable for Certificates or
Mortgage Loan..................................... 46
Section 9.04 Trustee May Own Certificates...................... 36
Section 9.05 Trustee's Fee and Expenses........................ 36
Section 9.06 Eligibility Requirements for Trustee.............. 37
Section 9.07 Resignation and Removal of Trustee................ 37
Section 9.08 Successor Trustee................................. 38
Section 9.09 Merger or Consolidation of Trustee................ 38
ARTICLE X
TERMINATION
Section 10.01 Termination....................................... 39
Section 10.02 Notice; Final Distribution........................ 39
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ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Severability of Provisions...................... 40
Section 11.02 Limitation on Rights of Certificateholders...... 40
Section 11.03 Amendment....................................... 41
Section 11.04 Solicitation of Certificateholders.............. 42
Section 11.05 Recordation of Agreement........................ 42
Section 11.06 Duration of Agreement........................... 42
Section 11.07 Governing Law................................... 43
Section 11.08 Notices......................................... 43
Section 11.09 Counterparts.................................... 43
Section 11.10 Jurisdiction.................................... 43
Section 11.11 Gender; Number.................................. 44
TESTIMONIUM..................................................... 45
EXHIBIT A-1--Mortgage Loan Schedule............................. A-1-1
EXHIBIT A-2--Mortgage Certificate Schedule...................... A-2-1
EXHIBIT A-3--Contents of Mortgage File.......................... A-3-1
EXHIBIT B--Form of Certificate.................................. B-1
EXHIBIT C--Form of Trustee Certification........................ C-1
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TRUST AGREEMENT
THIS TRUST AGREEMENT, dated as of May 14, 1993, is executed by and
among XXXXXXXXXX, as seller (together with its permitted successors, in such
capacity, "Seller"), and XXXXXXXXXX, a New York banking corporation, as trustee
(together with its permitted successors and assigns, "Trustee").
In consideration of the premises and the mutual agreements hereinafter set
forth, the Seller and the Trustee agree as follows:
PREFACE
Each Certificate evidences a beneficial ownership interest in the Trust
Fund, the assets of which include, among other things, a Mortgage Loan. The
Certificates are equally and ratably secured by and payable from the proceeds
of the Mortgage and Mortgage Note, respectively (as each such term is defined
herein).
Each Certificate is paid principal and/or interest, as set forth on the
Debt Service schedule on such Certificate, on a semiannual basis referred to
herein as the Remittance Dates, (the fourteenth day of the month of each Due
Date). Payments under the Mortgage Note are payable semiannually on the Due
Dates, (the fourteenth day of each month in which payment on the Mortgage Note
is due). The Available Distribution Amount is calculated on the Determination
Date.
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
"Administrative Expenses": The ordinary and necessary expenses incurred
in the course of administrating the affairs of the Trust, excluding any
Liquidation Expenses.
"Agreement": This Trust Agreement and all amendments hereof and
supplements hereto.
"Annual Rental": Has the meaning assigned in Article 4 of each Lease.
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"Appraisal": An appraisal or certification as to value made or caused
to be made by the Seller. Such appraisal shall be signed prior to the funding
of the Mortgage Loan by a qualified appraiser, duly appointed or approved by
the Seller, who at the time of such appraisal had no interest, direct or
indirect, in the Mortgaged Estate or in any loan made on the security thereof,
and whose compensation was not affected by the approval or disapproval of the
Mortgage Loan.
"Assignment of Mortgage": The Assignment of the Mortgage dated as of
May 14, 1993 between Seller and Trustee, the Assignment of Lease Assignment
dated as of May 14, 1993, between Seller and Trustee, and any other notice of
transfer or equivalent instrument, in recordable form, sufficient under the
laws of the jurisdiction where the Mortgaged Estate is located to reflect of
record the sale, conveyance, transfer and absolute assignment of the Mortgage
to the Trustee.
"Available Distribution Amount": As to any Remittance Date, an
amount equal to the amount on deposit in the Certificate Account as of the
close of business on the related Determination Date.
"Borrower": XXXXXXXXXX, formed under the laws of the State of
Connecticut, and its successors and assigns, having its principal office at c/o
XXXXXXXXXX.
"Business Day": Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking or savings and loan institutions in the city in which the
principal corporate trust offices of the Trustee are located are authorized or
obligated by law or executive order to be closed.
"Capitalized Debt Service Account": The trust account described in
Section 5.09.
"Capitalized Debt Service Reserve": Has the meaning assigned thereto in
Section 2 of the Loan Agreement.
"Cash Liquidation": Recovery of all cash proceeds by the Trustee with
respect to the termination of the defaulted Mortgage Loan following an Event of
Default, including Insurance Proceeds, condemnation awards and other payments
or recoveries (whether made at one time or over a period of time) which the
Trustee deems to be finally recoverable, in connection with the sale or
assignment of the Mortgage Loan, or a trustee's sale, foreclosure sale or other
disposition of the Mortgaged Estate, but only if title to the related Mortgaged
Estate was not acquired by foreclosure or deed in lieu of foreclosure by the
Trustee pursuant to Section 5.10 of this Agreement.
"Certificate" or "Certificates": The Certificate or Certificates
evidencing a beneficial cwnership interest in the
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Mortgage Loan executed by the Trustee substantially in the form
set forth in Exhibit B hereto.
"Certificate Account": The trust account described in Section 5.03.
"Certificate Balance": with respect to all the Certificates, the
original principal amount of the Certificates less all payments, prepayments
and redemptions of principal thereof, including without limitation any
payments of principal comprising Debt Service; and with respect to any
Certificate, the original principal amount of such Certificate less all
payments, prepayments and redemptions of principal thereof, including without
limitation any payments of principal comprising Debt Service on such
Certificate.
"Certificate Differential": Has the meaning assigned to it in Section 2
of the Loan Agreement and Section 2.1 of the Note Put Agreement.
"Certificateholder", "Certificateholders", "Holder" or "Holders": The
person or persons in whose name a certificate is registered in the Certificate
Register, except that, solely for the purposes of giving any consent, waiver,
request or demand pursuant to this Agreement, any Certificate registered in the
name of the Seller or any affiliate thereof shall be deemed not to be
outstanding and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage
Interests necessary to effect any such consent, waiver, request or demand has
been obtained. The Trustee shall be able to conclusively rely on a certificate
of the Seller in determining which Certificates are registered to an affiliate.
"Certificate Register": The register maintained pursuant to
Section 4.02.
"Certificate Schedule": The Certificate Schedule attached hereto as
Exhibit A-2 setting forth the following information for each Certificate issued
as of the Closing Date: (i) Certificate Number; (ii) the Certificate Balance as
of the Closing Date; and (iii) the Debt Service on such Certificate.
"Closing Costs": An amount equal to $794,427.56 which shall be
disbursed to Placement Agent on the Closing Date.
"Closing Date": May 20, 1993.
"Code": The Internal Revenue Code of 1986, as amended.
"Consent and Agreement": The Consent and Agreement dated as of May 14,
1993 among Kmart, Seller, Borrower, Tenants and Trustee relating to the Leases,
the Lease Guaranties, the Note Put Agreement and certain other related matters.
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"Corporate Trust Office": The principal Office of the Trustee in the
State of California at which at any particular time its corporate trust
business shall be administered, when office at the date of execution of this
instrument is located at XXXXXXXXXX.
"Debt Service": The interest and/or principal payable semiannually on
the Remittance Date as stated on a specific Certificate.
"Determination Date": The 5th day (or if such 5th day is not a Business
Day, the Business Day immediately following such 5th day) of the month of the
related Remittance Date.
"Due Date": With respect to the Mortgage Loan, the fourteenth day
of the month on which each Mortgage Payment is due on the Mortgage Loan,
exclusive of any days of grace.
"Due Period": With respect to any Remittance Date, the period ending on
the Due Date for the month of such Remittance Date and commencing on the Due
Date preceding such Remittance Date.
"Eligible Investments": One or more of the following:
(i) direct obligations of the United States of America,
(ii) obligations fully guaranteed, both as to principal and
interest, by the United States of America;
(iii) certificates of deposit issued by, or bankers'
acceptances of, or time deposits with, a bank or trust company organized under
the laws of the United States or any state thereof, having capital, surplus and
undivided profits aggregating at least $100,000,000 and whose long-term
certificates of deposit are, at the time of acquisition thereof, rated in the
highest rating category for such securities by S&P and Moodys'; and
(iv) taxable government money market portfolios restricted to
obligations with maturities of one year or less, issued or guaranteed by the
full faith and credit of the United States which, at the time of such
investment, are then rated in the highest rating category of S&P and Moody's
(the "highest rating category" as used in this definition shall mean (A) a
rating which would be assigned by S&P, as of the date first above written,
equivalent to or higher than "AAAm" or "AAAmG" with respect to money-market
securities; and (B) a rating which would be assigned by Moody's as of the date
first above written, equivalent to or higher than "Am" with respect to
money-market securities).
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provided that any such obligations of the types described in clauses (i)
through (iii) above shall not have a maturity later than the earlier of 90 days
and the Due Date immediately following the acquisition thereof; provided
further, that any such obligations of the types described in clauses (i) and
(ii) above may be made through a repurchase agreement in commercially
reasonable form with a bank or other financial institution (which may be the
Trustee) the senior unsecured debt of which is then assigned an A rating or
better by S&P or Moody's, so long as title to the underlying obligations shall
pass to the Trustee and that such underlying obligations shall be segregated in
a custodial or trust account of or for the benefit of the Trustee.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default": Any event of default described in Section 8.01.
"Excess Revenue Account": The trust account described in Section 5.05.
"Extraordinary Expense Advances": All reasonable and necessary "out
- -of-pocket" costs and expenses of the Trustee in enforcing the Note Documents
or otherwise reimbursable pursuant to the provisions thereof, and in compliance
with the obligations under Section 5.10.
"Extraordinary Expense Reserve Account": The account or accounts
described in Section 5.07.
"FDIC": Federal Deposit Insurance Corporation or any successor
organization.
"Insurance Proceeds": Proceeds paid by any insurer pursuant to any
insurance policy including self-insurance proceeds paid by Kmart or any of its
subsidiaries, covering the Mortgaged Estate.
"Kmart": Means Kmart Corporation, a Michigan corporation, and its
successors and assigns.
"Lease" or "Leases": Has the meaning assigned thereto in Section 1.1
of the Loan Agreement.
"Lease Guaranty" or "Lease Guaranties": Has the meaning assigned
thereto in Section 1.1 of the Loan Agreement.
"Liquidated Mortgage Loan": The Mortgage Loan after an Event of Default
when the Trustee has reasonably determined that all amounts which they expect
to recover from or on account of the Mortgage Loan have been recovered.
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"Liquidation Expenses": Expenses which are incurred by the Trustee in
connection with the liquidation of the defaulted Mortgage Loan, such expenses
including, without limitation, legal fees and expenses, any unreimbursed amount
expended by the Trustee pursuant to Section 5.10 (to the extent such amount is
reimbursable under the terms of Section 5.10) respecting the Mortgage Loan and
any related and unreimbursed expenditures for real estate property taxes or for
property restoration or preservation.
"Liquidation Proceeds": Cash (including Insurance Proceeds) received by
the Trustee in connection with the liquidation of the Mortgage Loan, if
defaulted, whether through the sale of the Mortgage Loan, the sale of the
Mortgaged Estate pursuant to foreclosure sale or otherwise, or the sale of the
Mortgaged Estate if the Mortgaged Estate is acquired in satisfaction of the
Mortgage Loan other than amounts required to be paid to the Mortgagor pursuant
to law or the terms of the Mortgage Note.
"Loan Agreement": The Loan Agreement dated as of May 14, 1993, between
Seller and Borrower, pursuant to the terms and conditions of which the Mortgage
Loan was made.
"Make-Whole Premium": Has the meaning assigned to it in Section 2 of
the Loan Agreement and Section 2.1 of the Note Put Agreement. The Trustee
shall be provided with a certificate evidencing the calculation of such amount
by the Holders of Certificates evidencing Percentage Interests in the aggregate
not less than 66-2/3% at any time requested by the Trustee, or in the event of
their failure to provide such certificate, it shall be provided by Seller.
"Moody's": Moody's Investor Service, Inc., a corporation organized and
existing under the laws of the State of Delaware, its successors and assigns.
"Mortgage": Has the meaning assigned thereto in Section 1.2 of the
Loan Agreement.
"Mortgage File": The items referred to in Exhibit A-3 annexed hereto
pertaining to the Mortgage Loan.
"Mortgage Loan": The loan pursuant to the Loan Agreement together with
all right, title and interest of Seller relating thereto, evidenced by the
Mortgage Note and secured by the Mortgage, sold, conveyed, transferred and
absolutely assigned by the Seller to the Trustee and which is the subject of
this Agreement and included in the Trust Fund. The Mortgage Loan is identified
on the Mortgage Loan Schedule annexed hereto as Exhibit A-1.
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"Mortgage Loan Schedule": The schedule attached hereto as Exhibit A-1
setting forth the following information for the Mortgage Loan: (i) the
Mortgagor's name; (ii) the Mortgaged Estate; (iii) the maturity date; (iv) the
Mortgage Note rate; (v) the First Due Date; (vi) a schedule setting forth the
Mortgage Payments; and (vii) the original Principal Balance of the Mortgage
Loan.
"Mortgage Note": The 8.4% Collateralized Promissory Note executed by
the Mortgagor or other evidence of the indebtedness of the Mortgagor secured
by the Mortgage.
"Mortgage Payment": The scheduled payment set forth in Exhibit A-1 of
principal and interest on the Mortgage Loan. Specifically, with respect to
interest, each May 14 and November 14, commencing November 14, 1993 and to and
including May 14, 2014, and with respect to principal, each May 14, commencing
May 14, 1994 and to and including May 14, 2014 (before any adjustment to such
payments by reason of any bankruptcy or similar proceeding or any moratorium or
similar waiver or grace period).
"Mortgaged Estate": The real and personal property securing the
Mortgage Note and the improvements constructed with the proceeds of the
Mortgage Loan, if any.
"Mortgagor": The Borrower, as obligor on the Mortgage Note.
"NAIC": The National Association of Insurance Commissioners, its
successors and assigns or the Securities Valuation office (SVO) thereof which
provides insurance companies with uniform prices and quality ratings.
"Net Liquidation Proceeds": Liquidation Proceeds net of Liquidation
Expenses.
"Note Documents": The Loan Agreement, the Mortgage Note, the Mortgage
and each other document which constitutes a Loan Document pursuant to the terms
and provisions of the Loan Agreement.
"Note Put Agreement": The Note Put Agreement, dated as of May 14, 1993,
by and between Seller and Kmart pursuant to the terms and conditions of which
a put of the Mortgage Loan may be made on the occurrence of certain events
specified therein.
"Officer's Certificate": A certificate signed by the Chairman of the
Board, the Chief Executive Officer, the President or a Vice President, the
Treasurer or the Secretary or one of the Assistant Treasurers or Assistant
Secretaries or any other duly authorized officer of the Seller and delivered to
the Trustee as required by this Agreement.
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"Opinion of Counsel": A written opinion of an attorney at law admitted
to practice in any state of the United States or the District of Columbia, or a
written opinion of a law firm (such attorney or law firm herein referred to as
"Counsel"), who may, in the case of an attorney, except as otherwise expressly
provided in this Agreement, be in-house counsel for the Seller and reasonably
acceptable to the Trustee.
"Paying Agent": The Person designated as the Paying Agent pursuant to
Section 4.05.
"Percentage Interest": The percentage of the whole undivided
beneficial interest in the Trust Fund held by a Holder, to be evidenced by a
Certificate which shall state the percentage interest therein.
"Permitted Encumbrances": The Permitted Encumbrances as defined in the
Mortgage.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Placement Agent": XXXXXXXXXX and its successors and assigns.
"Pledge Agreement": Has the meaning assigned thereto in Section 1.2 of
the Loan Agreement.
"Principal Balance": The principal balance of the Mortgage Loan as of
any Due Date (before any adjustment to such amortization schedule by reason of
any delay caused by any bankruptcy or similar proceeding or any moratorium or
similar waiver or grace period) which for purposes hereof initially
$15,616,000.
"Principal Prepayment": Any payment or other recovery of principal on
the Mortgage Loan, including any prepayment of principal pursuant to Section 3
of the Loan Agreement, Insurance Proceeds and condemnation awards to the extent
required to be deposited in the Certificate Account (other than Liquidation
Proceeds and monthly receipts of amounts referred to in Section 5.02(a)), which
is received in advance of its scheduled Due Date, and excluding any amount of
interest representing scheduled interest due.
"Project": The facilities comprised of retail stores constructed
by Borrower for lease by the Tenants on real property which will be acquired by
Borrower and which such facilities will be constructed on behalf of Borrower
using the proceeds of the Mortgage Loan.
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"Purchase Agreement": The agreement between the Seller and XXXXXXXXXX,
as purchaser, to sell and purchase Certificates.
"Purchase Price": Has the meaning assigned thereto in Section 2.1 of
the Note Put Agreement.
"Put": The right to require purchase of the Mortgage Note by Kmart
pursuant to the Note Put Agreement.
"Rating Agency": With respect to the Certificates shall mean NAIC; it
NAIC or a successor is no longer in existence, "Rating Agency" shall be such
nationally recognized statistical credit rating agency, or other comparable
Person, designated by Holders of Certificates evidencing Percentage Interests
in the aggregate of not less than 66-2/3% at any time requested by Trustee,
notice of which designation shall be given to the Trustee; references herein
to the two highest rating categories of a Rating Agency shall mean AA or
better, in the case of S&P and in the case of any other Rating Agency shall
mean such ratings without any plus or minus.
"Record Date": The close of business on the first Business Day of the
month of the related Remittance Date.
"Redemption": The redemption (or prepayment) of the Certificates, in
whole or in part, as provided in this Agreement.
"Redemption Date": The date determined in accordance with the
provisions of this Agreement for Redemption of the Certificates.
"Regulations": The Treasury Regulations, including proposed,
temporary and final regulations promulgated under the provisions of the Code.
"Remittance Date": With respect to the Certificates, an interest
payment date of November 14, 1993, and each November 14, and May 14, thereafter
until May 14, 2014, or the payment of the unpaid principal balance in full.
"Responsible Officer": When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors of Trustee, the Chairman or
Vice Chairman of the Executive or Standing Committee of the Board of Directors
of Trustee, the President, the Chairman of the Committee on Trust Matters, any
Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant
Cashier, any Trust Officer or Assistant Trust Officer, the Controller and any
Assistant Controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also, with respect to a particular matter, any other officer to whom such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.
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"Seller": XXXXXXXXXX and its successors in interest.
"S & P": Standard & Poor's Corporation and its successor in interest.
"Tenant" or "Tenants": One or more of Borders Books, Inc., The Sports
Authority, Inc. or OfficeMax, Inc., all of which are subsidiaries of Kmart and
have entered into a Lease with Borrower to occupy a facility comprised of a
retail store in the Project.
"Transfer Assurance": A Transfer Assurance required pursuant to
Section 4.02(d).
"Trust": The grantor trust created pursuant to this Agreement.
"Trustee": XXXXXXXXXX, and its permitted successors hereunder.
"Trustee's Fee": The amount of the annual fee paid to the Trustee for
its ordinary fees and expenses arising under this Agreement, equal to $3,000,
payable by Borrower pursuant to Section 9.13 of the Loan Agreement. Such fee
shall constitute all compensation payable under this Agreement, except for the
payment of certain additional amounts (which shall not be payable by Borrower)
for such extraordinary services and as otherwise provided in this Agreement.
"Trust Fund": The corpus of the Trust, to the extent described herein,
consisting of the Mortgage Loan, including all rights which secure the
obligation of the Borrower thereunder, all Note Documents, such assets as shall
from time to time be identified as deposited in the Certificate Account
(including the investment income thereon), property which secures the Mortgage
Loan and which has been acquired by foreclosure or deed in lieu of foreclosure
and the proceeds of insurance, condemnation awards and any other amounts
receivable under the Note Documents, and all funds advanced by the
Certificateholders to Trustee or otherwise held by Trustee (including without
limitation funds held in the Certificate Account, the Excess Revenue Account
and the Extraordinary Expense Reserve Account) in accordance with the
provisions hereof.
ARTICLE II
CONVEYANCE OF MORTGAGE LOAN; TRUST FUND
Section 2.01. Conveyance of Mortgage Loan. As grantor of the Trust,
the Seller, concurrently with the execution and delivery hereof, does hereby
sell, transfer, set over, convey and absolutely assign to the Trustee without
recourse (except as provided herein) in trust intending to establish the Trust,
all
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right, title and interest of the Seller in and to the Mortgage Loan, including
all interest, Make-Whole Premium and principal due or to become due from the
Borrower on or with respect to the Mortgage Loan.
In connection with such sale, conveyance, transfer and absolute
assignment, the Seller does hereby sell, transfer, convey and absolutely assign
and deliver to, and deposit with, the Trustee the documents constituting the
Mortgage File.
The ownership of the Mortgage Note, the Mortgage and the contents of the
Mortgage File is vested in the Trustee without reservation of any right, title
or interest whatsoever in the Seller. The Seller intends that the sale,
conveyance, transfer and absolute assignment of the Seller's right, title and
interest in and to the Mortgage Loan pursuant to this Agreement shall
constitute a purchase and sale and not a pledge of security for a loan.
However, if for any reason such conveyance is deemed not to be a sale, the
Seller intends that the rights and obligations of the parties shall
nevertheless be established pursuant to the terms of this Agreement and that
the Seller shall be deemed to have granted to the Trustee a first priority
security interest in all of the Seller's right, title and interest in, to and
under the Mortgage Loan, all payments of principal of or interest on the
Mortgage Loan, all other payments made in respect of the Mortgage Loan
(including, without limitation, Make-Whole Premium), and all proceeds of any
thereof, and any other assets of the Trust Fund, and that this Agreement shall
constitute a security agreement under applicable law. If the Trust terminates
prior to the satisfaction of all claims of any Person in any Certificates, the
security interest created hereby shall continue in full force and effect and
the Trustee shall be deemed to be the collateral agent for the benefit of such
Person.
Section 2.02. Acceptance by Trustee. The Trustee acknowledges receipt
of the documents referred to in Section 2.01, subject to any exceptions noted
in a certificate of the Trustee delivered within 30 days after the Closing
Date, and declares that it holds and will hold such documents and any other
documents constituting a part of the Mortgage File delivered to it in trust for
the use and benefit of all present and future Certificateholders. At the
Closing Date the Trustee agrees, for the benefit of Certificateholders, to
review within 30 days after the Closing Date each of the documents described in
Section 2.01 delivered to it to ascertain that all required documents have been
executed and received, and that such documents relate to the Mortgage Loan
identified in the Mortgage Loan Schedule, as supplemented, that have been sold,
conveyed, transferred and absolutely assigned to it. If the Trustee finds any
document or documents constituting a part of the documents described in Section
2.01 to be missing, mutilated, damaged, defaced, incomplete, improperly dated,
clearly forged or otherwise physically altered in any material respect, the
Trustee shall promptly (and in any event within no more than five Business Days
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after such discovery so) notify the Seller. At the Closing Date the Trustee
shall also notify the Seller, if in examining such documents, or through any
other means, the Trustee had notice or knowledge (a) of any adverse claim, lien
or encumbrance against the Mortgage Loan or Mortgaged Estate, (b) that the
Mortgage Note was overdue or had been dishonored, (c) of evidence on the face
of the Mortgage Note or Mortgage of any security interest or other right or
interest therein, or (d) any defense against or claim to the Mortgage Note by
any party. The Seller shall correct such omission or other irregularity
referred to above within 90 days from the Closing Date. The Trustee shall
review the documents referred to in Section 2.01 only for the purpose set forth
above in this Section 2.02 and the Trustee shall be under no duty or obligation
to inspect, review or examine any such documents, instruments, certificates or
other papers to determine that they are genuine, enforceable, or appropriate
for the represented purpose or that they have actually been recorded or that
they are other than what they purport to be on their face.
At the Closing Date, the Trustee shall deliver to the Seller and the
Certificateholders the Trustee's Certification attached hereto as Exhibit C.
Section 2.03. Trust Fund. The Trustee acknowledges that it holds the
Trust Fund created pursuant to this Agreement in trust for the use and benefit
of all present and future Certificateholders.
Section 2.04. Execution of Certificates. The Trustee acknowledges the
sale, conveyance, transfer and absolute assignment to it of the Mortgage Loan
and the delivery of the documents specified in Section 2.01 to it, and,
concurrently with such delivery, the Trustee has caused to be executed and
delivered Certificates in authorized denominations evidencing ownership of the
entire Trust Fund.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.01. Representations and Warranties of Seller. The Seller
represents and warrants to, and covenants with, the Trustee and the
Certificateholders that as of the Closing Date:
(i) Seller is duly organized, validly existing and in good standing as a
corporation under the laws of the State of Nevada and is qualified to transact
business in and is in good standing under the laws of the States of Connecticut
and Arizona or is otherwise exempt under applicable law from such qualification
and no demand for such qualification has been made upon Seller. The principal
place of business and chief executive office of the Seller is located in the
State of Arizona;
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(ii) Seller has the full power and authority, to execute, deliver and
perform, and to enter into and consummate all transactions contemplated by this
Agreement, has duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered this Agreement, and this Agreement
constitutes the legal, valid and binding obligation of Seller, enforceable
against it in accordance with its terms;
(iii) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement will conflict with
or result in a breach of any of the terms, conditions or provisions of Seller's
articles of incorporation or bylaws or any legal restriction or any agreement
or instrument to which Seller is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing,
or result in the violation of any law, rule, regulation, order, judgment or
decree to which Seller or its property is subject;
(iv) At the date hereof, Seller does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
and agreement of or by Seller contained in this Agreement;
(v) There is no litigation pending or, to Seller's knowledge,
threatened, which, if determined adversely to Seller, would adversely affect
the execution, delivery or enforceability of this Agreement or the Certificates
or would impair the ability of Seller to perform its obligations under this
Agreement, or, in Seller's reasonable judgment, which is likely to have a
material adverse effect on the financial condition of Seller;
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of or compliance by Seller with this Agreement, the
issuance of the Certificates, or the consummation of the transactions
contemplated by this Agreement;
(vii) The sale, transfer, assignment and conveyance of the Mortgage
Loan by Seller pursuant to this Agreement is not subject to the bulk transfer
or any similar statutory provisions in effect in any applicable jurisdiction;
(viii) Seller (a) has not engaged, and as of the date hereof, does not
engage in any business or investment activities other than those necessary for,
incident to, connected with or arising out of the Mortgage Loan, and (b) has
not incurred, and as of the date hereof, does not have, any indebtedness;
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(ix) With respect to the Mortgage Loan:
(a) The information set forth in the Mortgage Loan Schedule is
true and correct in all respects;
(b) As of the Closing Date, the Mortgage Loan is not delinquent in
payment; Seller has not advanced funds, or actively induced, solicited or
knowingly received any advance of funds from a party other than the owner of
the Mortgaged Estate subject to the Mortgage, directly or indirectly, for the
payment of any amount required by the Mortgage Loan; there is no requirement
for future advances; and all costs, expenses and fees in connection with the
making, closing or recording of the Mortgage Loan have been paid;
(c) The terms of the Note Documents have not been impaired, waived,
altered or modified in any respect; each such impairment, waiver, alteration or
modification is reflected on the Mortgage Loan Schedule; no instrument of
waiver, alteration or modification has been executed, and Mortgagor has not
been released, in whole or in part;
(d) The Mortgage has not been satisfied, cancelled, subordinated
or rescinded, and the Mortgaged Estate has not been released from the lien of
the Mortgage, in whole or in part, nor has any instrument been executed that
would effect any such release, cancellation, subordination or rescission;
(e) The lien of the Mortgage is insured by an ALTA lender's title
insurance policy or other generally acceptable form of policy of title
insurance, issued by a title insurer qualified to do business in the
jurisdiction where the Mortgaged Estate is located, insuring the first priority
lien of the Mortgage in the original principal amount of the Certificates
subject only to Permitted Encumbrances. After the transfer of the Mortgage
Loan to the Trustee pursuant to Section 2.01, the Trustee will be the named
insured of such lender's title insurance policy. To the best of Seller's
knowledge, no claims have been made under such lender's title insurance policy
and to the best of Seller's knowledge, no prior holder of the Mortgage,
including the Trustee has done, by act or omission, anything which would impair
the coverage of such policy;
(f) The Mortgaged Estate is located in the State of Connecticut
as indicated on the Mortgage Loan Schedule;
(g) To the best of Seller's knowledge, there is no default, breach,
violation or event of acceleration existing under the Note Documents and no
event which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or event
permitting acceleration of the Mortgage Loan; and Seller has not waived any
default, breach, violation or event permitting acceleration;
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(h) The Mortgage contains provisions for the acceleration of the
payment of the unpaid principal balance of the Mortgage Loan in the event the
related Mortgaged Estate is sold without satisfaction of certain conditions
precedent contained in the Mortgage;
(i) To the best of Seller's knowledge, the Mortgaged Estate is free
of damage and waste and to the best of Seller's knowledge, there is no
proceeding pending or, to the best of Seller's knowledge, threatened for the
total or partial condemnation thereof;
(j) Seller has not obtained any collateral for the Mortgage Note
other than the Mortgaged Estate;
(k) Seller had the legal capacity to enter into the Mortgage Loan
and to execute and deliver any and all documents relating to the Mortgage Loan;
(l) The proceeds of the Mortgage Loan have been fully disbursed to
or for the benefit of the Borrower;
(m) Immediately before the sale, transfer, conveyance and absolute
assignment to the Trustee, the Mortgage Note and the Mortgage were not subject
to an assignment or pledge, and Seller had good title thereto and was the sole
owner thereof and had full right to sell, transfer, convey and absolutely
assign the Mortgage Loan to the Trustee free and clear of any encumbrance,
equity, lien, pledge, charge, claim or security interest; immediately upon the
sale, transfer, conveyance and absolute assignment thereof pursuant to Section
2.01, the Trustee, on behalf of the Certificateholders, will have indefeasible
title to, and will be the sole owner of the Mortgage Loan, free and clear of
any encumbrance, equity, lien, pledge, charge, claim or security, except for
Permitted Encumbrances;
(n) The Mortgage File contains the Appraisal of the Mortgaged
Estate; and
(o) Each of the parties to the Note Documents has the full power and
authority to execute, deliver and perform the respective Note Documents to
which it is a party, and such party has duly executed and delivered each such
Note Document, and each such Note Document constitutes the legal, valid and
binding obligation of such party, enforceable against it in accordance with its
terms.
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ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates.
(a) Form and Terms. The Certificates shall be substantially in the
form annexed hereto as Exhibit B and shall be executed by Trustee. Each
Certificate shall bear interest and have the other terms as are set forth in
the Certificate Schedule and the Certificates.
Certificates shall not be subject to optional redemption except as
provided herein.
On the Closing Date, Trustee shall issue the Certificates indicated on
the Certificate Schedule. The principal amount of the Certificates to be
issued hereunder shall not exceed $16,332,700, except as provided in Section
4.02(b) and 4.02(c) or 4.03.
(b) Optional Prepayment Redemption. In the event of a prepayment of
the Mortgage Note pursuant to Section 3 of the Loan Agreement, upon receipt by
Trustee of the amount of such prepayment, Trustee shall promptly (but in any
event not later than the next Business Day following such receipt) redeem the
Certificates, in whole or in part, in a principal amount equal to the sum of
(i) the principal amount prepaid on the Mortgage Note, and (ii) the Certificate
Differential, by payment of such sum together with accrued interest thereon
plus a premium equal to the difference, if any, between the Make-Whole Premium
paid in respect of the Mortgage Note so prepaid and the amount set forth in
clause (ii) above (provided that such premium shall in no event be less than
zero).
(c) Note Put Redemption. Upon the direction in writing of the
Holders of Certificates evidencing Percentage Interests in the aggregate of not
less than 66-2/3%, Trustee shall exercise the Put in accordance with the terms
and provisions of the Note Put Agreement, Trustee shall designate the Purchase
Date under the Note Put Agreement (which Purchase Date shall be not more than
ten (10) Business Days after receipt of such direction and upon receipt of the
Purchase Price from Kmart, Trustee shall promptly (but in any event not later
than the next Business Day following such receipt) redeem the Certificates by
payment of the entire unpaid principal balance thereof, together with accrued
interest thereon plus a premium equal to the difference, if any, between the
Make-Whole Premium paid as part of the Purchase Price and the Certificate
Differential (provided that such premium shall in no event be less than zero).
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(d) Notice of Redemption. Notice of Redemption pursuant to Section
4.01(b) shall be given by sending such notice, by first-class mail, postage
prepaid, not less than 30 days nor more than 60 days prior to the date fixed
for Redemption. Notice of Redemption pursuant to any other provision hereof
shall be given as soon as reasonably practicable following notice of the facts
giving rise to such Redemption by the Trustee. All notices of Redemption shall
be mailed to the Certificateholder of each Certificate to be prepaid in whole
or in part at the address shown on the registration books maintained by the
Trustee. Neither the failure of any Certificateholder to receive a notice
mailed nor any defect in any notice so mailed shall affect the validity of the
proceedings for such Redemption. All Certificates or portions thereof so
called for Redemption will cease to accrue interest on the specified Redemption
Date provided funds for their Redemption are on deposit at the Corporate Trust
Office of the Trustee at that time.
(e) Rights of Holders to Payments. The rights of the
Certificateholders to receive payments with respect to the Trust Fund in
respect of the Certificates, and all ownership interests of the
Certificateholders in such payments, shall be as set forth in this Agreement.
(f) Application of Partial Prepayments. All partial prepayments of
the Certificates shall be applied on all outstanding Certificates ratably in
accordance with the unpaid principal amounts thereof.
Section 4.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at its Corporate Trust Office
or at the office of its designated agent, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee shall be the Certificate
Registrar. In preparing the Certificate Register, the Trustee shall initially
use the information regarding the Certificateholders provided in the Purchase
Agreement.
(b) Upon surrender for registration of transfer of any Certificate
at the Corporate Trust Office or at the office of any designated agent of the
Trustee maintained for such purpose, the Trustee shall execute and deliver, in
the name of the designated transferee or transferees, a new Certificate of a
like tenor and dated the date of such execution by the Trustee.
(c) No transfer of a Certificate shall be made (and the Trustee
shall have no obligation to register any attempted transfer) unless such
transfer is made pursuant to an effective registration statement or otherwise
in accordance with the requirements under the Securities Act of 1933, as
amended
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("Securities Act"), and effective registration or qualification under
applicable state securities laws or is made in a transaction which does not
require such registration or qualification under state law. So long as the
Certificates are not registered under the Securities Act, each Certificate
shall contain a legend to the following effect:
THIS CERTIFICATE MAY BE SOLD, PLEDGED, ASSIGNED, TRANSFERRED OR
HYPOTHECATED ONLY IN COMPLIANCE WITH THE PROVISIONS OF SECTION 4.02 OF THE
AGREEMENT.
The Trustee has no obligation to any Holder to register the
Certificates under, or to effect compliance with any exemption under, the
Securities Act. The Holder of a Certificate desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee and the Seller against
any liability that may result if the transfer is not so exempt or is not made
in accordance with such federal and state laws. The system of transfer of
Certificates established hereunder is intended to satisfy the requirements of
Section 163(f) of the Code and the Regulations promulgated thereunder.
(d) No transfer of a Certificate shall be made unless the Trustee
shall have received a Transfer Assurance consisting of either (i) a
representation letter from the transferee of such Certificate, reasonably
acceptable to the Trustee and Seller, to the effect that such transferee is not
an employee benefit plan subject to Section 406 of ERISA, nor a person acting
on behalf of any such plan, which representation letter shall not be an expense
of the Trustee or the Seller, or (ii) in the case of any such Certificate
presented for registration in the name of an employee benefit plan subject to
ERISA and Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan, an Opinion of Counsel reasonably
satisfactory to the Trustee and Seller to the effect that the purchase or
holding of such Certificate will not result in the assets of the Trust Fund
being deemed to be "plan assets" and subject to the prohibited transaction
provisions of ERISA and the Code and will not subject the Trustee or the Seller
to any obligation in addition to those undertaken in this Agreement, which
Opinion of Counsel shall not be an expense of the Trustee or the Seller.
(e) At the option of the Certificateholder, a Certificate may be
exchanged for another Certificate or Certificates of a like tenor, upon
surrender of the Certificate to be exchanged at the Corporate Trust Office or
at the office of any designated agent of the Trustee maintained for such
purpose. Whenever the Certificate is so surrendered for exchange, the Trustee
shall execute and deliver, a new Certificate which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or
surrendered for transfer or exchange shall (if so required by the Trustee) be
duly endorsed
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by, or be accompanied by a written instrument of transfer in the form
reasonably satisfactory to the Trustee duly executed by, the Holder thereof or
his attorney duly authorized in writing.
(f) No service charge shall be made to the Holder for any transfer
or exchange of the Certificate, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of the Certificate.
(g) All Certificates surrendered for transfer and exchange shall be
destroyed by the Trustee.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates. If
(i) any mutilated Certificate is surrendered to the Trustee or the Trustee
receives evidence to its reasonable satisfaction of the destruction, loss or
theft of any Certificate, and (ii) there is delivered to the Trustee such
reasonable security or indemnity as may be required by it to save it harmless,
then, in the absence of notice to the Trustee that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor. For purposes of satisfaction of
clause (ii) of this Section, a written indemnity from XXXXXXXXXX need not be
secured. Upon the issuance of any new Certificate under this Section, the
Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. Any replacement Certificate issued pursuant to
this Section shall constitute complete and indefeasible evidence of ownership
of the undivided interest of the Certificateholder in the Trust Fund, as if
originally issued, whether or not the mutilated, destroyed, lost or stolen
Certificate shall be found at any time.
Section 4.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Trustee may treat the Person in
whose name any Certificate is registered as the owner of such Certificate and
the undivided interest in the Trust Fund evidenced thereby for the purpose of
receiving remittances pursuant to Section 6.01 and for all other purposes
whatsoever, and the Trustee shall not be affected by notice to the contrary.
Section 4.05. Appointment of Paying Agent. The Trustee shall serve as
Paying Agent for the purposes of making distributions to Certificateholders
pursuant to Section 6.01.
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ARTICLE V
TRUSTEE'S DUTIES WITH RESPECT TO MORTGAGE LOAN;
ESTABLISHMENT OF ACCOUNTS
Section 5.01. Calculation of Distributions. The Trustee shall
calculate the Available Distribution Amount, make distributions on each
Remittance Date as set forth in Section 6.01 and have full power and authority
to do any and all things which it may deem necessary or desirable in connection
with such duties.
Section 5.02. Receipt of Lease Payments; Collection of Lease and Lease
Guaranty Payments; Collection of Mortgage Loan Payments; Investment Direction.
(a) The Trustee acknowledges that, pursuant to the Consent and
Agreement, the Trustee will be paid directly by each Tenant under each Lease.
All Annual Rental payable by Tenant under the Lease and received by Trustee
shall be deposited by the Trustee in the Certificate Account as described in
Section 5.03 hereof, and invested in Eligible Investments in accordance with
Section 5.02(d) of this Agreement, and applied to the payment of principal,
interest, and premium, if any, due, or to become due, on the Mortgage Note.
(b) In the event the Trustee does not receive any monthly
installment of Annual Rental on the date set forth in any Lease, the Trustee is
hereby directed to and the Trustee shall notify the Borrower (as landlord), the
Tenant and Kmart in writing regarding the Tenant's failure to make such timely
payment. In the event the Trustee does not receive the monthly installment of
Annual Rental within five Business Days of giving such written notice, the
Trustee shall use its best efforts to enforce the provisions of the Lease and
related Lease Guaranty by exercise of all of the remedies available to it at
law and in equity, including, but not limited to, the remedies available under
the Lease and the Lease Guaranty, provided however, the Trustee shall, in no
event, give notice of intent to terminate or take action to terminate the Lease
without the prior consent of Holders of Certificates evidencing Percentage
Interests aggregating not less than 66 and 2/3rds percent.
(c) Continuously from the date hereof until the principal and
interest on the Mortgage Loan are paid in full, the Trustee will use reasonable
best efforts to collect all payments due under the Mortgage Loan when the same
shall become due and payable. The Trustee shall also review any official
receipts from any taxing authority provided to it pursuant to Section 1.08(c)
of the Mortgage to monitor payment of Impositions (as defined in the Mortgage).
(d)(i) Prior to the Due Date of the corresponding payment on the
Mortgage Note for each Due Period, funds in the Certificate Account shall be
invested in Eligible Investments at
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the written direction of the Borrower provided that such instruments shall
mature on or prior to the Due Date and in no event shall be invested in
obligations maturing later than ninety days from the investment date. The risk
of investment loss during this period shall be borne by the Borrower.
Subsequent to such Due Date and prior to distribution to the
Certificateholders, funds in the Certificate Account shall be invested by the
Trustee in Eligible Investments as directed in writing by the
Certificateholders with a Maturity Date not less than two Business Days prior
to the anticipated date of distribution to the Certificateholders. The risk of
investment loss during this period shall be borne by the Certificateholders. On
or after the Due Date and prior to the Remittance Date for each Due Period, the
Trustee shall be prohibited from selling or transferring Eligible Investments
prior to maturity unless and until a default shall have occurred under the
Mortgage Note. In the event (i) the Trustee shall not have received at least
twenty-four hours' written notice as to any such investment direction upon the
maturity of an existing investment, or (ii) the Trustee shall have received no
investment direction by the Certificateholders as described in this Section
5.02(d), the Trustee shall be authorized to invest maturing amounts in Eligible
Investments described in subparagraph (iv) of the definition thereof (or in the
further proviso at the end of such definition) until further directed in
writing as to investments of such amounts. Investment earnings and losses
shall be deposited to or charged to a specific account as more fully set forth
in Sections 5.03(j), 5.05 and 5.07. The Trustee shall have no responsibility
for any loss on any Eligible Investments. No such investment or reinvestment
shall mature later than the two Business Days immediately preceding the next
Remittance Date or an earlier date to the extent such monies will be needed for
other payments set forth herein. Otherwise, Eligible Investments that impose
substantial breakage fees will not be deemed an Eligible Investment.
(ii) If an Event of Default occurs under the Note Documents,
the Borrower shall be prohibited from directing investments as contemplated
above and the Trustee shall invest in Eligible Investments described in
subparagraph (i), (ii) or (iv) of the definition thereof (or in the further
proviso at the end of such definition) until such Event of Default is cured.
Section 5.03. Establishment of Certificate Account; Deposits in
Certificate Account. With respect to the Mortgage Loan, the Trustee shall
cause to be segregated and held all funds collected and received pursuant to
the Mortgage Loan separate and apart from any of its own funds and general
assets and shall cause to be established and maintained a Certificate Account
in the form of a trust account titled "Mortgage Pass-Through Certificates (The
Crossroads at Buckland Hills, Manchester, Connecticut) Series 1993, Certificate
Account" in trust for the benefit of the Certificateholders.
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The Trustee shall cause to be deposited in the Certificate Account on a
daily basis, and retained therein:
(a) All scheduled payments due on account of principal on the
Mortgage Loan, and all Principal Prepayments collected;
(b) All payments on account of interest on the Mortgage Loan;
(c) Net Liquidation Proceeds;
(d) All Insurance Proceeds received by the Trustee
under any title, hazard or other insurance policy;
(e) All awards or settlements in respect of condemnation
proceedings affecting the Mortgaged Estate which are not released to the
Mortgagor in accordance with the terms of the documents contained in the
Mortgage File;
(f) All proceeds paid to Trustee by Kmart following an
exercise of the Put pursuant to the Note Put Agreement;
(g) All Extraordinary Expense Advances made by the Trustee;
(h) All revenues from the Mortgaged Estate acquired by the
Trustee by foreclosure or deed in lieu of foreclosure net of any Extraordinary
Expense Advances with respect to the Mortgaged Estate;
(i) All payments received pursuant to the terms of each Lease,
except those amounts described in Section 5.06(d)(i) which shall be deposited
in the Excess Revenue Account, and Lease Guaranty;
(j) All earnings (or losses) on funds held in the
Certificate Account derived from Eligible Investments with respect to which the
Certificateholders or the Trustee had the power to direct investments, under
Section 5.02; and
(k) All amounts required to be deposited therein in accordance with
any other provisions of this Agreement.
The foregoing requirements for deposit in the Certificate Account
shall be exclusive.
Section 5.04. Permitted Withdrawals From the Certificate Account. The
Trustee shall, from time to time, cause the withdrawal of funds from the
Certificate Account for the following purposes:
(a) to make payments to the Certificateholders in
the amounts and in the manner provided for in Section 6.01; and
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(b) on each Due Date, any excess Annual Rental payments and earnings
thereon remaining after the satisfaction of the Borrower's obligations under
the Mortgage Loan shall be transferred to the Excess Revenue Account; and
(c) to make any payments to clear and terminate the Certificate
Account upon the termination of this Agreement.
Notwithstanding the foregoing, on each Remittance Date, the Trustee shall
retain in the Certificate Account until the next succeeding Remittance Date,
and shall not permit the withdrawal of the amount equal to the excess, if any,
of (i) all scheduled principal payments and interest payments received in
respect of the Mortgage Loan on the Due Date for the month of such initial
Remittance Date, over (ii) the amount equal to the Debt Service due on such
initial Remittance Date on the Certificates.
Section 5.05. Excess Revenue Account. The Seller (on behalf of the
Borrower) hereby establishes the Excess Revenue Account with the Trustee.
This account shall be maintained as a fund separate and distinct from other
accounts created under this Agreement. The Excess Revenue Account shall remain
the property of the Borrower, subject to the rights of the Trustee under
Sections 5.06(b) and 5.06(c) and the Pledge Agreement. Funds in the Excess
Revenue Account shall be invested in Eligible Investments at the written
direction of the Borrower provided that such instruments shall mature on or
prior to each Remittance Date. The risk of loss shall be borne by the
Borrower. Upon satisfaction of the Borrower's obligations under the Mortgage
Loan, amounts remaining in the Excess Revenue Account shall be remitted to the
Borrower as set forth below.
The Trustee shall credit to the Excess Revenue Account (i) the amounts
deposited pursuant to Section 5.04(b) and (ii) all amounts received on earnings
on or income from (or losses due from) any investments or reinvestments of
amounts in Eligible Investments in the Excess Revenue Account.
Section 5.06. Permitted Withdrawals From the Excess Revenue Account. The
Trustee shall cause the withdrawal of funds from the Excess Revenue Account for
the following purposes and in the following order of priority:
(a) to pay to the Certificate Account any amounts needed to satisfy
the Borrower's obligation with respect to the Mortgage Loan to the extent not
previously satisfied from amounts in the Certificate Account;
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(b) to pay the Trustee for unpaid annual Trustee Fees payable by
Borrower pursuant to the Loan Agreement;
(c) to pay the Trustee for any unreimbursed Extraordinary Expense
Advances required by Borrower's default pursuant to the Note Documents and to
reimburse Trustee for any expenses, costs and liabilities for which it is
entitled to reimbursement under the Note Documents; prior to an Event of
Default the Trustee's right to reimburse itself (other than with respect to the
Trustee Fees) pursuant to this clause (c) with respect to the Mortgage Loan is
limited to reimbursement or payments from related Liquidation Proceeds,
condemnation proceeds and amounts representing Insurance Proceeds; however,
subsequent to an Event of Default the Trustee shall have a prior lien on all
moneys in the Excess Revenue Account for payment or reimbursement of its
Trustee Fees payable by Borrower and Extraordinary Expense Advances and other
amounts owed it and payable by Borrower under any provision of the Note
Documents;
(d) to disburse to Borrower, without requisition, (i) on or before
the fourteenth day of each calendar month any monthly installment of Annual
Rental received by Trustee for any calendar month commencing May 1, 1993 to and
including April 1, 1994, and (ii) any amounts remaining in the Excess Revenue
Account promptly following each Remittance Date on which principal payments are
made after paying or providing for the payment or withdrawal of amounts
described in clauses (a), (b) and (c) above.
Section 5.07. Extraordinary Expense Reserve Account. The Seller (on
behalf of the Borrower) hereby establishes the Extraordinary Expense Reserve
Account with the Trustee in the initial amount of Twenty Thousand Dollars
($20,000). This account shall be maintained as a fund separate and distinct
from all other accounts created under this Agreement. The Extraordinary
Expense Reserve Account shall remain the property of the Seller subject to the
rights of the Trustee under the terms of this Agreement and the Pledge
Agreement. Upon satisfaction of the Borrower's obligations under the Mortgage
Loan and under this Agreement, amounts remaining in the Extraordinary Expense
Reserve Account shall be remitted to the Seller.
Funds in the Extraordinary Expense Reserve Account shall be invested in
Eligible Investments at the written direction of the Seller provided that such
instruments shall mature on or prior to each Remittance Date. The risk of loss
shall be borne by Seller. The Trustee shall credit to the Extraordinary
Expense Reserve Account all amounts received as earnings on or income from (or
losses due from) any investments or reinvestments of amounts in Eligible
Investments in the Extraordinary Expense Reserve Account.
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Section 5.08. Permitted Withdrawals from the Extraordinary Expense
Reserve Account. The Trustee shall cause the withdrawal of funds from the
Extraordinary Expense Reserve Account for the following purposes and in the
following order of priority:
(a) to pay to the Certificate Account any amounts needed to satisfy
the Borrower's obligations under the Mortgage Loan;
(b) to pay the Administrative Expenses of the Trust, including but
not limited to the expenses incurred by the entity retained pursuant to Section
6.02 to prepare tax returns and reports;
(c) to pay the Trustee for unpaid Trustee's Fees payable by Borrower
pursuant to the Loan Agreement;
(d) to pay the Trustee for any unreimbursed Extraordinary Expense
Advances required by Borrower's default pursuant to the Note Documents for any
expenses, costs and liabilities for which it is entitled to reimbursement under
Section 6.03 or 7.03; provided, however, that (i) prior to an Event of Default
the Trustee's right to reimburse itself (other than with respect to the
Trustee's Fee) pursuant to this clause (d) with respect to the Mortgage Loan is
limited to reimbursement or payments from related Liquidation Proceeds,
condemnation proceeds and amounts representing Insurance Proceeds; and (ii)
subsequent to an Event of Default the Trustee shall have a prior lien on all
moneys in the Extraordinary Expense Reserve Account for payment or
reimbursement of its Trustee's Fee payable by Borrower and Extraordinary
Expense Advances and other amounts owed it and payable by Borrower under any
provision of the Note Documents;
(e) to the extent insufficient amounts are available from the
Trustee's Fee to fund all customary, reasonable and necessary costs and
expenses incurred in the performance by the Trustee of its obligations
hereunder, the Trustee may draw upon the Extraordinary Expense Reserve Account;
written notice of such a draw shall be made to the Certificateholders within
thirty (30) days after such draw; such written notice shall set forth the
amount of the draw, its use and the balance remaining in the Extraordinary
Expense Reserve Account; and
(f) to disburse to Borrower, without requisition, any amounts
remaining in the Extraordinary Expense Reserve Account promptly following
termination of the Trust provided, however, prior to the distribution of such
excess amounts the Trustee shall ensure that there remains, set aside in the
Extraordinary Expense Reserve Account amounts sufficient to pay for the
Administrative Expenses related to terminating the Trust, including, but not
limited to, the filing of any final tax returns.
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Section 5.09. Capitalized Debt Service Account. The Seller (on behalf of
the Borrower) hereby establishes the Capitalized Debt Service Account with the
Trustee. This account shall be maintained as a fund separate and distinct from
other accounts created under this Agreement. The Capitalized Debt Service
Account shall remain the property of the Borrower subject to the rights of the
Trustee under the terms of this Agreement and the pledge thereof by Borrower
pursuant to the Pledge Agreement to secure the Mortgage Loan. Funds in the
Capitalized Debt Service Account shall be invested in Eligible Investments at
the written direction of Borrower provided that such instruments shall mature
on or prior to each Remittance Date. The risk of loss shall be borne by the
Borrower. The Trustee shall cause to be deposited into the Capitalized Debt
Service Account (i) the amount of the Capitalized Debt Service Reserve received
on the Closing Date and (ii) all amounts received on earnings on or income from
(or losses due from) any investments or reinvestments of amounts in Eligible
Investments in the Capitalized Debt Service Account.
On each Remittance Date through and including May 14, 1994, the Trustee
shall cause the transfer of funds from the Capitalized Debt Service Account to
the Certificate Account in an amount necessary to satisfy Debt Service on the
Certificates on such Remittance Date.
After May 14, 1994 and upon the payment of all Debt Service on the
Certificates prior to and including such date, upon the transfer to the
Certificate Account of the annual Trustee Fee for the period commencing May 15,
1994 through May 14, 1995, and provided that Borrower is not then in default
under any one or more of the Note Documents, Trustee shall disburse to the
Borrower without requisition any amounts remaining in the Capitalized Debt
Service Account.
Section 5.10. Realization Upon Defaulted Mortgage Loan.
(a) If an Event of Default has occurred and is continuing and if
Certificateholders holding Percentage Interests aggregating not less than
66-2/3% direct, the Trustee shall use its best efforts to foreclose upon or
otherwise comparably convert the ownership of the Mortgaged Estate securing the
Mortgage Loan; shall manage, conserve and protect the Mortgaged Estate for the
purposes of its prompt disposition and sale; and shall dispose of the Mortgaged
Estate on such terms and conditions as the Certificateholders deem to be in
their best interests after the Trustee has received indemnity for its
reasonable costs, expenses and liabilities with respect thereto to its
reasonable satisfaction from the Certificateholders in accordance with Section
9.02 (iii). A written agreement from XXXXXXXXXX to pay such costs, expenses
and liabilities shall be deemed as satisfactory.
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(b) Notwithstanding the foregoing, if the Trustee has actual
knowledge or reasonably believes that all or any part of the Mortgaged Estate
is affected by hazardous or toxic wastes or substances, the Trustee need not
cause the Trust to acquire title to the Mortgaged Estate in a foreclosure or
similar proceeding. In connection with such activities, the Trustee shall
follow such practices and procedures as it shall deem necessary or advisable, as
shall be normal and usual in its trustee activities, and, in particular, the
Trustee shall be furnished with such certificates of appropriate public
officials and agencies, if any, a history of the Mortgaged Estate and its uses,
other evidence reasonably satisfactory to the Trustee showing that the
Mortgaged Estate conforms to existing environmental laws, regulations and
rules, and that no conditions exist in, on or beneath the surface of the
Mortgaged Estate that are or might become hazardous materials, and including
but not limited to an environmental report or reports from a company reasonably
satisfactory to Trustee, showing that there has been no storage, disposal or
release of any oil, fuels, gases, chemicals, trash, garbage or other solid
wastes or hazardous materials which report or reports shall be based upon
complete and thorough on-site inspections of the Mortgaged Estate, including
but not limited to investigations of the soil, surface water and groundwater,
to confirm the absence of any hazardous materials on or beneath the surface of
the Mortgaged Estate or adjacent lands.
(c) The activities set forth in Section 5.10(a) are also subject to
the proviso that the Trustee shall not be required to expend its own funds in
connection with any foreclosure or towards the restoration of the Mortgaged
Estate unless it shall determine that (i) such restoration or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan to Certificateholders
after reimbursement for such expenses and (ii) such expenses will be
recoverable either through Liquidation Proceeds, or revenues from the Mortgaged
Estate. The Trustee shall have no power under this Section 5.10 to perform any
act which, if consummated, would cause the entity created hereunder to fail to
be characterized as a trust for federal income tax purposes. The Trustee may
rely upon an Opinion of Counsel, as set forth in Section 9.02, if it reasonably
believes that such an act may cause the Trust to fail to be characterized as a
trust for federal income tax purposes.
Section 5.11. Trustee Compensation. The Trustee, as compensation for its
activities hereunder, shall be entitled to receive (a) on the Closing Date and
each Remittance Date on which a principal payment is made the amounts provided
for as the Trustee's Fee and (b) amounts representing reimbursement for
Extraordinary Expense Advances and reimbursement for certain expenses, as
specified by Sections 5.06(c) and 5.08(d). As so specified, from and after the
occurrence of an Event of Default, the Trustee will have a prior lien on the
Trust Fund for all such amounts.
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The Trustee shall be required to pay all expenses incurred by it in
connection with its activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided in Section 5.06(c) and
(d) and Section 5.08(c), (d) and (e).
Section 5.12. Rights of the Certificateholders. The Trustee shall afford
the Certificateholders, upon reasonable notice and during normal business
hours, access to all records maintained by the Trustee in respect of its rights
and obligations hereunder and access to officers of the Trustee responsible for
such obligations. Upon request, the Trustee shall furnish the
Certificateholders with its most recent financial statements and such other
information as the Trustee possesses regarding its business, property and
condition, financial or otherwise.
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01. Distributions.
(a) The Trustee shall cause to be distributed, from funds in the
Certificate Account, the following amounts:
(i) an amount equal to the Debt Service due on such
Remittance Date on the Certificate or Certificates held by such
Certificateholder; and
(ii) on the date provided for redemption of Certificates
pursuant to Section 4.01(b) or (c), to each Certificateholder an amount equal
to the amount payable on the Certificate or Certificates held by such
Certificateholder pursuant to Section 4.01(b) or (c), as the case may be; and
(iii) upon the termination of the Trust pursuant to Section
10.01 hereunder, to each Certificateholder an amount equal to the product of
(a) all amounts remaining in the Certificate Account after giving effect to the
distributions provided for in clauses (i) and (ii) hereof, and (b) the
Percentage Interest of such Certificateholder.
(b) All distributions made to Certificateholders on each Remittance
Date shall be made to the Certificateholders of record on the Record Date (other
than as provided in this Agreement or in the form of Certificate respecting the
final distribution), (i) by wire transfer in immediately available funds to the
account of such Holder at a bank or other financial or depository institution
having appropriate facilities therefor, if such Holder has so notified the
Trustee in writing by the Record Date at least 10 Business Days prior to such
Remittance Date and such Holders hold Certificates in the aggregate
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principal amount of $1,000,000 or more or (ii) for all other Holders of
Certificates, by check mailed to the address of the Person entitled thereto as
it appears on the Certificate Register. All distributions in respect of the
Certificates shall be made without presentation or surrender, except that the
final distribution in Redemption of the Certificates will be made only upon
presentation and surrender of the Certificates at the Corporate Trust Office
or such other agency of the Trustee specified in the final distribution notice
to Certificateholders. If on any Determination Date, the Trustee reasonably
determines that the Mortgage Loan is not outstanding and there are no other
funds or assets in the Trust Fund other than the funds in the Certificate
Account, the Trustee shall send the final distribution notice to each
Certificateholder and make provision for the final distribution in accordance
with Section 10.02.
Section 6.02. Statements to Certificateholders. Not later than each
Remittance Date, Trustee will cause to be sent to each Certificateholder a
statement setting forth the following information with respect to each
Certificate (which information may be aggregated for all Certificates held by
the same Holder), after giving effect to the distributions to be made pursuant
to Section 6.01 on or as of such Remittance Date:
(i) the amount of such distribution allocable to principal;
(ii) the amount of such distribution allocable to interest;
(iii) the amount of any Extraordinary Expense Advance by the
Trustee pursuant to Section 6.03; and
(iv) If applicable, whether the Mortgage Loan is delinquent.
In addition, not more than 90 days after the end of each calendar year or
by such earlier time as may be required under the Code, the Trustee will
furnish a report to each holder of a Certificate at any time during such
calendar year, an annual statement of interest paid in accordance with the
requirements of applicable federal income tax law listing the Principal Balance
of the Mortgage Loan outstanding at the end of such calendar year.
Concurrent with execution of this Agreement, Seller shall appoint Coopers &
Lybrand or a similar organization which regularly engages in the preparation
and filing of such documents on a continuous basis for profit and which
represents itself to be expert in such matters, as required by applicable law,
which shall cause to be prepared and which shall file, any and all tax returns,
information statements or other filings required to be delivered to (a) any
governmental taxing authorities or (b) the Certificateholders pursuant to any
applicable law with respect to
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the Trust Fund and the transactions contemplated hereby: provided, however,
that (i) any reasonable fees of the organization appointed as provided above
shall be paid from the Extraordinary Expense Reserve Account and (ii) the
Trustee shall cooperate in good faith in providing any necessary information
which it possesses regarding the Trust Fund and the Certificates to such
organization. Notice of any such appointment shall be given to the Trustee by
the party making such appointment at the time of such appointment.
Section 6.03. Advances by Trustee.
(a) The Trustee may from time to time make such Extraordinary
Expense Advances as Trustee in its sole discretion deems advisable, provided,
however, that (i) it is satisfied as to the availability of immediate and
direct reimbursement and (ii) the payment thereof to Trustee shall not impair
the payment of any distribution on the Certificates pursuant to Section 6.01.
(b) In order to make an Extraordinary Expense Advance, the Trustee
shall deposit in the Certificate Account an amount equal to such Advance. Any
moneys being held for future distribution to Certificateholders in the
Certificate Account shall not be so used.
ARTICLE VII
THE SELLER
Section 7.01. Indemnification; Third Party Claims. Subject to the
limitations of Section 9.01 with respect to the Trustee, the Seller shall
indemnify the Trustee and hold the Trustee harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, fees and expenses that the Trustee may sustain in any way
related to its failure to perform its duties in strict compliance with the
terms of this Agreement, other than any failure arising from the gross
negligence or willful misconduct of the Trustee. The Seller shall immediately
notify the Trustee if a claim is made by a third party with respect to this
Agreement or the Mortgage Loan, assume (with the consent of the Trustee) the
defense of any such claim and pay all expenses in connection therewith,
including counsel fees and expenses, and promptly pay, discharge and satisfy
any judgment or decree which may be entered against it or the Trustee in
respect of such claim.
Section 7.02. Maintaining Corporate Existence of the Seller. The Seller
will keep in full effect its existence, right and franchises as a corporation,
and will obtain and preserve its qualification to do business as a foreign
corporation in the jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, the
Certificates or the Mortgage Loan and to perform its duties under this
Agreement.
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The Seller will not, on or after the date of execution of this
Agreement (i) engage in any business or investment activities other than those
necessary for, incident to, connected with or arising out of the Mortgage Loan,
(ii) incur any indebtedness, or (iii) amend, or propose to its shareholders for
their consent any amendment of, its Articles of Incorporation or Bylaws without
giving notice thereof in writing not less than 30 days nor more than 90 days
prior to the date on which such amendment is to become effective to Trustee
and without first obtaining the written Consent of Trustee.
Section 7.03. Limitation on Liability of the Seller. Neither the Seller
nor any of the directors, officers, employees or agents of the Seller shall be
under any liability to the Trustee or the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Seller or any such person against any breach of
any warranty or representation made herein, or failure to perform its
obligations in strict compliance with any standard of care set forth in this
Agreement, or any liability which would otherwise be imposed by reason of any
willful misfeasance, bad faith or negligence in the performance of its duties
or by reason of reckless disregard of obligations and duties hereunder. The
Seller and any director, officer, employee or agent of the Seller may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder.
The Seller shall not be under any obligation to appear in, prosecute or
defend any legal action which is not incidental to its duties in accordance
with this Agreement and which in its opinion may involve it in any expense or
liability; provided, however, that the Seller may in its discretion undertake
any such action which it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In such event, the legal expenses and costs
of such action and any liability resulting therefrom shall be expenses, costs
and liabilities which the Seller shall be entitled to be reimbursed for out of
the Extraordinary Expense Reserve Account as provided by Section 5.06(b).
Section 7.04. Seller May Resign. The Seller may resign from the
obligations and duties hereby imposed on it with respect to its role as Seller;
provided that such resignation shall not be effective unless and until a
successor shall be appointed, which successor shall be a wholly-owned
subsidiary of Seller which shall assume all duties of the Seller hereunder; and
provided, further, that this provision shall not relieve the Seller from any
breach of its representations and warranties made in Article III; however, such
liability shall be limited as set forth in Section 7.03.
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ARTICLE VIII
DEFAULT
Section 8.01. Events of Default. The (a) nonpayment to any
Certificateholder of any payment required to be made under the terms of this
Agreement, which continues unremedied for a period of five days, (b) default in
the performance or observance of any covenant, contract or provision contained
herein, or (c) occurrence of any event constituting an Event of Default under
the Note Documents or any other document in the Mortgage File shall constitute
an Event of Default under this Agreement. If an Event of Default shall occur
and be continuing, then, and in each and every such case, so long as the Event
of Default shall not have been remedied, the Trustee may, and at the written
direction of the Holders of Certificates of Percentage Interests aggregating
not less than 66-2/3%, the Trustee shall, exercise any rights and remedies that
it may have pursuant to the Note Documents or at law or equity to damages,
including injunctive relief and specific performance, provided that the Trustee
shall have no such power which, if exercised, would cause the Trust to fail to
be characterized as a trust for federal income tax purposes. The Trustee may
rely upon an Opinion of Counsel, as set forth in Section 9.02, if they
reasonably believe that such an act may cause the Trust to fail to be
characterized as a trust for federal income tax purposes. The Trustee will
have no obligation to take any action or institute, conduct or defend any
litigation under this Agreement at the request, order or direction of any of
the Certificateholders, unless such Certificateholders have offered to the
Trustee reasonable indemnity against the costs, expenses and liabilities which
the Trustee may incur. A written agreement from XXXXXXXXXX to pay such costs,
expenses and liabilities shall be deemed as satisfactory. The Trustee shall
apply the proceeds recovered in the enforcement of the rights and remedies
under this Agreement in accordance with the terms of this Agreement.
Section 8.02. Waiver of Defaults. The Trustee may, and at the
direction of Holders of Certificates of Percentage Interests aggregating not
less than 66-2/3%, the Trustee shall, waive any default hereunder and its
consequences, except that a default in the making of any required distribution
on the Certificates may only be waived by the affected Certificateholders. The
Trustee shall have no authority to exercise the right of waiver if, as a result
thereof, this Trust would fail to be characterized as a trust for federal
income tax purposes. The Trustee may rely upon an Opinion of Counsel as set
forth in Section 9.02 if they reasonably believe that such an act may cause the
Trust to fail to be characterized as a trust for federal income tax purposes.
Upon any such waiver of a past default, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been remedied
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for every purpose of this Agreement. No such waiver shall extend to any
subsequent Event of Default or impair any right consequent thereon except to
the extent expressly so waived.
Section 8.03. Notification to Certificateholders. within 30 days after
acquiring actual knowledge of the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
Section 8.04. Rights of Certificateholders to Direct Proceedings.
Anything in this Agreement to the contrary notwithstanding, the Holders of
Percentage Interests aggregating not less than 66-2/3% shall have the right, at
any time during the continuance of an Event of Default, by an instrument or
instruments in writing executed and delivered to the Trustee, to direct the
time, place and method of conducting all proceedings to be taken in connection
with the enforcement of the terms and conditions of this Agreement; provided,
however that such direction shall not be otherwise than in accordance with the
provisions of law and this Agreement and provided that such Holders shall have
provided to the Trustee the reasonable indemnity pursuant to Section 9.02 (iii)
against the costs, expenses and liabilities which the Trustee may incur in
connection with such proceedings. A written agreement from XXXXXXXXXX to pay
such costs, expenses and liabilities shall be deemed to be satisfactory.
ARTICLE IX
CONCERNING THE TRUSTEE
Section 9.01. Duties of Trustee. The Trustee, prior to the occurrence
of an Event of Default and after the curing of all Events of Default which may
have occurred, undertake to perform such duties and only such duties as are
specifically set forth in this Agreement, including without limitation the
duties set forth in Sections 5.01 and 6.02. In case an Event of Default has
occurred (which has not been cured), the Trustee shall exercise such of the
rights and powers vested in it by this Agreement, and use the same degree of
care and skill in its exercise as a prudent man would exercise or use under the
circumstances in the conduct of such man's own affairs. No permissive rights
of the Trustee shall be construed as a mandatory duty of the Trustee.
The Trustee, upon receipt of any resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement and if they are deemed to
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be deficient, Trustee shall request cure of any such deficiency within a
reasonable period of time for such cure. if such deficiency is not cured to
the satisfaction of Trustee, Trustee may treat the requirement pursuant to
which such instrument is furnished as not having been satisfied.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and
after the curing of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in
this Agreement, no implied covenants or obligations shall be read into this
Agreement against the Trustee and, in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer or Responsible officers
of the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) The Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of holders of Certificates evidencing Percentage
Interests aggregating not less than 66-2/3% as to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Agreement;
and
(iv) The Trustee shall have no authority to perform any act
which, if consummated, would cause the entity created hereunder to fail to be
characterized as a trust for federal income tax purposes. The Trustee may rely
upon an Opinion of Counsel, as set forth in Section 9.02, if it reasonably
believes that such an act may cause the Trust to fail to be characterized as a
trust for federal income tax purposes.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any rights or powers, if there is reasonable
grounds for believing that the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
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Section 9.02. Certain Matters Affecting Trustee. Except as otherwise
provided in Section 9.01:
(i) The Trustee may rely and shall be protected acting or
refraining from acting upon any resolution, Officers' Certificate, certificate
of auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond or other paper or document
reasonably believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(ii) The Trustee may consult with counsel, and any Opinion
of Counsel shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel (costs associated therewith shall be
chargeable to the Extraordinary Expense Reserve Account);
(iii) The Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Agreement or to institute,
conduct or defend any litigation hereunder or in relation hereto at the
request, order or direction of any of the Certificateholders, pursuant to the
provisions of this Agreement, unless such Certificateholders shall have offered
to the Trustee reasonable indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby (the written agreement of XXXXXXXXXX
to pay such costs, expenses and liabilities shall be deemed as satisfactory);
the right of the Trustee to perform any discretionary act enumerated in this
Agreement shall not be construed as a duty, and the Trustee shall not be
answerable for other than negligence or willful misconduct in performance of
such act. Nothing contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of an Event of Default (which has not been
cured), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in its exercise as a
prudent man would exercise or use under the circumstances in the conduct of
such man's own affairs;
(iv) The Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(v) Except with respect to notice of deficient or missing
documents described in Section 2.02, prior to the occurrence of an Event of
Default hereunder and after the curing of all Events of Default which may have
occurred, the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in
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writing so to do by Holders of Certificates evidencing Percentage Interests
aggregating not less than 66-2/3%; provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such expense or liability as a condition to such
proceeding. A written agreement of XXXXXXXXXX to pay such costs, expenses and
liabilities shall be deemed as satisfactory. The reasonable expense of every
such examination shall be paid from the Extraordinary Expense Reserve Account,
if an Event of Default shall have occurred and is continuing, and otherwise by
the Certificateholder requesting the investigation; and
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys.
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loan.
The recitals contained herein and in the Certificates (other than the Trustee's
authentication of the Certificates) shall be taken as the statements of the
Seller and the Trustee assume no responsibility for its correctness. The
Trustee makes no representations or warranties as to the validity or
sufficiency of this Agreement or of the Certificates (except that the
Certificates shall be duly and validly authenticated by the Trustee) or of the
Mortgage Loan or related documents. The Trustee shall not be accountable for
the use or application by the Seller of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Seller with respect to the Mortgage Loan.
Section 9.04. Trustee May Own Certificates. The Trustee in its
corporate or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Trustee.
Section 9.05. Trustee's Fee and Expenses. The Trustee shall be
entitled to, reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust) for all services rendered by it in the execution of the trust hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee, and the Trustee shall be reimbursed for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and
of all persons not regularly in its employ), but solely from amounts available
in the Extraordinary Expense Reserve Account and Excess Revenue Account as
provided herein. Notwithstanding the above, no such expense, disbursement or
advance shall be reimbursable as may arise from its negligence or bad faith.
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Section 9.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation having its principal office in a
state and city acceptable to the Holders of Certificates evidencing Percentage
Interests aggregating not less than 66-2/3%, and organized and doing business
under the laws of such state or the United States of America, authorized under
such laws to exercise corporate trust powers, having (or, in the case of a
corporation included in a bank holding company system, the related bank holding
company shall have) a combined capital and surplus of at least $50,000,000 in
the case of XXXXXXXXXX and of at least $100,000,000 in the case of any
successor trustee and subject to supervision or examination by federal or state
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising
or examining authority, then for the purposes of this Section the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect specified in Section 9.07.
Section 9.07. Resignation and Removal of Trustee. The Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Certificateholders. Upon receiving such notice
of resignation, the Certificateholders evidencing Percentage Interests
aggregating not less than 66-2/3% shall promptly appoint a successor trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee. If
no successor trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee.
If at any time, the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 and shall fail to resign after written
request therefor by Certificateholders evidencing Percentage Interests
aggregating not less than 66-2/3%, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation conservation or liquidation then the
Certificateholders evidencing Percentage Interests aggregating not less than
66-2/3% may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the Trustee so removed and one copy to the successor trustee.
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The Certificateholders evidencing Percentage Interests aggregating not
less than 66-2/3% may at any time remove the Trustee and appoint a successor
trustee by written instrument or instruments, in triplicate, signed by such
Holders or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered to the Trustee so removed and one complete set
to the successor so appointed.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall
become effective only upon acceptance of appointment by the successor trustee
as provided in Section 9.08.
Section 9.08. Successor Trustee. Any successor trustee appointed as
provided in Section 9.06 or 9.07 shall execute, acknowledge and deliver to the
Certificateholders and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee shall
become effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The predecessor trustee shall deliver to the
successor trustee the Mortgage File and related documents and statements held
by it hereunder, and the Seller and the predecessor trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for more fully and certainly vesting and confirming in the successor trustee
all such rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Seller shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Seller fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Seller.
Section 9.9. Merger or Consolidation of Trustee. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the
Trustee hereunder,
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provided such corporation shall be eligible under the provisions of Section
9.06, without the execution or filing of any paper or any further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
ARTICLE X
TERMINATION
Section 10.01. Termination. The respective obligations and
responsibilities of the Seller and the Trustee under this Agreement (except
the duty to pay the Trustee's Fee and to provide indemnification under the
terms of this Agreement) shall, so long as such termination does not result in
the imposition of a tax on the Trust Fund, terminate upon the first to occur of
the final payment, prepayment in full or other liquidation (or any advance with
respect thereto) of the Mortgage Loan or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of the Mortgage Loan
and the remittance of all funds due hereunder; provided, however, that in no
event shall the trust created hereby continue beyond the expiration of 21 years
from the death of the last survivor of the descendants of Joseph P. Kennedy,
the late ambassador of the United States to the Court of St. James, living on
the date hereof.
Section 10.02. Notice; Final Distribution.
(a) Notice of any termination pursuant to Section 10.01, specifying the
Remittance Date after which all Certificateholders shall surrender their
Certificates to the Trustee for payment and cancellation, shall be given
promptly by the Trustee by letter to Certificateholders mailed no later than 15
days prior to such final distribution specifying (i) the Remittance Date upon
which final payment on the Certificates will be made and following which the
Certificateholders shall present and surrender their Certificates at the
Corporate Trust Office or the office of any designated agent of the Trustee
therein designated, and (ii) the amount of any such final payment, and (iii)
payments will be made only upon presentation and surrender of the Certificates
at the office or agency of the Trustee therein specified. After giving such
notice, the Trustee shall not register the transfer or exchange of any
Certificates. On the Remittance Date upon presentation and surrender of the
Certificates, the Trustee shall cause to be distributed to Certificateholders
an amount equal to the amount distributable on such Remittance Date.
(b) If all of the Certificateholders shall not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
39
<PAGE> 44
cancellation and receive the final distribution with respect thereto. If within
three months after the second notice a Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate and reasonable steps, to contact the
remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets which remain
in the Trust.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
Section 11.02. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust Fund, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
No Certificateholder shall have any right to vote (except as expressly
provided herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such Holder
previously shall have given to the Trustee a written notice of the occurrence
of an Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of Certificates evidencing in the
aggregate not less than 66-2/3% of the related Percentage Interest shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs,
40
<PAGE> 45
expenses and liabilities to be incurred therein or thereby, and the Trustee,
for 60 days after its receipt of such notice, request and offer of
indemnity , shall have neglected or refused to institute any such action, suit
or proceeding; it being understood and intended, and being expressly covenanted
by each Certificateholder with every other Certificateholder and the Trustee,
that no one or more Holders of Certificates shall have any right in any manner
whatever by virtue of any provision of this Agreement to affect, disturb or
prejudice the rights of the Holders of any other of such Certificates, or to
obtain or seek to obtain priority over or preference to any other such Holder,
or to enforce any right under this Agreement, except in the manner herein
provided and for the common benefit of Certificateholders. A written agreement
of XXXXXXXXXX to pay such costs, expenses and liabilities shall be deemed as
satisfactory. For the protection and enforcement of the provisions of this
Section, each and every Certificateholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
Section 11.03 Amendment. This Agreement may be amended from time
to time by the Seller and the Trustee with the consent of the Holders of
Certificates evidencing in the aggregate not less than 66-2/3% of the
Percentage Interest for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment shall (i) reduce in any manner the amount of,
or delay the timing of, payments on the Mortgage Loan or distributions required
to be made hereunder on any Certificate without the consent of the Holder of
such Certificate or (ii) reduce the aforesaid percentage of Certificates the
Holders of which are required to consent to any such amendment, without the
consent of all Certificateholders.
Promptly after the execution of any such amendment the Trustee
shall furnish written notification of the substance of such amendment to each
Certificateholder.
The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable regulations as the Trustee may prescribe.
No such amendment shall be effective, notwithstanding anything in
this Agreement to the contrary, unless the Trustee and Counsel shall have
received an Opinion of Counsel, in form and substance reasonably acceptable to
each of them, to the effect that such amendment, if consummated would not cause
the Trust to fail to be characterized as a trust for federal income tax
purposes.
41
<PAGE> 46
Section 11.04. Solicitation of Certificateholders. The Trustee
will not solicit, request or negotiate for or with respect to any direction or
proposed waiver or amendment of any of the provisions of this Agreement or the
Certificates, unless each Holder of the Certificates (irrespective of the amount
of Certificates then owned by it) shall be informed thereof by the Trustee and
shall be afforded the opportunity of considering the same and shall be supplied
by the Trustee with sufficient information to enable it to make an informed
decision with respect thereto. Executed or true and correct copies of any
waiver effected pursuant to the provisions of this Section shall be delivered
by the Trustee to each Holder of outstanding Certificates forthwith following
the date on which the same shall have been executed and delivered by the Holder
or Holders of the requisite percentage of outstanding Certificates. Neither
the Seller nor the Trustee nor any Affiliate thereof will, directly or
indirectly, pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, to any
Certificateholders as consideration for or as an inducement to the entering
into by any Certificateholders of any waiver or amendment of any of the terms
and provisions of this Agreement unless such remuneration is concurrently paid,
on the same terms, ratably to all Certificateholders.
Under any provisions of this Agreement that relate to consent,
waiver, direction, request or demand of or by Certificateholders, each and
every Certificateholder shall be entitled to give or make any such consent,
waiver, direction, request or demand without request or demand for such action
the Trustee.
In the event any such direction or similar action is so received
by the Trustee under any provision hereof from the Certificateholders of
requisite Percentage Interests, the Trustee shall follow the direction of such
Certificateholders.
Section 11.05. Recordation of Agreement. To the extent permitted
by applicable law, this Agreement is subject to recordation in appropriate
public offices for real property records in the county or other comparable
jurisdiction in which the Mortgaged Estate is situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Trustee accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of the
Certificateholders or is necessary in connection with the Mortgage Loan.
Section 11.06. Duration of Agreement. This Agreement shall
continue in existence and effect until terminated as herein provided.
42
<PAGE> 47
Section 11.07. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE CHOICE OF LAW PRINCIPLES THEREOF AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.08. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by first class or registered mail, postage
prepaid, to (i) in the case of the Seller, XXXXXXXXXX, XXXXXXXXXX, Attention:
XXXXXXXXXX, and (ii) in the case of the Trustee, XXXXXXXXXX, c/o XXXXXXXXXX,
XXXXXXXXXX, Attention: Corporate Trust Division, or (iii) in the case of any of
the foregoing Persons, such other addresses as such Persons furnish to the
other Persons. Any notice required or permitted to be mailed to a
Certificateholder shall be given by registered mail, postage prepaid, or by
express delivery service, at the address of such Certificateholder as shown in
the Certificate Register.
Section 11.09. Counterparts. For the purpose of facilitating the
recordation of this Agreement as herein provided and for other purposes, this
Agreement may be executed simultaneously in any number of counterparts, each of
which counterparts shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
Section 11.10. Submission to Jurisdiction. Each party hereto
hereby consents to the jurisdiction of any state or, federal court
located within the County of New York, State of New York and irrevocably agrees
that all actions or proceedings relating to this Agreement may be litigated in
such courts and each such party waives any objection which it may have based on
improper venue or forum non conveniens to the conduct of any proceeding in any
such court, waives personal service of any and all process upon it and consents
that all such service or process be made by registered or certified mail
(return receipt requested) or messengered to it at its address set forth in
Section 11.08 or to its Agent referred to below at such Agent's address set
forth below and that service so made shall be deemed to be completed in
accordance with Section 11.08. Each party hereto hereby appoints the Prentice
Hall Corporation System, Inc., with an office on the date hereof at 15 Columbus
Circle, New York, New York 10023 as its Agent for the purpose of accepting
service of any process within the State of New York and shall execute any
confirmation thereof requested by the other party hereto. Nothing in this
Section shall effect the right of any party hereto to serve legal process in
any other manner permitted by law to bring any action or proceeding in the
courts of any jurisdiction against the other party or to enforce a judgment
obtained in the courts of any other jurisdiction.
43
<PAGE> 48
Section 11.11. Gender; Number. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine,
neuter, singular or plural, as the context shall require.
THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK.
44
<PAGE> 49
IN WITNESS WHEREOF, the Seller and the Trustee has caused its
name to be signed hereto by its respective officers thereunto duly authorized
as of the day and year first above written.
XXXXXXXXXX, a
Nevada corporation
By /s/
--------------------------
Name
--------------------------
Title
--------------------------
XXXXXXXXXX, a New York banking
corporation
By
--------------------------
Name
--------------------------
Title
--------------------------
STATE OF Arizona ]
--------- ] ss.
CITY OF Maricopa ]
---------
On the 20th day of May, 1993 before me, a Notary Public in and for said
State, personally appeared XXXXXXXXXX, known to me (or proved to me on the
basis of satisfactory evidence) to be the person who executed the within
instrument as Vice President on behalf of XXXXXXXXXX, a Nevada corporation, and
acknowledged to me that such Corporation executed the within instrument
pursuant to its Bylaws or a resolution of its Board of Directors.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year first above written.
[NOTARIAL SEAL] Barbara J. Yodec
--------------------------
Notary Public
My Commission Expires:
My Commission Expires April 6,1997
- ----------------------------------
45
<PAGE> 50
IN WITNESS WHEREOF, the Seller and the Trustee has caused its name to
be signed hereto by its respective officers thereunto duly authorized as of the
day and year first above written.
XXXXXXXXXX, a
Nevada Corporation
By
--------------------------------
Name
--------------------------------
Title
--------------------------------
XXXXXXXXXX, a New York banking
corporation
By /s/ XXXXXXXXXX
--------------------------------
Name XXXXXXXXXX
--------------------------------
Title Authorized Signer
--------------------------------
STATE OF _________________ }
} SS.
CITY OF _____________________ }
On the _____ day of ________________, 1993 before me, a Notary
Public in and for said State, personally appeared _____________, known
to me (or proved to me on the basis of satisfactory evidence) to be the person
who executed the within instrument as ____________ on behalf of XXXXXXXXXX, a
Nevada corporation, and acknowledged to me that such Corporation executed
within instrument pursuant to its Bylaws or a resolution of its board of
Directors.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year first above written.
[NOTARIAL SEAL] ----------------------------------
Notary Public
My Commission Expires:
- ----------------------
<PAGE> 51
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT No. 5193
<TABLE>
<S><C>
State of CALIFORNIA } -- OPTIONAL SECTION --
}
County of LOS ANGELES } CAPACITY CLAIMED BY SIGNER
5/19/93 before me, MERRILEE J. DOWNEY, Notary Public, Though statute does not require the Notary to
- ------- ---------------------------------- fill in the data below, doing so may prove
DATE NAME, TITLE OF OFFICER - E.G., invaluable to persons relying on the document.
"JANE DOE, NOTARY PUBLIC"
/ / INDIVIDUAL
personally appeared XXXXXXXXXX
---------------------------, / / CORPORATE OFFICER(S)
NAME(S) OF SIGNER(S)
---------------------------
/X/ personally known to me to be the person whose name TITLE(S)
is subscribed to the within instrument and acknowledged to
me that she executed the same in her authorized capacity, / / PARTNER(S) / / LIMITED / / GENERAL
and that by her signature on the instrument the person or / / ATTORNEY-IN-FACT
the entity upon behalf of which the person acted, executed / / TRUSTEE(S)
the instrument. / / GUARDIAN/CONSERVATOR
/ / OTHER:
WITNESS my hand and official seal. ------------------------
-----------------------------
/s/ Merrilee J. Downey -----------------------------
- ---------------------------
SIGNATURE OF NOTARY SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
[SEAL]
MERILEE J. DOWNEY -------------------------------
COMM. #973882 -------------------------------
NOTARY PUBLIC -- CALIFORNIA
LOS ANGELES COUNTY
MY COMM. EXPIRES NOV 13, 1996
- --------------------------------------------- OPTIONAL SECTION --------------------------------------------------
THIS CERTIFICATE MUST BE ATTACHED TO TITLE OF TYPE OF DOCUMENT
THE DOCUMENT DESCRIBED AT RIGHT: -------------------------------------------
NUMBER OF PAGES DATE OF DOCUMENT
- ------------------------------------ -------------- ---------------------
Though the data requested here is not SIGNER(S) OTHER THAN NAMED ABOVE
required by law, it could prevent --------------------------------
fradulent reattachment of this form.
</TABLE>
<PAGE> 52
STATE OF California }
----------
} SS.
CITY OF Los Angeles }
-----------
On the 19th day of May, 1993 before me, a Notary Public in and for said
State, personally appeared XXXXXXXXXX, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person who executed the within
instrument as to be a Authorized Signer on behalf of XXXXXXXXXX, a New York
banking corporation, and acknowledged to me that such association executed
within instrument pursuant to its Bylaws or a resolution of its Board of
Directors.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
[NOTARIAL SEAL]
--------------------------------------
Notary Public
My Commission Expires:
- ------------------------------
<PAGE> 53
[Exhibits Intentionally Omitted]
<PAGE> 1
EXHIBIT 99.34
U.S. $15,616,000
May 20, 1993
THE CROSSROADS AT BUCKLAND HILLS
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned, XXXXXXXXXX, a Connecticut limited
partnership ("Maker"), hereby unconditionally promises to pay to the order of
XXXXXXXXXX ("Payee"), a New York banking corporation, c/o XXXXXXXXXX,
XXXXXXXXXX, or such other address given to Maker by Payee from time to time,
the principal sum of FIFTEEN MILLION SIX HUNDRED SIXTEEN THOUSAND DOLLARS
($15,616,000) in lawful money of the United States of America, together with
interest (calculated on the basis of a 360-day year of twelve 30-day months),
on the unpaid principal balance from day-to-day outstanding, computed from May
20, 1993, until Maturity (as defined below) at a rate per annum equal to the
lesser of (a) the Maximum Rate, or (b) eight and 40/100 percent (8.4%).
Section 1. Definitions. when used in this Note, the following terms
shall have the respective meanings specified herein or in the Section referred
to:
"Business Day" shall mean any day other than (i) a Saturday or Sunday,
or (ii) a day on which banks in New York or California are required by law to
close or are customarily closed.
" Event of Default" shall have the meaning assigned to it in Section 5.
"Holder" shall mean Payee, its successors and assigns and any subsequent
holder hereof.
"Lease Assignment" shall have the meaning assigned to it in Section 2 of
the Loan Agreement.
"Loan Agreement" shall mean that certain Loan Agreement dated as of
May 14, 1993 between Maker and Payee, pursuant to which the Loan, as defined
in the Loan Agreement, evidenced by this Note is governed.
"Loan Documents" shall mean the Mortgage, as hereinafter defined,
together with all financing statements and other documents executed by Maker,
Payee and others, as described in Section 1.2 of the Loan Agreement.
"Make-Whole Premium" shall have the meaning assigned to it in Section 2
of the Loan Agreement.
1
<PAGE> 2
"Maturity" shall mean the earlier of the Maturity Date (as defined in
Section 3(a)) or the date on which the entire outstanding principal balance,
accrued unpaid interest and Make-Whole Premium become due and payable pursuant
to the provisions of any Loan Document by acceleration, upon the occurrence of
an Event of Default, by any prepayment or otherwise.
"Maturity Date" shall mean May 14, 2014.
"Maximum Rate" shall mean, as of any day, with respect to the Holder,
the highest nonusurious rate of interest, if any, permitted by applicable law
on such day.
"Mortgage" shall mean the Mortgage, Security Agreement, Assignment of
Leases and Rents and Fixture Filing, dated as of May 14, 1993, from Maker to
Payee, encumbering the Mortgaged Estate more particularly described therein
located in Manchester, Connecticut.
"Mortgaged Estate" shall mean the real and personal property encumbered
by the Mortgage and more particularly described therein.
"Pledge Agreement" shall have the meaning assigned to it in Section 2 of
the Loan Agreement.
"Overdue Rate" shall mean a rate of interest equal to ten and 40/100
percent (10.4%) per annum which shall accrue on any overdue amounts due
hereunder following an Event of Default.
"Redemption Price" shall have the meaning assigned to it in the Loan
Agreement.
Section 2. Loan Agreement; Security.
(a) This Note is executed and delivered by the Maker pursuant to the
terms and conditions of the Loan Agreement.
(b) This Note and the payment and performance of the Maker's
obligations hereunder and pursuant to the other Loan Documents are secured by
the Mortgage, the Lease Assignment, the Pledge Agreement and certain of the
other Loan Documents.
Section 3. Maturity.
(a) This Note shall mature on the earlier of the Maturity Date or the
date on which the entire outstanding principal balance, accrued unpaid interest
and Make-Whole Premium become due and payable pursuant to the provisions of any
Loan Document by acceleration, upon the occurrence of an Event of Default, by
any required prepayment or otherwise.
2
<PAGE> 3
(b) Upon Maturity this Note shall be due and payable in full in the
amount of the entire outstanding principal balance, accrued unpaid interest and
Make-Whole Premium, if any.
Section 4. Payment.
(a) The principal of and interest upon this Note shall be due and
payable as follows:
(i) Interest shall be due and payable semiannually in arrears
in the amounts set forth on Exhibit A attached hereto, commencing
November 14, 1993, and thereafter, on the fourteenth (14th) day of each
succeeding November and May during the term of this Note and on
Maturity; and
(ii) The principal Of this Note shall be due and payable in the
amounts set forth on Exhibit A attached hereto, commencing on May 14,
1994, and thereafter, on the fourteenth (14th) day of May of each
succeeding year through and including the Maturity Date in the amount of
the then unpaid principal balance.
(b) Should any amount payable pursuant to this Note become due and
payable on any day other than a Business Day, such amount shall be payable on
the immediately preceding Business Day. All payments of any amount due and
payable pursuant to this Note shall be made by Maker to Payee in immediately
available federal reserve funds. Payments made to Payee by maker hereunder
shall be applied first to accrued interest, then, if applicable, to the
Make-Whole Premium, and then to principal.
(c) All past due amounts payable pursuant to this Note other than
interest and, to the extent permitted by applicable law, past due interest upon
this Note shall bear interest at the lesser of (i) the Maximum Rate or (ii) the
overdue Rate.
(d) This Note is not subject to prepayment, purchase or redemption at
the option of maker prior to its expressed Maturity Date except on the terms
and conditions and in the amounts, if any, set forth in Section 3 of the Loan
Agreement.
Section 5. Events of Default and Remedies.
(a) Each of the "Events of Default" as defined in the Loan Agreement
shall be an Event of Default pursuant to this Note.
(b) Upon the occurrence of an Event of Default the holder of the Note
may exercise such rights and remedies as are provided in the Loan Agreement and
any other Loan Document.
3
<PAGE> 4
Section 6. Waiver.
(a) Maker and each surety, endorser, guarantor and other party ever
liable for payment of any sums of money payable upon this Note, jointly and
severally waive presentment, demand, protest, notice of protest and nonpayment
or other notice of default, notice of acceleration and intention to accelerate
or other notice of any kind, and agree that their liability under this Note
shall not be affected by any renewal or extension of the time of payment
hereof, or by any indulgences, or by any release or change in any security for
the payment of this Note; and hereby consent to any and all such renewals,
extensions, indulgences, releases or changes, regardless of the number of such
renewals, extensions, indulgences, releases or changes.
(b) No course of dealing on the part of any Holder of this Note nor
any delay or failure on the part of any Holder of this Note to exercise any
right shall operate as a waiver of such right or otherwise prejudice such
Holder's rights, powers and remedies. No exercise or enforcement of any such
rights or remedies shall ever be held to exhaust any other right or remedy of
such Holder. The rights and remedies expressly provided for in this Note are
cumulative, and are not exclusive of any rights or remedies which any Holder of
this Note would otherwise have, including, without limitation, the rights and
remedies provided for in the mortgage.
Section 7. Notice. Whenever this Note requires or permits any notice,
approval, request or demand from one party to another, the notice, approval,
request or demand shall be given in accordance with the provisions of the Loan
Agreement.
Section 8. Collection Expense. Promptly after Holder's demand therefor,
Maker shall pay Holder all costs and expenses incurred by it in the collection
of this Note in connection with each Event of Default hereunder or pursuant to
any of the other Loan Documents, including reasonable attorney's fees,
disbursements and other charges of Holder's attorneys actually incurred for all
services rendered in connection therewith.
Section 9. Registered Note. This Note is registered on the books of
Maker and is transferable only by surrender thereof at the offices of Maker,
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered Holder or its attorney, duly authorized in writing. Payment
of or on account of any amount due and payable on this Note shall be made only
to or upon the order in writing of the registered Holder.
Section 10. Limited Recourse. Recourse under this Note is governed by
the provisions of Section 11 of the Loan Agreement.
4
<PAGE> 5
Section 11. Applicable law. The law of the State of New York (without
giving effect to the choice of law principles thereof) shall govern the
validity, construction, enforcement and interpretation of this Note.
Dated as of the date first above written.
XXXXXXXXXX, a Connecticut
limited partnership
By: XXXXXXXXXX, a
Connecticut corporation, its sole
General Partner
By: /s/
----------------------------
Its President
5
<PAGE> 6
[Exhibit A Intentionally Omitted]
<PAGE> 1
EXHIBIT 99.35
NOTE PUT AGREEMENT
THIS NOTE PUT AGREEMENT ("Agreement") is made as of the 14th day of
May, 1993, by and between KMART CORPORATION ("Kmart"), a Michigan corporation,
and XXXXXXXXXX ("Lender"), a Nevada corporation, each of which confirms and
agrees as follows:
SECTION 1: RECITALS
1.1 Loan. Pursuant to the Loan Agreement ("Loan Agreement") dated
as of May 14, 1993, between Lender and XXXXXXXXXX ("Borrower"), a Connecticut
limited partnership, Lender has agreed to make Borrower the Loan, to be
evidenced by the Note. The proceeds of the Loan will be used to acquire,
develop and construct the Project which is located in Manchester, Connecticut,
and will be leased in part by The Sports Authority, Inc., a Delaware
corporation, Borders Inc., a Delaware corporation, and OfficeMax, Inc., an Ohio
corporation, all of which are subsidiaries of Kmart (each a "Subsidiary" and,
collectively, "Subsidiaries") pursuant to certain Leases described in Exhibit
1.1C to the Loan Agreement. As a material inducement to Lender to make the
Loan Kmart has agreed to enter into this Agreement with Lender.
1.2 Terms; Governing Document. All capitalized terms used herein,
unless otherwise expressly provided, shall have the meaning set forth in the
Loan Agreement. In the event of any conflict between the terms and provisions
of this Agreement and the Loan Agreement, the terms and conditions of this
Agreement shall govern and prevail.
SECTION 2: PURCHASE OF NOTE
2.1 Certain Definitions. For purposes of this Section 2, the
following terms shall have the following meanings:
"Business Day" means any day other than (i) Saturday or
Sunday, or (ii) a day on which banks in New York or California are required by
law to be closed or are customarily closed.
"Called Principal" means the unpaid principal balance of the
Note to be paid as part of the Purchase Price upon exercise of the Put.
"Certificates" shall have the meaning assigned to it in
Section 3.2.
"Certificate Differential" means the excess of the outstanding
principal amount of the Certificates over the outstanding principal amount of
the Note after taking into effect
-1-
<PAGE> 2
all prepayments or payments of principal in respect thereof which have been
made prior to the date of calculation.
"Completion of Construction" means completion of the Construction in
accordance with the Plans and Specifications referred to in the Loan Agreement.
"Consent and Agreement" means the Consent and Agreement dated as of
May 14, 1993 among Kmart, Lender, Borrower, Subsidiaries and Trustee relating
to the Leases, Lease Guaranties, this Agreement and certain other related
matters.
"Discounted Prepayment Value" means, with respect to any amount of
Called Principal, the amount obtained by discounting all Remaining Scheduled
Payments with respect to Called Principal from their respective scheduled due
dates to the Purchase Date with respect to such Called Principal, in accordance
with generally accepted financial practice and at a discount factor (applied on
a semiannual basis) equal to the Reinvestment Yield.
"Facility" or "Facilities" means one or more specific "Demised
Premises" as that term is defined in a Lease pursuant to which a Subsidiary is
a Tenant.
"Failure of Completion:" means Completion of Construction of one
or more of the Facilities does not occur by November 14, 1994.
"Lease Guaranties" means those certain Lease Guaranties, described in
Exhibit 1.1C to the Loan Agreement, executed by Kmart Corporation which
guarantee the payment and performance of its Subsidiaries under the Leases.
"Lease/Lease Guaranty Default" means, with respect to any one or more
of the Leases and Lease Guaranties described in Exhibit 1.1C to the Loan
Agreement, the failure of (i) a Subsidiary under any Lease to pay any Annual
Rental or Additional Rent as defined in the Lease due under such Lease for a
period of fifteen (15) days after notice to Subsidiary of such default and
(ii) Kmart to pay any such Annual Rental or Additional Rent under the related
Lease Guaranty, if any, within fifteen (15) days after notice to Kmart of the
Subsidiary's failure to do so; provided that, no notice referred to in the
foregoing clause (i) or clause (ii) shall be required in the event that
Landlord or Trustee shall be stayed or prohibited by operation of law or
otherwise from the giving of such notice.
"Lease" or "Leases", means each individual lease or all of those
certain leases described in Exhibit 1.lC to the Loan Agreement.
"Lender" means XXXXXXXXXX, a Nevada corporation, and any
of its successors and assigns.
-2-
<PAGE> 3
"Make-Whole Premium" means, with respect to any amount of Called
Principal, an amount equal to the sum of (x) the excess (which shall in no
event be less than zero), if any, of the Discounted Prepayment Value over the
sum of (i) such Called Principal plus (ii) interest accrued thereon as of the
Purchase Date with respect to such Called Principal and (y) an amount equal to
the Certificate Differential.
"Minimum Investment Grade" means a rating of at least Baa3, in the
case of a rating by Moody's, and a rating of at least BBB-, in the case of a
rating by S&P, or the then equivalent of such rating by Moody's or S&P or, to
the extent applicable, by another Rating Agency.
"Moody's" means Moody's Investors Service or any successor thereto.
"Note" means the Note evidencing the Loan executed and delivered by
the Borrower to the Lender pursuant to the Loan Agreement.
"Purchase Date" means the Business Day first occurring thirty (30)
days after Lender gives notice to Kmart of Lender's election to exercise the
Put.
"Purchase Price" means the sum of the unpaid principal balance of the
Note, accrued interest thereon to the Purchase Date, and the Make-Whole
Premium.
"Put" means exercise of the right of Lender to require Kmart to
purchase the Note in accordance with Section 2.2 of this Agreement.
"Rating Agency" and "Rating Agencies" mean Moody's and S&P and, if
either Moody's or S&P (but not both) ceases to rate the indebtedness of
corporations generally, or unsubordinated, senior, unsecured indebtedness of
Kmart in particular, then another comparable rating agency of recognized
national standing in the United States.
"Rating Decline" means that:
(i) the rating assigned to unsubordinated, senior, unsecured
indebtedness of Kmart on such date by either Moody's or S&P: (a) declines to a
rating below the Minimum Investment Grade, or (b) further declines, in the
event then rated below the Minimum Investment Grade; or
(ii) (a) unsubordinated, senior, unsecured indebtedness of Kmart
ceases to be rated by either Moody's or S&P (other than by reason of such
Rating Agency ceasing to rate the indebtedness of corporations generally) at
such time as the rating then assigned by the remaining such Rating Agency shall
be
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below Minimum Investment Grade or (b) unsubordinated, senior, unsecured
indebtedness of Kmart ceases to be rated by either Moody's or S&P at such time
as the rating then assigned by the remaining such Rating Agency shall be at
least the Minimum Investment Grade and Kmart is unable to have such debt rated
by another Rating Agency within ninety (90) days thereafter; or
(iii) unsubordinated, senior, unsecured indebtedness of Kmart ceases
to be rated by both Moody's and S&P for any reason (except if, through no fault
of Kmart, both Moody's and S&P are unable to provide a rating due to a business
failure or interruption affecting both Moody's and S&P).
For purposes of determining whether a Rating Decline shall have occurred
pursuant to clause (i), the rating initially assigned by any Rating Agency
engaged by Kmart pursuant to clause (ii) to replace any rating withdrawn or
otherwise terminated by Moody's or S&P shall be compared to the last rating
assigned by Moody's or S&P, as the case may be, to determine if the
circumstances described in (i)(a) or (b) exist.
"Reinvestment Yield" means with respect to the Called Principal, the
lesser of 8.4% and the sum of (x) the yield to maturity implied by the
following: (i) the yields reported, as of 10:00 a.m. (New York City time) on
the third Business Day preceding the Purchase Date with respect to such Called
Principal, on the display designated as "Page 678" on the Telerate Service (or
such other display as may replace Page 678 on the Telerate Service) for
actively traded U.S. Treasury securities having a maturity equal (as near as
practicable) to the Remaining Average Life of the Called Principal being paid
or prepaid as of such Purchase Date, or (ii) if such yields shall not be
reported as of such time or the yields reported as of such time shall not be
ascertainable, the Treasury Constant Maturity Series yields reported, for the
latest day for which such yields shall have been so reported as of the third
Business Day preceding the Purchase Date with respect to such Called Principal,
in Federal Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a constant
maturity equal (as near as practicable) to the Remaining Average Life of the
Called Principal being paid or prepaid as of such Purchase Date, and (y) fifty
(50) basis points. Such implied yield shall be determined, if necessary, by
(a) converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between reported yields.
"Remaining Average Life" means, with respect to any amount of Called
Principal of the Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled
Payment of such Called Principal (but not of the interest thereon) by (b) the
number of years (calculated to the nearest one-twelfth year)
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<PAGE> 5
which will elapse between the Purchase Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
"Remaining Scheduled Payments" means, with respect to any amount of
the Called Principal, all payments of such Called Principal and interest
thereon that would be due on or after the Purchase Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
expressed maturity date.
"S&P" means Standard & Poor's Corporation, or any successor thereto.
"Triggering Event" means (i) a Rating Decline, (ii) a Lease/Lease
Guaranty Default, or (iii) a Failure of Completion.
2.2 Purchase of Note Following a Triggering Event.
(a) If a Triggering Event occurs, Lender will have the right to
require Kmart to purchase the Note in whole but not in part on the Purchase
Date at the Purchase Price.
(b) If a Triggering Event occurs and subsequent to such Triggering
Event another Triggering Event occurs, Lender will again have the rights, and
Kmart again will have the obligations, set forth in this Section 2.2.
(c) Within seven (7) Business Days after the first date on which a
Triggering Event has occurred, Kmart shall cause notice thereof to be mailed to
Lender. Such notice shall (i) state that a Triggering Event has occurred, (ii)
describe any action that caused such Triggering Event and the date of the
occurrence thereof and (iii) offer to purchase the Note in accordance with this
Agreement. Kmart's notice and other obligations shall continue so long as the
Note remains outstanding. Any failure of Kmart to give such notice or to make
such offer to purchase the Note shall not affect the obligations of Kmart under
this Section 2.2.
(d) In the event Lender elects to exercise the Put, Lender shall
do so by causing a notice to be mailed to Kmart within thirty (30) days after
the first date on which notice of a Triggering Event has been received in
accordance with Section 2.2(c) (or if Kmart fails to give the notice required
by Section 2.2(c), at any time after the occurrence of such Triggering Event),
which notice shall state (i) the occurrence of a Triggering Event, (ii) the
Purchase Date, (iii) the estimated Purchase Price, (iv) the manner in which the
Purchase Price has been determined, and (v) that Lender elects to have Kmart
purchase the Note on the Purchase Date. Kmart shall not be excused from any
obligation it may have under this Agreement by reason of any notice required
hereunder not being timely given or
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being defective, provided, however, Kmart's time for performance shall be
extended by a period equal to any period of delay in receiving such notice or
caused by the correction of such notice, if defective.
(e) In connection with the purchase of the Note pursuant
to this Section 2.2, (i) Lender will be required to surrender, on or before the
Purchase Date, at the principal office of the Trustee, duly endorsed without
recourse or assigned to Kmart or in blank without recourse and to assign
without recourse all right, title and interest of Lender under the Loan
Documents; and (ii) Kmart shall, on or before 10:00 a.m. (New York City time)
on the Purchase Date, pay the Purchase Price to Trustee, by wire transfer or
immediately available funds in lawful currency of the United States of America
at XXXXXXXXXX, XXXXXXXXXX for credit to Account Number XXXXXXXXXX (Mortgage
Pass-Through Certificates (The Crossroads at Buckland Hills, Manchester,
Connecticut) Series 1993). The Trustee shall hold the Note in trust for the
benefit of the Lender until payment in full of the Purchase Price to the
Lender on the Purchase Date and shall then and thereupon surrender the Note
to Kmart.
SECTION 3. SUCCESSORS AND ASSIGNS
3.1 General. This Agreement shall be binding upon Kmart and its
respective successors and assigns; provided that Kmart shall not assign any of
its obligations hereunder without the prior written consent of Trustee; and
provided further that no assignment of any of its obligations hereunder shall
relieve Kmart thereof and Kmart shall remain primarily and originally liable
thereon. Each successive holder or holders of the Note shall have all rights
and privileges of Trustee hereunder.
3.2 Consent to Assignment. Kmart hereby acknowledges and consents
to the sale, conveyance, transfer and absolute assignment by Lender of all of
its right, title and interest under this Agreement and in the Note and any and
all other Loan Documents to XXXXXXXXXX ("Trustee") as Trustee, pursuant to
the Trust Agreement under which the Mortgage Pass-Through Certificates (The
Crossroads at Buckland Hills, Manchester, Connecticut) Series 1993
("Certificates") will be issued. Trustee shall have the sole right to exercise
all rights, privileges and remedies (either in its own name or in the name of
the Lender for the use and benefit of Trustee) which by the terms of this
Agreement or by applicable law are permitted or provided to be exercised by the
Lender. Kmart further acknowledges and agrees that each successive holder or
holders of the Note, including but not limited to Lender, accepts transfer of
the Note in reliance upon Kmart's representations, warranties, covenants,
agreements and other obligations hereunder. In order to further induce any
such successive holder or holders of the Note, including but not limited to,
Lender, to accept such
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assignment and its obligations under this Agreement, Kmart hereby
makes the following representations, warranties, covenants and
agreements:
(i) Kmart does not have any right, including any claim, counterclaim,
right of setoff or deduction or other defense of any kind to withhold
performance of its obligations hereunder (collectively, "Kmart Defenses");
(ii) in the event Kmart becomes aware of any Kmart Defenses, Kmart
hereby waives and agrees not to assert the same against the Trustee or any
other holder of the Note;
(iii) upon consummation of the sale, conveyance, transfer and absolute
assignment to Trustee, Kmart waives any right to challenge Trustee's status as
a bonafide purchaser of the Note for value and holder in due course;
(iv) the Trustee and each holder of the Note are
and shall be third-party beneficiaries of this Agreement;
(v) upon consummation of the sale, conveyance, transfer and
absolute assignment to Trustee, Trustee and its successors and assigns shall be
deemed to be the Lender hereunder, and shall succeed to all rights of Lender
hereunder; and
(vi) Kmart hereby acknowledges and agrees that any and all rights
hereunder granted to Trustee may be exercised and enforced by Trustee,
including pursuant to legal process (and that any such exercise and enforcement
by Trustee shall have the same force and effect as the exercise and enforcement
by Lender).
SECTION 4. KMART'S REPRESENTATIONS AND WARRANTIES.
Kmart represents and warrants that (i) it is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Michigan and is duly qualified and in good standing as a foreign corporation
authorized to do business wherever required to do so by applicable law, (ii) it
has full power, authority and legal right to execute and deliver, and to
perform and observe the provisions of the Lease Guaranties, the Consent and
Agreement, and this Agreement and each of the Subsidiaries which is a party to
a Lease or the Consent and Agreement similarly has such full power, authority
and legal right to execute and deliver and to perform and observe the
provisions of the Lease and the Consent and Agreement to which it is a party,
(iii) there has been no material adverse change in the business or condition,
financial or otherwise, of Kmart or any of the Subsidiaries since the date of
Kmart's last audited financial report, (iv) there are no actions, proceedings
or investigations pending or threatened against or affecting Kmart or any of
the Subsidiaries (or any basis therefor known to Kmart) before any court,
arbitrator, administrative agency or
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other governmental authority, which if adversely decided would materially and
adversely affect the financial condition or operations of Kmart or any of the
Subsidiaries, or their respective ability to carry out any of the terms,
covenants and conditions of the Leases, the Lease Guaranties, the Consent and
Agreement,this Agreement or any other document relating to the Loan or the
Leases (to which it is a party), (v) the execution and delivery by Kmart and
the Subsidiaries respectively of the Leases, the Lease Guaranties, the Consent
and Agreement, this Agreement, or any of the other documents relating to the
Loan or the Leases (to which it is a party) have been duly authorized by all
necessary corporate action and each is enforceable in accordance with its
terms, (vi) neither the execution and delivery of the Leases, the Lease
Guaranties, the Consent and Agreement, this Agreement or any other document
relating to the Loan or the Leases (to which it is a party), nor compliance
with the terms and provisions thereof, conflicts or will conflict with or
result in a breach of any of the terms, conditions or provisions of the
Certificate of Incorporation or Bylaws of Kmart or any of its Subsidiaries, or
of any law, rule, regulation, order, writ, injunction, judgment or decree of
any court, arbitration or administering agency or governmental authority, or of
any agreement or other instrument to which Kmart or Subsidiary is a party or by
which it or its assets is bound or subject, or constitutes or will constitute a
default thereunder, and (vii) neither Kmart nor any Subsidiary is in default
under any judgment, order, decree, rule or regulation of any court, arbitrator,
administrative agency or other governmental authority to which it may be
subject.
SECTION 5. GENERAL
5.1 Counterparts. This Agreement may be executed in counterparts
by the parties but all such counterparts together shall constitute one and the
same document.
5.2 Notices. All notices, requests, demands or other
communications pursuant to this Agreement shall be in writing and shall be
addressed, in the case of Kmart, to Kmart, 3100 West Big Beaver Road, Troy,
Michigan 48084-3163, Attention: Senior Vice President, Real Estate Department;
in the case of Lender, to XXXXXXXXXX, XXXXXXXXXX, Attention: XXXXXXXXXX; in
the case of Trustee, which shall receive copies of all communications
hereunder, to XXXXXXXXXX c/o XXXXXXXXXX, XXXXXXXXXX, Attention: XXXXXXXXXX,
Corporate Trust Division; or to such other address as any party may designate
in writing. All notices hereunder shall be effective: (a) three (3) days after
deposit in the United States mail, postage prepaid, registered or certified
mail, return receipt requested; (b) upon delivery, if delivered in person, to
the address set forth above; or (c) upon delivery, if sent by overnight
courier, such as Federal Express or Airborne Express.
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5.3 Section Headings. Section headings are not to be
considered a part of this Agreement and are included solely for convenience of
reference and are not intended to be full or accurate descriptions of the
contents thereof.
5.4 Applicable Law. This Agreement shall be construed
and enforced under the laws of the State of New York without giving effect to
the choice of law principles thereof.
5.5 Severability. Should any provision of this Agreement
for any reason be declared unenforceable by a court of competent jurisdiction
(sustained on appeal, if any), such unenforceability shall not affect the
enforceability of any other provision hereof or thereof, all of which shall
remain in force and effect as if this Agreement had been executed with the
unenforceable provisions thereof eliminated and it is hereby declared the
intention of the parties hereto that they would have executed the remaining
provision of this Agreement without including therein any such part, parts or
portion which may for any reason be hereafter declared unenforceable, provided
that, if any provision of this Agreement shall be unenforceable by reason of a
final judgment of a court of competent jurisdiction based on a court's ruling
(sustained on appeal, if any) that such provision is unenforceable because of
the excessive degree of magnitude of the obligation imposed thereby on any
party, that unenforceable obligation shall be reduced in magnitude or degree by
the minimum degree or magnitude necessary in order to permit the provision to
be enforceable by Lender. In the event the provisions of the immediately
preceding sentence apply, the parties shall make appropriate adjustment to the
provisions of this Agreement to give effect to the benefits intended to be
conferred upon the parties hereby.
5.6 Waiver. Lender may waive any requirement herein. No
delay or omission by Lender in exercising any right hereunder shall impair any
right of Lender under this Agreement or be construed as Lender's waiver of or
acquiescence in any breach. No such delay or omission by Lender shall be
construed as a variation or waiver of any of the terms, conditions or
provisions of this Agreement. No purported waiver of any right hereunder shall
be effective unless it is written and signed by an authorized representative of
Lender. No waiver by Lender of any breach shall constitute a waiver of any
other prior or subsequent breach or of the same breach after notice to Kmart
demanding strict performance. Lender shall not be estopped to take or from
taking any action with respect to any breach because of any delay by Lender in
giving notice of such breach or exercising any remedy based thereon.
5.7 Submission to jurisdiction. Kmart hereby consents to
the jurisdiction of any state or federal court located within the County of New
York, State of New York and irrevocably agrees that all actions or proceedings
relating to this Agreement may be
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litigated in such courts and Kmart waives any objection which it may have based
on improper venue or forum nonconveniens to the conduct of any proceeding in
any such court, waives personal service of any and all process upon it, and
consents that all such service or process be made by registered or certified
mail (return receipt requested) or messengered to it at its address set forth
in Section 5.2 or to its Agent referred to below at such Agent's address set
forth below, and, that service so made shall be deemed to be completed in
accordance with Section 5.2. Kmart hereby appoints Prentice Hall Corporation
System, Inc. with an office on the date hereof at 15 Columbus Circle, New York,
New York 10023 as its Agent for the purpose of accepting service of any process
within the State of New York. Nothing contained in this Section shall affect
the right of Lender to serve legal process in any other manner permitted by
law, to bring any action or proceeding in the courts of any jurisdiction
against Kmart, or to enforce a judgment obtained in the courts of any other
jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above set forth.
KMART CORPORATION,
a Michigan corporation
By: /s/
-------------------------------
M. L. Skiles
Senior Vice President
XXXXXXXXXX, a
Nevada corporation
By:
-------------------------------
Its:
-------------------------
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litigated in such courts and Kmart waives any objection which it may have based
on improper venue or forum nonconveniens to the conduct of any proceeding in
any such court, waives personal service of any and all process upon it, and
consents that all such service or process be made by registered or certified
mail (return receipt requested) or messengered to it at its address set forth
in Section 5.2 or to its Agent referred to below at such Agent's address set
forth below, and, that service so made shall be deemed to be completed in
accordance with Section 5.2. Kmart hereby appoints Prentice Hall Corporation
System, Inc. with an office on the date hereof at 15 Columbus Circle, New York,
New York 10023 as its Agent for the purpose of accepting service of any process
within the State of New York. Nothing contained in this Section shall affect
the right of Lender to serve legal process in any other manner permitted by
law, to bring any action or proceeding in the courts of any jurisdiction
against Kmart, or to enforce a judgment obtained in the courts of any other
jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above set forth.
KMART CORPORATION,
a Michigan corporation
By:
----------------------------
M. L. Skiles
Senior Vice President
XXXXXXXXXX, a
Nevada corporation
By: /s/
----------------------------
Its: Vice President
----------------------
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EXHIBIT 99.36
THE BORROWERS HEREUNDER
$200,000,000
LOAN AGREEMENT
Dated as of January 21, 1992
with
The Financial Institutions Signatory Hereto
and
XXXXXXXXXX, As Managing Agent
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Accounting Terms; Financial Statements . . . . . . . . . . . . . . . 20
ARTICLE II
LOAN PROVISIONS
Section 2.1 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.2 Obligations; Notes; Loan Register; Waiver;
Application of Initial Loans . . . . . . . . . . . . . . . . . . . . 21
Section 2.3 Allocation of Total Commitment . . . . . . . . . . . . . . . . . . . 23
Section 2.4 Terms of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.5 Notice of Borrowing; Roll-Over Borrowings. . . . . . . . . . . . . . 24
Section 2.6 Disbursement of Funds. . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.7 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.8 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.9 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . . . 30
Section 2.10 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.11 Responsibility for Making Loans. . . . . . . . . . . . . . . . . . . 34
ARTICLE III
TERMINATION OF LOAN COMMITMENTS, PREPAYMENTS
AND FEES
Section 3.1 Mandatory Reduction of the Loan Commitments. . . . . . . . . . . . . 35
Section 3.2 Voluntary Reduction of the Total Commitment or
any Project Commitment . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.3 Voluntary Prepayments of the Loan Obligations. . . . . . . . . . . . 36
</TABLE>
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Section 3.4 Mandatory Prepayment of the Loan Obligations . . . . . . . . . . . . . . . . 36
Section 3.5 Other Provisions With Respect to Prepayments. . . . . . . . . . . . . . . . . 37
Section 3.6 Order of Prepayments and Payments . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.7 Unused Commitment Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.8 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.9 Net Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.10 Options to Extend Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the
Borrowers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of each Borrower . . . . . . . . . . . . . . . . . . . . 45
Section 5.2 Negative Covenants of each Borrower. . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VI
CONDITIONS OF CREDIT
Section 6.1 Conditions Precedent to the Initial Borrowing . . . . . . . . . . . . . . . . 53
Section 6.2 Conditions Precedent to any Initial Project
Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.3 Conditions Precedent to All Borrowings (other
than a Roll-Over Borrowing) . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.4 Conditions Precedent to All Roll-Over
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>
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ARTICLE VII
EVENTS OF DEFAULT
Section 7.1 Guarantor Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 7.2 Borrower Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE VIII
THE MANAGING AGENT
Section 8.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 8.2 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 8.3 Rights, Exculpation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 8.4 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 8.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 8.6 The Managing Agent Individually . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.7 Resignation by the Managing Agent . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE IX
MISCELLANEOUS
Section 9.1 No Waiver; Modifications in Writing . . . . . . . . . . . . . . . . . . . . . 66
Section 9.2 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 9.3 Notices, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 9.4 Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 9.5 Confirmations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 9.6 Adjustment; Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 9.7 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 9.8 Binding Effect; Assignment; Addition and
Substitution of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 9.9 Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
</TABLE>
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Section 9.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 9.11 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 9.12 Borrower Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 9.13 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 9.14 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
</TABLE>
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Exhibits
Exhibit A - Form of Additional Borrower Agreement
Exhibit B-1 - Form of Initial Note
Exhibit B-2 - Form of Amended Note
Exhibit B-3 - Form of Extension Note
Exhibit C - Form of Allocation Request
Exhibit D - Form of Allocation Increase/Decrease Request
Exhibit E - Form of Notice of Borrowing
Exhibit F - Form of Additional Conditions
Schedules
Schedule 1.1(a) - Amounts of Loan Commitments of the Banks
Schedule 2.5(a) - Timing Examples for Notices of Borrowing
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<PAGE> 7
LOAN AGREEMENT
This LOAN AGREEMENT, dated as of January 21, 1992, among the
Borrowers (as hereinafter defined), the undersigned financial institutions,
including XXXXXXXXXX, in their capacities as lenders hereunder (collectively,
the "Banks," and each individually, a "Bank") and XXXXXXXXXX, as managing
agent (the "Managing Agent") for the Banks.
W I T N E S S E T H
WHEREAS, the Borrowers have requested the Banks to make loans
to one or more of the Borrowers in an aggregate principal amount not to exceed
$200 million to be used to develop, manage and lease shopping centers in the
United States to be anchored by Kmart and/or Kmart Affiliates; and
WHEREAS, the Banks are willing to extend commitments to make
loans to the Borrowers for the purposes specified above and on the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained and the Guaranty (as hereinafter defined),
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Definitions. As used herein, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Additional Borrower Agreement" means an Additional
Borrower Agreement in the form of Exhibit A hereto.
"Affected Bank" has the meaning assigned to that term in
Section 2.9(d).
"Affiliate" means, with respect to any Person, any Person or group
acting in concert in respect of the Person in question that, directly or
indirectly, controls or is controlled by or is under common control with such
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person or group of Persons, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of management and policies of such Person, whether through (i) the
ownership of voting securities or (ii) by contract or otherwise. Neither
XXXXXXXXXX nor XXXXXXXXXX nor any of their respective Subsidiaries nor any
other Bank or its Subsidiaries and any corporation of which any
<PAGE> 8
Bank is a Subsidiary shall, for purposes of this Agreement, be deemed to be
Affiliates of any Borrower.
"Agreement" means this Loan Agreement, as the same may at any
time and from time to time be amended, supplemented or modified and in effect.
"Allocation Increase/Decrease Request" has the meaning
assigned to that term in Section 2.3(b).
"Allocation Request" has the meaning assigned to that
term in Section 2.3(a).
"Amended Note" has the meaning assigned to that term in
Section 2.2(b).
"XXXXXXXXXX" means XXXXXXXXXX, a Michigan general partnership.
"Assignees" has the meaning assigned to that term in
Section 9.8(c).
"Banks" and "Bank" have the respective meanings assigned
to those terms in the introduction to this Agreement.
"Board" means the Board of Governors of the Federal
Reserve System.
"Borrower" means any of XXXXXXXXXX and any Eligible Borrower
as to which an Additional Borrower Agreement shall, after the date of this
Agreement, have been delivered to the Managing Agent, duly executed by such
Eligible Borrower, the Guarantor and the Managing Agent on behalf of the Banks
and shall have become effective in accordance with its terms, until such time,
if any, as such Borrower shall have satisfied the conditions set forth in
Section 9.12, and "Borrowers" means all of the foregoing.
"Borrower Event of Default" has the meaning assigned to
that term in Section 7.2.
"Borrower Termination Agreement" means an agreement by and
between the Managing Agent and any Borrower on terms satisfactory to the
Managing Agent to be executed and delivered following the payment in full of
all obligations of such Borrower and the termination of all Project Commitments
with respect to such Borrower.
"Borrowing" means the incurrence of a Loan on a given
date pursuant to Section 2.5.
"Borrowing Margin" means one-half of one percent (.50%)
provided, however, that in the event that, and during any period
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that the long-term Indebtedness of the Guarantor shall be rated BBB or lower by
Standard & Poor's Corporation or Baa2 or lower by Moody's Investors Service,
Inc., the Borrowing Margin shall mean three quarters of one percent (.75%)
during such period.
"Bridge Borrowers" has the meaning assigned to that term
in Section 2.2(e).
"Bridge Agreement" has the meaning assigned to that term in
Section 2.2(e).
"XXXXXXXXXX" means XXXXXXXXXX, a New York banking corporation.
"Business Day" means (i) a day on which the Managing Agent is
open in New York, New York at its address specified in or for the purposes of
this Agreement for the purpose of conducting commercial banking business, and
(ii) with respect to a Eurodollar Rate Loan, also a day on which dealings in
foreign currencies and exchange between banks may be carried out in London,
England.
"Capital Expenditures" means, without duplication, with
respect to any Person: any amounts expended, incurred or obligated to be
expended during or in respect of a period for any purchase or other acquisition
for value of any asset that is classified on a consolidated balance sheet of
such Person prepared in accordance with generally accepted accounting
principles as a fixed or capital asset including, without limitation, the
direct or indirect acquisition of such assets or improvements by way of
increased product or service charges, offset items or otherwise, and shall
include Financing Lease Obligations.
"Code" means the Internal Revenue Code of 1986, as from time
to time amended, including the regulations proposed or promulgated thereunder,
or any successor statute and the regulations proposed or promulgated
thereunder.
"Completion Date" means, with respect to any Project, the date
on which a certificate of completion, in form satisfactory to the Managing
Agent, shall have been delivered to the Managing Agent.
"Contaminant" means any waste, pollutant (as that term is
defined in 42 U.S.C. 9601(33) or in 33 U.S.C. 1362(13)), hazardous substance
(as that term is defined in 42 U.S.C. 9601(14)), hazardous chemical (as that
term is defined by 29 CFR Section 1910.1200(c)), toxic substance, hazardous
waste (as that term is defined in 42 U.S.C. 6901), radioactive material,
special waste, petroleum, including crude oil or any petroleum-derived
substance, waste, or breakdown or decomposition product thereof, or any
constituent of any such substance or waste, including but not limited to
polychlorinated biphenyls, and asbestos.
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<PAGE> 10
"Credit Exposure" has the meaning assigned to that term
in Section 9.8(b).
"Default Rate" has the meaning assigned to such term in
Section 2.7(c).
"Deposited Monies" has the meaning assigned to that term
in Section 3.5.
"Dollar" and "$" shall mean lawful money of the United States
of America.
"Eligible Assignee" means any of:
(a) a commercial bank organized under the laws of the
United States, or any state thereof, and having total assets in excess
of $500,000,000 and a combined capital and surplus of at least
$100,000,000;
(b) a savings and loan association or savings bank
organized under the laws of the United States, or any state thereof,
and having total assets in excess of $500,000,000 and a combined
capital and surplus of at least $100,000,000;
(c) a commercial bank organized under the laws of any
other country that is at such time a member of organization for
Economic Cooperation and Development (the "OECD") or has concluded
special lending arrangements with the International Monetary Fund
associated with its General Arrangements to Borrow or of the Cayman
Islands, or a political subdivision of any such country, and having
total assets in excess of $500,000,000 and a combined capital and
surplus of at least $100,000,000; provided that such bank is acting
through a branch or agency located in the United States or the Cayman
Islands;
(d) the central bank of any country that is a member of
the OECD;
(e) a finance company, insurance company or other
financial institution or fund (whether a corporation, partnership or
other entity) that is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business,
and having total assets in excess of $500,000,000 and (other than in
the case of a fund) combined capital and surplus of at least
$100,000,000; and
(f) any Affiliate of any Bank acceptable to the
Guarantor; provided that such acceptance by the Guarantor shall not be
unreasonably withheld (and shall be deemed to be given if the
Guarantor fails to respond to a written request
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<PAGE> 11
therefor within ten (10) Business Days after its receipt thereof).
"Eligible Borrower" means any of the following Persons
organized for the purpose of developing and managing a Project:
(a) a general partnership or joint venture organized
under the laws of the United States or a state thereof all of the
general partners of which shall consist of:
(i) Guarantor or any wholly-owned Subsidiary of
Guarantor, and
(ii) any of the following:
(A) XXXXXXXXXX or an Affiliate of
XXXXXXXXXX (including a partnership in which
XXXXXXXXXX or an Affiliate of XXXXXXXXXX is
general partner),
(B) XXXXXXXXXX or an Affiliate of
XXXXXXXXXX, (including a partnership in which
XXXXXXXXXX or an Affiliate of XXXXXXXXXX is
general partner),
(C) XXXXXXXXXX or an Affiliate of
XXXXXXXXXX (including a partnership in which
XXXXXXXXXX or an Affiliate of XXXXXXXXXX is
general partner), or
(D) such other Person or Persons as may
be approved by the Managing Agent (which
approval shall not be unreasonably withheld)
and which, in all other respects, shall be
reasonably satisfactory to the Managing
Agent; and
(b) Guarantor or a general partnership, limited
partnership, corporation or other entity organized under the laws of
the United States or a state thereof which is wholly-owned, directly
or indirectly, by Guarantor and which Guarantor has designated in
writing to the Managing Agent to become an additional Borrower
hereunder and which is otherwise in all respects reasonably
satisfactory to the Managing Agent.
"Environmental Lien" means a Lien in favor of any governmental
authority for (i) any liability under federal or state environmental lave or
regulations, or (ii) damages arising from, or costs incurred by such
governmental authority in response to, a Release or threatened Release of a
Contaminant into the environment.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as from time to time amended.
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<PAGE> 12
"Eurodollar Rate" means, with respect to each Interest Period
to be applicable to a Eurodollar Rate Loan, the rate obtained by dividing (i)
the arithmetic average (rounded upward to the nearest 1/16th of 1% if such
average is not such a multiple) of the offered quotation, if any, to
first-class banks in the interbank Eurodollar market by XXXXXXXXXX for U.S.
dollar deposits of amounts in immediately available funds comparable to the
principal amount of the Eurodollar Rate Loan to be made by XXXXXXXXXX with
maturities comparable to such Interest Period, determined as of approximately
10:00 A.M. (New York City time) two Business Days prior to the commencement of
such Interest Period, by (ii) a percentage equal to 100% minus the stated
maximum rate (expressed as a percentage) as prescribed by the Board of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves and all reserves required to be
maintained against "Eurocurrency liabilities" as specified in Regulation D)
applicable on the first day of such Interest Period to any member bank of the
Federal Reserve System in respect of Eurodollar funding or liabilities. The
determination of the Eurodollar Rate by the Managing Agent shall be conclusive
and binding on each Borrower absent manifest error.
"Eurodollar Rate Loan" means any Loan which bears interest at
a rate determined with reference to the Eurodollar Rate.
"Eurodollar Tranche" means all or a portion of a Eurodollar
Loan as to which a Borrower has, in any Notice of Borrowing or Rate Selection
Notice, specified a distinct Interest Period for a stated principal amount.
"Extension Notes" has the meaning assigned to that term
in Section 3.10(c).
"Facility Termination Date" shall mean the earliest to
occur of:
(i) January 20, 1995, or such later date as may be
elected pursuant to the provisions of Section 3.10 hereof, or
(ii) the date on which the Total Commitment shall have been
reduced to $0 pursuant to this Agreement, or
(iii) the date, if any, of the acceleration of all of the
Loans in accordance with Section 7.1 or 7.2. hereof.
"Federal Funds Rate" means on any one day the weighted average
of the rate on overnight Federal funds transactions with members of the Federal
Reserve System only arranged by Federal funds brokers as published as of such
day (or, if such day is not a Business Day, as of the immediately preceding
Business Day) by
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<PAGE> 13
the Federal Reserve Bank of New York, or if not so published, the rate then
used by first class banks in extending overnight loans to other first class
banks.
"Fee Letter" means that certain letter by and among each of
the Borrowers and the Managing Agent dated as of October 31, 1991.
"Financing Lease" means, at the time any determination thereof
is to be made, any lease of property, real or personal, in respect of which the
present value of the minimum rental commitment is capitalized on the balance
sheet of the lessee in accordance with generally accepted accounting
principles.
"Financing Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of
a Financing Lease which would at such time be so required to be capitalized on
such a balance sheet in accordance with generally accepted accounting
principals.
"Guarantor" means Kmart Corporation, a Michigan corporation.
"Guarantor Event of Default" has the meaning assigned to
that term in Section 7.1.
"Guarantor Restructuring" means any disposition of assets of
Guarantor or corporate restructuring of Guarantor (including, without
limitation, any leveraged buy-out, recapitalization, grant of security
interest, merger or consolidation, reverse merger, sale of assets, "spin-off"
or other transfer of assets) pursuant to which all or a substantial portion of
the' business, operations or assets of Guarantor shall be transferred, assigned
or pledged to one or more other Persons, including, without limitation, any
such transfer to a wholly-owned Subsidiary of Guarantor.
"Guaranty" means that certain Guaranty Agreement dated the
date hereof made by Guarantor in favor of Managing Agent and the Banks.
"Indebtedness" means, without duplication, all obligations of
a Person or a Subsidiary of such Person which are classified upon a balance
sheet of such Person or such Subsidiary in accordance with generally accepted
accounting principles as liabilities of such Person or such Subsidiary or as
indebtedness of any other individual or entity for which such Person or such
Subsidiary is liable, in each case other than as excepted below in clauses (i)
through (v) of this definition, and in any event shall include, without
limitation:
(i) all indebtedness guaranteed, directly or indirectly, in
any manner by such Person or such Subsidiary or endorsed
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<PAGE> 14
(otherwise than for collection or deposit in the ordinary course of
business) or discounted with recourse;
(ii) all indebtedness in effect guaranteed, directly or
indirectly, by such Person or such Subsidiary through an agreement,
contingent or otherwise, (a) to purchase such indebtedness, or (b) to
purchase, sell or lease (as lessee or lessor) property, products,
materials or supplies, or to purchase or sell transportation or
services, for the purpose of enabling the debtor to make payment of
such indebtedness or to assure the owner of such indebtedness against
loss, regardless of the delivery or non-delivery for any reason of
the property, products, materials or supplies or the furnishing or
nonfurnishing for any reason of the transportation or services, except
supply contracts for goods or inventory to be used by such Person or
such Subsidiary in its business entered into in the ordinary course of
business of such Person or such Subsidiary and not having a term or,
if in effect on the date hereof, not having a remaining term (in each
case including all extensions or renewals thereof which are not in the
sole control of such Person or any Subsidiary of such Person) in
excess of three years, or (c) other than as permitted by this
Agreement, to make any loan, advance, capital contribution or other
investment in any debtor for the purpose of assuring a minimum equity,
asset base, working capital or other balance sheet condition for any
date, or to provide funds for the payment of any liability, dividend
or stock liquidation payment, or otherwise to supply funds to or in
any manner invest in any debtor;
(iii) all indebtedness of any joint venture, partnership or
other person or entity for which such Person or such Subsidiary is
liable, other than guarantees to the extent excluded in clauses (i) or
(ii) above by such Person or such Subsidiary;
(iv) all indebtedness, including Financing Lease
Obligations, of such Person or such Subsidiary created or arising
under any conditional sale agreement or other title retention
agreement or under any Financing Lease, even though the rights and
remedies of the seller or lender or lessor under such agreement or
lease in the event of default are limited repossession or sale of
property; and
(v) all indebtedness secured by any mortgage, lien,
pledge, charge, security interest, option or other encumbrance upon or
in property owned by such Person or such Subsidiary, even though such
Person or such Subsidiary has not assumed or become liable for the
payment of such indebtedness.
For the purpose of computing the "Indebtedness" of such Person or
a Subsidiary of such Person there shall be excluded any particular
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<PAGE> 15
Indebtedness if, upon or prior to the maturity thereof, there shall have been
irrevocably deposited with the proper depositary in trust the necessary funds
(or evidences of such Indebtedness, or other securities, if permitted by the
instrument creating such Indebtedness or otherwise consented to by the relevant
Person to which such Indebtedness is owed) to repay indefeasibly in full such
Indebtedness, and thereafter such funds, evidences of Indebtedness and
securities so deposited shall not be included in any computation of the assets
of such Person or a Subsidiary of such Person except to the extent that such
funds are subject to any writ, judgment, warrant of attachment, execution or
similar process, for the payment, redemption or satisfaction of such
Indebtedness.
"Indebtedness for Money Borrowed" means, without
duplication:
(i) all Indebtedness of a Person or a Subsidiary of such
Person, current or funded, secured or unsecured, incurred in
connection with borrowings (including the sale of debt securities) by
such Person or a Subsidiary or the making available of credit or funds
by such Person or a Subsidiary of such Person on behalf of another
Person other than (a) trade and intercompany accounts receivable owed
to such Person or any Subsidiary of such Person, and other than (b)
any forbearance by such Person or any Subsidiary of such Person with
respect to any accounts receivable owed to such Person or any
Subsidiary of such Person;
(ii) all Indebtedness of such Person or a Subsidiary of
such Person, as the case may be, issued, incurred or assumed in
respect of the purchase price of property except for trade and
intercompany accounts payable;
(iii) all Financing Lease Obligations of such Person or a
Subsidiary of such Person; and
(iv) any guarantee or other obligation specified in clause
(i) or (ii) of the definition of "Indebtedness" in respect of
Indebtedness of any other Person of any of the types specified in the
preceding clauses (i), (ii) and (iii).
"Initial Borrowing" means the first Borrowing by any Borrower
under this Agreement.
"Initial Borrowing Date" means the date of the Initial
Borrowing.
"Initial Loan" means the first Loan made by the Banks
under this Agreement.
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<PAGE> 16
"Initial Note" has the meaning assigned to that term in
Section 2.2(b).
"Initial Project Borrowing" means, with respect to any
Project, the first Borrowing made by a Borrower for such Project.
"Initial Project Borrowing Date" means, with respect to
any Project, the date of the Initial Project Borrowing.
"Initial Project Loan" means, with respect to any
Project, the first Loan made by the Banks for such Project.
"Interest Borrowing" has the meaning assigned to that
term in Section 2.7(h).
"Interest Period" has the meaning assigned to that term
in Section 2.8.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect a Borrower or any of its
Subsidiaries against fluctuations in interest rates.
"Interim Maturity Date" means the last day of any
Interest Period.
"Investment" means, with respect to any Person (such
Person being referred to in this definition as the "Investor"):
(i) any amount paid by the Investor, directly or
indirectly, or any transfer of property, directly or indirectly, by
the Investor to any other Person for capital stock of, or as a capital
contribution to, or any amount which the Investor has advanced,
directly or indirectly to, any other Person;
(ii) the equity interest of the Investor in any Person;
(iii) any Indebtedness of any Person which is owed to the
Investor and which has been acquired for value by the Investor; and
(iv) any guarantee or other obligation specified in clause
(i) or (ii) of the definition of "Indebtedness" in respect of any
Indebtedness of any other Person.
"XXXXXXXXXX" means XXXXXXXXXX, a Delaware corporation.
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<PAGE> 17
"Kmart Affiliate" means PACE Membership Warehouse, Builders Square,
Pay Less Drug Stores, Walden Book Company, the Sports Authority or Office Max.
"Kmart General Partner" means, with respect to any Borrower, any
wholly-owned Subsidiary of Guarantor which owns any interest in such Borrower.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien, charge or deposit arrangement of any kind (including, without limitation,
any conditional sale or other title retention agreement or lease in the nature
thereof, any sale of receivables or chattel paper with recourse against the
seller or any Affiliate of the seller, any filing or agreement to file a
financing statement as debtor under the Uniform Commercial Code or any similar
statute other than to reflect ownership by a third party of property leased to
a Borrower or any of its Subsidiaries under a lease which is not in the nature
of a conditional sale or title retention agreement, and any subordination
arrangement in favor of another Person).
"Loan" means, with respect to any Borrower, collectively, the loans
by each of the Banks to such Borrower in accordance with Section 2.1 and, with
respect to any Bank, the loans made by such Bank to a Borrower or all the
Borrowers, as the context may require and "Loans" means all of such Loans to
all Borrowers collectively.
"Loan Commitment" means, with respect to any Bank, the principal
amount set forth opposite such Bank's name in Schedule 1.1(a) under the caption
"Amount of Loan Commitment."
"Loan Documents" means, collectively, this Agreement, the Notes, the
Guaranty, any Additional Borrower Agreement, the Fee Letter and all other
agreements, instruments and documents executed and delivered by or on behalf of
any Borrower or Guarantor in connection with this Agreement.
"Loan Obligations" means, with respect to each Borrower, the
obligations of such Borrower to repay principal of, and to pay interest on the
Loans made to such Borrower pursuant to Section 2.1.
"Managing Agent" has the meaning assigned to that term in the
introduction to this Agreement.
"Managing Partner" means with respect to any Borrower, the managing
partner of such Borrower, which shall initially be XXXXXXXXXX or XXXXXXXXXX or
XXXXXXXXXX or a partnership in which XXXXXXXXXX and/or XXXXXXXXXX and/or
Affiliates of XXXXXXXXXX and/or XXXXXXXXXX are the general partners.
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<PAGE> 18
"Material Asset Sale" means (i) a Project Sale or (ii) the sale or
other disposition or a refinancing of any other assets of any Borrower or any
of its Subsidiaries to any Person (other than leases of space in Projects in
the ordinary course of business); provided that there shall be excluded from
the definition of Material Asset Sale, any sale or related series of sales (or
part of a sale or related series of sales) of the type described in subdivision
(ii) above to the extent that the Net Proceeds of all such sales or related
series of sales (or parts of all such sales or related series of sales) do not
exceed $100,000 in any one calendar year.
"Material Subsidiary" means, with respect to a Subsidiary of
Guarantor, any Subsidiary which, at the date of this Agreement or at any time
thereafter, has a consolidated Net Worth in excess of $100,000,000.
"Monthly Borrowing Date" means the 20th day of each month, provided,
however that if such day is not a Business Day, then the Monthly Borrowing Date
for such month shall be the next succeeding Business Day in such month.
"Multiemployer Plan" means any plan described in Section 4001(a)(3)
of ERISA to which contributions are or have been made by any Borrower or any of
its Related Persons or any Subsidiary of any Borrower, or Related Persons to
such Subsidiary.
"Net Proceeds" means, with respect to any Material Asset Sale, at any
date of determination, cash proceeds (including any cash received by way of
deferred payment pursuant to a note receivable or otherwise, but only as and
when so received) through that date from such Material Asset Sale by a Borrower
or any of its Subsidiaries, net of the expenses of such Material Asset Sale and
net of income taxes payable in respect of such Material Asset Sale.
"Net Worth" means, as to any Person as of the date of determination
thereof, total assets less total liabilities of such Person.
"XXXXXXXXXX" means XXXXXXXXXX, a Michigan corporation.
"Note" means any Initial Note, any Amended Note, any Extension Note,
and any note issued in replacement of, exchange for, or amendment or
restatement of, any thereof, and "Notes" means all such notes, collectively.
"Notice of Borrowing" has the meaning assigned to that term in
Section 2.5.
"Obligations" means, with respect to any Borrower at any time, the
aggregate of such Borrower's Loan Obligations at such
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<PAGE> 19
time and all other obligations and liabilities of such Borrower under the Loan
Documents at such time.
"Organizational Documents" means, with respect to any Borrower, the
partnership or joint venture agreement or, if applicable, the certificate of
incorporation and bylaws of such Borrower.
"Participants" has the meaning assigned to that term in Section
9.8(h).
"Partner" means, with respect to any Borrower organized as a
partnership or joint venture, any general partner or joint venturer of such
Borrower.
"Payment Office" has the meaning assigned to that term in Section 2.6.
"Permitted Investments" means (i) any evidence of indebtedness,
maturing not more than one year after the date of issue, issued by the United
States of America or any instrumentality or agency thereof the principal,
interest and premium, if any, of which is guaranteed fully by, or backed with
the full faith and credit of, the United States of America, (ii) any
certificate of deposit, maturing not more than 90 days after the date of
purchase, issued by the Managing Agent, or by another commercial banking
institution which is a member of the Federal Reserve System, has a combined
capital and surplus and undivided profits of not less than $200,000,000 and at
the time has a credit rating of AA or better from Standard & Poor's Corporation
or Aa or better from Moody's Investors Service, Inc., (iii) commercial paper,
maturing not more than 90 days after the date of purchase, issued by a
corporation (other than Guarantor, any Borrower or any Subsidiary of any
Borrower or any of their respective Affiliates) organized and existing under
the laws of any state within the United States of America with a rating, at the
time as of which any determination thereof is to be made, of "P-1" (or higher)
according to Moody's Investors Service, Inc. or "A-1" (or higher) according to
Standard & Poor's Corporation, (iv) shares or other evidences of participation
in any mutual fund which invests exclusively in one or more of the foregoing
and (v) demand deposits with any bank or trust company.
"Permitted Liens" means:
(i) Liens for taxes not yet due and payable or which are
being contested in good faith by appropriate proceedings diligently pursued,
provided that (a) if any proceedings shall have been commenced for the
enforcement of such Liens, no adverse judgment or order of foreclosure or other
similar order, writ or relief shall have been granted or issued, the effect of
which is to permit such Lien to be foreclosed or otherwise satisfied; and (b)
full
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<PAGE> 20
provision for the payment of all such taxes known to such Person has been made
on the books of such Person to the extent required by generally accepted
accounting principles;
(ii) mechanics', materialmen's, carriers', warehousemen's and
similar Liens arising by operation of law and arising in the ordinary course of
business and securing obligations of such Person that are not overdue for a
period of more than 30 days or are being contested in good faith by appropriate
proceedings diligently pursued, provided that in the case of any such contest
(a) if any proceedings shall have been commenced for the enforcement of such
Liens, no adverse judgement or order of foreclosure or other similar order,
writ or relief shall have been granted or issued, the effect of which is to
permit such Lien to be foreclosed or otherwise satisfied; and (b) full
provision for the payment of such Liens has been made on the books of such
Person to the extent required by generally accepted accounting principles;
(iii) Liens arising in connection with worker's compensation,
unemployment insurance, old age pensions and social security benefits which are
not overdue or are being contested in good faith by appropriate proceedings
diligently pursued, provided that in the case of any such contest (a) any
proceedings commenced for the enforcement of such Liens shall have been duly
suspended; and (b) full provision for the payment of such Liens has been made
on the books of such Person to the extent required by generally accepted
accounting principles;
(iv) (a) Liens incurred or deposits made in the ordinary
course of business to secure the performance of bids, tenders, statutory
obligations, fee and expense arrangements with trustees and fiscal agents
(exclusive of obligations incurred in connection with the borrowing of money or
the payment of the deferred purchase price of property) and (b) Liens securing
surety, indemnity, performance, appeal and release bonds, in the case of either
clause (a) or clause (b), securing such bonds in an amount not to exceed
individually or in the aggregate $250,000 at any time outstanding, provided
that full provision for the payment of all such obligations has been made on
the books of such Person to the extent required by generally accepted
accounting principles;
(v) Permitted Mortgage Liens;
(vi) Permitted Third Party Mortgage Liens, if at the time such
Lien is incurred, no Guarantor Event of Default or Unmatured Guarantor Event of
Default exists; or
(vii) such other imperfections of title, covenants,
restrictions, easements and encumbrances shown on the title reports (as redated
and recertified as commitments to issue title insurance, if applicable) and
such other imperfections of title, covenants, restrictions, easements and other
encumbrances on real
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property which in each case do not arise out of the incurrence of any
Indebtedness for Money Borrowed and which do not interfere with or impair in
any material respect the utility, operation, value or marketability of the real
property on which such Lien is imposed; and
provided, however, to the extent that the amount of obligations of a Borrower
arising from claims being contested in good faith secured by such Liens in
clauses (i), (ii), (iii) and (iv) above exceeds $1,000,000 in the aggregate,
such Borrower shall have set aside full cash reserves in the amount of the
excess over $1,000,000 of such obligations or there shall be availability under
the applicable Project Commitment for an amount equal to the excess amount of
such obligations minus the cash reserves so set aside.
"Permitted Mortgage Lien" means a mortgage created by a Borrower in
favor of Guarantor which encumbers such Borrower's ownership interest in a
Project solely for the purposes of:
(1) securing such Borrower's reimbursement obligations to
Guarantor with respect to any amounts actually paid by Guarantor under
the Guaranty, or
(2) securing any other obligations of such Borrower to
Guarantor under such Borrower's Organizational Documents;
provided, however, that such mortgage instrument shall expressly provide that:
(a) Guarantor shall have no right to foreclose such mortgage,
or to enforce any other rights thereunder which conflict with or are
inconsistent with Managing Agent's and the Banks' rights under this Loan
Agreement (including, without limitation, any rights to collect insurance
proceeds), without Managing Agent's prior written consent unless:
(i) no Guarantor Event of Default has occurred
and is continuing and such foreclosure or other exercise of rights
is solely for the purpose of, and does in fact have the effect of,
causing title to the relevant Project to be vested in another
Borrower hereunder and concurrently therewith such other Borrower
assumes, in accordance with the provisions of Section 9.8(e) hereof,
all of the transferring Borrower's Obligations with respect to all
Project Loans outstanding with respect to such Project, or
(ii) all Project Loans with respect to such
Project have been paid in full and the applicable Project
Commitments have been terminated;
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(b) the mortgage Lien, and all rights of Guarantor under
such mortgage, shall be subordinate to any Lien with respect to such
Project at any time created in favor of Managing Agent or the Banks
(including, without limitation, any judgment Lien); and
(c) Guarantor shall have no rights with respect to the
rental income from such Project prior to foreclosure of such mortgage.
"Permitted Third Party Mortgage Lien" means a mortgage created by a
Borrower in favor of any Person other than Guarantor which encumbers such
Borrower's ownership interest in a Project for the purpose of refinancing all
or a portion of the Project Loans with respect to such Project, provided, that
all proceeds of such refinancing (net of costs of such refinancing) are
applied by such Borrower to the prepayment of such Project Loans.
"Person" means any of an individual, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.
"Plan" means any plan described in Section 4021(a) of ERISA and not
excluded pursuant to Section 4021(b) thereof, which may be or has been
established or maintained, or to which contributions are or have been made, by
any Borrower or any of its Related Persons or any Subsidiary of any Borrower or
any Related Persons to such Subsidiary, but not including any Multiemployer
Plan.
"Prime Rate" means the greater of (i) the rate which XXXXXXXXXX
announces from time to time as its prime lending rate, as in effect from time
to time, or (ii) the Federal Funds Rate in effect from time to time plus one
half of one percent (1/2 of 1%). The Prime Rate is a reference rate and does
not necessarily represent the lowest or best rate actually charged to any
customer. XXXXXXXXXX may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.
"Prime Rate Loan" means any Loan which bears interest at a rate
determined with reference to the Prime Rate.
"Project" means a development by a Borrower of a shopping center, to
be located in the United States and anchored by a Kmart store and/or the
store(s) of one or more Kmart Affiliates, identified as a project by any
Borrower in an Allocation Request and for which the Managing Agent has
established a Project Commitment.
"Project Budget" means, with respect to any Project, a budget,
approved by Guarantor, in such detail as may be reasonably
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required by Managing Agent setting forth the various cost categories of all
hard and soft costs to be incurred by the relevant Borrower in connection with
the land acquisition, ownership, development and construction of the applicable
Project in each instance approved by Guarantor and as the same may from time to
time, upon ten (10) days prior notice to the Managing Agent, be modified by the
relevant Borrower with the prior written approval of the Guarantor; provided,
however, that the amount of the Project Budget, as so modified, shall not
exceed the Project Commitment with respect to such Project.
"Project Commitment" means, with respect to any Project, for all
Banks, the portion of the Total Commitment allocated to said Project pursuant
to Section 2.3 hereof and with respect to any Project for each Bank, such
Bank's Pro Rata Share of the portion of the Total Commitment allocated to such
Project, in each case, as such amount may be reduced or increased from time to
time pursuant to the terms hereof.
"Project Loan" means with respect to any Project, at any time, the
aggregate amount of all Loans made with respect to such Project.
"Project Sale" means the sale, lease (other than leases of space in
a Project) or other disposition (including, without limitation, any sale and
leaseback transaction) to any Person (other than to an Affiliate of the
affected Borrower) of:
(i) any of the capital stock or partnership or other
ownership interests of any Borrower;
(ii) substantially all the assets of any Borrower; or
(iii) all or substantially all of any Project.
"Pro Rata Share" means, when used with reference to any Bank and any
described aggregate or total amount, an amount equal to the result obtained by
multiplying such described aggregate or total amount by a fraction the
numerator of which shall be such Bank's Loan Commitment at such time and the
denominator of which shall be the Total Commitment at such time.
"Rate Selection Notice" means, with respect to any Borrowing or
Roll-Over Borrowing by any Borrower, an irrevocable telecopied notice given
by such Borrower to the Managing Agent (not later than 11:00 A.M. (New York
time) on the date required to be given) specifying whether such Borrowing or
Roll-over Borrowing is to consist of Prime Rate Loans or Eurodollar Rate Loans
and if such Loans are to be a Eurodollar Rate Loans, specifying, the desired
Interest Period with respect thereto.
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"Regulation D" means Regulation D of the Board as from time to time
in effect and any successor to all or a portion thereof establishing reserve
requirements.
"Related Person" means, with respect to any Person, any trade
or business (whether or not incorporated) which, together with such Person, is
under common control as described in Section 414 (c) of the Code or is a member
of a controlled group, as defined in Section 414(b) of the Code, which includes
such Person.
"Release" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property of any
Borrower or any of its Subsidiaries, including the movement of Contaminants
through or in the air, soil, surface water, groundwater or property of such
Borrower or its Subsidiaries.
"Remedial Action" means actions required to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release or minimize the
further Release of Contaminants so they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; or
(iii) perform pre-remedial studies and investigations and post-remedial
monitoring and care.
"Required Banks" means, as of the date of determination thereof, the
holders of at least fifty one percent (51%) of the aggregate of (i) the
principal amount of the Loans then outstanding and (ii) the Total Unused
Commitment at that time.
"Responsible Officer" means, as to any Borrower, any of the Chairman
of the Board of Directors, President, Executive Vice President, Treasurer or
Chief Financial Officer of such Borrower or such Borrower's Managing Partner
at such time.
"Roll-Over Borrowing" means a Loan to a Borrower which, after giving
effect to such Loan and the application of the proceeds thereof, does not
increase the aggregate amount of outstanding Loans to such Borrower. Roll-over
Borrowings do not constitute either new borrowings or disbursements by the
Banks of additional monies, the term "Roll-Over Borrowing" being used merely
for convenience of definition and to denote changes in interest rates.
"Solvent" shall mean, when used with respect to any Borrower, that
(i) after giving effect to the Borrowings which will be permitted by such
Borrower hereunder, it is able to pay its debts or obligations in the ordinary
course as they mature; and (ii) such Borrower has capital sufficient to carry
on its business and all business in which it is about to engage.
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<PAGE> 25
"Subsidiary" of any Person shall mean any corporation, partnership
(limited or general), trust or other entity of which a majority of the stock
(or equivalent ownership or controlling interest) having voting power to
elect a majority of the Board of Directors (if a corporation) or to select the
trustee or equivalent controlling interest, shall, at the time such reference
becomes operative, be directly or indirectly owned or controlled by such Person
or one or more of the other subsidiaries of such Person or any combination
thereof.
"Taxes" has the meaning assigned to that term in Section 3.9(a).
"Total Commitment" means, at the time any determination thereof is
to be made, the sum of the respective Loan Commitments of the Banks at such
time.
"Total Project Commitment" means, at any time any determination
thereof is to be made, the sum of the respective Project Commitments for all
Projects at such time.
"Total Unused Commitment" means, at the time any determination
thereof is to be made, the sum of the respective Unused Commitments of the
Banks at such time.
"Unallocated Total Commitment" means, at any time, the lesser of (i)
the Total Commitment less the Total Project Commitments or (ii) the Total
Unused Commitment.
"Unmatured Borrower Event of Default" means an event of default or
event, act or occurrence which with the giving of notice or the lapse of time
(or both) would become a Borrower Event of Default.
"Unmatured Guarantor Event of Default" means an event of default or
event, act or occurrence which with the giving of notice or the lapse of time
(or both) would become a Guarantor Event of Default.
"Unused Commitment" means, when used with reference to any Bank at
the time any determination thereof is to be made, the excess, if any, of (i)
such Bank's Loan Commitment at such time over (ii) such Bank's Utilized
Commitment at such time.
"Unused Project Commitment" means, when used with reference to any
Bank at the time any determination thereof is to be made, the excess, if any,
of (i) such Bank's Project Commitment at such time and with reference to any
Project over (ii) such Bank's Pro Rata Share of the Project Loans for such
Project.
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"Utilized Commitment" means, when used with reference to any Bank at
the time any determination thereof is to be made, the then outstanding
principal amount of all Loans made by such Bank pursuant to this Agreement.
"XXXXXXXXXX" means XXXXXXXXXX, a Delaware corporation.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. The words "herein," "hereof"
and words of similar import as used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision in the Agreement.
Section 1.2 Accounting Terms: Financial Statements. All accounting
terms used herein but not expressly defined in this Agreement shall have
the respective meanings given to them in accordance with generally accepted
accounting principles in effect on the date hereof (except with respect to
financial statements delivered to the Managing Agent or the Banks after the
date hereof, as to which generally accepted accounting principles shall be such
as are in effect on the respective dates of such financial statements) in the
United States of America. Except as otherwise expressly provided herein, (i)
all computations and determinations for purposes of determining compliance with
the financial requirements of this Agreement shall be made in accordance with
the generally accepted accounting principles set forth in the preceding
sentence as in effect on the date of this Agreement; and (ii) wherever any
computation is to be made with respect to any Person and its Subsidiaries, such
computation shall be made so as to exclude all items of income, assets and
liabilities attributable to any Person which is not a Subsidiary.
ARTICLE II
LOAN PROVISIONS
Section 2.1 Loans. Each Bank, severally and for itself alone,
hereby agrees, on the terms and subject to the conditions hereinafter set
forth, to make loans to one or more of the Borrowers, on the date requested
from time to time from and after the date of this Agreement to, but not
including, the Facility Termination Date, in the Pro Rata Share of such Bank of
such amounts as a Borrower may request, but not exceeding: (i) in the aggregate
at any one time outstanding, the Loan Commitment of such Bank; or (ii) with
respect to any Project, such Bank's Project Commitment for such Project.
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Section 2.2 Obligations; Notes; Loan Register; Waiver; Application of
Initial Loans.
(a) Loan Obligations. Each Borrower hereby severally and not jointly
agrees to repay to each Bank the principal amount of, and to pay to each Bank
interest on, such Bank's Loans to such Borrower (with payments hereunder to be
made to Managing Agent for the benefit of the Banks as set forth in Section
3.9 (b) hereof). Each Borrower shall pay interest on the principal balance of
its Loans from time to time outstanding as provided in this Agreement.
Subject to Section 2.5 and to the earlier acceleration or prepayment of the
Loans as permitted or required by this Agreement, each Borrower shall repay
the principal of its Loans in full on the Facility Termination Date with
respect to Prime Rate Loans and on the earlier of the Facility Termination
Date or each relevent Interim Maturity Date with respect to Eurodollar Rate
Loans.
(b) Notes. Each Borrower's obligation to pay the principal of, and
interest on, each Bank's Loans to such Borrower hereunder shall be evidenced by
a promissory note of such Borrower (each an "Initial Note") duly executed and
delivered by such Borrower to each such Bank at the time when the Initial
Project Loan pursuant to which such Initial Note is issued as requested by the
applicable Borrower. Each Initial Note shall:
(i) be payable to the order of the Bank to which it is issued;
(ii) be dated the date of the Initial Project Loan pursuant to which
such Note is issued;
(iii) be in original principal amount equal to such Bank's Pro Rata
Share of the Project Commitment in effect with respect to the Project to
which such Note relates; and
(iv) otherwise be in substantially the form of Exhibit B-1 hereto,
duly completed.
Notwithstanding that the stated principal amount of each Note shall be equal
to such Bank's Pro Rata Share of the Project Commitment to which such Note
relates, such Note shall be enforceable with respect to the applicable
Borrower's obligation to pay the principal amount thereof only to the extent of
the Loans evidenced thereby, and such Note shall bear interest from time to
time only on the unpaid principal amount of the Loans evidenced thereby.
In the event that any Borrower requests an increase in any Project
Commitment pursuant to Section 2.3(b) hereof, such Borrower shall concurrently
therewith execute and deliver to the Banks amended and restated Notes
evidencing such increases in each Bank's Project Commitment in respect of the
affected Project (each
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an "Amended Note"), which shall each be in substantially the form of Exhibit
B-2 hereto, duly completed, dated the date of such increased Project
Commitment and with a principal amount equal to the applicable Bank's Pro
Rata Share of the revised Project Commitment. Upon receipt of such Amended
Notes and acceptance thereof by the Managing Agent, the Initial Notes which
have been amended and restated thereby shall be deemed cancelled and of no
further effect and shall be returned to the Borrower which issued the same.
(c) Loan Register. The Managing Agent shall maintain a register (the
"Loan Register") on which it will record the Loan Commitment of each Bank, the
Loans from time to time made to each Borrower, the Borrowings made by each
Borrower from each Bank and each repayment in respect of any Loan made to each
Bank. Any such recordation by the Managing Agent on the Loan Register shall
be conclusive, absent manifest error. Each Bank shall record on its internal
records, and on the schedule attached to each Note for such purpose, or
otherwise in accordance with such Bank's customary business practice, the
amount of each Borrowing made by each Borrower from such Bank and each
repayment to it in respect thereof, which recordation shall be conclusive
absent manifest error. Notwithstanding the foregoing, the failure to make a
notation in the Loan Register or such internal records or upon the schedule
attached to any Note with respect to any Borrowing or principal payment, or
any error with respect to any such notation, shall not limit or otherwise
affect the obligation of any Borrower hereunder or under any Note with respect
to the Loans, and payments of principal by any Borrower shall not be affected
by the failure to make a notation thereof or by an error in such notation, nor
shall such failure or error affect any rights of any Borrower hereunder or
under applicable law.
(d) Waiver of Presentment, etc. Each Borrower waives presentment,
demand, protest and notice of dishonor in connection with the payment of its
Obligations.
(e) Application of Certain Initial Project Loans. Borrowers
acknowledge that Arlington and Kmart Corporation (the "Bridge Borrowers") are
parties to that certain Loan Agreement dated as of October 31, 1991 among
such Borrowers and XXXXXXXXXX as agent and lender thereunder (as amended, the
"Bridge Agreement"), pursuant to which the Bridge Borrowers borrowed funds
from XXXXXXXXXX to commence certain of the Projects (the "Bridged Projects").
The Banks and the Managing Agent hereby agree with each of the Bridge
Borrowers that the Indebtedness of the Bridge Borrowers to XXXXXXXXXX under the
Bridge Agreement shall be repaid in full under this Agreement and further agree
that such portion of the proceeds of the Initial Project Loan made to each
Bridge Borrower hereunder with respect to a Bridged Project as is necessary to
pay in full all Indebtedness of such Bridge Borrower to XXXXXXXXXX under the
Bridge Agreement in respect of such Bridged Project shall be applied to
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repayment of such Indebtedness to XXXXXXXXXX, and that no Loan shall be
made to any Bridge Borrower hereunder for any other purpose until all
Indebtedness of such Borrower to XXXXXXXXXX under the Bridge Agreement shall be
repaid in full.
Section 2.3 Allocation of Total Commitment. (a) Each Borrower
hereunder shall, on the date of the Notice of Borrowing with respect to the
Initial Project Borrowing for any Project, submit to the Managing Agent a
written request (an "Allocation Request") to establish a Project Commitment.
Each Allocation Request shall:
(i) be in the form of Exhibit C hereto,
(ii) be approved by Guarantor,
(iii) specify the aggregate amount of the then Unallocated Total
Commitment which such Borrower desires to be allocated to such Project
(which amount shall not be less than the Project Budget submitted
therewith),
(iv) be accompanied by a copy of the Project Budget for such Project
(which shall also be approved by Guarantor), and
(vi) be accompanied by Notes issued by such Borrower payable to each of
the Banks in their respective Pro Rata Shares of the Project Commitment
requested.
(b) Any Borrower may, at any time, submit to the Managing Agent a
written request (an "Allocation Increase/Decrease Request") to increase or
decrease an established Project Commitment. Each Allocation Increase/Decrease
Request shall:
(i) be in the form of Exhibit D hereto,
(ii) be in a minimum amount of $100,000,
(iii) be approved by Guarantor,
(iv) be accompanied by a copy of the revised Project Budget for such
Project (which shall also be approved by Guarantor),
(v) specify the aggregate amount of the then Unallocated Total
Commitment which such Borrower desires to be added to such Project
Commitment then in effect with respect to the related Project or, if such
request is for a decrease in such Project Commitment, specify the aggregate
amount of such decrease (which amount shall then be added back to the then
Unallocated Total Commitment), provided that in no case may a decrease
reduce the Project Commitment to an amount less
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than the aggregate outstanding principal balance of all Loans then
outstanding with respect to the related Project,
(vi) specify the revised Project Commitment requested (which amount
shall not be less than the revised Project Budget submitted therewith, but
may not be less than the aggregate outstanding principal balance of all
Loans then outstanding with respect to the related Project), and
(vi) be accompanied by Amended Notes issued by such Borrower payable to
each of the Banks in their respective Pro Rata Shares of the requested
increased Project Commitment.
(c) The Managing Agent shall consider Allocation Requests and
Allocation Increase/Decrease Requests in the order received or if received on
the same day, in the order so directed by Guarantor or, if no such direction
is given, in the Managing Agent's sole discretion. Subject to the foregoing,
the Managing Agent, within five (5) Business Days, either shall establish a
Project Commitment in the amount set forth in the Allocation Request or
Allocation Increase/Decrease Request, as the case may be, or, if the
Unallocated Total Commitment at such time is insufficient or the conditions
precedent to any Borrowing requested in connection with such request are not
otherwise satisfied (or waived), shall notify the applicable Borrower and the
Banks that such commitment cannot be established.
Section 2.4 Terms of Borrowing. The Loans shall, except as otherwise
provided in this Agreement, be Prime Rate Loans or Eurodollar Rate Loans. As
to any Eurodollar Rate Loan, any Bank may, if it so elects, fulfill its
commitment by causing a foreign branch or Affiliate to make or continue such
Loan, provided that in such event that Bank's Loan shall, for the purposes of
this Agreement, be considered to have been made by that Bank and the
obligation of the applicable Borrower to repay that Bank's Loan shall
nevertheless be to that Bank and shall be deemed held by that Bank, for the
account of such branch or affiliate.
Section 2.5 Notice of Borrowing; Roll-Over Borrowings.
(a) Each Borrower hereunder shall be entitled to request only one
Borrowing (other than Roll-Over Borrowings) per month, and all Loans to all
Borrowers in any month shall be funded on the same date, which shall be a
Monthly Borrowing Date. Subject to Section 2.5(c) hereof, on or before ten
(10) Business Days prior to the Monthly Borrowing Date in any month in which
any Borrower desires to obtain a Eurodollar Rate Loan hereunder or a Prime
Rate Loan hereunder, such Borrower shall give the Managing Agent, at its
office located at XXXXXXXXXX, telecopied notice (given not later than 11:00
A.M. (New York time) and confirmed in writing) of the amount which such
Borrower desires to borrow as a
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Borrowing hereunder during such month. Each such notice (each a "Notice of
Borrowing") , which shall be in the form of Exhibit E hereto, shall become
irrevocable on the date which is three (3) Business Days prior to the
applicable borrowing date and shall specify the Project for which such
Borrowing will be used, the amount of such Borrowing, the date of Borrowing
(which shall be a Monthly Borrowing Date), and shall (i) certify that
construction of the Project has proceeded to such date within the overall
Project Budget and Borrower reasonably believes that completion of the
construction of the Project within the overall Project Budget will occur,
(ii) provide by line item in the Project Budget a summary of amounts expended
prior to the date of such requested Borrowing and amounts intended to be
expended from proceeds of such Borrowing and (iii) certify as such other
matters with respect to the relevant Project and the applicable Borrower as
may from time to time be required by the Managing Agent. In the event that
the applicable Borrower is unable to certify as to any of the matters
required to be set forth in the Notice of Borrowing and certified by such
Borrower, or in the event of any inaccuracy or discrepancy contained therein,
the Managing Agent and the Banks shall not be required to make the Borrowing
so requested unless and until such certifications, inaccuracies or
discrepancies are remedied to the Managing Agent's satisfaction. On or
before three (3) Business Days prior to any date of Borrowing hereunder, the
applicable Borrower shall give to the Managing Agent at its address specified
in this Section 2.5(a), a Rate Selection Notice with respect to such
Borrowing. The Managing Agent shall promptly give each Bank telephonic
notice (confirmed in writing) of each proposed Borrowing, of such Bank's
proportionate share thereof and of the other relevant matters covered by the
Notice of Borrowing and Rate Selection Notice. Without in any way limiting
each Borrower's obligation to confirm in writing any telephonic notice, the
Managing Agent may act without liability upon the basis of telephonic notice
believed by the Managing Agent in good faith to be from such Borrower prior to
receipt of written confirmation, each Borrower hereby waiving the right to
dispute the Managing Agent's record of the terms of such telephonic notice.
Schedule 2.5(a) hereto sets forth, by way of example, the dates of notices and
actions required by this Section 2.5(a).
(b) On the last day of an Interest Period for an outstanding
Eurodollar Rate Loan, the principal amount of the Loan represented by such
outstanding Borrowing shall, subject to the conditions precedent set forth in
Section 6.4 hereof, be reborrowed (unless otherwise paid or prepaid) by the
applicable Borrower as a Roll-Over Borrowing and having such an Interest
Period as specified in the relevant Rate Selection Notice given or deemed given
pursuant to Section 2.8(b) unless such Loan shall be converted to a Prime Rate
Loan pursuant to Section 2.7 (b) or Section 2.7(c) hereof. Notwithstanding
anything in this Agreement to the contrary, it is understood that Roll-Over
Borrowings do not constitute either new borrowings or disbursements by the
Banks of
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additional monies, the term "Roll-Over Borrowing" being used merely for
convenience of definition and to denote changes in interest rates.
(c) The aggregate principal amount of each Borrowing (except for
Roll-Over Borrowings and Interest Borrowings) by a Borrower hereunder shall
not be less than (i) in the case of a Prime Rate Loan, $25,000 and (ii) in
the case of a Eurodollar Rate Loan, $1 million; provided, however, that,
subject to the other terms and conditions hereof, on the date of any Roll-Over
Borrowing of a Eurodollar Rate Loan, such Loan may be increased by $25,000 or
more on the date of reborrowing thereof pursuant to the preceding subsection.
Section 2.6 Disbursement of Funds. Subject to the terms hereof, no
later than 1:00 P.M. (New York time) on the date specified in each Notice
of Borrowing, each Bank will make available its Pro Rata Share of each
Borrowing (except with respect to any Borrowing representing a Roll-Over
Borrowing in which case each Bank will be deemed to have made available its Pro
Rata Share of such Borrowing) requested to be made on such date in U.S.
Dollars and in immediately available funds, at the office (the "Payment
Office") of the Managing Agent located at XXXXXXXXXX (for the account of
such non-U.S. office of the Managing Agent as the Managing Agent may direct
in the case of Eurodollar Rate Loans) and the Managing Agent will make
available to the applicable Borrower at its Payment Office the aggregate of
the amounts so made available by the Banks. Unless the Managing Agent shall
have been notified by any Bank prior to the date of Borrowing that such Bank
does not intend to make available to the Managing Agent such Bank's Pro Rata
Share of the Borrowing to be made on such date, the Managing Agent may assume
that such Bank has made such amount available to the Managing Agent on such
date of Borrowing and the Managing Agent may, in reliance upon such
assumption, make available to the applicable Borrower a corresponding amount.
If such corresponding amount is not in fact made available to the Managing
Agent by such Bank on the date of Borrowing, the Managing Agent shall be
entitled to recover such corresponding amount on demand from such Bank. If
such Bank does not pay such corresponding amount forthwith upon the Managing
Agent's demand therefor, the Managing Agent shall promptly notify the
applicable Borrower and the applicable Borrower shall immediately pay such
corresponding amount to the Managing Agent. The Managing Agent shall also be
entitled to recover from the applicable Borrower interest on such
corresponding amount in respect of each day from the date such
corresponding amount was made available by the Managing Agent to the Borrower
to the date such corresponding amount is recovered by the Managing Agent, at
a rate per annum equal to the rate for Prime Rate Loans or Eurodollar Rate
Loans, as the case may be, applicable during the period in question. Any
amounts due hereunder to the Managing Agent from the Banks which are not paid
when due shall bear
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interest, from the date due until the date paid, at the Federal Funds Rate.
Nothing in this Section 2.6 shall be deemed to relieve any Bank from its
obligation to fulfill its Loan Commitment hereunder or to prejudice any rights
which any Borrower may have against the Bank as a result of any default by such
Bank hereunder.
Section 2.7 Interest. (a) Each Borrower agrees to pay interest in
respect of the unpaid principal amount of each Prime Rate Loan made to such
Borrower from the date the proceeds thereof are made available to such
Borrower until maturity (whether by acceleration or otherwise) of such Prime
Rate Loan, or until such Prime Rate Loan is converted into a Eurodollar Rate
Loan, at a fluctuating rate per annum equal to the Prime Rate in effect from
time to time.
(b) Each Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Rate Loan made to such Borrower from the
date the proceeds thereof are made available to such Borrower (whether
pursuant to a new Borrowing or a Roll-Over Borrowing) until maturity (whether
at the Interim Maturity Date, the Facility Termination Date or by
acceleration or otherwise) of such Eurodollar Rate Loan at a rate per annum
which, unless otherwise provided herein, shall be the relevant Eurodollar
Rate plus the Borrowing Margin. In the event that the Interim Maturity Date
applicable to any Eurodollar Rate Loan shall occur less than one month prior to
the Facility Termination Date, then from and after such Interim Maturity Date
such Loan shall be a Prime Rate Loan hereunder.
(c) Notwithstanding the rates of interest specified in clauses (a)
and (b) above and the payment dates specified below, effective immediately
upon the occurrence of any Guarantor Event of Default and for so long
thereafter as any such Guarantor Event of Default shall be continuing, the
principal balance of each Loan then outstanding and, to the extent permitted
by applicable law, any interest payment on each Loan not paid when due, shall
bear interest payable upon demand, after as well as before judgment, at a rate
per annum equal to two percent (2%) above the greater of (i) the Prime Rate
as specified in clause (a) above or as otherwise provided herein or, (ii) if
applicable, the rate at which a Eurodollar Rate Loan bears interest as
specified in clause (b) above (such rate of interest being the "Default
Rate").
(d) Interest shall accrue from and including the date of any Borrowing
to but excluding the date of any repayment thereof. Interest on Eurodollar Rate
Loans shall be payable by each Borrower in arrears on the applicable Interim
Maturity Date and in the case of an Interest Period in excess of three months
at intervals of every three months after the initial date of such Interest
Period, provided, however, that after the occurrence and during the continuance
of a Guarantor Event of Default with respect
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to each Borrower or a Borrower Event of Default with respect to any Borrower,
interest shall be payable by such Borrower or Borrowers monthly in arrears
every month after the initial date of such Interest Period. Notwithstanding
the above, interest shall be payable on any amount prepaid on the date of such
prepayment and upon final maturity of such Loan and after maturity, on demand.
Interest on each Prime Rate Loan shall be payable monthly in arrears on the
20th day of each calendar month or if such day is not a Business Day on the
next succeeding Business Day in such month, on the date on which such Prime
Rate Loan is converted to a Eurodollar Rate Loan, upon any prepayment to the
extent accrued on the amount prepaid, on maturity and, after maturity, on
demand. Interest on all Loans shall be computed on the basis of a year
consisting of 360 days and actual days elapsed.
(e) The Managing Agent, upon determining the Eurodollar Rate for any
Interest Period, shall promptly notify by telephone or in writing the
applicable Borrower and the other Banks thereof.
(f) If any interest payment or other charge or fee payable hereunder
exceeds the maximum amount then permitted by applicable law, the applicable
Borrower shall be obligated to pay the maximum amount then permitted by
applicable law and the applicable Borrower shall continue to pay the maximum
amount from time to time permitted by applicable law until all such interest
payments and other charges and fees otherwise due hereunder (in the absence of
such restraint imposed by applicable law) have been paid in full.
(g) When and as interest is due hereunder, the Managing Agent will
invoice each Borrower for accrued interest or otherwise provide each Borrower
with a written statement as to outstanding Borrowings hereunder and interest
accruing thereon, and the Managing Agent will concurrently mail a copy of each
such invoice or statement to the Guarantor; provided that the failure of the
Managing Agent to provide any such invoice shall not affect the obligations of
any Borrower to pay any such amounts when and as due hereunder.
(h) If any Borrower shall fail to pay interest when due hereunder, the
Managing Agent may, in its sole discretion, to the extent of the Unused
Project Commitment relating to the Loan or Loans for which interest is then
due, and as long as no Guarantor Event of Default shall then exist, advance
all or a part of the amount of such unpaid interest as a Loan to such
Borrower and upon notification to each Bank, each Bank severally and for
itself alone, hereby agrees, on the terms and subject to the conditions
hereinafter set forth, to make a loan (an "Interest Borrowing") to such
Borrower in the lesser of the amount of interest then due such Bank or the
applicable Unused Project Commitment. Any Interest Borrowing made hereunder
shall be made on the Monthly Borrowing Date corresponding to the date such
interest is due and if such
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Borrower has a Roll-Over Borrowing of a Eurodollar Rate Loan with an
interest period of approximately one month, such Borrowing shall be applied
to increase the principal amount of such Loan. In the event such
Borrower does not have a Roll-Over Borrowing of a Eurodollar Rate Loan with
an interest period of approximately one month, then such Interest Borrowing
shall be made as a Prime Rate Loan.
Section 2.8 Interest Periods. (a) Subject to Section 2.8(b), at the
time it gives any Notice of Borrowing of a Eurodollar Rate Loan, a Borrower
shall elect, by giving the Managing Agent written notice, the interest period
(each an "Interest Period") applicable to the related Borrowing, which
Interest Period shall, at the option of such Borrower, be an approximate period
of a one, two, three, six, or if available, nine or twelve months, with the
Interim Maturity Date for such Eurodollar Rate Loan corresponding to the
applicable Monthly Borrowing Date in the month of maturity so elected, provided
that:
(i) the Interest Period for any Eurodollar Rate Loan shall commence on
the date of such Borrowing and each Interest Period occurring thereafter in
respect of such Loan shall commence on the day on which the next preceding
Interest Period expires;
(ii) if any Interest Period would otherwise expire on a day which is not
a Business Day, such Interest Period shall expire on the next succeeding
Business Day, provided, however, that if any Interest Period in respect of
a Eurodollar Rate Loan would otherwise expire on a day which is not a
Business Day and after which no Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iii) no Interest Period shall extend beyond the Facility Termination
Date; and
(iv) no Borrower may have more than two (2) Eurodollar Tranches at any
one time outstanding one of which shall have an Interest Period of
approximately one month.
A Prime Rate Loan shall have no Interest Period but may (subject to the other
terms and conditions hereof), on any Monthly Borrowing Date and upon the
delivery by the applicable Borrower to the Managing Agent of a Rate Selection
Notice be converted to a Eurodollar Rate Loan as a Roll-Over Borrowing.
(b) Subject to the restrictions set forth in Sections 2.7(b) and (c)
and Section 2.8(a) above, on or before three (3) Business Days prior to the
date of any Interim Maturity Date, the applicable Borrower shall give the
Managing Agent a Rate Selection Notice with respect to the principal amount of
each Loan maturing
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on such Interim Maturity Date, provided, however, that if such Borrower fails
to provide such notice on a timely basis, such Borrower shall be deemed to
have requested a new Interest Period for such Loan equal to the number of
days until the next successive Monthly Borrowing Date, or if such new Interest
Period would violate clause (iii) of Section 2.8(a) above, equal to the longest
Interest Period which would be permitted at such time without violating such
clause.
Section 2.9 Increased Costs, Illegality, etc. (a) In the event that any
Bank shall have determined (which determination shall, absent manifest error,
be final and conclusive and binding upon all parties):
(i) on any date for determining the Eurodollar Rate for any
Interest Period, that by reason of any changes arising after the date of
this Agreement affecting the interbank Eurodollar market, adequate means
do not exist for ascertaining the applicable interest rate on the basis
provided for in the definition of Eurodollar Rate; or
(ii) at any time, that by reason of (A) any change since the date
of this Agreement in any applicable law or governmental rule, regulation,
guideline or order (or any official interpretation thereof and including
the introduction of any new law or governmental rule, regulation,
guideline or order) and/or (B) in the case of Eurodollar Rate Loans,
other circumstances affecting such Bank, the interbank Eurodollar market
or the position of such Bank in such market (such as, for example but
not limited to, a change in official reserve requirements, but excluding
reserve requirements which have been included in calculating the
Eurodollar Rate for a given Interest Period specified in the definition
of "Eurodollar Rate") or otherwise as to any Loan such Bank shall be
subject to any tax, duty or other charge with respect to its Loans or
there shall have been a change in the basis of taxation of payments to
such Bank (or its applicable lending office) of the principal of or
interest on its Loans or any other amounts due under this Agreement in
respect of its Loans (except for changes in the rate of tax on the overall
net income of such Bank or its applicable lending office imposed by the
jurisdiction in which such Bank's principal executive office or lending
office is located) such that the Eurodollar Rate shall not represent the
effective cost to such Bank for funding or maintaining the affected
Eurodollar Rate Loan; or
(iii) at any time, that the making or continuance of any Eurodollar
Rate Loan has become unlawful as a result of compliance by such Bank in
good faith with any law, governmental rule, regulation, guideline or
order, or has become impracticable as a result of a contingency occurring
after the date of this Agreement; or
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(iv) any reserve, deposit or similar requirement is or
shall be applicable, imposed or modified in respect of any Loans or
commitments to make Loans (but excluding reserve requirements which
have been included in calculating any interest rate with respect
thereto);
then and in any such event, such Bank shall promptly give notice (by telephone
confirmed in writing) to the appropriate Borrower and to the Managing Agent of
such determination (which notice the Managing Agent shall promptly transmit to
each of the other Banks). Thereafter (A) in the case of clauses (ii) and (iv),
each Borrower shall pay to such Bank, upon written demand therefor, such
additional amounts (in the form of an increased rate of, or a different method
of calculating, interest or otherwise as such Bank in its sole discretion shall
determine) as shall be required to cause such Bank to receive interest with
respect to its affected Loans at a rate per annum which shall be an amount
equal to the applicable interest rate plus the Borrowing Margin then in effect,
if any, with respect to such Loans plus such additional amounts as will
compensate such Bank for the effective cost to the Bank to make or maintain
such Loans and (B) in the case of clause (iii) take one of the actions
specified in Section 2.9(b) as promptly as possible and, in any event, within
the time period required by law.
(b) At any time that any of its Eurodollar Rate Loans are affected
by any of the circumstances described in Section 2.9(a)(i) or (iii), the
relevant Borrower may (and in the case of a Eurodollar Rate Loan affected
pursuant to Section 2.9(a)(i) or (iii) shall):
(i) if the affected Eurodollar Rate Loans are yet
to be made pursuant to a Notice of Borrowing, either:
(A) withdraw the related Notice of Borrowing by
giving the Managing Agent telephonic (confirmed in writing)
notice thereof on the same date that such Borrower was
notified by any Bank pursuant to Section 2.9(a) hereof, or
(B) borrow such Borrowing as a Prime Rate Loan;
and
(ii) if the affected Eurodollar Rate Loan or Loans are
then outstanding, reborrow each Eurodollar Rate Loan so affected on
the next following Interim Maturity Date as a Prime Rate Loan or Prime
Rate Loans;
provided that if more than one Bank is affected at any time, then all affected
Banks must be treated the same pursuant to this Section 2.9(b). Until the
Managing Agent notifies such Borrower that the circumstances described in
Section 2.9(a)(i) or (iii) no longer exist, the obligations of the Banks to
make Eurodollar Rate
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Loans, as the case may be, shall be suspended, but, subject to the other terms
and conditions of this Agreement, the Banks' obligations to make Prime Rate
Loans shall not be suspended.
(c) Promptly after giving any notice to any Borrower pursuant to
Section 2.9(a), any Bank giving such notice will use its best efforts to
designate one of its offices located at an address other than that set forth in
Section 9.3 as the office from which its Pro Rata Share of any Borrowings will
be made after such designation if such designation will avoid the need for, or
reduce the amount of, any payment to which such Bank would otherwise be
entitled pursuant to Section 2.9(a) and will not, in the sole discretion of
such Bank, be otherwise disadvantageous to such Bank or contrary to its
internal policies.
(d) Without limiting the foregoing, in the event that any Bank (an
"Affected Bank") shall have determined that the adoption of any law, treaty, or
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, or any change therein or in the interpretation or
application thereof, or compliance by any Bank with any request or directive
regarding capital adequacy (whether or not having the force of law and whether
or not failure to comply therewith would be unlawful) from any central bank or
governmental agency or body having jurisdiction (a "Change in Law"), does or
shall have the effect of increasing the amount of capital required to be
maintained by such Bank or reducing the rate of return on such Bank's capital
as a consequence of its obligations hereunder to a level below that which such
Bank could have achieved but for such adoption, change or compliance (taking
into consideration such Bank's policies with respect to capital adequacy), then
each Borrower shall from time to time, within five (5) Business Days after
written notice and demand from such Bank, pay to such Bank, additional amounts
sufficient to compensate such Bank for the cost of such additional required
capital to the extent not otherwise reflected in the calculation of the Prime
Rate and Eurodollar Rate, as applicable, or such additional amount or amounts
as will compensate such Bank for such reduced rate of return, provided,
however, that if (i) a Bank has advance knowledge of a Change in Law, (ii) such
Bank is or becomes aware that such Change in Law will result in a determination
of increased cost under this Section 2.9(d) and (iii) the amount of such
increased cost is determinable in advance, then such Bank shall use reasonable
efforts to provide at least thirty (30) days (or such shorter period when each
of (i), (ii) and (iii) above are true) advance notice and demand for such
additional amounts. A certificate as to the amount of such cost, submitted to
such Borrower by such Bank, shall, absent manifest error, be final, conclusive
and binding for all purposes.
(e) In the event any Borrower shall be required to pay any
increased cost to any Bank pursuant to the foregoing provisions of this Section
2.9, such Borrower shall be entitled, by so
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notifying the Managing Agent and such Bank within thirty (30) days after such
Bank notifies such Borrower of any such increased cost, to arrange for the
substitution of another lender (which shall be an Eligible Assignee) for such
Bank within sixty (60) days thereafter pursuant to the relevant provisions of
Section 9.8(c), whereupon, upon the effectiveness of such substitution, the
affected Loans and the Loan Commitment and Project Commitments of such Bank
shall be assigned to such assignee; provided, however, that:
(i) the Bank shall be entitled to withdraw its notice of
increased taxes or costs within a period of thirty (30) days from the
date of notice by such Borrower, whereupon such Borrower shall no
longer be entitled to substitute for the Bank as described above;
(ii) in no event shall such Borrower be entitled to
substitute for an Bank unless the net present value of the additional
cost to such Borrower (including closing costs) of such substitution
is less than the net present value of the additional cost (including
increased taxes and costs payable pursuant to this Section 2.9) to
such Borrower of maintaining such Loans of the Bank (discounted to the
time in question using the same assumed rate of interest); and
(iii) in all events (other than that described in clause
(i) above), such Borrower shall remain liable for the increased
taxes and costs of the Bank for the period prior to such prepayment of
the Bank's Loans or the substitution of the assignee.
Section 2.10 Compensation. Each Borrower shall compensate
each Bank, upon its written request (which request shall set forth the basis
for requesting such amounts), for all losses, expenses and liabilities
(including, without limitation, any interest paid by such Bank to lenders of
funds borrowed by it to make or carry its Eurodollar Rate Loans to the extent
not recovered by the Bank in connection with the re-employment of such funds
and including the compensation payable by such Bank to a Person to which the
Bank has participated all or a portion of such Borrowing) and any loss
sustained by such Bank in connection with the re-employment of such funds
(including, without limitation, a return on such reemployment that would result
in such Bank receiving less than it would have received had such Eurodollar
Rate Loan remained outstanding until the last day of the Interest Period
applicable to such Eurodollar Rate Loan) which the Bank may sustain as a result
of:
(i) for any reason (other than a default by such Bank or the
Managing Agent) a Borrowing of Eurodollar Rate Loans does not occur on
a date specified therefor in a Notice of Borrowing (whether or not
withdrawn);
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(ii) any payment, prepayment or reborrowing of any
Eurodollar Rate Loan occurring for any reason whatsoever on a date
which is not the last day of an Interest Period applicable thereto; or
(iii) any other failure by such Borrower to repay its Loans
when required by the terms of this Agreement.
Section 2.11 Responsibility for Making Loans. No Bank shall be
responsible for any default by any other Bank in its obligation to make Loans
hereunder and each Bank shall be obligated to make the Loans provided to be
made by it hereunder, regardless of the failure of any other Bank to fulfill
its Loan Commitment hereunder.
Section 2.12 Withholding Tax Exemption. At least five Business Days
prior to the first date on which interest or fees are payable hereunder for the
account of any Bank, each Bank that is not incorporated under the laws of the
United States of America, or a state thereof, agrees that it will deliver to
the Managing Agent two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, certifying in either case that such Bank is entitled
to receive payments under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes. Each Bank which so
delivers a Form 1001 or 4224 further undertakes to deliver to the Managing
Agent two additional copies of such form (or a successor form) on or before the
date that such form expires (currently, three successive calendar years for
Form 1001 and one calendar year for Form 4224) or becomes obsolete or after the
occurrence of any event requiring a change in the most recent forms so
delivered by it, and such amendments thereto or extensions or renewals thereof
as may be reasonably requested by the Managing Agent, in each case certifying
that such Bank is entitled to receive payments under this Agreement and the
Notes without deduction or withholding of any United States federal income
taxes, unless an event (including without limitation any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such form with
respect to it and such Bank advises the Managing Agent that it is not capable
of receiving payments without any deduction or withholding of United States
federal income tax.
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ARTICLE III
TERMINATION OF LOAN COMMITMENTS, PREPAYMENTS AND FEES
Section 3.1 Mandatory Reduction of the Loan Commitments. If at any
time for any Project, the principal amount of a Loan by any Bank for such
Project exceeds the Project Commitments of such Bank then in effect with
respect to such Project, the applicable Borrower shall immediately prepay the
Loan Obligations incurred with respect to such Project, and the Notes
evidencing such Loan Obligations, in an aggregate principal amount equal to
such excess. If any Guarantor Event of Default shall have occurred and the
Managing Agent shall have notified the Borrowers of the election of the
Required Banks to take any action specified in Section 7.1, the Loan Commitment
and each Project Commitment of each Bank shall be automatically reduced to $0
without any action on the part of or the giving of notice to any Borrower by
the Managing Agent or any Bank. If a Borrower Event of Default shall have
occurred and the Managing Agent shall have notified the relevant Borrower of
the election of the Required Banks to take any action specified in Section 7.2,
the Project Commitment of each Bank for all Projects of such Borrower shall be
automatically reduced to $0 without any action on the part of or the giving of
notice to such Borrower by the Managing Agent or any Bank.
Section 3.2 Voluntary Reduction of the Total Commitment or any Project
Commitment. (a) After the Initial Borrowing Date, the Guarantor (which the
Borrowers hereby jointly and severally irrevocably designate as their
collective agent for such purpose) shall have the right, upon at least five (5)
Business Days' prior written notice to the Banks, without premium or penalty,
to permanently reduce or terminate the unutilized portion of the Unallocated
Total Commitment of the Banks, in whole at any time or in part from time to
time, in a minimum amount of $5 million (unless the amount of such Unallocated
Total Commitment at such time is less than $5 million, in which case, in an
amount equal to the amount of such Total Commitment at such time) and, if such
reduction is greater than $5 million, in an integral multiple of $1 million,
provided that any such reduction shall apply proportionately to the Loan
Commitment of each of the Banks. The Total Commitment shall not be so reduced
below the aggregate principal amount of outstanding Loans nor shall the Total
Commitment be reduced below the amount of the Total Project Commitment at such
time.
(b) After the Completion Date with respect to any Project, the
Guarantor (which the Borrowers hereby jointly and severally irrevocably
designate as their agent for such purpose) shall have the right, upon at least
five (5) Business Days' prior written notice to the Banks, without premium or
penalty, to permanently reduce or terminate the unutilized portion of the
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Project Commitment of the Banks with respect to such Project, or to reallocate
the unutilized portion of such Project Commitment to any other Project. The
Project Commitment for any Project shall not be so reduced below the aggregate
principal amount of outstanding Loans for such Project.
Section 3.3 Voluntary Prepayments of the Loan Obligations. Any
Borrower may, as hereinafter provided, prepay the Loan Obligations of such
Borrower, and the Notes evidencing the same, in whole at any time or in part
from time to time as provided herein, without premium or penalty, but subject
to the provisions of Section 2.10. Any partial prepayment of the Loan
Obligations of such Borrower pursuant to this Section 3.3 shall be in a minimum
aggregate amount of not less than $1 million. The relevant Borrower shall
irrevocably give notice (by telegram or telecopier, or by telephone (confirmed
in writing promptly thereafter)) to the Managing Agent (which shall promptly
advise each other Bank) of each proposed prepayment hereunder, prior to 10:00
A.M., New York time, on the second Business Day prior to the proposed
prepayment date, which notice shall specify the proposed prepayment date (which
shall be a Business Day) and the aggregate principal amount of the proposed
prepayment and the Project or Projects (and the Notes) to which such prepayment
applies. Upon giving of such irrevocable notice, the amount specified to be
prepaid shall become due and payable in full on the date specified in such
notice. Neither the Total Commitment nor the Loan Commitment of any Bank shall
be reduced pursuant to any such prepayment, unless the Borrowers shall have
requested such a reduction in compliance with the provisions of Section 3.2.
Section 3.4 Mandatory Prepayment of the Loan Obligations.
(a) If any Borrower or any of its Subsidiaries receives any Net
Proceeds with respect to any Project (whether in cash or securities), then such
Borrower shall prepay any outstanding Loans relating to such Project, and the
Notes evidencing the same, promptly (but in any event within five (5) Business
Days) to the extent of such proceeds for the ratable benefit of the Banks;
(b) If any Borrower receives any proceeds of a refinancing
incurred in connection with a Permitted Third Party Mortgage, then such
Borrower shall immediately prepay any outstanding Loans relating to the Project
encumbered by such mortgage, and the Notes evidencing such Loans, to the extent
of such proceeds (net of the cost of such refinancing) and, in the event such
proceeds are not sufficient to pay in full all of the Project Loans (and Notes
evidencing such Loans) for such Project, then such Borrower shall, not later
than twenty-four months after the date such Permitted Third Party Mortgage is
incurred or at such earlier date, as required by this Agreement, pay in full
the unpaid principal balance of the Project Loans for such Project and the
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Notes evidencing such Loans, together with accrued interest thereon, and any
unused Project Commitment with respect to such Project shall thereupon
terminate.
(c) Prepayments made pursuant to this Section 3.4 shall be treated
according to Section 3.5 to the extent that they are to be applied to
Eurodollar Rate Loans for which the relevant Interest Period has not expired at
the time of prepayment. Prepayments made pursuant to this Section 3.4 shall be
treated according to Section 3.6 for determining the order of application of
prepayments to the Loans.
Section 3.5 Other Provisions With Respect to Prepayments. Except as
otherwise provided herein, any repayment of a Eurodollar Rate Loan which shall
be made prior to the end of the applicable Interest Period for such Loan shall
be subject to the provisions of Section 2.10 hereof. Subject to the
obligations of the Managing Agent provided for in this Section 3.5, at the
option of the affected Borrower, any monies otherwise required to be used to
repay such Eurodollar Rate Loan may be so applied provided that such Borrower
concurrently pays any amount due under Section 2.10 hereof in respect of such
prepayment; otherwise if the relevant Interest Period for such Eurodollar Loan
has not expired such funds (the "Deposited Monies") shall, until the end of the
applicable Interest Period when the Deposited Monies shall be applied to make
such prepayment, be held in trust by the Managing Agent (or, at the Managing
Agent's option, as cash collateral) for the Banks in a noninterest bearing
account and the relevant Borrower shall have no right to or interest in such
funds and such funds shall be used to prepay such Eurodollar Rate Loan at the
end of the applicable Interest Period; provided, however, that any funds held
in such account shall be invested by the Managing Agent (to the extent the
Managing Agent is able to do so) on behalf of the relevant Borrower at the
direction of such Borrower in Permitted Investments selected by such Borrower
and having a maturity not exceeding the Business Day prior to the end of the
relevant Interest Period. Interest on the applicable Project Loan Obligations
shall continue to accrue until the Deposited Monies are applied to the
prepayment thereof. Any such investments shall be held by the Managing Agent
or under the control of the Managing Agent. The interest accruing on such
investments and any profits realized from such investments shall be, after
giving effect to such repayment of such Loans with the Deposited Monies, paid
to the relevant Borrower; provided that any loss resulting from such
investments shall be charged to and be immediately payable by such Borrower
upon demand of the Managing Agent. A prepayment so made by the Managing Agent
from such Deposited Monies shall be treated as a prepayment by such Borrower
pursuant to Section 3.3 (except that such prepayment shall not be subject to
the minimum prepayment amount requirements of Section 3.3) and shall be
otherwise governed by such Section.
Section 3.6 Order of Prepayments and Payments.
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(a) All prepayments of principal made by any Borrower pursuant to
Sections 3.3 and 3.4 shall be applied to the payment of the outstanding balance
of the applicable Project Loan and the Note evidencing the same as directed by
such Borrower with respect to breakage of Interest Periods, provided that no
Guarantor Event of Default and no Borrower Event of Default as to such Borrower
has occurred and is then continuing. Any prepayment of principal made after
the occurrence and during the continuance of a Guarantor Event of Default or a
Borrower Event of Default as to the applicable Borrower shall be applied
against the Loan Obligations of such Borrower and the Notes evidencing the same
as the Managing Agent shall, in its sole discretion, determine.
(b) Except as set forth in Section 5.1(g) any prepayments of a
Loan pursuant to Sections 3.3 and 3.4 shall permanently reduce by a like amount
the pro rata Project Commitment of each of the Banks corresponding to the
Project Loan so prepaid.
Section 3.7 Unused Commitment Fees. From and after the date hereof
the Borrowers shall pay to the Managing Agent for the pro rata distribution to
each Bank a fee in an amount in the aggregate equal to (a) the Total Unused
Commitments multiplied by (b) one quarter of one percent (.25%) per annum;
provided, however that such fee shall be increased to .35% per annum in the
event that the long-term Indebtedness of the Guarantor shall be rated BBB or
lower by Standard & Poor's Corporation or Baa2 or lower by Moody's Investors
Service, Inc. Such fee shall be calculated on the basis of a 360-day year for
the actual number of days elapsed. Such fee shall be payable in arrears on the
Monthly Borrowing Date occurring on each quarterly anniversary of the first
Monthly Borrowing Date following the Closing Date and at maturity, whether on
the termination of this Agreement or earlier and shall be allocated among the
Borrowers as follows: (i) if no Guarantor Event of Default has occurred and is
continuing, in such manner as Guarantor shall designate from time to time or,
if no designation is made, pro rata to each Borrower in proportion to its
aggregate Project Commitments outstanding as of the date such fee is payable;
and (ii) if a Guarantor Event of Default shall have occurred and be continuing,
then pro rata to each Borrower, in proportion to its respective Project
Commitments as of the date such fee is payable or, if no Project Commitments
are then outstanding, equally to each Borrower.
Section 3.8 Fees. Each Borrower shall pay to the Managing Agent the
fees due and owing as set forth in the Fee Letter.
Section 3.9 Net Payments. (a) All payments by any Borrower under this
Agreement or under any Note shall be made without set-off or counterclaim and
in such amounts as may be necessary in order that all such payments (after
deduction or withholding for or on account of any present or future taxes,
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levies, imposts, duties or other charges of whatsoever nature imposed by any
government or any political subdivision or taxing authority thereof, other than
any tax on or measured by the overall net income of a Bank pursuant to the
income tax laws of the United States of America or the jurisdictions where such
Bank's principal or lending offices are located (collectively the "Taxes"))
shall not be less than the amounts otherwise specified to be paid under this
Agreement or such Note, as applicable. A certificate as to any additional
amounts payable to a Bank under this Section 3.9 submitted to the appropriate
Borrower by such Bank shall show in reasonable detail the amount payable and
the calculations used to determine in good faith such amount and shall, absent
manifest error, be final, conclusive and binding upon all parties hereto. With
respect to each deduction or withholding for or on account of any Taxes, the
appropriate Borrower shall promptly furnish to each Bank such certificates,
receipts and other documents as may be reasonably required (in the judgment of
such Bank) to establish any tax credit to which such Bank may be entitled.
(b) All payments to be made by any Borrower on account of
principal and interest of any Loan shall be made to the Managing Agent at its
Payment Office in New York, New York for the ratable account of the Banks not
later than 11:00 A.M. (New York time) on the date when due in each case in
lawful money of the United States of America and in immediately available
funds. If any payment hereunder or under any Note becomes due and payable on a
day other than a Business Day, such payment shall be extended to the next
succeeding Business Day (except in the case of a payment made with respect to
an Interest Period which expires on the next preceding Business Day pursuant to
Section 2.8(a) , in which case such payment shall be made on such next
preceding Business Day), and, with respect to payments of principal and
interest thereon, interest thereon shall be payable at the then applicable rate
during such extension. Each determination by the Managing Agent of an interest
rate or fee under this Agreement or any Note, absent manifest error, shall be
final, conclusive and binding for all purposes.
Section 3.10 Options to Extend Term. (a) Provided that no Guarantor
Event of Default and no Unmatured Guarantor Event of Default shall have
occurred and be continuing on January 20, 1995, and provided further that the
long-term Indebtedness of the Guarantor shall not then be rated BBB or lower by
Standard & Poor's Corporation or Baa2 or lower by Moody's Investors Service,
Inc., Borrowers, acting through Guarantor (which Borrowers hereby jointly and
severally irrevocably designate as their collective agent for such purpose)
shall have the option to extend the Facility Termination Date for an additional
year from January 20, 1995 to but not including January 21, 1996, exercisable
by written notice given by Guarantor, acting as agent for all Borrowers, which
notice shall be delivered to Managing Agent not earlier than ninety (90) days
and not later than thirty (30) days prior to January 20, 1995. Upon exercise
of such option to extend, a fee equal to one tenth
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of one percent (0.1%) of the Total Commitment in effect at the time such
extension becomes effective shall be payable jointly and severally by the
Borrowers to Managing Agent for the benefit of the Banks in proportion to their
respective Loan Commitments then in effect. Such fee shall be in addition to
all other fees payable hereunder and shall payable in full not later than
January 20, 1995.
(b) Provided that no Guarantor Event of Default and no Unmatured
Guarantor Event of Default shall have occurred and be continuing on January 21,
1996, and provided further that the option to extend the Facility Termination
Date set forth in Section 3.10(a) above shall have been exercised, and provided
further that the long-term Indebtedness of the Guarantor shall not then be
rated BBB or lower by Standard & Poor's Corporation or Baa2 or lower by Moody's
Investors Service, Inc., Borrowers, acting through Guarantor (which Borrowers
hereby jointly and severally irrevocably designate as their collective agent
for such purpose) shall have the option to extend the Facility Termination Date
for an additional year from January 21, 1996 to but not including January 20,
1997, exercisable by written notice given by Guarantor, acting as agent for all
Borrowers, which notice shall be delivered to Managing Agent not earlier than
ninety (90) days and not later than thirty (30) days prior to January 21, 1996.
Upon exercise of such option to extend, a fee equal to one tenth of one percent
(0.1%) of the Total Commitment in effect at the time such extension becomes
effective shall be payable jointly and severally by the Borrowers to Managing
Agent for the benefit of the Banks in proportion to their respective Loan
Commitments then in effect. Such fee shall be in addition to all other fees
payable hereunder and shall be payable in full not later than January 21, 1996.
(c) In the event that the Facility Termination Date is extended
pursuant to either Section 3.10(a) or Section 3.10(b) hereof, each Borrower
with outstanding Loans hereunder shall concurrently therewith execute and
deliver to the Banks amended Notes evidencing such extension of the maturity of
the Loans evidenced thereby ("Extension Notes"), which shall each be in
substantially the form of Exhibit B-3 hereto, duly completed. Upon receipt of
such amended Notes, the Notes which have been amended thereby shall be deemed
superseded and of no further effect and shall be returned to the Borrowers
which issued the same.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Borrowers. Each
Borrower represents and warrants to the Managing Agent and to each Bank with
respect to itself and its partners or joint venturers, as follows:
(a) Organization, Standing, etc. Such Borrower is a general
partnership or corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization and is
an Eligible Borrower. Each such Borrower which is a corporation is duly
qualified and in good standing as a foreign corporation, and is duly authorized
to do business, in each jurisdiction in which the failure to so qualify would
have a material adverse effect on the business, condition, assets or operations
of such Borrower. Such Borrower and its subsidiaries have all requisite
partnership or corporate power and authority to own, operate and encumber its
property and assets and to carry on its business as presently conducted and as
proposed to be conducted. Such Borrower has all requisite power and authority
(partnership, corporate or otherwise) (i) to execute, deliver and perform its
obligations under each of the Loan Documents to which it is a party, and (ii)
to execute, deliver and perform its obligations under all other agreements and
instruments executed and delivered by it pursuant to or in connection with any
Loan Document to which it is a party. Since its organization to the date
hereof, such Borrower has not engaged in any business activity other than that
related to the Projects.
(b) Organization Documents. A complete and correct copy of
each of the Organizational Documents of such Borrower in effect on the date of
this Agreement or the date when such Borrower became a party to this Agreement
has been delivered to the Managing Agent.
(c) Subsidiaries. Such Borrower has no direct or indirect
Subsidiaries except such as may be or have been established in accordance with
Section 5.2(m).
(d) Conflicting Agreements and Other Matters. The execution,
delivery and performance by such Borrower of each of the Loan Documents to
which it is a party and all other agreements and instruments to be executed and
delivered by such Borrower pursuant thereto or in connection herewith or
therewith do not and will not:
(i) violate any provisions of any law, rule,
regulation, order, writ, judgment, decree, determination or award
presently in effect having applicability to such Borrower or any of
its Subsidiaries;
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(ii) conflict with or result in a breach of or
constitute a tortious interference with or constitute a default under
the Organizational Documents of either such Borrower or any of its
Subsidiaries or any indenture or loan or credit agreement, or any
other agreement or instrument, to which such Borrower or any of its
Subsidiaries is a party or by which such Borrower or any of its
Subsidiaries or any of their respective properties may be bound or
affected, or any governmental permit, license or order;
(iii) result in (except for Permitted Liens) or
require the creation or imposition of any Lien of any nature upon or
with respect to any of the properties now owned or hereafter acquired
by such Borrower or any of its Subsidiaries; or
(iv) require any approval of stockholders or any
approval or consent of any Person, except for such approvals or
consents which will have been obtained before the Initial Borrowing
Date for such Borrower.
Neither such Borrower nor any of its Subsidiaries is in default under or in
violation of any such law, rule, regulation, license, order, permit, writ,
judgment, decree, determination, award, indenture, agreement or instrument
described above or under its certificate of incorporation or by-laws, or other
organizational documents, as the case may be, in each case the consequences of
which default or violation, either in any one case or in the aggregate, would
materially and adversely affect the condition (financial or otherwise),
properties, business, prospects or results of operations of such Borrower and
its Subsidiaries taken as a whole.
(e) Due Execution, etc. The execution, delivery and
performance of each of the Loan Documents to which such Borrower is a party and
the consummation of the transactions on its part contemplated thereby, have
been duly authorized by all necessary partnership or corporate proceedings and
no other proceedings on the part of such Borrower are necessary to authorize
each of the Loan Documents to which such Borrower is a party. Each of the Loan
Documents to which it is a party and each other agreement or instrument
executed and delivered by such Borrower pursuant hereto or thereto or in
connection herewith or therewith has been duly executed and delivered by such
Borrower and constitutes or will constitute a legal, valid and binding
obligation of such Borrower, enforceable against such Borrower in accordance
with its respective terms (subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other similar laws affecting the enforcement of
creditors' rights generally and general equitable principles which may limit
the right to obtain the remedy of specific performance of executory covenants
and other equitable remedies). Each of the Loan Documents to which it is a
party is in full force and effect and no term or condition thereof has been
amended, modified or
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waived from the terms and conditions of the Loan Documents delivered to the
Managing Agent pursuant to Section 6.1 hereof without the prior written consent
of the Managing Agent, and such Borrower and the other parties thereto have
performed and complied in all material respects with all the terms, provisions,
agreements and conditions set forth therein and required to be performed or
complied with by such parties on or before the Initial Borrowing Date, and no
default by such Borrower or any of the other parties thereto exists thereunder.
(f) Indebtedness for Money Borrowed. Except for such
Borrower's obligations hereunder and except as permitted by Section 5.2(b),
such Borrower has no Indebtedness for Money Borrowed.
(g) Title to and Condition of Properties. Such Borrower has
good and marketable title to, or a subsisting leasehold interest in, all items
of real and personal property reflected in any balance sheet of such Borrower
delivered to the Banks from time to time pursuant to Section 5.1(a) of this
Agreement or acquired by it after the date of such balance sheet, except for
assets sold, transferred or otherwise disposed of in the ordinary course of
business since the date of such balance sheet, in each case (except as to
leasehold interests) free and clear of all Liens, except Permitted Liens and
other Liens permitted by Section 5.2 hereof. To the knowledge of such Borrower
after due inquiry, there are no actual, threatened or alleged defaults of a
material nature with respect to any leases of real property under which such
Borrower or any of its Subsidiaries is lessee or lessor.
(h) Litigation, Proceedings, Licenses, Permits; etc. There
are no actions, suits, proceedings or investigations pending or, to the
knowledge of such Borrower after due inquiry, threatened against or affecting
it or any of its Subsidiaries or any of its or their respective properties
before any court, governmental agency or regulatory authority (foreign,
Federal, state or local), which, if determined adversely to such Borrower or
any of its Subsidiaries, (i) would enjoin or otherwise materially interfere
with the satisfactory completion of any Project, the transactions contemplated
by the Loan Documents or have a material adverse effect on the condition
(financial or otherwise), properties, business, or results of operations of
such Borrower and its Subsidiaries taken as a whole, or (ii) would
(individually or in the aggregate) materially impair such Borrower's or any of
its Subsidiaries' ability to perform fully any obligations on a timely basis
which any of them has under or in connection with any Loan Document. Neither
such Borrower nor any of its Subsidiaries, (i) is in default with respect to
any order of any court, arbitrator or governmental body or is subject to or
party to any order of any court or governmental authority arising out of any
action, suit or proceeding against it under any statute or other law respecting
antitrust, monopoly, restraint of trade, unfair competition or similar matters,
or (ii) has violated or is in violation of any
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statute, rule or regulation of any governmental authority in each case where
such violation or default would materially and adversely affect the condition
(financial or otherwise), properties, business, or results of operations of
such Borrower and its Subsidiaries taken as a whole. Such Borrower and each of
its Subsidiaries have been and are current and in good standing with respect to
all governmental approvals, permits, certificates, licenses, inspections,
consents and franchises necessary to continue to conduct their respective
businesses and to own or lease and operate their respective properties as
heretofore conducted, owned, leased or operated.
(i) Governmental Consents, etc. Except as already received
by such Borrower as of the date hereof, no authorization, consent, approval,
license, qualification or formal exemption from, nor any filing, declaration or
registration with, any court, governmental agency or regulatory authority or
any securities exchange or any other Person is required in connection with the
execution, delivery and performance by such Borrower of this Agreement.
(j) No Material Adverse Change. As of the date hereof, since
the end of its most recently ended fiscal year, there has been no material
adverse change in the condition (financial or otherwise), properties,
business, or results of operations of Guarantor and its Subsidiaries taken as a
whole.
(k) Compliance with Laws. The operations of such Borrower
and each of its Subsidiaries comply in all material respects with all
applicable environmental, health and safety requirements under federal, state
and local laws and with all other laws and regulations where such failure to so
comply could have a material adverse effect on such Borrower or its assets.
(l) ERISA. No Borrower has or will at any time have any
Plans.
(m) Governmental Regulation. Neither such Borrower nor any
of its respective Subsidiaries is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, the Investment Company Act of 1940 or any other federal or state
statute or regulation such that its ability to incur indebtedness is limited or
its ability to consummate the transactions contemplated hereby is materially
impaired.
(n) Federal Reserve Regulations. Neither such Borrower nor
any of its respective Subsidiaries is engaged, directly or indirectly,
principally, or as one of its important activities, in the business of
extending, or arranging for the extension of, credit for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation G, T,
U or X of the Board.
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(o) Disclosure. The Loan Documents and any other document,
certificate or statement furnished or to be furnished to the Managing Agent or
any Bank by or on behalf of such Borrower or any of its Subsidiaries in
connection herewith or therewith do not and will not contain any untrue
statement of a material fact and do not and will not omit to state a material
fact necessary in order to make the statements made by such Borrower or any of
its Subsidiaries contained herein and therein not misleading in light of the
circumstances in which made.
(p) Solvency. Such Borrower is Solvent and will continue to
be Solvent after giving effect to the transactions contemplated by the Loan
Documents.
(q) Bridge Agreement. As of the date hereof, no "Guarantor
Event of Default", "Borrower Event of Default", "Unmatured Guarantor Event of
Default" or "Unmatured Borrower Event of Default" (as such terms are defined in
the Bridge Agreement) exists under the Bridge Agreement.
(r) Survival of Warranties. All representations and
warranties contained in this Agreement shall survive the execution and delivery
of this Agreement and the termination hereof. Any modifications or supplements
to the disclosures contained in this Agreement and provided by such Borrower
after the date hereof shall not be deemed a part of the Agreement until
accepted in writing by the Managing Agent.
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of each Borrower. Each Borrower
will:
(a) Furnish to each Bank:
(i) Within three (3) days after such Borrower shall have
obtained knowledge of the occurrence of a Guarantor Event of Default
and/or an Unmatured Guarantor Event of Default and/or a Borrower Event of
Default and/or an Unmatured Borrower Event of Default, the written statement of
a Responsible Officer of such Borrower setting forth the details of each such
Guarantor Event of Default, Unmatured Guarantor Event of Default, Borrower
Event of Default or Unmatured Borrower Event of Default which has occurred and
is continuing and the action which such Borrower or the Guarantor, as the case
may be, proposes to take with respect thereto,
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(ii) Copies of any annual financial statements required
to be provided by such Borrower to its equity holders or partners by
law or under its Organizational Documents, as and when the same are
provided to such equity holders. If so requested by the Managing
Agent, such Borrower shall also provide to the Managing Agent any
monthly and quarterly financial statements required to be provided by
such Borrower to its equity holders under its Organizational
Documents (as in effect from time to time), within the time periods
required thereunder. Each Borrower shall also send copies of all
financial statements delivered to the Managing Agent hereunder to
XXXXXXXXXX,
(iii) Promptly following such Borrower's receipt
thereof, copies of all financial or other reports or statements
submitted to such Borrower or any Subsidiary of such Borrower by
independent public accountants relating to any annual or interim
audit of the books of such Borrower or any Subsidiary of such
Borrower,
(iv) Promptly upon obtaining knowledge thereof,
notice of any action, suit, proceeding or investigation pending or
threatened against or affecting such Borrower or any Subsidiary of
such Borrower or any of its or their respective properties before any
court, governmental agency or regulatory authority (foreign, Federal,
state or local), which, if determined adversely to such Borrower or
any Subsidiary of such Borrower could have a material adverse effect
on the condition (financial or otherwise), business, properties (or
affecting title thereto), or results of operations of such Borrower
and its Subsidiaries individually or in the aggregate, or could
materially impair such Borrower's ability to perform its obligations
under the Loan Documents, and
(v) Such other information respecting the
properties, business affairs, financial condition and/or operations
of any Borrower or any Subsidiary of such Borrower as the Managing
Agent or any Bank may from time to time reasonably request.
(b) Preserve and maintain, and cause its
Subsidiaries to preserve and maintain, its and their lawful
partnership or corporate existence and all of its material rights,
privileges and franchises.
(c) Comply, and cause its Subsidiaries to comply,
with all laws, rules, regulations and governmental orders
(foreign, Federal, state and local) having applicability to it or
them or to the business or businesses at any time conducted by it,
where the failure to so comply would have a material adverse effect,
on the business, condition (financial or otherwise), assets or
operations of such Borrower and its Subsidiaries taken as a whole.
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(d) Duly and punctually pay and perform its obligations and cause
its Subsidiaries to pay and perform their respective obligations under the Loan
Documents in accordance with the terms thereof.
(e) Permit, and cause each of its Subsidiaries to permit, any
Bank or its respective representatives, at any reasonable time, and from time
to time upon written notice of such Bank, to visit and inspect its and their
respective properties, to examine and make copies of and take abstracts from
its and their respective records and books of account, and to discuss its and
their respective affairs, finances and accounts with its and their respective
principal officers and, with the written consent of such Borrower, their
respective independent public accountants and other agents.
(f) Keep, or cause to be kept, and cause its Subsidiaries to
keep or cause to be kept, adequate records and books of account, in which
complete entries are to be made reflecting its and their businesses and
financial transactions, such entries to be made in accordance with generally
accepted accounting principles consistently applied.
(g) Maintain, at its expense, such public liability and third
party property damage insurance in such amounts and with such deductibles as
the Managing Agent may reasonably require from time to time. Such Borrower
shall, at its expense, keep and maintain its assets and the assets of its
Subsidiaries insured (with an insurance company maintaining a rating of A or
better by A.M. Best Company) against loss or damage by fire, theft, explosion,
spoilage and all other hazards and risks ordinarily insured against by other
owners or users of such properties in similar businesses in amounts at least
equal to the full replacement value thereof. All such policies of insurance
shall be in the form and substance satisfactory to the Managing Agent. Upon
the request of the Managing Agent, such Borrower shall deliver to the Managing
Agent the original (or a certified copy) of each policy of insurance and
evidence of the prepayment of all premiums therefor. Such policies of insurance
shall contain an endorsement naming the Managing Agent (for the ratable benefit
of the Banks) as loss payee and additional insured and shall provide for no
cancellation without at least thirty (30) days prior written notice to the
Managing Agent. Such Borrower hereby directs all insurers under such policies
of insurance to pay all proceeds of such insurance policies to the Managing
Agent for the ratable benefit of the Banks; provided that so long as no
Guarantor Event of Default shall have occurred and be continuing, all proceeds
of such insurance as to any Project which in the aggregate are less than an
amount equal to five percent (5%) of the Project Budget then in effect for such
Project per occurrence shall be delivered to such Borrower. With respect to
occurrences giving rise to insurance proceeds in respect of a Project in excess
of five percent (5%) of the Project Budget then in effect for such Project
("Material Insurance Proceeds") , the Managing Agent shall
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apply such amount to the prepayment of the related Project Loans in accordance
with Section 3.3 unless the Guarantor and the affected Borrower shall in
writing direct the Managing Agent to release such proceeds to such Borrower to
pay for the repair, replacement or reconstruction of the assets subject to
such casualty, in which case such proceeds shall be so released, provided that:
(i) at the time of any requested release of funds no
Guarantor Event of Default or Unmatured Guarantor Event of Default
shall have occurred and be continuing; and
(ii) the relevant Borrower shall have submitted a revised
Project Budget and, if necessary, Allocation Increase Request for
the affected Project.
Prior to the occurrence and continuance of a Guarantor Event of
Default or Unmatured Guarantor Event of Default, any prepayment made pursuant
to this Section 5.1(q) shall be applied to the Project Loan in accordance with
Section 3.3 without regard to the minimum amount or integral multiple
requirements set forth therein. Notwithstanding the provision of Section
3.6(b), any such prepayment shall not constitute a permanent reduction in the
pro rata Project Commitment of each Bank hereunder. After the occurrence and
during the continuance of a Guarantor Event of Default or Unmatured Guarantor
Event of Default, all insurance proceeds may be applied by the Managing Agent,
upon the direction of the Required Banks, to the prepayment of the Loan
Obligations and the Notes with respect to the Project giving rise to such
proceeds and shall constitute a permanent reduction of the pro rata Project
Commitment of each of the Banks corresponding to the Project Loan so prepaid.
If a Guarantor Event of Default or Unmatured Guarantor Event of Default or
Borrower Event of Default shall have occurred and be continuing hereunder, such
Borrower irrevocably makes, constitutes and appoints the Managing Agent (and
all officers, employees or agents designated by the Managing Agent) as such
Borrower's true and lawful attorney-in-fact for the purpose of making, settling
and adjusting claims under all such policies of insurance, endorsing the name
of such Borrower on any check, draft, instrument or other item of payment
received by such Borrower or the Managing Agent pursuant to any such policies
of insurance and for making all determinations and decisions with respect to
such policies of insurance. If such Borrower, at any time or times hereafter,
shall fail to obtain or maintain any of the policies of insurance required
above or to pay any premium in whole or in part relating thereto, then the
Managing Agent, without waiving or releasing any Loan obligations, Guarantor
Event of Default or Unmatured Guarantor Event of Default or Borrower Event of
Default by such Borrower hereunder, may at any time or times thereafter (but
shall be under no obligation to do so) obtain and maintain such policies of
insurance and pay such premiums and take any other action with respect thereto
which the Managing Agent deems advisable and such payments shall be Loans.
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(h) Use the proceeds of the Loans only for the purposes specified in
the introduction to this Agreement.
(i) Maintain or cause to be maintained, and cause each of its
Subsidiaries to maintain or cause to be maintained, in good repair, working
order and condition, excepting ordinary wear and tear and damage due to
casualty or condemnation, all of its properties material to its operations and
will make or cause to be made all appropriate repairs, renewals and
replacements thereof, consistent with past practice.
(j) Maintain, and cause each of its Subsidiaries to maintain,
in full force and effect all licenses, permits, governmental approvals,
franchises, authorizations or other rights necessary for the operation of its
business, except where the failure to obtain any of the foregoing would not
have or is not reasonably likely to have a material adverse effect on the
condition (financial or otherwise), properties, business, or results of
operations of such Borrower and its Subsidiaries taken as a whole; and notify
the Managing Agent in writing, promptly after learning thereof, of the
suspension, cancellation, revocation or discontinuance of or of any pending or
threatened action or proceeding seeking to suspend, cancel, revoke or
discontinue any such license, permit, governmental approval, franchise
authorization or right.
(k)(i) Notify the Managing Agent, in writing, promptly, and in any
event within twenty (20) days after such Borrower's learning thereof, of any:
(A) notice or claim to the effect that such Borrower or any of its
Subsidiaries is or may be liable to any Person as a result of
the Release or threatened Release of any Contaminant into the
environment;
(B) notice that such Borrower or any of its Subsidiaries is
subject to investigation by any governmental authority
evaluating whether any Remedial Action is needed to respond to the
Release or threatened Release of any Contaminant into the
environment;
(C) notice that any property of such Borrower or its Subsidiaries
is subject to an Environmental Lien;
(D) notice of violation to such Borrower or any of its
Subsidiaries or awareness by such Borrower or any of its
Subsidiaries of a condition which might reasonably result in a notice
of violation of any environmental, health or safety requirement under
federal, state or local laws, which could have a material adverse
effect on the condition (financial or otherwise), properties,
business,
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prospects or results of operations of such Borrower and
its Subsidiaries taken as a whole;
(E) commencement or threat of any
judicial or administrative proceeding alleging a
violation of any environmental, health or safety
requirement under federal, state or local laws;
(F) new or proposed changes to any
existing environmental, health or safety requirement
under federal, state or local laws that could have a
material adverse effect on the operations of such
Borrower or its Subsidiaries; or
(G) any proposed acquisition of
stock, assets, real estate, or leasing of property, or
any other action by such Borrower or its Subsidiaries
that could subject such Borrower or its Subsidiaries to
environmental, health or safety liabilities, obligations
or costs that could have a material adverse effect on the
condition (financial or otherwise) , properties,
business, prospects or results of operations of such
Borrower and its Subsidiaries taken as a whole.
(ii) On December 31 of each calendar year,
commencing on December 31, 1992, submit to the Managing Agent a
report providing an update of the status of each environmental,
health or safety compliance, hazard or liability issue, if any,
identified in any notice or report required pursuant to clause (k)
(i) above and any other environmental, health and safety compliance
obligation, remedial obligation or liability that could have a
material adverse effect on the condition (financial or otherwise),
properties, business, prospects or results of operations of such
Borrower and its Subsidiaries taken as a whole.
Section 5.2 Negative Covenants of each Borrower. Such
Borrower will not nor will it permit any of its Subsidiaries to:
(a) Except for Permitted Liens:
(i) create, incur, assume or permit to exist any
Lien on any existing or future property, asset (including stock of
subsidiaries), income or rights in any thereof; or
(ii) take, cause or permit to be taken or cause
any action to be taken, which could create a Lien, or suffer to exist
any Lien, on the capital stock or other ownership interest of any
Subsidiary of such Borrower which would require the sharing of an
interest in such capital stock or other ownership interest with any
Person; or
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(iii) enter into or assume any other agreement containing a negative
pledge with respect to its property.
(b) Create, incur, assume or suffer to exist any Indebtedness for Money
Borrowed except for the Notes. Notwithstanding the foregoing, a Borrower may
create, incur, assume or suffer to exist after the date of this Agreement:
(i) Indebtedness for Money Borrowed consisting of Financing Lease
Obligations not exceeding $100,000 in any one case and not exceeding
$250,000 in the aggregate at any time outstanding;
(ii) Indebtedness for Money Borrowed issued, incurred or assumed in
respect of the purchase price of property not to exceed $1 million
principal amount of Indebtedness for Money Borrowed in the aggregate at
any time outstanding; and
(iii) Indebtedness for Money Borrowed secured by Permitted Third Party
Mortgage Liens or Permitted Mortgage Liens not to exceed the value of the
property so securing such Indebtedness.
Any Indebtedness for Money Borrowed used in the calculations of whether any
threshold amount specified in either clause (i) or (ii) immediately preceding
have been exceeded shall not be used to calculate whether the threshold in the
other of such thresholds specified in such clause (i) or (ii) has been
exceeded.
(c) Assume, guarantee or endorse, or otherwise become directly or
contingently liable in respect of, any obligation of any Person, except,
without duplication, guarantees of such Borrower of Indebtedness for Money
Borrowed constituting Financing Leases of such Borrower or any Subsidiary of
such Borrower permitted by Section 5.2(b) hereof or enter into any Interest
Rate Agreements other than those entered into by any Borrower with respect to
the dollar amount of any Loan or Loans made hereunder.
(d) Engage in any business or business activity except with respect to
such Borrower's Projects.
(e) After the occurrence and during the continuance of a Guarantor
Event of Default or a Borrower Event of Default with respect to such Borrower,
declare or pay any dividend or distribution, or purchase or redeem any shares
of any equity interest or class of capital stock of such Borrower, or make any
other payment or distribution on or in respect of any class of capital stock or
ownership interest of such Borrower or any of its Subsidiaries or set aside any
amounts for any such purposes, except that any Subsidiary may pay dividends to
such Borrower.
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(f) Have or make any loan or advance to or Investment in any
Subsidiary or other Affiliate or any other Person except for:
(i) Permitted Investments;
(ii) Investments by a Borrower in Persons as permitted by Section
5.2(h) hereof; and
(iii) guarantees permitted by Section 5.2(c) hereof.
(g) Merge or consolidate with or into any Person except that any
Subsidiary of a Borrower may merge or consolidate with or into such Borrower.
(h) Acquire any assets or capital stock of any Person except that a
Borrower may (i) acquire assets used in the ordinary course of business, (ii)
acquire the assets or capital stock of any Subsidiary, and (iii) make Capital
Expenditures in connection with such Borrower's Projects.
(i) Issue or distribute its partnership interests, capital stock or
other ownership interests to any Person or permit any Subsidiary to issue, sell
or otherwise dispose of any such interests to any Person except to the relevant
Borrower, provided, that the foregoing shall not be construed to prohibit the
transfer of all or part of any existing ownership interest by the owner thereof
to an Affiliate of such owner, provided, further that such transfer does not
result in a breach of any other provision of this Agreement and that such
transfer does not change the respective Borrower's status as an Eligible
Borrower hereunder.
(j) Without the prior written consent of the Managing Agent, enter
into any transaction with an Affiliate of such Borrower including, without
limitation, the purchase, sale or exchange of property or the rendering of any
service to or by an Affiliate, except for:
(i) transactions on terms no less favorable to such Borrower than if
negotiated at arm's length and for a term not to exceed two years;
(ii) the "Management Agreement" and "Leasing Agreement" contemplated
by such Borrower's joint venture agreement; and
(iii)payment of fees and expenses included in the Project Budget in
effect for a Project.
Except as set forth in clauses (ii) and (iii) of the immediately preceding
sentence, all transactions by any Borrower with any Affiliate shall be on terms
no less favorable to such Borrower or such Affiliate than could be obtained in
a comparable arms-length transaction with a Person not an Affiliate and be
reasonably
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necessary or desirable for such Borrower or such Affiliate in the conduct of
its business.
(k) Issue any power of attorney or other contract or agreement giving
any Person power or control over the day-to-day operations of its business
except as expressly contemplated by this Agreement.
(l) Modify or amend any of such Borrower's Organizational Documents
without the prior written consent of the Managing Agent.
(m) Without the prior written consent of the Managing Agent, take any
action which causes any Person to become a direct or indirect Subsidiary of
such Borrower or which results in the creation of a Subsidiary of such
Borrower.
ARTICLE VI
CONDITIONS OF CREDIT
Section 6.1 Conditions Precedent to the Initial Borrowing. The right
of any Borrower to make the Initial Borrowing and the obligation of the Banks
to make the Initial Loan under this Agreement shall be subject to the
fulfillment, at or prior to the time of the making of such Initial Loan, of
each of the following conditions:
(a) Each Borrower shall have executed and delivered to each Bank this
Agreement (including all schedules, exhibits, certificates, opinions and
financial statements delivered pursuant hereto) , which shall be in full force
and effect (without any waiver of, or other forbearance to exercise any rights
with respect to, any term or provision hereof, unless consented to in writing
by the Required Banks).
(b) All of the Loan Documents (excluding any Notes relating to
Borrowings which have not been requested at such time) shall have been duly
executed and delivered in form and substance satisfactory to the Managing Agent
and shall be in full force and effect; and there shall be no Guarantor Event of
Default or Unmatured Guarantor Event of Default which shall have occurred and
be continuing under this Agreement.
(c) The Managing Agent shall have received (with a signed copy for each
Bank):
(i) the signed opinion of Messrs. Dickinson, Wright, Moon, Van Dusen &
Freeman, special counsel to each Borrower and the
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Guarantor, dated the date hereof in form and substance satisfactory to
Managing Agent;
(ii) the signed opinion of A. N. Palizzi, counsel to the Guarantor,
dated the date hereof in form and substance satisfactory to Managing Agent;
(iii) such opinions of counsel to the general partners of the
Borrowers, dated the date hereof, in form and substance satisfactory to
Managing Agent, as may be reasonably requested by Managing Agent; and
(iv) a letter from the Guarantor and/or the applicable Borrower
requesting counsel rendering an opinion pursuant to this Agreement to
issue the opinion to Managing Agent and the Banks.
(d) Certified copies of the Organizational Documents for each Borrower,
and each general partner of each Borrower.
(e) A certificate of Guarantor and each Managing Partner of each
Borrower certifying as to the names, offices and signatures of each Person (i)
who is authorized to sign this Agreement or any Loan Document on such Person's
behalf and (ii) who will, until replaced by another Person or Persons duly
authorized for that purpose, act as its representative for the purposes of
signing documents and giving notices and other communications in connection
with this Agreement and the transactions contemplated hereby. The Managing
Agent and each Bank may conclusively rely on such certificate until they
receive notice in writing from such Person to the contrary.
(f) Each Borrower shall have paid the Managing Agent the fees then due
pursuant to Section 3.8 hereof.
(g) The Managing Agent shall have received a Notice of Borrowing with
respect to the Initial Loan, and duly executed Initial Notes in accordance with
Section 2.2(b) hereof.
(h) The Managing Agent shall have received (with a signed copy for each
Bank) the signed opinion of Messrs. XXXXXXXXXX, counsel to the Banks,
dated the date of the Initial Borrowing, in form and substance satisfactory to
the Managing Agent.
(i) The Managing Agent shall have received a list of all of Guarantor's
Material Subsidiaries as of the date hereof.
(j) All corporate and other proceedings taken in connection with the
transactions hereunder at or prior to the date of this Agreement, and all
documents incident thereto will be reasonably satisfactory in form and
substance to the Managing Agent; and the Banks shall have received such other
instruments and
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documents as the Managing Agent shall reasonably request in connection with the
Loans, and all such instruments and documents shall be reasonably satisfactory
in form and substance to the Managing Agent.
Section 6.2 Conditions Precedent to any Initial Project Borrowing.
In addition to the conditions set forth in Section 6.1, the right of any
Borrower to make an Initial Project Borrowing and the Obligation of the Banks
to make the Initial Project Loan under this Agreement to such Borrower shall be
subject to the fulfillment, at or prior to the time of the making of such
Initial Project Loan, of each of the following conditions:
(a) The Managing Agent shall have received an Allocation Request with
respect to such Project and shall have established a Project Commitment Amount
in accordance with the terms of this Agreement.
(b) The Managing Agent shall have received a Project Budget for such
Project.
(c) The Managing Agent shall have received executed Initial Notes
evidencing such Loan in accordance with Section 2.2(b) hereof.
(d) The long-term Indebtedness of the Guarantor shall be rated BBB or
above by Standard & Poor's Corporation and Baa2 or above by Moody's Investors
Service, Inc.
(e) Since the date hereof, there shall have been no material adverse
change in the condition (financial or otherwise), properties, business or
results of operations of Guarantor and its Subsidiaries, taken as a whole.
(f) The Managing Agent shall have received such other instruments,
documents and opinions as the Managing Agent shall reasonably request in
connection with such Loan, and all such instruments, documents and opinions
shall be reasonably satisfactory to the Managing Agent.
Section 6.3 Conditions Precedent to All Borrowings (other than a
Roll-Over Borrowing). In addition to the conditions set forth in Sections 6.1
and 6.2, the right of any Borrower to make any Borrowing (other than a
Roll-Over Borrowing) hereunder and the obligation of each Bank to make a Loan
in respect of any such Borrowing hereunder in each case shall be subject to the
fulfillment at or prior to the time of the making of such Borrowing of each of
the following conditions:
(a) The representations and warranties contained in this Agreement with
respect to such Borrower and such Project shall each be true and correct in all
material respects at and as of such time,
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as though made on and as of such time; each of the Loan Documents shall be in
full force and effect.
(b) No Guarantor Event of Default or Unmatured Guarantor Event of
Default or Borrower Event of Default or Unmatured Borrower Event of Default
with respect to such Borrower shall have occurred and shall then be continuing
on such date or will occur after giving effect to such Borrowing.
(c) No change shall have occurred or become known with respect to the
condition (financial or otherwise), business, prospects or results of
operations of the applicable Borrower or any of its Subsidiaries since the date
of this Agreement, which the Managing Agent deems to be material and adverse to
the condition (financial or otherwise), business or results of operations of
such Borrower and its Subsidiaries taken as a whole.
(d) The Managing Agent shall be reasonably satisfied as to the matters
set forth on Exhibit F hereto as such Exhibit may be modified from time to time
by the Managing Agent and the Guarantor.
(e) The Banks shall have received such other instruments, documents and
opinions (including Amended Notes and/or Extension Notes if applicable) as the
Managing Agent may reasonably request in connection with the Loans, and all
such instruments, documents and opinions shall be reasonably satisfactory in
form and substance to the Managing Agent.
Each Borrowing by any Borrower shall be deemed to constitute a
representation and warranty by it as to itself to the effect of clauses (a),
(b) and (c) of this Section 6.3.
Section 6.4 Conditions Precedent to All Roll-Over Borrowings. The
right of any Borrower to make any Roll-Over Borrowing hereunder and the
obligation of each Bank to make any Roll-Over Borrowing hereunder shall be
subject to the condition that the Loan Obligations of such Borrower shall not
have been accelerated.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1 Guarantor Events of Default. If any of the following
events, acts, occurrences or state of facts (herein called a "Guarantor Event
of Default") shall occur or exist (for any reason whatsoever, and whether such
happening shall be voluntary or involuntary or come about or be effected by
operation of law pursuant to or in accordance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body):
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(a) Indebtedness of the Guarantor shall be rated BBB- or lower by
Standard & Poor's Corporation or Baa3 or lower by Moody's Investors Service,
Inc. or shall not be rated by either of such entities;
(b) The Guarantor or any of its Material Subsidiaries, shall default in
the payment when due, whether at stated maturity or otherwise, of any
Indebtedness for Money Borrowed of the Guarantor or any of its Material
Subsidiaries, whether individually or in the aggregate, equal to or in excess
of $40 million, whether such Indebtedness now exists or shall hereafter be
created, and such default shall be uncured or unwaived after the expiration of
all applicable grace periods with respect thereto; or breach or default by
Guarantor or any of its Material Subsidiaries with respect to any other
material term of any evidence of any Indebtedness for Money Borrowed in excess
of $40 million or of any loan agreement, mortgage, indenture or other agreement
relating thereto, if the effect of such default or breach is to cause, or to
permit the holder or holders (or a trustee on behalf of such holder or holders)
of such Indebtedness for Money Borrowed to cause such Indebtedness for Money
Borrowed to become or be declared due prior to its stated maturity (upon the
giving or receiving of notice but after the expiration of all applicable grace
periods with respect thereto) provided, however, that with respect to
Indebtedness for Money Borrowed in respect of real property leases, no such
breach or default shall be deemed to exist if the Guarantor or Material
Subsidiary, as the case may be, is contesting in good faith the existence of
such breach or default by appropriate means and if the existence of such breach
or default, if determined adversely to Guarantor or the Material Subsidiary, as
the case may be, would not have a material adverse effect on Guarantor and its
Subsidiaries on a consolidated basis;
(c) The Guarantor or any of its Material Subsidiaries shall become
insolvent or generally fail to pay, or admit in writing its inability to pay,
its debts as they become due, or shall voluntarily commence any proceeding or
file any petition under any bankruptcy, insolvency or similar law or seeking
dissolution or reorganization or the appointment of a receiver, trustee,
custodian or liquidator for it or a substantial portion of its property, assets
or business or to effect a plan or other arrangement with its creditors, or
shall file any answer admitting the jurisdiction of the court and the material
allegations of an involuntary petition filed against it in any bankruptcy,
insolvency or similar proceeding, or shall be adjudicated bankrupt, or shall
consent to, or acquiesce in the appointment of, a receiver, trustee, custodian
or liquidator for a substantial portion of its property, assets or business,
shall call a meeting of its creditors with a view to arranging a composition or
adjustment of its debts or shall take any corporate action authorizing any of
the foregoing;
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(d) Involuntary proceedings or an involuntary petition shall be
commenced or filed against the Guarantor or any of its Material Subsidiaries
under any bankruptcy, insolvency or similar law or seeking the dissolution or
reorganization of it or the appointment of a receiver, trustee, custodian or
liquidator for it or of a substantial part of its property, assets or business,
or any writ, judgment, warrant of attachment, execution or similar process
shall be issued or levied against a substantial part of its property, assets or
business, and such proceedings or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process shall not
be released, vacated or fully bonded, within sixty (60) days after
commencement, filing or levy, as the case may be, or any order for relief shall
be entered in any such proceeding;
(e) This Agreement or the Guaranty shall cease for any reason to be in
full force and effect or there shall exist any event of default or breach of
any of Guarantor's representations or warranties, covenants or obligations
under the Guaranty or the Guarantor shall disavow any of its obligations under
the Guaranty;
(f) Any Guarantor Restructuring shall occur, other than a Guarantor
Restructuring in which:
(i) the obligations of Guarantor under the Guaranty shall continue in
full force and effect following such transaction, and
(ii) the following additional conditions shall be met:
(A) any transferee or pledgee of assets of Guarantor in
or pursuant to such Guarantor Restructuring (a "Transferee") shall
become an additional guarantor of the Obligations hereunder pursuant to
the terms of a written guaranty agreement in form and substance
satisfactory to the Managing Agent;
(B) after giving effect to such Guarantor Restructuring, and all
related transactions (including, without limitation, any
related financing), the long term Indebtedness of the Transferee shall
be rated BBB or above by Standard & Poor's Corporation and Baa2 or
above by Moody's Investors Service, Inc.; and
(C) this Agreement shall be amended in a manner satisfactory to the
Managing Agent to reflect the existence of such additional
guarantor and guaranty, including, without limitation, to provide that
occurrences with respect to the Transferee similar to those set forth
in clauses (a) through (g) of this Section 7.1 shall also be Guarantor
Events of Default hereunder; or
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(g) The Guarantor shall directly or indirectly create or otherwise
cause or suffer to exist or become effective any limitation (except as required
by applicable law or the Loan Agreement) on the ability of any of its Material
Subsidiaries to (A) pay dividends or make any other distributions on its
capital stock or any other interest or participation in, or measured by, its
profits owned by, or pay any Indebtedness owed to, the Guarantor or (B) make
loans or advances to the Guarantor;
then, and in any such event and at any time thereafter, the Managing Agent may
and, at the direction of the Required Banks shall, take one or more of the
following actions: (i) by written or oral or telephonic notice (in the case of
oral or telephonic notice confirmed in writing immediately thereafter) to
Guarantor, as agent for the Borrowers, declare the Total Commitment and each
Project Commitment to be terminated whereupon the Total Commitment and each
Project Commitment shall forthwith terminate, and/or (ii) by written or oral or
telephonic notice (in the case of oral or telephonic notice confirmed in
writing immediately thereafter) to each Borrower declare all sums then owing by
such Borrower hereunder and under any Notes to be forthwith due and payable,
whereupon all such sums shall become and be immediately due and payable without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by each Borrower. In cases of any occurrence of any event of
default described in clause (c) or (d) of this Section 7.1, the Notes, together
with accrued interest thereon, shall become due and payable forthwith without
the requirement of any such acceleration or request, and without presentment,
demand, protest or other notice of kind, all of which are expressly waived, any
provision of this Agreement or the Notes to the contrary notwithstanding and
other amounts payable by any Borrower hereunder or under any Notes shall also
become immediately due and payable all without notice of any kind.
Anything in this Section 7.1 to the contrary notwithstanding, the
Managing Agent shall, at the request of the Required Banks, rescind and annul
any acceleration of the Notes by written instrument filed with each Borrower;
provided that at the time such acceleration is so rescinded and annulled: (A)
all past due interest and principal, if any, on the Notes and all other sums
payable under this Agreement and the Notes (except any principal and interest
which has become due and payable solely by reason of such acceleration pursuant
to this Section 7.1) shall have been duly paid in full, and (B) no other
Guarantor Event of Default shall have occurred and be continuing which shall
not have been waived pursuant to Section 9.1 hereof.
Section 7.2 Borrower Events of Default. If any of the following
events, acts, occurrences or state of facts (herein called a "Borrower Event of
Default") shall occur or exist (for any reason whatsoever, and whether such
happening shall be voluntary or involuntary or come about or be effected by
operation of law
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pursuant to or in accordance with any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) Any Borrower shall default in the payment of principal of its Loan
obligations or Notes when due, or in the payment of interest or any other
amount owing hereunder or under any Note within three (3) Business Days after
notice of such failure is given to Guarantor and such Borrower; or
(b) Any representation or warranty on the part of any Borrower or any
of its Subsidiaries, as the case may be, contained in any Loan Document or any
document, instrument or certificate delivered pursuant thereto shall have been
incorrect in any material respect when made or deemed made; or
(c) Any Borrower shall default in the performance or observance of any
term, covenant, condition or agreement on its part to be performed or observed
under Section 5.2 hereof and such default shall continue unremedied for five
(5) days after written or telephonic (immediately confirmed in writing) notice
thereof has been given to such Borrower by the Managing Agent or any Bank (with
a copy of such Notice to Guarantor); or
(d) Any Borrower or any of its Subsidiaries shall default in the
performance or observance of any term, covenant, condition or agreement on its
part to be performed or observed hereunder or under any Loan Document (and not
constituting a Borrower Event of Default under any other clause of this Section
7.2) and such default shall continue unremedied for a period of thirty (30)
days after written or telephonic (immediately confirmed in writing) notice
thereof has been given to such Borrower by the Managing Agent or any Bank (with
a copy of such notice to Guarantor); or
(e) Any Borrower or any of its Subsidiaries or the Kmart General
Partner of such Borrower shall become insolvent or generally fail to pay, or
admit in writing its inability to pay, its debts as they become due, or shall
voluntarily commence any proceeding or file any petition under any bankruptcy,
insolvency or similar law or seeking dissolution or reorganization or the
appointment of a receiver, trustee, custodian or liquidator for it or a
substantial portion of its property, assets or business or to effect a plan or
other arrangement with its creditors, or shall file any answer admitting the
jurisdiction of the court and the material allegations of an involuntary
petition filed against it in any bankruptcy, insolvency or similar proceeding,
or shall be adjudicated bankrupt, or shall make a general assignment for the
benefit of creditors, or shall consent to, or acquiesce in the appointment of,
a receiver, trustee, custodian or liquidator for a substantial portion of its
property, assets or business, shall call a meeting of its creditors with a view
to arranging a composition or adjustment of its debts
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or shall take any corporate action authorizing any of the foregoing; or
(f) Involuntary proceedings or an involuntary petition
shall be commenced or filed against any Borrower or any of its Subsidiaries or
the Kmart General Partner of such Borrower under any bankruptcy, insolvency or
similar law or seeking the dissolution or reorganization of it or the
appointment of a receiver, trustee, custodian or liquidator for it or of a
substantial part of its property, assets or business, or any writ, judgment,
warrant of attachment, execution or similar process shall be issued or levied
against a substantial part of its property, assets or business, and such
proceedings or petition shall not be dismissed, or such writ, judgment, warrant
of attachment, execution or similar process shall not be released, vacated or
fully bonded, within sixty (60) days after commencement, filing or levy, as the
case may be, or any order for relief shall be entered in any such proceeding;
or
(g) One or more judgments or decrees shall be entered
against any Borrower or any of its Subsidiaries involving, individually or in
the aggregate, a liability of $50,000 or more and all such judgments or decrees
shall not have been vacated, discharged, satisfied or stayed pending appeal
within thirty (30) days from the entry thereof; or
(h) Any Borrower or any of its Subsidiaries shall disavow
its obligations under this Agreement or any Note as the Loan Obligations or
shall deny that it has any or further obligations hereunder or thereunder (in
each case other than by reason of the satisfaction of all of such Borrower's
obligations hereunder and thereunder or the unlawful disavowal by any other
party to such agreements of their respective obligations thereunder); or
(i) Any Borrower shall cease for any reason to be an
Eligible Borrower hereunder;
(j) Any order, judgment or decree shall be entered
against any Borrower or any of its Subsidiaries decreeing its involuntary
dissolution or split up and such order shall remain undischarged and unstayed
for a period in excess of thirty (30) days; or any Borrower or any of its
Subsidiaries shall otherwise dissolve or cease to exist; or
(k) Any Additional Borrower Agreement shall cease for any
reason to be in full force and effect as to any Borrower;
(l) Guarantor shall sell, assign, transfer or otherwise
dispose of any shares of capital stock of the Kmart General Partner of such
Borrower (except to the extent, if any, required to qualify directors of such
Subsidiary under any applicable law);
(m) The Kmart General Partner for any Borrower shall:
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(i) merge or consolidate with any other
Person, other than the Guarantor or a wholly-owned Subsidiary of
the Guarantor;
(ii) create, incur, assume or suffer to exist
or agree to create, incur or assume any Lien in, upon or with
respect to any of its ownership interest in any Borrower, whether
now owned or hereafter acquired; or
(iii) directly or indirectly create or otherwise
cause or suffer to exist or become effective any limitation (except
as required by applicable law or the Loan Agreement) on its ability
to (A) pay dividends or make any other distributions on its capital
stock or any other interest or participation in, or measured by,
its profits owned by, or pay any Indebtedness owed to, the
Guarantor, or (B) make loans or advances to the Guarantor.
then, and in any such event and at any time thereafter, the Managing Agent may
and, at the direction of the Required Banks shall, take one or more of the
following actions: (i) by written or oral or telephonic notice (in the case of
oral or telephonic notice confirmed in writing immediately thereafter) to the
Borrower or Borrowers as to which such Borrower Event of Default has occurred
declare any Project Commitment for such Borrower to be terminated whereupon
such Project Commitment shall forthwith terminate, and/or (ii) by written or
oral or telephonic notice (in the case of oral or telephonic notice confirmed
in writing immediately thereafter) to such Borrower declare all sums then owing
by such Borrower hereunder and under any Notes of such Borrower to be forthwith
due and payable, whereupon all such sums shall become and be immediately due
and payable without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by such Borrower. In cases of any occurrence
of any event of default described in clause (e) or (f) of this Section 7.2,
such Borrower's Notes, together with accrued interest thereon, shall become due
and payable forthwith without the requirement of any such acceleration or
request, and without presentment, demand, protest or other notice of any kind,
all of which are expressly waived, any provision of this Agreement or the Notes
to the contrary notwithstanding and other amounts payable by such Borrower
hereunder or under any Notes shall also become immediately due and payable all
without notice of any kind.
Anything in this Section 7.2 to the contrary notwithstanding, the
Managing Agent shall, at the request of the Required Banks, rescind and annul
any acceleration of such Borrower's Notes by written instrument filed with such
Borrower; provided that at the time such acceleration is so rescinded and
annulled: (A) all past due interest and principal, if any, on such Borrower's
Notes and all other sums payable by such Borrower under
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this Agreement and the Notes (except any principal and interest on such
Borrower's Loan Obligations which has become due and payable solely by reason
of such acceleration pursuant to this Section 7.2) shall have been duly paid in
full and (B) no other Borrower Event of Default shall have occurred and be
continuing with respect to such Borrower which shall not have been waived
pursuant to Section hereof.
ARTICLE VIII
THE MANAGING AGENT
In this Article VIII, the Banks agree among themselves as follows:
Section 8.1 Appointment. The Banks hereby appoint XXXXXXXXXX as
Managing Agent to act as herein specified. Each Bank hereby irrevocably
authorizes and each holder of any Note by the acceptance thereof shall be
deemed irrevocably to authorize the Managing Agent to take such action on its
behalf under the provisions of the Loan Documents (including, without
limitation, to give notices and take such actions on behalf of the Required
Banks as are consented to in writing by the Required Banks) and any other
instruments, documents and agreements referred to therein and to exercise such
powers hereunder and thereunder as are specifically delegated to the Managing
Agent by the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Managing Agent may perform any of its duties hereunder,
or under the Loan Documents, by or through its agents or employees.
Section 8.2 Nature of Duties. The Managing Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement.
The duties of the Managing Agent shall be mechanical and administrative in
nature. Without limiting the effect of the foregoing sentence, the Managing
Agent shall not have by reason of this Agreement a fiduciary relationship in
respect of any Bank. Nothing in any of the Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon the Managing
Agent any obligations in respect of any of the Loan Documents except as
expressly set forth herein or therein. Each Bank shall make its own
independent investigation of the financial condition and affairs of each
Borrower in connection with the making and the continuance of the Loans
hereunder and shall make its own appraisal of the creditworthiness of each
Borrower, and the Managing Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Bank with any credit or
other information with respect to any Borrower, whether coming into its
possession before making of the Loans or at any time or times thereafter
provided, however, upon the request of any Bank, the Managing Agent shall use
reasonable efforts to provide to such Bank, copies of any information required
to be furnished under Section
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5.1(a)(ii) or 5.1(k)(ii) by any Borrower to the Managing Agent and not to each
Bank. The Managing Agent will promptly notify each Bank at any time that the
Required Banks have instructed it to act or refrain from acting pursuant to
Article VII.
Section 8.3 Rights, Exculpation, etc. Neither the Managing Agent
nor any of its officers, directors, employees or agents shall be liable to any
Bank for any action taken or omitted by it hereunder or under any of the Loan
Documents, or in connection herewith or therewith, unless caused by its or
their gross negligence or willful misconduct. The Managing Agent shall not be
responsible to any Bank for any recitals, statements, representations or
warranties herein or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, or sufficiency of any of the Loan Documents or
the financial condition of any Borrower. The Managing Agent shall not be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement, any of the Notes
or any of the other Loan Documents or the financial condition of any Borrower,
or the existence or possible existence of any Unmatured Guarantor Event of
Default, Guarantor Event of Default, Unmatured Borrower Event of Default or
Borrower Event of Default unless requested to do so by the Required Banks. The
Managing Agent may at any time request instructions from the Banks with respect
to any actions or approvals which by the terms of any of the Loan Documents the
Managing Agent is permitted or required to take or to grant, and if such
instructions are requested, the Managing Agent shall be absolutely entitled to
refrain from taking any action or to withhold any approval and shall not be
under any liability whatsoever to any Person for refraining from any action or
withholding any approval under any of the Loan Documents until it shall have
received such instructions from the Required Banks. Without limiting the
foregoing, no Bank shall have any right of action whatsoever against the
Managing Agent as a result of the Managing Agent acting or refraining from
acting under any of the Loan Documents in accordance with the instructions of
the Required Banks.
Section 8.4 Reliance. The Managing Agent shall be entitled to rely
upon any written notice, statement, certificate, order or other document or any
telephone message reasonably believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person, and, with respect to all
matters pertaining to any of the Loan Documents and its duties hereunder or
thereunder, upon advice of counsel selected by it.
Section 8.5 Indemnification. To the extent that the Managing Agent
is not reimbursed and indemnified by the Borrowers or the Guarantor, the Banks
will reimburse and indemnify the Managing Agent for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may
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be imposed on, incurred by, or asserted against the Managing Agent, acting
pursuant hereto, in any way relating to or arising out of any of the Loan
Documents or any action taken or omitted by the Managing Agent under any of the
Loan Documents, in proportion to each Bank's respective Pro Rata Share of the
Total Commitment; provided, however, that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Managing
Agent's gross negligence or willful misconduct. The obligations of the Banks
under this Section 8.5 shall survive the payment in full of the Notes and the
termination of this Agreement.
Section 8.6 The Managing Agent Individually. With respect to its
Pro Rata Share of the Total Commitment hereunder and the Loans made by it and
any Notes issued to or held by it, the Managing Agent shall have and may
exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any other
Bank or holder of a Note. The terms "Banks" or "Required Banks" or "holders of
Notes" or any similar terms shall, unless the context clearly otherwise
indicates, include the Managing Agent in its individual capacity as a Bank, one
of the Required Banks or a holder of a Note. The Managing Agent may accept
deposits from, lend money to, and generally engage in any kind of banking,
trust or other business with any Borrower or any Subsidiary of any Borrower as
if it were not acting as Managing Agent pursuant hereto.
Section 8.7 Resignation by the Managing Agent; Removal.
(a) The Managing Agent may resign from the performance of
all its functions and duties hereunder at any time by giving 15 Business Days'
prior written notice to the Borrowers and the Banks. Such resignation shall
take effect upon the acceptance by a successor Managing Agent of appointment
pursuant to clauses (b) or (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Required
Banks shall appoint a successor Managing Agent who shall be satisfactory to the
Guarantor and shall be an incorporated bank or trust company.
(c) If a successor Managing Agent shall not have been so
appointed within said 15 Business Day period, the Managing Agent, with the
consent of the Borrowers, shall then appoint a successor Managing Agent who
shall serve as Managing Agent until such time, if any, as the Required Banks,
with the consent of the Guarantor, appoint a successor Managing Agent as
provided above.
(d) If no successor Managing Agent has been appointed
pursuant to clause (b) or (c) by the 30th day after the date such notice of
resignation was given by the managing Agent, the Managing Agent's resignation
shall become effective and the Required Banks
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shall thereafter perform all the duties of the Managing Agent hereunder until
such time, if any, as the Required Banks, with the consent of the Guarantor,
appoint a successor Managing Agent as provided above.
(e) The Managing Agent may be removed from the
performance of its functions and duties hereunder for cause (as defined herein)
upon written notice received by the Managing Agent from the Required Banks and
the Guarantor. For purposes of this Section 8.7(e), "cause" shall mean gross
negligence or willful misconduct by the Managing Agent in the performance of
its functions and duties hereunder.
ARTICLE IX
MISCELLANEOUS
Section 9.1 No Waiver: Modifications in Writing. No failure or
delay on the part of the Managing Agent or any Bank in exercising any right,
power or remedy hereunder or under any Note shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies provided for herein are cumulative and
are not exclusive of any remedies that may be available to the Managing Agent
or any Bank at law or in equity or otherwise. No amendment, modification,
supplement, termination or waiver of or to any provision of this Agreement, nor
consent to any departure by any Borrower or any Subsidiary of any Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
or on behalf of the Required Banks; provided, however, that no such amendment,
modification, supplement, termination, waiver or consent, as the case may be,
which has the effect of:
(i) reducing the rate or amount, or extending
the stated maturity or due date, of any sum payable by any Borrower
to any Bank hereunder or under any Loan Obligation;
(ii) changing this Section 9.1 or the
definitions of the terms "Required Banks" and "Pro Rata Share";
(iii) changing the Loan Commitment of any Bank
hereunder; or
(iv) amend, waive, modify, release or
terminate the Guaranty;
shall be effective unless the same shall be signed by or on behalf of each Bank
hereunder; provided, further, that no such amendment, modification, supplement,
termination, waiver or consent, as the case may be, which has the effect of (i)
increasing the duties or
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obligations of the Managing Agent hereunder, (ii) increasing the standard of
care or performance required on the part of the Managing Agent hereunder, (iii)
reducing or eliminating the fees, indemnities or immunities to which the
Managing Agent is entitled hereunder (including, without limitation, any
amendment or modification of this Section 9.1) or (iv) amending any provision
which requires action by all the Banks hereunder, shall be effective
unless the same shall be signed by or on behalf of the Managing Agent and
provided still further that the Managing Agent and the Guarantor may by mutual
agreement, amend or modify Exhibit F hereto without the consent of any Borrower
or any other Bank. Any amendment, modification or supplement of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by any Borrower from the terms of any provision of
this Agreement, shall be effective only in the specific instance and for the
specific purpose for which made or given. Except where notice is specifically
required by any Loan Document, no notice to or demand on any Borrower in any
case shall entitle such Borrower to any other or further notice or demand in
similar or other circumstances. The Managing Agent will provide to Guarantor a
copy of any proposed amendment, modification or waiver relating to this
Agreement not less than three (3) Business Days prior to the anticipated date
of execution thereof provided, however, that the failure of the Managing Agent
to provide such copy shall not affect the validity of the Guaranty or any
amendment, modification or waiver otherwise properly executed.
Section 9.2 Further Assurances. Each Borrower agrees to do such
further acts and things and to execute and deliver to the Managing Agent such
additional assignments, agreements, powers and instruments, as the Managing
Agent may reasonably require or deem advisable to carry into effect the
purposes of this Agreement or to better assure and confirm unto the Managing
Agent its rights, powers and remedies hereunder.
Section 9.3 Notices, etc. Except where telephonic instructions or
notices are authorized herein to be given, all notices, demands, instructions
and other communications required or permitted to be given to or made upon any
party hereto or any other Person shall be in writing and shall be personally
delivered or sent by registered or certified mail, postage prepaid, return
receipt requested, or by a reputable overnight or courier delivery service, or
by prepaid telegram (with messenger delivery specified in the case of a
telegram), or by telecopier, and shall be deemed to be given for purposes of
this Agreement, if by overnight or courier delivery service, on the day that
such writing is delivered, if by telecopy, on the day that such writing is sent
and if by mail, on the day which is two Business Days after the day such
writing is sent to the intended recipient thereof in accordance with the
provisions of this Section 9.3. Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this Section 9.3,
notices, demands, instructions and other
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communications in writing shall be given to or made upon the respective parties
hereto at their respective addresses (or to their respective telecopier
numbers) indicated below and, in the case of telephonic instructions or
notices, by calling the telephone number or numbers indicated for such party
below:
If to a particular Borrower, at its address as set forth on the
signature page hereto or on the most recent Additional Borrower
Agreement executed by such Borrower.
If to XXXXXXXXXX, in its individual capacity and as
Managing Agent:
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Attention: XXXXXXXXXX
Tel. No.: XXXXXXXXXX
Telecopier No.: XXXXXXXXXX
With copies to:
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Attention: XXXXXXXXXX
Tel. No. XXXXXXXXXX
Telecopier No.: XXXXXXXXXX
If to a particular Bank, at its address as set forth on the
signature page hereto or in any notice of assignment delivered to
each Borrower pursuant to Section 9.8(c) hereof.
Section 9.4 Costs, Expenses and Taxes. Each Borrower agrees
(without duplication) to pay all reasonable costs and expenses in connection
with the negotiation, preparation, printing, typing, reproduction, execution
and delivery of this Agreement, the Notes and the other Loan Documents, any
amendment or modifications of (or supplements to) any of the foregoing and any
and all other documents furnished pursuant hereto or thereto or in connection
herewith or therewith, including without limitation the reasonable fees and
out-of-pocket expenses of XXXXXXXXXX, special counsel to the Banks, and
any local counsel retained by the Managing Agent relative thereto or (but not
as well as) the reasonable allocated costs of staff counsel as well as the fees
and out-of-pocket expenses of counsel, independent public accountants and other
outside experts retained by the Managing Agent in connection with
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the administration of this Agreement, and all search fees, appraisal fees and
expenses, title insurance policy fees, costs and expenses and filing and
recording fees and all costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses or (but not as well as) the reasonable
allocated costs of staff counsel), if any, in connection with the enforcement
of this Agreement, the Loan Obligations, the Notes, any other Loan Document or
any other agreement furnished pursuant hereto or thereto or in connection
herewith or therewith. In addition, the appropriate Borrower shall pay any and
all stamp, transfer and other similar taxes payable or determined to be payable
in connection with the execution and delivery of this Agreement, the Notes, any
other Loan Document or the making of any Loan, and each Borrower agrees to save
and hold the Managing Agent and each Bank harmless from and against any and all
liabilities with respect to or resulting from any delay in paying, or omission
to pay, such taxes. Any portion of the foregoing fees, costs and expenses
which remains unpaid within two (2) days of the next Monthly Borrowing Date
which is at least ten (10) Business Days after any Bank's statement and request
for payment thereof shall bear interest from the date of such statement and
request to the date of payment at the Default Rate. The appropriate Borrower
will indemnify and hold harmless each Bank and the Managing Agent and each
director, officer, employee and Affiliate of each Bank and the Managing Agent
from and against all losses, claims, damages, expenses or liabilities to which
such Bank or the Managing Agent or such director, officer, employee or
affiliated Person may become subject, insofar as such losses, claims, damages,
expenses or liabilities (or actions, suits or proceedings including any inquiry
or investigation or claims in respect thereof) arise out of, in any way relate
to, or result from the transactions contemplated by this Agreement or any of
the other Loan Documents and to reimburse each of the Banks and the Managing
Agent and each such director, officer, employee or affiliated Person, upon
their demand, for any reasonable legal or other expenses (or (but not as well
as) the reasonable allocated costs of staff counsel) incurred in connection
with investigating, preparing to defend or defending any such loss, claim,
damage, liability, action or claim; provided, however:
(i) that no Bank shall have the right to be so
indemnified hereunder for its own gross negligence or willful
misconduct or bad faith or breach of this Agreement as finally
determined by a court of competent jurisdiction after all appeals
and the expiration of time to appeal, and
(ii) that nothing contained herein shall affect
the obligations and liabilities of the Banks to each Borrower
contained herein.
If any action, suit or proceeding arising from any of the foregoing is brought
against the Managing Agent, any Bank or any other Person indemnified or
intended to be indemnified pursuant to this
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Section 9.4, the appropriate Borrower will, if requested by the Managing Agent,
any Bank or any such indemnified Person, resist and defend such action, suit or
proceeding or cause the same to be resisted and defended by counsel reasonably
satisfactory to the Person or Persons indemnified or intended to be
indemnified. Each indemnified Person shall, if the Managing Agent, a Bank or
other indemnified Person has made the request described in the preceding
sentence and such request has not been complied with, have the right to employ
its own counsel (or (but not as well as) staff counsel) to investigate and
control the defense of any matter covered by such indemnity and the reasonable
fees and expenses of such counsel shall be at the expense of the indemnifying
party. If any Borrower shall fail to do any act or thing which it has
covenanted to do hereunder or any representation or warranty on the part of any
Borrower contained herein shall be breached, the Managing Agent may (but shall
not be obligated to) do the same or cause it to be done or remedy any such
breach, and may expend its funds for such purpose, and will use its best
efforts to give prompt written notice to the appropriate Borrower and the
Guarantor that it proposes to take such action. Any and all amounts so
expended by the Managing Agent shall be repayable to it by the appropriate
Borrower promptly upon the Managing Agent's demand therefor and shall be
considered a Loan hereunder; provided that, such Borrower may request
reasonable supporting information with respect to any such payment demanded.
If any such amount is not reimbursed to the Managing Agent within two (2) days
of the next Monthly Borrowing Date which is at least ten (10) Business Days
after demand therefor, or, if such supporting information is so requested,
within the date when such supporting information is provided to the applicable
Borrower, the unpaid amount outstanding and due shall bear interest for all
periods thereafter until paid at the Prime Rate in effect from time to time.
Notwithstanding the foregoing, during any period while a Guarantor Event of
Default or a Borrower Event of Default with respect to such Borrower shall have
occurred and be continuing, any amounts repayable to the Managing Agent which
are outstanding after demand therefore shall bear interest at the Default Rate
in effect from time to time. The obligations of each Borrower under this
Section 9.4 shall survive the termination of this Agreement and the discharge
of such Borrower's other obligations hereunder.
Section 9.5 Confirmations. Each Borrower and each holder of any
Note agree from time to time, upon written request received by one from the
other or from Guarantor, to confirm to the other or Guarantor, as the case may
be, in writing (with a copy of each such confirmation to the Managing Agent)
the aggregate unpaid principal amount of any Loan Obligation then outstanding.
Section 9.6 Adjustment; Set-off. (a) If any Bank (a "Benefitted
Bank") shall at any time receive any payment of all or part of its Loans, or
interest thereon, or receive any collateral (or proceeds thereof) in respect
thereof (whether voluntarily or involuntarily, by set-off, pursuant to events
or proceedings of the
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nature referred to in Sections 7.1(c), 7.1(d), 7.2(e) or 7.2(f), hereof, or
otherwise) in a greater proportion than any such payment to and collateral (or
proceeds thereof) received by any other Bank in respect of such other Bank's
Loans or interest thereon, such Benefitted Bank shall purchase for cash from
the other Banks such portion of each such other Bank's Loans, or shall provide
such other Banks with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such Benefitted Bank to share the
excess payment or benefits of such collateral or proceeds ratably with each of
the Banks; provided, however, that if all or any portion of such excess payment
or benefits is thereafter recovered from such Benefitted Bank, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest. Each Borrower agrees that each Bank so
purchasing a portion of another Bank's Loans may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Bank were the direct holder of such portion.
(b) In addition to any rights and remedies of the Banks provided
by law, each Bank shall have the right, without prior notice to any Borrower,
any such notice being expressly waived by each Borrower, upon the filing of a
petition under any of the provisions of the federal bankruptcy act or
amendments thereto, by or against, or the occurrence of a Guarantor Event of
Default or Borrower Event of Default with respect to, the making of an
assignment for the benefit of creditors by, the application for the
appointment, or the appointment, of any receiver of, or of any of the property
of, the issuance of any execution against any of the property of, the issuance
of a subpoena or order, in supplementary proceedings, against or with respect
to any of the property of, or the issuance of a warrant of attachment against
the property of, the appropriate Borrower, to set-off and apply against any
Indebtedness, whether matured or unmatured, of the appropriate Borrower to such
Bank, any amount owing from such Bank to each such Borrower, at or at any time
after, the happening of any of the above-mentioned events, and the aforesaid
right of set-off may be exercised by such Bank against each such Borrower or
against any trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receivers, or execution, judgment or attachment creditor
of each such Borrower, or against anyone else claiming through or against each
such Borrower or such trustee in bankruptcy, debtor in possession, assignee for
the benefit of creditors, receivers, or execution judgment or attachment
creditor, notwithstanding the fact that such right of set-off shall not have
been exercised by such Bank prior to the making, filing or issuance, or service
upon such Bank of, or of notice of, any such petition, assignment for the
benefit of creditors, appointment or application for the appointment of a
receiver, or issuance of execution, subpoena, order or warrant. Each Bank
agrees promptly to notify the appropriate Borrower, as the case may be, and the
Managing Agent after any such set-off and application made by such Bank,
provided that the failure to give
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such notice shall not affect the validity of such set-off and application.
Each Borrower expressly agrees that to the extent such Borrower makes
a payment or payments hereunder or under any Note and such payment or payments,
or any part thereof, are subsequently invalidated, declared to be fraudulent or
preferential, set aside or are required to be repaid to a trustee, receiver, or
any other party under any bankruptcy act, state or federal law, common law or
equitable cause, then to the extent of such payment or repayment, the
Indebtedness to the Banks or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if said payment or payments
had not been made.
Section 9.7 Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together,
shall constitute but one and the same Agreement.
Section 9.8 Binding Effect; Assignment; Addition and Substitution of
Banks.
(a) This Agreement shall be binding upon, and inure to the benefit
of, each Borrower, the Managing Agent, the Banks, all future holders of the
Notes and their respective successors and assigns; provided, however, that,
except as set forth in Section 9.8(e) below, no Borrower may assign its rights
or obligations hereunder or in connection herewith or any interest herein
(voluntarily, by operation of law or otherwise) without the prior written
consent of all of the Banks.
(b) Each Bank may at any time sell to one or more banks or other
entities ("Participants") participating interests in all or any portion of its
Loan Commitment and Loans made pursuant to this Agreement or any other interest
of such Bank hereunder or under any Note (in respect of any Bank, its "Credit
Exposure"), provided that it sells participating interests in its Credit
Exposure ratably according to all facilities comprising its Credit Exposure,
and provided, further that, notwithstanding the foregoing, any Bank may at any
time sell participating interests in all or a part of its Credit Exposure to
any Affiliate of such Bank or to any other Bank. In the event of any such sale
by a Bank of participating interests to a Participant, such Bank's obligations
under this Agreement shall remain unchanged, such Bank shall remain solely
responsible for the performance thereof, such Bank shall remain the holder of
any such Notes for all purposes under this Agreement and each Borrower and the
Managing Agent shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this Agreement. Each
Borrower agrees that if amounts outstanding under this Agreement and the Notes
are due or unpaid,
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or shall have been declared or shall have become due and payable upon the
occurrence of a Guarantor Event of Default or Borrower Event of Default, each
Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement and any Note to
the same extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement or any Note, provided that such
right of setoff shall be subject to the obligation of such Participant to share
with the Banks, and the Banks agree to share with such Participant, as provided
in Section 9.6. Each Borrower also agrees that each Participant shall be
entitled to the benefits of Sections 2.9 and 2.10 with respect to its
participation in the Loans outstanding from time to time. Each Bank agrees
that any agreement between such Bank and any such Participant in respect of
such participating interest shall not restrict such Bank's right to agree to
any amendment, supplement or modification to the Agreement or any of the Loan
Documents except to extend the final maturity of any Note or reduce the rate or
extend the time of payment of interest thereon or reduce the principal amount
thereof.
(c) Any Bank may at any time assign to one or more Eligible
Assignees all or any part of its Credit Exposure, provided that (i) it assigns
its Credit Exposure ratably according to all facilities comprising its Credit
Exposure, (ii) it assigns its Credit Exposure in an amount not less than $5
million, and (iii) such Eligible Assignee pays to the Managing Agent an
assignment fee of $3,000. Each Borrower and the Banks agree that to the extent
of any assignment to an Eligible Assignee in accordance with the foregoing
sentence, the assignee (the "Assignee") shall be deemed to have the same rights
and benefits with respect to each Borrower under this Agreement and any Notes
and the same rights of setoff and obligation to share pursuant to Section 9.6
as it would have had if it were a Bank hereunder, provided that each Borrower
and the Managing Agent shall be entitled to continue to deal solely and
directly with the assignor Bank in connection with the interests so assigned to
the Assignee until written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to each Borrower and the Managing Agent by the assignor
Bank and the Assignee (accompanied, in the case of the Managing Agent, by
payment of the assignment fee). Upon the assignment of Credit Exposure
provided for hereby, the assignor Bank shall be relieved of its obligations
hereunder to the extent of such assignment and the assignee shall become a
Bank hereunder. In the event that the holder of any Note (including any Bank)
shall assign or transfer such Note as permitted hereby, or any part of the
obligations evidenced thereby, the applicable Borrower shall, upon surrender of
such Note, issue new Notes to reflect such transfer or assignment payable to
the order of the relevant parties as their respective interests may appear;
provided that such Borrower and the Managing Agent shall be entitled to
continue to deal solely and directly with the assignor holder of such Note in
connection with the interests
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so assigned until written notice of such assignment shall have been given to
such Borrower and the Managing Agent by the assignor and the assignee of such
Note or interest therein.
(d) Each Borrower authorizes each Bank to disclose to any
Participant or Assignee and any prospective Participant or Assignee the terms
and provisions of the Loan Documents and any and all financial information in
such Bank's possession concerning such Borrower and any Subsidiary of such
Borrower which has been delivered to such Bank by such Borrower pursuant to
this Agreement or which has been delivered to such Bank by such Borrower in
connection with such Bank's credit evaluation of such Borrower prior to
entering into this Agreement.
(e) Any Borrower may, upon not less than thirty (30) days prior
written notice to the Managing Agent, at any time prior to the occurrence and
continuance of a Guarantor Event of Default, assign to another Borrower
hereunder ("Assignee Borrower") all, but not less than all of the assigning
Borrower's rights and obligations with respect to any Project Loan hereunder,
provided, that: (i) such Assignee Borrower shall have assumed all of the
assigning Borrower's Obligations hereunder and shall have received good and
marketable title to all of the assets of such Borrower with respect to such
Project (subject only to Permitted Liens); (ii) such Assignee Borrower shall
have executed and delivered to each affected Bank Notes of such Assignee
Borrower evidencing the obligations being assumed, which Notes shall be in
substantially the form of the Notes previously issued by the transferor
Borrower evidencing such obligations, with such changes and additions thereto
as the Banks may reasonably require; (iii) the representations and warranties
contained in this Agreement with respect to such Assignee Borrower shall each
be true and correct in all material respects at and as of such time of
assignment, as though made on and as of such time; (iv) no Borrower Event of
Default or Unmatured Borrower Event of Default with respect to such Assignee
Borrower shall have occurred and be continuing on such date or will occur after
giving effect to such assignment; (v) the Managing Agent shall have received an
assignment and assumption agreement with respect to such assignment executed by
the relevant Borrowers in form and substance satisfactory to the Managing
Agent; (vi) the Managing Agent shall have received the written consent of
Guarantor to such assignment; and (vi) such assignment and assumption shall, in
all other respects be reasonably satisfactory to the Managing Agent. The
Borrowers, the Managing Agent and the Banks agree that to the extent of any
assignment to an Assignee Borrower in accordance with the terms of this Section
9.8(e), the Assignee Borrower shall be deemed to have the same rights, benefits
and obligations as the Borrower assigning such rights, benefits and obligations
as if such Assignee Borrower had originally incurred the Loan Obligations so
assigned.
(f) In the event that the holder of any Note (including any Bank)
shall transfer such Note in accordance with the terms
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hereof, it shall immediately advise the Managing Agent and the applicable
Borrower of such transfer, and the Managing Agent and the applicable Borrower
shall be entitled conclusively to assume that no transfer of any Note has been
made by any holder (including any Bank) unless and until Managing Agent and
such Borrower shall have received written notice to the contrary. Except as
otherwise provided in this Agreement or as otherwise expressly agreed in
writing by all of the other parties hereto, no Bank shall, by reason of the
transfer of a Note or otherwise, be relieved of any of its obligations
hereunder. Each transferee of any Note shall take such Note subject to the
provisions of this Agreement and to any request made, waiver or consent given
or other action taken hereunder, prior to the receipt by the Managing Agent and
the applicable Borrower of written notice of such transfer, by each previous
holder of such Note, and, except as expressly otherwise provided in such
transfer by each previous holder of such Note, and, except as expressly
otherwise provided in such notice, the Managing Agent and the applicable
Borrower shall be entitled conclusively to assume that the transferee named in
such notice shall thereafter be vested with all rights and powers under this
Agreement with respect to the Pro Rata Share of the Loans of the Bank named as
the payee of the Note which is the subject of such transfer.
(g) Notwithstanding any other language in this Agreement, a Bank
may at any time assign all or any portion of its rights under this Agreement
and the Notes to a Federal Reserve Bank as collateral in accordance with
Regulation A of the Board of Governors of the Federal Reserve System and the
applicable operating circular of such Federal Reserve Bank, provided, however,
the Bank shall remain solely and exclusively responsible for its obligations
under this Agreement and the Notes.
Section 9.9 Consent to Jurisdiction. Each Borrower hereby irrevocably
submits to the nonexclusive jurisdiction of any United States Federal or New
York State court sitting in New York City in any action or proceeding arising
out of or relating to this Agreement or any other Loan Document, and each
Borrower hereby irrevocably agrees that all claims in respect of such action or
proceeding shall be heard and determined in any such United States Federal or
New York State court and each Borrower irrevocably waives 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 such respective jurisdictions.
Nothing herein shall affect the right of the Managing Agent or any of the Banks
to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against any Borrower in any other
jurisdiction. As a method of service, each Borrower also irrevocably consents
to the service of any and all process in any such action or proceeding brought
in any court in or of the State of New York by the delivery of copies of such
process to such
-75-
<PAGE> 82
Borrower, at its address specified in Section 9.4 hereof or by certified mail
direct to such address.
Section 9.10 Governing Law. This Agreement, the Notes and each Loan
Obligation shall be deemed to be a contract made under the laws of the State of
New York, and for all purposes shall be construed in accordance with the laws
of said State, without regard to principles of conflicts of law. Nothing
contained in this Agreement and no action taken by the Managing Agent or any
Bank pursuant hereto shall be deemed to constitute the Managing Agent or the
Banks a partnership, an association, a joint venture or other entity.
Section 9.11 Severability of Provisions. Any provision of this
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 or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 9.12 Borrower Termination. Any Borrower may, upon the
delivery to the Managing Agent of a Borrower Termination Agreement, cease to be
a party hereto, if such Borrower's Obligations hereunder and all Notes
evidencing the same have been paid in full or assigned to another Borrower in
accordance with the provisions of Section 9.8(e) and all Project Commitments
with respect to such Borrower have been terminated; provided, however, that
such Borrower's obligations under Sections 2.10, 8.5, 9.4, 9.6, 9.9 and 9.13
shall survive the termination of such Borrower.
Section 9.13 Waiver of Jury Trial. THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN CONNECTION WITH ANY
ACTION UNDER OR COUNTERCLAIM RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT.
Section 9.14 Headings. The Table of Contents and Article and Section
headings used in this Agreement are for convenience of reference only and shall
not affect the construction of this Agreement.
[signature pages follow]
-76-
<PAGE> 83
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
<TABLE>
<S> <C>
ADDRESS FOR NOTICES
XXXXXXXXXX XXXXXXXXXX, A MICHIGAN
XXXXXXXXXX GENERAL PARTNERSHIP
XXXXXXXXXX
XXXXXXXXXX By: BIG BEAVER DEVELOPMENT
Attn: XXXXXXXXXX CORPORATION, a Michigan
corporation, and its general
with a copy to: partner
/s/
Kmart Corporation By: --------------------------
3100 West Big Beaver Road Its: President
Troy, MI 48084 -------------------------
Attn: Michael E. Dowdle and
---
By: XXXXXXXXXX, a Michigan
limited partnership and its
managing general partner
By: XXXXXXXXXX, a Michigan
corporation and its sole
general partner
/s/
By: --------------------------
Its: President
-------------------------
Kmart Corporation KMART CORPORATION
3100 West Big Beaver Road /s/
Troy, MI 48084 By: ------------------------------
Attn: Michael E. Dowdle Its: Senior Vice President
-----------------------------
</TABLE>
-77-
<PAGE> 84
[BANK SIGNATURE PAGES INTENTIONALLY DELETED]
<PAGE> 85
[Exhibits and Schedules Intentionally Omitted]
<PAGE> 1
EXHIBIT 99.37
FIRST AMENDMENT TO LOAN AGREEMENT
This First Amendment dated as of January 21, 1992 (this
"Amendment"), is entered into by and among the Borrowers, the undersigned
financial institutions and XXXXXXXXXX, as Managing Agent. Capitalized terms
used but not otherwise defined herein shall have the meanings ascribed thereto
in the Loan Agreement.
WHEREAS, the Borrowers, the Banks and the Managing Agent have
entered into that certain Loan Agreement dated as of January 21, 1992 (the
"Loan Agreement") among the Borrowers (as defined therein), the financial
institutions signatory thereto, (collectively, the "Banks") and XXXXXXXXXX,
as managing agent (the "Managing Agent") for the Banks; and
WHEREAS, the parties hereto desire to amend the Loan
Agreement as hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the
agreements set forth herein, the parties hereto agree as follows:
Section 1. Amendment. The parties hereto agree that:
1.1 The definition of "Borrower" is amended to add the
words "or Kmart Corporation" after the word "XXXXXXXXXX" where it first appears
in such definition.
1.2 Section 4.1 of the Loan Agreement is hereby amended
by adding the following parenthetical immediately after the words "Each
Borrower" in the first sentence thereof:
"(Other than Kmart Corporation as to Section 4.1(c),
4.1(f) and 4.1(1))"
1.3 Section 5.2 of the Loan Agreement is hereby amended
by adding the following parenthetical after the words "Such Borrower" in the
first sentence thereof: ("other than Kmart Corporation").
Section 2. Representations and Warranties. The Borrowers
represent and warrant to the Banks that the following statements are true,
correct and complete:
2.1 Corporate Power and Authority. Each of the
Borrowers has all requisite corporate power and authority to
enter into this Amendment and the Loan Agreement as
amended hereby and to carry out the transactions contemplated
by, and perform its obligations under, the Loan Agreement as
amended by this Amendment (the "Amended Loan Agreement").
<PAGE> 2
2.2 Authorization of Agreements. The execution, delivery
and performance of this Amendment, and the performance of the
Amended Loan Agreement have been duly authorized by all
necessary corporate action by each of the Borrowers.
2.3 Incorporation of Warranties From Loan Agreement. The
representations and warranties contained in Section 4.1 of
the Loan Agreement, as modified by the Amendment, are and
will be true, correct and complete in all material respects on
and as of the date hereof to the same extent as though made on
and as of the date hereof, except to the extent that such
representations and warranties specifically relate to an
earlier date, in which case they are true, correct and
complete in all material respects as of such earlier date.
Section 3. Reference to and Effect on the Loan Agreement and
other Loan Documents.
3.1 On and after the effective date hereof, each
reference in the Loan Agreement to "this Agreement,"
"hereunder", "hereof", "herein" or words of like import
referring to the Loan Agreement and each reference in the
other Loan Documents to the "Loan Agreement", "thereunder",
"thereof", or words of like import referring to the Loan
Agreement shall mean and be a reference to the Loan Agreement
as amended by this amendment.
3.2 Except as specifically amended by this Amendment, the
Loan Agreement, the Notes and the other Loan Documents shall
remain in full force and effect and are hereby ratified and
confirmed.
Section 4. Execution and Counterparts; Effectiveness. This
Amendment may be executed in any number of counterparts, and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts taken together
shall constitute but one and the same instrument. This amendment shall become
effective as of the date hereof upon the execution of a counterpart hereof by
each Borrower, Guarantor, Required Banks and receipt by Managing Agent of
written or telephonic notice of such execution and authorization of delivery
thereof.
Section 5. Applicable law. This Amendment and the rights and
obligations of the parties hereto and all other aspects hereof shall be deemed
made under, shall be governed by, and shall be construed and enforced in
accordance with, the laws of the State of New York, without regard to
principles of conflicts of law.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the date first above written, by their
respective officers thereunto duly authorized.
XXXXXXXXXX, a Michigan
general partnership
By: BIG BEAVER DEVELOPMENT CORPORATION,
a Michigan corporation, and its
general partner
By: /s/
---------------------------------
Its: President
--------------------------------
and
By: XXXXXXXXXX, a Michigan limited partners
hip and its managing general partner
By: XXXXXXXXXX, a Michigan
corporation and its sole
general partner
By:
--------------------------------
Its:
-------------------------------
KMART CORPORATION
By: /s/
--------------------------------------
Its: Senior Vice President
-------------------------------------
-3-
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the date first above written, by their
respective officers thereunto duly authorized.
XXXXXXXXXX, a Michigan
general partnership
By: BIG BEAVER DEVELOPMENT CORPORATION,
a Michigan corporation, and its
general partner
By: /s/
----------------------------------
Its: President
---------------------------------
and
By: XXXXXXXXXX, a Michigan limited
partnership and its managing general
partner
By: XXXXXXXXXX, a Michigan
corporation and its sole
general partner
By: /s/
---------------------------------
Its:
--------------------------------
KMART CORPORATION
By: /s/
------------------------------------------
Its: Senior Vice President
-----------------------------------------
-3-
<PAGE> 5
[BANK SIGNATURE PAGES INTENTIONALLY OMITTED]
<PAGE> 6
ACKNOWLEDGEMENT AND CONSENT OF GUARANTOR
Kmart Corporation, in its capacity as Guarantor ("Guarantor") under that
certain Guaranty Agreement dated as of January 21, 1992 (the "Guaranty"), made
by Guarantor in favor of the Lenders (as such term is defined therein) hereby
consents to the Amendment dated as of January 21, 1992 and agrees that the
Guaranty and each other Loan Document to which it is a party shall continue in
full force and effect and shall be valid and enforceable and shall not be
impaired or affected by the execution of this Amendment. Guarantor hereby
acknowledges receipt of all notifications of such amendment in accordance with
the terms of the Loan Agreement.
Kmart Corporation
By: /s/
---------------------------------
Its: Senior Vice President
--------------------------------
<PAGE> 1
EXHIBIT 99.38
SECOND AMENDMENT TO LOAN AGREEMENT
This Second Amendment dated as of February 14, 1992 (this "Amendment"),
is entered into by and among the Borrowers, the undersigned financial
institutions and XXXXXXXXXX, as Managing Agent. Capitalized terms used but
not otherwise defined herein shall have the meanings ascribed thereto in the
Loan Agreement (as hereinafter defined).
WHEREAS, the Borrowers, the Banks and the Managing Agent have entered into
that certain Loan Agreement (the "Loan Agreement") dated as of January 21, 1992
as amended by that certain First Amendment to Loan Agreement dated as of
January 21, 1992 among the Borrowers (as defined therein), the financial
institutions signatory thereto, (collectively, the "Banks") and XXXXXXXXXX,
as managing agent (the "Managing Agent") for the Banks; and
WHEREAS, the parties hereto desire to amend the Loan Agreement as
hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the agreements set
forth herein, the parties hereto agree as follows:
Section 1. Amendment. The parties hereto agree that paragraph (iv) of
Section 2.8(a) of the Loan Agreement is hereby amended by deleting such
paragraph in its entirety and substituting therefor the following:
"(iv) no Borrower may have more than three (3) Eurodollar Tranches for any
single Project at any one time outstanding one of which shall have an
Interest Period of approximately one month."
Section 2. Representations and Warranties. The Borrowers represent
and warrant to the Banks that the following statements are true, correct and
complete:
2.1 Corporate Power and Authority. Each of the Borrowers has all
requisite corporate power and authority to enter into this Amendment and
the Loan Agreement as amended hereby and to carry out the transactions
contemplated by, and perform its obligations under, the Loan Agreement as
amended by this Amendment (the "Amended Loan Agreement").
2.2 Authorization of Agreements. The execution, delivery and performance
of this Amendment, and the performance of the Amended Loan Agreement have
been duly authorized by all necessary corporate action by each of the
Borrowers.
<PAGE> 2
2.3 Incorporation of Warranties From Loan Agreement. The representations
and warranties contained in Section 4.1 of the Loan Agreement, as modified
by the Amendment, are and will be true, correct and complete in all
material respects on and as of the date hereof to the same extent as
though made on and as of the date hereof, except to the extent that such
representations and warranties specifically relate to an earlier date, in
which case they are true, correct and complete in all material respects as
of such earlier date.
Section 3. Reference to and Effect on the Loan Agreement and other Loan
Documents.
3.1 On and after the effective date hereof, each reference in the Loan
Agreement to "this Agreement," "hereunder", "hereof", "herein" or words of
like import referring to the Loan Agreement and each reference in the
other Loan Documents to the "Loan Agreement", "thereunder", "thereof", or
words of like import referring to the Loan Agreement shall mean and be a
reference to the Loan Agreement as amended by this amendment.
3.2 Except as specifically amended by this Amendment, the Loan Agreement,
the Notes and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
Section 4. Execution and Counterparts; Effectiveness. This Amendment
may be executed in any number of counterparts, and by different parties hereto
in separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts taken together shall constitute
but one and the same instrument. This amendment shall become effective as of
the date hereof upon the execution of a counterpart hereof by each Borrower,
Guarantor, Required Banks and receipt by Managing Agent of written or
telephonic notice of such execution and authorization of delivery thereof.
Section 5. Applicable law. This Amendment and the rights and
obligations of the parties hereto and all other aspects hereof shall be deemed
made under, shall be governed by, and shall be construed and enforced in
accordance with, the laws of the State of New York, without regard to
principles of conflicts of law.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first above written, by their respective officers
thereunto duly authorized.
XXXXXXXXXX, a Michigan
general partnership
By: BIG BEAVER DEVELOPMENT
CORPORATION, a Michigan
corporation, and its general partner
By: /s/
---------------------------------
Its: President
---------------------------------
and
By: XXXXXXXXXX, a Michigan
limited partnership and its
managing general partner
By: XXXXXXXXXX, a Michigan
corporation and its sole
general partner
By: /s/
----------------------------
Its:
----------------------------
KMART CORPORATION
/s/
By: ----------------------------------
Its: Senior Vice President
---------------------------------
-3-
<PAGE> 4
[BANK SIGNATURE PAGES INTENTIONALLY OMITTED]
<PAGE> 5
ACKNOWLEDGMENT AND CONSENT OF GUARANTOR
Kmart Corporation, in its capacity as Guarantor ("Guarantor") under that
certain Guaranty Agreement dated as of January 21, 1992 (the "Guaranty"), made
by Guarantor in favor of the Lenders (as such term is defined therein) hereby
consents to the Amendment dated as of February 14, 1992 and agrees that the
Guaranty and each other Loan Document to which it is a party shall continue in
full force and effect and shall be valid and enforceable and shall not be
impaired or affected by the execution of this Amendment. Guarantor hereby
acknowledges receipt of all notifications of such amendment in accordance with
the terms of the Loan Agreement.
Kmart Corporation
By: /s/
------------------------------------
Its: Senior Vice President
------------------------------------
-8-
<PAGE> 1
EXHIBIT 99.39
THIRD AMENDMENT TO LOAN AGREEMENT
This Third Amendment to Loan Agreement (this "Amendment") is
dated as of December 20, 1994 and is made by and among the
"Borrowers" (as hereinafter defined), the undersigned financial
institutions (collectively, the "Banks") and XXXXXXXXXX,
as Managing Agent (the "Agent").
W I T N E S S E T H:
WHEREAS, Kmart Corporation and certain other entities
(collectively, the "Borrowers"), the Banks and the Agent are
parties to that certain Loan Agreement dated as of January 21, 1992
(as amended, modified or supplemented and in effect from time to
time, the "Loan Agreement") pursuant to which the Banks have
provided to the Borrowers certain credit facilities; and
WHEREAS, the Borrowers have requested that the Loan Agreement
be amended in certain respects set forth herein and the Banks
and the Agent are agreeable to the same, subject to the terms
and conditions hereof;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants contained herein, and other good and
valuable consideration the receipt and adequacy of which
are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. Terms capitalized herein and not otherwise
defined herein are used with the meanings ascribed to such terms
in the Loan Agreement.
2. Amendment of Loan Agreement. The Loan Agreement is hereby
amended, effective on the Third Amendment Effective Date,
as follows:
(A) Amendments to Definitions. Section 1.1 of the
Loan Agreement is amended by amending and restating the
definitions of "Guarantor Restructuring" in its entirety as
follows:
"Guarantor Restructuring" means any of: (a) any
merger or consolidation of the Guarantor with any other
Person, but excluding any merger or consolidation:
(i) in which the successor formed by or
resulting from such merger or consolidation is Kmart
Corporation or a Subsidiary of Kmart Corporation and,
if the survivor is a Subsidiary of Kmart Corporation,
such Subsidiary shall affirm the obligations of Kmart
Corporation under the Loan Documents in writing; and
(ii) occurring while no Unmatured Guarantor Event
of Default or Guarantor Event of Default exists; and
<PAGE> 2
(iii) which will not otherwise give rise to
or cause an Unmatured Guarantor Event of Default or a
Guarantor Event of Default;
and (b) any sale, assignment, lease, conveyance, transfer or
other disposition (whether in one or a series of transactions)
of any property (including accounts and notes receivable, with
or without recourse), but excluding any Permitted Disposition
of a Specialty Retail Subsidiary and also excluding any of the
following:
(i) dispositions of inventory, or used,
worn out or surplus equipment, all in the ordinary
course of business; and/or
(ii) the sale of equipment to the extent
that such equipment is exchanged for credit against
the purchase price of similar replacement equipment,
or the proceeds of such sale are reasonably promptly
applied to the purchase price of such replacement
equipment; and/or
(iii) dispositions of inventory or
equipment by Kmart Corporation to any Subsidiary
pursuant to reasonable business requirements; and/or
(iv) other dispositions of assets
having, in any fiscal year of Kmart Corporation, an
aggregate book value not exceeding 10% of Kmart
Corporation's consolidated total assets as of the end
of the most recently ended fiscal year of Kmart
Corporation, as reflected in Kmart Corporation's
balance sheet contained in its audited financial
statements for such fiscal year.
(B) New Definitions Added to Section 1.1. Section 1.1 of
the Loan Agreement is further amended by adding the following
additional definitions thereto in their proper alphabetical
places:
"Consolidated Net Worth" means as of the date
of any determination thereof, the consolidated net
worth of the Guarantor, determined in accordance with
generally accepted accounting principles consistently
applied; provided, however, that any gains or losses
from the disposition of any Specialty Retail
Subsidiary and any changes after October 7, 1994 in
the foreign currency translation adjustment account
as presented in the Guarantor's financial statements
(and in accordance with generally accepted accounting
principles consistently applied) shall be excluded
from the determination of Consolidated Net Worth.
-2-
<PAGE> 3
"EBITDAR" means, for any applicable period,
for the Guarantor the aggregate of the following,
without duplication: (a) consolidated net income for
such period, plus (b) consolidated interest expense
(net of any interest income) for such period, plus
(c) consolidated provision for taxes for such period,
plus (d) consolidated depreciation expense for such
period, plus (e) consolidated amortization expense
for such period, plus (f) consolidated Rent Expenses
for such period, minus (or plus, as applicable) (g)
on a consolidated basis, any extraordinary gains (or
plus extraordinary losses) for such period, minus (or
plus, as applicable) (h) any gains (or plus any
losses) attributable to the Specialty Retail
Subsidiaries for such period other than results of
operations in the ordinary course of business, plus
(i) solely with respect to the four fiscal quarter
period ending in October, 1994, the $1.348 billion
restructuring charge recorded in the fourth fiscal
quarter of the Guarantor's fiscal year ending January
26, 1994.
"Permitted Disposition of a Specialty Retail
Subsidiary" means any sale of all, substantially all,
or a part of the capital stock of, or of all,
substantially all or a part of the assets of, any
Specialty Retail Subsidiary, even if such an entity
is no longer a Subsidiary of Kmart Corporation at the
time in question, if (a) consideration received is
fair market value (as determined by Kmart
Corporation), or (b) Kmart Corporation's board of
directors deems such transaction to be necessary by
reason of applicable laws, regulations or
governmental policies applicable to Kmart
Corporation.
"Rent Expenses" means, for any period,
consolidated rent expense of the Guarantor for such
period, determined in accordance with generally
accepted accounting principles consistently applied,
less consolidated rental income for such period.
"Third Amendment" means that certain Third
Amendment to Loan Agreement dated as of December 20,
1994, by and among the Borrowers, the Banks and the
Managing Agent.
"Third Amendment Effective Date" means the
date upon which each of the conditions precedent set
forth in Section 4 of the Third Amendment have been
met.
"Specialty Retail Subsidiary" means any of
the following Subsidiaries of the Guarantor (or the
continuing investment of the Guarantor in any such
entity): Builders Square, Inc.; Borders Group, Inc.;
Coles Myer Ltd.; OfficeMax, Inc.; PACE Membership
-3-
<PAGE> 4
Warehouse, Inc.; PayLess Drug Stores Northwest, Inc.;
and The Sports Authority, Inc.
(C) Amendment of Subsection 6.2(d). Subsection
6.2(d) of the Loan Agreement is amended and restated in its
entirety as follows:
(d) The long-term Indebtedness of the
Guarantor shall be rated BBB- or above by Standard &
Poor's Corporation and Baa3 or above by Moody's
Investors Service, Inc.
(D) Amendment of Subsection 7.1(a). Subsection
7.1(a) of the Loan Agreement is amended and restated in its
entirety as follows:
(a) Indebtedness of the Guarantor shall
be rated BB+ or lower by S&P or Bal or lower by
Moody's, or shall not be rated by either S&P
or Moody's.
(E) Amendment of Subsection 7.1(b). Subsection
7.1(b) of the Loan Agreement is amended by deleting the
references therein to "$40 million" and substituting in lieu
thereof references to "$100 million".
(F) Amendment of Subsection 7.1(f). Subsection
7.1(f) of the Loan Agreement is amended and restated in its
entirety as follows:
(f) Any Guarantor Restructuring shall occur; or
(G) Addition of New Subsections to Section 7.1.
Section 7.1 of the Loan Agreement is further amended by the
addition thereto of new subsections (h), (i) and (j) thereto
as follows:
(h) A final judgment or judgments in excess
of One Hundred Million Dollars ($100,000,000) shall
be entered against the Guarantor by a court of record
and not discharged in accordance with its terms or,
within sixty (60) days from the date of entry
thereof, stayed from execution and (within said
period of sixty (60) days or such longer period
during which execution of such judgment(s) shall have
been stayed) appeal taken therefrom and execution
thereof stayed during such appeal;
(i) The Guarantor shall permit its ratio of
(A) EBITDAR (measured as of the end of
any fiscal quarter of the Guarantor
ending after October 7, 1994 for the
four fiscal quarters then ended)
-4-
<PAGE> 5
to
(B) the sum of (1) consolidated net
interest expense of the
Guarantor for such four fiscal
quarter period plus (2)
consolidated Rent Expense for
such four fiscal quarter period
to be less than 1.50 to 1.00; or
(j) The Guarantor shall permit its
Consolidated Net Worth at any time to be less than Four
Billion Five Hundred Million Dollars ($4,500,000,000).
3. Borrowers' Representations and Warranties. In order
to induce the Banks and the Managing Agent to enter into this
Amendment, each Borrower hereby severally represents and
warrants, solely as to itself that:
(a) such Borrower has the right, power and
capacity and has been duly authorized and empowered by
all requisite corporate and shareholder action to enter
into, execute, deliver and perform this Amendment;
(b) this Amendment constitutes such Borrower's
legal, valid and binding obligation, enforceable against
it, except as enforcement thereof may be subject to the
effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights generally and general principles of
equity (regardless of whether such enforcement is sought
in a proceeding in equity or at law or otherwise);
(c) such Borrower's execution, delivery and
performance of this Amendment do not and will not
violate its Organizational Documents or any law, rule,
regulation, order, writ, judgment, decree or award
applicable to it or any contractual provision to which
it is a party or to which it or any of its property is
subject;
(d) no authorization or approval or other
action by, and no notice to or filing or registration
with, any governmental authority or regulatory body
(other than those which have been obtained and are in
force and effect) is required in connection with its
execution, delivery and performance of this Amendment;
and
(e) No Borrower Event of Default or Unmatured
Borrower Event of Default exists as to such Borrower as
of the date hereof under the Loan Agreement or would
exist after giving effect to the transactions
contemplated by this Amendment.
4. Conditions to Third Amendment's Effectiveness. The
effectiveness of this Third Amendment is specifically subject to
-5-
<PAGE> 6
the satisfaction of the following conditions precedent or
concurrent:
(a) No Defaults. No Unmatured Guarantor
Event of Default or Guarantor Event of Default under
the Loan Agreement (as amended hereby) shall have
occurred and be continuing.
(b) Execution of Amendment. Each
Borrower and each Bank shall have delivered to the
Agent a counterpart of this Amendment duly executed
by such Borrower or Bank.
(c) Guaranty Reaffirmation. The
Guarantor shall have executed and delivered to the
Agent a Reaffirmation Agreement in substantially the
form of Exhibit A hereto.
5. MISCELLANEOUS. The parties hereto hereby
further agree as follows:
(a) Costs, Expenses and Taxes. Kmart Corporation
hereby agrees to pay all reasonable fees, costs and expenses
of the Agent incurred in connection with the negotiation,
preparation and execution of this Amendment and the
transactions contemplated hereby, including, without
limitation, the reasonable fees and expenses of Winston &
Strawn, counsel to the Agent and the Banks.
(b) Counterparts. This Amendment may be
executed in one or more counterparts, each of which, when
executed and delivered, shall be deemed to be an original and
all of which counterparts, taken together, shall constitute
but one and the same document with the same force and effect
as if the signatures of all of the parties were on a single
counterpart, and it shall not be necessary in making proof of
this Amendment to produce more than one (1) such counterpart.
(c) Headings. Headings used in this Amendment
are for convenience of reference only and shall not affect the
construction of this Amendment.
(d) Integration. This Amendment and the Loan
Agreement (as amended hereby) and the Guaranty (as amended by
the Guaranty Amendment and Reaffirmation Agreement) constitute
the entire agreement among the parties hereto with respect to
the subject matter hereof.
(e) GOVERNING LAW. THIS AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK
(WITHOUT REFERENCE TO CONFLICT OF LAWS PRINCIPLES).
(f) Binding Effect. This Amendment shall be
binding upon and inure to the benefit of and be enforceable by
the Borrowers, the Agent and the Banks and their respective
successors and permitted assigns. This Amendment shall not be
construed so as to confer any
-6-
<PAGE> 7
right or benefit upon any Person other than the Borrowers, the
Agent and the Banks and their respective successors and
permitted assigns.
(g) Amendment; Waiver. The parties hereto agree
and acknowledge that nothing contained in this Amendment in
any manner or respect limits or terminates any of the
provisions of the Loan Agreement other than as expressly set
forth herein and further agree and acknowledge that the Loan
Agreement (as amended hereby) remains and continues in full
force and effect and is hereby ratified and confirmed. Except
to the extent expressly set forth herein, the execution,
delivery and effectiveness of this Amendment shall not operate
as a waiver of any rights, power or remedy of the Banks or the
Agent under the Loan Agreement, nor constitute a waiver of any
provision of the Loan Agreement. No delay on the part of any
Bank or the Agent in exercising any of their respective
rights, remedies, powers and privileges under the Loan
Agreement or partial or single exercise thereof, shall
constitute a waiver thereof. None of the terms and conditions
of this Amendment may be changed, waived, modified or varied
in any manner, whatsoever, except in accordance with Section
9.1 of the Loan Agreement.
[Balance of page left intentionally blank; signature pages
follow.]
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.
THE BORROWERS:
KMART CORPORATION
By: /s/
-------------------------------
Title: Vice President and Treasurer
----------------------------
XXXXXXXXXX, a Michigan
general partnership
By: BIG BEAVER DEVELOPMENT
CORPORATION, a Michigan
corporation, and its managing
general partner
By: /s/
-------------------------------
Its: President
-------------------------------
and
By: XXXXXXXXXX, a Michigan
limited partnership and its
managing general partner
By: XXXXXXXXXX, a Michigan
corporation and its sole
general partner
By: /s/
------------------------
Its:
-----------------------
-8-
<PAGE> 9
[Additional Borrower Signature Pages
Intentionally Omitted]
<PAGE> 10
[BANK SIGNATURE PAGES INTENTIONALLY OMITTED]
<PAGE> 11
[Exhibit A Intentionally Omitted]
<PAGE> 1
EXHIBIT 99.40
GUARANTY AGREEMENT
dated as of January 21, 1992
made by
KMART CORPORATION
in favor of
THE LENDERS REFERRED TO HEREIN
<PAGE> 2
GUARANTY AGREEMENT
GUARANTY AGREEMENT dated as of January 21, 1992 (as the same
may be amended, supplemented or otherwise modified from time to time, this
"Guaranty"), made by KMART CORPORATION, a Michigan corporation (the "Company"),
in favor of the Lenders (as hereinafter defined). Certain capitalized terms
used herein are defined in Section 1 of this Guaranty.
W I T N E S S E T H:
WHEREAS, the Company owns all of the issued and outstanding
capital stock of Big Beaver Development Corporation, a Michigan corporation
("Big Beaver"); and
WHEREAS, Big Beaver has, prior to the date hereof, entered
into certain joint venture agreements with XXXXXXXXXX ("XXXXXXXXXX"),
XXXXXXXXXX ("XXXXXXXXXX") and XXXXXXXXXX pursuant to which joint ventures
named the "XXXXXXXXXX", the "XXXXXXXXXX", the "XXXXXXXXXX" and the
"XXXXXXXXXX" have been created for the purpose of acquiring, owning,
developing, leasing, operating and managing shopping centers, as described
more fully in such joint venture agreements; and
WHEREAS, the Company intends that Big Beaver, or another
wholly-owned subsidiary of the Company, shall hereafter enter into additional
joint venture agreements, or other arrangements with some or all of XXXXXXXXXX,
XXXXXXXXXX and/or XXXXXXXXXX ("XXXXXXXXXX") pursuant to which additional
joint ventures, partnerships or corporations will be established, also for the
purpose of acquiring, owning, developing, leasing, operating and managing
shopping centers (such additional joint ventures, partnerships and corporations
being hereinafter collectively referred to as the "Additional Joint Ventures");
and
WHEREAS, the XXXXXXXXXX has entered into that certain
Loan Agreement dated as of the date hereof with XXXXXXXXXX and the "Banks"
(as such term is defined therein), XXXXXXXXXX as Managing Agent for the
Banks (collectively, XXXXXXXXXX as a Bank and as such managing agent, and the
other Banks are referred to herein as the "Lenders") pursuant to which the
Banks have agreed to extend credit to the 'Borrowers' (as defined in such Loan
Agreement), subject to the terms and conditions thereof (such Loan Agreement,
as the same may be amended, modified or supplemented from time to time, is
hereinafter referred to as the "Loan Agreement"); and
WHEREAS, the Loan Agreement contemplates that the 'Borrowers'
thereunder shall include the XXXXXXXXXX and such of the Additional Joint
Ventures as may hereafter become parties
2
<PAGE> 3
(ii) all other present and future obligations and
liabilities (whether absolute, fixed or contingent, matured or
unmatured, joint, several or independent and howsoever
acquired) of each and every Borrower to the Lenders or any of
them, arising out of or in any way relating to any and all of
the Loan Documents and the transactions contemplated thereby;
and
(iii) any obligation of any Borrower to any Lender
under any Interest Rate Agreement;
together with all reasonable costs (including, without limitation, reasonable
legal fees and disbursements) incurred by the Lenders in connection with
recovering the same from the Borrowers or the Company. In case of the failure
of any Borrower to duly, punctually and indefeasibly make any such payment in
full as and when due and payable, the Company hereby agrees to duly, punctually
and indefeasibly make such payment as and when the same shall become due and
payable, whether on the due date therefor, upon stated maturity, by
acceleration, upon demand or otherwise, in accordance with the terms of this
Guaranty.
(b) The Company hereby also absolutely, unconditionally
and irrevocably guaranties to each of the Lenders completion of construction of
each Project for which a Project Commitment is established under the Loan
Agreement, free and clear of all Liens which are not Permitted Liens
(including, without limitation, mechanics' and materialmen's liens) and in
accordance with and in the manner contemplated by the Loan Agreement, the
Project Budget for such Project and the plans, as amended by the applicable
Borrower from time to time, for such Project.
(c) The payment and performance obligations guarantied by
this Guaranty are herein sometimes referred to collectively as the "Guarantied
Obligations".
(d) The Company hereby agrees that, except as set forth
in Section 3 hereof, the Company's obligations hereunder shall be continuing,
absolute and unconditional under any and all circumstances and not subject to
any reduction, limitation, impairment, termination, defense (other than prior,
final and indefeasible payment of all of the Guarantied Obligations in full) ,
set-off, abatement, counterclaim or recoupment whatsoever (all of which are
hereby expressly waived by the Company), whether by reason of any claim of any
character whatsoever, including, without limitation, any claim of waiver,
release, surrender, alteration or compromise, or by reason of any liability at
any time to the Company or any Borrower or any of their respective Subsidiaries
or otherwise, whether based upon any agreement, instrument or document
evidencing or securing the Guarantied Obligations or any other agreement,
instrument or document (including, without limitation, this Guaranty) or
otherwise, and howsoever arising, whether out of
4
<PAGE> 4
action or inaction or otherwise and whether resulting from default, willful
misconduct, negligence or otherwise, and without limiting the foregoing,
irrespective of:
(i) any insolvency, bankruptcy, reorganization or
dissolution, or any proceeding in respect of any thereof, of
the Company, any Borrower, any of their respective
Subsidiaries or any other guarantor of all or any portion of
the Guarantied Obligations;
(ii) the genuineness, validity, regularity or
enforceability of any Loan Document or any other agreement,
instrument or document evidencing or securing the Guarantied
Obligations or any other agreement, instrument or document or
the extension or renewal thereof, in whole or in part, with or
without notice to or assent from the Company, any Borrower,
any of their respective Subsidiaries or any other guarantor of
all or any portion of the Guarantied Obligations;
(iii) any rescission, compromise, alteration,
amendment, modification, extension (including, without
limitation, any extension of the Facility Termination Date
whether pursuant to Section 3.10 of the Loan Agreement or
otherwise), renewal, release, change, waiver, consent or other
action in respect of any of the terms, provisions, covenants
or conditions contained in any Loan Document or any other
agreement, instrument or document evidencing or securing the
Guarantied obligations or in any other agreement, instrument
or document;
(iv) the absence of notice or the absence of or any
delay in any action to enforce any obligation or to exercise
any right or remedy against the Company, any Borrower, any of
their respective Subsidiaries or any other guarantor of all or
any portion of the Guarantied Obligations, whether under any
Loan Document or any other agreement, instrument or document
evidencing or securing the Guarantied Obligations or under any
other agreement, instrument or document, or any indulgence or
extension or waiver granted to or compromise with the Company,
any Borrower, any of their respective Subsidiaries or any
other guarantor of all or any portion of the Guarantied
Obligations, or any action or proceeding taken or not taken
with respect to or by or on behalf of the Company, any
Borrower, any of their respective Subsidiaries or any other
guarantor of all or any portion of the Guarantied Obligations,
or the holder of any agreement, instrument or document
evidencing or securing the Guarantied Obligations;
(v) any default, failure or delay in the
performance of any obligation, covenant, duty, representation,
warranty or agreement contained in any Loan Document or any
other agreement, instrument or document evidencing or securing
the
5
<PAGE> 5
Guarantied Obligations or in any other agreement, instrument or document, or
arising pursuant to law;
(vi) any act or thing or omission to do or delay in
doing any act or thing which might in any manner result in any
lack of proper authorization or any invalid execution of any
Loan Document or any other agreement, instrument or document
evidencing or securing the Guarantied Obligations or any other
agreement, instrument or document;
(vii) any assignment by any Borrower or any
assumption by any Person of any obligation under any Loan
Document or any other agreement, instrument or document
evidencing or securing the Guarantied Obligations or under any
other agreement, instrument or document;
(viii) any event of force majeure;
(ix) any release or substitution of any collateral
for, or any obligor in respect of, the payment of the
Guarantied Obligations or obligations under any Loan Document
or any other agreement, instrument or document, in whole or in
part, with or without notice to or assent from the Company,
any Borrower, any of their respective Subsidiaries or any
other guarantor of all or any portion of the Guarantied
Obligations;
(x) whether a lien or security interest on any
collateral shall have been perfected or shall continue to be
perfected, or whether any collateral shall be impaired in any
manner, or whether any steps shall have been taken to enforce
rights against the Company, any Borrower, any of their
respective Subsidiaries or any other guarantor of all or any
portion of the Guarantied Obligations or any collateral;
(xi) the status of any Borrower as an Eligible Borrower
under the Loan Agreement; or
(xii) any other circumstances which might constitute
a legal or equitable discharge or defense of a surety or
guarantor.
(e) The Company hereby:
(i) waives diligence, presentment, demand (of
payment or otherwise), protest, notice, filing of claims with
a court in the event of the merger or bankruptcy of any
Borrower or any of any Borrower's Subsidiaries, any right to
require a proceeding first against any Borrower or any other
guarantor of all or any portion of the Guarantied Obligations
or to marshall or realize on any collateral, with respect to
the Guarantied Obligations;
6
<PAGE> 6
(ii) agrees that its obligations hereunder constitute
guaranties of payment and not of collection and are not in any
way conditional or contingent upon any attempt to collect from
or enforce against any Borrower or any other guarantor of all
or any portion of the Guarantied Obligations or upon any other
condition or contingency;
(iii) acknowledges that any agreement, instrument or
document evidencing and/or securing the Guarantied Obligations
may be transferred (upon and subject to the terms and
conditions thereof) and that the benefit of the Company's
obligations hereunder shall extend to each holder of any
agreement, instrument or document evidencing and/or securing
the Guarantied Obligations automatically and without notice to
the Company;
(iv) covenants that, except as otherwise expressly
provided in Section 3 hereof, this Guaranty will not be
discharged except by final, complete, indefeasible and
irrevocable payment and performance of the obligations
contained in the agreements, instruments and documents
evidencing the Guarantied Obligations and this Guaranty; and
(v) waives acceptance of this Guaranty by any of the
Lenders.
(f) The Company further agrees that if at any
time all or any part of any payment theretofore applied by, or on behalf of,
any Lender to any of the Guarantied Obligations is, or must be, rescinded or
returned by such Lender for any reason whatsoever or such payment is declared
invalid, void, preferential or fraudulent for any reason whatsoever, including,
without limitation, the insolvency, bankruptcy or reorganization of any
Borrower, any of the Company's Subsidiaries or any other guarantor of all or
any portion of the Guarantied Obligations, such Guarantied Obligations or
applicable portion thereof, for purposes of this Guaranty, to the extent that
such payment is or must be rescinded or returned or is declared invalid, void,
preferential or fraudulent, shall be deemed to have continued in existence
notwithstanding such application, and this Guaranty shall continue to be
effective or be reinstated, as the case may be, as to such Guarantied
Obligations or applicable portion thereof as though such application had not
been made, irrespective of whether any note or other evidence of indebtedness
has been surrendered or cancelled.
(g) All payments by the Company under this Guaranty
shall be made without set-off or counterclaim and in such amounts as may be
necessary in order that all such payments (after deduction or withholding for
or on account of any present or future taxes, levies, imposts, duties or other
charges of whatsoever nature imposed by any government or any political
subdivision or taxing authority thereof, other than any tax on or measured by
the
7
<PAGE> 7
overall not income of a Bank pursuant to the income tax laws of the United
States of America or the jurisdictions where such Lender's principal or lending
offices are located (collectively the "Taxes")) shall not be less than the
amounts otherwise required to be paid under this Guaranty. A certificate as to
any additional amounts payable to a Lender under this Section 2(g) submitted to
the Company by such Lender shall show in reasonable detail the amount payable
and the calculations used to determine in good faith such amount and shall,
absent manifest error, be final, conclusive and binding upon the Company and
such Bank. With respect to each deduction or withholding for or on account of
any Taxes, the Company shall promptly furnish to each Bank such certificates,
receipts and other documents as may be reasonably required (in the judgment of
such Bank) to establish any tax credit to which such Bank may be entitled.
(h) All payments to be made by the Company in respect of
the Guarantied Obligations shall be made to the Managing Agent at its Payment
Office in New York, New York for the ratable account of the Banks not later
than 11:00 A.M. (New York time) on the date when due in each case in lawful
money of the United States of America and in immediately available funds. If
any payment hereunder becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day.
Section 3. Special Limitation. Notwithstanding the foregoing,
the obligations of Guarantor under clause (b) of Section 2 hereof shall be
terminated and of no further force and effect with respect to any Project as of
such time, if ever, as (a) the Loan or Loans relating to such Project have been
indefeasibly paid in full and (b) the Project Commitment for such Project has
been terminated.
Section 4. Subordination; Subrogation. The Company hereby
agrees that any indebtedness of any Borrower to the Company arising or accruing
out of any payment which the Company may make pursuant to this Guaranty shall
be fully subordinate and junior in priority in right of payment to any
indebtedness of such Borrower to the Lenders, and the Company shall have no
right of reimbursement or indemnity in respect of such payment whatsoever
unless and until all obligations of such Borrower to the Lenders shall have
been finally, completely, indefeasibly and irrevocably paid and performed in
full. The Company hereby further agrees that it shall have no rights of
subrogation with respect to any payments made by it hereunder.
Section 5. Regresentations and Warranties. The Company hereby
makes the following representations and warranties to the Lenders, which
representations and warranties shall survive the execution and delivery of this
Guaranty, the Loan Agreement and the other Loan Documents:
8
<PAGE> 8
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Michigan. The Company is
duly qualified and in good standing as a foreign corporation, and is duly
authorized to do business, in each jurisdiction where the ownership or leasing
of property or the character of its operations make such qualification
necessary and in which the failure to so qualify would have a material adverse
effect (individually or taken as a whole) on the business, condition (financial
or otherwise) assets, liabilities, operations or prospects of the Company and
its Subsidiaries.
(b) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Guaranty, and has taken
all necessary corporate and other action to authorize the execution, delivery
and performance by it of this Guaranty. This Guaranty is the legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforcement hereof may be subject to (i)
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar law affecting creditors' rights generally, and (ii) general
principles of equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law).
(c) The execution, delivery and performance by the
Company of this Guaranty will not:
(i) contravene any provision of law, statute, rule or
regulation to which the Company is subject or any judgment, decree,
award, franchise, order or permit applicable to the Company;
(ii) conflict or be inconsistent with, or result in any
breach of, any of the terms, covenants or provisions of, or constitute
a default under, or result in the creation or imposition of any lien
upon any of the properties or assets of the Company pursuant to the
terms of, any indenture, mortgage, deed of trust, agreement or other
instrument (including, without limitation, any Loan Document) to which
the Company is a party or by which it or any of its properties or
assets may be bound; or
(iii) violate any provision of its Certificate of Incorporation
or By-laws.
(d) No authorization or approval of, or other action by, and no
notice to or filing or registration with, any governmental authority or
regulatory body is required (other than those that have been obtained and are
in force and
9
<PAGE> 9
effect) in connection with the execution, delivery and performance by the
Company of this Guaranty or the taking of any action hereby contemplated.
(e) The Company is not and, after giving effect to the
transactions contemplated by this Guaranty, it will not be, in default in any
material respect under any material mortgage, indenture, lease, contract or
other agreement or undertaking to which it is a party or by which it or any of
its properties or assets may be bound.
(f) The Company is not in material default under any order, award
or decree of any court, arbitrator or governmental authority binding upon or
affecting it or by which any of its properties or assets may be bound or
affected, and no such order, award or decree would materially and adversely
affect the ability of the Company to carry on its business as presently
conducted or the ability of the Company to perform its obligations under this
Guaranty.
(g) There are no actions, suits, proceedings or investigations
pending or, to the knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries or any of its or their respective
properties or assets before any court, governmental agency or regulatory
authority (Federal, state or local), which, if determined adversely to the
Company or any such Subsidiary, would (individually or in the aggregate)
materially impair the Company's ability to perform fully its obligations under
this Agreement on a timely basis. Neither the Company nor any of its
Subsidiaries (A) is in default with respect to any order of any court,
arbitrator or governmental body or (B) has violated or is in violation of any
statute, rule or regulation of any governmental authority, the violation of
which would materially and adversely affect the business , condition (financial
or otherwise), assets, liabilities, operations or prospects of the Company and
its Subsidiaries (in the aggregate).
(h) Neither the Company nor any of its Subsidiaries is an
"investment company" or a company "controlled" by a company required to be
registered as an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 6. (Intentionally Omitted)
Section 7. Affirmative Covenants. The Company hereby
agrees that, unless otherwise consented to in writing by the Required Banks,
it will:
(a) Furnish to each Lender:
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<PAGE> 10
(i) as soon as possible and in any event within seven (7) days
after the Company shall have obtained knowledge of the occurrence of a
Guarantor Event of Default or Unmatured Guarantor Event of Default,
the written statement of an officer of the Company setting forth
the details of each such Guarnator Event of Default or Unmatured
Guarantor Event of Default which is continuing and the action which
the Company proposes to take with respect thereto (if any);
(ii) promptly upon the earlier of their distribution or the
filing thereof with the Securities and Exchange Commission ("SEC")
(and in no event later than 60 days after filing), copies of the
Company's annual reports on Form 10K (which shall in any event
be delivered by May 31 of each year for the year then ended), copies
of any quarterly report by the Company on Form 10Q, and any report on
Form 8K;
(iii) promptly upon obtaining knowledge thereof, notice of any
action, suit, proceeding or investigation pending or threatened
against or affecting the Company or any of its Subsidiaries or any of
their respective properties before any court, governmental
agency or regulatory authority (Federal, state or local), whcih, if
determined adversely to the Company or any of its Subsidiaries, could
have a material adverse effect on the ability of the Company to
perform its obligations under this Guaranty;
(iv) promptly upon obtaining knowledge thereof, notice of any
downgrade of the Company's long-term Indebtedness by Standard & Poor's
Corporation or Moody's Investors Service, Inc. or of being placed on
any credit watch;
(v) such other information respecting the properties, business
affairs, financial condition and/or operations of the Company as the
Managing Agent may from time to time reasonably request;
(b) Duly and punctually pay and perform each of its obligations
hereunder in accordance with the terms hereof;
(c) Preserve and maintain its corporate existence, rights, privileges
and franchises in the jurisdiction of its incorporation;
(d) Comply, and cause Big Beaver and each other Subsidiary of the
Company which at any time owns any ownership interest in any Borrower to
comply, with all laws, rules, regulations and governmental orders (Federal,
state and local)
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<PAGE> 11
having applicability to it or to its businesses, where the failure
to so comply would have a material adverse effect on the business,
condition (financial or otherwise), assets, liabilities, operations
or prospects of the Company and its subsidiaries (in the aggregate);
and
(e) Furnish to the Managing Agent within forty-five (45)
days after the and of each fiscal quarter of the Company, a
certificate of an officer of the Company certifying that no Guarantor
Event of Default or Unmatured Guarantor Event of Default has occurred
and is continuing (or, if any such default has occurred and is
continuing or if the Company is not in compliance with its
representatives, warranties, covenants and agreements in this Guaranty,
specifying the nature of such Guarantor Event of Default or
non-compliance and any action which the Company has taken or proposes
to take in respect thereof).
Section 8. Breach of Representations, Warranties or Covenants. In the
event that the Company shall fail to comply with any of its covenants or
agreements contained in this Guaranty and such failure shall continue
unremedied for five (5) days after written notice thereof has been given to the
Guarantor by the Managing Agent or if any representation or warranty contained
in this Guaranty shall be inaccurate or untrue in any material respect, then in
any such event and at any time thereafter (so long as such failure or
inaccuracy shall not have been cured or waived in accordance with Section
9(d)), the Managing Agent may, and at the direction of the Required Banks
shall, for purposes of this Guaranty, declare some or all of the obligations of
any Borrower under the Loan Agreement (whether or not then due under the Loan
Agreement) immediately due and payable as to the Company.
Section 9. Miscellaneous.
(a) THIS GUARANTY SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER THE INTERNAL LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS OF SAID
STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.
(b) Any provision of this Guaranty that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding
the foregoing, in lieu of such prohibited or unenforceable provision, there
shall automatically be deemed incorporated herein (without further act or deed
by any party hereto) a provision as similar to such prohibited or unenforceable
provision as possible and as shall be enforceable and not prohibited pursuant
to applicable law. If this
12
<PAGE> 12
Guaranty would be held or determined by a court of competent jurisdiction in a
judicial proceeding to be void, voidable, invalid or unenforceable on account
of the amount of the aggregate liability of the Company under this Guaranty or
by reason of any inconsistent contractual provision binding on the Company and
in effect on or prior to the date hereof, then, notwithstanding any other
provision of this Guaranty to the contrary, the aggregate amount of the
liability of the Company under this Guaranty shall, without any further action
by the Company, the Managing Agent, the Lenders or any other Person, be
automatically limited and reduced to the maximum amount which is valid and
enforceable.
(c) No failure or delay on the part of any Lender in
exercising any right, power or remedy under this Guaranty shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for in this
Guaranty are cumulative and are not exclusive of any remedies that may be
available to any Lender at law or in equity or otherwise.
(d) Notwithstanding anything to the contrary contained
herein, no amendment, modification, supplement, termination or waiver of or to
any provision of this Guaranty, nor consent to any departure by the Company
therefrom, shall be effective unless the same shall be consented to in writing
by all of the Banks. Any amendment, modification or supplement of or to any
provision of this Guaranty, any waiver of any provision of this Guaranty, and
any consent to any departure by the Company from the terms of any provision of
this Guaranty, shall be effective only in the specific instance and for the
specific purpose for which made or given.
(e) Except where notice is specifically required by this
Guaranty or the Loan Agreement, no notice to or demand on the Company in any
case shall entitle the Company to any other or further notice or demand in
similar or other circumstances.
(f) The Company acknowledges receipt of a copy of the
Loan Agreement and the other Loan Documents in the form in which each was
executed and delivered by the parties thereto, as in effect on the date hereof,
and agrees that such copies constitute adequate notice of all matters contained
therein and consents to the execution and delivery of such agreements and the
performance of all transactions provided for or contemplated therein; provided
that none of the Lenders shall be obligated to furnish to the Company any
copies of any amendments, modifications or supplements or waivers with respect
to the Loan Agreement or any of the other Loan Documents.
(g) Except where telephonic instructions or notices are
authorized herein to be given, all notices, demands, instructions and other
communications required or permitted to be given to or
13
<PAGE> 13
made upon any party hereto shall be in writing and shall be personally
delivered or sent by registered or certified mail, postage prepaid, return
receipt requested, or by a reputable courier delivery service, or by
telecopier, and shall be deemed to have boon given to the Company for purposes
of this Guaranty, if by overnight or courier delivery service, on the day that
such writing is delivered, if by telecopy on the day that such writing is sent
and if my mail, on the day which is two Business Days after the day such
writing is sent to the intended recipient thereof in accordance with the
provisions of this subsection. Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this subsection,
notices, demands, instructions and other communications in writing shall be
given to or made upon the respective parties hereto at their respective
addresses (or to their respective telecopier numbers) indicated on Exhibit A
hereto, and, in the case of telephonic instructions or notices, by calling the
telephone number or numbers indicated for such party on Exhibit A hereto or in
any copy of a notice of assignment delivered to the Company in accordance with
the terms of the Loan Agreement.
(h) This Guaranty shall be binding upon the company and
its successors and assigns and shall inure to the benefit of, and be
enforceable by, each of the Lenders and their respective successors and assigns
(including any permitted assignee in accordance with Section 9.8 of the Loan
Agreement); provided that the Company may not assign or transfer any of its
obligations under this Guaranty without the prior written consent of each of
the Lenders.
(i) The Company hereby irrevocably and unconditionally
consents and submits to the nonexclusive jurisdiction of any United States
Federal or New York State court sitting in New York County in any action or
proceeding arising out of or relating to this Guaranty, and the Company hereby
irrevocably and unconditionally agrees that all claims in respect of such
action or proceeding brought against any of the Lenders in respect of this
Guaranty shall be brought in such United States Federal or New York State
court. The Company also irrevocably consents to the service of any and all
process in any such action or proceeding brought in any court in or of the
State of New York by the delivery of copies of such process to the Company at
its address specified in Section 9(g) hereof or by certified or registered mail
directed to such address. THE COMPANY AND THE MANAGING AGENT AND THE LENDERS,
BY ACCEPTANCE HEREOF, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN CONNECTION WITH ANY ACTION UNDER OR COUNTERCLAIM RELATING TO THIS
GUARANTY, THE LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND THE COMPANY AND
THE MANAGING AGENT AND THE LENDERS, BY ACCEPTANCE HEREOF, HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY OBJECTION, INCLUDING WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, OR THAT IT OR ITS ASSETS IS EXEMPT OR IMMUNE FROM ATTACHMENT OR
14
<PAGE> 14
EXECUTIONS WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OR MAINTAINING OF
ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
Nothing herein shall affect the right of any of the Lenders to serve process
in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Company in any other jurisdiction.
(j) The Company agrees to pay promptly on demand, to the
extent not previously finally and indefeasibly paid in full by any Borrower:
(i) all reasonable costs and expenses of the Managing Agent
in connection with the negotiation, preparation, execution, issuance,
delivery, filing and recording of this Guaranty and any other
documents which may be delivered in connection with this Guaranty,
including, without limitation, the reasonable fees and expenses of
XXXXXXXXXX, special counsel for the Managing Agent, and any
local counsel retained by the Managing Agent, with respect thereto and
with respect to advising the Managing Agent from time to time as to
its rights and responsibilities under or in respect of this Guaranty
and any amendment or modification of, or waiver under, this Guaranty;
and
(ii) from and after the occurrence of any Guarantor Event of
Default or Unmatured Guarantor Event of Default, all costs and
expenses (including reasonable counsel fees and expenses) of any
Lender in connection with (A) any and all amounts which any Lender may
incur relative to the curing of any default resulting from the acts or
omissions of the Company under this Guaranty, (B) any amendment or
modification of, or waiver under, this Guaranty and (C) the
enforcement of this Guaranty and the preservation of the Lenders'
rights hereunder; and
(iii) any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery,
filing and recording of this Guaranty and any other documents which
may be delivered in connection with this Guaranty, and agrees to save
the Lenders harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay
such taxes and fees.
The obligations of the Company under this subsection shall survive the payment
of the Company's other obligations hereunder and the termination of this
Guaranty.
(k) Section and other headings used in this Guaranty are
for convenience only and shall not affect the construction of this Guaranty.
15
<PAGE> 15
IN WITNESS WHEREOF, the Company has caused this Guaranty Agreement to
be duly executed and delivered by its proper and duly authorized officer as of
the day and year first above written.
KMART CORPORATION
By:
---------------------------------
Name:
--------------------------------
Title:
-------------------------------
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<PAGE> 16
EXHIBIT A
[INTENTIONALLY OMITTED]
<PAGE> 1
EXHIBIT 99.41
THE BORROWERS HEREUNDER
$200,000,000
LOAN AGREEMENT
Dated as of August 7, 1992
with
The Financial Institutions Signatory Hereto
and
XXXXXXXXXX, As Agent
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
<S> <C> <C>
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Accounting Terms; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 22
<CAPTION>
ARTICLE II
LOAN AND LETTER OF CREDIT PROVISIONS
<S> <C> <C>
Section 2.1 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.2 Obligations; Notes; Loan Register; Waiver . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.3 Allocation of Total Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.4 Terms of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.5 Notice of Borrowing; Roll-Over Borrowings . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.6 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.7 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.8 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.9 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.10 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.11 Responsibility for Making Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 2.12 Withholding Tax Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 2.13 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
<CAPTION>
ARTICLE III
TERMINATION OF LOAN COMMITMENTS, PREPAYMENTS AND FEES
<S> <C> <C>
Section 3.1 Mandatory Reduction of the Loan Commitments . . . . . . . . . . . . . . . . . . . . . 47
Section 3.2 Voluntary Reduction of the Total Commitment or any Project Commitment . . . . . . . . 47
Section 3.3 Voluntary Prepayments of the Loan
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 3.4 Mandatory Prepayment of the Loan Obligations . . . . . . . . . . . . . . . . . . . . . 48
Section 3.5 Other Provisions With Respect to Prepayments . . . . . . . . . . . . . . . . . . . . . 49
Section 3.6 Order of Prepayments and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 3.7 Unused Commitment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 3.8 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 3.9 Net Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 3.10 Options to Extend Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
<CAPTION>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
<S> <C> <C>
Section 4.1 Representations and Warranties of the Borrowers . . . . . . . . . . . . . . . . . . . 53
<CAPTION>
ARTICLE V
COVENANTS
<S> <C> <C>
Section 5.1 Affirmative Covenants of each Borrower . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 5.2 Negative Covenants of each Borrower . . . . . . . . . . . . . . . . . . . . . . . . . 63
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
Page
----
ARTICLE VI
CONDITIONS OF CREDIT
<S> <C> <C>
Section 6.1 Conditions Precedent to the Initial Borrowing . . . . . . . . . . . . . . . . . . . . 66
Section 6.2 Conditions Precedent to any Initial Project Borrowing . . . . . . . . . . . . . . . . 68
Section 6.3 Conditions Precedent to all Borrowings (other than a Roll-Over Borrowing) . . . . . . 69
Section 6.4 Conditions Precedent to All Roll-Over Borrowings . . . . . . . . . . . . . . . . . . . 70
<CAPTION>
ARTICLE VII
EVENTS OF DEFAULT
<S> <C> <C>
Section 7.1 Grantor Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.2 Borrower Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
<CAPTION>
ARTICLE VIII
THE AGENT
<S> <C> <C>
Section 8.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 8.2 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 8.3 Rights, Exculpation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.4 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 8.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 8.6 The Agent Individually . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 8.7 Resignation by the Agent; Removal . . . . . . . . . . . . . . . . . . . . . . . . . . 80
<CAPTION>
ARTICLE IX
MISCELLANEOUS
<S> <C> <C>
Section 9.1 No Waiver; Modifications in Writing . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 9.2 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 9.3 Notices, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 9.4 Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 9.5 Confirmations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 9.6 Adjustment; Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 9.7 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 9.8 Binding Effect; Assignment; Addition and
Substitution of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 9.9 Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 9.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 9.11 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 9.12 Borrower Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 9.13 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 9.14 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
</TABLE>
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<PAGE> 4
Exhibits
Exhibit 1.1-A Form of Additional Borrower Agreement
Exhibit 1.1-B Form of Collateral Security Agreement
Exhibit 1.1-C Form of LC Request
Exhibit 2.2(b)-1 Form of Initial Note
Exhibit 2.2(b)-2 Form of Amended Note
Exhibit 2.3(a) Form of Allocation Request
Exhibit 2.3(b) Form of Allocation Increase/Decrease Request
Exhibit 2.5(a) Form of Notice of Borrowing
Exhibit 3.10(b) Form of Extension Note
Exhibit 6.3(d) Form of Additional Conditions
Schedules
Schedule 1.1(a) Loan Commitments
Schedule 2.5(a) Example of Dates of Notices and Actions
-iii-
<PAGE> 5
LOAN AGREEMENT
This LOAN AGREEMENT, dated as of August 7, 1992 among the Borrowers (as
hereinafter defined), the undersigned financial institutions, including
XXXXXXXXXX, in their capacities as lenders hereunder (collectively, the
"Banks," and each individually, a "Bank"), and XXXXXXXXXX, as agent (the
"Agent") for the Banks.
W I T N E S S E T H
WHEREAS, the Borrowers have requested the Banks to issue letters of credit
and make loans to one or more of the Borrowers in an aggregate principal amount
not to exceed $200 million to be used by the Borrowers or their Subsidiaries to
develop or redevelop Kmart stores, Kmart Affiliate stores or shopping centers
anchored by such stores, located in the United States, Puerto Rico or certain
other Caribbean Islands; and
WHEREAS, the Banks are willing to extend commitments to make loans to the
Borrowers for the purposes specified above and on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and the Guaranty (as hereinafter defined), the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Definitions. As used herein, and unless the context requires
a different meaning, the following terms have the meanings indicated:
"Additional Borrower Agreement" means an Additional Borrower
Agreement in the form of Exhibit 1.1-A hereto.
"Affected Bank" has the meaning assigned to that term in Section
2.9(d).
"Affiliate" means, with respect to any Person, any Person or group
acting in concert in respect of the Person in question that, directly or
indirectly, controls or is controlled by or is under common control with such
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person or group of Persons, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of management and policies of such Person, whether through (i) the
ownership of voting securities or (ii) by contract or otherwise. None of
XXXXXXXXXX, XXXXXXXXXX, any of their respective Subsidiaries, any other
<PAGE> 6
Bank, any Subsidiaries of any other Bank or any corporation of which any Bank
is a Subsidiary shall, for purposes of this Agreement, be deemed to be
Affiliates of any Borrower.
"AFICA" means the Puerto Rico Industrial, Medical, Educational and
Environmental Pollution Control Facilities Financing Authority established by
the AFICA Act.
"AFICA Act" means Act No. 121 of June 27, 1977, as amended, of the
laws of the Commonwealth of Puerto Rico (12 L.P.R.A. Section 1251 et seq.).
"AFICA Bonds" shall mean bonds, temporary bonds, refunding bonds,
obligations, notes, interim receipts or provisional bonds, certificates or
other evidences of indebtedness of AFICA issued pursuant to and in accordance
with the AFICA Act.
"AFICA Financing Agreement" means an agreement or agreements between
AFICA and any Borrower, any Subsidiary of any Borrower or Guarantor in relation
to a Project, pursuant to which AFICA will loan the proceeds of the sale of
AFICA Bonds to such Borrower or Guarantor and such Borrower or Guarantor will
be required to make payments to AFICA in an amount sufficient to pay all of the
principal and interest and any redemption premium with respect to such AFICA
Bonds, and to provide and maintain any reserves for the bonds to be issued by
AFICA to pay the cost of such Project, and to pay the expenses incurred by
AFICA in connection therewith, including without limitation, a lease,
installment sales, purchase, conditional sales, sale and leaseback, loan
mortgage or lease contracts or any other financing agreement or combination of
the aforementioned as AFICA may determine, and any other documentation executed
by such Borrower or Guarantor relating thereto.
"Agent" has the meaning assigned to that term in the introduction to
this Agreement.
"Agreement" means this Loan Agreement, as the same may at any time
and from time to time be amended, supplemented or modified and in effect.
"Allocation Increase/Decrease Request" has the meaning assigned to
that term in Section 2.3(b).
"Allocation Request" has the meaning assigned to that term in
Section 2.3(a).
"Amended Note" has the meaning assigned to that term in Section
2.2(b).
"Assignees" has the meaning assigned to that term in Section 9.8(c).
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<PAGE> 7
"Authorized LC Officer" means, for any Borrower which is a
corporation, the Chairman, the President, any Vice President, the Treasurer,
the Assistant Treasurer, the Controller, the chief executive officer or the
chief financial officer of such Borrower or such other officer or employee of
such Borrower as may be identified in a written notice from an otherwise
Authorized LC Officer to the LC Bank, or, for any Borrower which is a
partnership, any of the foregoing officers or employees of the managing partner
of such Borrower.
"Banks" and "Bank" have the respective meanings assigned to those
terms in the introduction to this Agreement.
"Big Beaver of Caguas" means Big Beaver of Caguas Development
Corporation, a Michigan corporation and a wholly-owned Subsidiary of Guarantor.
"Board" means the Board of Governors of the Federal Reserve System.
"Borrower" means any of Big Beaver of Caguas and any Eligible
Borrower as to which an Additional Borrower Agreement shall, on or after the
date of this Agreement, have been delivered to the Agent, duly executed by such
Eligible Borrower, the Guarantor and the Agent on behalf of the Banks and shall
have become effective in accordance with its terms, until such time, if any, as
such Borrower shall have satisfied the conditions set forth in Section 9.12,
and "Borrowers" means all of the foregoing.
"Borrower Event of Default" has the meaning assigned to that term in
Section 7.2.
"Borrower Termination Agreement" means an agreement by and between
the Agent and any Borrower on terms satisfactory to the Agent to be executed
and delivered following the payment in full of all Obligations of such Borrower
and the termination of all Project Commitments with respect to such Borrower.
"Borrowing" means the incurrence of a Loan on a given date pursuant
to Section 2.5.
"Borrowing Margin" means one-half of one percent (.50%) provided,
however, that in the event that, and during any period that the long-term
Indebtedness of the Guarantor shall be rated BBB or lower by Standard & Poor's
Corporation or Baa2 or lower by Moody's Investors Service, Inc. or shall not be
rated, the Borrowing Margin shall mean three quarters of one percent (.75%)
during such period.
"Bridge Borrower" has the meaning assigned to that term in Section
2.2(e).
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<PAGE> 8
"Bridge Agreement" has the meaning assigned to that term in
Section 2.2(e).
" XXXXXXXXXX" means XXXXXXXXXX, a New York banking
corporation.
"Business Day" means (i) a day on which the Agent is open in
New York, New York at its address specified in or for the purposes of this
Agreement for the purpose of conducting commercial banking business, and (ii)
with respect to a Eurodollar Rate Loan, also a day on which dealings in foreign
currencies and exchange between banks may be carried out in London, England.
"XXXXXXXXXX" means XXXXXXXXXX, a Delaware limited partnership,
the general partners of which are Big Beaver of Caguas and XXXXXXXXXX, a
Delaware corporation.
"Capital Expenditures" means, without duplication, with
respect to any Person: any amounts expended, incurred or obligated to be
expended during or in respect of a period for any purchase or other acquisition
for value of any asset that is classified on a consolidated balance sheet of
such Person prepared in accordance with generally accepted accounting
principles as a fixed or capital asset including, without limitation, the
direct or indirect acquisition of such assets or improvements by way of
increased product or service charges, offset items or otherwise, and shall
include Financing Lease Obligations.
"Change in law" has the meaning assigned to that term in
Section 2.9(d).
"Closing Date" means the date of execution in full of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as from time
to time amended, including the regulations proposed or promulgated thereunder,
or any successor statute and the regulations proposed or promulgated
thereunder.
"Collateral Security Agreements" means those certain
Collateral Security Agreements by and between each Borrower and Agent and
Guarantor and Agent in substantially the form of Exhibit 1.1-B hereto.
"Completion Date" means, with respect to any Project, the date
on which a certificate of completion, in form satisfactory to the Agent, shall
have been delivered to the Agent.
"Contaminant" means any waste, pollutant (as that term is
defined in 42 U.S.C. 9601(33) or in 33 U.S.C. 1362(13)), hazardous substance
(as that term is defined in 42 U.S.C. 9601(14)),
-4-
<PAGE> 9
hazardous chemical (as that term is defined by 29 CFR Section 1910.1200(c)),
toxic substance, hazardous waste (as that term is defined in 42 U.S.C. 6901),
radioactive material, special waste, petroleum, including crude oil or any
petroleum-derived substance, waste, or breakdown or decomposition product
thereof, or any constituent of any such substance or waste, including but not
limited to polychlorinated biphenyls, and asbestos.
"Credit Exposure" has the meaning assigned to that term in
Section 9.8(b).
"Default Rate" has the meaning assigned to such term in
Section 2.7(c).
"Deposited Monies" has the meaning assigned to that term in
Section 3.5.
"Dollar" and "$" mean lawful money of the United States of
America.
"Eligible Assignee" means any of:
(a) a commercial bank organized under the laws of the
United States, or any state thereof, and having total assets in excess
of $500,000,000 and a combined capital and surplus of at least
$100,000,000;
(b) a savings and loan association or savings bank
organized under the laws of the United States, or any state thereof,
and having total assets in excess of $500,000,000 and a combined
capital and surplus of at least $100,000,000;
(c) a commercial bank organized under the laws of any
other country that is at such time a member of Organization for
Economic Cooperation and Development (the "OECD") or has concluded
special lending arrangements with the International Monetary Fund
associated with its General Arrangements to Borrow or of the Cayman
Islands, or a political subdivision of any such country, and having
total assets in excess of $500,000,000 and a combined capital and
surplus of at least $100,000,000; provided that such bank is acting
through a branch or agency located in the United States;
(d) the central bank of any country that is a member of
the OECD;
(e) a finance company, insurance company or other
financial institution or fund (whether a corporation, partnership or
other entity) that is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business,
and having total assets in
-5-
<PAGE> 10
excess of $500,000,000 and (other than in the case of a fund) combined
capital and surplus of at least $100,000,000; and
(f) any Affiliate of any Bank acceptable to the
Guarantor; provided that such acceptance by the Guarantor shall not be
unreasonably withheld (and shall be deemed to be given if the
Guarantor fails to respond to a written request therefor within ten
(10) Business Days after its receipt thereof).
"Eligible Borrower" means any of the following Persons
organized for the purpose of directly or indirectly developing and managing a
Project:
(a) a general or limited partnership or joint venture
organized under the laws of the United States or a state thereof or
under the laws of the Commonwealth of Puerto Rico, all of the general
partners of which shall consist of:
(i) Guarantor or any wholly-owned Subsidiary of
Guarantor, and
(ii) such other Person or Persons as may be approved by
the Agent (which approval shall not be unreasonably withheld)
and which, in all other respects, shall be reasonably
satisfactory to the Agent; and
(b) Guarantor or a general partnership, limited
partnership, corporation or other entity organized under the laws of
the United States or a state thereof or under the laws of the
Commonwealth of Puerto Rico which is wholly-owned, directly or
indirectly, by Guarantor and which Guarantor has designated in writing
to the Agent to become an additional Borrower hereunder and which is
otherwise in all respects reasonably satisfactory to the Agent.
"Eligible Subsidiary" means a Subsidiary of Borrower which
would qualify as an Eligible Borrower.
"Environmental Lien" means a Lien in favor of any governmental
authority for (i) any liability under federal or state environmental laws or
regulations, or (ii) damages arising from, or costs incurred by such
governmental authority in response to, a Release or threatened Release of a
Contaminant into the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as from time to time amended.
"Eurodollar Rate" means, with respect to each Interest Period
to be applicable to a Eurodollar Rate Loan, the rate obtained by dividing (i)
the arithmetic average (rounded upward to
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<PAGE> 11
the nearest 1/16th of 1% if such average is not such a multiple) of the offered
quotation, if any, to first-class banks in the interbank Eurodollar market by
XXXXXXXXXX for U.S. dollar deposits of amounts in immediately available funds
comparable to the principal amount of the Eurodollar Rate Loan to be made by
XXXXXXXXXX with maturities comparable to such Interest Period, determined as of
approximately 10:00 A.M. (New York City time) two Business Days prior to the
commencement of such Interest Period, by (ii) a percentage equal to 100% minus
the stated maximum rate (expressed as a percentage) as prescribed by the Board
of all reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves and all reserves required to
be maintained against "Eurocurrency liabilities" as specified in Regulation D)
applicable on the first day of such Interest Period to any member bank of the
Federal Reserve System in respect of Eurodollar funding or liabilities. The
determination of the Eurodollar Rate by the Agent shall be conclusive and
binding on each Borrower absent manifest error.
"Eurodollar Rate Loan" means any Loan which bears interest at
a rate determined with reference to the Eurodollar Rate.
"Eurodollar Tranche" means all or a portion of a Eurodollar
Loan as to which a Borrower has, in any Notice of Borrowing or Rate Selection
Notice, specified a distinct Interest Period for a stated principal amount.
"Extension Notes" has the meaning ascribed to such term in
Section 3.10(b).
"Facility Termination Date" means the earliest to occur of:
(i) August 7, 1997, or such later date as may be elected
pursuant to the provisions of Section 3.10 hereof;
(ii) the date on which the Total Commitment shall have been
reduced to $0 pursuant to this Agreement; or
(iii) the date, if any, of the acceleration of all of the
Loans in accordance with Section 7.1 or Section 7.2 hereof.
"Federal Funds Rate" means on any one day the weighted average
of the rate on overnight Federal funds transactions with members of the Federal
Reserve System only arranged by Federal funds brokers as published as of such
day (or, if such day is not a Business Day, as of the immediately preceding
Business Day) by the Federal Reserve Bank of New York, or if not so published,
the rate then used by first class banks in extending overnight loans to other
first class banks.
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<PAGE> 12
"Fee Letter" means that certain letter by and among each of
the Borrowers and the Agent dated as of the date hereof.
"Financing Lease" means, at the time any determination thereof
is to be made, any lease of property, real or personal, in respect of which the
present value of the minimum rental commitment is capitalized on the balance
sheet of the lessee in accordance with generally accepted accounting
principles.
"Financing Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of
a Financing Lease which would at such time be so required to be capitalized on
such a balance sheet in accordance with generally accepted accounting
principles.
"Guarantor" means Kmart Corporation, a Michigan corporation.
"Guarantor Event of Default" has the meaning assigned to that
term in Section 7.1.
"Guarantor Restructuring" means any disposition of assets of
Guarantor or corporate restructuring of Guarantor (including, without
limitation, any leveraged buy-out, recapitalization, grant of security
interest, merger or consolidation, reverse merger, sale of assets, "spin-off"
or other transfer of assets) pursuant to which all or a substantial portion of
the business, operations or assets of Guarantor shall be transferred, assigned
or pledged to one or more other Persons, including, without limitation, any
such transfer to a wholly-owned Subsidiary of Guarantor.
"Guaranty" means that certain Guaranty Agreement dated the
date hereof made by Guarantor in favor of Agent and the Banks.
"Indebtedness" means, without duplication, all obligations of
a Person or a Subsidiary of such Person which are classified upon a balance
sheet of such Person or such Subsidiary in accordance with generally accepted
accounting principles as liabilities of such Person or such Subsidiary or as
indebtedness of any other individual or entity for which such Person or such
Subsidiary is liable, in each case other than as excepted below in clauses (i)
through (v) of this definition, and in any event shall include, without
limitation, obligations under any Interest Rate Agreements and:
(i) all indebtedness guaranteed, directly or indirectly,
in any manner by such Person or such Subsidiary or endorsed (otherwise
than for collection or deposit in the ordinary course of business) or
discounted with recourse;
(ii) all indebtedness in effect guaranteed, directly or
indirectly, by such Person or such Subsidiary through an
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agreement, contingent or otherwise, (a) to purchase such indebtedness,
or (b) to purchase, sell or lease (as lessee or lessor) property,
products, materials or supplies, or to purchase or sell transportation
or services, for the purpose of enabling the debtor to make payment of
such indebtedness or to assure the owner of such indebtedness against
loss, regardless of the delivery or non-delivery for any reason of the
property, products, materials or supplies or the furnishing or
nonfurnishing for any reason of the transportation or services, except
supply contracts for goods or inventory to be used by such Person or
such Subsidiary in its business entered into in the ordinary course of
business of such Person or such Subsidiary and not having a term or,
if in effect on the date hereof, not having a remaining term (in each
case including all extensions or renewals thereof which are not in the
sole control of such Person or any Subsidiary of such Person) in
excess of three years, or (c) other than as permitted by this
Agreement, to make any loan, advance, capital contribution or other
investment in any debtor for the purpose of assuring a minimum equity,
asset base, working capital or other balance sheet condition for any
date, or to provide funds for the payment of any liability, dividend
or stock liquidation payment, or otherwise to supply funds to or in
any manner invest in any debtor;
(iii) all indebtedness of any joint venture, partnership or
other person or entity for which such Person or such Subsidiary is
liable, other than guarantees to the extent excluded in clauses (i) or
(ii) above by such Person or such Subsidiary;
(iv) all indebtedness, including Financing Lease
Obligations, of such Person or such Subsidiary created or arising
under any conditional sale agreement or other title retention
agreement or under any Financing Lease, even though the rights and
remedies of the seller or lender or lessor under such agreement or
lease in the event of default are limited to repossession or sale of
property; and
(v) all indebtedness secured by any mortgage, lien,
pledge, charge, security interest, option or other encumbrance upon
or in property owned by such Person or such Subsidiary, even though
such Person or such Subsidiary has not assumed or become liable for
the payment of such indebtedness.
For the purpose of computing the "Indebtedness" of such Person or a Subsidiary
of such Person there shall be excluded any particular Indebtedness if, upon or
prior to the maturity thereof, there shall have been irrevocably deposited with
the proper depositary in trust the necessary funds (or evidences of such
Indebtedness, or other securities, if permitted by the instrument creating such
Indebtedness or otherwise consented to by the relevant Person to
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which such Indebtedness is owed) to repay indefeasibly in full such
Indebtedness, and thereafter such funds, evidences of Indebtedness and
securities so deposited shall not be included in any computation of the assets
of such Person or a Subsidiary of such Person except to the extent that such
funds are subject to any writ, judgment, warrant of attachment, execution or
similar process, for the payment, redemption or satisfaction of such
Indebtedness.
"Indebtedness for Money Borrowed" means, without duplication:
(i) all Indebtedness of a Person or a Subsidiary of such
Person, current or funded, secured or unsecured, incurred in
connection with borrowings (including the sale of debt securities) by
such Person or a Subsidiary or the making available of credit or funds
by such Person or a Subsidiary of such Person on behalf of another
Person other than (a) trade and intercompany accounts receivable owed
to such Person or any Subsidiary of such Person, and other than (b)
any forbearance by such Person or any Subsidiary of such Person with
respect to any accounts receivable owed to such Person or any
Subsidiary of such Person;
(ii) all Indebtedness of such Person or a Subsidiary of
such Person, as the case may be, issued, incurred or assumed in
respect of the purchase price of property except for trade and
intercompany accounts payable;
(iii) all Financing Lease Obligations of such Person or a
Subsidiary of such Person; and
(iv) any guarantee or other obligation specified in clause
(i) or clause (ii) of the definition of "Indebtedness" in respect of
Indebtedness of any other Person of any of the types specified in the
preceding clauses (i), (ii) and (iii).
"Initial Borrowing" means the first Borrowing by any Borrower
under this Agreement or, if earlier, the first issuance of a Letter of Credit.
"Initial Borrowing Date" means the date of the Initial
Borrowing.
"Initial Loan" means the first Loan made by the Banks under
this Agreement or, if earlier, the first Letter of Credit issued hereunder.
"Initial Note" has the meaning assigned to that term in
Section 2.2(b).
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"Initial Project Borrowing" means, with respect to any
Project, the first Borrowing made by a Borrower for such Project or, if
earlier, the first Letter of Credit issued pursuant to a LC Request for such
Project.
"Initial Project Borrowing Date" means, with respect to any
Project, the date of the Initial Project Borrowing.
"Initial Project Loan" means, with respect to any Project, the
first Loan made by the Banks for such Project or, if earlier, the first Letter
of Credit issued with respect to such Project.
"Interest Borrowing" has the meaning assigned to that term in
Section 2.7(h).
"Interest Period" has the meaning assigned to that term in
Section 2.8.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect a Borrower or any of its
Subsidiaries against fluctuations in interest rates.
"Interim Maturity Date" means the last day of any Interest
Period.
"Investment" means, with respect to any Person (such Person
being referred to in this definition as the "Investor"):
(i) any amount paid by the Investor, directly or
indirectly, or any transfer of property, directly or indirectly, by
the Investor to any other Person for capital stock of, or as a capital
contribution to, or any amount which the Investor has advanced,
directly or indirectly to, any other Person;
(ii) the equity interest of the Investor in any Person;
(iii) any Indebtedness of any Person which is owed to the
Investor and which has been acquired for value by the Investor; and
(iv) any guarantee or other obligation specified in clause
(i) or clause (ii) of the definition of "Indebtedness" in respect of
any Indebtedness of any other Person.
"Kmart Affiliate" means PACE Membership Warehouse, Builders
Square, Pay Less Drug Stores, Walden Book Company, the Sports Authority or
Office Max.
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"Kmart General Partner" means, with respect to any Borrower
which is a partnership, any wholly-owned Subsidiary of Guarantor which owns any
interest in such Borrower.
"LC Bank" means a Bank which is or Banks which are selected
by Agent to issue a Letter of Credit or Letters of Credit pursuant to Section
2.13, each of which shall be rated AA or better by Standard & Poor's
Corporation or Aa2 or better by Moody's Investors Service, Inc.
"LC Borrower" means any Borrower on whose behalf a Letter of
Credit is issued or proposed to be issued by a LC Bank pursuant to Section 2.13.
"LC Request" means a request by a LC Borrower for the
issuance or amendment of a Letter of Credit by a LC Bank in substantially the
form of Exhibit 1.1-C hereto which shall specify (a) the proposed issuance date
and expiration date, (b) the name of the LC Borrower, (c) the name and address
of the beneficiary and (d) the Stated Amount of such proposed Letter of Credit,
and, in addition, shall contain a description of the terms and conditions to be
included in such proposed Letter of Credit (all of which terms and conditions
shall be acceptable to the applicable LC Bank); provided, however, that with
regard to a request made by a LC Borrower with respect to the issuance of a
Letter of Credit in connection with any AFICA Financing Agreement, such request
may specify (a) a reasonable range (which range shall be acceptable to the
applicable LC Bank) for the proposed issuance and expiration dates and (b) a
reasonable range (which range shall be acceptable to the applicable LC Bank) of
the Stated Amount of such proposed Letter of Credit; and provided, further,
that in the event any such range is specified, the applicable LC Borrower shall
provide reasonable notice to the applicable LC Bank prior to the issuance date
of such proposed Letter of Credit of the specific issuance and expiration dates
and Stated Amount requested, and may from time-to-time prior to such issuance
date so specified provide reasonable notice of any further change or changes in
such dates or Stated Amount.
"Letter of Credit" and "Letters of Credit" have the meaning
assigned to those terms in Section 2.13(a).
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien, charge or deposit arrangement of any kind (including,
without limitation, any conditional sale or other title retention agreement or
lease in the nature thereof, any sale of receivables or chattel paper with
recourse against the seller or any Affiliate of the seller, any filing or
agreement to file a financing statement as debtor under the Uniform Commercial
Code or any similar statute other than to reflect ownership by a third party of
property leased to a Borrower or any of its Subsidiaries under a lease which is
not in the nature of a conditional sale or
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<PAGE> 17
title retention agreement, and any subordination arrangement in favor of
another Person).
"Loan" means, with respect to any Borrower, collectively, the
loans by each of the Banks to such Borrower in accordance with Section 2.1 and,
with respect to any Bank, the loans made by such Bank to such Borrower or the
Borrowers, as the context may require.
"Loan Commitment" means, with respect to any Bank, the
principal amount set forth opposite such Bank's name in Schedule 1.1(a) under
the caption "Amount of Loan Commitment."
"Loan Documents" means, collectively, this Agreement, the
Notes, the Guaranty, any Additional Borrower Agreement, the Letters of Credit,
the Fee Letter, the Collateral Security Agreements and all other agreements,
instruments and documents executed and delivered by or on behalf of any
Borrower or Guarantor in connection with this Agreement.
"Loan Obligations" means, with respect to each Borrower, the
obligations of such Borrower to repay principal of, and to pay interest on the
Loans made to such Borrower pursuant to Section 2.1.
"Managing Partner" means with respect to any Borrower which is
a partnership, the managing partner of such Borrower.
"Material Asset Sale" means:
(i) a Project Sale, or
(ii) the sale or other disposition or a refinancing (other
than pursuant to an AFICA Financing Agreement or other financing
permitted by Section 5.2 (b) (v) which is supported by a Letter of
Credit issued hereunder) of any other assets of any Borrower or any of
its Subsidiaries to any Person (other than leases of space in Projects
in the ordinary course of business);
provided that there shall be excluded from the definition of Material Asset
Sale, any sale or related series of sales (or part of a sale or related series
of sales) of the type described in subdivision (ii) above to the extent that
the Net Proceeds of all such sales or related series of sales (or parts of all
such sales or related series of sales) do not exceed $100,000 in any one
calendar year.
"Material Subsidiary" means, with respect to a Subsidiary of
Guarantor, any Subsidiary which, at the date of this Agreement or at any time
thereafter, has a consolidated Net Worth in excess of $100,000,000.
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"Monthly Borrowing Date" means, with respect to the first
month, the Initial Borrowing Date and, with respect to any month thereafter,
the tenth (10th) day of such month, provided, however that if such day is not a
Business Day, then the Monthly Borrowing Date for such month shall be the next
succeeding Business Day in such month.
"Multiemplover Plan" means any plan described in Section 4001
(a)(3) of ERISA to which contributions are or have been made by any Borrower
or any of its Related Persons or any Subsidiary of any Borrower, or Related
Persons to such Subsidiary.
"Net Proceeds" means, with respect to any Material Asset Sale,
at any date of determination, cash proceeds (including any cash received by way
of deferred payment pursuant to a note receivable or otherwise, but only as and
when so received) through that date from such Material Asset Sale by a Borrower
or any of its Subsidiaries, net of the expenses of such Material Asset Sale,
and net of income taxes payable in respect of such Material Asset Sale.
"Net Worth" means, as to any Person as of the date of
determination thereof, total assets less total liabilities of such Person.
"Note" means any Initial Note, any Amended Note or any
Extension Note and any note issued in replacement of, exchange for, or
amendment or restatement of, any thereof, and "Notes" means all such notes,
collectively.
"Notice of Borrowing" has the meaning assigned to that term in
Section 2.5.
"Obligations" means, with respect to any Borrower at any time,
the aggregate of such Borrower's Loan Obligations at such time and all other
obligations and liabilities of such Borrower under the Loan Documents at such
time.
"Organizational Documents" means, with respect to any
Borrower, the partnership or joint venture agreement, the certificate of
limited partnership, or, if applicable, the certificate of incorporation and
bylaws of such Borrower.
"Participants" has the meaning assigned to that term in
Section 9.8(b).
"Partner" means, with respect to any Borrower organized as a
partnership or joint venture, any general partner or joint venturer of such
Borrower.
"Payment Office" has the meaning assigned to that term in
Section 2.6.
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"Permitted AFICA Lien" means a Lien created by a Borrower or
any Subsidiary of such Borrower in favor of, AFICA, the holders of AFICA Bonds
(or any trustee therefor) for the purpose of obtaining or securing financing
through the issuance by AFICA of AFICA Bonds with respect to which one or more
Letters of Credit have been issued hereunder.
"Permitted Investments" means:
(i) any evidence of indebtedness, maturing not more than
one year after the date of issue, issued by the United States of
America or any instrumentality or agency thereof the principal,
interest and premium, if any, of which is guaranteed fully by, or
backed with the full faith and credit of, the United States of
America;
(ii) any certificate of deposit, maturing not more than 90
days after the date of purchase, issued by the Agent, or by another
commercial banking institution which is a member of the Federal
Reserve System, has a combined capital and surplus and undivided
profits of not less than $200,000,000 and at the time has a credit
rating of AA or better from Standard & Poor's Corporation or Aa or
better from Moody's Investors Service, Inc.;
(iii) commercial paper, maturing not more than 90 days
after the date of purchase, issued by a corporation (other than
Guarantor, any Borrower or any Subsidiary of any Borrower or any of
their respective Affiliates) organized and existing under the laws of
any state within the United States of America with a rating, at the
time as of which any determination thereof is to be made, of "P-1"
(or higher) according to Moody's Investors Service, Inc. or "A-1" (or
higher) according to Standard & Poor's Corporation;
(iv) shares or other evidences of participation in any
mutual fund which invests exclusively in one or more of the foregoing;
and
(v) demand deposits with any bank or trust company.
"Permitted Liens" means:
(i) Liens for taxes not yet due and payable or which are
being contested in good faith by appropriate proceedings diligently
pursued, provided that (a) if any proceedings shall have been
commenced for the enforcement of such Liens, no adverse judgment or
order of foreclosure or other similar order, writ or relief shall have
been granted or issued, the effect of which is to permit such Lien to
be foreclosed or otherwise satisfied; and (b) full provision for the
payment of all such taxes known to such Person has been made on the
books
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<PAGE> 20
of such Person to the extent required by generally accepted accounting
principles;
(ii) mechanics', materialmen's, carriers', warehousemen's
and similar Liens arising by operation of law and arising in the
ordinary course of business and securing obligations of such Person
that are not overdue for a period of more than 30 days or are being
contested in good faith by appropriate proceedings diligently pursued,
provided that in the case of any such contest (a) if any proceedings
shall have been commenced for the enforcement of such Liens, no
adverse judgement or order of foreclosure or other similar order, writ
or relief shall have been granted or issued, the effect of which is to
permit such Lien to be foreclosed or otherwise satisfied; and (b) full
provision for the payment of such Liens has been made on the books of
such Person to the extent required by generally accepted accounting
principles;
(iii) Liens arising in connection with worker's
compensation, unemployment insurance, old age pensions and social
security benefits which are not overdue or are being contested in good
faith by appropriate proceedings diligently pursued, provided that in
the case of any such contest (a) any proceedings commenced for the
enforcement of such Liens shall have been duly suspended; and (b) full
provision for the payment of such Liens has been made on the books of
such Person to the extent required by generally accepted accounting
principles;
(iv) (a) Liens incurred or deposits made in the ordinary
course of business to secure the performance of bids, tenders,
statutory obligations, fee and expense arrangements with trustees and
fiscal agents (exclusive of obligations incurred in connection with
the borrowing of money or the payment of the deferred purchase price
of property) and (b) Liens securing surety, indemnity, performance,
appeal and release bonds, in the case of either clause (a) or clause
(b), securing such bonds in an amount not to exceed individually or in
the aggregate $250,000 at any time outstanding, provided that full
provision for the payment of all such obligations has been made on the
books of such Person to the extent required by generally accepted
accounting principles;
(v) Permitted Kmart Mortgage Liens;
(vi) Permitted Third Party Mortgage Liens, if at the time
such Lien is incurred, no Guarantor Event of Default or Unmatured
Guarantor Event of Default exists;
(vii) Liens in favor of the Agent for the benefit of the
Banks or, to the extent constituting a Lien, cash collateralized
Letters of Credit;
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<PAGE> 21
(viii) Permitted AFICA Liens; or
(ix) such other imperfections of title, covenants,
restrictions, easements and encumbrances shown on the title reports
(as redated and recertified as commitments to issue title insurance,
if applicable) and such other imperfections of title, covenants,
restrictions, easements and other encumbrances on real property which
in each case do not arise out of the incurrence of any Indebtedness
for Money Borrowed and which do not interfere with or impair in any
material respect the utility, operation, value or marketability of the
real property on which such Lien is imposed;
provided, however, to the extent that the amount of obligations of a Borrower
arising from claims being contested in good faith secured by such Liens in
clauses (i), (ii), (iii) and (iv) above exceeds $1,000,000 in the aggregate,
such Borrower shall have set aside full cash reserves in the amount of the
excess over $1, 000, 000 of such obligations or there shall be availability
under the applicable Project Commitment for an amount equal to the excess
amount of such obligations minus the cash reserves so set aside.
"Permitted Kmart Mortgage Lien" means a mortgage created by a
Borrower or any Subsidiary of such Borrower in favor of Guarantor or any
Subsidiary of Guarantor which encumbers such Borrower's or its Subsidiary's
ownership interest in a Project solely for the purposes of:
(1) securing such Borrower's reimbursement obligations to
Guarantor with respect to any amounts actually paid by Guarantor under
the Guaranty, or
(2) securing any other obligations of such Borrower or such
Subsidiary to Guarantor or any Subsidiary of Guarantor;
provided, however, that such mortgage instrument shall expressly provide that:
(a) Guarantor or such Subsidiary of Guarantor shall have
no right to foreclose such mortgage, or to enforce any other rights
thereunder which conflict with or are inconsistent with Agent's and
the Banks' rights under this Loan Agreement (including, without
limitation, any rights to collect insurance proceeds), without Agent's
prior written consent unless:
(i) no Guarantor Event of Default has occurred
and is continuing and such foreclosure or other exercise of
rights is solely for the purpose of, and does in fact have the
effect of, causing title to the relevant Project to be vested
in another Borrower or a Subsidiary thereof hereunder and
concurrently therewith such other Borrower
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<PAGE> 22
assumes, in accordance with the provisions of Section 9.8(e)
hereof, all of the transferring Borrower's Obligations with
respect to all Project Loans outstanding with respect to such
Project, or
(ii) all Project Loans with respect to such
Project have been paid in full and the applicable Project
Commitments have been terminated;
(b) the mortgage Lien, and all rights of Guarantor or
such Subsidiary of Guarantor under such mortgage, shall be subordinate
to any Lien with respect to such Project at any time created in favor
of Agent or the Banks (including, without limitation, any judgment
Lien); and
(c) Guarantor or such Subsidiary of Guarantor shall have
no rights with respect to the rental income from such Project prior to
foreclosure of such mortgage.
"Permitted Third Party Mortgage Lien" means a mortgage created
by a Borrower or any Subsidiary of such Borrower in favor of any Person other
than Guarantor or any Subsidiary thereof which encumbers such Borrower's or its
Subsidiary's ownership interest in a Project for the purpose of refinancing all
of the Project Loans with respect to such Project and cash collateralization of
all Letters of Credit with respect to such Project, provided, that all proceeds
of such refinancing (net of costs of such refinancing) are applied by such
Borrower to the prepayment in full of such Project Loans and the cash
collateralization of the aggregate Stated Amount of any Letters of Credit
outstanding with respect to such Project.
"Person" means any of an individual, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind.
"Plan" means any plan described in Section 4021(a) of ERISA
and not excluded pursuant to Section 4021(b) thereof, which may be or has been
established or maintained, or to which contributions are or have been made, by
any Borrower or any of its Related Persons or any Subsidiary of any Borrower or
any Related Persons to such Subsidiary, but not including any Multiemployer
Plan.
"Prime Rate" means the greater of (i) the rate which
XXXXXXXXXX announces from time to time as its prime lending rate, as in effect
from time to time, or (ii) the Federal Funds Rate in effect from time to
time plus one half of one percent (1/2 of 1%). The Prime Rate is a reference
rate and does not necessarily represent the lowest or best rate actually
charged to any customer. XXXXXXXXXX may make commercial loans or other loans
at rates of interest at, above or below the Prime Rate.
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<PAGE> 23
"Prime Rate Loan" means any Loan which bears interest at a
rate determined with reference to the Prime Rate.
"Project" means a development or redevelopment by a Borrower
or any Subsidiary of such Borrower of a Kmart store or Kmart Affiliate store or
shopping center anchored by such a store and/or store(s), to be located in
the United States, Puerto Rico or such other Caribbean Islands as may be
satisfactory to Agent in its sole discretion, identified as a project by any
Borrower in an Allocation Request and for which the Agent has established a
Project Commitment.
"Project Budget" means, with respect to any Project, a budget,
approved by Guarantor, in such detail as may be reasonably required by the
Agent setting forth the various cost categories of all hard and soft costs to
be incurred by the relevant Borrower or any Subsidiary of such Borrower in
connection with the land acquisition, ownership, development and construction
of the applicable Project in each instance approved by Guarantor and as the
same may from time to time, upon ten (10) days prior notice to the Agent, be
modified by the relevant Borrower with the prior written approval of the
Guarantor; provided, however, that the amount of the Project Budget, as so
modified, shall not exceed the Project Commitment with respect to such Project.
"Project Commitment" means, with respect to any Project, for
all Banks, the portion of the Total Commitment allocated to said Project
pursuant to Section 2.3 hereof and with respect to any Project for each Bank,
such Bank's Pro Rata Share of the portion of the Total Commitment allocated to
such Project, in each case as such amount may be reduced or increased from time
to time pursuant to the terms hereof.
"Project Loan" means with respect to any Project, at any time,
the aggregate amount of all Loans made with respect to such Project.
"Project Sale" means the sale, lease (other than leases of
space in a Project) or other disposition (including, without limitation, any
sale and leaseback transaction) to any Person (other than to an Affiliate of
the affected Borrower) of:
(i) any of the capital stock or partnership or other
ownership interests of any Borrower;
(ii) substantially all the assets of any Borrower; or
(iii) all or substantially all of any Project.
"Pro Rata Share" means, when used with reference to any Bank
and any described aggregate or total amount, an amount equal to the result
obtained by multiplying such described aggregate or
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<PAGE> 24
total amount by a fraction the numerator of which shall be such Bank's Loan
Commitment at such time and the denominator of which shall be the Total
Commitment at such time.
"Rate Selection Notice" means, with respect to any Borrowing
or Roll-Over Borrowing by any Borrower, an irrevocable telecopied notice given
by such Borrower to Agent (not later than 11:00 A.M. (New York time) on the
date required to be given) specifying whether such Borrowing or Roll-Over
Borrowing is to consist of Prime Rate Loans or Eurodollar Rate Loans and if
such Loans are to be Eurodollar Rate Loans, specifying, the desired Interest
Period with respect thereto.
"Regulation D" means Regulation D of the Board as from time to
time in effect and any successor to all or a portion thereof establishing
reserve requirements.
"Related Person" means, with respect to any Person, any trade
or business (whether or not incorporated) which, together with such Person, is
under common control as described in Section 414(c) of the Code or is a member
of a controlled group, as defined in Section 414(b) of the Code, which includes
such Person.
"Release" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property of any
Borrower or any of its Subsidiaries, including the movement of Contaminants
through or in the air, soil, surface water, groundwater or property of such
Borrower or its Subsidiaries.
"Remedial Action" means actions required to (i) clean up,
remove, treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release or minimize the
further Release of Contaminants so they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; or
(iii) perform pre-remedial studies and investigations and post-remedial
monitoring and care.
"Required Banks" means, as of the date of determination
thereof, the holders of at least fifty one percent (51%) of the aggregate of
(i) the principal amount of the Loans then outstanding and (ii) the Total
Unused Commitment at that time.
"Responsible Officer" means, as to any Borrower, any of the
Chairman of the Board of Directors, President, Executive Vice President,
Treasurer or Chief Financial Officer of such Borrower or such Borrower's
Managing Partner at such time.
"Roll-Over Borrowing" means a Loan to a Borrower which, after
giving effect to such Loan and the application of the
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proceeds thereof, does not increase the aggregate amount of outstanding Loans
to such Borrower. Roll-Over Borrowings do not constitute either new borrowings
or disbursements by the Banks of additional monies, the term "Roll-Over
Borrowing" being used merely for convenience of definition and to denote
changes in interest rates.
"Solvent" means, when used with respect to any Borrower, that
(i) after giving effect to the Borrowings which will be permitted by such
Borrower hereunder, it is able to pay its debts or obligations in the ordinary
course as they mature; and (ii) such Borrower has capital sufficient to carry
on its business and all business in which it is about to engage.
"Stated Amount" means, with respect to any Letter of Credit,
the stated or face amount of such Letter of Credit to the extent available at
the time for drawing (subject to presentment of all requisite documents) , as
the same may be increased or decreased from time to time in accordance with the
terms of such Letter of Credit.
"Subsidiary" of a Person means (i) any corporation 50% or more
of the outstanding securities having ordinary voting power of which shall at
the time be owned or controlled, directly or indirectly, by such Person or by
one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, association, joint venture or similar
business organization 50% or more of the outstanding equity interests of which
shall be so owned or controlled.
"Taxes" has the meaning assigned to that term in
Section 3.9(a).
"Total Commitment" means, at the time any determination
thereof is to be made, the sum of the respective Loan Commitments of the Banks
at such time.
"Total Project Commitments" means, at any time any
determination thereof is to be made, the sum of the respective Project
Commitments for all Projects at such time.
"Total Unused Commitment" means, at the time any determination
thereof is to be made, the sum of the respective Unused Commitments of the
Banks at such time.
"Unallocated Total Commitment" means, at any time, the lesser
of (i) the Total Commitment less the Total Project Commitments or (ii) the
Total Unused Commitment.
"Unmatured Borrower Event of Default" means an event of
default or event, act or occurrence which with the giving of notice
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or the lapse of time (or both) would become a Borrower Event of
Default.
"Unmatured Guarantor Event of Default" means an event of
default or event, act or occurrence which with the giving of notice or the
lapse of time (or both) would become a Guarantor Event of Default.
"Unused Commitment" means, when used with reference to any
Bank at the time any determination thereof is to be made, the excess, if any,
of (i) such Bank's Loan Commitment at such time over (ii) such Bank's Utilized
Commitment at such time.
"Unused Project Commitment" means, when used with reference to
any Bank at the time any determination thereof is to be made, the excess, if
any, of (i) such Bank's Project Commitment at such time with reference to any
Project over (ii) such Bank's Pro Rata Share of (a) the Project Loans and (b)
the aggregate Stated Amount of Letters of Credit for such Project.
"Utilized Commitment" means, when used with reference to any
Bank at the time any determination thereof is to be made, the sum of (i) the
then outstanding principal amount of all Loans made by such Bank pursuant to
this Agreement plus (ii) the Pro Rata Share of such Bank in the Stated Amount
of all Letters of Credit issued by the LC Banks.
The foregoing definitions shall be equally applicable to both
the singular and plural forms of the defined terms. The words "herein,"
"hereof" and words of similar import as used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision in the Agreement.
Section 1.2 Accounting Terms; Financial Statements. All
accounting terms used herein but not expressly defined in this Agreement shall
have the respective meanings given to them in accordance with generally
accepted accounting principles in effect on the date hereof (except with
respect to financial statements delivered to the Agent or the Banks after the
date hereof, as to which generally accepted accounting principles shall be such
as are in effect on the respective dates of such financial statements) in the
United States of America. Except as otherwise expressly provided herein, (i)
all computations and determinations for purposes of determining compliance with
the financial requirements of this Agreement shall be made in accordance with
the generally accepted accounting principles set forth in the preceding
sentence as in effect on the date of this Agreement; and (ii) wherever any
computation is to be made with respect to any Person and its Subsidiaries, such
computation shall be made so as to exclude all items of income, assets and
liabilities attributable to any Person which is not a Subsidiary.
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ARTICLE II
LOAN AND LETTER OF CREDIT PROVISIONS
Section 2.1 Loans. Each Bank, severally and for itself
alone, hereby agrees, on the terms and subject to the conditions hereinafter
set forth, to make loans to one or more of the Borrowers, on the date requested
from time to time from and after the date of this Agreement to, but not
including, the Facility Termination Date, in the Pro Rata Share of such Bank of
such amounts as a Borrower may request, but not exceeding: (i) in the aggregate
at any one time outstanding, the Loan Commitment of such Bank minus such Bank's
Pro Rata Share of the aggregate Stated Amount of Letters of Credit (including
such Bank's Pro Rata Share of the aggregate proposed Stated Amount of all
requested Letters of Credit); or (ii) with respect to any Project, such Bank's
Project Commitment for such Project minus such Bank's Pro Rata Share of the
aggregate Stated Amount of Letters of Credit relating to such Project
(including such Bank's Pro Rata Share of the aggregate proposed Stated Amount
of all requested Letters of Credit relating to such Project).
Section 2.2 Obligations; Notes; Loan Register; Waiver.
(a) Loan Obligations. Each Borrower hereby severally and
not jointly agrees to repay to each Bank the principal amount of, and to pay to
each Bank interest on, such Bank's Loans to such Borrower (with payments
hereunder to be made to Agent for the benefit of the Banks as set forth in
Section 3.9(g) hereof) . Each Borrower shall pay interest on the principal
balance of its Loans from time to time outstanding as provided in this
Agreement. Subject to Section 2.5 and to the earlier acceleration or prepayment
of the Loans as permitted or required by this Agreement, each Borrower shall
repay the principal of its (i) Prime Rate Loans and all amounts due hereunder
in full on the Facility Termination Date and (ii) Eurodollar Rate Loans on the
earlier of the Facility Termination Date or each relevant Interim Maturity
Date.
(b) Notes. Each Borrower's obligation to pay the
principal of, and interest on, each Bank's Loans to such Borrower hereunder
shall be evidenced by a promissory note of such Borrower (each an "Initial
Note") duly executed and delivered by such Borrower to each such Bank at the
time of the Initial Project Loan pursuant to which such Initial Note is issued
as requested by the applicable Borrower. Each Initial Note shall:
(i) be payable to the order of the Bank to which it is
issued;
(ii) be dated the date of the Initial Project Loan
pursuant to which such Note is issued;
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(iii) be in original principal amount equal to such Bank's
Pro Rata Share of the Project Commitment in effect with respect to the
Project to which such Note relates; and
(iv) otherwise be in substantially the form of Exhibit
2.2(b)-l hereto, duly completed.
Notwithstanding that the stated principal amount of each Note shall be equal to
such Bank's Pro Rata Share of the Project Commitment to which such Note
relates, such Note shall be enforceable with respect to the applicable
Borrower's obligation to pay the principal amount thereof only to the extent of
the Loans evidenced thereby, and such Note shall bear interest from time to
time only on the unpaid principal amount of the Loans evidenced thereby.
In the event that any Borrower requests an increase in a
Project Commitment pursuant to Section 2.3(b) hereof, such Borrower shall
concurrently therewith execute and deliver to the Banks amended and restated
Notes evidencing such increases in each Bank's Project Commitment in respect of
the affected Project (each an "Amended Note"), which shall each be in
substantially the form of Exhibit 2.2(b)-2 hereto, duly completed, dated the
date of such increased Project Commitment and with a principal amount equal to
the applicable Bank's Pro Rata Share of the revised Project Commitment. Upon
receipt of such Amended Notes and acceptance thereof by the Agent, the Initial
Notes which have been amended and restated thereby shall be deemed cancelled
and of no further effect and shall be returned to the Borrower which issued the
same.
(c) Loan Register. The Agent shall maintain a register
(the "Loan Register") on which it will record the Loan Commitment of each Bank,
the Loans from time to time made to each Borrower, the Borrowings made by each
Borrower from each Bank and each repayment in respect of any Loan made to each
Bank. Any such recordation by the Agent on the Loan Register shall be
conclusive, absent manifest error. Each Bank shall record on its internal
records, and on the schedule attached to each Note for such purpose, or
otherwise in accordance with such Bank's customary business practice, the
amount of each Borrowing made by each Borrower from such Bank and each
repayment to it in respect thereof, which recordation shall be conclusive
absent manifest error. Notwithstanding the foregoing, the failure to make a
notation in the Loan Register or such internal records or upon the schedule
attached to any Note with respect to any Borrowing or principal payment, or any
error with respect to any such notation, shall not limit or otherwise affect
the obligation of any Borrower hereunder or under any Note with respect to the
Loans, and payments of principal by any Borrower shall not be affected by the
failure to make a notation thereof or by an error in such notation, nor shall
such failure or error affect any rights of any Borrower hereunder or under
applicable law.
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(d) Waiver of Presentment, etc. Each Borrower waives
presentment, demand, protest and notice of dishonor in connection with the
payment of its Obligations.
(e) Application of Certain Initial Project Loans.
Borrowers acknowledge that Big Beaver of Caguas (the "Bridge Borrower") is
party to that certain Loan Agreement dated as of April 28, 1992 among such
Borrower and XXXXXXXXXX as agent and lender thereunder (as amended, the
"Bridge Agreement") , pursuant to which the Bridge Borrower borrowed funds
from XXXXXXXXXX to commence certain of the Projects (the "Bridged Projects").
The Banks and the Agent hereby agree with the Bridge Borrower that the
Indebtedness of the Bridge Borrower to XXXXXXXXXX under the Bridge
Agreement shall be repaid in full under this Agreement and further agree that
such portion of the proceeds of the Initial Project Loan made to the Bridge
Borrower hereunder with respect to a Bridged Project as is necessary to pay in
full all Indebtedness of such Bridge Borrower to XXXXXXXXXX under the Bridge
Agreement in respect of such Bridged Project shall be applied to repayment of
such Indebtedness to XXXXXXXXXX, and that no Loan shall be made to the Bridge
Borrower hereunder for any other purpose until all Indebtedness of such
Borrower to XXXXXXXXXX under the Bridge Agreement shall be repaid in full;
provided, however, that, notwithstanding anything to the contrary contained
herein, if any portion of the Indebtedness of the Bridge Borrower to
XXXXXXXXXX under the Bridge Agreement is a "Eurodollar Rate Loan", then the
Indebtedness of the Bridge Borrower to XXXXXXXXXX under the Bridge Agreement
shall not be required to be repaid so long as such Indebtedness shall be
permitted under Section 5.2(b)(vii) hereof.
Section 2.3 Allocation of Total Commitment. (a) Each
Borrower hereunder shall, on or before the date of the Notice of Borrowing or
LC Request, as the case may be, with respect to the Initial Project Borrowing
for any Project, submit to the Agent a written request (an "Allocation
Request") to establish a Project Commitment. Each Allocation Request shall:
(i) be in the form of Exhibit 2.3(a) hereto;
(ii) be approved by Guarantor;
(iii) specify the aggregate amount of the then Unallocated
Total Commitment which such Borrower desires to be allocated to such
Project (which amount shall not be less than the Project Budget
submitted therewith);
(iv) be accompanied by a copy of the Project Budget; and
(v) be accompanied by Notes issued by such Borrower
payable to each of the Banks in their respective Pro Rata Share of the
Project Commitment requested.
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(b) Any Borrower may, at any time, submit to the Agent a
written request (an "Allocation Increase/Decrease Request") to increase
or decrease an established Project Commitment. Each Allocation
Increase/Decrease Request shall:
(i) be in the form of Exhibit 2.3(b) hereto;
(ii) be in a minimum amount of $100,000;
(iii) be approved by Guarantor;
(iv) be accompanied by a copy of the revised Project
Budget for such Project (which shall also be approved by Guarantor);
(v) specify the aggregate amount of the then Unallocated
Total Commitment which such Borrower desires to be added to such
Project Commitment then in effect with respect to the related Project
or, if such request is for a decrease in such Project Commitment,
specify the aggregate amount of such decrease (which amount shall then
be added back to the then Unallocated Total Commitment), provided that
in no case may a decrease reduce the Project Commitment to an amount
less than the aggregate outstanding principal balance of all Loans and
the aggregate Stated Amount of Letters of Credit then outstanding (or
requested to become outstanding unless revoked pursuant to
Section 2.13(d)) with respect to the related Project;
(vi) specify the revised Project Commitment requested
(which amount shall not be less than the revised Project Budget
submitted therewith, nor less than the aggregate outstanding principal
balance of all Loans and the aggregate Stated Amount of Letters of
Credit then outstanding (or requested to become outstanding unless
revoked pursuant to Section 2.13(d)) with respect to the related
Project); and
(vii) if an increase is requested, be accompanied by
Amended Notes issued by such Borrower payable to each of the Banks in
their respective Pro Rata Share of the requested increased Project
Commitment.
(c) The Agent shall consider Allocation Requests and
Allocation Increase/Decrease Requests in the order received or if received on
the same day, in the order so directed by Guarantor or, if no such direction is
given, in Agent's sole discretion. Subject to the foregoing, the Agent, within
five (5) Business Days, either shall establish a Project Commitment in the
amount set forth in the Allocation Request or Allocation Increase/Decrease
Request, as the case may be, or, if the Unallocated Total Commitment at such
time is insufficient or the conditions precedent to any Borrowing requested in
connection with such request are not otherwise
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satisfied (or waived), shall notify the applicable Borrower and the Banks that
such commitment cannot be established.
Section 2.4 Terms of Borrowing. The Loans shall, except
as otherwise provided in this Agreement, be Prime Rate Loans or Eurodollar Rate
Loans. As to any Eurodollar Rate Loan, any Bank may, if it so elects, fulfill
its commitment by causing a foreign branch or Affiliate to make or continue
such Loan, provided that in such event that Bank's Loan shall, for the purposes
of this Agreement, be considered to have been made by that Bank and the
obligation of the applicable Borrower to repay that Bank's Loan shall
nevertheless be to that Bank and shall be deemed held by that Bank, for the
account of such branch or affiliate.
Section 2.5 Notice of Borrowing; Roll-Over Borrowings.
(a) Each Borrower hereunder shall be entitled to request
only one Borrowing (other than Roll-Over Borrowings) per month, and all Loans
to all Borrowers in any month shall be funded on the same date, which shall be
a Monthly Borrowing Date. Subject to Section 2.5(c) hereof, on or before ten
(10) Business Days prior to the Monthly Borrowing Date in any month in which
any Borrower desires to obtain a Eurodollar Rate Loan hereunder or a Prime Rate
Loan hereunder, such Borrower shall give the Agent, at its office located at
XXXXXXXXXX, telecopied notice (given not later than 11:00 A.M. (New York time)
and confirmed in writing) of the amount which such Borrower desires to borrow
as a Borrowing hereunder during such month. Each such notice (each a "Notice
of Borrowing"), which shall be in the form of Exhibit 2.5(a) hereto, shall
become irrevocable on the date which is three (3) Business Days prior to the
applicable borrowing date and shall specify the Project for which such
Borrowing will be used, the amount of such Borrowing, the date of Borrowing
(which shall be a Monthly Borrowing Date), and shall (i) certify that
construction of the Project has proceeded to such date within the overall
Project Budget and Borrower reasonably believes that completion of the
construction of the Project within the overall Project Budget will occur, (ii)
provide by line item in the Project Budget a summary of amounts expended prior
to the date of such requested Borrowing and amounts intended to be expended
from proceeds of such Borrowing and (iii) certify as such other matters with
respect to the relevant Project and the applicable Borrower as may from time to
time be required by the Agent. In the event that the applicable Borrower is
unable to certify as to any of the matters required to be set forth in the
Notice of Borrowing and certified by such Borrower, or in the event of any
inaccuracy or discrepancy contained therein, the Agent and the Banks shall not
be required to make the Borrowing so requested unless and until such
certifications, inaccuracies or discrepancies are remedied to the Agent's
satisfaction. On or before three (3) Business Days prior to any date of
Borrowing hereunder, the applicable Borrower shall give to the Agent at its
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address specified in this Section 2.5(a), a Rate Selection Notice with respect
to such Borrowing. The Agent shall promptly give each Bank telephonic notice
(confirmed in writing) or a facsimile transmission of each proposed Borrowing,
of such Bank's proportionate share thereof and of the other relevant matters
covered by the Notice of Borrowing and Rate Selection Notice. Without in any
way limiting each Borrower's obligation to confirm in writing any telephonic
notice, the Agent may act without liability upon the basis of telephonic notice
believed by the Agent in good faith to be from such Borrower prior to receipt
of written confirmation, each Borrower hereby waiving the right to dispute the
Agent's record of the terms of such telephonic notice. Schedule 2.5(a) hereto
sets forth, by way of example, the dates of notices and actions required by
this Section 2.5(a).
(b) On the last day of an Interest Period for an
outstanding Eurodollar Rate Loan, the principal amount of the Loan represented
by such outstanding Borrowing shall, subject to the conditions precedent set
forth in Section 6.4 hereof, be reborrowed (unless otherwise paid or prepaid)
by the applicable Borrower as a Roll-Over Borrowing and having such an Interest
Period as specified in the relevant Rate Selection Notice given or deemed given
pursuant to Section 2.8(b) unless such Loan shall be converted to a Prime Rate
Loan pursuant to Section 2.7(b) or Section 2.7(c) hereof. Notwithstanding
anything in this Agreement to the contrary, it is understood that Roll-Over
Borrowings do not constitute either new borrowings or disbursements by the
Banks of additional monies, the term "Roll-Over Borrowing" being used merely
for convenience of definition and to denote changes in interest rates.
(c) The aggregate principal amount of each Borrowing
(except for Roll-Over Borrowings and Interest Borrowings) by a Borrower
hereunder shall not be less than (i) in the case of a Prime Rate Loan, $25,000
and (ii) in the case of a Eurodollar Rate Loan, $1 million; provided, however,
that, subject to the other terms and conditions hereof, on the date of any
Roll-Over Borrowing of a Eurodollar Rate Loan, such Loan may be increased by
$25,000 or more on the date of reborrowing thereof pursuant to the preceding
subsection.
Section 2.6 Disbursement of Funds. Subject to the terms
hereof, no later than 1:00 P.M. (New York time) on the date specified in each
Notice of Borrowing, each Bank will make available its Pro Rata Share of each
Borrowing (except with respect to any Borrowing representing a Roll-Over
Borrowing in which case each Bank will be deemed to have made available its Pro
Rata Share of such Borrowing) requested to be made on such date in U.S. Dollars
and in immediately available funds, at the office (the "Payment Office") of the
Agent located at XXXXXXXXXX (for the account of such non-U.S. office of the
Agent as the Agent may direct in the case of Eurodollar Rate
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Loans) and the Agent will make available to the applicable Borrower at its
Payment Office the aggregate of the amounts so made available by the Banks.
Unless the Agent shall have been notified by any Bank prior to the date of
Borrowing that such Bank does not intend to make available to the Agent such
Bank's Pro Rata Share of the Borrowing to be made on such date, the Agent may
assume that such Bank has made such amount available to the Agent on such date
of Borrowing and the Agent may, in reliance upon such assumption, make
available to the applicable Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by such Bank on
the date of Borrowing, the Agent shall be entitled to recover such
corresponding amount on demand from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Agent's demand therefor, the Agent
shall promptly notify the applicable Borrower and the applicable Borrower shall
immediately pay such corresponding amount to the Agent. The Agent shall also
be entitled to recover from the applicable Borrower interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Agent to the Borrower to the date such
corresponding amount is recovered by the Agent, at a rate per annum equal to
the rate for Prime Rate Loans or Eurodollar Rate Loans, as the case may be,
applicable during the period in question. Any amounts due hereunder to the
Agent from the Banks which are not paid when due shall bear interest, from the
date due until the date paid, at the Federal Funds Rate. Nothing in this
Section 2.6 shall be deemed to relieve any Bank from its obligation to fulfill
its Loan Commitment hereunder or to prejudice any rights which any Borrower may
have against the Bank as a result of any default by such Bank hereunder.
Section 2.7 Interest.
(a) Each Borrower agrees to pay interest in respect of
the unpaid principal amount of each Prime Rate Loan made to such Borrower from
the date the proceeds thereof are made available to such Borrower until
maturity (whether by acceleration or otherwise) of such Prime Rate Loan, or
until such Prime Rate Loan is converted into a Eurodollar Rate Loan, at a
fluctuating rate per annum equal to the Prime Rate in effect from time to time.
Except as otherwise provided for herein, all other Obligations not paid when
due shall bear interest at the rate then borne by Prime Rate Loans.
(b) Each Borrower agrees to pay interest in respect of
the unpaid principal amount of each Eurodollar Rate Loan made to such Borrower
from the date the proceeds thereof are made available to such Borrower (whether
pursuant to a new Borrowing or a Roll-Over Borrowing) until maturity (whether at
the Interim Maturity Date, the Facility Termination Date or by acceleration or
otherwise) of such Eurodollar Rate Loan at a rate per annum which, unless
otherwise provided herein, shall be the relevant Eurodollar Rate plus the
Borrowing Margin. In the event that the Interim
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Maturity Date applicable to any Eurodollar Rate Loan shall occur less than one
month prior to the Facility Termination Date, then from and after such Interim
Maturity Date such Loan shall be a Prime Rate Loan hereunder.
(c) Notwithstanding the rates of interest specified in
clauses (a) and (b) above and the payment dates specified below, effective
immediately upon the occurrence of any Guarantor Event of Default and for so
long thereafter as any such Guarantor Event of Default shall be continuing, the
principal balance of each Loan then outstanding and, to the extent permitted by
applicable law, any interest payment on each Loan not paid when due, shall bear
interest payable upon demand, after as well as before judgment, at a rate per
annum equal to two percent (2%) above the greater of (i) the Prime Rate as
specified in clause (a) above or as otherwise provided herein, or (ii) if
applicable, the rate at which a Eurodollar Rate Loan bears interest as
specified in clause (b) above (such rate of interest being the "Default Rate").
(d) Interest shall accrue from and including the date of
any Borrowing to but excluding the date of any repayment thereof. Interest on
Eurodollar Rate Loans shall be payable by each Borrower in arrears on the
applicable Interim Maturity Date and in the case of an Interest Period in
excess of three months at intervals of every three months after the initial
date of such Interest Period, provided, however, that after the occurrence and
during the continuance of a Guarantor Event of Default with respect to each
Borrower or a Borrower Event of Default with respect to any Borrower, interest
shall be payable by such Borrower or Borrowers monthly in arrears every month
after the initial date of such Interest Period on each Monthly Borrowing Date.
Notwithstanding the above, interest shall be payable on any amount prepaid on
the date of such prepayment and upon final maturity of such Loan and after
maturity, on demand. Interest on each Prime Rate Loan shall be payable monthly
in arrears on the (tenth) 10th day of each calendar month or if such day is not
a Business Day on the next succeeding Business Day in such month, on the date
on which such Prime Rate Loan is converted to a Eurodollar Rate Loan, upon any
prepayment to the extent accrued on the amount prepaid, on maturity and, after
maturity, on demand. Interest on all Loans shall be computed on the basis of a
year consisting of 360 days and actual days elapsed.
(e) The Agent, upon determining the Eurodollar Rate for
any Interest Period, shall promptly notify by telephone or in writing the
applicable Borrower and the other Banks thereof.
(f) If any interest payment or other charge or fee
payable hereunder exceeds the maximum amount then permitted by applicable law,
the applicable Borrower shall be obligated to pay the maximum amount then
permitted by applicable law and the applicable Borrower shall continue to pay
the maximum amount from
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time to time permitted by applicable law until all such interest payments and
other charges and fees otherwise due hereunder (in the absence of such
restraint imposed by applicable law) have been paid in full. In the event any
interest payment or other charge or fee payable by any Borrower hereunder
(calculated without regard to this Section 2.7(f)) is determined to exceed the
maximum amount then permitted by applicable law, then, from and after the date
of such determination and notice thereof to all the Banks from the Agent, the
Banks shall not be required to make additional loans to such Borrower or any
other similarly situated Borrower pursuant to Section 2.1 or to participate in
Letters of Credit which are requested after the date of such determination and
notice for any such Borrower or similarly situated Borrower.
(g) When and as interest is due hereunder, the Agent will
invoice each Borrower for accrued interest or otherwise provide each Borrower
with a written statement as to outstanding Borrowings hereunder and interest
accruing thereon, and the Agent will concurrently mail a copy of each such
invoice or statement to the Guarantor; provided that the failure of the Agent
to provide any such invoice shall not affect the obligations of any Borrower to
pay any such amounts when and as due hereunder.
(h) If any Borrower shall fail to pay interest or fees
when due hereunder, the Agent may, in its sole discretion, to the extent of the
Unused Project Commitment relating to the Loan or Loans for which interest or
fees are then due, and as long as no Guarantor Event of Default shall then
exist, advance all or a part of the amount of such unpaid interest or fees as a
Loan to such Borrower and upon notification to each Bank, each Bank severally
and for itself alone, hereby agrees, on the terms and subject to the conditions
hereinafter set forth, to make a loan (an "Interest Borrowing") to such
Borrower in the lesser of the amount of interest or fees then due such Bank or
such Bank's Pro Rata Share of the applicable Unused Project Commitment. Any
Interest Borrowing made hereunder shall be made on the Monthly Borrowing Date
corresponding to the date such interest or fees are due and if such Borrower
has a Roll-Over Borrowing of a Eurodollar Rate Loan with an interest period of
approximately one month, such Borrowing shall be applied to increase the
principal amount of such Loan. In the event such Borrower does not have a
Roll-Over Borrowing of a Eurodollar Rate Loan with an interest period of
approximately one month, then such Interest Borrowing shall be made as a Prime
Rate Loan.
Section 2.8 Interest Periods. (a) Subject to Section
2.8(b), at the time it gives any Notice of Borrowing of a Eurodollar Rate Loan,
a Borrower shall elect, by giving the Agent written notice, the interest period
(each an "Interest Period") applicable to the related Borrowing, which Interest
Period shall, at the option of such Borrower, be an approximate period of one,
two, three, six, or if available, nine or twelve months, with the
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Interim Maturity Date for such Eurodollar Rate Loan corresponding to the
applicable Monthly Borrowing Date in the month of maturity so elected,
provided that:
(i) the Interest Period for any Eurodollar Rate
Loan shall commence on the date of such Borrowing and each
Interest Period occurring thereafter in respect of such Loan
shall commence on the day on which the next preceding
Interest Period expires;
(ii) if any Interest Period would otherwise expire
on a day which is not a Business Day, such Interest
Period shall expire on the next succeeding Business
Day, provided, however, that if any Interest Period in
respect of a Eurodollar Rate Loan would otherwise expire on
a day which is not a Business Day and after which no
Business Day occurs in such month, such Interest Period
shall expire on the next preceding Business Day;
(iii) no Interest Period shall extend beyond the
Facility Termination Date; and
(iv) no Borrower may have more than three (3)
Eurodollar Tranches for any single Project at any one time
outstanding, one of which shall have an Interest Period of
approximately one month.
A Prime Rate Loan shall have no Interest Period but may (subject to the other
terms and conditions hereof), on any Monthly Borrowing Date and upon the
delivery by the applicable Borrower to the Agent of a Rate Selection Notice, be
converted to a Eurodollar Rate Loan as a Roll-Over Borrowing.
(b) Subject to the restrictions set forth in Sections
2.7(b) and (c) and Section 2.8(a) above, on or before three (3) Business Days
prior to the date of any Interim Maturity Date, the applicable Borrower shall
give the Agent a Rate Selection Notice with respect to the principal amount of
each Loan maturing on such Interim Maturity Date provided, however that if
such Borrower fails to provide such notice on a timely basis, such Borrower
shall be deemed to have requested a new Interest Period for such Loan equal to
the number of days until the next successive Monthly Borrowing Date, or if such
new Interest Period would violate clause (iii) of Section 2.8(a) above, equal
to the longest Interest Period which would be permitted at such time without
violating such clause.
Section 2.9 Increased Costs, Illegality, etc. (a) In the event
that any Bank shall have determined (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties):
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(i) on any date for determining the Eurodollar Rate for
any Interest Period, that by reason of any changes arising after the
date of this Agreement affecting the interbank Eurodollar market,
adequate means do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of Eurodollar Rate;
or
(ii) at any time, that by reason of (A) any change since
the date of this Agreement in any applicable law or governmental rule,
regulation, guideline or order (or any official interpretation thereof
and including the introduction of any new law or governmental rule,
regulation, guideline or order) and/or (B) in the case of Eurodollar
Rate Loans, other circumstances affecting such Bank, the interbank
Eurodollar market or the position of such Bank in such market (such
as, for example but not limited to, a change in official reserve
requirements, but excluding reserve requirements which have been
included in calculating the Eurodollar Rate for a given Interest
Period specified in the definition of "Eurodollar Rate") or otherwise
as to any Loan such Bank shall be subject to any tax, duty or other
charge with respect to its Loans or there shall have been a change in
the basis of taxation of payments to such Bank (or its applicable
lending office) of the principal of or interest on its Loans or any
other amounts due under this Agreement in respect of its Loans (except
for changes in the rate of tax on the overall net income of such Bank
or its applicable lending office imposed by the jurisdiction in which
such Bank's principal executive office or lending office is located)
such that the Eurodollar Rate shall not represent the effective cost
to such Bank for funding or maintaining the affected Eurodollar Rate
Loan; or
(iii) at any time, that the making or continuance of any
Eurodollar Rate Loan has become unlawful as a result of compliance by
such Bank in good faith with any law, governmental rule, regulation,
guideline or order, or has become impracticable as a result of a
contingency occurring after the date of this Agreement; or
(iv) any reserve, deposit or similar requirement is or
shall be applicable, imposed or modified in respect of any Loans or
commitments to make Loans (but excluding reserve requirements which
have been included in calculating any interest rate with respect
thereto);
then and in any such event, such Bank shall promptly give notice (by telephone
confirmed in writing) to the appropriate Borrower and to the Agent of such
determination (which notice the Agent shall promptly transmit to each of the
other Banks). Thereafter (A) in the case of clauses (ii) and (iv), each
Borrower shall pay to such Bank, upon written demand therefor, such additional
amounts (in the form of an increased rate of, or a different method of
calculating,
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interest or otherwise as such Bank in its sole discretion shall determine) as
shall be required to cause such Bank to receive interest with respect to its
affected Loans at a rate per annum which shall be an amount equal to the
applicable interest rate plus the Borrowing Margin then in effect, if any, with
respect to such Loans plus such additional amounts as will compensate such Bank
for the effective cost to the Bank to make or maintain such Loans and (B) in
the case of clause (iii) take one of the actions specified in Section 2.9(b)
as promptly as possible and, in any event, within the time period required by
law.
(b) At any time that any of its Eurodollar Rate Loans are affected by
any of the circumstances described in Section 2.9(a)(i) or Section 2.9(a)(iii)
the relevant Borrower may (and in the case of a Eurodollar Rate Loan
affected pursuant to Section 2.9(a)(i) or Section 2.9(a)(iii) shall):
(i) if the affected Eurodollar Rate Loans are yet to be made
pursuant to a Notice of Borrowing, either:
(A) withdraw the related Notice of Borrowing by
giving the Agent telephonic (confirmed in writing) notice
thereof on the same date that such Borrower was notified by any
Bank pursuant to Section 2.9(a) hereof, or
(B) borrow such Borrowing as a Prime Rate Loan; and
(ii) if the affected Eurodollar Rate Loan or Loans are then
outstanding, reborrow each Eurodollar Rate Loan so affected on the
next following Interim Maturity Date as a Prime Rate Loan or Prime
Rate Loans;
provided that if more than one Bank is affected at any time, then all affected
Banks must be treated the same pursuant to this Section 2.9(b). Until the
Agent notifies such Borrower that the circumstances described in Section
2.9(a)(i) or Section 2.9(a)(iii) no longer exist, the obligations of the
Banks to make Eurodollar Rate Loans, as the case may be, shall be suspended,
but, subject to the other terms and conditions of this Agreement, the Banks'
obligations to make Prime Rate Loans shall not be suspended.
(c) Promptly after giving any notice to any Borrower pursuant to
Section 2.9(a), any Bank giving such notice will use its best efforts to
designate one of its offices located at an address other than that set forth in
Section 9.3 as the office from which its Pro Rata Share of any Borrowing will
be made after such designation if such designation will avoid the need for, or
reduce the amount of, any payment to which such Bank would otherwise be
entitled pursuant to Section 2.9(a) and will not, in the sole discretion of
such Bank, be otherwise disadvantageous to such Bank or contrary to its
internal policies.
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(d) Without limiting the foregoing, in the event that any
Bank (an "Affected Bank") shall have determined that the adoption of
any law, treaty, or governmental (or quasigovernmental) rule, regulation,
guideline or order regarding capital adequacy, or any change therein or in the
interpretation or application thereof, or compliance by any Bank with any
request or directive regarding capital adequacy (whether or not having the
force of law and whether or not failure to comply therewith would be unlawful)
from any central bank or governmental agency or body having jurisdiction (a
"Change in Law"), does or shall have the effect of increasing the amount of
capital required to be maintained by such Bank or reducing the rate of return
on such Bank's capital as a consequence of its obligations hereunder to a level
below that which such Bank could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's policies with respect to
capital adequacy), then each Borrower shall from time to time, within five (5)
Business Days after written notice and demand from such Bank, pay to such Bank,
additional amounts sufficient to compensate such Bank for the cost of such
additional required capital to the extent not otherwise reflected in the
calculation of the Prime Rate and Eurodollar Rate, as applicable, or such
additional amount or amounts as will compensate such Bank for such reduced rate
of return, provided, however, that if:
(i) a Bank has advance knowledge of a Change in Law,
(ii) such Bank is or becomes aware that such Change in Law
will result in a determination of increased cost under this Section
2.9(d), and
(iii) the amount of such increased cost is determinable in
advance,
then such Bank shall use reasonable efforts to provide at least thirty (30)
days (or such shorter period when each of (i), (ii) and (iii) above are true)
advance notice and demand for such additional amounts. A certificate as to the
amount of such cost, submitted to such Borrower by such Bank, shall, absent
manifest error, be final, conclusive and binding for all purposes.
(e) In the event any Borrower shall be required to pay
any increased cost to any Bank or any Participant thereof pursuant to the
foregoing provisions of this Section 2.9, such Borrower shall be entitled, by
so notifying the Agent and such Bank within thirty (30) days after such Bank
notifies such Borrower of any such increased cost, to arrange for the
substitution of another lender (which shall be an Eligible Assignee) for such
Bank within sixty (60) days thereafter pursuant to the relevant provisions
of Section 9.8(c), whereupon, upon the effectiveness of such substitution, the
affected Loans and the Loan Commitment and Project Commitments of
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such Bank shall be assigned to such assignee; provided, however,
that:
(i) the Bank shall be entitled to withdraw its notice of
increased taxes or costs within a period of thirty (30) days from
the date of notice by such Borrower, whereupon such Borrower
shall no longer be entitled to substitute for the Bank as described
above;
(ii) in no event shall such Borrower be entitled to
substitute for any Bank unless the net present value of the
additional cost to such Borrower (including closing costs) of such
substitution is less than the net present value of the additional
cost (including increased taxes and costs payable pursuant to this
Section 2.9) to such Borrower of maintaining such Loans of the Bank
(discounted to the time in question using the same assumed rate of
interest); and
(iii) in all events (other than that described in clause (i)
above), such Borrower shall remain liable for the increased taxes and
costs of the Bank for the period prior to such prepayment of the
Bank's Loans or the substitution of the assignee.
Section 2.10 Compensation. Each Borrower shall compensate
each Bank, upon its written request (which request shall set forth the basis
for requesting such amounts), for all losses, expenses and liabilities
(including, without limitation, any interest paid by such Bank to lenders of
funds borrowed by it to make or carry its Eurodollar Rate Loans to the extent
not recovered by the Bank in connection with the re-employment of such funds
and including the compensation payable by such Bank to a Person to which the
Bank has participated all or a portion of such Borrowing) and any loss
sustained by such Bank in connection with the reemployment of such funds
(including, without limitation, a return on such reemployment that would result
in such Bank receiving less than it would have received had such Eurodollar
Rate Loan remained outstanding until the last day of the Interest Period
applicable to such Eurodollar Rate Loan) which the Bank may sustain as a result
of:
(i) for any reason (other than a default by such Bank or
the Agent) a Borrowing of Eurodollar Rate Loans does not occur on a
date specified therefor in a Notice of Borrowing (whether or not
withdrawn);
(ii) any payment, prepayment or reborrowing of any
Eurodollar Rate Loan occurring for any reason whatsoever on a date
which is not the last day of an Interest Period applicable thereto; or
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(iii) any other failure by such Borrower to repay is Loans when
required by the terms of this Agreement.
Section 2.11 Responsibility for Making Loans. No Bank shall be
responsible for any default by any other Bank in its obligation to make Loans
hereunder and each Bank shall be obligated to make the Loans provided to be
made by it hereunder, regardless of the failure of any other Bank to fulfill
its Loan Commitment hereunder.
Section 2.12 Withholding Tax Exemption. At least five (5) Business
Days prior to the first day on which interest or fees are payable hereunder for
the account of any Bank, each Bank that is not incorporated under the laws of
the United States of America, or a state thereof, agrees that it will deliver
to the Agent two duly completed copies of United States Internal Revenue
Service Form 1001 or Form 4224, certifying in either case that such Bank is
entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes. Each Bank
which so delivers a Form 1001 or Form 4224 further undertakes to deliver to the
Agent two (2) additional copies of such form (or any applicable successor form)
on or before the date that such form expires (currently, three (3) successive
calendar years for Form 1001 and one (1) calendar year for Form 4224) or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent forms so delivered by it, and such amendments thereto or extensions
or renewals thereof as may be reasonably requested by the Agent, in each case
certifying that such Bank is entitled to receive payments under this Agreement
and the Notes without deduction or withholding of any United States federal
income taxes, unless an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Bank from duly completing and delivering any such
form with respect to it and such Bank advises the Agent that it is not capable
of receiving payments without any deduction or withholding of United States
federal income taxes.
Section 2.13 Letters of Credit. (a) Subject to the terms and conditions
hereof, each LC Bank, severally, and not jointly, agrees to issue, each in its
own name but for the ratable benefit of all Banks, one or more irrevocable
standby letters of credit having a Stated Amount in Dollars and otherwise in
form and substance acceptable to Agent and the applicable LC Bank (together
with any increase or decrease in the Stated Amount thereof and together with
any renewals, amendments and/or extensions thereof, all in accordance with the
terms hereof and thereof, each a "Letter of Credit" and collectively, "Letters
of Credit") for the account of any LC Borrower, from the date of this Agreement
to but not including a date 90 days prior to the Facility Termination Date at
such times as any LC Borrower may request; provided, however, that
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the aggregate Stated Amount of Letters of Credit (including such requested
Letter of Credit) at any one time outstanding shall not exceed the aggregate
amount of Loan Commitments minus the aggregate principal amount of outstanding
Loans and, with respect to any Project, the aggregate Stated Amount of Letters
of Credit for such Project (including such requested Letter of Credit) at any
one time outstanding shall not exceed the Project Commitment for such Project
minus the aggregate principal amount of outstanding Project Loans for such
Project; provided, further, that each Letter of Credit shall be for the purpose
of providing standby credit for AFICA Bond or other financing with respect to
the applicable Project. The issuance of a Letter of Credit pursuant to this
Section 2.13(a) shall be deemed to be a Borrowing for purposes of the
satisfaction of the applicable conditions set forth in Article VI hereof, and
shall reduce the Total Unused Commitment of the Banks then in effect by an
amount equal to the Stated Amount of such Letter of Credit as set forth herein.
Each Bank agrees to participate in each such Letter of Credit issued by a LC
Bank in an amount equal to its Pro Rata Share of the Stated Amount of the
Letter of Credit requested by the applicable LC Borrower; provided, however,
that no Bank shall be required to participate in any Letter of Credit to the
extent that its participation therein plus (i) such Bank's Pro Rata Share of
the aggregate Stated Amount of all other Letters of Credit and (ii) such Bank's
Pro Rata Share of the outstanding principal amount of any Loans, would exceed
an amount equal to such Bank's Loan Commitment as then in effect or, with
respect to any Project, to the extent that its participation therein plus (i)
such Bank's Pro Rata Share of the aggregate Stated Amounts of all other Letters
of Credit for such Project and (ii) such Bank's Pro Rata Share of the
outstanding principal amount of Loans with respect to such Project would exceed
an amount equal to such Bank's Project Commitment then in effect with respect
to such Project. Subject to the foregoing, each Bank agrees with the LC Banks
that it will participate in each Letter of Credit issued by any LC Bank. No
Bank's obligation to participate in a Letter of Credit shall be affected by any
other Bank's failure to participate in the same or any other Letter of Credit.
(b) The LC Borrower shall deliver to Agent, at least ten
(10) Business Days (or such shorter period as may be agreed to by the Agent in
any particular instance) prior to the proposed issuance date or amendment date
of any Letter of Credit, a LC Request. The LC Borrower may also transmit a LC
Request by means of facsimile transmission at least ten (10) Business days (or
such shorter period as may be agreed to by the Agent in any particular
instance) prior to the proposed issuance date or amendment date of any Letter
of Credit, provided that the LC Borrower also delivers to the Agent a LC
Request at least five (5) Business Days (or such shorter period as may be
agreed to by the Agent in any particular instance) prior to the proposed
issuance date or amendment date of any Letter of Credit. Upon receipt of a LC
Request for the proposed issuance of a Letter of Credit, the Agent shall seek
bids for the issuance
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of such requested Letter of Credit from such Banks as Guarantor may select or
if Guarantor does not so select, from such Banks as the Agent may determine.
Upon receipt of one or more of such bids, the Agent and Guarantor shall select
the Bank or Banks to be the LC Bank or LC Banks based upon an evaluation by
Guarantor and the Agent of price, market conditions and any other factors
deemed relevant by Guarantor or the Agent. The Agent shall promptly notify the
Bank or Banks selected to be the LC Bank or LC Banks with respect to the
requested Letter of Credit or Letters of Credit. Not more than two (2)
Business Days after the issuance of any Letter of Credit, the applicable LC
Bank shall notify each Bank of the amount and other terms of such Letter of
Credit or amendment and of the date of issuance and shall provide each Bank
with a copy of such Letters of Credit or amendment. Subject to the terms and
conditions set forth in Section 2.13(a), the LC Bank will make the Letter of
Credit available at the LC Bank's principal office not later than 4:00 P.M.
(New York time) on the issuance date, and, immediately upon the issuance of
each Letter of Credit, each Bank shall be deemed to participate in such Letter
of Credit to the extent set forth in Section 2.13(a).
(c) Each of the Authorized LC Officers of a LC Borrower may request
a Letter of Credit pursuant to Section 2.13(b) on behalf of such LC Borrower.
The LC Bank shall be entitled to rely conclusively on an Authorized LC
Officer's authority to request a Letter of Credit on behalf of a LC Borrower
until the LC Bank receives written notice to the contrary. The LC Bank shall
have no duty to verify the authenticity of the signature appearing on any LC
Request and, with respect to a facsimile transmission or computer entry request
for a Letter of Credit, the LC Bank shall have no duty to verify the identity
of any Person representing himself as one of the Authorized LC Officers
entitled to make such request on behalf of a LC Borrower.
(d) Each LC Request shall be irrevocable, and the applicable LC
Borrower shall be bound to accept the issuance of a Letter of Credit in
accordance therewith unless, on or before two (2) Business Days (or such
shorter period as may be agreed to by the Agent and the proposed LC Bank in any
particular instance) prior to the proposed issuance date set forth in such LC
Request, the LC Borrower provides written notice of revocation thereof to the
Agent and such proposed LC Bank; provided, that in the event of a LC Request
for a proposed Letter of Credit to be issued with respect to a AFICA Financing
Agreement, such LC Request may be cancelled by the applicable LC Borrower at
any time prior to the issuance of the proposed Letter of Credit, so long as the
applicable LC Bank receives actual notice of such cancellation, receipt of
which is confirmed by such LC Bank in writing.
(e) Each LC Borrower acknowledges that neither the Agent nor any LC
Bank is obligated to such LC Borrower to accept a LC Request by facsimile
transmission or computer entry or to issue Letters of
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Credit in accordance with such LC Requests, but that the Agent or the LC Bank
may do so solely as a convenience to such LC Borrower. The Agent or any LC
Bank may at any time notify a LC Borrower that the Agent or such LC Bank no
longer will accept any future LC Request by facsimile transmission or computer
entry. The LC Borrower acknowledges that the facsimile transmission or
computer entry of a LC Request to a LC Bank and such LC Bank's ability to issue
Letters of Credit in accordance with such LC Requests, may be interrupted or
affected by industrial disputes, acts of government, acts of God, fires, power
failures, computer malfunctions, civil disturbances or other causes or events
not within the control of such LC Bank. Each LC Request received by facsimile
transmission or computer entry, and the issuance of each Letter of Credit
pursuant to such a LC Request, shall be subject to, and shall be governed by,
the terms and conditions of such Letter of Credit and the provisions of this
Agreement.
(f) All Letters of Credit shall have a stated expiration date;
provided, however, that no Letter of Credit shall be stated to expire on a date
which is after the date thirty (30) days prior to August 7, 1997, or August 7,
1998 if the option set forth in Section 3.10 hereof is exercised.
(g) In the event that any amount is drawn under a Letter of Credit,
the applicable LC Borrower shall immediately reimburse the applicable LC Bank
for such amount drawn. In the event that the applicable LC Borrower shall not
have immediately reimbursed the applicable LC Bank for the amount so drawn,
such amount drawn shall be treated as an outstanding Prime Rate Loan under this
Agreement and such LC Bank shall promptly notify each Bank by telex, telecopy,
telegram, telephone or other similar means of transmission, and each Bank shall
promptly and unconditionally pay to such LC Bank, for the applicable LC Bank's
own account, an amount equal to such Bank's Pro Rata Share of such Letter of
Credit (to the extent of the amount drawn). If and to the extent any such Bank
shall not make such amount available to the LC Bank on the Business Day on
which such draw occurs, such Bank agrees to pay such amount to such LC Bank
forthwith on demand, together with interest thereon, for each day from the date
on which such draw occurred until the date on which such amount is paid to such
LC Bank, at the Federal Funds Rate until three days after the date on which
such LC Bank gives notice of such draw and at the Federal Funds Rate plus 1%
for each day thereafter. Further such Bank shall be deemed to have assigned
any and all payments made of principal and interest on its Loans, amounts due
with respect to its Letters of Credit and any other amounts due to it hereunder
to such LC Bank to fund the amount of any drawn Letter of Credit which such
Bank was required to fund pursuant to this Section 2.13(g) until such amount
has been funded (as a result of such assignment or otherwise). The failure of
any Bank to make funds available to such LC Bank of such amount shall not
relieve any other Bank of its
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obligation hereunder to make funds available to such LC Bank pursuant to
this Section 2.13(g).
(h) The obligation of a LC Borrower to reimburse the applicable LC
Bank, and of the Banks to make payments to such LC Bank with respect to Letters
of Credit shall be irrevocable and shall not be subject to any qualification or
exception whatsoever and shall be made in accordance with the terms and
conditions of this Agreement under all circumstances, including, without
limitation, any of the following circumstances:
(i) Any lack of validity or enforceability of this
Agreement, any Letter of Credit or any of the other Loan
Documents;
(ii) The existence of any claim, setoff, defense
or other right which a LC Borrower may have at any time
against a beneficiary named in a Letter of Credit or any
transferee of any Letter of Credit (or any Person for
whom any such transferee may be acting), the LC Bank,
any Bank or any other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions
(including any underlying transactions between a LC
Borrower and the beneficiary named in any Letter of
Credit);
(iii) Any draft, certificate or any other
document presented under the Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or
inaccurate in any respect;
(iv) The surrender or impairment of any security for the
performance or observance of any of the terms of any of
the Loan Documents;
(v) Payment by a LC Bank under any Letter of
Credit against presentation of a demand, draft or
certificate or other document which does not comply with
the terms of such Letter of Credit; provided, that such
payment does not constitute gross negligence or willful
misconduct of such LC Bank;
(vi) Any other circumstance or happening whatsoever which
would give rise to a defense against payment or is
similar to any of the foregoing; or
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(vii) The occurrence of any Guarantor Event of Default,
Borrower Event of Default, Unmatured Guarantor Event of
Default or Unmatured Borrower Event of Default.
(i) Whenever a LC Bank receives a reimbursement payment from a LC
Borrower on account of an amount drawn under a Letter of Credit issued by such
LC Bank, as to which such LC Bank has received for its own account any payment
from the Banks pursuant to this Section 2.13, then such LC Bank shall promptly
pay such amount to Agent in Dollars and in the kind of funds so received, and
the Agent shall apply such amount, as prepayment of such LC Borrower's Loan
Obligations. Any amount so applied shall be treated as a permanent reduction
of the Project Commitment with respect to the Project for which such Letter of
Credit was issued.
(j) Each LC Borrower shall pay to the Agent for the account of the
Banks (based on their respective Pro Rata Share of Letters of Credit),
quarterly in arrears on or prior to the day ten (10) days after the last day of
each calendar quarter, or if such day is not a Business Day, on the next
succeeding Business Day, a fee of one-half of one percent (.50%) per annum
(calculated on the basis of a year of 360 days, for actual days elapsed) of the
average daily aggregate amount available for drawing during the period from and
including the first day of such calendar quarter through the last day of such
calendar quarter under all outstanding Letters of Credit issued on behalf of
such LC Borrower; provided, however, that during any period when the long-term
Indebtedness of Guarantor shall be unrated or shall be rated BBB or lower by
Standard & Poor's Corporation or Baa2 or lower by Moody's Investors Service,
Inc., the fee set forth above shall be three quarters of one percent (.75%) per
annum. In addition, each LC Borrower shall pay the standard service charges
for Letters of Credit issued from time to time by the applicable LC Bank,
including, without limitation, a facing fee and such additional fees as may be
required in connection with the issuance and servicing or proposed issuance of
such Letter of Credit. Such additional fees shall be paid to the applicable LC
Bank for its own account. All such fees shall be payable when due in
immediately available funds and shall be nonrefundable.
(k) If by reason of (A) any change since the date of this
Agreement in any applicable law, governmental rule, regulation, guideline or
order (or any official interpretation thereof and including the introduction
of any new law or governmental rule, regulation, guideline or order) or (B)
compliance by a LC Bank or any of the Banks with any direction, request or
requirement (whether or not having the force of law) of any governmental or
monetary authority including, without limitation, Regulation D:
(i) Any Bank or LC Bank shall be subject to any tax, levy,
charge or withholding of any nature
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or to any variation thereof or to any penalty with
respect to the maintenance or fulfillment of its
obligations under this Section 2.13 (except for changes
in the rate of tax on the overall net income of such
Bank or LC Bank imposed by the jurisdiction in which the
principal executive office of such Bank or LC Bank is
located), whether directly or by such tax, levy, charge,
withholding, variation or penalty being imposed on or
suffered by such Bank or LC Bank;
(ii) any reserve, deposit or similar requirement is or shall
be applicable, imposed or modified in respect of any
Letters of Credit issued by a LC Bank (including,
without limitation, reimbursement obligations
thereunder) and participated in by the Banks; or
(iii) there shall be imposed on a LC Bank or any Bank any
other condition regarding any Letter of Credit issued by
a LC Bank (including, without limitation, reimbursement
obligations thereunder) and participated in by the Banks
pursuant of this Section 2.13;
and the result of the foregoing is to directly or indirectly increase the cost
of any Bank or LC Bank of issuing, making, maintaining or participating in any
Letter of Credit, or to reduce the amount receivable in respect thereof by any
Bank or LC Bank, then such Bank or LC Bank may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify any LC Borrower and such LC Borrower shall pay on demand such amounts as
such Bank or LC Bank may specify to be necessary to compensate it for such
additional cost or reduced receipt. The determination by any Bank or LC Bank
of any amount due pursuant to this Section 2.13(k) as set forth in a
certificate setting forth the calculation thereof in reasonable detail, shall,
in the absence of manifest error, be final, conclusive and binding on all of
the parties hereto.
(1) Without limiting the foregoing, in the event that any LC Bank
or Bank shall have determined that a Change-in-Law, does or shall have the
effect of increasing the amount of capital required to be maintained by such LC
Bank or Bank with respect to, or as a result of, the issuance of, a
participation in or the existence of Letters of Credit hereunder, then each LC
Borrower shall from time to time, within five (5) days of written notice and
demand from any such LC Bank or Bank (with a copy to the Agent and the
applicable LC Bank), pay such LC Bank or Bank for the cost of such additional
required capital. A certificate as to the amount of such cost, submitted to a
LC Borrower by the applicable LC Bank or Bank,
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<PAGE> 48
shall, absent manifest error, be final, conclusive and binding for all
purposes.
(m) Notwithstanding anything to the contrary contained in clauses (k)
or (l) of this Section 2.13, if:
(i) a LC Bank or Bank has advance knowledge of a change in law
as described in either such clause (k) or (l),
(ii) such LC Bank or Bank is or becomes aware that such
change in law will result in a determination of increased cost under
either such clause (k) or (l), and
(iii) the amount of such increased cost is determinable in
advance,
then such LC Bank or Bank shall use reasonable efforts to provide at least
thirty (30) days (or such shorter period when each of (i), (ii) and (iii) above
are true) advance notice and demand for such additional amounts. A certificate
as to the amount of such cost, submitted to such LC Borrower by such LC Bank or
Bank, shall, absent manifest error, be final, conclusive and binding for all
purposes.
(n) In the event any LC Borrower shall be required to pay any
increased cost to any LC Bank or Bank or any Participant thereof pursuant to
the foregoing provisions of clauses (k) or (l) of this Section 2.13, such LC
Borrower shall be entitled, by so notifying the Agent and such LC Bank or Bank
within thirty (30) days after such LC Bank or Bank notifies such LC Borrower of
any such increased cost, (x) in the case of notice of increased cost given by a
LC Bank, to request the issuance of a new letter of credit as a substitute for
the Letters of Credit issued by such LC Bank (but only to the extent such
substitution is permissible under the terms of the Letter of Credit, would not
result in a Borrower Event of Default or Unmatured Borrower Event of Default
and would not result in a drawing of any portion of the Stated Amount of such
Letter of Credit by the beneficiary thereof), or (y) in the case of notice of
increased cost given by a Bank participating in a Letter of Credit, to arrange
for the substitution of another participant for such Bank (which shall be an
Eligible Assignee) within sixty (60) days thereafter pursuant to the relevant
provisions of Section 9.8(c), whereupon, upon the effectiveness of such
substitution, the affected participations of such Bank in Letters of Credit
shall be assigned to such assignee; provided, however, that:
(i) the LC Bank or Bank, as the case may be, shall be
entitled to withdraw its notice of increased taxes or costs within a
period of thirty (30) days from the date of notice by such LC
Borrower, whereupon such LC Borrower shall no longer be entitled to
substitute for the LC Bank or Bank as described above;
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(ii) in no event shall such LC Borrower be entitled to
substitute for a LC Bank or Bank unless the net present value of the
additional cost to such LC Borrower (including closing costs) of such
substitution is less than the net present value of the additional cost
(including increased taxes and costs payable pursuant to clauses (k)
or ("l") of this Section 2.13) to such LC Borrower of maintaining
such issuances of the LC Bank of Letters of Credit or participation
of the Bank in Letters of Credit (discounted to the time in question
using the same assumed rate of interest); and
(iii) in all events (other than that described in clause (i)
above), such LC Borrower shall remain liable for the increased
taxes and costs of the LC Bank or Bank for the period prior to
replacement of such LC Bank or substitution of the assignee for such
Bank with respect to Letters of Credit issued or participated in by
it, as the case may be.
(o) Each LC Borrower hereby agrees, in furtherance and extension
and not in restriction of the specific provisions of Section 2.13 and any of
any other provision of this Agreement or any other Loan Document, that neither
any LC Bank nor any Bank shall be liable to any LC Borrower, and that, except
in the case of any LC Bank's gross negligence or willful misconduct (as
determined by a court of competent jurisdiction) each LC Borrower will protect,
reimburse, indemnify and pay each LC Bank and each Bank and their respective
officers, directors, and employees for, and hold each LC Bank and each Bank
harmless from and against any and all claims, obligations, demands,
liabilities, damages, penalties, actions, judgements, suits, losses, costs,
charges or expenses of any kind whatsoever, howsoever caused, including,
without limitation, any attorneys' fees or expenses (including allocated costs
of internal counsel), paid, suffered or incurred by, or imposed upon any LC
Bank or any Bank, directly or indirectly, as a result or consequence of, or in
any way connected with, (i) the action taken by any LC Bank or any Bank under
or in connection with any Letter of Credit or related certificates, (ii) the
failure of any LC Bank to honor a drawing under any Letter of Credit as a
result of any act or omission, whether rightful or wrongful, of any present or
future government or governmental authority (all such acts or omissions herein
called "Government Acts"), (iii) the failure of any LC Bank to issue a Letter
of Credit pursuant to a LC Request, or (iv) for otherwise acting in accordance
with this Section 2.13.
(p) As between (i) any LC Borrower and (ii) the applicable LC Bank
and the Banks, such LC Borrower assumes all risks of the acts and omissions of,
or misuse of the Letters of Credit issued by such LC Bank, by the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation
of the foregoing, no LC Bank shall be responsible: (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
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any party in connection with the application for and issuance of such Letters
of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity
or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the right or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of
any such Letter of Credit to comply fully with conditions required in order to
draw upon such Letter of Credit; (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) for errors in
interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; and (viii) for any consequences
arising from causes beyond the reasonable control of such LC Bank, including,
without limitation, any Government Acts. None of the above shall affect,
impair, or prevent the vesting of any of such LC Bank's rights or powers
hereunder.
(q) Any cash deposited by any Borrower pursuant to a requirement
in this Agreement to cash collateralize or provide cash collateral in respect
of any Letter of Credit, or any similar requirement provided for in this
Agreement, shall, until the expiration date of the applicable Letter of Credit,
be held in trust by Agent (or, at the Agent's option, as cash collateral) for
Banks in a noninterest bearing account and the relevant Borrower shall have no
right to or interest in such funds and such funds shall be used to satisfy any
Obligations with respect to Letters of Credit issued on behalf of Borrower or
any other Obligations of Borrower; provided, however, that any funds held in
such account shall be invested by the Agent (to the extent the Agent is able to
do so) on behalf of the relevant Borrower at the direction of such Borrower in
Permitted Investments selected by such Borrower and having a maturity not
exceeding the Business Day prior to the expiration of the relevant Letter of
Credit. All fees and other Obligations with respect to the applicable Letter
of Credit shall continue to accrue until the expiration of such Letter of
Credit and the satisfaction of all Obligations with respect thereto. Any such
investments shall be held by the Agent or under the control of the Agent. The
interest accruing on such investments and any profits realized from such
investments shall after giving effect to such satisfaction of all Obligations
with respect to such Letters of Credit, be paid to the relevant Borrower;
provided that any loss resulting from such investments shall be charged to and
be immediately payable by such Borrower upon demand of the Agent.
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ARTICLE III
TERMINATION OF LOAN COMMITMENTS, PREPAYMENTS AND FEES
Section 3.1 Mandatory Reduction of the Loan Commitments. If at any
time for any Project, the principal amount of a Loan by any Bank plus such
Bank's Pro Rata Share of the aggregate Stated Amount of any Letters of Credit
for such Project exceeds the Project Commitment of such Bank then in effect
with respect to such Project, the applicable Borrower shall immediately pay the
Agent an amount equal to such excess. The Agent shall then apply such payment
first, to prepay the Loan Obligations incurred with respect to such Project,
including the Notes evidencing such Loan Obligations, and second, to cash
collateralize any Letters of Credit with respect to such Project. If any
Guarantor Event of Default shall have occurred and the Agent shall have
notified the Borrowers of the election of the Required Banks to take any action
specified in Section 7.1, the Loan Commitment and each Project Commitment of
each Bank shall be automatically reduced to $0 without any action on the part
of or the giving of notice to any Borrower by the Agent or any Bank. If a
Borrower Event of Default shall have occurred and the Agent shall have notified
the relevant Borrower of the election of the Required Banks to take any action
specified in Section 7.2, the Project Commitment of each Bank for all Projects
of such Borrower shall be automatically reduced to $0 without any action on the
part of or the giving of notice to such Borrower by the Agent or any Bank.
Section 3.2 Voluntary Reduction of the Total Commitment or any Project
Commitment. (a) After the Initial Borrowing Date, the Guarantor (which the
Borrowers hereby jointly and severally irrevocably designate as their
collective agent for such purpose) shall have the right, upon at least five (5)
Business Days' prior written notice to the Banks, without premium or penalty,
to permanently reduce or terminate the unutilized portion of the Unallocated
Total Commitment of the Banks, in whole at any time or in part from time to
time, in a minimum amount of $5 million (unless the amount of such Unallocated
Total Commitment at such time is less than $5 million, in which case, in an
amount equal to the amount of such Total Commitment at such time) and, if such
reduction is greater than $5 million, in an integral multiple of $1 million,
provided that any such reduction shall apply proportionately to the Loan
Commitment of each of the Banks. The Total Commitment shall not be so reduced
below the aggregate principal amount of outstanding Loans plus the aggregate
Stated Amount of any Letters of Credit nor shall the Total Commitment be
reduced below the amount of the Total Project Commitment at such time.
(b) After the Completion Date with respect to any Project, the
Guarantor (which the Borrowers hereby jointly and
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severally irrevocably designate as their agent for such purpose) shall have the
right, upon at least five (5) Business Days' prior written notice to the Banks,
without premium or penalty, to permanently reduce or terminate the unutilized
portion of the Project Commitment of the Banks with respect to such Project, or
to reallocate the unutilized portion of such Project Commitment to any other
Project, provided that any such reduction or termination shall apply
proportionately to the Project Commitment of each of the Banks. The Project
Commitment for any Project shall not be so reduced below the aggregate
principal amount of outstanding Loans plus the aggregate Stated Amount of any
Letters of Credit for such Project.
Section 3.3 Voluntary Prepayments of the Loan Obligations. Any
Borrower may, as hereinafter provided, prepay the Loan Obligations of such
Borrower, and the Notes evidencing the same, in whole at any time or in part
from time to time as provided herein, without premium or penalty, but subject
to the provisions of Section 2.10. Any partial prepayment of the Loan
Obligations of such Borrower pursuant to this Section 3.3 shall be in a minimum
aggregate amount of not less than $1 million. The relevant Borrower shall
irrevocably give notice (by telegram or telecopier, or by telephone (confirmed
in writing promptly thereafter)) to the Agent (which shall promptly advise each
other Bank) of each proposed prepayment hereunder, prior to 10:00 A.M., New
York time, on the second Business Day prior to the proposed prepayment date,
which notice shall specify the proposed prepayment date (which shall be a
Business Day) and the aggregate principal amount of the proposed prepayment and
the Project or Projects (and the Notes) to which such prepayment applies. Upon
giving of such irrevocable notice, the amount specified to be prepaid shall
become due and payable in full on the date specified in such notice. Neither
the Total Commitment nor the Loan Commitment of any Bank shall be reduced
pursuant to any such prepayment, unless the Borrowers shall have requested such
a reduction in compliance with the provisions of Section 3.2.
Section 3.4 Mandatory Prepayment of the Loan Obligations. (a) If
any Borrower or any of its Subsidiaries receives any Net Proceeds with respect
to any Project (whether in cash or securities), then such Borrower shall
immediately use such proceeds first, to prepay any outstanding Loans relating
to such Project, and the Notes evidencing the same, and then, to the extent
such Net Proceeds exceed the amount used to prepay any such Loans and Notes, to
deposit with the Agent for the ratable benefit of the Banks cash collateral for
each Letter of Credit outstanding with respect to such Project;
(b) If any Borrower or any of its Subsidiaries receives any
proceeds of a refinancing incurred in connection with a Permitted Third Party
Mortgage Lien, then such Borrower shall immediately use such proceeds first, to
prepay any outstanding
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Loans relating to the Project encumbered by such mortgage, and the Notes
evidencing such Loans, and then, to the extent such proceeds exceed the amount
used to prepay any such Loans and Notes, to deposit with the Agent for the
ratable benefit of the Banks cash collateral for each Letter of Credit
outstanding with respect to such Project and any Unused Project Commitment with
respect to such Project shall thereupon terminate;
(c) Prepayments made pursuant to this Section 3.4 shall be treated
according to Section 3.5 to the extent that they are to be applied to
Eurodollar Rate Loans for which the relevant Interest Period has not expired at
the time of prepayment. Prepayments made pursuant to this Section 3.4 shall be
treated according to Section 3.6 for determining the order of application of
prepayments to the Loans.
Section 3.5 Other Provisions With Respect to Prepayments. Except as
otherwise provided herein, any repayment of a Eurodollar Rate Loan which shall
be made prior to the end of the applicable Interest Period for such Loan shall
be subject to the provisions of Section 2.10 hereof. Subject to the
obligations of the Agent provided for in this Section 3.5, at the option of the
affected Borrower, any monies otherwise required to be used to repay such
Eurodollar Rate Loan may be so applied provided that such Borrower concurrently
pays any amount due under Section 2.10 hereof in respect of such prepayment;
otherwise if the relevant Interest Period for such Eurodollar Loan has not
expired such funds (the "Deposited Monies") shall, until the end of the
applicable Interest Period when the Deposited Monies shall be applied to make
such prepayment, be held in trust by the Agent (or, at the Agent's option, as
cash collateral) for the Banks in a noninterest bearing account and the
relevant Borrower shall have no right to or interest in such funds and such
funds shall be used to prepay such Eurodollar Rate Loan at the end of the
applicable Interest Period; provided, however, that any funds held in such
account shall be invested by the Agent (to the extent the Agent is able to do
so) on behalf of the relevant Borrower at the direction of such Borrower in
Permitted Investments selected by such Borrower and having a maturity not
exceeding the Business Day prior to the end of the relevant Interest Period.
Interest on the applicable Project Loan Obligations shall continue to accrue
until the Deposited Monies are applied to the prepayment thereof. Any such
investments shall be held by the Agent or under the control of the Agent. The
interest accruing on such investments and any profits realized from such
investments shall be, after giving effect to such repayment of such Loans with
the Deposited Monies, paid to the relevant Borrower; provided that any loss
resulting from such investments shall be charged to and be immediately payable
by such Borrower upon demand of the Agent. A prepayment so made by the Agent
from such Deposited Monies shall be treated as a prepayment by such Borrower
pursuant to Section 3.3 (except that such prepayment shall not be
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subject to the minimum prepayment amount requirements of Section 3.3)
and shall be otherwise governed by such Section.
Section 3.6 Order of Prepayments and Payments. (a) All prepayments of
principal made by any Borrower pursuant to Sections 3.3 and 3.4 shall be
applied to the payment of the outstanding balance of the applicable Project
Loan and the Note evidencing the same as directed by such Borrower with respect
to breakage of Interest Periods, provided that no Guarantor Event of Default
and no Borrower Event of Default as to such Borrower has occurred and is then
continuing. Any prepayment of principal made after the occurrence and during
the continuance of a Guarantor Event of Default or a Borrower Event of Default
as to the applicable Borrower shall be applied against the Loan Obligations of
such Borrower and the Notes evidencing the same as the Agent shall, in its sole
discretion, determine.
(b) Except as set forth in Section 5.1(g) any prepayments of a
Loan pursuant to Section 3.3 and Section 3.4 shall permanently reduce by a like
amount the pro rata Project Commitment of each of the Banks corresponding to
the Project Loan so prepaid. Upon the expiration, termination or payment of
any Letter of Credit which is required to be cash collateralized by the terms
hereof, the Project Commitment of each of the Banks for which such Letter of
Credit was issued shall be permanently reduced by the amount of such Bank's Pro
Rata Share of the Stated Amount of such Letter of Credit.
Section 3.7 Unused Commitment Fees. From and after the date hereof the
Borrowers shall pay to the Agent for the pro rata distribution to each Bank a
fee in an amount in the aggregate equal to (a) the Total Unused Commitments
multiplied by (b) one quarter of one percent (.25%) per annum; provided,
however that such fee shall be increased to .35% per annum in the event that
the long-term Indebtedness of the Guarantor shall be rated BBB or lower by
Standard & Poor's Corporation or Baa2 or lower by Moody's Investors Service,
Inc. Such fee shall be calculated on the basis of a 360-day year for the
actual number of days elapsed. Such fee shall be payable in arrears on the
Monthly Borrowing Date occurring on each quarterly anniversary of the first
Monthly Borrowing Date following the Closing Date and at maturity, whether on
the termination of this Agreement or earlier and shall be allocated among the
Borrowers as follows: (i) if no Guarantor Event of Default has occurred and is
continuing, in such manner as Guarantor shall designate from time to time or,
if no designation is made, pro rata to each Borrower in proportion to its
aggregate Project Commitments outstanding as of the date such fee is payable;
and (ii) if a Guarantor Event of Default shall have occurred and be continuing,
then pro rata to each Borrower, in proportion to its respective Project
Commitments as of the date such fee is payable or, if no Project Commitments
are then outstanding, equally to each Borrower.
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Section 3.8 Fees. Each Borrower shall pay to the Agent the fees due
and owing as set forth in the Fee Letter.
Section 3.9 Net Payments. (a) All payments on account of or with
respect to any Note and the principal of, and interest on, the Loans, the
Letters of Credit and all other amounts payable under this Agreement by any
Borrower to the Agent, any LC Bank or any Bank shall be made in United States
Dollars, without set-off or counterclaim and free and clear of and without
reduction by reason of all present and future income, stamp and other taxes and
levies, imposts, duties, deductions, charges, compulsory loans and withholdings
whatsoever imposed, assessed, levied or collected by the U.S., any state or
local government, any foreign government, any territory or possession of the
U.S. or any political subdivision or taxing authority thereof or therein,
together with interest thereon and penalties with respect thereto, if any, on
or in respect of this Agreement, the Loans, any Note, any Letter of Credit, the
registration, notarization or other formalization of any thereof, and any
payments of principal, interest, charges, fees or other amounts made on, under
or in respect thereof, other than any tax on or measured by the overall net
income of a Bank pursuant to the income tax laws of the United States or the
jurisdictions where such Bank's principal or lending offices are located
(hereinafter called "Taxes"), all of which will be paid by such Borrower, for
its own account, prior to the date on which any interest or penalties attach
thereto.
(b) Each Borrower will indemnify the Agent and each Bank against,
and reimburse the Agent and each Bank on demand for, any Taxes and any loss,
liability, claim, or expense including interest, penalties, and legal fees
which the Agent or the Bank may incur at any time arising out of or in
connection with any failure of such Borrower to make any payments of Taxes when
due.
(c) In the event that any Borrower is required by applicable law,
decree or regulation to deduct or withhold Taxes from any amounts payable on,
under or in respect of this Agreement, under any Note or Letter of Credit, such
Borrower shall pay in United States Dollars such additional amount as may be
required, after the deduction or withholding of Taxes, to enable the Agent or
the LC Banks, as the case may be, to receive from such Borrower an amount equal
to the amount stated to be payable under or with respect to this Agreement, any
Note or Letter of Credit.
(d) Each Borrower shall promptly furnish to the Agent original tax
receipts in respect of any withholding of Taxes required under this Section 3.9
and any other information, documents and receipts that the Agent may, in its
sole discretion from time to time, require to establish to its satisfaction
that full and timely payment has been made of all Taxes required to be paid
under this Section 3.9.
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(e) The covenants and agreements of the Borrowers under this
Section 3.9 shall survive the repayment of the Obligations and the Notes.
(f) All payments to be made by any Borrower on account of
principal and interest of any Loan or payment of fees with respect to any
Letter of Credit shall be made to the Agent at its Payment Office in New York,
New York for the ratable account of the Banks not later than 11:00 A.M. (New
York time) on the date when due in each case in lawful money of the United
States of America and in immediately available funds. If any payment hereunder
or under any Note becomes due and payable on a day other than a Business Day,
such payment shall be extended to the next succeeding Business Day (except in
the case of a payment made with respect to an Interest Period which expires on
the next preceding Business Day pursuant to Section 2.8(a), in which case
such payment shall be made on such next preceding Business Day), and, with
respect to payments of principal and interest thereon, interest thereon shall
be payable at the then applicable rate during such extension. Each
determination by the Agent of an interest rate or fee under this Agreement or
any Note, absent manifest error, shall be final, conclusive and binding for all
purposes.
Section 3.10 Options to Extend Term. (a) Provided that no Guarantor
Event of Default and no Unmatured Guarantor Event of Default shall have
occurred and be continuing and, provided, further that the long-term
Indebtedness of the Guarantor shall not then be unrated or, if rated, shall not
then be rated BBB or lower by Standard & Poor's Corporation or Baa2 or lower by
Moody's Investors Service, Inc., Borrowers, acting through Guarantor (which
Borrowers hereby jointly and severally irrevocably designate as their
collective agent for such purpose) shall have the option to extend the Facility
Termination Date for an additional year from August 7, 1997 to but not
including August 7, 1998, exercisable by written notice given by Guarantor,
acting as agent for all Borrowers, which notice shall be delivered to Agent at
any time prior to the date which is thirty (30) days prior to August 7, 1997.
Upon exercise of such option to extend, a fee equal to one tenth of one percent
(0.1%) of the Total Commitment in effect at the time such extension becomes
effective shall be payable jointly and severally by the Borrowers to Agent for
the benefit of the Banks in proportion to their respective Loan Commitments
then in effect. Such fee shall be in addition to all other fees payable
hereunder.
(b) In the event that the Facility Termination Date is extended
pursuant to Section 3.10(a) hereof, each Borrower with outstanding Loans
hereunder shall concurrently therewith execute and deliver to the Banks amended
Notes evidencing such extension of the maturity of the Loans evidenced thereby
("Extension Notes"), which shall each be in substantially the form of Exhibit
3.10(b) hereto, duly completed. Upon receipt of such amended Notes, the
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Notes which have been amended thereby shall be deemed superseded and of no
further effect and shall be returned to the Borrowers which issued the same.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Borrowers. Each
Borrower (other than Guarantor to the extent it is or becomes a Borrower
hereunder as to Sections 4.1(c), (f) and (l)) represents and warrants to
the Agent and to each Bank with respect to itself, its Subsidiaries and its
partners or joint venturers, as follows:
(a) Organization, Standing, etc. Such Borrower is a general or
limited partnership or corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization and is
an Eligible Borrower. Each such Borrower which is a corporation is duly
qualified and in good standing as a foreign corporation, and is duly
authorized to do business, in each jurisdiction in which the failure to so
qualify would have a material adverse effect on the business, condition, assets
or operations of such Borrower. Such Borrower and its Subsidiaries have all
requisite partnership or corporate power and authority to own, operate and
encumber its property and assets and to carry on its business as presently
conducted and as proposed to be conducted. Such Borrower has all requisite
power and authority (partnership, corporate or otherwise) (i) to execute,
deliver and perform its obligations under each of the Loan Documents to which
it is a party, and (ii) to execute, deliver and perform its obligations under
all other agreements and instruments executed and delivered by it pursuant to
or in connection with any Loan Document to which it is a party. Since its
organization to the date hereof, such Borrower has not engaged in any business
activity other than that related to the Projects.
(b) Organization Documents. A complete and correct copy of each
of the Organizational Documents of such Borrower in effect on the date of this
Agreement or the date when such Borrower became party to this Agreement has
been delivered to the Agent.
(c) Subsidiaries. Such Borrower has no direct or indirect
Subsidiaries except such as may be or have been established in accordance with
Section 5.2(m).
(d) Conflicting Agreements and Other Matters. The execution,
delivery and performance by such Borrower of each of the Loan Documents to
which it is a party and all other agreements and instruments to be executed and
delivered by such Borrower pursuant thereto or in connection herewith or
therewith do not and will not:
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(i) violate any provisions of any law, rule, regulation,
order, writ, judgment, decree, determination or award presently in
effect having applicability to such Borrower or any of its
Subsidiaries;
(ii) conflict with or result in a breach of or constitute a
tortious interference with or constitute a default under the
Organizational Documents of either such Borrower or any of its
Subsidiaries or any indenture or loan or credit agreement, or any
other agreement or instrument, to which such Borrower or any of its
Subsidiaries is a party or by which such Borrower or any of its
Subsidiaries or any of their respective properties may be bound or
affected, or any governmental permit, license or order;
(iii) result in (except for Permitted Liens) or require the
creation or imposition of any Lien of any nature upon or with respect
to any of the properties now owned or hereafter acquired by such
Borrower or any of its Subsidiaries; or
(iv) require any approval of stockholders or any approval or
consent of any Person, except for such approvals or consents which
will have been obtained before the Initial Borrowing Date for such
Borrower. Neither such Borrower nor any of its Subsidiaries is in
default under or in violation of any such law, rule, regulation,
license, order, permit, writ, judgment, decree, determination, award,
indenture, agreement or instrument described above or under its
certificate of incorporation or by-laws, or other organizational
documents, as the case may be, in each case the consequences of which
default or violation, either in any one case or in the aggregate,
would materially and adversely affect the condition (financial or
otherwise), properties, business, prospects or results of operations
of such Borrower and its Subsidiaries taken as a whole.
(e) Due Execution, etc. The execution, delivery and performance
of each of the Loan Documents to which such Borrower is a party and the
consummation of the transactions on its part contemplated thereby, have been
duly authorized by all necessary partnership or corporate proceedings and no
other proceedings on the part of such Borrower are necessary to authorize each
of the Loan Documents to which such Borrower is a party. Each of the Loan
Documents to which it is a party and each other agreement or instrument
executed and delivered by such Borrower pursuant hereto or thereto or in
connection herewith or therewith has been duly executed and delivered by such
Borrower and constitutes or will constitute a legal, valid and binding
obligation of such Borrower, enforceable against such Borrower in accordance
with its respective terms (subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other similar laws affecting the enforcement of
creditors' rights generally and general equitable principles which
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may limit the right to obtain the remedy of specific performance of executory
covenants and other equitable remedies) . Each of the Loan Documents to which
it is a party is in full force and effect and no term or condition thereof has
been amended, modified or waived from the terms and conditions of the Loan
Documents delivered to the Agent pursuant to Section 6.1 hereof without the
prior written consent of the Agent, and such Borrower and the other parties
thereto have performed and complied in all material respects with all the
terms, provisions, agreements and conditions set forth therein and required to
be performed or complied with by such parties on or before the Initial
Borrowing Date, and no default by such Borrower or any of the other parties
thereto exists thereunder.
(f) Indebtedness for Money Borrowed. Except for such Borrower's
obligations hereunder and except as permitted by Section 5.2(b), neither such
Borrower nor any of its Subsidiaries has any Indebtedness for Money Borrowed.
(g) Title to and Condition of Properties. Such Borrower or any of
its Subsidiaries has good and marketable title to, or a subsisting leasehold
interest in, all items of real and personal property relating to any Project
reflected in any balance sheet of such Borrower delivered to the Banks from
time to time pursuant to Section 5.1(a) of this Agreement or acquired by it
after the date of such balance sheet, except for assets sold, transferred or
otherwise disposed of in the ordinary course of business since the date of such
balance sheet, in each case (except as to leasehold interests) free and clear
of all Liens, except Permitted Liens and other Liens permitted by Section 5.2
hereof. To the knowledge of such Borrower after due inquiry, there are no
actual, threatened or alleged defaults of a material nature with respect to any
leases of real property relating to any Project under which such Borrower or
any of its Subsidiaries is lessee or lessor.
(h) Litigation, Proceedings, Licenses, Permits; etc. There are no
actions, suits, proceedings or investigations pending or, to the knowledge of
such Borrower after due inquiry, threatened against or affecting it or any of
its Subsidiaries or any of its or their respective properties before any court,
governmental agency or regulatory authority (foreign, Federal, state or local),
which, if determined adversely to such Borrower or any of its Subsidiaries,
(i) would enjoin or otherwise materially interfere with the
satisfactory completion of any Project, the transactions contemplated
by the Loan Documents or have a material adverse effect on the
condition (financial or otherwise), properties, business, or results
of operations of such Borrower and its Subsidiaries taken as a whole;
or
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(ii) would (individually or in the aggregate) materially
impair such Borrower's or any of its Subsidiaries' ability to perform
fully any obligations on a timely basis which any of them has under or
in connection with any Loan Document.
Neither such Borrower nor any of its Subsidiaries:
(1) is in default with respect to any order of any court,
arbitrator or governmental body or is subject to or party to any order
of any court or governmental authority arising out of any action, suit
or proceeding against it under any statute or other law respecting
antitrust, monopoly, restraint of trade, unfair competition or similar
matters; or
(2) has violated or is in violation of any statute, rule or
regulation of any governmental authority in each case where such
violation or default would materially and adversely affect the
condition (financial or otherwise), properties, business, or results
of operations of such Borrower and its Subsidiaries taken as a whole.
Such Borrower and each of its Subsidiaries have been and are current and in
good standing with respect to all governmental approvals, permits,
certificates, licenses, inspections, consents and franchises necessary to
continue to conduct their respective businesses and to own or lease and operate
their respective properties as heretofore conducted, owned, leased or operated.
(i) Governmental Consents, etc. Except as already received by
such Borrower as of the date hereof, no authorization, consent, approval,
license, qualification or formal exemption from, nor any filing, declaration or
registration with, any court, governmental agency or regulatory authority or
any securities exchange or any other Person is required in connection with the
execution, delivery and performance by such Borrower of this Agreement.
(j) No Material Adverse Change. As of the date hereof, since the
end of its most recently ended fiscal year, there has been no material adverse
change in the condition (financial or otherwise), properties, business, or
results of operations of Guarantor and its Subsidiaries taken as a whole.
(k) Compliance with Laws. The operations of such Borrower and
each of its Subsidiaries comply in all material respects with all applicable
environmental, health and safety requirements under federal, state and local
laws and with all other laws and regulations where such failure to so comply
could have a material adverse effect on such Borrower or its assets.
(l) ERISA. Neither any Borrower nor any of its Subsidiaries has or will
at any time have any Plans.
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(m) Governmental Regulation. Neither such Borrower nor any of its
respective Subsidiaries is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce
Act, the Investment Company Act of 1940 or any other federal or state statute
or regulation such that its ability to incur indebtedness is limited or its
ability to consummate the transactions contemplated hereby is materially
impaired.
(n) Federal Reserve Regulations. Neither such Borrower nor any of
its respective Subsidiaries is engaged, directly or indirectly, principally, or
as one of its important activities, in the business of extending, or arranging
for the extension of, credit for the purpose of purchasing or carrying any
margin stock within the meaning of Regulation G, T, U or X of the Board.
(o) Disclosure. The Loan Documents and any other document,
certificate or statement furnished or to be furnished to the Agent or any Bank
by or on behalf of such Borrower or any of its Subsidiaries in connection
herewith or therewith do not and will not contain any untrue statement of a
material fact and do not and will note omit to state a material fact necessary
in order to make the statements made by such Borrower or any of its
Subsidiaries contained herein and therein not misleading in light of the
circumstances in which made.
(p) Solvency. Such Borrower is Solvent and will continue to be
Solvent after giving effect to the transactions contemplated by the Loan
Documents.
(q) Bridge Agreement. As of the date hereof, no "Guarantor Event
of Default", "Borrower Event of Default", "Unmatured Guarantor Event of
Default" or "Unmatured Borrower Event of Default" (as such terms are defined in
the Bridge Agreement) exists under the Bridge Agreement.
(r) Survival of Warranties. All representations and warranties
contained in this Agreement shall survive the execution and delivery of this
Agreement and the termination hereof. Any modifications or supplements to the
disclosures contained in this Agreement and provided by such Borrower after the
date hereof shall not be deemed a part of the Agreement until accepted in
writing by the Agent.
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of each Borrower. Each Borrower
will, so long as any Loans or Letters of Credit are
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outstanding to such Borrower hereunder or so long as the Banks have any Project
Commitments outstanding to such Borrower:
(a) Furnish to each Bank:
(i) Within three (3) days after such Borrower shall have
obtained knowledge of the occurrence of a Guarantor Event of Default
and/or an Unmatured Guarantor Event of Default and/or a Borrower Event
of Default and/or an Unmatured Borrower Event of Default, the written
statement of a Responsible Officer of such Borrower setting forth the
details of each such Guarantor Event of Default, Unmatured Guarantor
Event of Default, Borrower Event of Default or Unmatured Borrower
Event of Default which has occurred and is continuing and the action
which such Borrower or Guarantor, as the case may be, proposes to take
with respect thereto;
(ii) Copies of any annual financial statements required to
be provided by such Borrower or any Subsidiary to its respective
equity holders or partners by law or under its Organizational
Documents, as and when the same are provided to such equity holders.
If so requested by the Agent, such Borrower shall also provide to the
Agent any monthly and quarterly financial statements required to be
provided by such Borrower or any Subsidiary to its respective equity
holders under its Organizational Documents (as in effect from time to
time), within the time periods required thereunder. Each Borrower
shall also send copies of all financial statements delivered to the
Agent hereunder to XXXXXXXXXX;
(iii) Promptly following such Borrower's receipt thereof,
copies of all financial or other reports or statements submitted to
such Borrower or any Subsidiary of such Borrower by independent public
accountants relating to any annual or interim audit of the books of
such Borrower or any Subsidiary of such Borrower;
(iv) Promptly upon obtaining knowledge thereof, notice of
any action, suit, proceeding or investigation pending or threatened
against or affecting such Borrower or any Subsidiary of such Borrower
or any of its or their respective properties before any court,
governmental agency or regulatory authority (foreign, Federal, state
or local), which, if determined adversely to such Borrower or any
Subsidiary of such Borrower could have a material adverse effect on
the condition (financial or otherwise), business, properties (or
affecting title thereto), or results of operations of such Borrower
and its Subsidiaries individually or in the aggregate, or could
materially impair such Borrower's ability to perform its obligations
under the Loan Documents; and
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(v) Such other information respecting the properties,
business affairs, financial condition and/or operations of any
Borrower or any Subsidiary of such Borrower as the Agent or any Bank
may from time to time reasonably request.
(b) Preserve and maintain, and cause its Subsidiaries to
preserve and maintain, its and their lawful partnership or corporate existence
and all of its material rights, privileges and franchises, except where, the
failure to so preserve or maintain such rights, privileges and franchises would
not have a material adverse effect on the business, condition (financial or
otherwise), assets or operations of such Borrower and its Subsidiaries taken
as a whole.
(c) Comply, and cause its Subsidiaries to comply, with
all laws, rules, regulations and governmental orders (foreign, Federal, state
and local) having applicability to it or them or to the business or businesses
at any time conducted by it, where the failure to so comply would have a
material adverse effect, on the business, condition (financial or otherwise),
assets or operations of such Borrower and its Subsidiaries taken as a whole.
(d) Duly and punctually pay and perform its obligations
and cause its Subsidiaries to pay and perform their respective obligations
under the Loan Documents in accordance with the terms thereof.
(e) Permit, and cause each of its Subsidiaries to permit,
any Bank or its respective representatives, at any reasonable time, and from
time to time upon written notice of such Bank, to visit and inspect its and
their respective properties, to examine and make copies of and take abstracts
from its and their respective records and books of account, and to discuss its
and their respective affairs, finances and accounts with its and their
respective principal officers and, with the written consent of such Borrower,
their respective independent public accountants and other agents.
(f) Keep, or cause to be kept, and cause its Subsidiaries
to keep or cause to be kept, adequate records and books of account, in which
complete entries are to be made reflecting its and their businesses and
financial transactions, such entries to be made in accordance with generally
accepted accounting principles consistently applied.
(g) Maintain, at its expense, such public liability and
third party property damage insurance (in the case of Guarantor as a Borrower,
with respect to each Project) in such amounts and with such deductibles as the
Agent may reasonably require from time to time. Such Borrower shall, at its
expense, keep and maintain its assets and the assets of its Subsidiaries (in
the case of Guarantor as a Borrower, the assets which relate to any Project)
insured
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(with an insurance company maintaining a rating of A or better by A.M. Best
Company) against loss or damage by fire, theft, explosion, spoilage and all
other hazards and risks ordinarily insured against by other owners or users of
such properties in similar businesses in amounts at least equal to the full
replacement value thereof. All such policies of insurance shall be in the form
and substance satisfactory to the Agent. Upon the request of the Agent, such
Borrower shall deliver to the Agent the original (or a certified copy) of each
policy of insurance and evidence of the prepayment of all premiums therefor.
Such policies of insurance shall contain an endorsement naming the Agent (for
the ratable benefit of the Banks) as loss payee and additional insured and
shall provide for no cancellation without at least thirty (30) days prior
written notice to the Agent. Such Borrower hereby directs all insurers under
such policies of insurance to pay all proceeds of such insurance policies to
the Agent for the ratable benefit of the Banks; provided that so long as no
Guarantor Event of Default shall have occurred and be continuing, all proceeds
of such insurance as to any Project which in the aggregate are less than an
amount equal to five percent (5%) of the Project Budget then in effect for such
Project per occurrence shall be delivered to such Borrower. With respect to
occurrences giving rise to insurance proceeds in respect of a Project in excess
of five percent (5%) of the Project Budget then in effect for such Project
("Material Insurance Proceeds"), the Agent shall apply such amount to the
prepayment of the related Project Loans in accordance with Section 3.3 unless
the Guarantor and the affected Borrower shall in writing direct the Agent to
release such proceeds to such Borrower to pay for the repair, replacement or
reconstruction of the assets subject to such casualty, in which case such
proceeds shall be so released, provided that:
(i) at the time of any requested release of funds no
Guarantor Event of Default or Unmatured Guarantor Event of Default
shall have occurred and be continuing; and
(ii) the relevant Borrower shall have submitted a revised
Project Budget and, if necessary, Allocation Increase Request for the
affected Project.
Prior to the occurrence and continuance of a Guarantor Event of Default or
Unmatured Guarantor Event of Default, any prepayment made pursuant to this
Section 5.1(q) shall be applied to the Project Loan and/or held by the Agent
as cash collateral for Letters of Credit for such Project in accordance with
Section 3.3 without regard to the minimum amount or integral multiple
requirements set forth therein. Notwithstanding the provision of Section
3.6(b), any such prepayment shall not constitute a permanent reduction in the
pro rata Project Commitment of each Bank hereunder. After the occurrence and
during the continuance of a Guarantor Event of Default or Unmatured Guarantor
Event of Default, all insurance proceeds may be applied by the Agent, upon the
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direction of the Required Banks, to the prepayment of the Loan Obligations and
the Notes with respect to the Project giving rise to such proceeds and shall
constitute a permanent reduction of the pro rata Project Commitment of each of
the Banks corresponding to the Project Loan so prepaid. If a Guarantor Event
of Default or Unmatured Guarantor Event of Default or Borrower Event of Default
shall have occurred and be continuing hereunder, such Borrower irrevocably
makes, constitutes and appoints the Agent (and all officers, employees or
agents designated by the Agent) as such Borrower's true and lawful
attorney-in-fact for the purpose of making, settling and adjusting claims under
all such policies of insurance, endorsing the name of such Borrower on any
check, draft, instrument or other item of payment received by such Borrower or
the Agent pursuant to any such policies of insurance and for making all
determinations and decisions with respect to such policies of insurance. If
such Borrower, at any time or times hereafter, shall fail to obtain or maintain
any of the policies of insurance required above or to pay any premium in whole
or in part relating thereto, then the Agent, without waiving or releasing any
Loan Obligations, Guarantor Event of Default or Unmatured Guarantor Event of
Default or Borrower Event of Default by such Borrower hereunder, may at any
time or times thereafter (but shall be under no obligation to do so) obtain and
maintain such policies of insurance and pay such premiums and take any other
action with respect thereto which the Agent deems advisable and such payments
shall be Loans.
(h) Use the Letters of Credit and the proceeds of the
Loans only for the purposes specified in the introduction to this Agreement,
provided, further, that to the extent such Borrower or any Subsidiary thereof
has entered into any AFICA Financing Agreements, such Borrower will use or
cause its Subsidiary to use the proceeds of Loans only for purposes which have
not been designated as uses of proceeds of the AFICA Bonds in accordance with
the terms of such AFICA Financing Agreements.
(i) Maintain or cause to be maintained, and cause each of
its Subsidiaries to maintain or cause to be maintained, in good repair, working
order and condition, excepting ordinary wear and tear and damage due to
casualty or condemnation, all of its properties material to its operations and
will make or cause to be made all appropriate repairs, renewals and
replacements thereof, consistent with past practice.
(j) Maintain, and cause each of its Subsidiaries to
maintain, in full force and effect all licenses, permits, governmental
approvals, franchises, authorizations or other rights necessary for the
operation of its business, except where the failure to obtain any of the
foregoing would not have or is not reasonably likely to have a material adverse
effect on the condition (financial or otherwise), properties, business, or
results of operations of such Borrower and its Subsidiaries taken
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as a whole; and notify the Agent in writing, promptly after learning thereof,
of the suspension, cancellation, revocation or discontinuance of or of any
pending or threatened action or proceeding seeking to suspend, cancel, revoke
or discontinue any such license, permit, governmental approval, franchise
authorization or right.
(k)(i) Notify the Agent, in writing, promptly, and in any
event within twenty (20) days after such Borrower's learning thereof (in the
case of Guarantor as a Borrower, to the extent any of the following
occurrences, actions, events or the like relates to a Project), of any:
(A) notice or claim to the effect that such Borrower or
any of its Subsidiaries is or may be liable to any Person as a result
of the Release or threatened Release of any Contaminant into the
environment;
(B) notice that such Borrower or any of its Subsidiaries
is subject to investigation by any governmental authority evaluating
whether any Remedial Action is needed to respond to the Release or
threatened Release of any Contaminant into the environment;
(C) notice that any property of such Borrower or its
Subsidiaries is subject to an Environmental Lien;
(D) notice of violation to such Borrower or any of its
Subsidiaries or awareness by such Borrower or any of its Subsidiaries
of a condition which might reasonably result in a notice of violation
of any environmental, health or safety requirement under federal,
state or local laws, which could have a material adverse effect on the
condition (financial or otherwise), properties, business, prospects
or results of operations of such Borrower and its Subsidiaries taken
as a whole;
(E) commencement or threat of any judicial or
administrative proceeding alleging a violation of any environmental,
health or safety requirement under federal, state or local laws;
(F) new or proposed changes to any existing
environmental, health or safety requirement under federal, state or
local laws that could have a material adverse effect on the operations
of such Borrower or its Subsidiaries; or
(G) any proposed acquisition of stock, assets, real
estate, or leasing of property, or any other action by such Borrower
or its Subsidiaries that could subject such Borrower or its
Subsidiaries to environmental, health or safety liabilities,
obligations or costs that could have a material
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adverse effect on the condition (financial or otherwise), properties,
business, prospects or results of operations of such Borrower and its
Subsidiaries taken as a whole.
(ii) On December 31 of each calendar year, commencing on
December 31, 1992, such Borrower shall submit to the Agent a report with
respect to such Borrower (in the case of Guarantor as a Borrower, with respect
to such Project) providing an update of the status of each environmental,
health or safety compliance, hazard or liability issue, if any, identified in
any notice or report required pursuant to clause (k)(i) above and any other
environmental, health and safety compliance obligation, remedial obligation or
liability that could have a material adverse effect on the condition (financial
or otherwise), properties, business, prospects or results of operations of such
Borrower and its Subsidiaries taken as a whole.
Section 5.2 Negative Covenants of each Borrower. Such
Borrower (other than Guarantor to the extent it is or becomes a Borrower
hereunder) will not nor will it permit any of its Subsidiaries to, so long as
any Loans or Letters of Credit are outstanding to such Borrower hereunder or so
long as the Banks have any Project Commitments outstanding to such Borrower:
(a) Except for Permitted Liens:
(i) create, incur, assume or permit to exist any Lien on
any existing or future property, asset (including stock of
Subsidiaries), income or rights in any thereof; or
(ii) take, cause or permit to be taken or cause any action
to be taken, which could create a Lien, or suffer to exist any Lien,
on the capital stock or other ownership interest of any Subsidiary of
such Borrower which would require the sharing of an interest in such
capital stock or other ownership interest with any Person; or
(iii) enter into or assume any other agreement containing a
negative pledge with respect to its property.
(b) Create, incur, assume or suffer to exist any
Indebtedness for Money Borrowed except for the Notes and the Letters of Credit.
Notwithstanding the foregoing, a Borrower or any Subsidiary of such Borrower
may create, incur, assume or suffer to exist after the date of this Agreement:
(i) Indebtedness for Money Borrowed consisting of
Financing Lease Obligations not exceeding $100,000 in any one case and
not exceeding $250,000 in the aggregate at any time outstanding;
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(ii) Indebtedness for Money Borrowed issued, incurred or
assumed in respect of the purchase price of property not to exceed $1
million principal amount of Indebtedness for Money Borrowed in the
aggregate at any time outstanding;
(iii) Indebtedness for Money Borrowed secured by Permitted
Third Party Mortgage Liens or Permitted Kmart Mortgage Liens not to
exceed the value of the property so securing such Indebtedness;
(iv) Indebtedness for Money Borrowed issued or incurred
pursuant to AFICA Financing Agreements;
(v) Indebtedness for Money Borrowed which is secured
solely by a Letter of Credit issued hereunder in an amount not in
excess of the Stated Amount of the Letter of Credit issued as support
for such Indebtedness;
(vi) Indebtedness for Money Borrowed with respect to any
Project not exceeding 15% of the Project Budget for such Project; and
(vii) Indebtedness for Money Borrowed incurred by the
Bridge Borrower pursuant to the Bridge Agreement on or prior to the
Initial Borrowing Date in an amount not in excess of $7,250,000;
provided, however, that such Indebtedness shall be paid in full on or
before the first Monthly Borrowing Date which occurs after August 26,
1992 (the end of the applicable "Interest Period" for the Bridge
Borrower's current "Eurodollar Rate Loan" under the Bridge Agreement).
Any Indebtedness for Money Borrowed used in the calculations of whether any
threshold amount specified in either clause (i), (ii) or (vi) immediately
preceding have been exceeded shall not be used to calculate whether the
threshold in the other of such thresholds specified in such clause (i), (ii) or
(vi) has been exceeded. Any Indebtedness for Money Borrowed by a Subsidiary of
a Borrower shall be deemed to be Indebtedness for Money Borrowed of such
Borrower for purposes of this Section 5.2(b).
(c) Assume, guarantee or endorse, or otherwise become
directly or contingently liable in respect of, any obligation of any Person,
except, without duplication, guarantees of such Borrower of Indebtedness for
Money Borrowed constituting Financing Leases of such Borrower or any Subsidiary
of such Borrower permitted by Section 5.2(b) hereof and, except for
reimbursement obligations under letters of credit which, together with
Indebtedness for Money Borrowed permitted under Section 5.2(b) (vi) do not
exceed 15% of the Project Budget for any Project or enter into any Interest
Rate Agreements, other than Interest Rate Agreements entered into by any
Borrower with respect to the dollar amount of any Loan or Loans made hereunder.
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(d) Engage in any business or business activity except
with respect to such Borrower's or its Subsidiary's Projects.
(e) After the occurrence and during the continuance of a
Guarantor Event of Default or a Borrower Event of Default with respect to
such Borrower, declare or pay any dividend or distribution, or purchase or
redeem any shares of any equity interest or class of capital stock of such
Borrower, or make any other payment or distribution on or in respect of any
class of capital stock or ownership interest of such Borrower or any of its
Subsidiaries or set aside any amounts for any such purposes, except that any
Subsidiary may pay dividends to such Borrower.
(f) Have or make any loan or advance to or Investment in
any Subsidiary or other Affiliate or any other Person except for:
(i) Permitted Investments;
(ii) Investments by a Borrower in Persons as permitted by
Section 5.2(i) hereof;
(iii) guarantees permitted by Section 5.2(c) hereof; and
(iv) Investments in a Subsidiary which has been
established in accordance with Section 5.2(m) or in the case of Big
Beaver of Caguas Investments, Investments in Caguas Centrum.
(g) Merge or consolidate with or into any Person except
that any Subsidiary of a Borrower may merge or consolidate with or into such
Borrower.
(h) Acquire any assets or capital stock of any Person
except that a Borrower may (i) acquire assets used in the ordinary course of
business, (ii) acquire the assets or capital stock of any Subsidiary, and (iii)
make Capital Expenditures in connection with such Borrower's Projects.
(i) Issue or distribute its partnership interests,
capital stock or other ownership interests to any Person or permit any
Subsidiary to issue, sell or otherwise dispose of any such interests to any
Person except to the relevant Borrower, provided, that the foregoing shall not
be construed to prohibit the transfer of all or part of any existing ownership
interest by the owner thereof to an Affiliate of such owner, provided, further
that such transfer does not result in a breach of any other provision of this
Agreement and that such transfer does not change the respective Borrower's
status as an Eligible Borrower hereunder or change the status of any Subsidiary
of such Borrower as an Eligible Subsidiary hereunder.
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(j ) Without the prior written consent of the Agent, enter
into any transaction with an Affiliate of such Borrower or Subsidiary
including, without limitation, the purchase, sale or exchange of property or
the rendering of any service to or by an Affiliate, except for:
(i) transactions on terms no less favorable to such
Borrower or Subsidiary than if negotiated at arm's length and for a
term not to exceed two years;
(ii) the "Management Agreement" and "Leasing Agreement"
contemplated by such Borrower's or such Subsidiary's joint venture
agreement, if any; and
(iii) payment of fees and expenses included in the Project
Budget in effect for a Project.
Except as set forth in clauses (ii) and (iii) of the immediately preceding
sentence, all transactions by any Borrower or any Subsidiary with any Affiliate
shall be on terms no less favorable to such Borrower or such Affiliate than
could be obtained in a comparable arms-length transaction with a Person not an
Affiliate and be reasonably necessary or desirable for such Borrower or such
Affiliate in the conduct of its business.
(k) Issue any power of attorney or other contract or
agreement giving any Person power or control over the day-to-day operations of
its business except as expressly contemplated by this Agreement.
(l) Modify or amend any of such Borrower's or such
Subsidiary's Organizational Documents without the prior written consent of the
Agent.
(m) Take any action which causes any Person to become a
direct or indirect Subsidiary of such Borrower or which results in the creation
of a Subsidiary of such Borrower other than an Eligible Subsidiary which is
approved in writing by the Agent.
ARTICLE VI
CONDITIONS OF CREDIT
Section 6.1 Conditions Precedent to the Initial
Borrowing. The right of any Borrower to make the Initial Borrowing and the
obligation of the Banks to make the Initial Loan under this Agreement shall be
subject to the fulfillment, at or prior to the time of the making of such
Initial Loan, of each of the following conditions:
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(a) Each Borrower shall have executed and delivered to
each Bank this Agreement (including all schedules, exhibits, certificates,
opinions and financial statements delivered pursuant hereto), which shall be
in full force and effect (without any waiver of, or other forbearance to
exercise any rights with respect to, any term or provision hereof, unless
consented to in writing by the Required Banks).
(b) All of the Loan Documents (excluding any Notes
relating to Borrowings which have not been requested at such time) shall have
been duly executed and delivered in form and substance satisfactory to the
Agent and shall be in full force and effect; and there shall be no Guarantor
Event of Default or Unmatured Guarantor Event of Default which shall have
occurred and be continuing under this Agreement.
(c) The Agent shall have received (with a signed copy for
each Bank):
(i) the signed opinion of Messrs. Dickinson, Wright,
Moon, Van Dusen & Freeman, special counsel to each Borrower and the
Guarantor, dated the date hereof in form and substance satisfactory to
the Agent;
(ii) the signed opinion of A. N. Palizzi, counsel to
Guarantor dated the date hereof in form and substance satisfactory to
the Agent;
(iii) such other opinions of counsel to Borrowers and the
Guarantor and to the general partners of Borrowers as may be
reasonably requested by Agent; and
(iv) a letter from Guarantor and/or the applicable
Borrower requesting counsel rendering an opinion pursuant to this
Agreement to issue the opinion to the Agent and the Banks.
(d) Certified copies of the Organizational Documents for
each Borrower and each general partner of each Borrower.
(e) A certificate of Guarantor, of each Borrower which is
a corporation, and of each Managing Partner of each Borrower which is a
partnership, certifying as to the names, offices and signatures of each Person
(i) who is authorized to sign this Agreement or any Loan Document on such
Person's behalf and (ii) who will, until replaced by another Person or Persons
duly authorized for that purpose, act as its representative for the purposes of
signing documents and giving notices and other communications in connection
with this Agreement and the transactions contemplated hereby. The Agent and
each Bank may conclusively rely on such certificate until they receive notice
in writing from such Person to the contrary.
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(f) Each Borrower shall have paid the Agent the fees then due
pursuant to Section 3.8 hereof.
(g) The Agent shall have received duly executed Initial Notes
in accordance with Section 2.2(b) hereof.
(h) The Agent shall have received (with a signed copy for
each Bank) the signed opinion of Messrs. XXXXXXXXXX, counsel to the
Banks, dated the date of the Initial Borrowing, in form and substance
satisfactory to the Agent.
(i) The Agent shall have received a list of all of
Guarantor's Material Subsidiaries as of the date hereof.
(j) All corporate and other proceedings taken in
connection with the transactions hereunder at or prior to the date of this
Agreement, and all documents incident thereto will be reasonably satisfactory
in form and substance to the Agent; and the Banks shall have received such
other instruments and documents as the Agent shall reasonably request in
connection with the Loans, and all such instruments and documents shall be
reasonably satisfactory in form and substance to the Agent.
Section 6.2 Conditions Precedent to any Initial Project
Borrowing. In addition to the conditions set forth in Section 6.1, the right
of any Borrower to make an Initial Project Borrowing and the Obligation of the
Banks to make the Initial Project Loan under this Agreement to such Borrower
shall be subject to the fulfillment, at or prior to the time of the making of
such Initial Project Loan, of each of the following conditions:
(a) The Agent shall have received an Allocation Request
with respect to such Project and shall have established a Project Commitment
Amount in accordance with the terms of this Agreement.
(b) The Agent shall have received a Project Budget for such
Project.
(c) The Agent shall have received executed Initial Notes
evidencing such Loan in accordance with Section 2.2(b). hereof.
(d) The long-term Indebtedness of the Guarantor shall be
rated BBB or above by Standard & Poor's Corporation and Baa2 or above by
Moody's Investors Service, Inc.
(e) Since the date hereof, there shall have been no
material adverse change in the condition (financial or otherwise), properties,
business or results of operations of Guarantor and its Subsidiaries, taken as a
whole.
(f) The Agent shall have received such other instruments,
documents and opinions as the Agent shall reasonably
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request in connection with such Loan, and all such instruments, documents and
opinions shall be reasonably satisfactory to the Agent.
Section 6.3 Conditions Precedent to all Borrowings (other
than a Roll-Over Borrowing). In addition to the conditions set forth in
Sections 6.1 and 6.2, the right of any Borrower to make any Borrowing (other
than a Roll-Over Borrowing) or to request any Letter of Credit hereunder and
the obligation of each Bank to make a Loan (or, in the case of a LC Bank, to
issue a Letter of Credit) in respect of any such Borrowing hereunder in each
case shall be subject to the fulfillment at or prior to the time of the making
of such Borrowing of each of the following conditions:
(a) The representations and warranties contained in this
Agreement with respect to such Borrower and such Project shall each be true and
correct in all material respects at and as of such time, as though made on and
as of such time; each of the Loan Documents shall be in full force and effect.
(b) No Guarantor Event of Default or Unmatured Guarantor
Event of Default or Borrower Event of Default or Unmatured Borrower Event of
Default with respect to such Borrower shall have occurred and shall then be
continuing on such date or will occur after giving effect to such Borrowing.
(c) No change shall have occurred or become known with
respect to the condition (financial or otherwise), business, prospects or
results of operations of the applicable Borrower or any of its Subsidiaries
since the date of this Agreement, which the Agent deems to be material and
adverse to the condition (financial or otherwise), business or results of
operations of such Borrower and its Subsidiaries taken as a whole.
(d) The Agent shall be reasonably satisfied as to the
matters set forth on Exhibit 6.3(d) hereto as such Exhibit may be modified from
time to time by the Agent and the Guarantor.
(e) The Agent shall have received a Notice of Borrowing
or, in the case of a requested Letter of Credit, the Agent shall have received
a LC Request in accordance with the terms hereof.
(f) The Banks shall have received such other instruments,
documents and opinions (including Amended Notes and/or Extension Notes if
applicable) as the Agent may reasonably request in connection with the
Loans, and all such instruments, documents and opinions shall be reasonably
satisfactory in form and substance to the Agent.
Each Borrowing by any Borrower shall be deemed to constitute a
representation and warranty by it as to itself to the effect of clauses (a),
(b) and (c) of this Section 6.3.
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Section 6.4 Conditions Precedent to All Roll-Over
Borrowings. The right of any Borrower to make any Roll-Over Borrowing hereunder
and the obligation of each Bank to make any Roll-Over Borrowing hereunder shall
be subject to the condition that the Loan Obligations of such Borrower shall
not have been accelerated.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1 Guarantor Events of Default. If any of the
following events, acts, occurrences or state of facts (herein called a
"Guarantor Event of Default") shall occur or exist (for any reason whatsoever,
and whether such happening shall be voluntary or involuntary or come about or
be effected by operation of law pursuant to or in accordance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) The long-term Indebtedness of the Guarantor shall be
rated BBB- or lower by Standard & Poor's Corporation or Baa3 or lower by
Moody's Investors Service, Inc. or shall not be rated by either of such
entities or, after the fifth anniversary date of the date hereof, the long-term
Indebtedness of Guarantor shall be rated BBB or lower by Standard & Poor's
Corporation or Baa2 or lower by Moody's Investors Service, Inc. or shall not be
rated by either of such agencies;
(b) The Guarantor or any of its Material Subsidiaries,
shall default in the payment when due, whether at stated maturity or otherwise,
of any Indebtedness for Money Borrowed of the Guarantor or any of its Material
Subsidiaries, whether individually or in the aggregate, equal to or in excess
of $40 million, whether such Indebtedness now exists or shall hereafter be
created, and such default shall be uncured or unwaived after the expiration of
all applicable grace periods with respect thereto; or breach or default by
Guarantor or any of its Material Subsidiaries with respect to any other
material term of any evidence of any Indebtedness for Money Borrowed in excess
of $40 million or of any loan agreement, mortgage, indenture or other agreement
relating thereto, if the effect of such default or breach is to cause, or to
permit the holder or holders (or a trustee on behalf of such holder or holders)
of such Indebtedness for Money Borrowed to cause such Indebtedness for Money
Borrowed to become or be declared due prior to its stated maturity (upon the
giving or receiving of notice but after the expiration of all applicable grace
periods with respect thereto) provided, however, that with respect to
Indebtedness for Money Borrowed in respect of real property leases, no such
breach or default shall be deemed to exist if the Guarantor or Material
Subsidiary, as the case may be, is contesting in good faith the
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existence of such breach or default by appropriate means and if the existence
of such breach or default, if determined adversely to Guarantor or the
Material Subsidiary, as the case may be, would not have a material adverse
effect on Guarantor and its Subsidiaries on a consolidated basis;
(c) The Guarantor or any of its Material Subsidiaries
shall become insolvent or generally fail to pay, or admit in writing its
inability to pay, its debts as they become due, or shall voluntarily commence
any proceeding or file any petition under any bankruptcy, insolvency or similar
law or seeking dissolution or reorganization or the appointment of a receiver,
trustee, custodian or liquidator for it or a substantial portion of its
property, assets or business or to effect a plan or other arrangement with its
creditors, or shall file any answer admitting the jurisdiction of the court and
the material allegations of an involuntary petition filed against it in any
bankruptcy, insolvency or similar proceeding, or shall be adjudicated bankrupt,
or shall consent to, or acquiesce in the appointment of, a receiver, trustee,
custodian or liquidator for a substantial portion of its property, assets or
business, shall call a meeting of its creditors with a view to arranging a
composition or adjustment of its debts or shall take any corporate action
authorizing any of the foregoing;
(d) Involuntary proceedings or an involuntary petition
shall be commenced or filed against the Guarantor or any of its Material
Subsidiaries under any bankruptcy, insolvency or similar law or seeking the
dissolution or reorganization of it or the appointment of a receiver, trustee,
custodian or liquidator for it or of a substantial part of its property, assets
or business, or any writ, judgment, warrant of attachment, execution or similar
process shall be issued or levied against a substantial part of its property,
assets or business, and such proceedings or petition shall not be dismissed, or
such writ, judgment, warrant of attachment, execution or similar process shall
not be released, vacated or fully bonded, within sixty (60) days after
commencement, filing or levy, as the case may be, or any order for relief shall
be entered in any such proceeding;
(e) This Agreement or the Guaranty shall cease for any
reason to be in full force and effect or there shall exist any event of default
or breach of any of Guarantor's representations or warranties, covenants or
obligations under the Guaranty or the Guarantor shall disavow any of its
obligations under the Guaranty;
(f) Any Guarantor Restructuring shall occur, other than a
Guarantor Restructuring in which:
(i) the obligations of Guarantor under the Guaranty shall
continue in full force and effect following such transaction, and
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(ii) the following additional conditions shall be met:
(A) any transferee or pledgee of assets of
Guarantor in or pursuant to such Guarantor Restructuring (a
"transferee") shall become an additional guarantor of the
Obligations hereunder pursuant to the terms of a written
guaranty agreement in form and substance satisfactory to the
Agent;
(B) after giving effect to such Guarantor
Restructuring, and all related transactions (including,
without imitation, any related financing), the long term
Indebtedness of the Transferee shall be rated BBB or above by
Standard & Poor's Corporation and Baa2 or above by Moody's
Investors Service, Inc.; and
(C) this Agreement shall be amended in a manner
satisfactory to the Agent to reflect the existence of such
additional guarantor and guaranty, including, without
limitation, to provide that occurrences with respect to the
Transferee similar to those set forth in clauses (a) through
(g) of this Section 7.1 shall also be Guarantor Events of
Default hereunder; or
(g) The Guarantor shall directly or indirectly create or
otherwise cause or suffer to exist or become effective any limitation (except
as required by applicable law or the Loan Agreement) on the ability of any of
its Material Subsidiaries to (A) pay dividends or make any other distributions
on its capital stock or any other interest or participation in, or measured by,
its profits owned by, or pay any Indebtedness owed to, the Guarantor, or (B)
make loans or advances to the Guarantor;
then, and in any such event and at any time thereafter, the Agent may and, at
the direction of the Required Banks shall, take one or more of the following
actions: (i) by written or oral or telephonic notice (in the case of oral or
telephonic notice confirmed in writing immediately thereafter) to Guarantor, as
agent for the Borrowers, declare the Total Commitment and each Project
Commitment to be terminated whereupon the Total Commitment and each Project
Commitment shall forthwith terminate, and/or (ii) by written or oral or
telephonic notice (in the case of oral or telephonic notice confirmed in
writing immediately thereafter) to Guarantor, as agent for the Borrowers,
declare all sums then owing by such Borrower hereunder and under any Notes to
be forthwith due and payable, whereupon all such sums shall become and be
immediately due and payable without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by Guarantor and each
Borrower, and/or (iii) require such Borrower to immediately cash collateralize
with the Agent for the ratable benefit of the Banks all outstanding Letters of
Credit or obtain replacement letters of credit for such Letters of Credit, all
in
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form, substance and manner satisfactory to Agent. In cases of any occurrence
of any event of default described in clause (c) or (d) of this Section 7.1, the
Notes, together with accrued interest thereon, shall become due and payable
forthwith without the requirement of any such acceleration or request, and
without presentment, demand, protest or other notice of kind, all of which are
expressly waived, any provision of this Agreement or the Notes to the contrary
notwithstanding and other amounts payable by any Borrower hereunder or under
any Notes shall also become immediately due and payable all without notice of
any kind.
Anything in this Section 7.1 to the contrary notwithstanding, the Agent
shall, at the request of the Required Banks, rescind and annul any acceleration
of the Notes by written instrument filed with each Borrower; provided that at
the time such acceleration is so rescinded and annulled: (A) all past due
interest and principal, if any, on the Notes and all other sums payable under
this Agreement and the Notes (except any principal and interest which has
become due and payable solely by reason of such acceleration pursuant to this
Section 7.1) shall have been duly paid in full, and (B) no other Guarantor
Event of Default shall have occurred and be continuing which shall not have
been waived pursuant to Section 9.1 hereof.
Section 7.2 Borrower Events of Default. If any of the following events,
acts, occurrences or state of facts (herein called a "Borrower Event of
Default") shall occur or exist (for any reason whatsoever, and whether such
happening shall be voluntary or involuntary or come about or be effected by
operation of law pursuant to or in accordance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body):
(a) Any Borrower shall default in the payment of principal of its Loan
Obligations, Notes or reimbursement obligations with respect to any Letters of
Credit issued for the account of such Borrower when due, or in the payment of
interest or any other amount owing hereunder or under any Note or the failure
to satisfy any obligation hereunder to provide cash collateral with respect to
any Letter of Credit within three (3) Business Days after notice of such
failure is given to Guarantor and such Borrower; or
(b) Any Borrower (other than Guarantor as a Borrower) or any Subsidiary of
such Borrower shall default in the payment when due, whether at stated maturity
or otherwise, of any Indebtedness for Money Borrowed of such Borrower or such
Subsidiary, whether individually or in the aggregate, equal to or in excess of
$250,000 whether such Indebtedness now exists or shall hereafter be created,
and such default shall be uncured or unwaived after the expiration of all
applicable grace periods with respect thereto; or breach or default by such
Borrower or such Subsidiary with respect to any
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other material term of any evidence of any Indebtedness for Money Borrowed in
excess of $250,000 or of any loan agreement, mortgage, indenture or other
agreement relating thereto, if the effect of such default or breach is to
cause, or to permit the holder or holders (or a trustee on behalf of such
holder or holders) of such Indebtedness for Money Borrowed to cause such
Indebtedness for Money Borrowed to become or be declared due prior to its
stated maturity (upon the giving or receiving of notice but after the
expiration of all applicable grace periods with respect thereto); provided,
however, that with respect to Indebtedness for Money Borrowed in respect of
real property leases, no such breach or default shall be deemed to exist if
such Borrower or such Subsidiary, as the case may be, is contesting in good
faith the existence of such breach or default by appropriate means and if the
existence of such breach or default, if determined adversely to such Borrower
or such Subsidiary, as the case may be, would not have a material adverse
effect on such Borrower or such Subsidiary;
(c) Any representation or warranty on the part of any Borrower or any of
its Subsidiaries, as the case may be, contained in any Loan Document or any
document, instrument or certificate delivered pursuant thereto shall have been
incorrect in any material respect when made or deemed made; or
(d) Any Borrower or any of its Subsidiaries shall default in the
performance or observance of any term, covenant, condition or agreement on its
part to be performed or observed under Section 5.2 hereof and such default
shall continue unremedied for five (5) days after written or telephonic
(immediately confirmed in writing) notice thereof has been given to such
Borrower by the Agent or any Bank (with a copy of such Notice to Guarantor); or
(e) Any Borrower or any of its Subsidiaries shall default in the
performance or observance of any term, covenant, condition or agreement on its
part to be performed or observed hereunder or under any Loan Document (and not
constituting a Borrower Event of Default under any other clause of this Section
7.2) and such default shall continue unremedied for a period of thirty (30)
days after written or telephonic (immediately confirmed in writing) notice
thereof has been given to such Borrower by the Agent or any Bank (with a copy
of such notice to Guarantor); or
(f) Any Borrower or any of its Subsidiaries or the Kmart General Partner
of such Borrower shall become insolvent or generally fail to pay, or admit in
writing its inability to pay, its debts as they become due, or shall
voluntarily commence any proceeding or file any petition under any bankruptcy,
insolvency or similar law or seeking dissolution or reorganization or the
appointment of a receiver, trustee, custodian or liquidator for it or a
substantial portion of its property, assets or business or to
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effect a plan or other arrangement with its creditors, or shall file any answer
admitting the jurisdiction of the court and the material allegations of an
involuntary petition filed against it in any bankruptcy, insolvency or similar
proceeding, or shall be adjudicated bankrupt, or shall make a general
assignment for the benefit of creditors, or shall consent to, or acquiesce in
the appointment of, a receiver, trustee, custodian or liquidator for a
substantial portion of its property, assets or business, shall call a meeting
of its creditors with a view to arranging a composition or adjustment of its
debts or shall take any corporate action authorizing any of the foregoing; or
(g) Involuntary proceedings or an involuntary petition shall be commenced
or filed against any Borrower or any of its Subsidiaries or the Kmart General
Partner of such Borrower under any bankruptcy, insolvency or similar law or
seeking the dissolution or reorganization of it or the appointment of a
receiver, trustee, custodian or liquidator for it or of a substantial part of
its property, assets or business, or any writ, judgment, warrant of attachment,
execution or similar process shall be issued or levied against a substantial
part of its property, assets or business, and such proceedings or petition
shall not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully bonded,
within sixty (60) days after commencement, filing or levy, as the case may be,
or any order for relief shall be entered in any such proceeding; or
(h) One or more judgments or decrees shall be entered against any Borrower
or any of its Subsidiaries involving, individually or in the aggregate, a
liability of $50,000 (or with respect to Guarantor as a Borrower, $250,000) or
more and all such judgments or decrees shall not have been vacated, discharged,
satisfied or stayed pending appeal within thirty (30) days from the entry
thereof; or
(i) Any Borrower or any of its Subsidiaries shall disavow its obligations
under this Agreement or any Note as the Loan Obligations or shall deny that it
has any or further obligations hereunder or thereunder (in each case other than
by reason of the satisfaction of all of such Borrower's obligations hereunder
and thereunder or the unlawful disavowal by any other party to such agreements
of their respective obligations thereunder); or
(j) Any Borrower shall cease for any reason to be an Eligible Borrower
hereunder;
(k) Any order, judgment or decree shall be entered against any Borrower or
any of its Subsidiaries decreeing its involuntary dissolution or split up and
such order shall remain undischarged and unstayed for a period in excess of
thirty (30)
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days; or any Borrower or any of its Subsidiaries shall otherwise dissolve
or cease to exist; or
(l) Any Additional Borrower Agreement shall cease for any reason to be in
full force and effect as to any Borrower;
(m) Guarantor shall sell, assign, transfer or otherwise dispose of any
shares of capital stock of the Kmart General Partner of such Borrower (except
to the extent, if any, required to qualify directors of such Subsidiary under
any applicable law);
(n) The Kmart General Partner for any Borrower shall:
(i) merge or consolidate with any other Person, other than the
Guarantor or a wholly-owned Subsidiary of the Guarantor;
(ii) create, incur, assume or suffer to exist or agree to create,
incur or assume any Lien in, upon or with respect to any of its ownership
interest in any Borrower, whether now owned or hereafter acquired; or
(iii) directly or indirectly create or otherwise cause or suffer
to exist or become effective any limitation (except as required by
applicable law or the Loan Agreement) on its ability to (A) pay dividends
or make any other distributions on its capital stock or any other interest
or participation in, or measured by, its profits owned by, or pay any
Indebtedness owed to, the Guarantor, or (B) make loans or advances to the
Guarantor.
then, and in any such event and at any time thereafter, the Agent may and, at
the direction of the Required Banks shall, take one or more of the following
actions: (i) by written or oral or telephonic notice (in the case of oral or
telephonic notice confirmed in writing immediately thereafter) to the Borrower
or Borrowers as to which such Borrower Event of Default has occurred declare
any Project Commitment for such Borrower to be terminated whereupon such
Project Commitment shall forthwith terminate, and/or (ii) by written or oral or
telephonic notice (in the case of oral or telephonic notice confirmed in
writing immediately thereafter) to such Borrower declare all sums then owing by
such Borrower hereunder and under any Notes of such Borrower to be forthwith
due and payable, whereupon all such sums shall become and be immediately due
and payable without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by such Borrower and/or (iii) require such
Borrower to immediately cash collateralize with the Agent for the ratable
benefit of the Banks all outstanding Letters of Credit or obtain replacement
letters of credit for such Letters of Credit, all in form, substance and manner
satisfactory to Agent. In cases of any
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occurrence of any event of default described in clause (f) or (g) of this
Section 7.2, such Borrower's Notes, together with accrued interest thereon,
shall become due and payable forthwith without the requirement of any such
acceleration or request, and without presentment, demand, protest or other
notice of any kind, all of which are expressly waived, any provision of this
Agreement or the Notes to the contrary notwithstanding and other amounts
payable by such Borrower hereunder or under any Notes shall also become
immediately due and payable all without notice of any kind.
Anything in this Section 7.2 to the contrary notwithstanding, the Agent
shall, at the request of the Required Banks, rescind and annul any acceleration
of such Borrower's Notes by written instrument filed with such Borrower;
provided that at the time such acceleration is so rescinded and annulled: (A)
all past due interest and principal, if any, on such Borrower's Notes and all
other sums payable by such Borrower under this Agreement and the Notes (except
any principal and interest on such Borrower's Loan Obligations which has become
due and payable solely by reason of such acceleration pursuant to this Section
7.2) shall have been duly paid in full and (B) no other Borrower Event of
Default shall have occurred and be continuing with respect to such Borrower
which shall not have been waived pursuant to Section 9.1 hereof.
ARTICLE VIII
THE AGENT
In this Article VIII, the Banks agree among themselves as follows:
Section 8.1 Appointment. The Banks hereby appoint XXXXXXXXXX as Agent
to act as herein specified. Each Bank hereby irrevocably authorizes and each
holder of any Note or participant in any Letter of Credit by the
acceptance of such Note or participation shall be deemed irrevocably to
authorize the Agent to take such action on its behalf under the provisions of
the Loan Documents (including, without limitation, to give notices and take
such actions on behalf of the Required Banks as are consented to in writing by
the Required Banks) and any other instruments, documents and agreements
referred to therein and to exercise such powers hereunder and thereunder as are
specifically delegated to the Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The Agent may perform any
of its duties hereunder, or under the Loan Documents, by or through its agents
or employees.
Section 8.2 Nature of Duties. The Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement. The
duties of the Agent shall be mechanical and administrative in nature. Without
limiting the effect of the
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foregoing sentence, the Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Bank. Nothing in any of the Loan
Documents, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of any of the Loan Documents
except as expressly set forth herein or therein. Each Bank shall make its own
independent investigation of the financial condition and affairs of each
Borrower in connection with the making and the continuance of the Loans
hereunder and shall make its own appraisal of the creditworthiness of each
Borrower, and the Agent shall have no duty or responsibility, either initially
or on a continuing basis, to provide any Bank with any credit or other
information with respect to any Borrower, whether coming into its possession
before making of the Loans or at any time or times thereafter; provided,
however, upon the request of any Bank, the Agent shall use reasonable efforts
to provide to such Bank copies of any information required to be furnished
under Section 5.1(a)(ii) or Section 5.1(k)(ii) by any Borrower to the Agent
and not to each Bank. The Agent will promptly notify each Bank at any time
that the Required Banks have instructed it to act or refrain from acting
pursuant to Article VII.
Section 8.3 Rights, Exculpation, etc. Neither the Agent nor any of its
officers, directors, employees or agents shall be liable to any Bank for any
action taken or omitted by it hereunder or under any of the Loan Documents, or
in connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The Agent shall not be responsible to any
Bank for any recitals, statements, representations or warranties herein or for
the execution (by any party other than the Agent), effectiveness, genuineness,
validity, enforceability, collectibility, or sufficiency of any of the Loan
Documents or the financial condition of any Borrower. The Agent shall not be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement, any of the Notes
or any of the other Loan Documents or the financial condition of any Borrower,
or the existence or possible existence of any Unmatured Guarantor Event of
Default, Guarantor Event of Default, Unmatured Borrower Event of Default or
Borrower Event of Default unless requested to do so by the Required Banks. The
Agent may at any time request instructions from the Banks with respect to any
actions or approvals which by the terms of any of the Loan Documents the Agent
is permitted or required to take or to grant, and if such instructions are
requested, the Agent shall be absolutely entitled to refrain from taking any
action or to withhold any approval and shall not be under any liability
whatsoever to any Person for refraining from any action or withholding any
approval under any of the Loan Documents until it shall have received such
instructions from the Required Banks. Without limiting the foregoing, no Bank
shall have any right of action whatsoever against the Agent as a result of the
Agent acting or refraining from acting under any of the Loan
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Documents in accordance with the instructions of the Required Banks.
Section 8.4 Reliance. The Agent shall be entitled to rely upon any
written notice, statement, certificate, order or other document or any
telephone message reasonably believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person, and, with respect to all
matters pertaining to any of the Loan Documents and its duties hereunder or
thereunder, upon advice of counsel selected by it.
Section 8.5 Indemnification. To the extent that the Agent is not
reimbursed and indemnified by the Borrowers or the Guarantor, the Banks will
reimburse and indemnify the Agent for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Agent, acting pursuant hereto, in any
way relating to or arising out of any of the Loan Documents or any action taken
or omitted by the Agent under any of the Loan Documents, in proportion to each
Bank's respective Pro Rata Share of the Total Commitment; provided, however,
that no Bank shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful
misconduct. Each LC Bank shall indemnify and hold harmless the Agent and the
other Banks for any loss, cost, damage or expense incurred or suffered as a
result of payment by such LC Bank under any Letter of Credit where such payment
constitutes the gross negligence or willful misconduct of such LC Bank. The
obligations of the Banks under this Section 8.5 shall survive the payment in
full of the Notes and the termination of this Agreement.
Section 8.6 The Agent Individually. With respect to its Pro Rata Share
of the Total Commitment hereunder and the Loans made by it and any Notes issued
to or held by it and its Pro Rata Share of Letters of Credit held by it, the
Agent shall have and may exercise the same rights and powers hereunder and is
subject to the same obligations and liabilities as and to the extent set forth
herein for any other Bank or holder of a Note or participant in Letters of
Credit. The terms "Banks" or "Required Banks" or "holders of Notes" or
"participants in Letters of Credit" "participations in Letters of Credit" or
"holders of Loan Obligations" or any similar terms shall, unless the context
clearly otherwise indicates, include the Agent in its individual capacity as a
Bank, one of the Required Banks or a holder of a Note or participant in Letters
of Credit. The Agent may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with any Borrower or any
Subsidiary of any Borrower as if it were not acting as Agent pursuant hereto.
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Section 8.7 Resignation by the Agent; Removal.
(a) The Agent may resign from the performance of all its functions and
duties hereunder at any time by giving 15 Business Days' prior written notice
to the Borrowers and the Banks. Such resignation shall take effect upon the
acceptance by a successor Agent of appointment pursuant to clauses (b) or (c)
below or as otherwise provided below.
(b) Upon any such notice of resignation, the Required Banks shall appoint
a successor Agent who shall be satisfactory to the Guarantor and shall be an
incorporated bank or trust company.
(c) If a successor Agent shall not have been so appointed within said 15
Business Day period, the Agent, with the consent of the Guarantor, shall then
appoint a successor Agent who shall serve as Agent until such time, if any, as
the Required Banks, with the consent of the Guarantor, appoint a successor
Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause (b) or (c)
by the 30th day after the date such notice of resignation was given by the
Agent, the Agent's resignation shall become effective and the Required Banks
shall thereafter perform all the duties of the Agent hereunder until such time,
if any, as the Required Banks, with the consent of the Borrowers, appoint a
successor Agent as provided above.
(e) The Agent may be removed from the performance of its functions and
duties hereunder for cause (as defined herein) upon written notice received by
the Agent from the Required Banks and the Guarantor. For purposes of this
Section 8.7(e), "cause" shall mean gross negligence or willful misconduct by
the Agent in the performance of its functions and duties hereunder.
ARTICLE IX
MISCELLANEOUS
Section 9.1 No Waiver; Modifications in Writing. No failure or delay on
the part of the Agent or any Bank in exercising any right, power or remedy
hereunder or under any Note or Letter of Credit shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Agent or any
Bank at law or in equity or otherwise. No amendment, modification, supplement,
termination or waiver of or to any provision of this Agreement, nor consent to
any departure by any Borrower or any Subsidiary of any Borrower
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therefrom, shall be effective unless the same shall be in writing and signed by
or on behalf of the Required Banks; provided, however, that no such amendment,
modification, supplement, termination, waiver or consent, as the case may be,
which has the effect of:
(i) reducing the rate or amount, or extending the stated maturity or
due date, of any sum payable (including without limitation principal,
interest and fees) by any Borrower to any Bank hereunder or under any Loan
Obligation or constituting unreimbursed Letter of Credit payments;
provided, however, that any modification that has the effect of reducing
the aggregate amount of any fees payable to the Agent and/or the LC Bank
for their own account shall require only consent of the Agent and/or the
LC Bank, as applicable,;
(ii) changing this Section 9.1 or the definitions of the terms
"Required Banks" and "Pro Rata Share";
(iii) changing the Loan Commitment of any Bank hereunder;
(iv) amending, waiving, modifying, releasing or terminating the
Guaranty; or
(v) extending the term of a Letter of Credit beyond the Facility
Termination Date,
shall be effective unless the same shall be signed by or on behalf of each Bank
hereunder; provided, further, that no such amendment, modification, supplement,
termination, waiver or consent, as the case may be, which has the effect of:
(1) increasing the duties or obligations of the Agent hereunder;
(2) increasing the standard of care or performance required on the
part of the Agent hereunder;
(3) reducing or eliminating the fees, indemnities or immunities to
which the Agent is entitled hereunder (including, without limitation, any
amendment or modification of this Section 9.1); or
(4) amending any provision which requires action by all the Banks
hereunder,
shall be effective unless the same shall be signed by or on behalf of the Agent
and provided still further that the Agent and the Guarantor may by mutual
agreement, amend or modify Exhibit 6.3(d) hereto without the consent of any
Borrower or any other Bank. Any amendment, modification or supplement of or to
any provision of this Agreement, any waiver of any provision of this Agreement,
and
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any consent to any departure by any Borrower from the terms of any provision of
this Agreement, shall be effective only in the specific instance and for the
specific purpose for which made or given. Except where notice is specifically
required by any Loan Document, no notice to or demand on any Borrower in any
case shall entitle such Borrower to any other or further notice or demand in
similar or other circumstances. The Agent will provide to Guarantor a copy of
any proposed amendment, modification or waiver relating to this Agreement not
less than three (3) Business Days prior to the anticipated date of execution
thereof provided, however, that the failure of the Agent to provide such copy
shall not affect the validity of the Guaranty or any amendment, modification or
waiver otherwise properly executed.
Section 9.2 Further Assurances. Each Borrower agrees to do such further
acts and things and to execute and deliver to the Agent such additional
assignments, agreements, powers and instruments, as the Agent may reasonably
require or deem advisable to carry into effect the purposes of this Agreement
or to better assure and confirm unto the Agent its rights, powers and remedies
hereunder.
Section 9.3 Notices, etc. Except where telephonic instructions or
notices are authorized herein to be given, all notices, demands, instructions
and other communications required or permitted to be given to or made upon any
party hereto or any other Person shall be in writing and shall be personally
delivered or sent by registered or certified mail, postage prepaid, return
receipt requested, or by a reputable overnight or courier delivery service, or
by prepaid telegram (with messenger delivery specified in the case of a
telegram), or by telecopier, and shall be deemed to be given for purposes of
this Agreement, if by overnight or courier delivery service, on the day that
such writing is delivered, if by telecopy, on the day that such writing is sent
and if by mail, on the day which is two (2) Business Days after the day such
writing is sent to the intended recipient thereof in accordance with the
provisions of this Section 9.3. Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this Section 9.3,
notices, demands, instructions and other communications in writing shall be
given to or made upon the respective parties hereto at their respective
addresses (or to their respective telecopier numbers) indicated below and, in
the case of telephonic instructions or notices, by calling the telephone number
or numbers indicated for such party below:
If to a particular Borrower, at its address as set forth on the
signature page hereto or on the most recent Additional Borrower
Agreement executed by such Borrower.
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If to XXXXXXXXXX, in its individual
capacity and as Agent:
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Attention: XXXXXXXXXX
Tel. No.: XXXXXXXXXX
Telecopier No.: XXXXXXXXXX
With copies to:
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Attention: XXXXXXXXXX
Tel. No. XXXXXXXXXX
Telecopier No.: XXXXXXXXXX
If to a particular Bank, at its address as set forth on the signature
page hereto or in any notice of assignment delivered to each Borrower
pursuant to Section 9.8(c) hereof.
Section 9.4 Costs, Expenses and Taxes. Each Borrower agrees (without
duplication) to pay all reasonable costs and expenses in connection with the
negotiation, preparation, printing, typing, reproduction, execution and
delivery of this Agreement, the Notes and the other Loan Documents, any
amendment or modifications of (or supplements to) any of the foregoing and any
and all other documents furnished pursuant hereto or thereto or in connection
herewith or therewith, including without limitation the reasonable fees and
out-of-pocket expenses of XXXXXXXXXX, special counsel to the Banks, and
any local counsel retained by the Agent relative thereto or (but not as well
as) the reasonable allocated costs of staff counsel as well as the fees and
out-of-pocket expenses of counsel, independent public accountants and other
outside experts retained by the Agent in connection with the administration of
this Agreement, and all search fees, appraisal fees and expenses, title
insurance policy fees, costs and expenses and filing and recording fees and all
costs and expenses (including, without limitation, reasonable attorneys' fees
and expenses or (but not as well as) the reasonable allocated costs of staff
counsel), if any, in connection with the enforcement of this Agreement, the
Obligations, the Notes, any other Loan Document or any other agreement
furnished pursuant hereto or thereto or in connection herewith or therewith. In
addition, the appropriate Borrower shall pay any and all stamp, transfer and
other similar taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement, the Notes, any other Loan Document or
the making of any Loan or the issuance of any Letter of
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Credit, and each Borrower agrees to save and hold the Agent and each Bank
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying, or omission to pay, such taxes. Any portion of the
foregoing fees, costs and expenses which remains unpaid within two (2) days of
the next Monthly Borrowing Date which is at least ten (10) Business Days after
any Bank's statement and request for payment thereof shall bear interest from
the date of such statement and request to the date of payment at the Default
Rate. The appropriate Borrower will indemnify and hold harmless each Bank and
the Agent and each director, officer, employee and Affiliate of each Bank and
the Agent from and against all losses, claims, damages, expenses or liabilities
to which such Bank or the Agent or such director, officer, employee or
affiliated Person may become subject, insofar as such losses, claims, damages,
expenses or liabilities (or actions, suits or proceedings including any inquiry
or investigation or claims in respect thereof) arise out of, in any way relate
to, or result from the transactions contemplated by this Agreement or any of
the other Loan Documents and to reimburse each of the Banks and the Agent and
each such director, officer, employee or affiliated Person, upon their demand,
for any reasonable legal or other expenses (or (but not as well as) the
reasonable allocated costs of staff counsel) incurred in connection with
investigating, preparing to defend or defending any such loss, claim, damage,
liability, action or claim; provided, however: (i) that no Bank shall have the
right to be so indemnified hereunder for its own gross negligence or willful
misconduct or bad faith or breach of this Agreement as finally determined by a
court of competent jurisdiction after all appeals and the expiration of time to
appeal and (ii) that nothing contained herein shall affect the obligations and
liabilities of the Banks to each Borrower contained herein. If any action,
suit or proceeding arising from any of the foregoing is brought against the
Agent, any Bank or any other Person indemnified or intended to be indemnified
pursuant to this Section 9.4, the appropriate Borrower will, if requested by
the Agent, any Bank or any such indemnified Person, resist and defend such
action, suit or proceeding or cause the same to be resisted and defended by
counsel reasonably satisfactory to the Person or Persons indemnified or
intended to be indemnified. Each indemnified Person shall, if the Agent, a
Bank or other indemnified Person has made the request described in the
preceding sentence and such request has not been complied with, have the right
to employ its own counsel (or (but not as well as) staff counsel) to
investigate and control the defense of any matter covered by such indemnity and
the reasonable fees and expenses of such counsel shall be at the expense of the
indemnifying party. If any Borrower shall fail to do any act or thing which it
has covenanted to do hereunder or any representation or warranty on the part of
any Borrower contained herein shall be breached, the Agent may (but shall not
be obligated to) do the same or cause it to be done or remedy any such breach,
and may expend its funds for such purpose, and will use its best efforts to
give prompt written notice to the
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appropriate Borrower and the Guarantor that it proposes to take such action.
Any and all amounts so expended by the Agent shall be repayable to it by the
appropriate Borrower promptly upon the Agent's demand therefor and shall be
considered a Loan hereunder; provided that, such Borrower may request
reasonable supporting information with respect to any such payment demanded.
If any such amount is not reimbursed to the Agent within two (2) days of the
next Monthly Borrowing Date which is at least ten (10) Business Days after
demand therefor, or, if such supporting information is so requested, within the
date when such supporting information is provided to the applicable Borrower,
the unpaid amount outstanding and due shall bear interest for all periods
thereafter until paid at the Prime Rate in effect from time to time.
Notwithstanding the foregoing, during any period while a Guarantor Event of
Default or a Borrower Event of Default with respect to such Borrower shall have
occurred and be continuing, any amounts repayable to the Agent which are
outstanding after demand therefore shall bear interest at the Default Rate in
effect from time to time. The obligations of each Borrower under this Section
9.4 shall survive the termination of this Agreement and the discharge of such
Borrower's other obligations hereunder.
Section 9.5 Confirmations. Each Borrower and each holder of any Note
agree from time to time, upon written request received by one from the other or
from Guarantor, to confirm to the other or Guarantor, as the case may be, in
writing (with a copy of each such confirmation to the Agent) the aggregate
unpaid principal amount of any Loan Obligation then outstanding.
Section 9.6 Adjustment; Set-off.
(a) If any Bank (a "Benefitted Bank") shall at any time receive any
payment in respect of all or part of its Loans or interest thereon, or payment
of its Pro Rata Share with respect to amounts drawn under Letters of Credit, or
receive any collateral (or proceeds thereof) in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Sections 7.1(c), 7.1(d), 7.2(e) or 7.2(f), hereof, or
otherwise) in a greater proportion than any such payment to and collateral (or
proceeds thereof) received by any other Bank in respect of such other Bank's
Loans or interest thereon or Pro Rata Share of Letters of Credit, such
Benefitted Bank shall purchase for cash from the other Banks such portion of
each such other Bank's Loans or Pro Rata Share of Letters of Credit, or shall
provide such other Banks with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such Benefitted Bank to share
the excess payment or benefits of such collateral or proceeds ratably with each
of the Banks; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such Benefitted Bank, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest.
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Each Borrower agrees that each Bank so purchasing a portion of another Bank's
Loans or Pro Rata Share of Letters of Credit, may exercise all rights of
payment (including, without limitation, rights of set-off) with respect to such
portion as fully as if such Bank were the direct holder of such portion.
(b) In addition to any rights and remedies of the Banks provided by law,
each Bank shall have the right, without prior notice to any Borrower, any such
notice being expressly waived by each Borrower, upon the filing of a petition
under any of the provisions of the federal bankruptcy act or amendments
thereto, by or against, or the occurrence of a Guarantor Event of Default or
Borrower Event of Default with respect to, the making of an assignment for the
benefit of creditors by, the application for the appointment, or the
appointment, of any receiver of, or of any of the property of, the issuance of
any execution against any of the property of, the issuance of a subpoena or
order, in supplementary proceedings, against or with respect to any of the
property of, or the issuance of a warrant of attachment against the property
of, the appropriate Borrower, to set-off and apply against any Indebtedness,
whether matured or unmatured, of the appropriate Borrower to such Bank, any
amount owing from such Bank to each such Borrower, at or at any time after, the
happening of any of the above-mentioned events, and the aforesaid right of
set-off may be exercised by such Bank against each such Borrower or against any
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receivers, or execution, judgment or attachment creditor of each
such Borrower, or against anyone else claiming through or against each such
Borrower or such trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receivers, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Bank prior to the making, filing or issuance, or service upon
such Bank of, or of notice of, any such petition, assignment for the benefit of
creditors, appointment or application for the appointment of a receiver, or
issuance of execution, subpoena, order or warrant. Each Bank agrees promptly
to notify the appropriate Borrower, as the case may be, and the Agent after any
such set-off and application made by such Bank, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
Each Borrower expressly agrees that to the extent such Borrower makes a
payment or payments hereunder or under any Note and such payment or payments,
or any part thereof, are subsequently invalidated, declared to be fraudulent or
preferential, set aside or are required to be repaid to a trustee, receiver, or
any other party under any bankruptcy act, state or federal law, common law or
equitable cause, then to the extent of such payment or repayment, the
Indebtedness to the Banks or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if said payment or payments
had not been made.
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Section 9.7 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together,
shall constitute but one and the same Agreement.
Section 9.8 Binding Effect; Assignment; Addition and Substitution of
Banks.
(a) This Agreement shall be binding upon, and inure to the benefit of,
each Borrower, the Agent, the Banks, all future holders of the Notes or
participants in Letters of Credit, and their respective successors and assigns;
provided, however, that, except as set forth in Section 9.8(e) below, no
Borrower may assign its rights or obligations hereunder or in connection
herewith or any interest herein (voluntarily, by operation of law or otherwise)
without the prior written consent of all of the Banks.
(b) Each Bank may at any time sell to one or more banks or other entities
("Participants") participating interests in all or any portion of its Loan
Commitment and Loans made, and issuances or participations in Letters of Credit
issued, pursuant to this Agreement or any other interest of such Bank hereunder
or under any Note (in respect of any Bank, its "Credit Exposure"), provided
that it sells participating interests in its Credit Exposure ratably according
to all facilities comprising its Credit Exposure, and provided, further that,
notwithstanding the foregoing, any Bank may at any time sell participating
interests in all or a part of its Credit Exposure to any Affiliate of such Bank
or to any other Bank. In the event of any such sale by a Bank of participating
interests to a Participant, such Bank's obligations under this Agreement shall
remain unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any such Notes and any such
participations in Letters of Credit for all purposes under this Agreement and
each Borrower and the Agent shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under this
Agreement. Each Borrower agrees that if amounts outstanding under this
Agreement and the Notes are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of a Guarantor Event of Default
or Borrower Event of Default, each Participant shall be deemed to have the
right of setoff in respect of its participating interest in amounts owing under
this Agreement and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under this Agreement
or any Note, provided that such right of setoff shall be subject to the
obligation of such Participant to share with the Banks, and the Banks agree to
share with such Participant, as provided in Section 9.6. Each Borrower also
agrees that each Participant shall be entitled to the benefits of Sections 2.9,
2.10, 2.13(1), 2.13(m), 2.13(p), and 3.9 with respect to its
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participation in the Loans and Letters of Credit outstanding from time to time.
Each Bank agrees that any agreement between such Bank and any such Participant
in respect of such participating interest shall not restrict such Bank's right
to agree to any amendment, supplement or modification to the Agreement or any
of the Loan Documents except to extend the final maturity of any Note or reduce
the rate or extend the time of payment of interest thereon or reduce the
principal amount thereof.
(c) Any Bank may at any time assign to one or more Eligible Assignees all
or any part of its Credit Exposure, provided that (i) it assigns its Credit
Exposure ratably according to all facilities comprising its Credit Exposure,
(ii) it assigns its Credit Exposure in an amount not less than $5 million, and
(iii) such Eligible Assignee pays to the Agent an assignment fee of $3,000.
Each Borrower and the Banks agree that to the extent of any assignment to an
Eligible Assignee in accordance with the foregoing sentence, the assignee (the
"Assignee") shall be deemed to have the same rights and benefits with respect
to each Borrower under this Agreement and any Notes and the same rights of
setoff and obligation to share pursuant to Section 9.6 as it would have had if
it were a Bank hereunder, provided that each Borrower and the Agent shall be
entitled to continue to deal solely and directly with the assignor Bank in
connection with the interests so assigned to the Assignee until written notice
of such assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to each
Borrower and the Agent by the assignor Bank and the Assignee (accompanied, in
the case of the Agent, by payment of the assignment fee). Upon the assignment
of Credit Exposure provided for hereby, the assignor Bank shall be relieved of
its obligations hereunder to the extent of such assignment and the assignee
shall become a Bank hereunder. In the event that the holder of any Note
(including any Bank) shall assign or transfer such Note as permitted hereby, or
any part of the obligations evidenced thereby, the applicable Borrower shall,
upon surrender of such Note, issue new Notes to reflect such transfer or
assignment payable to the order of the relevant parties as their respective
interests may appear; provided that such Borrower and the Agent shall be
entitled to continue to deal solely and directly with the assignor holder of
such Note in connection with the interests so assigned until written notice of
such assignment shall have been given to such Borrower and the Agent by the
assignor and the assignee of such Note or interest therein.
(d) Each Borrower authorizes each Bank to disclose to any Participant or
Assignee and any prospective Participant or Assignee the terms and provisions
of the Loan Documents and any and all financial information in such Bank's
possession concerning such Borrower and any Subsidiary of such Borrower which
has been delivered to such Bank by such Borrower pursuant to this Agreement or
which has been delivered to such Bank by such Borrower in
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connection with such Bank's credit evaluation of such Borrower prior to
entering into this Agreement.
(e) Any Borrower may, upon not less than thirty (30) days prior written
notice to the Agent, at any time prior to the occurrence and continuance of a
Guarantor Event of Default, assign to another Borrower hereunder ("Assignee
Borrower") all, but not less than all of the assigning Borrower's rights and
obligations with respect to any Project Loan hereunder or Letter of Credit
issued hereunder, provided, that (i) such Assignee Borrower shall have assumed
all of the assigning Borrower's Obligations hereunder and shall have received
good and marketable title to all of the assets of such Borrower with respect to
such Project (subject only to Permitted Liens); (ii) such Assignee Borrower
shall have executed and delivered to each affected Bank, Notes of such Assignee
Borrower evidencing the obligations being assumed, which Notes shall be in
substantially the form of the Notes previously issued by the transferor
Borrower evidencing such obligations, with such changes and additions thereto
as the Banks may reasonably require; (iii) such Assignee Borrower shall have
executed and delivered to each affected LC Bank all documents which the LC Bank
may reasonably require in order to evidence the obligations being assumed; (iv)
the representations and warranties contained in this Agreement with respect to
such Assignee Borrower shall each be true and correct in all material respects
at and as of such time of assignment, as though made on and as of such time;
(v) no Borrower Event of Default or Unmatured Borrower Event of Default with
respect to such Assignee Borrower shall have occurred and be continuing on such
date or will occur after giving effect to such assignment; (vi) the Agent shall
have received an assignment and assumption agreement with respect to such
assignment executed by the relevant Borrowers in form and substance
satisfactory to the Agent; (vii) the Agent shall have received the written
consent of Guarantor to such assignment; and (viii) such assignment and
assumption shall, in all other respects be reasonably satisfactory to the
Agent. The Borrowers, the Agent and the Banks agree that to the extent of any
assignment to an Assignee Borrower in accordance with the terms of this Section
9.8(e), the Assignee Borrower shall be deemed to have the same rights,
benefits and obligations as the Borrower assigning such rights, benefits and
obligations as if such Assignee Borrower had originally incurred the Loan
Obligations so assigned.
(f) In the event that the holder of any Note (including any Bank) shall
transfer such Note in accordance with the terms hereof, it shall immediately
advise the Agent and the applicable Borrower of such transfer, and the Agent
and the applicable Borrower shall be entitled conclusively to assume that no
transfer of any Note has been made by any holder (including any Bank) unless
and until Agent and such Borrower shall have received written notice to the
contrary. Except as otherwise provided in this Agreement or as otherwise
expressly agreed in writing by all of the
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other parties hereto, no Bank shall, by reason of the transfer of a Note or
otherwise, be relieved of any of its obligations hereunder. Each transferee of
any Note shall take such Note subject to the provisions of this Agreement and
to any request made, waiver or consent given or other action taken hereunder,
prior to the receipt by the Agent and the applicable Borrower of written notice
of such transfer, by each previous holder of such Note, and, except as
expressly otherwise provided in such transfer by each previous holder of such
Note, and, except as expressly otherwise provided in such notice, the Agent and
the applicable Borrower shall be entitled conclusively to assume that the
transferee named in such notice shall thereafter be vested with all rights and
powers under this Agreement with respect to the Pro Rata Share of the Loans of
the Bank named as the payee of the Note which is the subject of such transfer.
(g) Notwithstanding any other language in this Agreement, a Bank may at
any time assign all or any portion of its rights under this Agreement and the
Notes to a Federal Reserve Bank as collateral in accordance with Regulation A
of the Board of Governors of the Federal Reserve System and the applicable
operating circular of such Federal Reserve Bank, provided, however, the Bank
shall remain solely and exclusively responsible for its obligations under this
Agreement and the Notes.
Section 9.9 Consent to Jurisdiction. Each Borrower hereby irrevocably
submits to the nonexclusive jurisdiction of any United States Federal or New
York State court sitting in New York City in any action or proceeding arising
out of or relating to this Agreement or any other Loan Document, and each
Borrower hereby irrevocably agrees that all claims in respect of such action or
proceeding shall be heard and determined in any such United States Federal or
New York State court and each Borrower irrevocably waives 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 such respective jurisdictions.
Nothing herein shall affect the right of the Agent or any of the Banks to serve
process in any other manner permitted by law or to commence legal proceedings
or otherwise proceed against any Borrower in any other jurisdiction. As a
method of service, each Borrower also irrevocably consents to the service of
any and all process in any such action or proceeding brought in any court in or
of the State of New York by the delivery of copies of such process to such
Borrower, at its address specified in Section 9.4 hereof or by certified mail
direct to such address.
Section 9.10 Governing Law. This Agreement, the Notes and each Loan
Obligation shall be deemed to be a contract made under the laws of the State of
New York, and for all purposes shall be construed in accordance with the laws
of said State, without regard to principles of conflicts of law. Nothing
contained in
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this Agreement and no action taken by the Agent or any Bank pursuant hereto
shall be deemed to constitute the Agent or the Banks a partnership, an
association, a joint venture or other entity.
Section 9.11 Severability of Provisions. Any provision of this 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 or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 9.12 Borrower Termination. Any Borrower may, upon the delivery
to the Agent of a Borrower Termination Agreement, cease to be a party hereto if
there are no Letters of Credit outstanding with respect to such Borrower and
such Borrower's Obligations hereunder and all Notes evidencing the same have
been paid in full, or such Obligations, Notes and reimbursement of all other
obligations of the account party with respect to Letters of Credit have been
assigned to another Borrower in accordance with the provisions of Section
9.8(e) and all Project Commitments with respect to such Borrower have been
terminated; provided, however, that such Borrower's obligations under Sections
2.9, 2.10, 2.13(l), 2.13(m), 2.13(p), 3.9, 3.10, 8.5, 9.4, 9.6, 9.9 and 9.13
shall survive the termination of such party as a Borrower hereunder.
Section 9.13 Waiver of Jury Trial. THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN CONNECTION WITH ANY ACTION UNDER OR
COUNTERCLAIM RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
Section 9.14 Headings. The Table of Contents and Article and Section
headings used in this Agreement are for convenience of reference only and shall
not affect the construction of this Agreement.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
ADDRESS FOR NOTICES
c/o Kmart Corporation BIG BEAVER OF CAGUAS DEVELOPMENT CORPORATION,
3100 West Big Beaver Road a Michigan corporation
Troy, MI 48084
Attn: Michael E. Dowdle By: /s/ M. L. Skiles
-------------------------------
Title: President
----------------------------
XXXXXXXXXX, in its
individual capacity and as Managing Agent
By: /s/ XXXXXXXXXX
-------------------------------
Title: Vice President
----------------------------
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[BANK SIGNATURE PAGES INTENTIONALLY OMITTED]
<PAGE> 98
[Exhibits and Schedules Intentionally Omitted]
<PAGE> 1
EXHIBIT 99.42
FIRST AMENDMENT TO LOAN AGREEMENT
This First Amendment to Loan Agreement (this "Amendment") is dated as
of December 20, 1994 and is made by and among the "Borrowers" (as hereinafter
defined), the undersigned financial institutions (collectively, the "Banks")
and XXXXXXXXXX, as Managing Agent (the "Agent").
W I T N E S S E T H:
WHEREAS, Kmart Corporation and certain other entities (collectively,
the "Borrowers"), the Banks and the Agent are parties to that certain Loan
Agreement dated as of August 7, 1992 (as amended, modified or supplemented and
in effect from time to time, the "Loan Agreement") pursuant to which the Banks
have provided to the Borrowers certain credit facilities; and
WHEREAS, the Borrowers have requested that the Loan Agreement be
amended in certain respects set forth herein and the Banks and the Agent are
agreeable to the same, subject to the terms and conditions hereof;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, and other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Definitions. Terms capitalized herein and not otherwise defined
herein are used with the meanings ascribed to such terms in the Loan Agreement.
2. Amendment of Loan Agreement. The Loan Agreement is hereby
amended, effective on the First Amendment Effective Date, as follows:
(A) Amendments to Definitions. Section 1.1 of the Loan
Agreement is amended by amending and restating the definitions of
"Guarantor Restructuring" in its entirety as follows:
"Guarantor Restructuring" means any of: (a) any
merger or consolidation of the Guarantor with any other
Person, but excluding any merger or consolidation:
(i) in which the successor formed by or
resulting from such merger or consolidation is Kmart
Corporation or a Subsidiary of Kmart Corporation and,
if the survivor is a Subsidiary of Kmart Corporation,
such Subsidiary shall affirm the obligations of Kmart
Corporation under the Loan Documents in writing; and
(ii) occurring while no Unmatured Guarantor
Event of Default or Guarantor Event of Default
exists; and
<PAGE> 2
(iii) which will not otherwise give rise
to or cause an Unmatured Guarantor Event of Default
or a Guarantor Event of Default;
and (b) any sale, assignment, lease, conveyance, transfer or
other disposition (whether in one or a series of transactions)
of any property (including accounts and notes receivable, with
or without recourse), but excluding any Permitted Disposition
of a Specialty Retail Subsidiary and also excluding any of the
following:
(i) dispositions of inventory, or used,
wornout or surplus equipment, all in the ordinary
course of business; and/or
(ii) the sale of equipment to the extent
that such equipment is exchanged for credit against
the purchase price of similar replacement equipment,
or the proceeds of such sale are reasonably promptly
applied to the purchase price of such replacement
equipment; and/or
(iii) dispositions of inventory or
equipment by Kmart Corporation to any Subsidiary
pursuant to reasonable business requirements; and/or
(iv) other dispositions of assets having,
in any fiscal year of Kmart Corporation, an aggregate
book value not exceeding 10% of Kmart Corporation's
consolidated total assets as of the end of the most
recently ended fiscal year of Kmart Corporation, as
reflected in Kmart Corporation's balance sheet
contained in its audited financial statements for
such fiscal year.
(B) New Definitions Added to Section 1.1. Section 1.1 of the
Loan Agreement is further amended by adding the following additional
definitions thereto in their proper alphabetical places:
"Consolidated Net Worth" means as of the date of any
determination thereof, the consolidated net worth of the
Guarantor, determined in accordance with generally accepted
accounting principles consistently applied; provided, however,
that any gains or losses from the disposition of any Specialty
Retail Subsidiary and any changes after October 7, 1994 in the
foreign currency translation adjustment account as presented
in the Guarantor's financial statements (and in accordance
with generally accepted accounting principles consistently
applied) shall be excluded from the determination of
Consolidated Net Worth.
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<PAGE> 3
"EBITDAR" means, for any applicable period, for the
Guarantor the aggregate of the following, without duplication:
(a) consolidated net income for such period, plus (b)
consolidated interest expense (net of any interest income) for
such period, plus (c) consolidated provision for taxes for
such period, plus (d) consolidated depreciation expense for
such period, plus (e) consolidated amortization expense for
such period, plus (f) consolidated Rent Expenses for such
period, minus (or plus, as applicable) (g) on a
consolidated basis, any extraordinary gains (or plus
extraordinary losses) for such period, minus (or plus, as
applicable) (h) any gains (or plus any losses) attributable to
the Specialty Retail Subsidiaries for such period other than
results of operations in the ordinary course of business, plus
(i) solely with respect to the four fiscal quarter period
ending in October, 1994, the $1.348 billion restructuring
charge recorded in the fourth fiscal quarter of the Guarantor's
fiscal year ending January 26, 1994.
"Permitted Disposition of a Specialty Retail
Subsidiary" means any sale or all, substantially all, or a
part of the capital stock of, or of all, substantially all or
a part of the assets of, any Specialty Retail Subsidiary, even
if such an entity is no longer a Subsidiary of Kmart
Corporation at the time in question, if (a) consideration
received is fair market value (as determined by Kmart
Corporation), or (b) Kmart Corporation's board of directors
deems such transaction to be necessary by reason of applicable
laws, regulations or governmental policies applicable to Kmart
Corporation.
"Rent Expenses" means, for any period, consolidated
rent expense of the Guarantor for such period, determined in
accordance with generally accepted accounting principles
consistently applied, less consolidated rental income for such
period.
"First Amendment" means that certain First Amendment
to Loan Agreement dated as of December 20, 1994, by and among
the Borrowers, the Banks and the Managing Agent.
"First Amendment Effective Date" means the date upon
which each of the conditions precedent set forth in Section 4
of the First Amendment have been met.
"Specialty Retail Subsidiary" means any of the
following Subsidiaries of the Guarantor (or the continuing
investment of the Guarantor in any such entity): Builders
Square, Inc.; Borders Group, Inc.; Coles Myer Ltd.; OfficeMax,
Inc.; PACE Membership
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<PAGE> 4
Warehouse, Inc.; PayLess Drug Stores Northwest, Inc.; and The
Sports Authority, Inc.
(C) Amendment of Subsection 6.2(d). Subsection 6.2(d) of the
Loan Agreement is amended and restated in its entirety as follows:
(d) The long-term Indebtedness of the Guarantor
shall be rated BBB- or above by Standard & Poor's Corporation
and Baa3 or above by Moody's Investors Service, Inc.
(D) Amendment of Subsection 7.1(a). Subsection 7.1(a) of the
Loan Agreement is amended and restated in its entirety as follows:
(a) Indebtedness of the Guarantor shall be rated
BB+ or lower by S&P or Bal or lower by Moody's, or shall not
be rated by either S&P or Moody's.
(E) Amendment of Subsection 7.1(b). Subsection 7.1(b)
of the Loan Agreement is amended by deleting the references therein to
"$40 million" and substituting in lieu thereof references to "$100
million".
(F) Amendment of Subsection 7.1(f). Subsection 7.1(f) of the
Loan Agreement is amended and restated in its entirety as follows:
(f) Any Guarantor Restructuring shall occur; or
(G) Addition of New Subsections to Section 7.1. Section
7.1 of the Loan Agreement is further amended by the addition thereto
of new subsections (h), (i) and (i) thereto as follows:
(h) A final judgment or judgments in excess of
One Hundred Million Dollars ($100,000,000) shall be entered
against the Guarantor by a court of record and not discharged
in accordance with its terms or, within sixty (60) days from
the date of entry thereof, stayed from execution and (within
said period of sixty (60) days or such longer period during
which execution of such judgment(s) shall have been stayed)
appeal taken therefrom and execution thereof stayed during
such appeal;
(i) The Guarantor shall permit its ratio of
(A) EBITDAR (measured as of the end of
any fiscal quarter of the Guarantor ending after October 7,
1994 for the four fiscal quarters then ended)
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<PAGE> 5
to
(B) the sum of (1) consolidated net interest
expense of the Guarantor for such four fiscal quarter period
plus (2) consolidated Rent Expense for such four fiscal
quarter period
to be less than 1.50 to 1.00; or
(j) The Guarantor shall permit its Consolidated Net Worth
at any time to be less than Four Billion Five Hundred Million Dollars
($4,500,000,000).
3. Borrowers' Representations and Warranties. In order to induce
the Banks and the Managing Agent to enter into this Amendment, each Borrower
hereby severally represents and warrants, solely as to itself that:
(a) such Borrower has the right, power and capacity and
has been duly authorized and empowered by all requisite corporate and
shareholder action to enter into, execute, deliver and perform this
Amendment;
(b) this Amendment constitutes such Borrower's legal,
valid and binding obligation, enforceable against it, except as
enforcement thereof may be subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and general principles of equity
(regardless of whether such enforcement is sought in a proceeding in
equity or at law or otherwise);
(c) such Borrower's execution, delivery and performance
of this Amendment do not and will not violate its Organizational
Documents or any law, rule, regulation, order, writ, judgment, decree
or award applicable to it or any contractual provision to which it is
a party or to which it or any of its property is subject;
(d) no authorization or approval or other action by, and
no notice to or filing or registration with, any governmental
authority or regulatory body (other than those which have been
obtained and are in force and effect) is required in connection with
its execution, delivery and performance of this Amendment; and
(e) No Borrower Event of Default or Unmatured Borrower
Event of Default exists as to such Borrower as of the date hereof
under the Loan Agreement or would exist after giving effect to the
transactions contemplated by this Amendment.
-5-
<PAGE> 6
4. Conditions to First Amendment's Effectiveness. The
effectiveness of this First Amendment is specifically subject to the
satisfaction of the following conditions precedent or concurrent:
(a) No Defaults. No Unmatured Guarantor Event of Default
or Guarantor Event of Default under the Loan Agreement (as amended
hereby) shall have occurred and be continuing.
(b) Execution of Amendment. Each Borrower and each Bank
shall have delivered to the Agent a counterpart of this Amendment duly
executed by such Borrower or Bank.
(c) Guaranty Reaffirmation. The Guarantor shall have
executed and delivered to the Agent a Reaffirmation Agreement in
substantially the form of Exhibit A hereto.
5. MISCELLANEOUS. The parties hereto hereby further agree as
follows:
(a) Costs, Expenses and Taxes. Kmart Corporation hereby agrees
to pay all reasonable fees, costs and expenses of the Agent incurred in
connection with the negotiation, preparation and execution of this Amendment
and the transactions contemplated hereby, including, without limitation, the
reasonable fees and expenses of XXXXXXXXXX, counsel to the Agent and the Banks.
(b) Counterparts. This Amendment may be executed in one or more
counterparts, each of which, when executed and delivered, shall be deemed to be
an original and all of which counterparts, taken together, shall constitute but
one and the same document with the same force and effect as if the signatures
of all of the parties were on a single counterpart, and it shall not be
necessary in making proof of this Amendment to produce more than one (1) such
counterpart.
(c) Headings. Headings used in this Amendment are for
convenience of reference only and shall not affect the construction of this
Amendment.
(d) Integration. This Amendment and the Loan Agreement (as
amended hereby) and the Guaranty (as amended by the Guaranty Amendment and
Reaffirmation Agreement) constitute the entire agreement among the parties
hereto with respect to the subject matter hereof.
(e) GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS AND DECISIONS OF
THE STATE OF NEW YORK (WITHOUT REFERENCE TO CONFLICT OF LAWS PRINCIPLES).
(f) Binding Effect. This Amendment shall be binding upon and
inure to the benefit of and be enforceable by the Borrowers, the
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<PAGE> 7
Agent and the Banks and their respective successors and permitted assigns. This
Amendment shall not be construed so as to confer any right or benefit upon any
Person other than the Borrowers, the Agent and the Banks and their respective
successors and permitted assigns.
(g) Amendment; Waiver. The parties hereto agree and acknowledge that
nothing contained in this Amendment in any manner or respect limits or
terminates any of the provisions of the Loan Agreement other than as expressly
set forth herein and further agree and acknowledge that the Loan Agreement (as
amended hereby) remains and continues in full force and effect and is hereby
ratified and confirmed. Except to the extent expressly set forth herein, the
execution, delivery and effectiveness of this Amendment shall not operate as a
waiver of any rights, power or remedy of the Banks or the Agent under the Loan
Agreement, nor constitute a waiver of any provision of the Loan Agreement. No
delay on the part of any Bank or the Agent in exercising any of their
respective rights, remedies, powers and privileges under the Loan Agreement or
partial or single exercise thereof, shall constitute a waiver thereof. None of
the terms and conditions of this Amendment may be changed, waived, modified or
varied in any manner, whatsoever, except in accordance with Section 9.1 of the
Loan Agreement.
[Balance of page left intentionally blank; signature pages follow.]
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first written above.
THE BORROWERS:
KMART CORPORATION
By:____________________________
Title:_________________________
BIG BEAVER OF CAGUAS DEVELOPMENT
CORPORATION
By:_____________________________
Title:__________________________
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<PAGE> 9
[Additional Borrower Signature Pages
Intentionally Omitted]
<PAGE> 10
[BANK SIGNATURE PAGES INTENTIONALLY OMITTED]
<PAGE> 1
EXHIBIT 99.43
================================================================================
GUARANTY AGREEMENT
dated as of August 7, 1992
made by
KMART CORPORATION
in favor of
THE LENDERS REFERRED TO HEREIN
================================================================================
<PAGE> 2
GUARANTY AGREEMENT
GUARANTY AGREEMENT dated as of August 7, 1992 (as the same may be
amended, supplemented or otherwise modified from time to time, this
"Guaranty"), made by KMART CORPORATION, a Michigan corporation (the "Company"),
in favor of the Lenders (as hereinafter defined). Certain capitalized terms
used herein are defined in Section 1 of this Guaranty.
W I T N E S S E T H:
WHEREAS, the Company owns all of the issued and outstanding capital
stock of Big Beaver of Caguas Development Corporation, a Michigan corporation
("Big Beaver of Caguas"); and
WHEREAS, Big Beaver of Caguas has entered into that certain Loan
Agreement dated as of the date hereof with XXXXXXXXXX and the "Banks" (as
such term is defined therein), XXXXXXXXXX as Agent for the Banks
(collectively, XXXXXXXXXX as a Bank and as such agent, and the other Banks
are referred to herein as the "Lenders", and individually any of them may be
referred to as a "Lender") pursuant to which the Lenders have agreed to extend
credit to the "Borrowers" (as defined in such Loan Agreement), subject to the
terms and conditions thereof (such Loan Agreement, as the same may be amended,
modified or supplemented from time to time, is hereinafter referred to as the
"Loan Agreement"); and
WHEREAS, the Loan Agreement contemplates that the 'Borrowers'
thereunder shall include Big Beaver of Caguas and such additional borrowers as
may hereafter become parties to the Loan Agreement in accordance with the terms
thereof (Big Beaver of Caguas and each other person which becomes a 'Borrower'
under the Loan Agreement are hereinafter collectively referred to as the
"Borrowers", and individually any of them may be referred to as a "Borrower",
it being the intent of this Agreement to include within the meaning of the
terms "Borrowers" and "Borrower" each and every entity which at any time, now
or hereafter, is a 'Borrower' under the Loan Agreement); and
WHEREAS, Company desires to induce the Lenders to extend credit to, and
issue Letters of Credit on behalf of, the Borrowers under and in accordance
with the terms of the Loan Agreement, and the Company will benefit from such
extensions of credit; and
WHEREAS, it is a continuing condition precedent to the obligations of
the Lenders to make any extensions of credit under the Loan Agreement that the
Company shall have guarantied the payment and performance of the obligations of
the Borrowers to the Lenders pursuant to this Guaranty and shall have executed
and delivered this Guaranty to the Lenders;
2
<PAGE> 3
NOW, THEREFORE, in consideration of the premises and to induce the
Lenders to make extensions of credit and loans to the Borrowers, the Company
hereby agrees as follows for the benefit of the Lenders:
Section 1. Definitions. As used in this Guaranty, and unless the
context requires a different meaning, capitalized terms not otherwise defined
herein have the respective meanings provided for such terms in the Loan
Agreement.
Section 2. Guaranty of Obligations and Completion. (a) The Company
hereby absolutely, unconditionally and irrevocably guaranties to each of the
Lenders, as the primary obligation and debt of the Company and not as a surety,
the due and punctual payment of:
(i) all principal, interest (as such interest may be calculated
without regard to Section 2.7(f) of the Loan Agreement and including,
without limitation, any post-petition interest whether or not allowed or
accrued or payable under any bankruptcy, insolvency or similar law), fees
and other costs, expenses and amounts required to be paid (including,
without limitation, any requirement to cash collateralize Letters of
Credit), from time to time, by each and every Borrower under or in
connection with the Loan Agreement (including, without limitation, amounts
incurred in connection with the repayment of the Bridge Borrower's
obligations under the Bridge Agreement), when and as the same shall become
due and payable, whether on the due date therefor, upon stated maturity, by
acceleration, upon demand or otherwise, according to the terms of the Loan
Agreement (and notwithstanding any automatic stay or similar provision of
any bankruptcy law), provided, however that the amounts so guarantied shall
be reduced by the aggregate amount of Collateral Proceeds (as such term
is defined in any Collateral Security Agreement) which are applied to the
Guarantied Obligations; and
(ii) all other present and future Obligations and liabilities (whether
absolute, fixed or contingent, matured or unmatured, joint, several or
independent and howsoever acquired) of each and every Borrower to the
Lenders or any of them, arising out of or in any way relating to any
and all of the Loan Documents and the transactions contemplated thereby;
and
(iii) any obligation of any Borrower to any Lender under any Interest
Rate Agreement;
together with all reasonable costs (including, without limitation, reasonable
legal fees and disbursements) incurred by the Lenders in connection with
recovering the same from the Borrowers or the Company. In case of the failure
of any Borrower to duly,
3
<PAGE> 4
punctually and indefeasibly make any such payment in full as and when due and
payable, the Company hereby agrees to duly, punctually and indefeasibly make
such payment as and when the same shall become due and payable, whether on the
due date therefor, upon stated maturity, by acceleration, upon demand or
otherwise, in accordance with the terms of this Guaranty.
(b) The Company hereby also absolutely, unconditionally and
irrevocably guaranties to each of the Lenders completion of construction of
each Project for which a Project Commitment is established under the Loan
Agreement, free and clean of all Liens which are not Permitted Liens
(including, without limitation, mechanics' and materialmen's liens) and in
accordance with and in the manner contemplated by the Loan Agreement, the
Project Budget for such Project and the plans, as amended by the applicable
Borrower from time to time, for such Project.
(c) The payment and performance obligations guarantied by this Guaranty
are herein sometimes referred to collectively as the "Guarantied Obligations".
(d) The Company hereby agrees that, except as set forth in Section 3
hereof, the Company's obligations hereunder shall be continuing, absolute and
unconditional under any and all circumstances and not subject to any reduction,
limitation, impairment, termination, defense (other than prior, final and
indefeasible payment of all the Guarantied Obligations in full), set-off,
abatement, counterclaim or recoupment whatsoever (all of which are hereby
expressly waived by the Company), whether by reason of any claim of any
character whatsoever, including, without limitation, any claim of waiver,
release, surrender, alteration or compromise, or by reason of any liability at
any time to the Company or any Borrower or any of their respective Subsidiaries
or otherwise, whether based upon any agreement, instrument or document
evidencing or securing the Guarantied Obligations or any other agreement,
instrument or document (including, without limitation, this Guaranty) or
otherwise, and howsoever arising, whether out of action or inaction or
otherwise and whether resulting from default, willful misconduct, negligence or
otherwise, and without limiting the foregoing, irrespective of:
(i) any insolvency, bankruptcy, reorganization or dissolution, or any
proceeding in respect thereof, of the Company, any Borrower, any of their
respective Subsidiaries or any other guarantor of all or any portion of the
Guarantied Obligations;
(ii) the genuineness, validity, regularity or enforceability of any
Loan Document or any other agreement, instrument or document evidencing or
securing the Guarantied Obligations or any other agreement, instrument or
document or the extension or renewal thereof, in whole or in part
4
<PAGE> 5
(including, without limitation, a determination that any interest or other
amounts payable under any Loan Document exceeds the maximum amount then
permitted by applicable law), with or without notice to or assent from the
Company, any Borrower, any of their respective Subsidiaries or any other
guarantor of all or any portion of the Guarantied Obligations;
(iii) any rescission, compromise, alteration, amendment, modification,
extension (including, without limitation, any extension of the Facility
Termination Date whether pursuant to Section 3.10 of the Loan Agreement or
otherwise), renewal, release, change, waiver, consent or other action in
respect of any of the terms, provisions, covenants or conditions contained
in any Loan Document or any other agreement, instrument or document
evidencing or securing the Guarantied Obligations or in any other
agreement, instrument or document;
(iv) the absence of notice or the absence of or any delay in any
action to enforce any obligation or to exercise any right or remedy against
the Company, any Borrower, any of their respective Subsidiaries or any
other guarantor of all or any portion of the Guarantied Obligations,
whether under any Loan Document or any other agreement, instrument or
document evidencing or securing the Guarantied Obligations or under any
other agreement, instrument or document, or any indulgence or extension or
waiver granted to or compromise with the Company, any Borrower, any of
their respective Subsidiaries or any other guarantor of all or any portion
of the Guarantied Obligations, or any action or proceeding taken or not
taken with respect to or by or on behalf of the Company, any Borrower, any
of their respective Subsidiaries or any other guarantor of all or any
portion of the Guarantied Obligations, or the holder of any agreement,
instrument or document evidencing or securing the Guarantied Obligations;
(v) any default, failure or delay in the performance of any
obligation, covenant, duty, representation, warranty or agreement contained
in any Loan Document or any other agreement, instrument or document
evidencing or securing the Guarantied Obligations or in any other
agreement, instrument or document, or arising pursuant to law;
(vi) any act or thing or omission to do or delay in doing any act or
thing which might in any manner result in any lack of proper authorization
or any invalid execution of any Loan Document or any other agreement,
instrument or document evidencing or securing the Guarantied Obligations
or any other agreement, instrument or document;
(vii) any assignment by any Borrower or any assumption by any Person
of any obligation under any Loan Document or any other agreement,
instrument or document evidencing or securing
5
<PAGE> 6
the Guarantied Obligations or under any other agreement, instrument or
document;
(viii) any event of force majeure;
(ix) any release or substitution of any collateral for, or any obligor
in respect of, the payment of the Guarantied Obligations or obligations
under any Loan Document or any other agreement, instrument or document, in
whole or in part, with or without notice to or assent from the Company,
any Borrower, any of their respective Subsidiaries or any other guarantor
of all or any portion of the Guarantied Obligations;
(x) whether a lien or security interest on any collateral shall have
been perfected or shall continue to be perfected, or whether any collateral
shall be impaired in any manner, or whether any steps shall have been taken
to enforce rights against the Company, any Borrower, any of their
respective Subsidiaries or any other guarantor of all or any portion of the
Guarantied Obligations or any collateral;
(xi) the status of any Borrower as an Eligible Borrower under the Loan
Agreement;
(xii) the existence of any claim, setoff, defense or other right which
an LC Borrower or the Company may have at any time against a beneficiary
named in a Letter of Credit or any transferee of any Letter of Credit (or
any Person for whom any such transferee may be acting), the LC Bank, any
Lender or any other Person, whether in connection with this Agreement, the
Loan Agreement, any Letter of Credit, the transactions contemplated herein
or any unrelated transactions (including any underlying transactions
between a LC Borrower and the beneficiary named in any Letter of Credit);
(xiii) any draft, certificate or any other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(xiv) the payment by a LC Bank under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does
not comply with the terms of such Letter of Credit, provided that such
payment does not constitute gross negligence or willful misconduct of such
LC Bank; or
(xv) any other circumstances which might constitute a legal or
equitable discharge or defense of a surety or guarantor.
(e) The Company hereby:
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<PAGE> 7
(i) waives diligence, presentment, demand (of payment or otherwise),
protest, notice, filing of claims with a court in the event of the merger
or bankruptcy of any Borrower or any of any Borrower's Subsidiaries, any
right to require a proceeding first against any Borrower or any other
guarantor of all or any portion of the Guarantied Obligations or to
marshall or realize on any collateral, with respect to the Guarantied
Obligations;
(ii) agrees that its obligations hereunder constitute guaranties of
payment and not of collection and are not in any way conditional or
contingent upon any attempt to collect from or enforce against any
Borrower or any other guarantor of all or any portion of the Guarantied
Obligations or upon any other condition or contingency;
(iii) acknowledges that any agreement, instrument or document
evidencing and/or securing the Guarantied Obligations may be transferred
(upon and subject to the terms and conditions thereof) and that the benefit
of the Company's obligations hereunder shall extend to each holder of
any agreement, instrument or document evidencing and/or securing the
Guarantied Obligations automatically and without notice to the Company;
(iv) covenants that, except as otherwise expressly provided in Section
3 hereof, this Guaranty will not be discharged except by final, complete,
indefeasible and irrevocable payment and performance of the obligations
contained in the agreements, instruments and documents evidencing the
Guarantied Obligations and this Guaranty; and
(v) waives acceptance of this Guaranty by any of the Lenders.
(f) The Company further agrees that, notwithstanding any provision set
forth herein, if at any time all or any part of any payment, cash collateral or
Collateral Proceeds theretofore applied by, or on behalf of, any Lender to any
of the Guarantied Obligations is, or must be, rescinded or returned by such
Lender for any reason whatsoever or such payment, cash collateral or Collateral
Proceeds is declared invalid, void, preferential or fraudulent for any reason
whatsoever, including, without limitation, the insolvency, bankruptcy or
reorganization of any Borrower, any of its Subsidiaries, any of the Company's
Subsidiaries or any other guarantor of all or any portion of the Guarantied
Obligations, such Guarantied Obligations or applicable portion thereof, for
purposes of this Guaranty, to the extent that such payment, cash collateral or
Collateral Proceeds is or must be rescinded or returned or is declared invalid,
void, preferential or fraudulent, shall be deemed to have continued in
existence notwithstanding such application, and this Guaranty shall continue
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<PAGE> 8
to be effective or be reinstated, as the case may be, as to such Guarantied
Obligations or applicable portion thereof as though such application had not
been made, irrespective of whether any note or other evidence of indebtedness
has been surrendered or cancelled.
(g) All amounts payable by the Company under this Guaranty shall be
made in United States Dollars without setoff or counterclaim and free and clear
of and without reduction by reason of all present and future income, stamp and
other taxes and levies, imposts, duties, deductions, charges, compulsory loans
and withholdings whatsoever imposed, assessed, levied or collected by the
United States, any state or local government, any foreign government, any
territory or possession of the U.S. or any political subdivision or taxing
authority thereof or therein, together with interest thereon and penalties with
respect thereto, if any, on or in respect of this Guaranty, the registration,
notarization or other formalization hereof, and any payments of principal,
interest, charges, fees or other amounts made on, under or in respect hereof,
other than any tax on or measured by the overall net income of a Lender (or a
Participant, as the case may be) pursuant to the income tax laws of the United
States or the jurisdictions where such Lender's (or Participant's, as the case
may be) principal or lending offices are located (hereinafer called "Taxes"),
all of which will be paid by the Company for its own account, prior to the date
on which any interest or penalties attach thereto.
(h) the Company will indemnify the Agent and each Lender (and each
Participant) against, and reimburse the Agent and each Lender (and each
Participant) on demand for, any Taxes and any loss, liability, claim, or
expense including interest, penalties, loss, liability, claim, or expense
including interest, penalties, and legal fees which the Agent or the Lender may
incur at any time arising out of or in connection with any failure of the
Company to make any payments of Taxes when due. The obligations of the Company
under this subsection shall survive the payment of the Company's other
obligations hereunder and the termination of this Guaranty.
(i) In the event that the Company is required by applicable law,
decree or regulation to deduct or withhold Taxes from any amounts payable on,
under or in respect of this Guaranty, the Company shall pay in United States
Dollars such additional amount as may be required, after the deduction or
withholding of Taxes, to enable the Agent to receive from the Company an amount
equal to the amount stated to be payable under this Guaranty.
(j) The Company shall promptly furnish to the Agent original tax
receipts in respect of any withholding of Taxes required under this Section
2(j) and any other information, documents and receipts that the Agent may, in
its sole discretion from time to time, require to establish to its satisfaction
that
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full and timely payment has been made of all Taxes required to be paid under
this Section 2(j).
(k) All payments to be made by the Company in respect of the
Guarantied Obligations shall be made to the Agent at its Payment Office in New
York, New York for the ratable account of the Lenders not later than 11:00 A.M.
(New York time) on the date when due in each case in lawful money of the United
States of America and in immediately available funds. If any payment hereunder
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day.
Section 3. Special Limitation. Notwithstanding the foregoing, the
obligations of Guarantor under clause (b) of Section 2 hereof shall be
terminated and of no further force and effect with respect to any Project as of
such time, if ever, as (a) the Loan or Loans relating to such Project have been
indefeasibly paid in full and (b) the Project Commitment for such Project has
been terminated.
Section 4. Subordination; Subrogation. The Company hereby agrees that
any indebtedness of any Borrower to the Company arising or accruing out of any
payment which the Company may make pursuant to this Guaranty shall be fully
subordinate and junior in priority in right of payment to any indebtedness of
such Borrower to the Lenders, and the Company shall have no right of
reimbursement or indemnity in respect of such payment whatsoever unless and
until all obligations of such Borrower to the Lenders shall have been finally,
completely, indefeasibly and irrevocably paid and performed in full. The
Company hereby further agrees that it shall have no rights of subrogation with
respect to any payments made by it hereunder.
Section 5. Representations and Warranties. The Company hereby makes
the following representations and warranties to the Lenders, which
representations and warranties shall survive the execution and delivery of this
Guaranty, the Loan Agreement and the other Loan Documents:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Michigan. The Company is
duly qualified and in good standing as a foreign corporation, and is duly
authorized to do business, in each jurisdiction where the ownership or
leasing of property or the character of its operations make such
qualification necessary and in which the failure to so qualify would have
a material adverse effect (individually or taken as a whole) on the
business, condition (financial or otherwise) assets, liabilities,
operations or prospects of the Company and its Subsidiaries.
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(b) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Guaranty, and has
taken all necessary corporate and other action to authorize the execution,
delivery and performance by it of this Guaranty. This Guaranty is the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as enforcement hereof may be
subject to (i) the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights
generally, and (ii) general principles of equity (regardless of whether
such enforcement is sought in a proceeding in equity or at law).
(c) The execution, delivery and performance by the Company of this
Guaranty will not:
(i) contravene any provision of law, statute, rule or
regulation to which the Company is subject or any judgment, decree,
award, franchise, order or permit applicable to the Company;
(ii) conflict or be inconsistent with, or result in
any breach of, any of the terms, covenants or provisions of, or
constitute a default under, or result in the creation or imposition of
any lien upon any of the properties or assets of the Company pursuant
to the terms of, any indenture, mortgage, deed of trust, agreement or
other instrument (including, without limitation, any Loan Document)
to which the Company is a party or by which it or any of its properties
or assets may be bound; or
(iii) violate any provision of its Certificate of
Incorporation or By-laws.
(d) No authorization or approval of, or other action by, and no notice
to or filing or registration with, any governmental authority or regulatory
body is required (other than those that have been obtained and are in force
and effect) in connection with the execution, delivery and performance by
the Company of this Guaranty or the taking of any action hereby
contemplated.
(e) The Company is not and, after giving effect to the transactions
contemplated by this Guaranty, it will not be, in default in any material
respect under any material mortgage, indenture, lease, contract or other
agreement or undertaking to which it is a party or by which it or any of
its properties or assets may be bound.
(f) The Company is not in material default under any order, award or
decree of any court, arbitrator or
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governmental authority binding upon or affecting it or by which any of its
properties or assets may be bound or affected, and no such order, award or
decree would materially and adversely affect the ability of the Company to
carry on its business as presently conducted or the ability of the Company
to perform its obligations under this Guaranty.
(g) There are no actions, suits, proceedings or investigations pending
or, to the knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries or any of its or their respective
properties or assets before any court, governmental agency or regulatory
authority (foreign, Federal, state or local), which, if determined
adversely to the Company or any such Subsidiary, would (individually or in
the aggregate) materially impair the Company's ability to perform fully its
obligations under this Agreement on a timely basis. Neither the Company
nor any of its Subsidiaries (A) is in default with respect to any order of
any court, arbitrator or governmental body or (B) has violated or is in
violation of any statute, rule or regulation of any governmental authority,
the violation of which would materially and adversely affect the business,
condition (financial or otherwise), assets, liabilities, operations
or prospects of the Company and its Subsidiaries (in the aggregate).
(h) Neither the Company nor any of its Subsidiaries is an "investment
company" or a company "controlled" by a company required to be registered
as an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 6. [Intentionally Omitted]
Section 7. Affirmative Covenants. The Company hereby agrees that,
unless otherwise consented to in writing by the Required Banks, it will:
(a) Furnish to each Lender:
(i) as soon as possible and in any event within seven (7) days
after the Company shall have obtained knowledge of the occurrence of a
Guarantor Event of Default or Unmatured Guarantor Event of Default, the
written statement of an officer of the Company setting forth the
details of each such Guarantor Event of Default or Unmatured Guarantor
Event of Default which is continuing and the action which the
Company proposes to take with respect thereto (if any);
(ii) promptly upon the earlier of their distribution or the
filing thereof with the Securities and Exchange Commission ("SEC")
(and in no event later than 60 days
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after filing), copies of the Company's annual reports on Form 10K
(which shall in any event be delivered by May 31 of each year for the
year then ended), copies of any quarterly report by the Company on Form
10Q, and any report on Form 8K;
(iii) promptly upon obtaining knowledge thereof, notice of any
action, suit, proceeding or investigation pending or threatened against
or affecting the Company or any of its Subsidiaries or any of their
respective properties before any court, governmental agency or
regulatory authority (foreign, Federal, state or local), which, if
determined adversely to the Company or any of its Subsidiaries, could
have a material adverse effect on the ability of the Company to
perform its obligations under this Guaranty;
(iv) promptly upon obtaining knowledge thereof, notice of any
downgrade of the Company's long-term Indebtedness by Standard & Poor's
Corporation or Moody's Investors Service, Inc. or of being placed on
any credit watch or of becoming unrated by either of such rating
agencies;
(v) such other information respecting the properties, business
affairs, financial condition and/or operations of the Company as the
Agent may from time to time reasonably request;
(b) Duly and punctually pay and perform each of its obligations
hereunder in accordance with the terms hereof;
(c) Preserve and maintain its corporate existence, rights, privileges
and franchises in the jurisdiction of its incorporation;
(d) Comply, and cause Big Beaver of Caguas and each other Subsidiary
of the Company which at any time owns any ownership interest in any
Borrower to comply, with all laws, rules, regulations and governmental
orders (foreign, Federal, state and local) having applicability to it or to
its businesses, where the failure to so comply would have a material
adverse effect on the business, condition (financial or otherwise), assets,
liabilities, operations or prospects of the Company and its
Subsidiaries (in the aggregate); and
(e) Furnish to the Agent within forty-five (45) days after the end of
each fiscal quarter of the Company, a certificate of an officer of the
Company certifying that no Guarantor Event of Default or Unmatured
Guarantor Event of Default has occurred and is continuing (or, if any such
default has occurred and is continuing, or if the Company is
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not in compliance with its representatives, warranties, covenants and
agreements in this Guaranty, specifying the nature of such Guarantor Event
of Default or non-compliance and any action which the Company has taken or
proposes to take in respect thereof).
Section 8. Breach of Representations, Warranties or Covenants. In the
event that the Company shall fail to comply with any of its covenants or
agreements contained in this Guaranty and such failure shall continue
unremedied for five (5) days after written notice thereof has been given to the
Guarantor by the Agent or if any representation or warranty contained in this
Guaranty shall be inaccurate or untrue in any material respect, then in any
such event and at any time thereafter (so long as such failure or inaccuracy
shall not have been cured or waived in accordance with Section 9(d)), the Agent
may, and at the direction of the Required Banks shall, for purposes of this
Guaranty, declare some or all of the obligations of any Borrower under the Loan
Agreement (whether or not then due under the Loan Agreement) immediately due
and payable as to the Company.
Section 9. Miscellaneous.
(a) THIS GUARANTY SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
INTERNAL LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED
BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS OF SAID STATE,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.
(b) Any provision of this Guaranty that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction. Notwithstanding the foregoing, in lieu of
such prohibited or unenforceable provision, there shall automatically be deemed
incorporated herein (without further act or deed by any party hereto) a
provision as similar to such prohibited or unenforceable provision as possible
and as shall be enforceable and not prohibited pursuant to applicable law. If
this Guaranty would be held or determined by a court of competent jurisdiction
in a judicial proceeding to be void, voidable, invalid or unenforceable on
account of the amount of the aggregate liability of the Company under this
Guaranty or by reason of any inconsistent contractual provision binding on the
Company and in effect on or prior to the date hereof, then, notwithstanding any
other provision of this Guaranty to the contrary, the aggregate amount of the
liability of the Company under this Guaranty shall, without any further action
by the Company, the Agent, the Lenders or any other Person, be automatically
limited and reduced to the maximum amount which is valid and enforceable.
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(c) No failure or delay on the part of any Lender in exercising any
right, power or remedy under this Guaranty shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies provided for in this Guaranty are
cumulative and are not exclusive of any remedies that may be available to any
Lender at law or in equity or otherwise.
(d) Notwithstanding anything to the contrary contained herein, no
amendment, modification, supplement, termination or waiver of or to any
provision of this Guaranty, nor consent to any departure by the Company
therefrom, shall be effective unless the same shall be consented to in writing
by all of the Lenders. Any amendment, modification or supplement of or to any
provision of this Guaranty, any waiver of any provision of this Guaranty, and
any consent to any departure by the Company from the terms of any provision of
this Guaranty, shall be effective only in the specific instance and for the
specific purpose for which made or given.
(e) Except where notice is specifically required by this Guaranty or
the Loan Agreement, no notice to or demand on the Company in any case shall
entitle the Company to any other or further notice or demand in similar or
other circumstances.
(f) The Company acknowledges receipt of a copy of the Loan Agreement
and the other Loan Documents in the form in which each was executed and
delivered by the parties thereto, as in effect on the date hereof, and agrees
that such copies constitute adequate notice of all matters contained therein
and consents to the execution and delivery of such agreements and the
performance of all transactions provided for or contemplated therein; provided
that none of the Lenders shall be obligated to furnish to the Company any
copies of any amendments, modifications or supplements or waivers with respect
to the Loan Agreement or any of the other Loan Documents.
(g) Except where telephonic instructions or notices are authorized
herein to be given, all notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto shall be in
writing and shall be personally delivered or sent by registered or certified
mail, postage prepaid, return receipt requested, or by a reputable courier
delivery service, or by telecopier, and shall be deemed to have been given to
the Company for purposes of this Guaranty, if by overnight or courier delivery
service, on the day that such writing is delivered, if by telecopy on the day
that such writing is sent and if my mail, on the day which is two Business Days
after the day such writing is sent to the intended recipient thereof in
accordance with the provisions of this subsection. Unless otherwise specified
in a notice sent or delivered in accordance with the foregoing provisions of
this subsection, notices, demands,
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instructions and other communications in writing shall be given to or made
upon the respective parties hereto at their respective addresses (or to their
respective telecopier numbers) indicated on Exhibit A hereto, and, in the case
of telephonic instructions or notices, by calling the telephone number or
numbers indicated for such party on Exhibit A hereto or in any copy of a notice
of assignment delivered to the Company in accordance with the terms of the Loan
Agreement.
(h) This Guaranty shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of, and be enforceable
by, each of the Lenders and their respective successors and assigns (including
any permitted assignee in accordance with Section 9.8 of the Loan Agreement);
provided that the Company may not assign or transfer any of its obligations
under this Guaranty without the prior written consent of each of the Lenders.
(i) The Company hereby irrevocably and unconditionally consents
and submits to the nonexclusive jurisdiction of any United States Federal or
New York State court sitting in New York County in any action or proceeding
arising out of or relating to this Guaranty, and the Company hereby irrevocably
and unconditionally agrees that all claims in respect of such action or
proceeding brought against any of the Lenders in respect of this Guaranty shall
be brought in such United States Federal or New York State court. The Company
also irrevocably consents to the service of any and all process in any such
action or proceeding brought in any court in or of the State of New York by the
delivery of copies of such process to the Company at its address specified in
Section 9(g) hereof or by certified or registered mail directed to such
address. THE COMPANY AND THE AGENT AND THE LENDERS, BY ACCEPTANCE HEREOF,
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN CONNECTION WITH
ANY ACTION UNDER OR COUNTERCLAIM RELATING TO THIS GUARANTY, THE LOAN AGREEMENT
OR ANY OTHER LOAN DOCUMENT, AND THE COMPANY AND THE AGENT AND THE LENDERS, BY
ACCEPTANCE HEREOF, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION,
INCLUDING WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, OR THAT IT OR ITS ASSETS IS EXEMPT OR
IMMUNE FROM ATTACHMENT OR EXECUTIONS WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OR MAINTAINING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS. Nothing herein shall affect that right of any of the Lenders to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Company in any other jurisdiction.
(j) The Company agrees to pay promptly on demand, to the extent not
previously finally and indefeasibly paid in full by any Borrower:
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(i) all reasonable costs and expenses of the Agent in
connection with the negotiation, preparation, execution, issuance,
delivery, filing and recording of this Guaranty and any other
documents which may be delivered in connection with this Guaranty,
including, without limitation, the reasonable fees and expenses of
XXXXXXXXXX, special counsel for the Agent, and any local
counsel retained by the Agent, with respect thereto and with
respect to advising the Agent from time to time as to its rights
and responsibilities under or in respect of this Guaranty and any
amendment or modification of, or waiver under, this Guaranty; and
(ii) from and after the occurrence of any Guarantor Event of
Default or Unmatured Guarantor Event of Default, all costs and
expenses (including reasonable counsel fees and expenses) of any
Lender in connection with (A) any and all amounts which any Lender
may incur relative to the curing of any default resulting from the
acts or omissions of the Company under this Guaranty, (B) any
amendment or modification of, or waiver under, this Guaranty and
(C) the enforcement of this Guaranty and the preservation of the
Lenders' rights hereunder; and
(iii) any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution,
delivery, filing and recording of this Guaranty and any other
documents which may be delivered in connection with this Guaranty,
and agrees to save the Lenders harmless from and against any and
all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.
The obligations of the Company under this subsection shall survive the payment
of the Company's other obligations hereunder and the termination of this
Guaranty.
(k) Section and other headings used in this Guaranty are for
convenience only and shall not affect the construction of this Guaranty.
* * *
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IN WITNESS WHEREOF, the Company has caused this Guaranty Agreement to
be duly executed and delivered by its proper and duly authorized officer as of
the day and year first above written.
KMART CORPORATION
By: /s/ M. L. Skiles
--------------------
Name: M. L. Skiles
-------------------
Tile: Senior Vice President
---------------------
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EXHIBIT A
[INTENTIONALLY OMITTED]
