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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
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TABLE OF CONTENTS
Page
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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
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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
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Kmart Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
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
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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, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, 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. ▇▇▇▇▇▇▇▇▇
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.
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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 ▇▇▇▇▇'▇ 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
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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 ▇▇▇▇ 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
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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
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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.
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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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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 & ▇▇▇▇▇▇▇, counsel to the Company and A.N. ▇▇▇▇▇▇▇,
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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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 ▇▇▇▇▇'▇ 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.
"▇▇▇▇▇'▇" 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 &
▇▇▇▇▇▇▇ 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
▇▇▇▇▇'▇ 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, ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Attention: ▇.▇. ▇▇▇▇▇▇ 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
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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 ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, 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:
37
Accepted and agreed as of the date first above written.
XXXXXXXXXX, a
Nevada corporation
By /s/ XXXXXXXXXX
------------------------------
Name: XXXXXXXXXX
Title: Vice President
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[Exhibits Intentionally Omitted]