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EXHIBIT 99.1
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NOTE PURCHASE AGREEMENT
BETWEEN
KMART CORPORATION
AND
XXXXXXXXXX
Dated as of May 29, 1992
$8,135,000 8.95% Collateralized
Promissory Note Due 2007
$29,545,000 9.35% Collateralized
Promissory Note Due 2022
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TABLE OF CONTENTS
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(Not A Part of the Agreement)
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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 . . . . . . . . . . . . . . . . 3
2.1. Optional Prepayment . . . . . . . . . . . . . 3
2.2. Notice of Prepayments. . . . . . . . . . . . . 3
2.3. Special Put Option of Holders Following a
Rating Decline . . . . . . . . . . . . . . . . 3
2.5. Allocation of Prepayments. . . . . . . . . . . 7
SECTION 3. REPRESENTATIONS . . . . . . . . . . . . . . . . . . 7
3.1. Representations of the Company . . . . . . . . 7
3.2. Representations and Agreements of the
Purchaser; Legend. . . . . . . . . . . . . . . 11
SECTION 4. CLOSING CONDITIONS. . . . . . . . . . . . . . . . . 12
4.1. Company's Closing Certificate. . . . . . . . . 12
4.2. Legal Opinions . . . . . . . . . . . . . . . . 12
4.3. Related Transactions . . . . . . . . . . . . . 12
4.4. Ratings. . . . . . . . . . . . . . . . . . . . 15
4.5. Private Placement Number Application . . . . . 15
4.6. Legality . . . . . . . . . . . . . . . . . . . 15
4.7. Funding Instructions . . . . . . . . . . . . . 15
4.8. No Default or Event of Default . . . . . . . . 15
4.9. Satisfactory Proceedings . . . . . . . . . . . 15
4.10. Costs and Expenses . . . . . . . . . . . . . . 15
SECTION 5. COMPANY COVENANTS . . . . . . . . . . . . . . . . . 16
5.1. Financial Reports and Books and Records. . . . 16
5.2. Books and Records; Financial Information . . . 18
5.3. Payments . . . . . . . . . . . . . . . . . . . 19
5.4. Paying Agency. . . . . . . . . . . . . . . . . 19
5.5. Corporate Existence, etc . . . . . . . . . . . 19
5.6. Taxes. . . . . . . . . . . . . . . . . . . . . 20
5.7. Insurance. . . . . . . . . . . . . . . . . . . 20
5.8. Limitation on Consolidation or Merger. . . . . 20
5.9. Ratings. . . . . . . . . . . . . . . . . . . . 21
5.10. Direct Payments. . . . . . . . . . . . . . . . 21
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SECTION ▇.▇▇▇▇▇▇ OF DEFAULT AND REMEDIES THEREFOR . . . . . . . . . . 22
6.1. Events of Default . . . . . . . . . . . . . . . . . . 22
6.2. Notice to Holders . . . . . . . . . . . . . . . . . . 24
6.3. Acceleration of Maturities . . . . . . . . . . . . . 24
6.4. Rescission of Acceleration. . . . . . . . . . . . . . 25
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS . . . . . . . . . . . . . 26
7.1. Consent Required . . . . . . . . . . . . . . . . . . 26
7.2. Solicitation of Holders. . . . . . . . . . . . . . . 26
7.3. Effect of Amendment or Waiver. . . . . . . . . . . . 27
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS . . . . . . . . . 27
8.1. Definitions. . . . . . . . . . . . . . . . . . . . . 27
8.2. Accounting Principles . . . . . . . . . . . . . . . 32
SECTION 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 32
9.1. Registered Notes . . . . . . . . . . . . . . . . . . 32
9.2. Exchange of Notes. . . . . . . . . . . . . . . . . . 33
9.3. Loss, Theft, etc. of Notes . . . . . . . . . . . . . 33
9.4. Expenses, Stamp Tax Indemnity. . . . . . . . . . . . 33
9.5. Powers and Rights Not Waived; Remedies
Cumulative . . . . . . . . . . . . . . . . . . . . . 34
9.6. Notices. . . . . . . . . . . . . . . . . . . . . . . 35
9.7. Successors and Assigns . . . . . . . . . . . . . . . 35
9.8. Survival of Covenants and Representations. . . . . . 36
9.9. Severability . . . . . . . . . . . . . . . . . . . . 36
9.10. Governing Law. . . . . . . . . . . . . . . . . . . 37
9.11. Submission to Jurisdiction . . . . . . . . . . . . 37
9.12. Captions . . . . . . . . . . . . . . . . . . . . . 38
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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ATTACHMENTS TO NOTE PURCHASE AGREEMENT:
Exhibit A - Form of 8.95% Collateralized Promissory Note due
2007
Exhibit B - Form of 9.35% Collateralized Promissory Note due
2022
Exhibit C - Closing Certificate of the Company
Exhibit D - Closing Opinion of Special North Carolina
Counsel to the Company
Exhibit E - Closing Opinion of General Counsel to the
Company
Exhibit F - Closing Opinion of Special New York Counsel to
the Company
Exhibit G - Form of Deed of Trust
Exhibit H - Form of Assignment Agreement
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Kmart Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
NOTE PURCHASE AGREEMENT
$8,135,000 8.95% Kmart Collateralized
Promissory Note Due 2007
and
$29,545,000 9.35% Kmart Collateralized
Promissory Note Due 2022
May 29, 1992
XXXXXXXXXX
XXX
XXX
Gentlemen:
The undersigned, Kmart Corporation, a Michigan corporation
(the "Company"), hereby agrees with XXXXXXXXXX (" XXXXXXXXXX") as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
1.1. DESCRIPTION OF NOTES. The Company has
authorized the issuance and sale of $8,135,000 aggregate principal amount of
its 8.95% Collateralized Promissory Notes due 2007 (the "8.95% Notes") and
$29,545,000 aggregate principal amount of its 9.35% Collateralized Promissory
Notes due 2022 (the "9.35% Notes" and, together with the 8.95% Notes, the
"Notes"), each to be dated the date of issue, to bear interest from such date
as is set forth therein to but not including the date of repayment of such
principal amount at the rate of 8.95% per annum and 9.35% per annum,
respectively, payable on the lst day of each May and November in each year
(commencing November 1, 1992) and at maturity, and to bear interest on overdue
principal, overdue premium, if any, and any overdue installment of interest at
the Overdue Rate, whether at scheduled maturity, upon acceleration or
otherwise, until paid, to mature on May
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1, 2007 and May 1, 2022, respectively, and to be substantially in the form
attached hereto as Exhibits A and B, respectively. Interest on the Notes shall
be computed on the basis of a 360-day year of twelve 30-day months. Principal
on the Notes shall be due and payable in equal annual installments (determined
by dividing the aggregate principal amount then outstanding by the number of
annual installments remaining) commencing on May 1, 1993, in the case of the
8.95% Notes, and May 1, 2008, in the case of the 9.35% Notes, and, thereafter,
on the first day of May in each succeeding year through and including, in the
case of the 8.95% Notes, May 1, 2007, or, in the case of the 9.35% Notes, May
1, 2022. The Notes are not subject to prepayment, purchase or redemption at
the option of the Company prior to their expressed maturity date except on the
terms and conditions and in the amounts and with the premiums, if any, set
forth in the various paragraphs of Section 2 of this Agreement and in the
Notes. The term "Notes" as used herein shall include each Note delivered
pursuant to this Agreement, and each Note issued in exchange or replacement
therefor. XXXXXXXXXX is hereinafter sometimes referred to as the "Purchaser."
Certain capitalized terms used herein shall have the meanings set forth in
Section 8.1, unless the context shall otherwise require.
1.2. COMMITMENT; CLOSING DATE. Subject to the terms and conditions
hereof and on the basis of the representations and warranties hereinafter set
forth, the Company agrees to issue and sell to Purchaser, and Purchaser agrees
to purchase from the Company, $8,135,000 aggregate principal amount of 8.95%
Notes of the Company and $29,545,000 aggregate principal amount of 9.35% Notes
of the Company at a price of 100% and 100% of the principal amount thereof,
respectively, for an aggregate purchase price of $37,680,000.00 (the "Purchase
Price"), on the Closing Date hereinafter mentioned.
Delivery of the Notes will be made at the offices of ▇▇▇▇, Weiss,
Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ against payment therefor in the amount of the Purchase Price at 10:00
A.M., New York City time, on June 2, 1992 or such later date as shall be
mutually agreed upon by the Company and the Purchaser (the "Closing Date").
Payment for the Notes shall be effected by wire transfer of federal funds to
such bank account of the Company as may be specified by the Company in writing
at least one Business Day before the Closing Date. The Notes delivered to
Purchaser on the Closing Date will be
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delivered to Purchaser in the form of one or more registered Notes for the full
amount of Purchaser's purchase, registered in Purchaser's name or in the name
of such nominee(s) or assignee(s) as you shall have specified in writing.
SECTION 2. PREPAYMENT OF NOTES.
No prepayment of the Notes may be made except to the extent
and in the manner expressly provided in this Agreement and the Notes.
2.1. OPTIONAL PREPAYMENT. Upon compliance with Section
2.2, the Company shall have the option at any time and from time to time of
prepaying the outstanding Notes, either in whole or in part (but if in part,
then in units of U.S. $1,000,000 or an integral multiple of $100,000 in excess
thereof) by payment of the principal amount of the Notes, or portion thereof to
be prepaid, together with accrued interest thereon to (but not including) the
date of such prepayment and a premium (determined three Business Days prior to
the date of such prepayment) equal to the Make-Whole Premium (the "Redemption
Price").
2.2. NOTICE OF PREPAYMENTS. The Company shall give
written notice of any prepayment of the Notes pursuant to Section 2.1 hereof to
each holder thereof not less than 30 days nor more than 60 days before the date
fixed for such prepayment of the Notes. Notices required by this Section 2.2
shall specify (a) the date of prepayment, (b) the principal amount of the
holder's Notes to be prepaid on such date, and (c) the estimated Make-Whole
Premium and the accrued interest applicable to the prepayment. Notice of
prepayment having been so given, the aggregate principal amount of the Notes
specified in such notice, together with the Make-Whole Premium and accrued
interest thereon shall become due and payable on the prepayment date set forth
in such notice. The Company shall also give written notice to each holder of
the Notes, by telecopy or other same day written communication, setting forth
the computation and amount of the Make-Whole Premium payable in connection with
a prepayment pursuant to Section 2.1 at least three Business Days prior to the
date of such prepayment.
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2.3. SPECIAL PUT OPTION OF HOLDERS FOLLOWING A RATING
DECLINE.
(a) RATING DECLINE. If a Rating Decline (as
defined in paragraph (d) below) occurs, each holder of a Note will have the
right, at such holder's option, to require the Company to redeem such Note in
whole (but not in part) on the Redemption Date (as defined in paragraph (c)
below) at a price equal to 101.138% of the principal amount thereof in the case
of the 8.95% Notes or 101.097% of the principal amount thereof in the case of
the 9.35% Notes, together with accrued interest thereon to the Redemption Date
(the "Ratings Decline Redemption Price"). The obligations of the Company to
give the notices required pursuant to paragraph (b) of this Section 2.3 shall
remain in effect so long as any Notes remain outstanding. If a Rating Decline
occurs and subsequent to such Rating Decline another Rating Decline occurs,
then each holder of a Note will again have the rights, and the Company again
will have the obligations, as set forth in this Section 2.3.
(b) NOTICE. Within seven days after the first
date on which a Rating Decline has occurred (the "Trigger Date"), the Company
will cause a notice to be mailed to each holder of Notes, which notice shall
(1) state that a Rating Decline has occurred, (2) describe the action taken
with respect to the rating that constituted such Rating Decline, including the
date of the occurrence thereof, (3) set forth the Company's offer to redeem all
of the Notes as provided in paragraph (c) below, and (4) state (i) the Final
Surrender Date (as defined below), (ii) the manner in which the Redemption Date
has been determined, (iii) the estimated Ratings Decline Redemption Price
and (iv) the party to whom the holder of a Note electing redemption shall
surrender such Note on or before the Final Surrender Date.
(c) ELECTION OF REDEMPTION. In connection with
the redemption of any Note pursuant to this Section 2.3, the holder thereof
will be required to surrender, on or before the Final Surrender Date, at the
principal office of the Paying Agent (as defined in Section 5.4 hereof) or, in
the event no Paying Agent is then retained by the Company, the offices of any
other entity meeting the qualifications of Paying Agent set forth in Section
5.4 designated by the Company in any notice delivered pursuant to paragraph (b)
above, such Note duly endorsed or assigned to the Company or in blank, together
with written notice of the holder's
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election to have the Company redeem such Notes specified in such notice. The
Paying Agent or such other qualified entity shall hold the Notes in trust for
the benefit of the holders of the Notes electing redemption pursuant to this
Section 2.3 until payment in full of the Ratings Decline Redemption Price to
the holders on the Final Surrender Date and shall then and thereupon surrender
such Notes to the Company. Election of redemption by a holder pursuant to this
Section 2.3 shall (unless otherwise provided by law) be irrevocable. "Final
Surrender Date" means a Business Day selected by the Company that is, subject
to any contrary requirements of applicable law, not less than 30 nor more than
60 days after the Trigger Date, and "Redemption Date" means the Business Day
next succeeding the Final Surrender Date.
(d) CERTAIN DEFINED TERMS. For purposes of this
Section 2.3, the following terms shall have the following meanings:
A "RATING DECLINE" shall exist upon any date that:
(a) the ratings assigned to unsubordinated, senior,
unsecured indebtedness of the Company on such date by either Moody's or S&P:
(1) declines to a rating below the Minimum Investment Grade, or (2) further
declines, in the event then rated below the Minimum Investment Grade; or
(b) (1) unsubordinated, senior, unsecured indebtedness of the
Company ceases to be rated by either Moody's or S&P (other than by reason of
such rating agency ceasing to rate the indebtedness of corporations generally)
at such time as the rating then assigned by the remaining such Rating Agency
shall be below Minimum Investment Grade or (2) unsubordinated, senior,
unsecured indebtedness of the Company ceases to be rated by either Moody's
or S&P at such time as the rating then assigned by the remaining such Rating
Agency shall be at least the Minimum Investment Grade and the Company is unable
to have such debt rated by another Rating Agency within 90 days thereafter
(except that no Rating Decline shall be deemed to have occurred under this
clause (b)(2) if such debt ceases to be rated by Moody's and S&P by reason of
both such Rating Agencies ceasing to rate the indebtedness of corporations
generally); or
(c) unsubordinated, senior, unsecured indebtedness of the
Company ceases to be rated by both Moody's and S&P for any reason (except if,
through no fault of the Company,
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both Moody's and S&P are unable to provide a rating due to a business failure
or interruption affecting both Moody's and S&P).
For purposes of determining whether a Rating Decline shall have occurred under
clause (a) of this definition, the rating initially assigned by any Rating
Agency engaged by the Company pursuant to clause (b) hereof to replace any
rating withdrawn or otherwise terminated by Moody's or S&P shall be compared to
the last rating assigned by Moody's or S&P, as the case may be.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc. or any successor
thereto.
"S&P" means Standard & Poor's Corporation or any successor thereto.
"RATING AGENCY" and "RATING AGENCIES" mean Moody's and S&P and, if
either Moody's or S&P (but not both) ceases to rate the indebtedness of
corporations generally, or unsubordinated, senior, unsecured indebtedness of
the Company in particular, then another comparable rating agency of recognized
national standing in the United States.
"MINIMUM INVESTMENT GRADE" is defined to mean a rating of at least
Baa2, in the case of a rating by Moody's, and a rating of at least BBB, in the
case of a rating by S&P or the then equivalent of such rating by Moody's or S&P
or, to the extent applicable, by another Rating Agency.
2.4. OTHER PREPAYMENT. In the event that either (a) the
Company shall be required to prepay the Notes pursuant to Section or 1.07 or
1.14 of the Deed of Trust, or (b) the Company shall have failed to provide the
Purchaser with a true and correct original copy of a permanent certificate of
occupancy issued by the appropriate governmental authority in Guilford County,
North Carolina, with respect to the Property and Improvements (the
"Certificate of Occupancy") on or prior to the ninetieth day following the
Closing Date (the "Certificate of Occupancy Due Date"); then, within the time
provided in the Deed of Trust with respect to clause (a) above, or not later
than five Business Days following the Certificate of Occupancy Due Date (the
"Certificate of Occupancy Pay-Off Date"), with respect to clause (b) above, (i)
each holder of a Note shall be required to surrender such Note, duly endorsed
or assigned
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to the Company in blank, at the principal office of the Paying Agent or, in the
event no Paying Agent is then retained by the Company, the offices of any other
entity meeting the qualifications of Paying Agent set forth in Section 5.4
designated by the Company in a notice delivered to the holders, and (ii) the
Paying Agent or such other qualified entity shall hold the Notes in trust for
the benefit of the holders of the Notes until payment in full of the Redemption
Price shall have been made to such holders within the time provided in the Deed
of Trust, with respect to clause (a) above, or on the Certificate of Occupancy
Pay-Off Date, with respect to clause (b) above, and shall then and thereupon
surrender such Notes to the Company. If the provisions of clause (a) of the
preceding sentence shall apply, Purchaser shall apply the proceeds of any
condemnation proceeding, insurance or other award relating to all or a portion
of the Mortgaged Estate to the payment of the Redemption Price.
Notwithstanding the foregoing if, on the Certificate of Occupancy Due Date, the
Company is diligently pursuing the issuance of the Certificate of Occupancy but
none has yet been issued due to circumstances beyond the Company's control, and
the Company provides evidence to Purchaser that the Company is reasonably
likely to obtain a Certificate of Occupancy, the Certificate of Occupancy Due
Date shall be extended until the one hundred and eightieth day following the
Closing Date and the Certificate of Occupancy Pay-Off Date shall be extended
until the fifth Business Day following such extended Certificate of Occupancy
Due Date.
2.5. ALLOCATION OF PREPAYMENTS. Except as set forth in
Section 2.3, all partial prepayments shall be applied on all outstanding Notes
ratably in accordance with the unpaid principal amounts thereof.
SECTION 3. REPRESENTATIONS.
3.1. REPRESENTATIONS OF THE COMPANY. The Company hereby
represents and warrants for the benefit of Purchaser that the representations
set forth as follows are true and correct as of the date hereof and shall be
true and correct as of the Closing Date:
(a) The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Michigan.
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(b) The Company is duly qualified to do business as a
foreign corporation in North Carolina and in each other jurisdiction in which
the conduct of its business or the ownership of its properties would require
such qualification, except where the failure to so qualify would not have a
Material Adverse Effect.
(c) The execution, delivery and performance of this
Agreement, the Notes and the other Note Documents are within the corporate
powers of the Company and have been duly authorized by all necessary corporate
action on the part of the Company. On the Closing Date, this Agreement, the
Notes and the other Note Documents will have been duly executed by and will be
the legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
enforcement of creditors' rights generally and by general principles of equity.
(d) The audited consolidated financial statements of the
Company and its Subsidiaries for the Company's fiscal years ended January 31,
1991 and January 29, 1992 (the "Audited Financials") have been prepared in
accordance with generally accepted accounting principles, consistent with the
principles and practices used in the preparation of the Company's audited
consolidated financial statements for the immediately preceding fiscal year
(except as otherwise indicated in the Audited Financials, including the notes
thereto) and present fairly in all material respects the consolidated financial
condition of the Company at the end of each such financial year and the
consolidated results of operations and changes in financial position of the
Company for each of such periods.
(e) No consent, approval or authorization of, or
declaration, registration or filing with, or payment to, any governmental body
or any non-governmental Person is required to be obtained or made on or prior
to the Closing Date in connection with the execution, delivery and performance
by the Company of this Agreement, the Notes and the other Note Documents or
the transactions contemplated hereby or thereby or as a condition to the
legality, validity or enforceability of the Company's obligations under this
Agreement, the Notes or the other Note Documents, or the offer, issue, sale or
delivery of the Notes to the Purchaser or the fulfillment of or compliance with
the terms
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and provisions of the Notes, this Agreement or the other Note Documents, except
for the recording of a mortgage and the filing of forms UCC-1 in the
appropriate offices in Guilford County, North Carolina, the filing of forms
UCC-1 with the Secretary of State of the State of North Carolina and the
payment of nominal filing fees.
(f) The Company and its Subsidiaries have paid all taxes
that they are required to have paid, except for (i) taxes that are presently
payable but not overdue, (ii) other taxes the payment of which is being
contested in good faith and by appropriate proceedings and (iii) other taxes
the non-payment of which would not have a Material Adverse Effect.
(g) Neither the execution and delivery of this Agreement,
the Notes or the other Note Documents by the Company nor the performance of the
terms and provisions hereof and thereof, nor the issuance and sale of the Notes
by the Company will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in any
violation of, any charter instrument, contract, agreement, mortgage, indenture,
lease, instrument or order, or of any statute, law, rule or regulation of the
United States of America or the States of Michigan or North Carolina, to which
the Company is subject.
(h) Neither the Company's annual report on Form 10-K for
the fiscal year ending January 29, 1992 (the "1991 10-K") nor the Company's
quarterly reports on Form 10-Q filed after the 1991 10-K (if any) contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements made therein, in light of the circumstances in
which they were made, not misleading.
(i) Since January 29, 1992, there has not been any material
adverse change in the financial condition or results of operations of the
Company or in the condition of the Mortgaged Estate.
(j) The net proceeds from the issuance and sale of the
Notes will be used for general corporate purposes of the Company. No part of
the proceeds of the sale of the Notes are intended to be used, directly or
indirectly, for the purpose of purchasing or carrying any "margin stock"
within the meaning of Regulations G, T or X of the Board of Governors of the
Federal Reserve System.
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The assets of the Company and its Subsidiaries do not include an amount of
"margin stock" that would cause the provisions of Rule 207.2(f)(2)(i) of
Regulation G to be inapplicable and neither the Company nor any of its
Subsidiaries has any present intention of purchasing such an amount of "margin
stock".
(k) Neither the Company nor, to its knowledge, anyone
acting on its behalf has offered the Notes or any similar securities relating
to the Property to, or solicited any offer to purchase the same from, any
Person other than the Purchaser and not more than 20 other institutional
investors, or has taken any other action which would require the registration
of the Notes under Section 5 of the Act.
(l) The consummation of the transactions contemplated by
this Agreement and compliance by the Company with the provisions hereof and the
Notes issued hereunder and the other Note Documents will not constitute a
prohibited transaction within the meaning of ERISA or Section 4975 of the Code.
Each Plan complies in all material respects with all applicable statutes and
governmental rules and regulations, and (1) no Reportable Event has occurred
and is continuing with respect to any Plan subject to Title IV of ERISA, (2)
neither the Company nor any ERISA Affiliate has withdrawn from any Plan subject
to Title IV of ERISA or any Multiemployer Plan or instituted steps to do so,
and (3) no steps have been instituted to terminate in a distress termination
any Plan subject to Title IV of ERISA. No condition exists or event or
transaction has occurred in connection with any Plan which could result in the
incurrence by the Company or any ERISA Affiliate of any material liability,
fine or penalty. No Plan maintained by the Company or any ERISA Affiliate and
no trust created thereunder have incurred any "accumulated funding deficiency"
as defined in Section 302 of ERISA, and the present value of all benefits
vested under all Plans subject to Title IV of ERISA does not exceed the value
of the assets of such Plans allocable to such vested benefits (such present
value to be determined as of, and based on, the most recent valuation of such
Plan for funding purposes). The Company has no material contingent liability
with respect to any post-retirement "welfare benefit plan" (as such term is
defined in ERISA), other than as required by section 4980B of the Code.
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(m) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, and the Company is
not directly or indirectly controlled by an investment Company. The Company is
not a "holding company" or a "subsidiary" or an "affiliate" of a "holding
company" or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(n) Except as disclosed in the 1991 10-K, there are no
actions, suits or proceedings pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries in any court or
before any governmental authority or arbitration board or tribunal which, if
adversely determined, would have a Material Adverse Effect.
(o) To the knowledge of the Company, the Company is not
in violation of, and is not subject to any liability under, any environmental
laws affecting it or its properties, except for such violations and liabilities
as would not in the aggregate have a Material Adverse Effect.
(p) The Company is not in violation of any federal,
state, local or foreign law, ordinance or regulation or any order, judgment,
injunction, award or decree or any other requirement of any government or
regulatory body, court or arbitrator applicable to the business or properties
of the Company, except for such violations as would not in the aggregate have a
Material Adverse Effect.
(q) Each of the representations and warranties made or to
be made by the Company in the other Note Documents shall be incorporated herein
on the Closing Date as if set forth herein in their entirety and shall be true
and correct as of such date.
3.2. REPRESENTATIONS AND AGREEMENTS OF THE PURCHASER; LEGEND.
(a) Purchaser represents that it is acquiring the Notes
for its own account and not with a view to distribution (as such term is used
under Section 2(11) of the Act) thereof; provided that the disposition of
Purchaser's property shall at all times be and remain within its control.
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(b) Purchaser represents and warrants that no part of
such funds constitutes assets allocated to any separate account maintained by
it in which any employee benefit plan (or its related trust) has any interest.
SECTION 4. CLOSING CONDITIONS.
Purchaser's obligation to purchase the Notes on the Closing
Date shall be subject to the performance by the Company of its agreements
hereunder and under the other Note Documents which by the terms hereof are to
be performed at or prior to the time of delivery of the Notes and to the
following further conditions precedent:
4.1. COMPANY'S CLOSING CERTIFICATE. Concurrently with the
delivery of Notes to Purchaser on the Closing Date, Purchaser shall have
received a certificate of the Company signed by an Executive Officer of the
Company in substantially the form of Exhibit C hereto, to the effect that,
among other things, (a) the representations and warranties contained in Section
3.1 and the other Note Documents are true on and as of the Closing Date and (b)
no Default or Event of Default exists on and as of the Closing Date.
4.2. LEGAL OPINIONS. Concurrently with the delivery of Notes
to Purchaser on the Closing Date, Purchaser shall have received from ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, North Carolina counsel to the Company, Squire,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, New York counsel to the Company, and ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.,
General Counsel to the Company, their respective opinions, dated the Closing
Date, in substantially the form and substance set forth in Exhibits D, E and F
hereto, respectively.
4.3. RELATED TRANSACTIONS. Prior to or concurrently with the
issuance and sale of Notes to you on the Closing Date, the Company (and, in the
case of the Deed of Trust, the Trustee) shall have executed and delivered the
Deed of Trust, in substantially the form of Exhibit G hereto, and all other
Note Documents, including all such Note Documents as shall be requested to
evidence and effect the XXXXXXXXXX Assignment, and:
(i) the Company shall have good and marketable fee simple
title to the Property, free and clear of all liens and encumbrances except
Permitted Encumbrances;
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(ii) the Company shall have (i) caused the Deed of Trust
and all required Uniform Commercial Code financing statements to be duly
recorded or filed in the manner required by the laws of North Carolina and (ii)
paid, or caused to be paid, all filing fees and recording charges incurred in
connection therewith, and such recordings and filings shall be satisfactory to
the Purchaser and their special counsel;
(iii) the Purchaser shall have received an A.L.T.A.
Standard Loan Policy of title insurance (or such other form of loan or
mortgagee policy as may be prescribed by statute in North Carolina) covering
the Property (or a valid, binding unconditional commitment therefor), dated the
Closing Date, in the current 1990 A.L.T.A. form and including mechanics' and
materialmen's lien coverage, issued by a title insurance company acceptable to
the Purchaser and with such reinsurance as may be required by the Purchaser.
Such policy shall (i) insure (a) the Deed of Trust as a first lien on the
Property, subject to no other liens or encumbrances or restrictions except
Permitted Encumbrances,, which shall be fully identified thereon, (b) that any
restrictions or easements affecting the Property have not been violated and
that a future violation thereof will not result in a forfeiture or reversion of
title, and (c) that all streets adjoining the Property have been completed,
dedicated and accepted for public maintenance and use by the appropriate
governmental authorities, (ii) be in the aggregate amount of $38,096,684.95,
and (iii) be satisfactory in all other respects to the Purchaser. The company
will provide the Purchaser with such endorsements to the title insurance policy
as the Purchaser may reasonably request;
(iv) the Purchaser shall have received a copy of a final
A.L.T.A. as-built survey of the Property, certified not more than 20 days
before Closing Date, such survey to be satisfactory in form and substance to
the Purchaser and to include (i) a metes and bounds description (or an
otherwise sufficient legal description) of the Property, (ii) all lot and
street lines, (iii) a statement of whether the Property is located in a flood
plain or zone as designated by any governmental authority and (iv) the location
of improvements, easements and rights of way (identified by reference to the
recorded instrument creating the same, if any) and encroachments, if any,
prepared and duly certified to the title company, the trustee under the
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Deed of Trust and the Purchaser as an accurate survey by a surveyor duly
licensed in the State of North Carolina;
(v) the Purchaser shall have received a certificate of self-
insurance executed by the Company;
(vi) the Purchaser shall have received an appraisal of the
Property satisfactory to the Purchaser by an appraisal company acceptable to
the Purchaser the cost of which shall be paid by XXXXXXXXXX ;
(vii) the Purchaser shall have received a Phase I
environmental audit report on the Property satisfactory to the Purchaser by an
environmental consulting company acceptable to the Purchaser;
(viii) the Purchaser shall have received a soils report on
the Property satisfactory to the Purchaser by an engineering company acceptable
to the Purchaser;
(ix) the Purchaser shall have received a copy of all
certificates, permits and licenses of governmental authorities or inspection
organizations as are required or are customarily procured in connection with
the construction, use, occupancy or operation of the Property, and each such
certificate, permit and license shall be in full force and effect;
(x) the Purchaser shall have received evidence satisfactory
to it that there does not exist any violation of any law, regulation or order
affecting the Property, including, without limitation, laws, regulations and
orders relating to (i) zoning, subdivision and building restrictions and (ii)
hazardous waste, asbestos or other environmental conditions;
(xi) on the Closing Date, the Property shall be (i)
undamaged by fire or other causes and (ii) unaffected by any pending or
threatened condemnation proceeding;
(xii) the Purchaser shall have received a certificate of the
Company's project manager in charge of the construction of the Property
certifying, among other things, that the Improvements have been constructed in
a good and workmanlike manner and in compliance with all applicable laws, that
all roads, easements, utilities and other services necessary for access to the
Improvements and
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the full utilization of the Improvements have been constructed, entered into or
are available; and
(xiii) the Purchaser and XXXXXXXXXX shall
have received evidence satisfactory to it that the description of the tax lot
or lots covering the Property does not include any lands or buildings other
than those described in the Deed of Trust.
4.4. RATINGS. The Notes shall have a National Association
of Insurance Commissioners's rating of "1" and Purchaser shall have received
written evidence thereof.
4.5. PRIVATE PLACEMENT NUMBER APPLICATION. An application
for issuance of a private placement number for the Notes shall have been made to
S&P.
4.6. LEGALITY. The Notes shall qualify as a legal
investment for Purchaser under the laws and regulations of each jurisdiction to
which Purchaser is subject and Purchaser shall have received such information
concerning the Company its Subsidiaries as Purchaser shall reasonably request
to establish such fact.
4.7. FUNDING INSTRUCTIONS. Purchaser shall have received
written instructions executed by an officer of the Company directing transfer
of the payment of funds in the manner required by Section 1.2 hereof setting
forth (a) the name of the transferee bank, (b) such transferee bank's ABA
Number and (c) the account name and number into which the purchase price for
the Notes is to be deposited.
4.8. NO DEFAULT OR EVENT OF DEFAULT. On the Closing Date,
no Default or Event of Default shall exist.
4.9. SATISFACTORY PROCEEDINGS. All proceedings taken in
connection with the transactions contemplated by this Agreement, and all
documents necessary for the consummation thereof, shall be satisfactory in form
and substance to Purchaser and ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, and
Purchaser shall have received a copy (executed or certified as may be
appropriate) of all legal documents or proceedings taken in connection with the
consummation of such transactions.
4.10. COSTS AND EXPENSES. The Company shall have paid or
provided for the payment of all expenses that the Company is obligated to pay
pursuant to Section 9.4. In
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addition, Purchaser and XXXXXXXXXX shall have received reasonable assurance
in writing that all other fees and expenses incurred by any other Person
in connection with the transactions contemplated hereunder shall have been paid
on or prior to the Closing Date.
If on the Closing Date the Company fails to tender to Purchaser the Notes to be
issued on such date or if the conditions specified in this Section 4 have not
been fulfilled, Purchaser may thereupon elect to be relieved of all further
obligations under this Agreement. Without limiting the foregoing, if the
conditions specified in this Section 4 have not been fulfilled, Purchaser may
waive compliance by the Company with any such condition to such extent as
Purchaser may in its own sole discretion, determine. Nothing herein shall
operate to relieve the Company of any of its obligations hereunder, including
without limitation the payment of any expenses pursuant to Section 9.4 or to
waive any of Purchaser's rights against the Company.
SECTION 5. COMPANY COVENANTS.
Without limiting the obligations of the Company set forth in
the Deed of Trust or any of the other Note Documents, from and after the
Closing Date and continuing so long as any amount remains unpaid on any Note:
5.1. FINANCIAL REPORTS AND BOOKS AND RECORDS.
The Company will furnish to each holder of the Notes:
(a) As soon as available and in any event within 45 days
after the end of each quarterly fiscal period (except the last) of each fiscal
year, copies of:
(i) a consolidated balance sheet of the Company
and its Subsidiaries as of the close of such period, and
(ii) consolidated statements of income,
shareholders' equity and cash flows of the Company and its
Subsidiaries for the portion of the fiscal year ending with
such period;
in each case setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year, all in reasonable detail and
certified as complete and correct, subject to changes resulting from year-end
audit
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adjustments, by the chief accounting officer of the Company; provided that the
Company will have satisfied the requirements of this Section 5.1 by the
delivery within the time period described hereinabove of its quarterly reports
on Form 10-Q as filed with the Securities and Exchange commission so long as
such Form l0-Q contains quarterly statements reflecting the financial position
and results of operations of the Company and its consolidated Subsidiaries for
such quarter:
(b) As soon as available and in any event within 90 days
after the close of each fiscal year of the Company, copies of:
(i) a consolidated balance sheet of the Company
and its Subsidiaries as of the close of such fiscal year, and
(ii) consolidated statements of income,
shareholders' equity and cash flows of the Company and its
Subsidiaries for such fiscal year;
(c) Promptly upon their becoming available, and the
provision of Sections 5.1(a) and (b) notwithstanding, copies of each financial
statement, report, notice or proxy statement sent by the Company to
stockholders or debenture holders generally;
(d) Except at such times as the Company is a reporting
company under Section 13 or 15(d) of the Exchange Act, such financial or other
information as any holder of the Notes or any Person designated by such holder
may reasonably determine is required to permit such holder to comply with the
requirements of Rule 144A promulgated under the Act in connection with the
resale by it of the Notes, in any such case promptly after the same is
requested; and
(e) Within the period provided in paragraphs 5.1(a) and (b)
above, a certificate of an Executive Officer of the Company stating that such
officer has reviewed the provisions of this Agreement and the other Note
Documents and stating whether there existed as of the date of such financial
statements and whether, to the best of such officers' knowledge, there exists
at the time of the certificate or existed at any time during the period
covered by such financial statements any Default or Event of Default and, if
any such condition or event does exist on the date
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of the certificate, specifying the nature and period of existence thereof and
the action the Company is taking and/or proposes to take with respect thereto.
The annual and interim financial statements described in paragraphs
(a) through (d) above shall be prepared in accordance with accounting
principles generally accepted in the United States, consistently applied.
5.2. BOOKS AND RECORDS; FINANCIAL INFORMATION. The Company will,
and will cause each of its material Subsidiaries to, keep proper books of
record and account in accordance with generally accepted United States
accounting practices or in accordance with the generally accepted accounting
practices of the country in which each such corporation is organized.
Purchaser (so long as it holds any Notes) and any Institutional Holder that,
together with any Affiliates, holds at least 10% of the aggregate principal
amount of Notes then outstanding shall, upon the occurrence and during the
continuance of a Default or from and after the occurrence of either any event
that has a Material Adverse Effect or a Rating Decline, at the expense of the
Company, have the right for reasonable purposes, during regular business hours,
subject to reasonable notice and as often as may be reasonably requested, to
visit and inspect the properties of the Company and its Subsidiaries, to
examine the corporate books and records of the Company and its Subsidiaries and
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the appropriate officers of the Company and, in the presence
of a representative of the Company, their independent public accountants.
Notwithstanding the foregoing, neither the Company nor any of its Subsidiaries
shall be obligated to disclose any information pursuant to this Section 5.2
which they are prohibited from disclosing by law or by any contract entered
into with any Person other than an Affiliate.
Each holder of the Notes by its acceptance thereof agrees that any information
obtained by such Person pursuant to this Section 5.2 will be treated as
confidential; provided, however, that nothing herein contained shall limit or
impair the right or obligation of any holder of the Notes to disclose such
information: (1) to its auditors, attorneys, employees or agents, (2) when
required by any law, ordinance or governmental order, regulation, rule, policy,
investigation or any regulatory authority request, (3) as may be required or
appropriate in any report, statement or testi-
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mony submitted to any municipal, state, provincial or Federal regulatory body
having or claiming to have jurisdiction over such holder or to the United
States National Association of Insurance Commissioners or similar organizations
or their successors, (4) in connection with the enforcement of the terms and
conditions of this Agreement, the Notes and any of the other Note Documents,
(5) which is publicly available or readily ascertainable from public sources,
or which is received by any holder of the Notes from a third Person who or
which, to such holder's knowledge, is not bound to keep the same confidential,
(6) as required by legal process in connection with any proceeding, case or
matter pending (or on its face purported to be pending) or threatened before
any court, tribunal, arbitration board or any governmental agency, commission,
authority, board or similar entity, or (7) to the extent necessary in
connection with any contemplated transfer of any Notes by any holder thereof
(it being understood and agreed that any transferee that purchases such Notes
shall itself be bound by the terms and provisions hereof).
5.3. PAYMENTS. The Company will duly and punctually pay
the principal of, premium (if any) and interest on the Notes in accordance with
their terms and this Agreement, without any deduction, withholding or setoff of
any kind.
5.4. PAYING AGENCY. The Company will maintain an office
in the United States of America where notices, presentations and demands to or
upon the Company in respect of this Agreement, the Notes and the other Note
Documents may be given or made. As of the date of this Agreement, such office
is located at the Company's address set forth in Section 9.6 hereof. The
Company will give written notice to the holders of the Notes of any change of
location of such office within five Business Days after the date of any such
change. Notwithstanding the foregoing, in lieu of, or in addition to,
maintaining an office as herein contemplated, the Company may appoint and
maintain an agent for receiving notices, presentations or demands and/or making
payments on the Notes which shall be a state or national bank or trust company
organized under the laws of the United States of America or any State thereof
or the District of Columbia and having capital, surplus and undivided profits
aggregating at least U.S. $250,000,000 (the "Paying Agent") for the Notes in
the Borough of Manhattan in the City of New York.
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5.5. CORPORATE EXISTENCE, ETC. The Company will, and
(except as permitted below) will cause each of its material Subsidiaries to, do
or cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and comply with all applicable laws, statutes,
regulations, rules, orders, and all applicable restrictions imposed by any
governmental or regulatory body except those being contested in good faith by
appropriate proceedings and except where the failure so to comply would not
have a Material Adverse Effect, and maintain all licenses and permits necessary
properly to conduct its business or own its properties, except where the
failure so to do would not have a Material Adverse Effect; provided, however
that the foregoing shall not restrict (x) the Company from causing, permitting
or suffering the sale, merger or liquidation of such of its Subsidiaries (but
not the Company) as its Board of Directors shall determine to be in the best
interests of the Company in the exercise of its reasonable business judgment or
(y) any transaction permitted by Section 5.8.
5.6. TAXES. The Company will, and will cause each of its
Subsidiaries to, pay all applicable taxes except for (i) taxes the payment of
which is being contested by the Company or such Subsidiary in good faith and by
appropriate proceedings and (ii) taxes the non-payment of which would not have
a Material Adverse Effect.
5.7. INSURANCE. The Company will, and will cause its
Subsidiaries to, carry and maintain in full force and effect at all times with
fiscally sound and reputable insurers insurance against such risks as is
reasonable and prudent in the circumstances (which insurance obligation may be
fulfilled by a reasonable and prudent self-insurance program, except as
provided below) and in any event as may be required by applicable laws,
statutes, regulations, rules or orders and, with respect to the Mortgaged
Estate, such insurance as is required by the Deed of Trust.
5.8. LIMITATION ON CONSOLIDATION OR MERGER. The company
will not, directly or indirectly, consolidate or merge with, or sell, lease or
otherwise dispose of all or substantially all of its assets to, any other
Person unless (a) no Default or Event of Default shall have occurred and be
continuing immediately before or immediately after such transaction and (b) the
Company is the survivor of such transaction or, if the Company is not the
survivor, the survivor is a corporation organized under the laws of any
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State of the United States which expressly assumes in writing the Company's
obligations under this Agreement, the Notes and the other Note Documents and
which shall own all or substantially all the assets of the Company. In the
case of any such consolidation, merger or sale or other disposition of assets
in which the Company is not the surviving corporation, the surviving
corporation shall furnish to the holders of the Notes an unqualified opinion of
independent counsel to the effect that the instrument of assumption has been
duly authorized, executed and delivered and constitutes the legal, valid and
binding contract and agreement of the surviving corporation enforceable in
accordance with its terms, except as enforcement of such terms may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and by general equitable principles.
Following a transaction of the kind described above, the successor corporation
shall use its reasonable best efforts to cause such Rating Agencies that,
immediately prior to the relevant transaction, shall have rated the
unsubordinated, unsecured debt of the Company to confirm that such debt
continues to be rated. No merger, consolidation, sale, lease or other
disposition prohibited or permitted hereunder shall in any manner limit or
reduce Purchaser's rights under Section 2.3.
5.9. RATINGS. The Company will use its reasonable best
efforts to enable ▇▇▇▇▇'▇ and S&P or a comparable rating agency to have in
effect a rating for its unsubordinated, senior, unsecured indebtedness.
5.10. DIRECT PAYMENTS. Notwithstanding anything to the
contrary in this Agreement or the Notes, in the case Purchaser or its nominee
or by any other Institutional Holder of the Notes (or its nominee(s)) has given
written notice to the Company and the Paying Agent requesting that the
provisions of this Section 5.10 shall apply, the Company will cause the Paying
Agent promptly and punctually to pay when due the principal of the Notes and
premium, if any, and interest thereon, without any presentment thereof directly
to Purchaser or such subsequent Institutional Holder at the address of
Purchaser set forth above or at such other address as Purchaser or such
subsequent Institutional Holder may from time to time designate in writing to
the Company and the Paying Agent or, if a bank account is designated for
Purchaser in any written notice to the Company and the Paying Agent from such
Purchaser or any such subsequent Institutional Holder, the Company will cause
the Paying Agent to make such payments in current and immediately
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available funds which at the time of payment shall be legal tender in the
United States of America for the payment of public and private debts to such
bank account, marked for attention as indicated, or in such other manner or to
such other account of Purchaser or such Institutional Holder in any bank in the
United States as the Purchaser or any such Institutional Holder may from time
to time direct in writing. With respect to Notes to which this Section 5.10
applies, the Company and the Paying Agent shall be entitled to presume
conclusively that the original or such subsequent Institutional Holder as shall
have requested the provisions hereof to apply to its Notes remains the holder
of such Notes until such Notes shall have been presented to the Company as
evidence of the transfer.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
6.1. EVENTS OF DEFAULT. Any one or more of the following
shall constitute an "Event of Default" as the term is used herein or in the
other Note Documents:
(a) The Company shall fail to pay when due (i) any
payment of the principal of any Note or of any premium thereon; or (ii) any
payment of interest on any Note and such interest payment default shall
continue for more than 5 days; or
(b) the Company shall fail to observe or perform any
other obligation, covenant, undertaking, condition or provision in respect of
the Notes or contained in this Agreement or the other Note Documents which is
not remedied within 30 days after the earlier of: (i) the furnishing of notice
thereof by the Company to the holders of the Notes, (ii) the Company's willful
failure to provide any notice required under Section 6.2 hereof or (iii)
receipt of written notice thereof from the holder of any Note by the Company
requiring the same to be remedied; provided that a default under Section 6.09
of the Deed of Trust shall constitute an Event of Default hereunder not subject
to cure; or
(c) any representation or warranty made by the Company
herein, or made by the Company in any other Note Document, shall be untrue or
inaccurate in any material respect; or
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(d) any of the Note Documents or any provision thereof
shall cease to be a legal, valid and binding agreement enforceable against the
Company (or, in the case of the Deed of Trust, the Trustee or the Company) in
accordance with the respect of terms thereof or shall in any way be terminated
or become or be declared ineffective or inoperative or shall in any way
whatsoever cease to give or provide the respective liens, security interest,
rights, titles, interest, remedies, powers or privileges intended to be created
thereby; or
(e) a judgment shall be rendered against the Company or
any Principal subsidiary for the payment of money in excess of $250 million
individually or $250 million in the aggregate (as to such foregoing amount, net
of the portion thereof covered by insurance) and such judgment shall not be
discharged or dismissed, or execution thereof stayed pending appeal, within 45
days after entry; or
(f) (i) the Company or any Principal Subsidiary shall
commence or consent to any case, proceeding or other action (1) under
any existing or future law of any jurisdiction relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate
it as bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (2) seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or any
substantial part of its assets (including the Mortgaged Estate), or
the Company shall make a general assignment for the benefit of
creditors or admit in writing that it is unable to pay its debts as
they become due; or
(ii) there shall be commenced against the Company
or any Principal Subsidiary any such case, proceeding or other action
referred to in subclause (i) of this clause (f) that (1) results in
the entry of an order for relief or any such adjudication or
appointment or (2) is not dismissed, discharged or stayed for a period
of 30 days from the entry thereof; or
(iii) there shall be commenced against the Company
or any Principal Subsidiary any case, proceeding or other action
seeking issuance of a
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warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets (or against the
Mortgaged Estate) that results in the entry of any order for any such
relief which shall not have been vacated, discharged or stayed within
30 days from the entry thereof; or
(iv) the Company shall have been dissolved or
terminated; or
(v) the Company or any Principal Subsidiary shall
take any action authorizing, or in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth
above in this clause (f).
6.2. NOTICE TO HOLDERS. Whenever the Company becomes aware that
any Default or Event of Default has occurred, or if the Company is aware that
the holder of any Note has either given any notice or taken any other action
with respect to a Default or Event of Default, or the Company receives written
notice from a third party concerning an event which constitutes a Default or
Event of Default, the Company will ensure that notice is given (or such third
party notice is forwarded) to all holders of the Notes then outstanding, no
later than the fifth day (or second day in the case of an Event of Default or
Default under Section 6.1(a)) after it becomes aware that such Event of Default
or Default has occurred, or that such notice has been given or such other
action has been taken with respect to such Default or Event of Default, such
notice to be in writing and sent in the manner provided in Section 9.6.
6.3. ACCELERATION OF MATURITIES; OTHER REMEDIES.
(a) Upon the occurrence of an Event of Default under
Section 6.1(a) above, the holder of each Note as to which such Event of Default
occurred may, by written notice to the Company, declare such Note to be due and
payable (without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Company) at the Redemption Price. Upon the
occurrence of an Event of Default under Section 6.1(f) above in respect of the
Company (but not of a Principal Subsidiary), all Notes shall immediately become
due and payable at the Redemption Price. Upon the occurrence of any other
Event of Default, holders of Notes representing at least 51% of the unpaid
principal amount of all Notes then outstanding, excluding
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any Notes held by the Company or any Subsidiary or Affiliate (the "requisite
holders") may, by written notice to the Company, declare all Notes to be due
and payable (without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Company) at the Redemption Price. No
course of dealing on the part of any holder of any Note nor any delay or
failure on the part of any holder of any Note to exercise any right shall
operate as a waiver of such right or otherwise prejudice such holder's rights,
powers and remedies. The Company further agrees to pay to the holder or
holders of the Notes all costs and expenses incurred by them in the collection
of any Note upon any default hereunder or thereon, including the fees,
disbursements and other charges of such holder's or holders' attorneys for all
services rendered in connection therewith.
(b) The rights and remedies expressly provided for in
this agreement are cumulative and not exclusive of any rights or remedies which
the Purchaser or any holder of a Note would otherwise have, including, without
limitation, the rights and remedies provided for in the Deed of Trust.
6.4. RESCISSION OF ACCELERATION. The provisions of Section 6.3 are
subject to the condition that if the principal of and accrued interest on all
or any outstanding Notes have been declared or have become immediately due and
payable by reason of the occurrence of any Event of Default described in
paragraphs (a) through (e), inclusive, of Section 6.1, then (i) for any such
declaration by a holder as the result of an Event of Default described in
paragraph (a) of Section 6.1, such holder or (ii) for any such declaration as
the result of the Event of Default described in paragraphs (b) through (e) of
Section 6.1, the holders of at least 51% of the unpaid principal amount of all
Notes then outstanding (other than any Notes held by the Company or any
Subsidiary or Affiliate), may by written instrument filed with the Company,
rescind and annul such declaration and the consequences thereof, provided that
at the time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the
payment of any monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all
other sums payable under the Notes and under this Agreement (except
any principal, interest or premium on the Notes which has become due
and payable
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solely by reason of such declaration under Section 6.3) shall have
been duly paid; and
(c) each and every other Default and Event of Default shall
have been cured or waived pursuant to Section 7.1 and the Company
shall have paid all of Purchaser's costs and expenses as provided for
in Section 9.4;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS
7.1. CONSENT REQUIRED. Any term, covenant, agreement or
condition of this Agreement or the Notes or the other Note Documents may, with
the consent of the Company (and, if required by applicable law, in the case of
the Deed of Trust, the Trustee), be amended or compliance therewith may be
waived (either generally or in a particular instance and either retroactively
or prospectively), if the Company shall have obtained the consent in writing of
the holders of at least 51% of the unpaid principal amount of outstanding Notes
(other than any Notes held or agreed to be purchased by the Company or any
Subsidiary or Affiliate) provided that no such waiver, modification, alteration
or amendment shall (a) change the time of payment of the principal of or the
interest on any Note or reduce the principal amount thereof or reduce the rate
of interest thereon, (b) change any of the provisions with respect to Section 2
hereof, or (c) change the percentage of holders of the Notes required to
consent to any such amendment, alteration or modification or any of the
provisions of this Section 7 without the consent of each holder of the Notes
affected thereby. Executed or true and correct copies of any waiver,
modification, alteration or amendment to this Agreement shall be delivered by
the Company to each holder of outstanding Notes forthwith following the date on
which the same shall have been executed and delivered by the holder or holders
of the requisite percentage of outstanding Notes.
7.2. SOLICITATION OF HOLDERS. So long as there are any Notes
outstanding, the Company will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes or the other Note Documents unless each holder of Notes
(irrespective of the amount of Notes then owned by it) shall be informed
thereof by the Company and shall be afforded the opportunity of considering the
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same and shall be supplied by the Company with sufficient information to enable
it to make an informed decision with respect thereto. The Company will not,
directly or indirectly, pay or cause to be paid any remuneration, whether by
way of supplemental or additional interest, fee or otherwise, to any holder as
consideration for or as an inducement to entering into by any holder of any
waiver or amendment of any of the terms and provisions of the Agreements or the
Notes or the other Note Documents unless such remuneration is concurrently
offered, on the same terms, ratably to the holders of all Notes then
outstanding.
7.3. EFFECT OF AMENDMENT OR WAIVER. Any such amendment or waiver
shall apply equally to all of the holders of the Notes and shall be binding
upon them, upon each future holder of any Note and upon the Company (and in the
case of the Deed of Trust, the Trustee), whether or not such Note shall have
been marked to indicate such amendment or waiver. No such amendment or waiver
shall extend to or affect any obligation not expressly amended or waived or
impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS
8.1. DEFINITIONS. Unless the context otherwise requires,
the terms hereinafter set forth when used herein shall have the following
meanings and the following definitions shall be equally applicable to both the
singular and plural forms of any of the terms herein defined. Capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the other Note Documents.
"ACT" means the Securities Act of 1933, as amended.
"AFFILIATE" means any Person which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, the Company, as the case may be. The term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting stock, by contract or otherwise.
"AGREEMENT" shall have the meaning assigned thereto in Section
1.4 hereof.
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"BUSINESS DAY" means any day other than a Saturday, Sunday or
other day on which banks in New York are required by law to close or are
customarily closed.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the
principal of such Note that is to be paid or prepaid pursuant to any paragraph
of Section 2 or is declared to be immediately due and payable pursuant to
Section 6.3, as the context requires.
"CLOSING DATE" shall have the meaning assigned thereto in
Section 1.2 hereof.
"CODE" means the Internal Revenue Code of 1986, as amended;
"DEED OF TRUST" means that certain Deed of Trust, Security
Agreement, Assignment of Rents and Fixture Filing, in substantially the form of
Exhibit F, to be entered into on the Closing Date by and among the Company, the
Purchaser and the Trustee.
"DEFAULT" means any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default as defined in Section 6.1.
"DISCOUNTED PREPAYMENT VALUE" shall mean, with respect to the
Called Principal of any Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a discount
factor (applied on a semiannual basis) equal to (i) for any Settlement Date
with respect to the 9.35% Notes on or before the tenth anniversary of the date
of original issuance, the Reinvestment Yield or (ii) with respect to the 8.95%
Notes for any Settlement Date or with respect to the 9.35% Notes for any
Settlement Date after the tenth anniversary of the date of original issuance,
the sum of the Reinvestment Yield plus 50 basis points.
" XXXXXXXXXX" means XXXXXXXXXX.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with
regulations thereunder, in each case as in effect from time to time.
References to
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sections of ERISA shall be construed to also refer to any successor sections;
"ERISA AFFILIATE" means any corporation, trade or business
that is, along with the Company, a member of a controlled group of corporations
or a controlled group of trades or businesses, as described in Section 414(b)
and 414(c), respectively, of the Code or Section 4001 of ERISA;
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXECUTIVE OFFICER" means the President, Vice-President or
Treasurer of the Company.
"INSTITUTIONAL HOLDER" means (i) Purchaser, (ii) any other
holder of Notes which is an insurance company, charitable foundation, fraternal
benefit society, pension, retirement or profit sharing trust or fund within the
meaning of Title I of the Employee Retirement Income Security Act of 1974, as
amended, or for which any bank, trust company, national banking association or
investment advisor registered under the Investment Advisers' Act of 1940, as
amended, is acting as a trustee or agent, any broker or dealer registered under
the Investment Advisers' Act of 1940, as amended, or any government, public
employees' pension retirement system, or any other governmental agency
supervising the investment of public funds and (iii) an affiliate of any
Person described in clause (i) or (ii) which holds any Notes.
"MAKE-WHOLE PREMIUM" means, with respect to any Note, a
premium equal to the sum of (x) the excess, if any, of the Discounted
Prepayment Value of the Called Principal of such Note over the sum of (i) such
Called Principal plus (ii) interest accrued thereon as of the Settlement Date
with respect to such Called Principal and (y) an amount equal to the product of
the Called Principal Amount and 101.146%, in the case of the 8.95% Notes, or
101.105%, in the case of the 9.35% Notes. The Prepayment Make-Whole Premium
shall in no event be less than zero.
"MATERIAL ADVERSE EFFECT" means:
(a) a material adverse effect on the financial condition
of the Company and its Subsidiaries taken as a whole or on the
condition, value or use of the Mortgaged Estate or on the ability of
the Company to perform its obligations under this Agreement, the Notes
or any other Note Document; or
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(b) a material adverse effect on the legality, validity
or enforceability of the Company's obligations under this Agreement or
the Notes or the other Note Documents or a material impairment of the
liens or security interest granted under the Note Documents.
"▇▇▇▇▇'▇" shall have the meaning assigned thereto
in Section 2.4(d) hereof.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in
ERISA as to which the Company has any outstanding liability;
"NOTE DOCUMENTS" means this Agreement, the Notes, the Deed of
Trust and any other agreements, documents and writings now or hereafter
executed by, on behalf of or for the benefit of the Company, Purchaser, the
Trustee or other holders of the Notes pursuant to or in connection with this
Agreement or the transactions contemplated hereby, together with all
amendments, modifications (including through the waiver of any provision
thereof), supplements and/or restatements thereto.
"OVERDUE RATE" means the rate of interest then in
effect plus 200 basis points.
"PBGC" means the Pension Benefit Guaranty Corporation;
"PERSON" means an individual, partnership, corporation, trust
or unincorporated organization, and a government or agency or political
subdivision thereof.
"PLAN" means any United States employee benefit plan
established, maintained or contributed to by the Company or any ERISA Affiliate
for the benefit of the Company or such ERISA Affiliate's respective employees
as to which the Company has any outstanding liability; and
"PRINCIPAL SUBSIDIARY" means (i) any Subsidiary of the Company
(a) whose profits (before tax and extraordinary items) for its last financial
year as shown in its latest profit and loss account as prepared for the
purposes of the latest audited profit and loss account of the Company are at
least 10% of the consolidated profits (before tax and extraordinary items) of
the Company for its last fiscal year as shown in the latest audited
consolidated profit and loss account of the Company or (b) whose total assets
(excluding goodwill and other intangible assets and deducting intercompany
indebtedness and minority interests) as shown by its latest balance sheet as
prepared for the purposes of the
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latest audited balance sheet of the Company are at least 10% of the total
assets of the Company as shown by the latest audited consolidated balance sheet
of the Company. A report by the independent auditors of the Company that in
their opinion a Subsidiary is or is not a Principal Subsidiary shall, in the
absence of manifest error, be conclusive and binding on the Company and the
holders of the Notes.
"PURCHASER" AND "PURCHASERS" shall have the meaning assigned
thereto in Section 1.1 hereof.
"RATING AGENCY" and "RATING AGENCIES" shall have the meanings
assigned thereto in Section 2.4(d) hereof.
"REINVESTMENT YIELD" shall mean, with respect to the Called
Principal of any Note, the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the third Business Day
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such other display
as may replace Page 678 on the Telerate Service) for actively traded U.S.
Treasury securities having a maturity equal to the weighted average remaining
life of the Called Principal being paid or prepaid as of such Settlement Date,
or if such yields shall not be reported as of such time or the yields reported
as of such time shall not be ascertainable, (ii) the Treasury Constant Maturity
Series yields reported, for the latest day for which such yields shall have
been so reported as of the third Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical Release
H.15(519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the weighted average
remaining life of the Called Principal being paid or prepaid as of such
Settlement Date. Such implied yield shall be determined, if necessary, by (a)
converting U.S. Treasury ▇▇▇▇ quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between reported yields.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due on or after the Settlement Date with respect
to such Called Principal if no payment of such Called Principal were made prior
to its expressed maturity date.
"REPORTABLE EVENT" shall have the same meaning as
in ERISA but shall not include any reportable event for
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which the 30-day notice period has been waived under applicable regulations.
"SETTLEMENT DATE" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is to be paid or
prepaid pursuant to any paragraph of Section 2 or is declared to be immediately
due and payable pursuant to Section 6.3, as the context requires.
"SUBSIDIARY" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of
such corporation (assuming exercise or conversion solely of the securities held
by such Person) is at the time beneficially owned by such Person directly or
indirectly through Subsidiaries, and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% equity interest at the time or the power to
elect a majority of the Board of Directors or similar governing body.
"S&P" shall have the meaning assigned thereto in
Section 2.4(d) hereof.
"TRUSTEE" means XXXXXXXXXX.
8.2. ACCOUNTING PRINCIPLES. Where the character or amount
of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in
accordance with United States generally accepted accounting principles.
SECTION 9. MISCELLANEOUS
9.1. REGISTERED NOTES. The Company shall cause to be kept
a register for the registration and transfer of the Notes (hereinafter called
the "Note Register") at the office of the Company or the Paying Agent, and the
Company will cause to be registered or transferred on the Note Register as
hereinafter provided and under such reasonable regulations as it may prescribe,
any Note issued pursuant to this Agreement.
At any time and from time to time the registered holder of any
Note which has been duly registered as hereinabove provided may, subject to
compliance with applicable securities laws and the provisions of Section 3.2,
transfer such Note upon surrender thereof at the Company or the
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principal office of the Paying Agent (if one shall have been appointed) duly
endorsed or accompanied by a written instrument of transfer duly executed by
the registered holder of such Note or its attorney duly authorized in writing;
provided that the Company or the Paying Agent may decline to exchange or
register the transfer of any Note during the period of five Business Days
preceding the due date for any payment of principal or interest on the Notes.
The Person in whose name any registered Note shall be
registered shall be deemed and treated as the owner and holder thereof for all
purposes of this Agreement. Payment of or on account of the principal,
premium, if any, and interest on any registered Note shall be made to or upon
the written order of such registered holder.
9.2. EXCHANGE OF NOTES. At any time and from time to
time, upon not less than three Business Days' notice to that effect given by
the holder of any Note initially delivered or of any Note substituted therefor
pursuant to Section 9.1, this Section 9.2, or Section 9.3 (except in the case
of a lost, stolen, or mutilated certificate sought to be exchanged pursuant to
Section 9.3, as soon as practicable), and, upon surrender of such Note at the
office of the Paying Agent, the Company will cause the Paying Agent to deliver
in exchange therefor, without expense to the holder, except as set forth below,
Notes for the same aggregate principal amount as the then unpaid principal
amount of the Note so surrendered, in the denomination of U.S. $100,000 or any
amount in excess thereof as such holder shall specify, dated as of the date to
which interest has been paid on the Note so surrendered, or, if such surrender
is prior to the payment of any interest thereon, then dated as of the date of
issue, payable to such Person or Persons, or registered assigns, as may be
designated by such holder and otherwise permitted hereunder, and otherwise of
the same form and tenor as the Notes so surrendered for exchange. The Company
may require the payment of a sum sufficient to cover any stamp tax or
governmental charges imposed upon such exchange or transfer.
9.3. LOSS, THEFT, ETC. OF NOTES. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
any Notes, and in the case of any such loss, theft or destruction upon delivery
of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation upon surrender
and cancellation of the Note, the Company will cause the Paying Agent to
deliver without expense to the holder thereof, a new Note, of like tenor, in
lieu of such lost, stolen, destroyed or mutilated Note. If any
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Institutional Holder is the owner of any such lost, stolen or destroyed Note,
then the affidavit of an authorized officer of such owner, setting forth the
fact of loss, theft or destruction and of its ownership of the Note at the time
of such loss, theft or destruction shall be accepted as satisfactory evidence
thereof and no further indemnity shall be required as a condition to the
execution and delivery of a new Note other than the written agreement of such
owner to indemnify the Company.
9.4. EXPENSES, STAMP TAX INDEMNITY. Whether or not the
transactions herein contemplated (including the XXXXXXXXXX Assignment) shall
be consummated, XXXXXXXXXX agrees to pay directly all of its and XXXXXXXXXX
out-of-pocket expenses in connection with the preparation, execution and
delivery of this Agreement and the transactions contemplated or permitted
hereby, including but not limited to the reasonable fees, disbursements and
other charges of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, XXXXXXXXXX special
counsel, and of ▇▇▇▇▇ ▇▇▇▇, and all duplicating and printing costs and charges
for shipping the Notes, adequately insured to XXXXXXXXXX at XXXXXXXXXX home
office or at such other place as XXXXXXXXXX may designate. The Company agrees
to pay all of its out-of-pocket expenses in connection with the preparation,
execution and delivery of this Agreement and the transactions contemplated or
permitted hereby, including but not limited to the fees and expenses of
Dickenson, Wright, Moon Van Dusen & ▇▇▇▇▇▇▇ and of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇. The Company also agrees to pay all expenses relating to the performance
of any transactions contemplated or permitted hereby, any title insurance
premiums, filings or recordings any action for the enforcement or collection of
the Notes or this Agreement and any amendment, waivers or consents pursuant to
the provisions hereof (whether or not the same are actually executed and
delivered), including, without limitation, any amendments, waivers or consents
resulting from any workout, restructuring or similar proceedings relating to
the performance by the Company of its obligations under this Agreement, the
Notes and the other Note Documents. The Company also agrees that it will pay
any fees and related expenses incurred or to be incurred in connection with its
cooperation with ▇▇▇▇▇'▇ 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
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agrees to protect and indemnify Purchaser against any liability for any and all
brokerage fees and commissions payable or claimed to be payable by the Company
to any Person in connection with the transactions contemplated by this
Agreement other than the fees, commissions, costs and expenses of XXXXXXXXXX
and its counsel and financial advisors which are to be paid from the proceeds
of the XXXXXXXXXX Assignment. Without limiting the foregoing, the Company
agrees to pay the cost of obtaining a private placement number for the Notes
and authorizes the submission of such information as may be required by S&P
for the purpose of obtaining such number.
9.5. POWERS AND RIGHTS NOT WAIVED; REMEDIES CUMULATIVE.
No delay or failure on the part of the holder of any Note in the exercise of
any power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to and are not exclusive of any rights or
remedies any such holder would otherwise have, and no waiver or consent, given
or extended pursuant to Section 7 hereof, shall extend to or affect any
obligation or right not expressly waived or consented to.
9.6. NOTICES. All communications provided for hereunder
shall be in writing and, if to XXXXXXXXXX, delivered or mailed by registered
or certified mail or by overnight courier or by facsimile communication
(confirmed in writing by registered or certified mail or by overnight courier),
in each case prepaid and addressed to XXXXXXXXXX at XXXXXXXXXX address
appearing above or such other address as XXXXXXXXXX or the subsequent holder
of any Note initially issued to XXXXXXXXXX may designate to the Company in
writing, and if to the Company delivered or mailed by registered or certified
mail, return receipt requested, or by overnight courier, or by facsimile
communication transmitted on a Business Day (confirmed in writing by
registered or certified mail, return receipt requested, or by overnight
courier), in each case prepaid and addressed to Kmart Corporation, ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or to such
other address as the Company or the Paying Agent may in writing designate to
Purchaser or to a subsequent holder of the Note initially issued to Purchaser.
Any such communication, if to XXXXXXXXXX, shall be addressed to XXXXXXXXXX.
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9.7. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the Company and its respective successors and assigns and shall
be binding upon and inure to Purchaser's benefit and to the benefit of
Purchaser's successors and assigns, including each successive holder or
holders of any Notes. Each such successive holder or holders of any Notes,
including XXXXXXXXXX, shall have all rights and privileges of the "Purchaser"
hereunder. The Company hereby acknowledges that, simultaneously with the
Closing, XXXXXXXXXX is assigning all of its right, title and interest
hereunder and under the Notes, the Deed of Trust and the other Note Documents
to XXXXXXXXXX pursuant to an Assignment Agreement in substantially the form
of Exhibit H hereto (the " XXXXXXXXXX Assignment"). The Company further
acknowledges and agrees that XXXXXXXXXX is accepting the XXXXXXXXXX
Assignment in reliance upon the Company's representations, warranties,
covenants, agreements and other obligations hereunder and under the Notes, the
Deed of Trust and the other Note Documents. In order to further induce ▇▇▇▇▇
▇▇▇▇▇ to enter into the XXXXXXXXXX Assignment, the Company hereby makes the
following representations, warranties, covenants and agreements:
(i) To the best of its knowledge, the Company
does not have any right, including any claim, counterclaim, right of
set-off or deduction or other defense of any kind, to withhold payment
or performance of any of its obligations hereunder or under any of the
other Note Documents (" XXXXXXXXXX Defenses");
(ii) In the event the Company becomes aware of any
XXXXXXXXXX Defenses, the Company hereby waives and agrees not to
assert the same against XXXXXXXXXX or any other holder of the Notes;
(iii) The Company hereby acknowledges and agrees
that, upon consummation of the XXXXXXXXXX Assignment, XXXXXXXXXX
will be a bona fide purchaser of the Notes for value and will be a
holder of the Notes in due course and the Company hereby waives any
right to challenge XXXXXXXXXX status as such; and
(iv) The Company acknowledges and agrees that
XXXXXXXXXX is a third party beneficiary of this Agreement and the
other Note Documents entered into between the Company and XXXXXXXXXX.
In addition, XXXXXXXXXX hereby acknowledges and agrees that XXX is a
third party beneficiary of this Agreement and the other Note Documents
entered into between the Company and XXXXXXXXXX.
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9.8. SURVIVAL OF COVENANTS AND REPRESENTATIONS. All
covenants, representations and warranties made by the Company herein and in any
other Note Documents and in any certificates delivered pursuant hereto or
thereto, whether or not in connection with the Closing Date, shall survive the
closing and the delivery of this Agreement and the Notes.
9.9. SEVERABILITY. Should any provision of this Agreement
or any of the other Note Documents for any reason be declared unenforceable by
a court of competent jurisdiction (sustained on appeal, if any), such
unenforceability shall not affect the enforceability of any other provision
hereof or thereof, all of which shall remain in force and effect as if this
Agreement or such other Note Document had been executed with the unenforceable
provision thereof eliminated and it is hereby declared the intention of the
parties hereto that they would have executed the remaining provision of this
Agreement without including therein any such part, parts, or portion which may,
for any reason, be hereafter declared unenforceable; provided that, if any
provision of this Agreement or any of the other Note Documents shall be
unenforceable by reason of a final judgment of a court of competent
jurisdiction based upon a court's ruling (sustained on appeal, if any) that
such provision is unenforceable because of the excessive degree or magnitude of
the obligation imposed thereby on any company, that unenforceable obligation
shall be reduced in magnitude or degree by the minimum degree or magnitude
necessary in order to permit the provision to be enforceable by the Purchaser.
In the event the provisions of the immediately preceding sentence applies, the
parties shall make appropriate adjustment to the provisions of this Agreement
and the other Note Documents to give effect to the benefits intended to be
conferred upon the parties hereby.
9.10. GOVERNING LAW. This Agreement and the Notes issued and
sold hereunder shall be governed by and construed in accordance with the laws
of the State of New York.
9.11. SUBMISSION TO JURISDICTION. The Company hereby consents
to the jurisdiction of any state or federal court located within the County of
New York, State of New York, and irrevocably agrees that all actions or
proceedings (except actions and proceedings for the enforcement of the Deed of
Trust against property located in North Carolina) relating to this Agreement,
the Notes and other Note Documents shall be litigated in such courts, and the
Company waives any objection which it may have based on improper venue or forum
non conveniens to the conduct of any
42
proceeding in any such court and waives personal service of any and all process
upon it, and consents that all such service of process be made by
registered or certified mail (return receipt requested) or messenger directed
to it at its address set forth in Section 9.6 above or to its agent referred to
below at such agent's address set forth below and that service so made shall be
deemed to be completed in accordance with Section 9.6 hereof. The Company
hereby irrevocably appoints The Prentice Hall Corporation System, Inc., with an
office on the date hereof at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, 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
43
Company or to enforce a judgment obtained in the courts of any other
jurisdiction.
9.12. CAPTIONS. The descriptive headings of the
various Sections or parts of this Agreement are for convenience only and shall
not affect the meaning or construction of any of the provisions hereof.
The execution hereof by you shall constitute a contract
between the Company and Purchaser for the uses and purposes hereinabove set
forth, and this Agreement may be executed in any number of counterparts, each
executed counterpart constituting an original but all together only one
agreement.
KMART CORPORATION
By /s/ ▇. ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇. ▇. ▇▇▇▇▇▇
Title: Senior Vice President
Accepted as of the date first above written.
XXXXXXXXXX
By /s/ XXX
----------------------------
Name: XXX
Title: Vice President
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[EXHIBITS INTENTIONALLY OMITTED]