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EXHIBIT 99.3
CONFORMED COPY
________________________________________________________________________________
GUARANTY AGREEMENT
dated as of October 7, 1994
made by
KMART CORPORATION
in favor of
THE LENDERS REFERRED TO HEREIN
________________________________________________________________________________
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GUARANTY AGREEMENT
GUARANTY AGREEMENT dated as of October 7, 1994 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, this
"Guaranty"), made by KMART CORPORATION, a Michigan corporation (the "Company"),
in favor of the Lenders (as hereinafter defined).
W I T N E S S E T H:
WHEREAS, the Borrowers (as hereinafter defined) have entered into that
certain Warehouse Facility Credit Agreement dated as of October 7, 1994 with
the "Banks" (as such term is defined therein) and Bankers Trust Company, as a
Bank and as Documentation Agent for the Banks (collectively, Bankers Trust
Company as a Bank and as such Documentation Agent, and the other Banks are
referred to herein as the "Lenders") (such Credit Agreement, as the same may be
amended, restated, modified or supplemented and in effect from time to time, is
hereinafter referred to as the "Credit Agreement") pursuant to which the Banks
have agreed to extend credit to the "Borrowers" (as defined in the Credit
Agreement), subject to the terms and conditions thereof; and
WHEREAS, the Company desires to induce the Lenders to extend credit to
the "Non-Kmart Borrowers" (as defined in the Credit Agreement) under and in
accordance with the terms of the Credit Agreement, and the Company will
benefit from such extensions of credit; and
WHEREAS, it is a continuing condition precedent to the obligations of
the Lenders to make any such extensions of credit under the Credit Agreement
that the Company shall have guarantied the payment and performance of the
obligations of the Non-Kmart Borrowers to the Lenders pursuant to this Guaranty
and shall have executed and delivered this Guaranty to the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Lenders to make extensions of credit and loans to the Borrowers, the Company
hereby agrees as follows for the benefit of the Lenders:
Section 1. Definitions. Capitalized terms used in this Guaranty and not
otherwise defined herein have the respective meanings provided for such terms
in the Credit Agreement.
Section 2. Guaranty of Obligations. (a) The Company hereby absolutely,
unconditionally and irrevocably guaranties to each of the Lenders, as the
primary obligation of the Company and not as a surety, the due and punctual
payment of:
(i) all principal, interest (including, without limitation, any
post-petition interest whether or not allowed or accrued or payable under any
bankruptcy, insolvency or
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similar law), fees and other costs, expenses and amounts required to be
paid, from time to time, by each and every Non-Kmart Borrower under or in
connection with the Credit Agreement, when and as the same shall become due
and payable, whether on the due date therefor, upon stated maturity, by
acceleration, upon demand or otherwise, according to the terms of the
Credit Agreement and the other Loan Documents (and notwithstanding any
automatic stay or similar provision of any bankruptcy law); and
(ii) all other present and future obligations and liabilities (whether
absolute, fixed or contingent, matured or unmatured, joint, several or
independent and howsoever acquired) of each and every Non-Kmart Borrower to
the Lenders or any of them, arising out of or in any way relating to any
and all of the Loan Documents and the transactions contemplated thereby;
together with all reasonable costs (including, without limitation, reasonable
legal fees and disbursements) incurred by the Lenders in connection with
recovering the same from the Non-Kmart Borrowers or the Company. In case of the
failure of any Non-Kmart Borrower to duly, punctually and indefeasibly make any
such payment in full as and when due and payable, the Company hereby agrees to
duly, punctually and indefeasibly make such payment as and when the same shall
become due and payable, whether on the due date therefor, upon stated maturity,
by acceleration, upon demand or otherwise, in accordance with the terms of this
Guaranty.
(b) The payment and performance obligations guarantied by this Guaranty
are herein sometimes herein referred to collectively as the "Guarantied
Obligations".
(c) The Company hereby agrees that the Company's obligations hereunder
shall be continuing, absolute and unconditional under any and all circumstances
and not subject to any reduction, limitation, impairment, termination, defense
(other than prior, final and indefeasible payment of all of the Guarantied
Obligations in full), set-off, abatement, counterclaim or recoupment whatsoever
(all of which are hereby expressly and unconditionally waived by the Company),
whether by reason of any claim of any character whatsoever, including, without
limitation, any claim of waiver, release, surrender, alteration or compromise,
or by reason of any liability at any time to the Company or any Borrower or any
of their respective Subsidiaries or otherwise, whether based upon any
agreement, instrument or document evidencing or securing the Guarantied
Obligations or any other agreement, instrument or document (including, without
limitation, this Guaranty) or otherwise, and howsoever arising, whether out of
action or inaction or otherwise and whether resulting from default, willful
misconduct, negligence or otherwise, and without limiting the foregoing,
irrespective of:
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(i) any insolvency, bankruptcy, reorganization or dissolution, or any
proceeding in respect of any thereof, of the Company, any Borrower, any of
their respective Subsidiaries or any other guarantor of all or any portion of
the Guarantied Obligations;
(ii) the genuineness, validity, regularity or enforceability of any
Loan Document or any other agreement, instrument or document evidencing or
securing the Guarantied Obligations or any other agreement, instrument or
document, or the extension or renewal thereof, in whole or in part, with or
without notice to or assent from the Company, any Borrower, any of their
respective Subsidiaries or any other guarantor of all or any portion of the
Guarantied Obligations;
(iii) any rescission, compromise, alteration, amendment, modification,
extension, renewal, release, change, waiver, consent or other action in respect
of any of the terms, provisions, covenants or conditions contained in any Loan
Document or any other agreement, instrument or document evidencing or securing
the Guarantied Obligations or in any other agreement, instrument or document;
(iv) the absence of notice or the absence of or any delay in any
action to enforce any obligation or to exercise any right or remedy against the
Company, any Borrower, any of their respective Subsidiaries or any other
guarantor of all or any portion of the Guarantied Obligations, whether under
any Loan Document or any other agreement, instrument or document evidencing or
securing the Guarantied Obligations or under any other agreement, instrument or
document, or any indulgence or extension or waiver granted to or compromise
with the Company, any Borrower, any of their respective Subsidiaries or any
other guarantor of all or any portion of the Guarantied Obligations, or any
action or proceeding taken or not taken with respect to or by or on behalf of
the Company, any Borrower, any of their respective Subsidiaries or any other
guarantor of all or any portion of the Guarantied Obligations, or the holder of
any agreement, instrument or document evidencing or securing the Guarantied
Obligations;
(v) any default, failure or delay in the performance of any
obligation, covenant, duty, representation, warranty or agreement contained in
any Loan Document or any other agreement, instrument or document evidencing or
securing the Guarantied Obligations or in any other agreement, instrument or
document, or arising pursuant to law;
(vi) any act or thing or omission to do or delay in doing any act or
thing which might in any manner result in any lack of proper authorization or
any invalid execution of any Loan Document or any other agreement, instrument
or document
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evidencing or securing the Guarantied Obligations or any other agreement,
instrument or document;
(vii) any assignment by any Borrower or any assumption by any Person of
any obligation under any Loan Document or any other agreement, instrument or
document evidencing or securing the Guarantied Obligations or under any other
agreement, instrument or document;
(viii) any event of force majeure;
(ix) any release or substitution of any collateral for, or any obligor
in respect of, the payment of the Guarantied Obligations, in whole or in part,
with or without notice to or assent from the Company, any Borrower, any of
their respective Subsidiaries or any other guarantor of all or any portion of
the Guarantied Obligations;
(x) whether a lien or security interest on any collateral shall have
been perfected or shall continue to be perfected, or whether any collateral
shall be impaired in any manner, or whether any steps shall have been taken to
enforce rights against the Company, any Borrower, any of their respective
Subsidiaries or any other guarantor of all or any portion of the Guarantied
Obligations or any collateral;
(xi) the status of any Borrower as an Eligible Borrower under the
Credit Agreement; or
(xii) any other circumstances which might constitute a legal or
equitable discharge or defense of a surety or guarantor.
(d) The Company hereby:
(i) waives diligence, presentment, demand (of payment or otherwise),
protest, notice, filing of claims with a court in the event of the merger or
bankruptcy of any Borrower or any of any Borrower's Subsidiaries, any right to
require a proceeding first against any Borrower or any other guarantor of all
or any portion of the Guarantied Obligations or to xxxxxxxx or realize on any
collateral, with respect to the Guarantied Obligations;
(ii) agrees that its obligations hereunder constitute guaranties of
payment and not of collection and are not in any way conditional or contingent
upon any attempt to collect from or enforce against any Borrower or any other
guarantor of all or any portion of the Guarantied Obligations or upon any other
condition or contingency;
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(iii) acknowledges that any agreement, instrument or document
evidencing and/or securing the Guarantied Obligations may be
transferred (upon and subject to the terms and conditions thereof) and
that the benefit of the Company's obligations hereunder shall extend to
each permitted holder of any agreement, instrument or document
evidencing and/or securing the Guaranteed Obligations automatically and
without notice to the Company;
(iv) covenants that this Guaranty will not be discharged except
by final, complete, indefeasible and irrevocable payment and
performance of the obligations contained in the agreements, instruments
and documents evidencing the Guarantied Obligations and this Guaranty;
and
(v) waives acceptance of this Guaranty by any of the Lenders.
(e) The Company further agrees that if at any time all or any part of
any payment theretofore applied by, or on behalf of, any Lender to any of the
Guarantied Obligations is, or must be, rescinded or returned by such Lender for
any reason whatsoever or such payment is declared invalid, void, preferential
or fraudulent for any reason whatsoever, including, without limitation, the
insolvency, bankruptcy or reorganization of any Borrower, any of the Company's
Subsidiaries or any other guarantor of all or any portion of the Guarantied
Obligations, such Guarantied Obligations or applicable portion thereof, for
purposes of this Guaranty, to the extent that such payment is or must be
rescinded or returned or is declared invalid, void, preferential or fraudulent,
shall be deemed to have continued in existence notwithstanding such
application, and this Guaranty shall continue to be effective or be reinstated,
as the case may be, as to such Guarantied Obligations or applicable portion
thereof as though such application had not been made, irrespective of whether
any note or other evidence of indebtedness has been surrendered or cancelled.
(f) All payments by the Company under this Guaranty shall be made
without set-off or counterclaim for or on account of, and free and clear of,
and without deduction or withholding for, or on account of, any Taxes. If the
Company shall be required by law to deduct or withhold any Taxes from or in
respect of any sum payable hereunder to any Lender, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section 2(f)) such Lender receives an amount equal to the sum it
would have received had no such deductions or withholdings been made;
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(ii) the Company shall make such deductions and withholdings;
(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law;
(iv) within thirty (30) days after the date of its receipt
thereof, the Company shall furnish the relevant Lender(s) the original
or a certified copy of a receipt evidencing payment of such Taxes, or
other evidence of payment satisfactory to such Lender(s); and
(v) each Lender receiving such receipt or other evidence of
payment shall reimburse the Company for the amount of any credit or
other economic benefit available to such Lender by reason or on account
of such payment by the Company or such Lender's possession of such
receipt or other evidence of payment under any tax, levy, impost, duty,
fee, assessment or other charge of any nature imposed by any
Governmental Authority applicable to such Lender. The amount of such
reimbursement calculated by such Lender shall be conclusive and binding
absent manifest error in computation.
(g) Unless otherwise waived by the Documentation Agent with respect to
a payment, all payments to be made by the Company in respect of the Guarantied
Obligations shall be made to the Documentation Agent at its Payment Office in
New York, New York for the ratable account of the Lenders not later than 2:00
p.m. (New York City time) on the date when due in each case in lawful money of
the United States of America and in immediately available funds. If any payment
hereunder becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day.
Section 3. Representations and Warranties. The Company hereby makes the
following representations and warranties to the Lenders, which representations
and warranties shall survive the execution and delivery of this Guaranty, the
Credit Agreement and the other Loan Documents:
(a) Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and is duly qualified to do business and is
in good standing in each additional jurisdiction where failure to so qualify
would have an effect which, when taken together with the simultaneous effect of
failure to qualify in any other jurisdictions, would in the aggregate have a
Material Adverse Effect.
(b) Authorization; No Contravention. The execution, delivery and
performance of this Guaranty by the Company are within
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its corporate powers, have been duly authorized by all necessary corporate
action, and are not in contravention of any Requirement of Law or of the terms
of the Company's Articles of Incorporation or by-laws, or of any agreement,
undertaking, contract or other obligation to which the Company is a party or by
which it is bound.
(c) Consents and Approvals. No consent, waiver, approval, notification
of, or registration or filing with, any Governmental Authority or any
non-governmental Person is required in connection with the execution and
delivery by the Company of this Guaranty or in connection with the consummation
of any transaction contemplated hereby, except those disclosed in Schedule 3(c)
hereto and which the Company has obtained or made.
(d) Binding Effect. This Guaranty is valid, binding and enforceable
against the Company in accordance with the terms thereof (subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting the enforcement of
creditors' rights and general equitable principles which may limit the right to
obtain the remedy of specific performance of executory covenants and other
equitable remedies).
(e) Litigation. No litigation or governmental proceeding is pending or,
to the knowledge of the Company, threatened, against the Company for which
sufficient provision has not been made in the financial statements of the
Company and which could have a material adverse effect on the Company's
condition or business, financial or otherwise, or which purport to affect or
pertain to this Guaranty or any of the transactions contemplated hereby.
(f) Financial Statements. The balance sheet as of January 26, 1994, and
the related statements of income and stockholders' equity and cash flows, of
the Company and its Subsidiaries contained in the most recent annual report of
the Company to its stockholders have been audited and certified by Price
Waterhouse, independent certified public accountants, and are complete and
accurate in all material respects and present fairly the financial condition of
the Company and its Subsidiaries as of the dates of such statements and the
results of their operations for the periods covered thereby, in accordance with
GAAP, consistently applied. The balance sheet as of July 27, 1994, and the
related statements of income, stockholders' equity and cash flows, of the
Company and its Subsidiaries contained in the most recent quarterly report of
the Company filed with the U.S. Securities and Exchange Commission (the
"SEC") on Form 10-Q, are complete and accurate in all material respects and
present fairly the financial condition of the Company and its Subsidiaries as
of the dates of such statements and the results of their operations for the
periods covered thereby, in accordance with GAAP, consistently applied.
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(g) No Default. No Unmatured Guarantor Event of Default or Guarantor
Event of Default exists or would result from the Company's execution and
delivery of this Guaranty.
(h) Taxes. The Company has filed all Federal and other material tax
returns and reports required to be filed, and has paid all Federal and other
material taxes, assessments, fees and other governmental charges levied or
imposed upon it or its properties, income or assets otherwise due and payable,
except those which are being contested in good faith by appropriate proceedings
and for which adequate reserves have been provided in accordance with GAAP.
There is no proposed tax assessment against the Company that could, if made,
have a Material Adverse Effect.
(i) Insurance. The properties and business of the Company are insured
in such amounts, with such deductibles and covering such risks as are
customarily carried by similar companies of comparable size engaged in similar
businesses and owning or operating similar properties in localities where the
Company operates.
(j) Compliance With Laws. The Company is in compliance with all
applicable laws, rules and regulation (including environmental laws, rules and
regulations and the Employee Retirement Income Security Act of 1976, as
amended, and all regulations thereunder) except where the failure to be in such
compliance could not reasonably be expected to have a Material Adverse Effect.
Section 4. Covenants. The Company hereby covenants and agrees that,
unless otherwise consented to in writing by the Required Banks:
(a) Affirmative Covenants:
(1) Payment of Taxes. The Company will pay, when due, all taxes
assessed against the Company or its property and all other claims which may
become a Lien upon any of its property, except to the extent that (a) the same
are being contested in good faith by appropriate proceedings, and (b) adequate
reserves for payment thereof have been established in accordance with GAAP.
(2) Insurance. The Company shall maintain insurance with respect to
its properties and business in such amounts, with such deductibles and covering
such risks as are customarily carried by similar companies of comparable size
engaged in similar businesses and owning or operating similar properties in
localities where the Company operates.
(3) Preservation of Existence; Compliance with Laws. The Company shall:
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(A) preserve and maintain in full force and effect its
corporate existence and good standing under the laws of
its state or jurisdiction of incorporation; and
(B) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications,
permits, licenses and franchises necessary or desirable in the
normal conduct of its business except in connection with
transactions permitted by Section 4(b)(1) and dispositions of
assets permitted by Section 4(b)(2).
(4) Maintenance of Property. The Company shall maintain and
preserve all its property which is used or useful in its
business in good working order and condition, ordinary wear and tear
excepted, and make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect, and except as
permitted by Section 4(b)(2).
(5) Compliance with Laws. The Company shall comply, in all
material respects with all Requirements of Law of any
Governmental Authority having jurisdiction over it or its business,
except such as may be contested in good faith or as to which a bona
fide dispute may exist.
(6) Books and Records; Other Information. The Company shall
maintain proper books of record and account, in which full,
true and correct entries in conformity with GAAP consistently applied
shall be made of all financial transactions and matters involving the
assets and business of the Company, and will provide to the
Documentation Agent and the Banks such other information as they may
reasonably request and which is reasonably available to the Company or
can be reasonably computed from the Company's books and records.
(7) Financial Information. The Company shall deliver to the
Documentation Agent for distribution to each Bank (and, if
requested, with sufficient copies for each Bank):
(A) within sixty (60) days after the end of each of the
first three (3) fiscal quarters of the Company, copies
of (i) the consolidated balance sheet of the Company and its
Subsidiaries as of the end of such quarter, (ii) the
consolidated statement of income of the Company and its
Subsidiaries for such quarter and for the period from the end
of the most reent fiscal year of the Company through the end of
such quarter, (iii) the consolidated statement of cash flows of
the Company and its Subsidiaries for the period from the end of
the most recent fiscal year of the Company through the end of
such quarter, all prepared in accordance with GAAP and
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certified by a Responsible Officer as being a fair
statement of results for the periods covered thereby, subject
to ordinary year-end audit and adjustments;
(B) concurrently with the delivery of the financial
statements referred to in Sections 4(a)(7)(A) and (C),
a certificate duly completed and executed by a Responsible
Officer, as to compliance by the Company with the covenants
contained in Section 4(b)(4) and (5) hereof, and stating that
no Guarantor Event of Default then exists (or, if any should
then exist, identifying the same and stating any actions being
taken by the Company with respect thereto);
(C) within one hundred twenty (120) days after the end of
each fiscal year of the Company, copies of (i) the
consolidated balance sheet of the Company and its Subsidiaries
as at the end of such fiscal year, (ii) the consolidated
statement of income of the Company and its Subsidiaries for
such fiscal year, and (iii) the consolidated statement of cash
flows of the Company and its Subsidiaries for such fiscal year,
setting forth in each case in comparative form the
corresponding figures for the previous fiscal year, all in
reasonable detail and prepared in accordance with GAAP and
certified by a nationally recognized independent public
accounting firm; and
(D) promptly, copies of all financial statements and
reports that the Company sends to its shareholders and
copies of all Forms 10K, 10Q and 8K that the Company files with
the SEC.
(8) Notices. (A) The Company shall notify each Lender
promptly, but not later than three (3) Business Days after the
Company becomes aware thereof, of the occurrence of any Guarantor Event
of Default.
(B) The Company shall notify the Documentation Agent promptly,
but not later than three (3) Business Days after the Company
becomes aware thereof, of the occurrence of:
(i) any Unmatured Guarantor Event of Default;
(ii) any Material Adverse Effect or any event or other
development which could have a Material Adverse Effect;
(iii) any change in the Debt Rating by Xxxxx'x or S&P; or
(iv) any Reportable Event.
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(b) Negative Covenants:
(1) Consolidations and Mergers. The Company shall not merge or
consolidate with any other Person, unless:
(A) the successor formed by or resulting from such
consolidation or merger or to which such sale, lease, transfer or other
disposition shall have been made is the Company or a Subsidiary of the
Company (and, if the survivor is a Subsidiary of the Company, such
Subsidiary shall affirm the Company's Obligations under the Loan
Documents in writing), and
(B) no Guarantor Event of Default or Unmatured Guarantor
Event of Default shall have occurred and then be continuing or would
arise after giving effect thereto.
(2) Disposition of Assets. The Company shall not, directly or
indirectly, sell, assign, lease, convey, transfer or otherwise dispose of
(whether in one or a series of transactions) any property (including accounts
and notes receivable, with or without recourse) or enter into any agreement to
do any of the foregoing except:
(A) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
(B) the sale of equipment to the extent that such equipment
is exchanged for credit against the purchase price of similar
replacement equipment, or the proceeds of such sale are reasonably
promptly applied to the purchase price of such replacement equipment;
(C) dispositions of inventory or equipment by the Company
to any Subsidiary pursuant to reasonable business requirements; and
(D) other dispositions of assets having, in any fiscal year
of the Company, an aggregate book value not exceeding 10% of the
Company's consolidated total assets as of the end of the most recently
ended fiscal year of the Company, as reflected in the Company's balance
sheet contained in its audited financial statements for such fiscal
year;
provided, however, that this Section 4(b)(2) shall not be deemed to prohibit
the sale of all, substantially all, or part of the capital stock of or all,
substantially all, or part of the assets of any Specialty Retail Subsidiary of
the Company, even if such entity is no longer a Subsidiary of the Company, if
(x) consideration received is fair market value (as
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determined by the Company), or (y) the Company's board of directors deems such
transaction to be necessary by reason of applicable laws, regulations or
governmental policies applicable to the Company.
(3) Limitation on Liens. The Company shall not incur any
Indebtedness which is secured by a Lien on any assets of the Company, whether
now owned or hereafter acquired, unless, concurrently with creation of any Lien
securing Indebtedness of $50,000,000 or more, the Company shall cause its
obligations under this guaranty to be equally and ratably secured by the same
assets, provided, however, that such restriction shall not apply with respect
to any of the following types of Liens:
(A) Liens for taxes not delinquent or being contested in
good faith;
(B) Liens created in connection with workers' compensation,
unemployment insurance and other social security legislation, or to
secure the performance of bids, tenders, contracts (other than for the
repayment of borrowed money), statutory obligations, surety and appeal
bonds and other similar obligations incurred in the ordinary course;
(C) purchase money mortgages (including vendors' rights
under purchase or land contracts or under other agreements whereby
title or other interest is retained by the vendor for the purpose of
securing the purchase price thereof) on property acquired or
constructed after the date hereof, or the acquisition after the date
hereof of property subject to such a Lien which is limited to such
property and was not created in anticipation of such acquisition;
(D) mortgages on real property which is the sole security
for Indebtedness the amount of which does not exceed the greater of the
cost of such property and improvements or the fair market value
thereof;
(E) mortgages, security interests and Liens on assets of
the Company existing on the date hereof and set forth on Schedule
4(b)(3), or any refundings or extensions for an amount not exceeding
the principal amount of such Indebtedness and applying only to the same
property or assets; and
(F) mortgages, security interests and Liens in connection
with indebtedness under industrial revenue bond financings or similar
government agency supported financings.
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(4) EBITDAR Coverage Ratio. The Company shall not permit its
ratio of
(A) EBITDAR (measured as of the end of any fiscal
quarter ending after the Closing Date for the four
fiscal quarters then ended)
to
(B) the sum of (i) consolidated net interest expense
for such four fiscal quarter period plus (ii)
consolidated Rent Expense for such four fiscal quarter period
to be less than 1.50 to 1.00.
(5) Consolidated Net Worth. The Company shall not permit its
Consolidated Net Worth at any time to be less than Four Billion
Five Hundred Million Dollars ($4,500,000,000).
Section 5. Miscellaneous.
(a) Amendments and Waivers. No amendment or waiver of any provision
of this Guaranty, and no consent with respect to any departure by the Company
therefrom, shall be effective unless the same shall be in writing and signed by
all the Banks and acknowledged in writing by the Documentation Agent, and then
such waiver shall be effective only in the specific instance and for the
specific purpose for which given.
(b) Notices. All notices, requests and other communications provided
for hereunder shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission) and mailed, faxed or delivered,
(i) if to the Company, to its address specified on the signature pages hereof
and (ii) if to any Lender, to its Lending Office.
All such notices and communications shall, when transmitted by
overnight delivery or by facsimile, be effective when delivered for overnight
delivery or transmitted by facsimile (to be promptly confirmed by sender by
telephone), respectively, or if delivered, upon delivery.
(c) No Waiver. No failure to exercise and no delay in exercising, on
the part of any Lender, of any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege.
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(d) Costs and Expenses. The Company agrees to pay promptly on demand,
to the extent not previously finally and indefeasibly paid in full by any
Borrower:
(i) the Documentation Agent for all reasonable costs and
expenses incurred by the Documentation Agent in connection with the
development, preparation, delivery, administration and execution of,
and any amendment, supplement, waiver or modification to, this Guaranty
and any other documents prepared in connection herewith, and the
consummation of the transactions contemplated hereby, including the
Attorney Costs incurred by the Documentation Agent with respect
thereto; provided, that the fees and expenses of outside counsel in
connection with the preparation of this Guaranty and the Credit
Agreement and the other Loan Documents shall be in accordance with a
letter agreement dated August 30, 1994 from Winston & Xxxxxx to the
Documentation Agent;
(ii) from and after the occurrence of any Guarantor Event of
Default or Unmatured Guarantor Event of Default, all costs and expenses
(including reasonable counsel fees and expenses) of any Lender in
connection with (A) any and all amounts which any Lender may incur
relative to the curing of any default resulting from the acts or
omissions of the Company under this Guaranty, (B) any amendment or
modification of, or waiver under, this Guaranty and (C) the enforcement
or attempted enforcement of this Guaranty and the preservation of the
Lenders' rights or remedies (including in connection with any "workout"
or restructuring) regarding this Guaranty, including Attorney Costs
incurred by the Documentation Agent or any other Lender; and
(iii) pay or reimburse the Documentation Agent on demand for
all reasonable appraisal (including the allocated cost of internal
appraisal services), audit, environmental inspection and review
(including the allocated cost of such internal services), search and
filing costs, fees and expenses, incurred or sustained by the
Documentation Agent in connection with this Guaranty.
The obligations of the Company under this subsection shall survive the payment
of the Company's other obligations hereunder until payment in full of the
Company's obligations under this Section 5(d).
(e) Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Lenders and their respective
successors and permitted assigns.
(f) Set-off. In addition to any rights and remedies of the Lenders
provided by law, if the Obligations shall have become due and payable in full,
each Lender is authorized at any time and
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from time to time, without prior notice to the Company, any such notice being
waived by the Company to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held by, and other indebtedness at any time owing to, such
Lender to or for the credit or the account of the Company against any and all
Guarantied Obligations owing to such Lender, now or hereafter existing,
irrespective of whether or not such Lender shall have made demand under this
Guaranty or any Loan Document. Each Lender agrees promptly to notify the
Company and the Documentation Agent after any such set-off and application made
by such Lender; provided, that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of each Lender under
this Section 5(g) are in addition to the other rights and remedies (including
other rights of set-off) which the Lender may have.
(g) Severability. The illegality or unenforceability of any provision
of this Guaranty shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Guaranty.
(h) No Third Parties Benefited. This Guaranty is made and entered into
for the sole protection and legal benefit of the Lenders and their permitted
successors and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Guaranty.
(i) Governing Law and Jurisdiction.
THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAW PROVISIONS
THEREOF); PROVIDED THAT THE COMPANY AND THE LENDERS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY
BY THE GUARANTOR, AND ACCEPTANCE HEREOF BY THE LENDERS, EACH OF THE COMPANY AND
THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
JURISDICTION OF THOSE COURTS AND IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS GUARANTY OR ANY DOCUMENT
RELATED HERETO, AND EACH OF THE COMPANY AND THE LENDERS WAIVES PERSONAL SERVICE
OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER
MEANS PERMITTED BY NEW YORK LAW.
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(j) Enforcement. Each of the Lenders, by its acceptance of this
Guaranty, hereby severally agrees that notwithstanding any other provision of
this Guaranty to the contrary, any action, suit or proceeding with respect to
this Guaranty and the obligations of the Company hereunder may be instituted
only by the Documentation Agent in its capacity as such on behalf and for the
benefit of the Lenders.
(k) Waiver of Jury Trial. THE COMPANY, BY ITS EXECUTION AND DELIVERY
HEREOF, AND THE LENDERS, BY THEIR ACCEPTANCE HEREOF, EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED
HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE, AND EACH AGREE THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT
TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY OR ANY PROVISION HEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS GUARANTY.
(1) Entire Agreement. This Guaranty, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Banks and the Documentation Agent with respect to the subject matter hereof
and thereof, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof, except for the fee letters referenced in Sections
2.15(b) and 2.15(c) of the Credit Agreement, and any prior arrangements made
with respect to the payment by the Company of (or any indemnification for) any
fees, costs or expenses payable to or incurred (or to be incurred) by or on
behalf of the Lenders.
(m) Acknowledgement. The Company acknowledges receipt of a copy of
the Credit Agreement and the other Loan Documents in the form in which each was
executed and delivered by the parties thereto, as in effect on the date hereof,
and agrees that such copies constitute adequate notice of all matters contained
therein and consents to the execution and delivery of such agreements and the
performance of all transactions provided for or contemplated therein; provided
that none of the Lenders shall be obligated to furnish to the Company any
copies of any amendments, modifications or supplements or waivers with respect
to the Credit Agreement or any of the other Loan Documents.
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(n) Sections and Headings. Section and other headings used in this
Guaranty are for convenience only and shall not affect the construction of this
Guaranty.
[Balance of page left intentionally blank; signature page follows.]
* * *
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IN WITNESS WHEREOF, the Company has caused this Guaranty Agreement to
be duly executed and delivered by its proper and duly authorized officer as of
the day and year first above written.
KMART CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
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Title: Vice President and Treasurer
Address for Notices:
Kmart Corporation
0000 Xxxx Xxx Xxxxxx Xxxx
Xxxx, Xxxxxxxx 00000
Attention: Treasurer
Tel. No. (000) 000-0000
Telecopy No. (000) 000-0000
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