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EXHIBIT 99.35
NOTE PUT AGREEMENT
THIS NOTE PUT AGREEMENT ("Agreement") is made as of the 14th day of
May, 1993, by and between KMART CORPORATION ("Kmart"), a Michigan corporation,
and XXXXXXXXXX ("Lender"), a Nevada corporation, each of which confirms and
agrees as follows:
SECTION 1: RECITALS
1.1 Loan. Pursuant to the Loan Agreement ("Loan Agreement") dated
as of May 14, 1993, between Lender and XXXXXXXXXX ("Borrower"), a Connecticut
limited partnership, Lender has agreed to make Borrower the Loan, to be
evidenced by the Note. The proceeds of the Loan will be used to acquire,
develop and construct the Project which is located in Manchester, Connecticut,
and will be leased in part by The Sports Authority, Inc., a Delaware
corporation, Borders Inc., a Delaware corporation, and OfficeMax, Inc., an Ohio
corporation, all of which are subsidiaries of Kmart (each a "Subsidiary" and,
collectively, "Subsidiaries") pursuant to certain Leases described in Exhibit
1.1C to the Loan Agreement. As a material inducement to Lender to make the
Loan Kmart has agreed to enter into this Agreement with Lender.
1.2 Terms; Governing Document. All capitalized terms used herein,
unless otherwise expressly provided, shall have the meaning set forth in the
Loan Agreement. In the event of any conflict between the terms and provisions
of this Agreement and the Loan Agreement, the terms and conditions of this
Agreement shall govern and prevail.
SECTION 2: PURCHASE OF NOTE
2.1 Certain Definitions. For purposes of this Section 2, the
following terms shall have the following meanings:
"Business Day" means any day other than (i) Saturday or
Sunday, or (ii) a day on which banks in New York or California are required by
law to be closed or are customarily closed.
"Called Principal" means the unpaid principal balance of the
Note to be paid as part of the Purchase Price upon exercise of the Put.
"Certificates" shall have the meaning assigned to it in
Section 3.2.
"Certificate Differential" means the excess of the outstanding
principal amount of the Certificates over the outstanding principal amount of
the Note after taking into effect
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all prepayments or payments of principal in respect thereof which have been
made prior to the date of calculation.
"Completion of Construction" means completion of the Construction in
accordance with the Plans and Specifications referred to in the Loan Agreement.
"Consent and Agreement" means the Consent and Agreement dated as of
May 14, 1993 among Kmart, Lender, Borrower, Subsidiaries and Trustee relating
to the Leases, Lease Guaranties, this Agreement and certain other related
matters.
"Discounted Prepayment Value" means, with respect to any amount of
Called Principal, the amount obtained by discounting all Remaining Scheduled
Payments with respect to Called Principal from their respective scheduled due
dates to the Purchase Date with respect to such Called Principal, in accordance
with generally accepted financial practice and at a discount factor (applied on
a semiannual basis) equal to the Reinvestment Yield.
"Facility" or "Facilities" means one or more specific "Demised
Premises" as that term is defined in a Lease pursuant to which a Subsidiary is
a Tenant.
"Failure of Completion:" means Completion of Construction of one
or more of the Facilities does not occur by November 14, 1994.
"Lease Guaranties" means those certain Lease Guaranties, described in
Exhibit 1.1C to the Loan Agreement, executed by Kmart Corporation which
guarantee the payment and performance of its Subsidiaries under the Leases.
"Lease/Lease Guaranty Default" means, with respect to any one or more
of the Leases and Lease Guaranties described in Exhibit 1.1C to the Loan
Agreement, the failure of (i) a Subsidiary under any Lease to pay any Annual
Rental or Additional Rent as defined in the Lease due under such Lease for a
period of fifteen (15) days after notice to Subsidiary of such default and
(ii) Kmart to pay any such Annual Rental or Additional Rent under the related
Lease Guaranty, if any, within fifteen (15) days after notice to Kmart of the
Subsidiary's failure to do so; provided that, no notice referred to in the
foregoing clause (i) or clause (ii) shall be required in the event that
Landlord or Trustee shall be stayed or prohibited by operation of law or
otherwise from the giving of such notice.
"Lease" or "Leases", means each individual lease or all of those
certain leases described in Exhibit 0.xX to the Loan Agreement.
"Lender" means XXXXXXXXXX, a Nevada corporation, and any
of its successors and assigns.
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"Make-Whole Premium" means, with respect to any amount of Called
Principal, an amount equal to the sum of (x) the excess (which shall in no
event be less than zero), if any, of the Discounted Prepayment Value over the
sum of (i) such Called Principal plus (ii) interest accrued thereon as of the
Purchase Date with respect to such Called Principal and (y) an amount equal to
the Certificate Differential.
"Minimum Investment Grade" means a rating of at least Baa3, in the
case of a rating by Xxxxx'x, and a rating of at least BBB-, in the case of a
rating by S&P, or the then equivalent of such rating by Moody's or S&P or, to
the extent applicable, by another Rating Agency.
"Moody's" means Xxxxx'x Investors Service or any successor thereto.
"Note" means the Note evidencing the Loan executed and delivered by
the Borrower to the Lender pursuant to the Loan Agreement.
"Purchase Date" means the Business Day first occurring thirty (30)
days after Lender gives notice to Kmart of Lender's election to exercise the
Put.
"Purchase Price" means the sum of the unpaid principal balance of the
Note, accrued interest thereon to the Purchase Date, and the Make-Whole
Premium.
"Put" means exercise of the right of Lender to require Kmart to
purchase the Note in accordance with Section 2.2 of this Agreement.
"Rating Agency" and "Rating Agencies" mean Moody's and S&P and, if
either Moody's or S&P (but not both) ceases to rate the indebtedness of
corporations generally, or unsubordinated, senior, unsecured indebtedness of
Kmart in particular, then another comparable rating agency of recognized
national standing in the United States.
"Rating Decline" means that:
(i) the rating assigned to unsubordinated, senior, unsecured
indebtedness of Kmart on such date by either Xxxxx'x or S&P: (a) declines to a
rating below the Minimum Investment Grade, or (b) further declines, in the
event then rated below the Minimum Investment Grade; or
(ii) (a) unsubordinated, senior, unsecured indebtedness of Kmart
ceases to be rated by either Xxxxx'x or S&P (other than by reason of such
Rating Agency ceasing to rate the indebtedness of corporations generally) at
such time as the rating then assigned by the remaining such Rating Agency shall
be
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below Minimum Investment Grade or (b) unsubordinated, senior, unsecured
indebtedness of Kmart ceases to be rated by either Xxxxx'x or S&P at such time
as the rating then assigned by the remaining such Rating Agency shall be at
least the Minimum Investment Grade and Kmart is unable to have such debt rated
by another Rating Agency within ninety (90) days thereafter; or
(iii) unsubordinated, senior, unsecured indebtedness of Kmart ceases
to be rated by both Moody's and S&P for any reason (except if, through no fault
of Kmart, both Moody's and S&P are unable to provide a rating due to a business
failure or interruption affecting both Moody's and S&P).
For purposes of determining whether a Rating Decline shall have occurred
pursuant to clause (i), the rating initially assigned by any Rating Agency
engaged by Kmart pursuant to clause (ii) to replace any rating withdrawn or
otherwise terminated by Moody's or S&P shall be compared to the last rating
assigned by Moody's or S&P, as the case may be, to determine if the
circumstances described in (i)(a) or (b) exist.
"Reinvestment Yield" means with respect to the Called Principal, the
lesser of 8.4% and the sum of (x) the yield to maturity implied by the
following: (i) the yields reported, as of 10:00 a.m. (New York City time) on
the third Business Day preceding the Purchase Date with respect to such Called
Principal, on the display designated as "Page 678" on the Telerate Service (or
such other display as may replace Page 678 on the Telerate Service) for
actively traded U.S. Treasury securities having a maturity equal (as near as
practicable) to the Remaining Average Life of the Called Principal being paid
or prepaid as of such Purchase Date, or (ii) if such yields shall not be
reported as of such time or the yields reported as of such time shall not be
ascertainable, the Treasury Constant Maturity Series yields reported, for the
latest day for which such yields shall have been so reported as of the third
Business Day preceding the Purchase Date with respect to such Called Principal,
in Federal Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a constant
maturity equal (as near as practicable) to the Remaining Average Life of the
Called Principal being paid or prepaid as of such Purchase Date, and (y) fifty
(50) basis points. Such implied yield shall be determined, if necessary, by
(a) converting U.S. Treasury xxxx quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between reported yields.
"Remaining Average Life" means, with respect to any amount of Called
Principal of the Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled
Payment of such Called Principal (but not of the interest thereon) by (b) the
number of years (calculated to the nearest one-twelfth year)
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which will elapse between the Purchase Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
"Remaining Scheduled Payments" means, with respect to any amount of
the Called Principal, all payments of such Called Principal and interest
thereon that would be due on or after the Purchase Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
expressed maturity date.
"S&P" means Standard & Poor's Corporation, or any successor thereto.
"Triggering Event" means (i) a Rating Decline, (ii) a Lease/Lease
Guaranty Default, or (iii) a Failure of Completion.
2.2 Purchase of Note Following a Triggering Event.
(a) If a Triggering Event occurs, Lender will have the right to
require Kmart to purchase the Note in whole but not in part on the Purchase
Date at the Purchase Price.
(b) If a Triggering Event occurs and subsequent to such Triggering
Event another Triggering Event occurs, Lender will again have the rights, and
Kmart again will have the obligations, set forth in this Section 2.2.
(c) Within seven (7) Business Days after the first date on which a
Triggering Event has occurred, Kmart shall cause notice thereof to be mailed to
Lender. Such notice shall (i) state that a Triggering Event has occurred, (ii)
describe any action that caused such Triggering Event and the date of the
occurrence thereof and (iii) offer to purchase the Note in accordance with this
Agreement. Kmart's notice and other obligations shall continue so long as the
Note remains outstanding. Any failure of Kmart to give such notice or to make
such offer to purchase the Note shall not affect the obligations of Kmart under
this Section 2.2.
(d) In the event Lender elects to exercise the Put, Lender shall
do so by causing a notice to be mailed to Kmart within thirty (30) days after
the first date on which notice of a Triggering Event has been received in
accordance with Section 2.2(c) (or if Kmart fails to give the notice required
by Section 2.2(c), at any time after the occurrence of such Triggering Event),
which notice shall state (i) the occurrence of a Triggering Event, (ii) the
Purchase Date, (iii) the estimated Purchase Price, (iv) the manner in which the
Purchase Price has been determined, and (v) that Lender elects to have Kmart
purchase the Note on the Purchase Date. Kmart shall not be excused from any
obligation it may have under this Agreement by reason of any notice required
hereunder not being timely given or
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being defective, provided, however, Kmart's time for performance shall be
extended by a period equal to any period of delay in receiving such notice or
caused by the correction of such notice, if defective.
(e) In connection with the purchase of the Note pursuant
to this Section 2.2, (i) Lender will be required to surrender, on or before the
Purchase Date, at the principal office of the Trustee, duly endorsed without
recourse or assigned to Kmart or in blank without recourse and to assign
without recourse all right, title and interest of Lender under the Loan
Documents; and (ii) Kmart shall, on or before 10:00 a.m. (New York City time)
on the Purchase Date, pay the Purchase Price to Trustee, by wire transfer or
immediately available funds in lawful currency of the United States of America
at XXXXXXXXXX, XXXXXXXXXX for credit to Account Number XXXXXXXXXX (Mortgage
Pass-Through Certificates (The Crossroads at Buckland Hills, Manchester,
Connecticut) Series 1993). The Trustee shall hold the Note in trust for the
benefit of the Lender until payment in full of the Purchase Price to the
Lender on the Purchase Date and shall then and thereupon surrender the Note
to Kmart.
SECTION 3. SUCCESSORS AND ASSIGNS
3.1 General. This Agreement shall be binding upon Kmart and its
respective successors and assigns; provided that Kmart shall not assign any of
its obligations hereunder without the prior written consent of Trustee; and
provided further that no assignment of any of its obligations hereunder shall
relieve Kmart thereof and Kmart shall remain primarily and originally liable
thereon. Each successive holder or holders of the Note shall have all rights
and privileges of Trustee hereunder.
3.2 Consent to Assignment. Kmart hereby acknowledges and consents
to the sale, conveyance, transfer and absolute assignment by Lender of all of
its right, title and interest under this Agreement and in the Note and any and
all other Loan Documents to XXXXXXXXXX ("Trustee") as Trustee, pursuant to
the Trust Agreement under which the Mortgage Pass-Through Certificates (The
Crossroads at Buckland Hills, Manchester, Connecticut) Series 1993
("Certificates") will be issued. Trustee shall have the sole right to exercise
all rights, privileges and remedies (either in its own name or in the name of
the Lender for the use and benefit of Trustee) which by the terms of this
Agreement or by applicable law are permitted or provided to be exercised by the
Lender. Kmart further acknowledges and agrees that each successive holder or
holders of the Note, including but not limited to Lender, accepts transfer of
the Note in reliance upon Kmart's representations, warranties, covenants,
agreements and other obligations hereunder. In order to further induce any
such successive holder or holders of the Note, including but not limited to,
Lender, to accept such
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assignment and its obligations under this Agreement, Kmart hereby
makes the following representations, warranties, covenants and
agreements:
(i) Kmart does not have any right, including any claim, counterclaim,
right of setoff or deduction or other defense of any kind to withhold
performance of its obligations hereunder (collectively, "Kmart Defenses");
(ii) in the event Kmart becomes aware of any Kmart Defenses, Kmart
hereby waives and agrees not to assert the same against the Trustee or any
other holder of the Note;
(iii) upon consummation of the sale, conveyance, transfer and absolute
assignment to Trustee, Kmart waives any right to challenge Trustee's status as
a bonafide purchaser of the Note for value and holder in due course;
(iv) the Trustee and each holder of the Note are
and shall be third-party beneficiaries of this Agreement;
(v) upon consummation of the sale, conveyance, transfer and
absolute assignment to Trustee, Trustee and its successors and assigns shall be
deemed to be the Lender hereunder, and shall succeed to all rights of Lender
hereunder; and
(vi) Kmart hereby acknowledges and agrees that any and all rights
hereunder granted to Trustee may be exercised and enforced by Trustee,
including pursuant to legal process (and that any such exercise and enforcement
by Trustee shall have the same force and effect as the exercise and enforcement
by Lender).
SECTION 4. KMART'S REPRESENTATIONS AND WARRANTIES.
Kmart represents and warrants that (i) it is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Michigan and is duly qualified and in good standing as a foreign corporation
authorized to do business wherever required to do so by applicable law, (ii) it
has full power, authority and legal right to execute and deliver, and to
perform and observe the provisions of the Lease Guaranties, the Consent and
Agreement, and this Agreement and each of the Subsidiaries which is a party to
a Lease or the Consent and Agreement similarly has such full power, authority
and legal right to execute and deliver and to perform and observe the
provisions of the Lease and the Consent and Agreement to which it is a party,
(iii) there has been no material adverse change in the business or condition,
financial or otherwise, of Kmart or any of the Subsidiaries since the date of
Kmart's last audited financial report, (iv) there are no actions, proceedings
or investigations pending or threatened against or affecting Kmart or any of
the Subsidiaries (or any basis therefor known to Kmart) before any court,
arbitrator, administrative agency or
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other governmental authority, which if adversely decided would materially and
adversely affect the financial condition or operations of Kmart or any of the
Subsidiaries, or their respective ability to carry out any of the terms,
covenants and conditions of the Leases, the Lease Guaranties, the Consent and
Agreement,this Agreement or any other document relating to the Loan or the
Leases (to which it is a party), (v) the execution and delivery by Kmart and
the Subsidiaries respectively of the Leases, the Lease Guaranties, the Consent
and Agreement, this Agreement, or any of the other documents relating to the
Loan or the Leases (to which it is a party) have been duly authorized by all
necessary corporate action and each is enforceable in accordance with its
terms, (vi) neither the execution and delivery of the Leases, the Lease
Guaranties, the Consent and Agreement, this Agreement or any other document
relating to the Loan or the Leases (to which it is a party), nor compliance
with the terms and provisions thereof, conflicts or will conflict with or
result in a breach of any of the terms, conditions or provisions of the
Certificate of Incorporation or Bylaws of Kmart or any of its Subsidiaries, or
of any law, rule, regulation, order, writ, injunction, judgment or decree of
any court, arbitration or administering agency or governmental authority, or of
any agreement or other instrument to which Kmart or Subsidiary is a party or by
which it or its assets is bound or subject, or constitutes or will constitute a
default thereunder, and (vii) neither Kmart nor any Subsidiary is in default
under any judgment, order, decree, rule or regulation of any court, arbitrator,
administrative agency or other governmental authority to which it may be
subject.
SECTION 5. GENERAL
5.1 Counterparts. This Agreement may be executed in counterparts
by the parties but all such counterparts together shall constitute one and the
same document.
5.2 Notices. All notices, requests, demands or other
communications pursuant to this Agreement shall be in writing and shall be
addressed, in the case of Kmart, to Kmart, 0000 Xxxx Xxx Xxxxxx Xxxx, Xxxx,
Xxxxxxxx 00000-0000, Attention: Senior Vice President, Real Estate Department;
in the case of Lender, to XXXXXXXXXX, XXXXXXXXXX, Attention: XXXXXXXXXX; in
the case of Trustee, which shall receive copies of all communications
hereunder, to XXXXXXXXXX c/o XXXXXXXXXX, XXXXXXXXXX, Attention: XXXXXXXXXX,
Corporate Trust Division; or to such other address as any party may designate
in writing. All notices hereunder shall be effective: (a) three (3) days after
deposit in the United States mail, postage prepaid, registered or certified
mail, return receipt requested; (b) upon delivery, if delivered in person, to
the address set forth above; or (c) upon delivery, if sent by overnight
courier, such as Federal Express or Airborne Express.
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5.3 Section Headings. Section headings are not to be
considered a part of this Agreement and are included solely for convenience of
reference and are not intended to be full or accurate descriptions of the
contents thereof.
5.4 Applicable Law. This Agreement shall be construed
and enforced under the laws of the State of New York without giving effect to
the choice of law principles thereof.
5.5 Severability. Should any provision of this Agreement
for any reason be declared unenforceable by a court of competent jurisdiction
(sustained on appeal, if any), such unenforceability shall not affect the
enforceability of any other provision hereof or thereof, all of which shall
remain in force and effect as if this Agreement had been executed with the
unenforceable provisions thereof eliminated and it is hereby declared the
intention of the parties hereto that they would have executed the remaining
provision of this Agreement without including therein any such part, parts or
portion which may for any reason be hereafter declared unenforceable, provided
that, if any provision of this Agreement shall be unenforceable by reason of a
final judgment of a court of competent jurisdiction based on a court's ruling
(sustained on appeal, if any) that such provision is unenforceable because of
the excessive degree of magnitude of the obligation imposed thereby on any
party, that unenforceable obligation shall be reduced in magnitude or degree by
the minimum degree or magnitude necessary in order to permit the provision to
be enforceable by Lender. In the event the provisions of the immediately
preceding sentence apply, the parties shall make appropriate adjustment to the
provisions of this Agreement to give effect to the benefits intended to be
conferred upon the parties hereby.
5.6 Waiver. Lender may waive any requirement herein. No
delay or omission by Lender in exercising any right hereunder shall impair any
right of Lender under this Agreement or be construed as Lender's waiver of or
acquiescence in any breach. No such delay or omission by Lender shall be
construed as a variation or waiver of any of the terms, conditions or
provisions of this Agreement. No purported waiver of any right hereunder shall
be effective unless it is written and signed by an authorized representative of
Lender. No waiver by Lender of any breach shall constitute a waiver of any
other prior or subsequent breach or of the same breach after notice to Kmart
demanding strict performance. Lender shall not be estopped to take or from
taking any action with respect to any breach because of any delay by Lender in
giving notice of such breach or exercising any remedy based thereon.
5.7 Submission to jurisdiction. Kmart hereby consents to
the jurisdiction of any state or federal court located within the County of New
York, State of New York and irrevocably agrees that all actions or proceedings
relating to this Agreement may be
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litigated in such courts and Kmart waives any objection which it may have based
on improper venue or forum nonconveniens to the conduct of any proceeding in
any such court, waives personal service of any and all process upon it, and
consents that all such service or process be made by registered or certified
mail (return receipt requested) or messengered to it at its address set forth
in Section 5.2 or to its Agent referred to below at such Agent's address set
forth below, and, that service so made shall be deemed to be completed in
accordance with Section 5.2. Kmart hereby appoints Prentice Hall Corporation
System, Inc. with an office on the date hereof at 00 Xxxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 as its Agent for the purpose of accepting service of any process
within the State of New York. Nothing contained in this Section shall affect
the right of Lender to serve legal process in any other manner permitted by
law, to bring any action or proceeding in the courts of any jurisdiction
against Kmart, or to enforce a judgment obtained in the courts of any other
jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above set forth.
KMART CORPORATION,
a Michigan corporation
By: /s/
-------------------------------
X. X. Xxxxxx
Senior Vice President
XXXXXXXXXX, a
Nevada corporation
By:
-------------------------------
Its:
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litigated in such courts and Kmart waives any objection which it may have based
on improper venue or forum nonconveniens to the conduct of any proceeding in
any such court, waives personal service of any and all process upon it, and
consents that all such service or process be made by registered or certified
mail (return receipt requested) or messengered to it at its address set forth
in Section 5.2 or to its Agent referred to below at such Agent's address set
forth below, and, that service so made shall be deemed to be completed in
accordance with Section 5.2. Kmart hereby appoints Prentice Hall Corporation
System, Inc. with an office on the date hereof at 00 Xxxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 as its Agent for the purpose of accepting service of any process
within the State of New York. Nothing contained in this Section shall affect
the right of Lender to serve legal process in any other manner permitted by
law, to bring any action or proceeding in the courts of any jurisdiction
against Kmart, or to enforce a judgment obtained in the courts of any other
jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above set forth.
KMART CORPORATION,
a Michigan corporation
By:
----------------------------
X. X. Xxxxxx
Senior Vice President
XXXXXXXXXX, a
Nevada corporation
By: /s/
----------------------------
Its: Vice President
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