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EXHIBIT 10.42
LEASE GUARANTY
The undersigned (the "Guarantor") hereby absolutely and unconditionally
guarantees the prompt, complete, and full and punctual payment, observance, and
performance of all the terms, covenants, and conditions provided to be paid,
kept, and performed by the tenant under that certain Lease Agreement (such
lease, as amended, being herein referred to as the "Lease"), dated November 18,
1996, between Security Capital Industrial Trust, as Landlord ("Landlord"), and
Floor Ready Apparel, as Tenant ("Tenant") covering the premises located at 0000
Xxx Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxxxx, and all written renewals, amendments,
expansions, and modifications of the Lease. This Guaranty shall include any
liability of Tenant which shall accrue under the terms of the Lease.
The obligation of the Guarantor is primary and independent of Tenant's
obligations under the Lease and may be enforced directly against the Guarantor
independently of and, except as hereinafter set forth, without proceeding
against the Tenant or exhausting or pursuing any remedy against Tenant or any
other person or entity after expiration of notice and cure periods under the
Lease. Guarantor waives any requirement that Landlord mitigate damages under the
Lease.
Landlord hereby agrees, with respect to payment obligations under the Lease
only, to draw upon the Security Deposit provided under the Lease prior to
recourse against Guarantor and, in such situations, may only draw on the
Guaranty if (i) Tenant does not replenish funds from the Security Deposit within
20 days of any such withdrawal or (ii) if the amount owed to Landlord is greater
than the Security Deposit (but only for the difference between the current
amount owed and the balance of the Security Deposit) of (iii) if Landlord is
unable to draw upon the Security Deposit for any reason (excluding any act or
omission of Landlord), including the bankruptcy of Tenant.
This instrument may not be changed, modified, discharged, or terminated
orally or in any manner other than by an agreement in writing signed by
Guarantor and the Landlord.
The obligations of Guarantor under this Guaranty shall not be released or
otherwise affected by reason of any sublease, assignment, or other transfer of
the Tenant's interest under the Lease, whether or not Landlord consents to such
sublease, assignment, or other transfer.
Any act of Landlord, or the successors or assigns of Landlord, consisting
of a waiver of any of the terms or conditions of said Lease, or the giving of
any consent to any manner or thing relating to said Lease, or the granting of
any indulgences or extensions of time to Tenant, may be done without notice to
Guarantor and without releasing the obligations of Guarantor hereunder.
The obligations of Guarantor hereunder shall not be release by Landlord's
receipt, application, or release of security given for the performance and
observance of covenants and conditions in said Lease contained on Tenant's part
to be performed or observed not by any modification of such Lease; but in case
of any such modification the liability of Guarantor shall be deemed modified in
accordance with the terms of any such modification of the Lease.
Notwithstanding anything to the contrary contained herein, Landlord hereby
acknowledges and agrees that this Guaranty and the obligations hereunder shall
be of no force or effect with respect to any amendment or modification of the
Lease not acknowledged to in writing by the Guarantor.
Guarantor waives any defense or right arising by reason of any disability
or lack of authority or power of Tenant and shall remain liable hereunder if
Tenant or any other party shall not be liable under the Lease for such reason.
Until any and all of Tenant's outstanding and unsatisfied obligations under
the Lease have been fully paid or otherwise satisfied, Guarantor (i) shall have
no right of subrogation against Tenant by reason of any payments or acts of
performance by the Guarantor, in compliance with the obligations of the
Guarantor hereunder; (ii) waives any right to enforce any remedy which Guarantor
now or hereafter shall have against
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Tenant by reason of any one or more payments or acts of performance in
compliance with the obligations of Guarantor hereunder; and (iii) subordinates
any liability or indebtedness of Tenant now or hereafter held by Guarantor to
the obligations of Tenant to the Landlord under said Lease.
The liability of Guarantor hereunder shall not be released or otherwise
affected by (i) the release or discharge of Tenant in any insolvency,
bankruptcy, reorganization, receivership, or other debtor relief proceeding
involving Tenant (collectively "proceeding for relief"); (ii) the impairment,
limitation, or modification of the liability of Tenant or the estate of the
Tenant in any proceeding for relief, or of any remedy for the enforcement of
Tenant's liability under the Lease, resulting from the operation of any law
relating to bankruptcy, insolvency, or similar proceeding or other law or from
the decision in any court; (iii) the rejection or disaffirmance of the Lease in
any proceeding for relief; or (iv) the cessation from any cause whatsoever of
the liability of Tenant.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment by Tenant to Landlord under the Lease is
rescinded or must otherwise be returned by Landlord upon the insolvency,
bankruptcy, reorganization, receivership, or other debtor relief proceeding
involving Tenant, all as though such payment had not been made.
This Guaranty is executed and delivered for the benefit of Landlord and its
successors and assigns, and, except as set forth herein, is and shall be binding
upon Guarantor and its successors and assigns, but Guarantor may not assign its
obligations hereunder.
GUARANTOR AND LANDLORD WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN
LANDLORD AND GUARANTOR ARISING OUT OF THIS GUARANTY OR ANY OTHER DOCUMENT OR
INSTRUMENT EXECUTED IN CONNECTION HEREWITH OR ANY TRANSACTION RELATED TO THIS
GUARANTY.
Guarantor agrees to pay all costs and expenses, including reasonable
attorneys' fees, incurred by Landlord in enforcing the terms of this Guaranty.
This Guaranty shall be governed by and construed in accordance with the
internal laws of the State which governs the Lease excluding any principles of
conflicts of laws. For the purpose solely of litigating any dispute under this
Guaranty, the undersigned Guarantor and Landlord submit to the jurisdiction of
the courts of said state.
If at any time during the term of the Lease Designer Holdings, Ltd. becomes
the Tenant thereunder, the Guaranty will automatically be deemed null and void
and no additional or substitute security will be required therefore.
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Notwithstanding anything to the contrary contained herein, Landlord agrees
to surrender the Guaranty upon (i) delivery of a substitute guaranty in form and
substance reasonable acceptable to Landlord from an "acceptable guarantor" as
hereafter defined. An "acceptable guarantor" shall be an entity that (i) has a
tangible net worth (excluding goodwill) of at least fifty million dollars
($50,000,000), and such net worth has not declined for the immediately previous
three years and (ii) has not been, at any time, in material default, beyond any
applicable grace and cure periods, under any lease with Landlord. In addition,
if, at any time during the Lease Term, Tenant meets the standards of an
acceptable guarantor, Landlord agrees to release this Guaranty.
WITNESS THE EXECUTION hereof this 12th day of November, 1996.
GUARANTOR:
DESIGNER HOLDINGS, LTD.
By:
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
Acknowledged and Agreed to:
SECURITY CAPITAL INDUSTRIAL TRUST
By:
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice-President
