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EXHIBIT 99.32
NOTE PUT AGREEMENT
THIS NOTE PUT AGREEMENT ("Agreement") is made as of the 11th day of
June, 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 June 11, 1993, between Lender and XXXXXXXXXX ("Borrower"), a Michigan
limited partnership, Borrower has executed the Note in favor of Trustee (as
hereinafter defined) evidencing a loan to Borrower in the principal amount of
$5,187,000 ("Loan"). The proceeds of the Loan will be used to acquire, develop
and construct the Project which is located in Utica, Michigan, and will be
leased by Borders Inc., a Delaware corporation, which is a subsidiary of Kmart
("Subsidiary") pursuant to that certain Lease 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 all prepayments or payments of principal in
respect thereof which have been made prior to the date of calculation.
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"Completion of Construction" means completion of the Construction
in accordance with the Plans and Specifications referred to in the Loan
Agreement and the Lease.
"Consent and Agreement" means the Consent and Agreement dated as
of June 11, 1993 among Kmart, Lender, Borrower, Subsidiary and Trustee relating
to the Lease, Lease Guaranty, 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" means the specific "Improvements" as that term is
defined in the Lease pursuant to which the Subsidiary is a Tenant.
"Failure of Completion:" means Completion of Construction of the
Facility does not occur by December 30, 1994.
"Lease Guaranty" means that certain Lease Guaranty, described in
Exhibit 1.1C to the Loan Agreement, executed by Kmart Corporation which
guarantees the payment and performance of its Subsidiary under the Lease.
"Lease/Lease Guaranty Default" means, with respect to the Lease
and Lease Guaranty described in Exhibit 1.1C to the Loan Agreement, the failure
of (i) the Subsidiary under the 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" means that certain Lease described in Exhibit 1.1C to the
Loan Agreement.
"Lender" means XXXXXXXXXX, a Nevada corporation, and any of its
successors and assigns.
"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
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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 Xxxxx'x and S&P for any reason (except if, through
no fault of Kmart, both Xxxxx'x and S&P are unable to provide a rating due to a
business failure or interruption affecting both Xxxxx'x 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 Xxxxx'x or S&P shall be compared to the last rating
assigned by Xxxxx'x 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 8.45% 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) which will elapse
between the Purchase Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
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"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 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.
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(e) In connection with the purchase of the Note pursuant to this
Section 2.2, (i) in the event Trustee does not have physical possession of the
Note, 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 for credit to
Account Number XXXXXXXXXX (Mortgage Pass-Through Certificates (Borders Books,
Utica, Michigan) Series 1993). The Trustee shall hold the Note until payment
in full of the Purchase Price to the Trustee 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 (Borders
Books, Utica, Michigan) 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
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
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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 bona fide 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 Guaranty, the Consent and
Agreement, and this Agreement and the Subsidiary 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, (iii) there has been no
material adverse change in the business or condition, financial or otherwise,
of Kmart or the Subsidiary 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 the Subsidiary (or any basis therefor
known to Kmart) before any court, arbitrator, administrative agency or other
governmental authority, which if adversely decided would materially and
adversely affect the financial condition or operations of Kmart or the
Subsidiary, or their respective ability to carry out any of the terms,
covenants and conditions of the Lease, the Lease Guaranty, the Consent and
Agreement, this Agreement or any other document relating to the Loan or the
Lease, (v) the execution and delivery by Kmart and the Subsidiary
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respectively of the Lease, the Lease Guaranty, the Consent and Agreement, this
Agreement, or any of the other documents relating to the Loan or the Lease (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 Lease, the Lease Guaranty, the Consent and
Agreement, this Agreement or any other document relating to the Loan or the
Lease (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 the Subsidiary, 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 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.
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.
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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 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
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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 and shall execute any
confirmation thereof requested by Lender. 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/
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X. X. Xxxxxx
Senior Vice President
XXXXXXXXXX, a
Nevada corporation
By: /s/
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Its: Vice President
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