Guaranty Agreement - Borders Group Inc.
EXECUTION COPY
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GUARANTY AGREEMENT
from
BORDERS GROUP, INC., AND CERTAIN
SUBSIDIARIES OF BORDERS GROUP, INC.
Dated as of June 21, 2002
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TABLE OF CONTENTS
Page
SECTION 1. Guaranty . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Bankruptcy . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. Right of Set-Off . . . . . . . . . . . . . . . . . 2
SECTION 4. Continuing Guaranty . . . . . . . . . . . . . . . 3
SECTION 5. Reinstatement . . . . . . . . . . . . . . . . . . 3
SECTION 6. Certain Actions . . . . . . . . . . . . . . . . . 3
SECTION 7. Application . . . . . . . . . . . . . . . . . . . 4
SECTION 8. Waiver . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 9. Assignment . . . . . . . . . . . . . . . . . . . . 4
SECTION 10. Miscellaneous . . . . . . . . . . . . . . . . . . 4
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GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of June 21, 2002 (as amended or
otherwise modified from time to time, this "Guaranty"), is made by BORDERS
GROUP, INC., a Michigan corporation ("BGI"), and certain Subsidiaries of BGI
that are, and may become, parties hereto as guarantors (individually, a
"Guarantor" and collectively the "Guarantors").
W I T N E S S E T H:
WHEREAS, the Guarantors, Borders, Inc., and certain other Subsidiaries
of BGI that are or may become party thereto, as Lessees, Atlantic Financial
Group, Ltd., as Lessor, the financial institutions party thereto, as Lenders,
Fleet National Bank, as Co-Arranger and Syndication Agent, and SunTrust Bank, as
Agent, Co-Arranger and Documentation Agent, have entered into that certain
Master Agreement, dated as of June 21, 2002 (as it may be modified, amended or
restated from time to time as and to the extent permitted thereby, the "Master
Agreement"; and, unless otherwise defined herein, terms which are defined or
defined by reference in the Master Agreement (including Appendix A thereto)
shall have the same meanings when used herein as such terms have therein); and
WHEREAS, it is a condition precedent to the Funding Parties
consummating the transactions to be consummated on the Initial Closing Date that
the Guarantors execute and deliver this Guaranty; and
WHEREAS, it is in the best interests of the Guarantors that the
transactions contemplated by the Master Agreement be consummated on the Initial
Closing Date; and
WHEREAS, this Guaranty, and the execution, delivery and performance
hereof, have been duly authorized by all necessary corporate action of each
Guarantor; and
WHEREAS, this Guaranty is offered by the Guarantors as an inducement to
the Funding Parties to consummate the transactions contemplated in the Master
Agreement, which transactions, if consummated, will be of benefit to the
Guarantors;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each Guarantor, each Guarantor hereby agrees as follows:
SECTION 1. Guaranty. The Guarantors, jointly and severally, hereby
unconditionally guaranty to the Agent and the Funding Parties the full and
prompt payment when due, whether by acceleration or otherwise, and at all times
thereafter, and the full and prompt performance, of all of the Liabilities (as
hereinafter defined), including rent, interest and Yield on any such
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Liabilities, whether accruing before or after any bankruptcy or insolvency case
or proceeding involving any Guarantor, any Lessee or any other Person and, if
rent, interest or Yield on any portion of such obligations ceases to accrue by
operation of law by reason of the commencement of such case or proceeding,
including such rent, interest and earnings as would have accrued on any such
portion of such obligations if such case or proceeding had not commenced, and
further agrees to pay all reasonable expenses (including reasonable attorneys'
fees and legal expenses) actually paid or incurred by each of the Funding
Parties in endeavoring to collect the Liabilities, or any part thereof, and in
enforcing this Guaranty. The term "Liabilities", as used herein, shall mean,
without duplication, all of the following, in each case howsoever created,
arising or evidenced, whether direct or indirect, joint or several, absolute or
contingent, or now or hereafter existing, or due or to become due: (i) all
amounts payable by the Lessees or the Construction Agent to the Agent and the
Funding Parties under the Lease (including, without limitation, Basic Rent and
Supplemental Rent), the Master Agreement, the Construction Agency Agreement or
any other Operative Document, and (ii) all principal of the Notes and interest
accrued thereon, and all additional amounts and other sums at any time due and
owing, and required to be paid, to the Funding Parties under the terms of the
Master Agreement, the Loan Agreement, the Construction Agency Agreement, the
Assignments of Lease and Rents, the Mortgages, the Notes or any other Operative
Document; provided, however, that no Guarantor will be obligated to pay to the
Agent and Funding Parties under this Guaranty any amounts greater than the
Lessees and the Construction Agent would have had to pay to the Agent and the
Funding Parties under the Lease, the Master Agreement, the Construction Agency
Agreement and the other Operative Documents assuming that such documents were
enforced in accordance with their terms (and without giving effect to any
discharge or limitation thereon resulting or arising by reason of the bankruptcy
or insolvency of a Lessee), plus all actual and reasonable costs of enforcing
this Guaranty.
By way of extension but not in limitation of any of its other
obligations hereunder, each Guarantor stipulates and agrees that if any
foreclosure proceedings are commenced with respect to any Leased Property and
result in the entering of a foreclosure judgment, any such foreclosure judgment,
to the extent related to the Liabilities and payable to any of the Funding
Parties, shall be treated as part of the Liabilities, and each Guarantor
unconditionally guarantees the full and prompt payment of such judgment.
SECTION 2. Bankruptcy. Each Guarantor agrees that, in the event any
bankruptcy, reorganization or insolvency proceeding shall be instituted by or
against any Guarantor and, if instituted against such Guarantor, shall not be
dismissed or stayed for a period of sixty (60) days, and if such event shall
occur at a time when any of the Liabilities may not then be due and payable, the
Guarantors will pay to the Funding Parties forthwith the full amount which would
be payable hereunder by the Guarantors if all Liabilities were then due and
payable.
SECTION 3. Right of Set-Off. To secure all obligations of the
Guarantors hereunder, to the extent permitted by Applicable Law, each Funding
Party and the Agent shall have a right to set-off, without demand or prior
notice of any kind, at any time and from time to time when any
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amount shall be due and payable by the Guarantors hereunder against any and
all balances, credits, deposits, accounts or moneys of or in any Guarantor's
name now or hereafter, for any reason or purpose whatsoever, in the possession
or control of, or in transit to, any Funding Party, the Agent or any agent or
bailee for any Funding Party or the Agent, and apply any such amounts toward the
payment of the Liabilities then due in such order as in accordance with the
Operative Documents.
SECTION 4. Continuing Guaranty. THIS GUARANTY SHALL IN ALL RESPECTS BE
A CONTINUING, ABSOLUTE AND UNCONDITIONAL GUARANTY OF PROMPT AND COMPLETE PAYMENT
AND PERFORMANCE (AND NOT MERELY OF COLLECTION), AND SHALL REMAIN IN FULL FORCE
AND EFFECT (NOTWITHSTANDING, WITHOUT LIMITATION, THE DISSOLUTION OF GUARANTOR)
UNTIL THE TERMINATION OF THE COMMITMENTS AND THE FULL AND FINAL PAYMENT OF ALL
OF THE LIABILITIES.
SECTION 5. Reinstatement. Each Guarantor further agrees that, if at any
time all or any part of any payment theretofore applied to any of the
Liabilities is or must be rescinded or returned for any reason whatsoever
(including, without limitation, the insolvency, bankruptcy or reorganization of
any Guarantor or any Lessee), such Liabilities shall, for the purposes of this
Guaranty, to the extent that such payment is or must be rescinded or returned,
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 Liabilities, all as though such application had not been made.
SECTION 6. Certain Actions. The Agent and the Funding Parties may, from
time to time at their discretion and without notice to the Guarantors (but
subject to the terms of the other Operative Documents), take any or all of the
following actions without impairing the Guarantors' obligations hereunder: (a)
retain or obtain (i) a security interest in any Lessee's interests in the Lease
or the Leased Property and (ii) a lien or a security interest hereafter granted
by any Person upon or in any property, in each case to secure any of the
Liabilities or any obligation hereunder; (b) retain or obtain the primary or
secondary obligation of any obligor or obligors, in addition to the Guarantors,
with respect to any of the Liabilities; (c) extend or renew for one or more
periods (regardless of whether longer than the original period), or release or
compromise any obligation of any Guarantor hereunder or any obligation of any
nature of any other obligor (including, without limitation, the Lessor and the
Lessees) with respect to any of the Liabilities; (d) release or fail to perfect
its Lien upon or security interest in, or impair, surrender, release or permit
any substitution or exchange for, all or any part of any property securing any
of the Liabilities or any obligation hereunder, or extend or renew for one or
more periods (regardless of whether longer than the original period) or release
or compromise any obligations of any nature of any obligor with respect to any
such property; and (e) resort to any Guarantor for payment of any of the
Liabilities, regardless of whether the Agent or any other Person shall have
resorted to any property securing any of the Liabilities or any obligation
hereunder or shall have proceeded against any Lessee or any other obligor
primarily or secondarily obligated with respect to any of
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the Liabilities (all of the actions referred to in this clause (e) being
hereby expressly waived by each Guarantor).
SECTION 7. Application. Any amounts received by any Funding Party from
whatever source on account of the Liabilities shall be applied by it toward the
payment of such of the Liabilities, and in such order of application, as is set
forth in the Operative Documents.
SECTION 8. Waiver. Each Guarantor hereby expressly waives: (a) notice
of the acceptance of this Guaranty; (b) notice of the existence or creation or
non-payment of all or any of the Liabilities; (c) presentment, demand, notice of
dishonor, protest, and all other notices whatsoever; and (d) all diligence in
collection of or realization upon the Liabilities or any thereof, any obligation
hereunder, or any security for or guaranty of any of the foregoing.
SECTION 9. Assignment. Subject to Article VI of the Master Agreement,
each Funding Party may, from time to time, whether before or after any
discontinuance of this Guaranty, at its sole discretion and without notice to
the Guarantors, assign or transfer any or all of its portion of the Liabilities
or any interest therein; and, notwithstanding any such assignment or transfer or
any subsequent assignment or transfer thereof, such Liabilities shall be and
remain Liabilities for the purposes of this Guaranty, and each and every such
immediate and successive assignee or transferee of any of the Liabilities or of
any interest therein shall, to the extent of such assignee's or transferee's
interest in the Liabilities, be entitled to the benefits of this Guaranty to the
same extent as if such assignee or transferee were such Funding Party.
SECTION 10. Miscellaneous. No delay in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise of
any right or remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy. No action permitted hereunder shall in
any way affect or impair any Funding Party's rights or any Guarantors'
obligations under this Guaranty. For the purposes of this Guaranty, Liabilities
shall include all of the obligations described in the definition thereof,
notwithstanding any right or power of any Lessee or the Lessor or anyone else to
assert any claim or defense (other than final payment or full performance) as to
the invalidity or unenforceability of any such obligation, and no such claim or
defense shall affect or impair the obligations of any Guarantor hereunder. Each
Guarantor hereby acknowledges that there are no conditions to the effectiveness
of this Guaranty.
This Guaranty shall be binding upon each Guarantor and upon each
Guarantor's successors and permitted assigns; and all references herein to any
Guarantor shall be deemed to include any successor or successors thereof,
whether immediate or remote, to such Person; provided that no Guarantor shall
assign its obligations hereunder without the prior written consent of the
Funding Parties.
The Documentary Conventions shall apply to this Guaranty.
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IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
and delivered as of the date first above written.
BORDERS GROUP, INC.
By: /s/ Edward W. Wilhelm
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Name Printed: Edward W. Wilhelm
Title: Senior Vice President and Chief Financial
Officer
BORDERS, INC.
By: /s/ Edward W. Wilhelm
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Name Printed: Edward W. Wilhelm
Title: Senior Vice President and Treasurer
PLANET MUSIC, INC.
By: /s/ Edward W. Wilhelm
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Name Printed: Edward W. Wilhelm
Title: Senior Vice President and Treasurer
BORDERS PROPERTIES, INC.
By: /s/ Edward W. Wilhelm
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Name Printed: Edward W. Wilhelm
Title: Senior Vice President and Treasurer
WALDENBOOKS PROPERTIES, INC.
By: /s/ Edward W. Wilhelm
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Name Printed: Edward W. Wilhelm
Title: Senior Vice President and Treasurer
S-1 GUARANTY
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BORDERS ONLINE, LLC
By: /s/ Edward W. Wilhelm
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Name Printed: Edward W. Wilhelm
Title: Senior Vice President and Treasurer
BORDERS OUTLET, INC.
By: /s/ Edward W. Wilhelm
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Name Printed: Edward W. Wilhelm
Title: Senior Vice President and Treasurer
BORDERS FULFILLMENT, INC.
By: /s/ Edward W. Wilhelm
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Name Printed: Edward W. Wilhelm
Title: Senior Vice President and Treasurer
THE LIBRARY, LTD.
By: /s/ Edward W. Wilhelm
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Name Printed: Edward W. Wilhelm
Title: Senior Vice President and Treasurer
WALDEN BOOK COMPANY, INC.
By: /s/ Edward W. Wilhelm
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Name Printed: Edward W. Wilhelm
Title: Senior Vice President and Treasurer
BORDERS ONLINE, INC.
By: /s/ Edward W. Wilhelm
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Name Printed: Edward W. Wilhelm
Title: Senior Vice President and Treasurer
S-3 GUARANTY