Guaranty of Payment of Lease - Traverse Retail LP and Borders Inc.
GUARANTY OF PAYMENT OF LEASE
(Traverse City, Michigan)
1. RECITALS.
TRAVERSE RETAIL LIMITED PARTNERSHIP, a Delaware limited partnership
(together with its successors and assigns, "Landlord"), and BORDERS, INC., a
Colorado corporation ("Tenant"), are parties to the Lease, as hereinafter
defined, pursuant to which Landlord leases the Property, as defined in the
Lease, to Tenant for use as a retail store. BORDERS GROUP, INC., a Michigan
corporation ("Guarantor"), desires that Landlord continue to lease the Property
to Tenant.
Guarantor, the owner of all of Tenant's outstanding stock, deems it to
be in the direct pecuniary and business interests of Guarantor that Tenant
continue to lease the Property from Landlord.
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Guarantor understands that Landlord is willing to continue to lease the
Property to Tenant only upon certain terms and conditions, one of which is that
Guarantor guarantee the payment and performance of the Lease Obligations, as
hereinafter defined, and this Guaranty of Payment of Lease (as the same may from
time to time be amended, restated or otherwise modified, this "Agreement") is
being executed and delivered in consideration of Landlord continuing to lease
the Property to Tenant and for other valuable considerations.
2. DEFINITIONS. As used herein, the following terms shall have the
following meanings:
2.1. "Guarantor Credit Agreement" shall mean the Multicurrency Credit
Agreement among Guarantor, Tenant, Walden Book Company, Inc., BGP (UK) Limited,
Borders (UK) Limited, the banks a party thereto, and PNC Bank, National
Association, as agent, dated as of July 9, 1999, as the same may from time to
time be amended, restated or otherwise modified.
2.2. "Guarantor Participation Agreement" shall mean the Amended and
Restated Participation Agreement among Guarantor, Tenant, Walden Book Company,
Inc., Waldenbooks Properties, Inc., Borders Properties, Inc., Wilmington Trust
Company, as Owner Trustee, Sam Project Funding Corp. I, as Investor, PNC Bank,
National Association, as Administrative Agent, The First National Bank of
Chicago, as Syndication Agent, Bankers Trust Company, as Real Estate
Administrative Agent, and the Lenders a party thereto, dated as of November 22,
1995, as amended and restated as of October 17, 1997, as the same may from time
to time be amended, restated or otherwise modified.
2.3. "Guaranty Enforcement Event" means the occurrence of any one of
the following events: (a) a Lease Default or Lease Event of Default, (b) the
termination of the Lease by Tenant or the failure of the Lease to be valid,
binding and enforceable against Tenant, or (c) the existence of any default, or
any event or condition that, with the lapse of time or the giving of notice or
both, would constitute a default, under the Guarantor Credit Agreement, or any
agreement executed in connection therewith, or the Guarantor Participation
Agreement, or any Operative Document (as defined in the Guarantor Participation
Agreement).
2.4. "KeyBank" shall mean KeyBank National Association, a national
banking association whose principal address is 127 Public Square, Cleveland,
Ohio 44114, together with its successors and assigns.
2.5. "Landlord Credit Agreement" shall mean the Credit Agreement among
Landlord, Braintree Limited Partnership, a Delaware limited partnership,
Fredericksburg Retail Limited Partnership, Delaware limited partnership, and
Whitehall Retail, L.L.C., a Pennsylvania limited liability company, as
borrowers, and KeyBank, dated as of October 25, 2000, as the same may from time
to time be amended, restated or otherwise modified.
2.6. "Lease" shall mean the Amended and Restated Lease between
Landlord and Tenant, dated as of May 31, 1996, as amended and restated as of
October 25, 2000, as the same may from time to time be further amended,
restated or otherwise modified.
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2.7. "Lease Default" shall mean an event or condition that constitutes,
or with the lapse of any applicable grace period or the giving of notice or both
would constitute, a Lease Event of Default.
2.8. "Lease Event of Default" shall mean the occurrence of a Lease
Event of Default, as defined in Section 18.1 of the Lease.
2.9. "Lease Obligations" shall mean, collectively, (a) the Basic Rent,
as defined in the Lease, the Supplemental Rent, as defined in the Lease, and all
other rent obligations or other payments in connection with the Lease; (b) all
other indebtedness now owing or hereafter incurred by Tenant to Landlord
pursuant to the Lease and each renewal, extension, consolidation or refinancing
of the Lease; (c) the performance of all obligations of Tenant under the Lease
and every other liability, now or hereafter owing to Landlord by Tenant pursuant
to the Lease or any document, instrument or agreement executed in connection
therewith; and (d) all costs and expenses, including attorneys' fees, incurred
by Landlord in connection with the Lease or in connection with the collection of
any portion of the indebtedness or other obligations described in (a), (b) or
(c) hereof.
2.10."Obligor" shall mean any Person that, or any of whose property,
is or shall be obligated on the Lease Obligations or any part thereof in any
manner and includes, without limiting the generality of the foregoing, Tenant or
Guarantor, and any other co-maker, endorser, guarantor of payment, subordinating
creditor, assignor, grantor of a security interest, pledgor, mortgagor or any
hypothecator of property, if any.
2.11."Person" shall mean any individual, sole proprietorship,
partnership, joint venture, unincorporated organization, corporation, limited
liability company, institution, trust, estate, government or other agency or
political subdivision thereof or any other entity.
Except as specifically defined herein, capitalized terms used herein that are
defined in the Lease shall have their respective meanings ascribed to them in
the Lease.
3. GUARANTY OF LEASE OBLIGATIONS. Guarantor hereby absolutely and
unconditionally guarantees the prompt payment and performance in full of all of
the Lease Obligations as and when the respective parts thereof become due and
payable. If any Guaranty Enforcement Event shall occur or the Lease Obligations,
or any part thereof, shall not be paid in full when due and payable, or
performed in full when performance is due, Landlord shall have the right to
proceed directly against Guarantor under this Agreement to collect and obtain
the payment and performance in full of the Lease Obligations, regardless of
whether or not Landlord shall have theretofore proceeded or shall then be
proceeding against Tenant or any other Obligor or collateral, if any, or any of
the foregoing, it being understood that Landlord, in its sole discretion, may
proceed against any Obligor and any collateral and may exercise each right,
power or privilege that Landlord may then have at such time or times and as
often and in such order as Landlord, in its sole discretion, may from time to
time deem expedient to collect the payment in full, and to enforce full
performance, of the Lease Obligations.
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4. PAYMENTS CONDITIONAL. Whenever Landlord shall credit any payment
to any of the Lease Obligations, or any part thereof, whatever the source or
form of payment, the credit shall be conditional as to Guarantor unless and
until the payment shall be final and valid as to all the world. Without limiting
the generality of the foregoing, Guarantor agrees that if any check or other
instrument so applied shall be dishonored by the drawer or any party thereto, or
if any proceeds of collateral or payment so applied shall thereafter be
recovered by any trustee in bankruptcy or any other Person, Landlord, in each
case, may reverse any entry relating thereto on its books and Guarantor shall
remain liable therefor, even if Landlord may no longer have in its possession
any evidence of the Lease Obligations to which the payment in question was
applied.
5. GUARANTOR'S OBLIGATIONS ABSOLUTE AND UNCONDITIONAL. Regardless of
the duration of time, regardless of whether Tenant may from time to time cease
to be indebted to Landlord and irrespective of any act, omission or course of
dealing whatever on the part of Landlord, Guarantor's liabilities and other
obligations under this Agreement shall remain in full effect until the payment
and performance in full of all of the Lease Obligations. Without limiting the
generality of the foregoing:
5.1. Guarantor's Waiver of Notice, Presentment, etc. Guarantor waives
(a) presentment, demand for payment and notice of dishonor of any of the Lease
Obligations or any other indebtedness incurred by Tenant to Landlord, (b) notice
of any indulgence granted to any Obligor and (c) any other notice to which
Guarantor might, but for this waiver, be entitled;
5.2. Landlord's Rights Not Prejudiced by Action or Omission. Landlord,
in its sole discretion, may, without any prejudice to its rights under this
Agreement, at any time or times, without notice to or the consent of Guarantor,
(a) release or discharge Tenant, (b) alter or amend the Lease, (c) sell, assign,
sublease, pledge or mortgage all of the rights or obligations of Tenant under
the Lease, (d) terminate the Lease, (e) grant Tenant whatever financial
accommodations that Landlord may from time to time deem advisable, even if
Tenant might be in default in any respect and even if those financial
accommodations might not constitute indebtedness the payment of which is
guaranteed hereunder, (f) assent to any renewal, extension or refinancing of the
Lease, (g) forbear from demanding security, if Landlord shall have the right to
do so, (h) release any Obligor or collateral or assent to any exchange of
collateral, if any, irrespective of the consideration, if any, received
therefor, (i) grant any waiver or consent or forbear from exercising any right,
power or privilege that Landlord may have or acquire, (j) grant any other
indulgence to any Obligor, (k) accept any collateral for, or any other Obligor
upon, the Lease Obligations or any part thereof, and (l) fail, neglect or omit
in any way to realize upon any collateral or to protect the Lease Obligations or
any part thereof or any collateral therefor;
5.3. Liabilities Survive Dissolution. Guarantor's liabilities and
other obligations under this Agreement shall survive any dissolution of
Guarantor or Tenant; and
5.4. Liabilities Absolute and Unconditional. Guarantor's liabilities
and other obligations under this Agreement shall be absolute and unconditional
irrespective of any (a) lack of validity or enforceability of the Lease or any
other agreement, instrument or document executed in connection with the Lease,
(b) (i) defect in compliance with specifications, design, operation or fitness
for use of the Property, or (ii) damage to or loss or destruction of the
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Property or any interruption or cessation in use of the Property or any portion
thereof, whether or not the fault of Landlord, Tenant or any other Person, (c)
any termination, forfeiture, expiration or foreclosure of the Lease for any
reason, (d) default by Landlord under the Lease, (e) any assignment of the Lease
or this Agreement, or (f) other defense available to Guarantor in respect of
this Agreement or to Tenant with respect to the Lease.
6. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
that (a) Guarantor is a duly organized and validly existing corporation, in good
standing under the laws of the state of its incorporation (as referenced in the
first paragraph of this Agreement), and is qualified to do business in each
state where a failure to so qualify would have a material adverse effect on
Guarantor; (b) Guarantor has legal power and right to execute and deliver this
Agreement and to perform and observe the provisions hereof; (c) the officers
executing and delivering this Agreement on behalf of Guarantor have been duly
authorized to do so, and this Agreement, when executed, is legal and binding
upon Guarantor in every respect; (d) except for matters disclosed pursuant to
Guarantor's most recent public securities filing, no litigation or proceeding is
pending or threatened against Guarantor before any court or any administrative
agency that, in Guarantor's opinion, after consultation with Guarantor's
counsel, is reasonably expected to have a material adverse effect on Guarantor;
(e) Guarantor has received consideration that is the reasonable equivalent value
of the obligations and liabilities that Guarantor has incurred to Landlord; (f)
Guarantor is not insolvent, as defined in any applicable state or federal
statute, nor will Guarantor be rendered insolvent by the execution and delivery
of this Agreement to Landlord; (g) Guarantor is not engaged or about to engage
in any business or transaction for which the assets retained by Guarantor are or
will be an unreasonably small amount of capital, taking into consideration the
obligations to Landlord incurred hereunder; and (h) Guarantor does not intend
to, nor does Guarantor believe that Guarantor will, incur debts beyond
Guarantor's ability to pay such debts as they mature.
7. DISABILITY OF OBLIGOR. Without limiting the generality of any of
the other provisions hereof, Guarantor specifically agrees that upon the
dissolution of any Obligor and/or the filing or other commencement of any
bankruptcy or insolvency proceedings by, for or against any Obligor, including
without limitation, any assignment for the benefit of creditors or other
proceedings intended to liquidate or rehabilitate any Obligor, Landlord, in its
sole discretion, may declare any of the Lease Obligations to be forthwith due
and payable in full without notice. Upon the occurrence of any of the events
enumerated in the immediately preceding sentence, Guarantor shall, upon
Landlord's demand, whenever made, pay to Landlord an amount equal to the amount
of the Lease Obligations.
8. WAIVER OF GUARANTOR'S RIGHTS AGAINST TENANT AND COLLATERAL. To
the extent permitted by law, until the Debt, as defined in the Guarantor Credit
agreement, shall have been irrevocably paid in full, Guarantor waives any claim
or other right that Guarantor might now have or hereafter acquire against Tenant
or any other Obligor that arises from the existence or performance of
Guarantor's liabilities or other obligations under this Agreement, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution, indemnification, and any right to participate in any claim or
remedy of Landlord against Tenant or any collateral that Landlord now has or
hereafter acquires, whether or not such claim, remedy or right arises in equity,
or under contract, statute or common law.
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9. NOTICE. All notices, requests, demands and other communications
provided for hereunder shall be in writing and, if to Guarantor, mailed or
delivered to it, addressed to it at the address specified on the signature page
of this Agreement, if to Landlord, mailed or delivered to it, addressed to
Landlord, c/o Zaremba Group, Incorporated, 14600 Detroit Avenue, Suite 1500,
Lakewood, Ohio 44107, Attention: Joseph C. Urbancic, with a copy to KeyBank
National Association, 127 Public Square, Cleveland, Ohio 44114, Attention: Large
Corporate Banking. All notices, statements, requests, demands and other
communications provided for hereunder shall be deemed to be given or made when
delivered or forty-eight (48) hours after being deposited in the mails with
postage prepaid by registered or certified mail, addressed as aforesaid, or sent
by facsimile with telephonic confirmation of receipt, except that notices from
Guarantor to Landlord pursuant to any of the provisions hereof shall not be
effective until received by Landlord.
10. SUCCESSORS AND ASSIGNS. This Agreement shall bind Guarantor and
Guarantor's successors and assigns and shall inure to the benefit of Landlord
and its successors and assigns, including, but not limited to, KeyBank as set
forth in Section 11 hereof.
11. ASSIGNMENT TO KEYBANK. Concurrently with the execution and
delivery of this Agreement, Landlord is entering into the Landlord Credit
Agreement pursuant to which KeyBank will make loans and other financial
accommodations to Landlord, all upon the terms and conditions set forth therein.
Guarantor understands that KeyBank is willing to enter into the Landlord Credit
Agreement, and make the financial accommodations thereunder, only upon certain
terms and conditions, one of which is that Landlord assign all of its rights
under this Agreement to KeyBank as security for the indebtedness and other
liabilities incurred by Landlord in connection with the Landlord Credit
Agreement. Guarantor, by executing this Agreement, acknowledges and consents to
the foregoing assignment and agrees that KeyBank shall at all times have all of
the rights and benefits of Landlord hereunder to the fullest extent as if this
Agreement were made directly in favor of KeyBank. Upon request of Landlord or
KeyBank whenever made, Guarantor will execute an appropriate assignment
agreement, or such other documents, instruments or agreements as KeyBank shall
deem necessary or advisable, to give effect to or confirm the assignment to
KeyBank contemplated herein.
12. MISCELLANEOUS. If, at any time, one or more provisions of this
Agreement is or becomes invalid, illegal or unenforceable in whole or in part,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby. This Agreement constitutes a final
written expression of all of the terms of this Agreement, is a complete and
exclusive statement of those terms and supersedes all oral representations,
negotiations and prior writings, if any, with respect to the subject matter
hereof. The captions herein are for convenience of reference only and shall be
ignored in interpreting the provisions of this Agreement.
13. GOVERNING LAW; SUBMISSION TO JURISDICTION. The provisions of this
Agreement and the respective rights and duties of Guarantor and Landlord
hereunder shall be governed by and construed in accordance with Ohio law,
without regard to principles of conflict of laws. Guarantor hereby irrevocably
submits to the non-exclusive jurisdiction of any
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Ohio state or federal court sitting in Cleveland, Ohio, over any action or
proceeding arising out of or relating to this Agreement, and Guarantor hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such Ohio state or federal court. Guarantor hereby
irrevocably waives, to the fullest extent permitted by law, any objection it may
now or hereafter have to the laying of venue in any action or proceeding in any
such court as well as any right it may now or hereafter have to remove such
action or proceeding, once commenced, to another court on the grounds of FORUM
NON CONVENIENS or otherwise. Guarantor agrees that a final, nonappealable
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
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14. JURY TRIAL WAIVER. GUARANTOR AND LANDLORD, TO THE EXTENT
PERMITTED BY LAW, EACH WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING
ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG LANDLORD,
TENANT AND/OR GUARANTOR ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN EACH OF THEM AND GUARANTOR IN
CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER AGREEMENT, INSTRUMENT OR
DOCUMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR THE TRANSACTIONS
RELATED THERETO. THIS WAIVER SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR
MODIFY BANK'S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT
OR COGNOVIT PROVISION CONTAINED IN ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT AMONG BORROWERS AND BANK.
Executed as of the 25th day of October, 2000 at .
Address: 100 Phoenix Drive
BORDERS GROUP,
INC.
Ann Arbor, Michigan 48108
Attention:
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By:
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Title:
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