Case No. 02-B02474 (Jointly Administered)United States Bankruptcy Court, N.D. Illinois, Eastern Division.
April 15, 2003
ORDER PURSUANT TO 11 U.S.C. § 363 AND 365 AND FED. R. BANK. P. 6004 AND 6006 AUTHORIZING DEBTORS TO SELL, ASSUME AND ASSIGN CERTAIN REAL PROPERTY TO BEALL’S DEPARTMENT STORES, INC. AND OTHER PURCHASERS
SUSAN PIERSON SONDERBY, United States Bankruptcy Judge
Upon the emergency motion (the “Motion”) of Kmart Corporation (“Kmart”) and certain of its domestic subsidiaries and affiliates (the “Affiliate Debtors”), debtors and debtors-in-possession in the above-captioned cases (collectively, the “Debtors”) for an Order Pursuant to 11 U.S.C. § 363
and 365 and F.R.Bankr.P. 6004 and 6006 Authorizing Debtors to Sell, Assume and Assign Certain Real Property to Successful Bidders and Other Purchasers (the “Order”); the Court having reviewed the Motion and having heard statements of counsel in support of the relief requested therein at hearings before the Court on April 14, 2003 (the “Sale Hearing”); all parties in interest having been heard, or having the opportunity to be heard at the Sale Hearing regarding the Asset Purchase Agreement (the “Purchase Agreement”) attached hereto as Exhibit 1 for the purchase by Beall’s Department Stores, Inc. (the “Purchaser”) for the purchase of certain owned real property (the “Owned Property”) and/or certain unexpired leases of non-residential real property and leasehold interests in the properties (the “Leased Property” and together with the Owned Property, if any, the “Properties” or, collectively, the “Property”) and the transactions contemplated thereby (the “Transactions”); and it appearing that the relief requested is in the best interest of the Debtors, their estates, creditors and other parties in interest and is a proper exercise of the Debtors’ business judgment; it appearing that good and sufficient notice of the Motion having been given and a reasonable Opportunity to object to, or be heard regarding, the relief requested in the Motion has been afforded to all interested persons and entities, including any entity known to have an interest in the Properties and that no other or further notice of the Motion or of the entry of this Order need to be provided; and upon the entire record herein,
IT FURTHER APPEARING TO THE COURT, FOR THE REASONS STATED ON THE RECORD, THAT:
1. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 157 and 1334, and this matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (N), and (O). Venue of these cases and the Motion in this district is proper under 28 U.S.C §§ 1408
and 1409.
2. The statutory predicates for the relief sought in the Motion are sections 105(a), 363, 365 and 1146(c) of the United States Bankruptcy Code and F.R.Bankr.P. 2002, 6004, 6006 and 9014.
3. As evidenced by the affidavits of service and publication previously filed with the Court, and based on the representations of counsel, (i) proper, timely, adequate and sufficient notice of the Motion, the Sale and the Sale Hearing has been provided in accordance with sections 102(1), 363 and 365 of the Bankruptcy Code and Bankruptcy Rules 2002, 6004, 6006 and 9014 and in compliance with the Procedures Order, (ii) such notice was good and sufficient, and appropriate under the particular circumstances, and (iii) no other or further notice of the Motion, the Sale or the Sale Hearing is or shall be required. A reasonable opportunity to object or be heard on the relief requested was afforded to all parties in interest.
4. The Debtors have undertaken thorough marketing efforts to identify potential buyers of the Properties, and such marketing efforts are adequate and sufficient under the circumstances. As a result of such efforts, the Debtors entered into the Purchase Agreement with the Purchaser.
5. Subsequent to the filing of the Motion, the Debtors continued to solicit and evaluate bids for the Properties. As demonstrated by (i) the testimony and other evidence proffered or adduced at the Sale Hearing and (ii) the representations of counsel made on the record at the Sale Hearing, the Debtors have marketed the Properties and conducted the sales process in accordance with the Bidding Procedures.
6. The Bidding Procedures utilized by the Debtors were fair and reasonable and were designed to yield the highest and best recovery possible for the Properties.
7. The Bidding Procedures set April 9 and/or 10, 2003 in Chicago, Illinois, as the tentative date and location of the auction (the “Auction”). On or before April 7, 2003, the Debtors advised all Qualified Bidders that the Auction was to take place on April 9, 2003, at 10:00 am. (Prevailing Central Time), at the office of Skadden, Arps, Slate, Meagher Flom (Illinois), 333 West Wacker Drive, Suite 1900, Chicago Illinois. The Auction was properly conducted according to the Bidding Procedures.
8. After considering the offers prior to or during the Auction, the Debtors, in consultation with the statutory committees and their professionals, and the proper exercise of their business judgement, determined that the Purchaser submitted the highest and best bid for the Properties upon which the Purchase Agreement attached hereto as Exhibit1 was based.
9. The Purchase Agreement and the Assignment Agreement (the “Agreements”), if any, constitutes valid and binding contracts between the Debtors and the Purchaser, each having all the corporate power and authority necessary to consummate the transactions contemplated by the Purchase Agreement.
10. The Agreements were negotiated, proposed and entered into by the Debtors and the Purchaser without collusion, in good faith, and from arm’s length bargaining positions. Neither the Debtors nor the Purchaser have engaged in any conduct that would cause or permit the Agreements to be avoided under section 363(n) of the Bankruptcy Code.
11. The Purchaser is a good faith purchaser under section 363(m) of the Bankruptcy Code and, as such, is entitled to all of the protections afforded thereby. The Purchaser will be acting in good faith within the meaning of section 363(m) of the Bankruptcy Code in closing the transactions contemplated by the Agreements at all times after the entry of this Order.
12. The transactions contemplated herein are entitled to the full protections of section 363(m) of the Bankruptcy Code. The Purchaser was represented by counsel of its choosing. The Purchaser did not have an undue advantage over the other potential buyers and bidders at any time. The transactions complies with the provisions of section 363(n) of the Bankruptcy Code.
13. The Purchaser is a third-party purchaser, unrelated to the Debtors. The Purchaser is not a successor in interest to the Debtors and is a non-insider of the Debtors.
14. The consideration provided by the Purchaser for the purchase of the Property pursuant to the Purchase Agreement (i) is fair and reasonable, (ii) is the highest or otherwise best offer for the Property, (iii) will provide a greater recovery for the Debtors’ creditors than would be provided by any other practicable available alternative, and (iv) constitutes reasonably equivalent value and fair consideration under the Bankruptcy Code and under the laws of the United States, any state, territory, possession, or the District of Columbia.
15. The sale of the Property to the Purchaser is a reasonable and valid exercise of the Debtors’ business judgment and is otherwise appropriate under section 363 and 365 of the Bankruptcy Code.
16. The Court has statutory authority to approve the transaction contemplated herein pursuant to sections 105, 363, 365 and 1146(c) of the Bankruptcy Code and Bankruptcy Rules 2002, 6004, 6006 and 9014.
17. The Debtors estimate that the amounts necessary to cure the defaults under the Real Property Leases are the amounts (the “Cure Claims”) indicated on the notice described in paragraph 27 of the Motion (the “Sale Notice”) which was served by the Debtors in accordance with the Motion. All cure amounts and all monetary defaults for the Real Property Leases, to the extent required by Bankruptcy Code, will be cured as set forth in the Agreements.
18. It is necessary and appropriate for the Court to retain jurisdiction to interpret and enforce these terms and all disputes concerning any provision hereof.
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED:
a. The Debtors are authorized to enter into the Agreements and the terms of the Agreements (as may be subsequently modified in accordance with the terms of the Purchase Agreement) are hereby approved pursuant to section 363 of the Bankruptcy Code.
b. The Debtors are authorized to assume those certain real property leases set forth on Schedule 1 attached hereto along with any and all easements, licenses, non-disturbance agreements and other similar agreements entered into by the Debtors which relate to their use and occupancy of the leased property, and all amendments, licenses, consents and other similar agreements between the Debtors and the landlord relating to the Property (collectively, the “Real Property Leases”). The Debtors’ decision to assume the Real Property Leases, however, remains subject to satisfaction of any and all conditions as set forth in the Assignment Agreement (as defined below).
c. The Debtors are authorized to assign the Real Property Lease pursuant to the terms of that certain Lease Assignment and Assumption Agreement, a copy of which is attached hereto as Exhibit 2 (the “Assignment Agreement”).
d. The Debtors are authorized to sell and/or assign their interests in the Property to Purchaser free and clear of all liens, claims and encumbrances (except as set forth in the Agreements) pursuant to section 363(f) of the Bankruptcy Code, with all such valid and enforceable liens, claims and encumbrances to attach to the proceeds of the sale and/or assignment of the Property, in the same relative priority as existed with respect to the Property.
e. The conditions of section 365(b)(1) of the Bankruptcy Code with respect to the assumption of an unexpired lease or executory contract have been satisfied in connection with the assumption of the Real Property Leases. In particular, the Debtors have provided the landlords with adequate assurance of future performance pursuant to section 365(b)(1)(C).
f. While the Court does not expressly decide the issue of whether the Leased Property is part of a “shopping center” within the meaning of section 365, all of the so-called “shopping center provisions” of the Bankruptcy Code with respect to the assumption of a shopping center lease have been satisfied in connection with the assumption of the Real Property Leases.
g. The assumption and assignment of the Real Property Leases is effective as of the Assignment Date (as defined in the Assignment Agreement).
h. Subject to the terms of the Agreements, the Debtors are authorized to sell their interests in the Properties to the Purchaser free and clear of all liens, claims, encumbrances and interests pursuant to sections 363(f) of the Bankruptcy Code in accordance with the Agreements, with all such valid and enforceable liens, claims, encumbrances and interests to attach to the proceeds of the sale/assignment of the Properties in the same relative priority as existed with respect to the Properties, subject to the rights and defenses, if any, of the Debtors and any party in interest with respect thereto.
i. The Purchaser is a good faith purchaser entitled to the protection of sections 363(m) of the Bankruptcy Code. The transactions complies with the provisions of section 363(n) of the Bankruptcy Code.
j. The Debtors and Purchaser, as welt as their officers, employees and agents are authorized to perform all of their obligations, take whatever actions necessary, and issue, execute and deliver whatever documents, leases, deeds and bills of sale as may be necessary or appropriate to implement and effectuate the Agreements in accordance with the terms thereof and of this Order. Any actions taken by the Debtors and the Purchaser necessary or desirable to consummate such transactions prior to the entry of this Order are hereby ratified.
k. In accordance with section 1146(c) of the Bankruptcy Code, the sale/assignment of the Properties is hereby exempt from any law imposing a stamp tax, transfer tax or similar tax.
l. Each and every federal state and local government agency or department is hereby directed to accept any and all documents and instruments necessary or appropriate to consummate sale/assignment of the Properties without imposition and payment of any stamp tax, transfer tax or similar tax, pursuant to section 1146(c) of the Bankruptcy Code. The register or recorder of deeds (or other similar recording agency) is hereby directed to accept and include a certified copy of this Order along with any other appropriate conveyance documents used to record and index the transfer of the Properties in the appropriate public records.
m. In the event that the Purchaser fails to close for any reason, the Debtors are authorized to consummate the sale transaction with the next highest and best bidder, and such bidder shall be deemed to be the Purchaser and all of the terms of the Order shall apply to such bidder as if it were the original Purchaser,
Go-Dark and Other Lease Provisions
n. Notwithstanding any provision in any lease, contract, reciprocal easement agreement (“REA”) or local law, the Purchaser is authorized to allow the Properties to remain dark for up to an additional fifteen (15) months after assignment, notwithstanding any subsequent assignment or disposition of a respective Property in accordance with the terms of the Real Property Lease. The fact that a Property remains dark for up to fifteen (15) months after assignment shall not result in the termination or forfeiture of any restrictions encumbering other parcels which benefit such Property.
o. In connection with the opening and operating of a retail store at the Properties, the Purchaser is authorized to perform alterations and remodeling to the extent necessary to operate their retail operations and to replace and modify existing signage, notwithstanding any provision in any lease or REA to the contrary.
p. The terms of the Agreements, if any, shall be, and hereby are, approved, and this Order and Agreements shall be binding upon the Debtors, all creditors of the Debtors, and any trustees appointed in these proceedings or any trustees appointed in any subsequent proceedings under chapter 7 or chapter 11 of the Bankruptcy Code relating to the Debtors, and all other parties in interest. Notwithstanding anything to the contrary contained in this Order or in the Agreements, the interests of any lender to the lessor(s) of the Property (the “Lender”) including, but not limited to, the Lender’s claims, liens and mortgages relating to its borrower or the borrower’s lease to the Debtors, will not be affected or prejudiced in any way by the terms of the Order and/or the Agreements and the sale and assignment of the Lease.
q. Provisions contained in Real Property Leases or REAs affecting the Properties which are or could have the effect of being provisions which restrict “going dark”, alteration and recapture provisions contained in Real Property Leases, clauses which impose a fee or a penalty or a profit sharing upon assignment, clauses which seek to increase the rent or impose a penalty or to modify or terminate a lease or REA as a result of going dark or upon assignment, provisions which directly or indirectly limit or condition or prohibit assignment, continuous operating covenants, covenants that any user of the Debtors’ premises operate under the name of “Kmart,” and/or operate with a use similar to a “Kmart” and similar provisions contained in the reciprocal easement agreements or other documents with respect to the Properties, shall not restrict, limit, or prohibit the sale or assumption and assignment of the Properties to the Purchaser and such clauses are hereby deemed and found to be anti-assignment clauses within the meaning of sections 365(f) and (1).
r. Purchaser is authorized to use the Property for any use permitted under the terms of the Real Property Leases, if applicable.
s. Extension and renewal options contained in Real Property Leases which purport to be personal only to the Debtors or to be exercisable only by the Debtors constitute an unenforceable restriction on assignment and may be freely exercised by the Purchaser or the Debtors to its full extent.
t. The failure specifically to include any particular provisions of the Agreements in this Order shall not diminish or impair the effectiveness of such provision, it being the intent of the Court that the Agreements be authorized and approved in its entirety.
u. This Court shall retain jurisdiction to interpret, implement and enforce the terms of this Order and the Agreements and to resolve any disputes or controversies arising in, under, in relation to or in connection with this Order or the Agreements.
v. Notwithstanding anything herein to the contrary, any written agreement of settlement of an objecting party or a party to an REA which is executed by such party and the Purchaser relating to the relief sought in this Order is (a) hereby approved, and (b) shall govern and control to the extent inconsistent with this Order.
w. Except as expressly set forth herein, notwithstanding anything herein to the contrary, any provision of a Real Property Lease or REA deemed to be an unenforceable restraint on assignment, including, but not limited to, a going-dark clause or termination right, shall be deemed unenforceable only with respect to the transfer to the Purchaser and to no other person or entity.
x. The Purchaser and any Designee shall have no successor liability or liability for any employee claims or benefits.
y. To the extent required by the Bankruptcy Code, any and all monetary defaults shall be cured as set forth in the Agreements.
z. The Cure Claim for the Real Property Leases are the amounts set forth in the Sale Notice. If a Cure Claim is not disputed, the Debtors shall pay the Cure Claim to the landlord or other party designated in the Sale Notice in the amount set forth in the Sale Notice within ten business days of the Assignment Date.
aa. The failure of any party to:
(a) allege in these proceedings any pre-assumption and assignment default under the Real Property Leases not hereinabove enumerated;
(b) identify any amendment, modification or other agreement relating to or affecting the Property, other than those listed on the Sale Notice;
(c) assert any material waiver, failure to act, or act or statement contrary to that presented in the Motion by the Debtors, or
(d) assert any objection or defense to the entry of this Order,
shall forever bar and estop said party, its heirs, successors and assigns, and any predecessor in interest, of itself and anyone claiming by, through or under it or them, from asserting any claims based thereon in any subsequent cases, proceedings, or actions against the Debtors or the Purchaser (or parties claiming through the Purchaser), in law or in equity in this or before any other court or tribunal, and any such claims(s) shall be and hereby are terminated, exonerated, barred, and adjudicated against such person.
bb. Nothing in this Order shall be deemed to extend the time to assume or reject the Real Property Lease under section 365(d)(4) of the Bankruptcy Code.
cc. The Court shall retain exclusive jurisdiction to resolve any dispute arising from or relating to the assumption and assignment authorized herein or this Order.
dd. Notwithstanding Rule 6004(g) and 6006(d) of the Federal Rules of Bankruptcy Procedure, this Order shall take effect immediately upon signature.
EXHIBIT 1
This Agreement is for the purchase of (check one or both):
ASSET PURCHASE AGREEMENT FOR THE PURCHASE OF CERTAIN FEE AND/OR LEASEHOLD INTERESTS OF KMART CORPORATION (AND THE UNDERSIGNED AFFILIATES OF KMART CORPORATION BY BEALL’S DEPARTMENT STORES, INC., A FLORIDA CORPORATION [PURCHASER] __________ 2003 ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of _________, 2003, between [Kmart Corporation, a Michigan corporation (“Kmart”) [and the undersigned affiliates of Kmart], debtors and debtors-in-possession operating under Chapter 11 of the Bankruptcy Code (collectively, “Seller”), and Beall’sDepartment [Inc.] Stores, a Florida [corporation] (“Purchaser”).
RECITALS
Seller and certain of its domestic subsidiaries and affiliates filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (as defined below) on January 22, 2002. Since that rime Seller has remained in possession of its property and has continued to operate its business pursuant to Sections 1107 and 1108 of the Bankruptcy Code. Seller’s Chapter 11 case is currently pending before the United States Bankruptcy Court for the Northern District of Illinois (Eastern Division) (the “Bankruptcy Court”) in re Kmart Corporation, et al., Case No. 02-B02474 (the “Bankruptcy Case”).
Purchaser desires to purchase, and Seller desires to sell the Real Estate (as hereinafter defined) and all of Seller’s right, title and interest in the Leases (hereinafter defined) upon the terms and subject to the condition, set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and in reliance upon the representations and warranties contained herein, the parties hereto covenant and agree as follows:
ARTICLE I CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following designated meanings:
“Agreement” means this Asset Purchase Agreement, including the exhibits and the schedules attached hereto.
“Assigned Leases” means the leases, with all amendments thereto, described on Exhibit 2 attached hereto.
“Assignment and Assumption Agreement” means the assignment and assumption agreement substantially in the form attached hereto as Exhibit4.
“Auction” has the meaning set forth in Section 10.1 hereof.
“Authorized Officer” of any Person means the chief executive officer, the president, any vice president or any secretary of such Person.
“Bankruptcy Case” has the meaning set forth in the recitals hereof.
“Bankruptcy Code” means Title 11 and applicable portions of Titles 18 and 28 of the United States Code, as amended from time to time.
“Bankruptcy Court” has the meaning set forth in the recitals hereof.
“Bidding Procedures” has the meaning set forth in Section 10.1 hereof.
“Business Day” means any day other than Saturday, Sunday or a nationally recognized banking holiday.
“Closing” has the meaning set forth in Section 3.1 hereof.
“Deed” has the meaning set forth in Section 3.1 hereof.
“Deposit” has the meaning set forth in Section 2.3 hereof.
“Escrow Agent” means First American Title Insurance Company.
“Execution Date” shall mean the date first above written.
“Closing Date” means the date of consummation of the transactions contemplated by this Agreement which shall occur (i) with respect to each parcel of Real Estate, the later of(a) within five (5) days after the entry of the applicable Sale Order or (b) within five (5) days after the completion of the Seller’s going-out-of-business sales located at such Real Estate and (ii) with respect to each Assigned Lease, the later of (a) within five (5) day; after the entry of the applicable Lease Order or (b) within five (5) days after the completion of Seller’s going-out-of-business sales at the applicable Leased Premises, Purchaser acknowledges that the Closing (hereinafter defined) for each parcel of Real Estate and Assigned Lease may occur at different times depending on the date of entry of the applicable Sale Order, Lease Order, the date of completion of the going-out-of-business sales at the applicable Leased Premises or otherwise, and that, as a result, the Closing Date may be different for each parcel of Real Property and/or each Assigned Lease.
“Lease Order” means the order(s) to be entered by the Bankruptcy Court, in the form reasonably satisfactory to Seller and Purchaser, authorizing and approving Seller’s assumption and assignment of the Leases to Purchaser.
“Leased Premises” mean the premises which are the subject of the Leases.
“Leasehold Interests” means the interest of Seller, as tenant, in and to the Leases.
“Leases” means, collectively, the leases with all amendments thereto described on Exhibit 2.
“Liens” has the meaning set forth in Section 6.4 hereof.
“Permitted Exception” means, collectively: (i) exceptions for taxes and other governmental charges and assessments (including special assessments) that are not yet due and payable or that are being contested in good faith by appropriate proceedings, (ii) mechanics’, carriers’, workers’, repairers’, materialmen’s, warehousemen’s, and other similar liens arising or incurred in the ordinary course of business (x) for sums not yet due and payable or (y) the enforcement of which is stayed by the Bankruptcy Court and orders promulgated thereby, (iii) imperfections of title that do not materially detract from the value of or materially impair the use of the Properties as a retail store location. (iv) local, county, state and federal laws, ordinances or governmental regulations now or hereafter in effect relating to the Properties, (v) violations of laws, regulations, ordinances, orders or requirements, if any, arising out of the adoption, promulgation, repeal, modification or reinterpretation of any law, rule, regulation, ordinance or order of any federal, state, county or local government, governmental agency, court, commission, department or other such entity which occurs subsequent to the Execution Date, (vi) title exceptions or imperfections of title caused by or resulting from the acts of Purchaser or any of its affiliates, employees, officers, directors, agents, contractors, invitees or licensees, (vii) encroachments, overlaps, boundary line disputes, and any other matters, which would be disclosed by an accurate survey or that are observable by physical inspection of the premises and that do not materially detract from the value of or materially impair the use of the Properties as a retail store location, (viii) liens that will be released at the Closing by payment or order of the Bankruptcy Court, whether contained in the Sale Order or the Lease Order or otherwise and (ix) any and all matters of record.
“Person” means any natural person, corporation, general partnership, limited partnership, limited liability partnership, limited liability company, trust, union, association, court, agency, government, tribunal, instrumentality, or other entity or authority.
“Properties” means the Real Estate and, as applicable, the Leases and/or Leased Premises.
“Purchase Price” has the meaning set forth in Section 2.3 hereof.
“Purchase Price Allocation” means, with respect to a parcel of Real Estate or a Lease, the amount of the Purchase Price allocated to such Lease as indicated on Schedule 10.2. [Multiple Property Purchases Only]
“Real Estate” means the real property owned by Seller, including land, building improvements thereon, easements, licenses, rights-of-way, permits and other appurtenants thereto (including Seller’s rights in and to public streets, Whether or not vacated and warranties relating thereto, if any), as more commonly described on Exhibit 1, along with any leases for such parcel listed on Schedule 3.4.
“Remaining Properties” has the meaning set forth in Section 10.2.
“Sale Order” means the order to be entered by the Bankruptcy Court pursuant to Section 363 and 365, as applicable, of the Bankruptcy Code authorizing the sale of the Real Estate to Purchaser.
“Successful Bidder” has the meaning set forth in Section 1.3.
ARTICLE II THE TRANSACTION
1.1 Purchase and Sale of Properties. On the terms and subject to the conditions contained in this Agreement, the Sale Order and any applicable Lease Order, on the Closing Date, Seller shall sell, convey, assign, transfer and deliver to Purchaser and Purchaser shall purchase and accept, free and clear of all liens, other than Permitted Exceptions, all of Seller’s right, title and interest in, to and under the Real Estate and the Assigned Leases, in each case including all tax, Insurance and other escrow accounts relating to such Leases, if any, prorated in accordance with Section 9.3 hereof.
1.2 Assumption of Liabilities. Purchaser’s obligations relating to Seller shall be solely as set forth in this Agreement.
1.3 Purchase Price. The aggregate purchase price (the “Purchase Price”) for the Real Estate and Assigned Leases, shall be SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($750,000.00). The Purchase Price shall be payable as follows: (a) the amount of $50,000.00 [the amount that equals the greaterof $50,000.00 per Property or 10% of the Purchase Price] payable by certified check made payable to the order of “First American Title Insurance Company, as escrow agent for Kmart Corporation” on the date Purchaser delivers to Seller or its agent a copy of this Agreement executed by Purchaser (the “Deposit”), and (b) the remainder, plus or minus prorations as provided herein, by wire transfer of funds at Closing. The Deposit shall be held by the escrow Agent in an interest-bearing account in accordance with the escrow agreement attached hereto as Exhibit 3. The Deposit shall be nonrefundable, except in the event of a default by Seller or as otherwise provided herein. Interest on the Deposit shall belong to whomever is entitled to the Deposit hereunder. Notwithstanding anything to the contrary contained herein, in the event that Purchaser shall increase the Purchase Price at the Auction or otherwise modify the terms of this Agreement and Purchaser shall be deemed the Successful Bidder (as defined in the Bidding Procedures) or the second highest and best bidder at the Auction, Purchaser shall, within two (2) Business Days of the Auction, deposit such additional amounts with the Escrow Agent such that the Deposit held by the Escrow Agent is the amount that equals 10% of the Purchase Price, as increased.
ARTICLE III THE CLOSING
1.4 Closing.
(a) Time and Place of Closing. The consummation of the transactions provided for in this Agreement (the “Closing”) shall take place at the offices of Skadden, Arps, Slate, Meagher Flom (Illinois), 333 West Wacker Drive, Chicago. Illinois, on or before the Closing Date, but subject to satisfaction of all of the conditions to Closing set forth in Article 5 hereof and elsewhere in this Agreement. At the request of either Party, this Agreement shall close through escrow in accordance with the general provisions of the usual form of escrow agreement used in similar transactions with special provisions inserted as may be required to conform to this Agreement.
(b) Deliveries by Seller. At the Closing, Seller shall deliver to Purchaser the following:
(i) the Sale Order and/or the Lease Order(s), as applicable;
(ii) with respect to the Real Estate, special warranty deeds (“Deeds”), bills of sale, assignments and other instruments for the due transfer of the Real Estate to Purchaser,
(iii) with respect to the Assigned Leases, a duly executed Assignment and Assumption Agreement and, if applicable, bills of sale for each of the Assigned Leases;
(iv) the certificate contemplated by Article 5
hereof;
(v) the cancellation of any leases or subleases between Seller and any affiliates of Seller affecting the Assigned Leases; and
(vi) all other documents, instruments, writings, affidavits, statements and certifications as required to be delivered by Seller at or prior to the Closing Date pursuant to this Agreement or as may be customarily and reasonably required by Purchaser and/or a title insurer in connection herewith.
(c) Deliveries by Purchaser. At the Closing, Purchaser shall deliver the following:
(i) the Purchase Price Allocation for the Properties subject to the Closing;
(ii) with respect to the Assigned Leases, a duly executed Assignment and Assumption Agreement and, if applicable, bills of sale for each of the Assigned Leases;
(iii) the certificate contemplated by Article 4 hereof; and
(iv) all other documents, instruments, writings, affidavits, statements and certifications as required to be delivered by Purchaser at or prior to the Closing Date pursuant to this Agreement or as may be customarily and reasonably required by Seller and/or a title insurer in connection herewith.
3.2 Reserved.
3.3 Possession. Purchaser shall have the right to take possession of the Real Estate and Assigned Leases as of the Closing Date pursuant to the Sale Order and/or Lease Order, as applicable, at which time Seller shall thereupon deliver to Purchaser copies, and originals where available of all documents and keys relating to the applicable Properties. Except as otherwise expressly stated in this Agreement. Purchaser shall accept the Properties on an “AS-IS, WHERE-IS AND WITH ALL FAULTS BASIS” as of the Closing Date, free of any tenancy or possessory rights of any Person except for the subleases referred to in Schedule 3.4. Without limitation of the foregoing, (i) Seller and its agents, employees, advisors and other representatives have not and do not make any representations or warranties, express or implied, to Purchaser regarding the fair market value, physical condition or environmental condition of the Properties, and (ii) Purchaser acknowledges, represents and warrants to Seller that Purchaser has not been induced to execute this Agreement by any act, statement or representation of Seller or its agents, employees, advisors or other representatives not expressly set forth in this Agreement.
3.4 Costs of Closing.
(a) Seller shall pay for the preparation of the Deeds, Assignment and Assumption Agreements and bills of sale. Purchaser shall pay for the title insurance premiums and examination fees, to the extent Purchaser seeks to obtain title insurance, and other instrument for the due transfer of the Properties to Purchaser. All other costs associated with the Closing and the transactions contemplated under the Agreement shall be allocated as provided elsewhere in the Agreement.
(b) Seller shall pay or cause to be paid any and all cure payments required to be paid under Section 365 of the Bankruptcy Code for monetary defaults to the extent accrued prior to she Closing Date. Notwithstanding the foregoing, as of the Closing Date, Purchaser shall assume any and all repair, maintenance and/or restoration obligations with respect to the Leased Premises under the Assigned Leases including, without limitation, any obligation which arose prior to the Closing Date and which may be classified as a cure obligation required to be paid or performed under Section 365 of the Bankruptcy Code.
(c) SEE RIDER I ATTACHED HERETO AND INCORPORATED HEREIN.
ARTICLE IV CONDITIONS TO SELLER’S OBLIGATIONS
Seller’s obligations to consummate the transactions contemplated by this Agreement are subject to the satisfaction at or prior to the Closing Date of each of the following conditions.
4.1 Representations, Warranties and Covenants, All representations and warranties of Purchaser contained in this Agreement shall be true and correct at and as of the Closing Date, as if such representations and warranties were made at and as of the Closing Date and Purchaser shall have performed all agreements and covenants required by this Agreement to be performed by is prior to or at the Closing Date. On the Closing Date, there shall be delivered to Seller a certificate (dated as of the Closing Date and signed by an Authorized Officer of Purchaser) as to the matters set forth in this Section 4.1.
4.2 No Injunction. No injunction, stay or restraining order shall be in effect prohibiting the consummation of the transactions contemplated by this Agreement.
4.3 Sale Order and Lease Order. The Bankruptcy Court shall have entered the Sale Order and/or the Lease Order(s), as applicable,
4.4 Auction. If an Auction is held, Purchaser shall be the successful bidder at the Auction for the Properties or the Remaining Properties, as the case may be.
Each of the preceding conditions shall be satisfied in all material respects and (except for the condition set forth in Section 4.3 above) may be waived by Seller, but only if such waiver is set forth in a writing executed by Seller, which may be done without further order of the Bankruptcy Court and without notice to any other entity. If any of the preceding conditions shall not be satisfied, and is not waived by Seller, Seller may terminate this Agreement and, provided that Purchaser is not in default hereunder, neither party shall have any further liability to the other except for the return to Purchaser of the Deposit.
ARTICLE V CONDITION TO PURCHASER’S OBLIGATIONS
Purchaser’s obligation to consummate the transactions contemplated by this Agreement is subject, in the discretion of Purchaser, to the satisfaction at or prior to the Closing Date of each of the following conditions.
5.1 Representation, Warranties and Covenants. All representations and warranties of Seller contained in this Agreement shall be true and correct in all material respects at and as of the Closing Date as if such representation and warranties were made at and as of the Closing Date and Seller shall have performed all agreements and covenants required by this Agreement to be performed by it prior to or at the Closing Date in all material respects. On the Closing Date, there shall be delivered to Purchaser a certificate (dated as of the Closing Date and signed by an Authorized Officer of Seller) as to the matters set forth in this Section 5.1.
5.2 Sale Order and Lease Order. The Bankruptcy Court shall have entered the Sale Order and/or the Lease Order(s), as applicable.
5.3 No Injunction. No injunction, stay or restraining order shall be in effect prohibiting the consummation of the transactions contemplated by this Agreement.
5.4 Title to Properties. Seller shall be in a position to deliver (i) valid leasehold interest in each of the Leases and (ii) good and indefeasible fee simple title to the Real Estate, in each case free and clear of all Liens, other than Permitted Exceptions; provided, however,
that if Seller is unable to deliver a valid leasehold interest in any Lease or good and indefeasible fee simple title to any parcel of Real Estate, the applicable Lease(s) or parcel(s) of Real Estate shall be removed from this Agreement and the Purchase Price for the Remaining Properties shall be reduced by the Purchase Price Allocation for that Property and this condition shall be deemed fulfilled. Purchaser’s sole and exclusive remedy relating to the preceding sentence shall be the aforementioned reduction in the Purchase Price, and nothing in the preceding sentence shall be construed so as to convey to Purchaser the right to terminate or rescind this Agreement in its entirety.
5.5 Auction. If an Auction is held, Purchaser shall be the successful bidder at the Auction for the Properties or the Remaining Properties, as the case may be.
Each of the preceding conditions shall be satisfied in all material respects and (except for the condition set forth in Section 5.2 above) may be waived by Purchaser, but only if such waiver is set forth in a writing executed by Purchaser or if Purchaser closes the transaction with respect to such Properties. If one of the preceding conditions shall not be satisfied and is not waived by Purchaser, Purchaser may (i) if such condition affects all of the Properties, terminate this Agreement and neither party shall have any further liability to the other, except for the return to the Purchaser of the Deposit so long as Purchaser is not in default hereunder, or (ii) if such condition affects less than all of the Properties, remove the applicable Lease(s) or parcel of Real Estate from this Agreement and the Purchase Price for the Remaining Properties shall be reduced by the Purchase Price Allocation for that Property. Purchaser’s sole and exclusive remedy relating to the preceding sentence shall be the aforementioned reduction in the Purchase Price, and nothing in the preceding sentence shall be construed so as to convey to Purchaser the right to terminate or rescind this Agreement in its entirety.
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to, Purchaser as follows:
6.1 Due Incorporation, Etc. Each Seller is a corporation validly existing and in good standing under the laws of the jurisdiction of its incorporation and, subject to any required approval of the Bankruptcy Court, has the corporate power and authority and all necessary governmental approvals to operate and own or lease the Properties and to carry on its business as it is now being conducted or presently proposed to be conducted.
6.2 Authorization, No Conflicts, Etc. Except far any required approvals of the Bankruptcy Court, each Seller has the corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution, delivery and performance of this Agreement by Seller and the consummation by the Seller of the transactions contemplated hereby have been duly authorized by all requisite corporate action. Subject to the entry and effectiveness of the Sale Order and/or the Lease Order(s), as applicable, this Agreement has been duly and validly executed and delivered by Seller and (assuming this Agreement constitutes a valid and binding obligation of Purchaser and upon receipt of any required approval of the Bankruptcy Court) constitutes a valid and binding agreement of Seller, enforceable against Seller in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditor’s rights generally from time to time in effect and to general equitable principles.
6.3 Consents and Approvals. No consent, approval or authorization of, or declaration, filing, or registration with, any United States federal or state governmental or regulatory authority is required to be made or obtained by Seller in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, except (a) for consents, approvals, or authorizations of, or declarations or filings with, the Bankruptcy Court, and (b) for consents, approvals, authorizations, declarations, filings or registrations, which, if not obtained, would not, individually or in the aggregate, have a material adverse effect on the transactions contemplated by this Agreement.
6.4 Leases and Real Estate.
(a) Subject to entry of the Sale Order and/or the Lease Order(s), as applicable, by the Bankruptcy Court, Seller has (i) with respect to the Real Estate, good and indefeasible fee simple title to such properties, free and clear of all liens, security interests and encumbrances (collectively “Liens”), other than Permitted Exceptions and (ii) with respect to the Leasehold Interests, leasehold title and valid leases with respect to each Lease, free and clear of all Liens, other than Permitted Exceptions.
(b) Exhibit 2 collectively identifies the instruments through which Seller derives its Leasehold Interests. Complete and correct copies of the Leases have been delivered to or made available for inspection by Purchaser and none of the Leases have been modified in any material respect except to the extent that such modifications are disclosed by the copies delivered to or made available for inspection by Purchaser.
6.5 Closing Date. No representations or warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive beyond the Closing Date.
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
7.1 Financial Ability. Purchaser has the financial resources to consummate the transactions contemplated herein and pay the Purchase Price.
7.2 Due Incorporation, Etc. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida.
7.3 Authorization. No Conflicts, Etc. Purchaser has the corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution, delivery and performance of this Agreement by Purchaser and the consummation by Purchaser of the transactions contemplated thereby have been duly authorized by all requisite corporate action. Subject to the entry, and effectiveness of the Sale Order and/or the Lease Order(s), as applicable, this Agreement has been duly and validly executed and delivered by Purchaser and (assuming this Agreement constitutes a valid and binding obligation of the Seller) constitutes a valid and binding agreement of Purchaser, enforceable against Purchaser in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditor’s rights generally from time to time in effect and to general equitable principles.
7.4 Consents and Approvals. No consent, approval or authorization of, or declaration, filing, or registration with, any United States federal or state governmental or regulatory authority is required to be made or obtained by Purchaser in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, except (a) for consents, approvals, or authorizations of, or declarations or filings with, the Bankruptcy Court, and (b) for consents, approvals, authorizations, declarations, filings or registrations. which, if not obtained, would not, individually or in the aggregate, have a material adverse effect on the transactions contemplated by this Agreement.
7.5 Litigation. There is no action, suit, inquiry, proceeding or investigation by or before any court or governmental or other regulatory or administrative agency or commission pending, or, to the best knowledge of Purchaser, threatened against Purchaser which questions or challenges the validity of this Agreement or in connection with the transactions contemplated thereby; not to the best knowledge of Purchaser, is there any basis for any such action, proceeding or investigation. To the best of Purchaser’s knowledge there are no circumstances or facts that would prevent Purchaser from engaging in the transactions contemplated in this Agreement.
7.6 Closing Date. No representations or warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive beyond the Closing Date.
ARTICLE VIII COVENANTS PRIOR TO CLOSING
8.1 Affirmative and Negative Covenants Pending Closing. Except as expressly set forth below, during the period from the date hereof to the Closing Date. Seller covenants and agrees that it shall, unless otherwise agreed with Purchaser:
(a) Affirmative Covenants Pending Closing. Maintain the Properties in the same condition as they are as of the date hereof, subject only to ordinary wear and tear, except that Seller may cease to operate its retail operations at and may vacate any of the Properties and may, in its sole and absolute discretion, remove all fixtures, signage and personal property located thereon, provided that any such fixtures, signage or personal property remaining at the Properties after the Closing Date shall, to the extent allowed under the Leases and applicable law, become the property of Purchaser.
(b) Negative Covenants Pending Closing. Except as expressly permitted herein, Seller shall not, without the consent of Purchaser (whose consent shall not be unreasonably withheld or delayed):
(i) Leases. Amend the Leases, enter into new leases or grant or terminate any other interests in the Properties;
(ii) Encumbrances. Encumber, sublease or otherwise grant any rights with respect to the Properties, to the extent same would nor constitute Permitted Exceptions; or
(iii) Contracts. Enter into any contracts or agreements affecting the Properties which cannot be terminated on less than 60 days notice,
8.2 Satisfaction of Purchaser’s Obligations. Purchaser shall maintain funds available (either cash on hand or pursuant to committed financing agreements which do not contain any material qualification to the lender’s obligation to advance funds to Purchaser) to satisfy all of Purchaser’s obligations under this Agreement at the time and in the manner set forth herein including, without limitations, the payment of the Purchase Price.
8.3 Adequate Assurance. With respect to each Lease, Purchaser shall use best efforts to provide adequate assurance as required under the Bankruptcy Code of the future performance of the applicable Lease by Purchaser agrees that it will promptly take all actions reasonably required by Seller to assist in obtaining the Bankruptcy Court’s entry of the applicable Lease Orders such as furnishing affidavits, non-confidential financial information or other documents or information for filing with the Bankruptcy Court and making Purchaser’s employees and representatives available to testify before the Bankruptcy Court with respect to demonstrating adequate assurance of future performance by Purchaser under the Leases, provided that Purchaser hereby agrees to provide such information including, without limitation, confidential financial information, as requested by the landlord under any Lease in order to demonstrate adequate assurance of future performance by Purchaser under such Lease.
8.4 Consents and Further Actions. Subject to the terms and conditions herein provided, Seller and Purchaser covenant and agree to use commercially reasonable efforts to take, or cause to be taken, all action, or do, or cause to be done, all things, necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement; including causing all closing conditions to be satisfied.
ARTICLE IX COVENANTS AFTER CLOSING
9.1 Further Transfers and Assurances. Seller will execute and deliver such further instruments of conveyance and transfer and take such additional action as Purchaser may reasonably request to effect, consummate, confirm or evidence the transfer to Purchaser of the Real Estate and the Leasehold Interests. Seller will execute such documents as may be reasonably necessary to assist Purchaser in preserving or perfecting its rights in the Real Estate and the Leasehold interests.
9.2 Communications. All mail and other communications relating to the Properties received by Seller at any time after the Closing Date shall be promptly turned over to Purchaser.
9.3 Taxes, Recording Charges, Escrow Fee, Prorations. All taxes (based upon the most recent ascertainable taxes if current tax information is not available) relating to the Properties due and payable after the Closing Date which relate to periods prior to the Closing Date shall be the responsibility of Seller and shall be prorated as of the Closing Date. All transfer, documentary, deed stamps, sales, use, stamp, registration, conveyance, income, gains, value added or other taxes and fees arising out of the sale of the Properties or otherwise incurred in connection with this Agreement or the consummation of the transactions contemplated hereby and all charges for or in connection with the recording of any document or instrument contemplated hereby shall be the responsibility of Purchaser when due. At the Closing, Seller and Purchaser shall execute, acknowledge and deliver all such real estate transfer tax returns as may be necessary to comply with any applicable city, county, or state real estate conveyance tax laws. Purchaser will, at its expense, file all necessary tax returns and other documentation in connection with the taxes and fees encompassed in this Section 9.3. Purchaser shall pay the escrow fee charged by the Escrow Agent. At Seller’s request, Purchaser shall provide to Seller a certificate which sets forth the Purchase Price allocated to the Properties. All rent, additional rent, maintenance and other charges, insurance obligations and utility charges for the Real Estate, Leases and the Leased Premises shall be prorated as of the Closing Date and any special assessments relating to same shall be paid by Purchaser. Additionally, any security deposits and/or pre-paid deposits made by Seller under the Leases or otherwise with respect to the Leased Premises shall be assigned to Purchaser, and Seller shall be credited for such amounts at Closing. Purchaser and Seller agree to prorate real estate taxes and assessments based on when such taxes and assessments are due and payable, notwithstanding when such taxes and assessments become a lien on the Properties.
9.4 Insurance. Without the prior written consent of Purchaser, Seller will not cancel any insurance policy relating to any Real Estate or Assigned Lease prior to the Closing Date, unless such Property is otherwise removed from this Agreement in accordance with the terms hereof.
ARTICLE X BID PROCESS
10.1 Auction. Purchaser acknowledges that Seller may conduct one or more auction sales of the Properties prior to the hearing on a motion seeking approval of the transactions contemplated hereby on terms and conditions consistent with those set forth herein (the “Auction”);provided, however, that bids at the Auction must be made in accordance with the terms and conditions approved by the Bankruptcy Court (such terms and conditions, the “Bidding Procedures”).
10.2 Price Reductions. If, as a result of the Auction or as otherwise determined or ordered by the Bankruptcy Court, (i) Seller conveys one or more of the Properties to another Person or otherwise does not convey any Property to Purchaser, or (ii) Purchaser or an affiliate of Purchaser purchases one or more Properties after competitive bidding at the Auction, then Seller shall reduce the Purchase Price for the Remaining Properties by an amount equal to the amount set forth as the Purchase Price Allocation for that Property. Notwithstanding the foregoing, in the event certain of the Properties are not purchased by Purchaser pursuant to the first sentence of this Section 10.2, subject to the provisions of Section 12.1 and Section 12.20. Purchaser shall have no obligations relating to such Properties and the Agreement shall be deemed amended to exclude such Properties and (ii) Purchaser shall be obligated to close the transaction for the Remaining Properties, if any (the “RemainingProperties”). This Section 10.2 constitutes Purchaser’s sole and exclusive remedy upon the occurrence of the conditions contemplated herein, and nothing contained in this Section 10.2 shall be construed so as to convey to Purchaser the right to terminate or rescind this Agreement in its entirety.
10.3 Competing Bids. In the event a Person submits a competing offer to purchase any or all of the Properties, such competing bid shall be made in accordance with the Bidding Procedures.
ARTICLE XI LEASE ASSIGNMENT
11.1 Reserved.
11.2 Reserved.
11.3 Reserved.
11.4 Conditions to Assignment. It shall be a condition to assignment of any Lease that Seller shall have cured any default in base rental or additional rental payments (excluding renovations, repairs, maintenance and/or restorations required under the applicable Lease if denominated as “additional rent”) arising under the Lease and outstanding as of the Closing Date and required to be paid under Section 363 of the Bankruptcy Code, provided that Seller shall not be obligated to cure any such default that is in dispute as of the Closing Date if an escrow or other arrangement with respect thereto shall have been established pursuant to an order of the Bankruptcy Court. With respect to any cure amount that is for a non-monetary default, Purchaser shall provide Seller with notice of its intent to cure such amount within three (3) Business Days’ of receipt of notice of such amount. if Purchaser elects not to Cure any such non-monetary default, the affected Lease shall be removed from this Agreement and the Purchase Price for the Remaining Properties shall be reduced by the Purchase Price Allocation for that Lease, this condition will be deemed fulfilled and Purchaser’s sole and exclusive remedy relating to the preceding sentence shall be the aforementioned reduction in the Purchase Price; provided, however, that if Purchaser refuses to cure such non-monetary default, Seller shall have the right to cure the same and, in the event Seller does cure the same, Purchaser shall be obligated to close with respect to such Lease in accordance with this Agreement,
11.5 Reserved.
ARTICLE XII MISCELLANEOUS
12.1 Termination.
(a) This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time, but not later than the Closing Date:
(i) by mutual consent of Purchaser and Seller;
(ii) by Seller if the Closing does not occur on or prior to the Closing Date, provided, that Seller will not be entitled to terminate this Agreement (except due to a default by Purchaser) pursuant to this subsection (ii) if Seller is in breach of this Agreement or has failed to satisfy any condition to Closing in Article V hereof that Seller was required to satisfy; or
(iii) automatically with respect to a particular Property (but not as to this Agreement in its entirety), (A) three (3) Business Days after such Property has been disposed of by Seller pursuant to the Bidding Procedures or withdrawn from the Auction by Seller, or (B) at 5:00 p.m. on the forty-fifth (45th) day following the entry of an order by the Bankruptcy Court approving the sale of such Property to a third party (other than Purchaser).
(b) In the event of the termination of this Agreement as above provided, except as a result of a default by’ Purchaser or Seller, this Agreement shall forthwith become void, the Deposit shall be returned to the Purchaser, and no party shall have any further liability hereunder, including any liability for damages, except as otherwise expressly provided herein, and except for any willful breach by any party hereto of such party’s representations, warranties or covenants which shall also survive the termination of this Agreement. In the event that a condition precedent to its obligation is not met, nothing contained herein shall be deemed to require any party to terminate this Agreement rather than to waive (without further Bankruptcy Court order or notice to any third party) such condition precedent and proceed with the Closing.
12.2 Casualty and Condemnation. If any one of the Properties is destroyed or materially damaged, or if condemnation proceedings are commenced against such Property, the Parties shall close in accordance with this Agreement and all proceeds or insurance or condemnation awards payable to Seller by reason of such damage or condemnation shall be paid or assigned to Purchaser. In the event of non-material damage to a Property that is otherwise uninsured, which damage Seller is unwilling to repair prior to Closing, Purchaser shall be entitled to a reduction in the Purchase Price to the extent or the cost of repairing such damage, as reasonably agreed to by the parties. This Section 12.2 shall contain Purchaser’s sole remedies in the event of any casualty or condemnation.
12.3 Assignment.
(a) This Agreement will inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto and their respective successors and assigns, except as provided in subsections (b) and (c) below.
(b) Seller may not assign any of its duties or obligations hereunder without the prior written consent of Purchaser, which consent shall not be unreasonably withheld.
(c) Purchaser may not assign any of its rights, duties or obligations hereunder in whole or in part without Seller’s consent. Purchaser reserves the right to take title to any parcel of Real Estate or Lease in the name of a nominee or assignee provided that such nominee or assignee shall provide adequate assurance as required under the Bankruptcy Code of the future performance of the applicable Lease in accordance with Section 8.4 hereof. In the event of such designation, Purchaser shall continue to be obligated and liable for all of Purchaser’s obligations and liabilities under this Agreement.
12.4 Default and Remedies. In the event of a default hereunder by Purchaser or Seller, the non-breaching party may (i) cancel this Agreement by written notice to the other Patty or (ii) proceed with whatever steps the non-breaching Party deems necessary in order to enforce its rights and remedies under this Agreement, at law or in equity including, without limitation, the right to seek specific performance or recover monetary damages for the breach of this Agreement. In addition, in the event that Purchaser defaults under this Agreement, Seller shall be entitled to retain the Deposit. No remedy herein or otherwise conferred upon the Parties shall be considered exclusive of any other remedy, but the same shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity or by statute.
12.5 Confidentiality. Purchaser and its agents, officers, employees, and other representatives shall hold in the strictest confidence the terms and conditions of this Agreement and all data and information obtained with respect to the Properties, whether obtained before or after the Execution Date: provided, however, that it is understood and agreed that Purchaser may disclose such claw and information to the employees, consultants, accountants and attorneys of Purchaser provided that such persons agree in writing to treat such data and information confidentially. In the evens this Agreement is terminated or Purchaser fails to perform hereunder, Purchaser shall promptly return to Seller any leases, surveys, statements, documents, schedules, exhibits or other written information obtained from Seller in connection with this Agreement or the transactions contemplated herein.
12.6 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or mailed, by certified or registered mail, return receipt requested, first class postage prepaid, or by Federal Express or some other reputable overnight carrier, to the parties at the following addresses:
If to Seller, addressed to:
Kmart Corporation 3100 W. Big Beaver Road Troy, Michigan 48084-3163 Fax Number (248) 463-5787 Attn: Chief Restructuring Officer
With copies (which shall not constitute notice hereunder) to:
Kmart Corporation 3100 W, Big Beaver Road Troy, Michigan 48084-3163 Fax Number: (248) 637-4857 Attn: General Counsel
Skadden, Arps, Slate, Meagher Flom (Illinois). 333 West Wacker Drive, Suite 2100 Chicago. IL 60606 Fax Number: (312) 407-0411 Attention: Marian P. Wexler, Esq.
If to Purchaser, addressed to:
Beall’s Department Stores, Inc. 1086 38th Avenue East Bradenton, Florida 34208 Attention: James C. Simpson
With copies (which shall not constitute notice hereunder) to:
Clifford L. Walters, Esq. Blalock, Landers, Walters Vogler, P.A. 802 11th Street West Bradenton, Florida 34205
or to such other place and with such other copies as any party may designate by written notice to this other party.
12.7 Expenses. Except as otherwise provided in this Agreement, each party hereto shall pay its own expenses, including attorneys’ and accountants’ fees, in connection with this Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated hereby. Notwithstanding the foregoing, if any action is brought by either party against the other party, the prevailing party shall be entitled to recover court costs incurred and reasonable attorneys’ fees and costs.
12.8 Brokerage Commissions and Fees. Purchaser warrants and represents that it shall separately pay any brokerage commissions or fees due to its real estate broker(s), [___ N/A ______ INSERT NAME], in connection with the transactions contemplated by this Agreement, and agrees that should any claim be made for commissions or fees by its broker(s) or any other broker claiming to have been hired by Purchaser against Seller, Purchaser will indemnify and hold the Seller free and harmless from and against any and all loss, liability and expenses in connection therewith. Seller warrants and represents that it has not engaged any brokers in connection with the transactions contemplated by this Agreement, and agrees that should any claim be made for commissions or fees by any broker claiming to have been hired by Seller against Purchaser, Seller will indemnify and hold the Purchaser free and harmless from and against any and all loss, liability and expenses in connection therewith. Notwithstanding anything contained herein to the contrary, the provisions of this Section 12.8 shall survive Closing or the earlier termination of this Agreement.
12.9 Entire Agreement. This Agreement supersedes all prior discussions and agreement between the parties with respect to the subject matter hereof and this Agreement, including the schedules and exhibits hereto, and other documents to be delivered in connection herewith (together with such confidentiality letter), contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof.
12.10 Waiver. Any term or condition of this Agreement may be waived at any time by the party which is entitled to the benefit thereof. To be effective, each such waiver shall be in writing, shall specifically refer to this Agreement and the term or condition being waived, and shall be executed by an Authorized Officer of such party. A waiver on one occasion shall not be deemed to be a waiver of the same or any other breach on a future occasion. A waiver hereunder shall be effective without an order of the Bankruptcy Court, or notice to the Bankruptcy Court or any third party, in relation to such waiver.
12.11 Amendment. This Agreement may be modified or amended only in a writing duly executed by or on behalf of each of the parties hereto.
12.12 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
12.13 Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under any present or future law, rule, or regulation, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof. The remaining provisions of this Agreement shall remain in full force and effect, and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid, and enforceable provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible.
12.14 Headings Gender, Etc. The headings used in this Agreement have been inserted for convenience and do not constitute matter to be construed or interpreted in connection with this Agreement. Unless the context of this Agreement otherwise requires, (a) words of any gender shall be deemed to include each other gender, (b) words using the singular or plural number shall also include the plural or singular number, respectively, (c) references to “hereof,” “herein,” “hereby” and similar terms shall refer to this entire Agreement, and (d) each reference to Seller shall be a reference to any of its subsidiaries and predecessors and each representation, warranty, covenant and other agreement made herein with respect to Seller shall be deemed made with respect to all such subsidiaries and predecessors. The language used in this Agreement shall be deemed to the language chosen by the parties hereto to express their mutual intent and no rule of strict construction shall be applied against any Person.
12.15 Continuing Jurisdiction. The parties agree that the Bankruptcy Court shall retain jurisdiction over the enforcement of this Agreement, including, but not limited to, the performance of the obligations and transactions contemplated hereunder.
12.16 Choice of Law. This Agreement shall be construed, interpreted and the rights of the parties determined in accordance with the laws of the State of Michigan without regard to conflicts of laws principles thereof, except with respect to matters of law concerning the internal corporate affairs of any corporation or limited liability company which is a party to or the subject of this Agreement, and as to those matters the law of the jurisdiction of incorporation or organization of such entity shall govern.
12.17 Time of the Essence. With respect to the obligations imposed upon Purchaser only, time is of the essence under this Agreement.
12.18 No Third Party Beneficiary. Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person, firm or corporation, other than the parties hereto and their respective permitted successors and assigns, any rights or remedies under or by reason of this Agreement.
12.19 Recordation of Agreement; Waiver of Lis Pendens. Purchaser shall not (a) record, or attempt to record, this Agreement or a memorandum hereof or (b) place, or attempt to place, a lien upon the Properties. To the extent that such filing or recordation is made in violation of this Agreement, (i) Purchaser shall indemnify Seller and each and every guarantor (if any) with respect to Seller’s obligations under any applicable Lease against any damages (including consequential damages) incurred by Seller as a result thereof, and (ii) the same shall constitute a material breach of this Agreement and Seller shall be entitled to exercise all of the rights and remedies available to Seller as a result thereof. The provisions of the Section 12.2 shall survive the termination of this Agreement.
12.20 Irrevocable Bid/Purchaser Bound by Bidding Procedures. Purchaser acknowledgers that, in accordance with the Bidding Procedures, all bids made or deemed to be made at the Auction or otherwise in accordance with the Bidding Procedures including, without limitation, the bid reflected in this Agreement, shall remain open and irrevocable until the later of(i) three (3) Business Days after the Lease(s) have been disposed of by Seller pursuant to the Bidding Procedures or withdrawn from the Auction by Seller, or (ii) at 5:00 p.m. on the forty-fifth (45th) day following the entry of an order by the Bankruptcy Court approving the sale of such Lease(s) to a third party (other than Purchaser). In the event of any conflict or inconsistency between the provisions of this Agreement and the Bidding Procedures, the provisions of the Bidding Procedures shall govern and control. In the event of any conflict or inconsistency between the provisions of this Agreement and the order approving this Agreement, the provisions of the order shall govern and control.
12.21 Incorporation of Stalking-Horse Provisions. In the event Seller notifies Purchaser that the offer contained in this Agreement is to be used as a stalking-horse bid at the Auction, the following provisions shall apply (and in the event of any conflict or inconsistency with other provisions of the Agreement shall govern and control): (1) Seller may solicit competing bids for the Properties individually or in packages (consisting of any number or combination of Properties) during the Auction; provided, however, Seller shall not accept any competing bid(s) for the Properties unless the Seller would receive cumulative consideration such for bid(s) which is between Three percent and Five percent (5%) (as determined by the Seller in its sole discretion on or before the Auction) greater than the initial bid made herein by Purchaser, with all subsequent competing bids after the initial bid in increments to be established by the Seller in its sole discretion; (2) If Seller accepts a competing bid or competing bids, Seller shall pay to Purchaser a break-up fee in the amount of 2% of the initial bid made herein by Purchaser (the “Break-Up Fee”). The Break-Up Fee shall be paid to Purchaser from the proceeds of (and at the time of) a closing of any competing transaction or transactions from a successful competing bid offered and accepted at the Auction; and (3) Notwithstanding the provisions of Section 10.2 or any other provision of this Agreement, Purchaser shall not be required to set forth a Purchase Price Allocation for the Properties, it being understood that, without Purchaser’s consent, Seller has no right to remove Properties from this Agreement and require that Purchaser close on the remaining Properties with a reduced Purchase Price.
SIGNATURE PAGE TO FOLLOW
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed as of the day year first above written.
Beall’s Department Stores, Inc., ________________________________ a Florida corporation
By: ____________________________ James C. Simpson
Title: VP, Stores and Real Estate ___________________________
KMART CORPORATION, Debtor and Debtor-in-Possession
By: Michelle Gluck ______________________________
Title: VP, Real Estate and Construction ___________________________
(Other Title Holder), Debtor and Debtor-in-Possession
By: ____________________________
Title: _________________________
SCHEDULE 3.4 SUBLEASES
NONE.
SCHEDULE 10.2 LEASE ALLOCATIONS
NONE.
EXHIBIT I REAL ESTATE
NONE.
EXHIBIT 2 ASSIGNED LEASES
1. Kmart Store No. 7359 Boynton Beach, Florida.
RIDER I TO ASSET PURCHASE AGREEMENT BETWEEN KMART CORPORATION AND BEALL’S DEPARTMENT STORES, INC.
The Asset Purchase Agreement is amended to add the following as Paragraph 3.4(c):
(c) Subject to the second sentence of Paragraph 3.4(b), Seller shall be responsible for the payment of all rent, additional rent, taxes, insurance, common area maintenance, utilities and other expenses arising under the Lease or otherwise relating to the Leased Premises for the period prior to the Closing Date. At Closing, the parties shall prorate such expenses as may be appropriate. Seller shall provide Purchaser with proof of payment of such items, as well as certified copies of any orders, notices, claims or other documents arising in the Bankruptcy proceedings relating to cure requirements, cure claims, and cure bar dates relating to the Leased Premises, together with such other documentation as Purchaser may reasonably request to evidence Seller’s compliance with this Paragraph.
EXHIBIT 2 LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Assignment”) is made as of this ______ day of 200 ___ between [Kmart Corporation, a Michigan corporation], having its office at 3100 W. Big Beaver Road, Troy, Michigan 48084-3163 (“Assignor”) and _______________, a _____________ having its office at _____________________________________ (“Assignee”).
WITNESSETH WHEREAS, Assignor entered into that certain lease more particularly described in Schedule 1 attached hereto and made a part hereof (as the same may have been amended, supplemented or extended from time to time, and together with any and all other leases and agreements affecting the Premises (hereinafter defined) including, without limitation, the subleases, if any, more particularly described in Schedule 2 attached hereto (collectively, the “Lease”), whereby Assignor leases from the landlord set forth in Schedule 1 certain real property more particularly described in Schedule 1 and in the Lease (the “Premises”);
WHEREAS, on January 22, 2002, Assignor and certain of its affiliates filed voluntary petitions for reorganization under Chapter 11 of title 11 of the United States Code, 11 U.S.C. § 101 et seq., as amended (the “Bankruptcy Code”), in the United States Bankruptcy Court for the Northern District of Illinois (the “Bankruptcy Court”); and
WHEREAs, on ____________, 2002, pursuant to the Order Approving Standing Bidding Procedures to be Utilized in Connection with Asset Sales, the parties entered into that certain Asset Purchase Agreement for the Purchase of Certain Leasehold Interests (the “Agreement”), which provided for this Assignment; and
WHEREAS, on _____________, 2002, the Bankruptcy Court approved the Agreement and the parties entering into the Assignment; and
WHEREAS, subject to the terms of this Assignment, Assignor desires to assign and transfer all of its right, title and interest in the Lease and the estate created thereby to Assignee and Assignee desires to purchase and accept such assignment and assume all rights, duties and obligations or the Assignor under the Lease arising on and after the Assignment Date, as defined herein.
NOW THEREFORE, the parties hereto for and in consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is conclusively acknowledged by the parties hereto, agree as follows:
1. Assumption of Lease. As of the Assignment Date, Assignor hereby assumes the Lease pursuant to 11 U.S.C. § 365.
2 Assignment of Lease. As of the Assignment Date, Assignor hereby assigns, transfers, and sets over unto Assignee, its successors and assigns, all of Assignor’s right, title and interest in, to and under the Lease including, without limitation, any security deposits thereunder.
3. Assumption of Leasehold Obligations. Assignee hereby accepts the foregoing assignment and covenants with Assignor, that, from and after the Assignment Date, Assignee and its successors and assigns hereby assume and agree to keep, perform, fulfill or cause to be performed all of the terms, covenants, conditions and obligations contained in the Lease, which, by the respective terms therein, are imposed upon Assignor, and Assignee hereby acknowledges that Assignee shall assume any and all repair, maintenance and/or restoration obligations with respect to the Premises including, without limitation, any obligation which arose prior to the Assignment Date.
4. Ratification of Lease. Assignor and Assignee hereby ratify, reaffirm and adopt and agree that the Lease shall be in full force and effect as to Assignee.
5. Indemnification. Assignee hereby agrees to indemnify, protect, defend and hold Assignor harmless from and against all claims, damages, losses, costs and expenses (including attorneys’ fees) arising in connection with the Lease and relating to the period subsequent to the Assignment Date.
6. Governing Law. This Assignment shall be governed by and construed in accordance with the laws of the state where the Premises are located.
7. Assignment Date. The “Assignment Date” shall mean the day and year first written above.
8. Counterparts. This Assignment may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument, and it shall constitute sufficient proof of this Assignment to present any copy, copies or facsimiles signed by the parties to be charged.
IN WITNESS WHEREOF, the parties hereto have duly executed this Assignment as of the day and year first written above.
ASSIGNOR ASSIGNEE
By: ______________________ By: ______________________
Name: ____________________ Name: ____________________
Its: _____________________ Its: _____________________
Schedule 1Store #7359 — Boynton Beach, Florida
Lease between Mitchell Hornes to Kmart Corporation, dated 9/15/80 (Recorded M of L)
First Amendment to Lease dated 12/10/81.
Amendment No. 2 to Lease re Exhibits “A” and “B” dated 5/31/83.
Lease Subordination, Nondisturbance and Attornment Agreement dated 7/3/84.
Development Agreement dated 5/5/95.