Case No. 02-B02474 (Jointly Administered)United States Bankruptcy Court, N.D. Illinois, Eastern Division.
January 20, 2003
ORDER AUTHORIZING DEBTORS TO ENTER INTO FOURTH AMENDMENT TO POST-PETITION FINANCING AGREEMENT APPROVED PURSUANT TO FINALORDER
SUSAN PIERSON SONDERBY, United States Bankruptcy Judge.
Upon the motion filed January 14, 2003 (the “Motion”) of Kmart Corporation (“Kmart”) and certain of its subsidiaries and affiliates, debtors and debtors-in-possession in the above-captioned cases (collectively, the “Debtors”), for entry of an order (the “Order”) approving certain amendments (the “Amendment”) to the Debtors’ post-petition credit facility (the “DIP Facility”), including the adjustment of certain financial covenants and seeking the authority for the payment of fees in connection therewith; and it appearing to the Court that (i) it has jurisdiction over the matters raised in the Motion pursuant to 28 U.S.C. § 157 and 1334; (ii) this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2); and (iii) proper and adequate notice of the Motion has been given pursuant to Bankruptcy Rules 2002 and 4001 and no other or further notice is necessary; and upon the record made in connection with the hearings on the approval of the DIP Facility and on the Motion and after due deliberation and consideration and sufficient cause appearing therefor:
IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:
1. The Debtors’ decision to enter into the Amendment, substantially in the form set forth as Exhibit 1 attached hereto, is reasonable and appropriate under the circumstances and such Amendment is hereby approved.
2. The fees payable pursuant to the terms of the Amendment and the fee letter referred to therein and the other fees described in the Motion are reasonable and appropriate and are hereby approved and shall be nonrefundable upon their payment in accordance with the Amendment.
3. The Debtors and the guarantors are authorized to execute and deliver the Amendment and to perform all acts and to make, execute and deliver the fee letters and other instruments and documents as may be reasonably required by the Administrative Agent (as defined in the Motion) to give effect or evidence the same (all such letters, instruments, documents, amendments and modifications are referred to collectively as the “Documents”) and the Debtors are authorized to take any and all actions necessary or desirable to perform the obligations under the Amendment and the Documents.
4. The Amendment has been negotiated in good faith and at arm’s-length among the Debtors, the Administrative Agent and the Lenders, as that term is used in Section 364(e) of the Code.
5. The Post-Petition Financing (as defined in the Final Order of this Court dated March 6, 2002 (the “Final Order”), approving the DIP Financing) as amended from time to time including as amended by the Amendment remains subject to all of the same terms, conditions, protections, claims and liens set forth in the Final Order and the Final Order is incorporated herein by reference as if fully set forth herein.
6. Notwithstanding Rule 4001 of the Federal Rules of Bankruptcy Procedure, this Order shall take effect immediately upon its entry.
EXHIBIT 1 — AMENDMENT EXHIBIT 1
FOURTH AMENDMENT TO REVOLVING CREDIT AND GUARANTY AGREEMENT FOURTH AMENDMENT, dated as of January 9, 2003 (the “Amendment”), to theREVOLVING CREDIT AND GUARANTY AGREEMENT, dated as of January 22, 2002; among KMART CORPORATION, a Michigan corporation (the “Borrower”), a debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code, the Guarantors named therein (the “Guarantors”), JP MORGAN CHASE BANK, a New York banking corporation (“JP Morgan Chase”), each of the other financial institutions party thereto (together with JP Morgan Chase, the “Banks”) and JP MORGAN CHASE BANK as Agent for the Banks (in such capacity, the “Agent”):
WITNESSETH: WHEREAS, the Borrower, the Guarantors, the Banks and the Agent are parties to that certain Revolving Credit and Guaranty Agreement, dated as of January 22, 2002, as amended by that certain First Amendment to Revolving Credit and Guaranty Agreement dated as of February 15, 2002, as further amended by that certain Second Amendment to Revolving Credit and Guaranty Agreement dated as of March 7, 2002 and as further amended by that certain Third Amendment to Revolving Credit and Guaranty Agreement dated as of August 23, 2002 (as the same may be further amended, modified or supplemented from time to time, the “Credit Agreement”) and
WHEREAS, the Borrower and the Guarantors have requested that certain provisions of the Credit Agreement be amended subject to and upon the terms and conditions set forth herein so as to, among other things, modify the negative covenant with respect to minimum EBITDA appearing in the Credit Agreement and permit additional store closures;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. As used herein, all terms that are defined in the Credit Agreement shall have the same meanings herein.
2. Section 5.01(d) of the Credit Agreement is hereby amended by; (I) deleting the word “and” appearing immediately before subclause “(y)” in the sixth line of subsection (i) and inserting a comma in its place; (II) immediately before the semicolon appearing, at the end of subclause “(y)” in subsection (i). inserting “and (z) a report setting forth computations in reasonable detail satisfactory to the Agent demonstrating compliance with the provisions of Sections 6.03, 6.04, 6.05 and 6.10”; (III) deleting the word “and” appearing immediately before clause “(ii)” in the seventh line thereof and inserting a comma in its place; and (IV) adding the following clause (iii) at the end thereof; “and (iii) 30 days after the end of each fiscal month, a report in detail reasonably satisfactory to the Agent setting forth the cumulative Net Proceeds, received during the period from January 22, 2002 through the end of such month of sales and other dispositions of leasehold interests and other fixed assets referred to in Section 2.13(b);”.
4. Section 2.19 of the Credit Agreement is hereby amended by: (i). deleting the word “and” appearing therein and inserting a comma in its place; and (ii). inserting the following at the end thereof: “and that certain Fourth Amendment Fee Letter dated January 9, 2003”.
5. Item 13 of Schedule 6.11 to the Credit Agreement is hereby amended in its entirety to read as follows:
13. Any sale or other disposition of all or any of the inventory, fixtures, equipment real estate, leasehold and other related assets in connection with (x) prior to the Fourth Amendment Effective Date (as referred to below), up to 15% of the Borrower’s and the Guarantors’ current stores that may be dosed from time to time and (y) from and after the Fourth Amendment Effective Date (as defined in that certain Fourth Amendment to Revolving Credit and Guaranty Agreement dated as of January 17, 2003) up to an additional 432 of the Borrower’s and the Guarantors’ stores (and up to two distribution centers) existing on the Fourth Amendment Effective Date that may be closed from time to time.
6. The amendments set forth in this Amendment shall not become effective (the “Fourth Amendment Effective Date”) until the date on which this Amendment shall have been executed by the Borrower, the Guarantors, the Required Bank and the Agent, and the Agent shall have received evidence satisfactory to it of such execution, provided that notwithstanding the occurrence of the Fourth Amendment Effective Date, the effect of this Amendment shall terminate and be of no further force or effect if (x) on or before January 31, 2003, the Bankruptcy Court shall not have entered an order substantially in the form of Exhibit A hereto authorizing the terms of this Amendment and the payment no later than January 31, 2003 by the Borrower to the Agent for its own account of an arrangement fee in the amount heretofore agreed upon by the Borrower and the Agent and the payment no later than January 31, 2003 by the Borrower to the Agent, for the respective account of each Bank that has executed and delivered to the Agent a counterpart of this Amendment by not later then 5:00 p.m. (New York City time) on January 16, 2003, an amendment fee in an amount equal to 1/4 of 1% of such Bank’s Tranche A Commitment and/or Tranche B Credit-Linked Deposit on January 16, 2003, and (y) such arrangement fee and amendment fee shall not have been paid in cash to the Agent for its own account and the accounts of the Banks referred to above, respectively, within one Business Day after entry of the order referred to above.
7. The Borrower and the Guarantors represent that as of December 31, 2002, the cumulative Net Proceeds received by them in connection with sales or other dispositions of leasehold interests and fixed assets contemplated by Section 2.13(b) of the Credit Agreement is in the amount of $53,077,832.
8. Except to the extent hereby amended, the Credit Agreement and each of the Loan Documents remain in full force and effect and are hereby ratified and affirmed.
9. The Borrower agrees that its obligations set forth in Section 10.05 of the Credit Agreement shall extend to the preparation, execution and delivery of this Amendment, including the reasonable fees and disbursements of special counsel to the. Agent.
10. This Amendment shall be limited precisely as written and shall not be deemed (a) to be a consent granted pursuant to, or a waiver or modification of, any other term or condition of the Credit Agreement or any of the instruments or agreements referred to therein or (b) to prejudice any right or rights which the Agent or the Banks may now have or have in the future under or in connection with the Credit Agreement or any of the instruments or agreements referred to therein. Whenever the Credit Agreement is referred to in the Credit Agreement or any of the instruments, agreements or other documents or papers executed or delivered in connection therewith, such reference shall be deemed to mean the Credit Agreement as modified by this Amendment.
11. This Amendment may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument.
12. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.
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