In re: Kmart Corporation, et al., Chapter 11, Debtors

No. 02-B02474 (Jointly Administered)United States Bankruptcy Court, N.D. Illinois, Eastern Division
October 15, 2002

ORDER APPROVING MOTION FOR ORDER PURSUANT TO 11 U.S.C. § 363 AND 365 AND FED. R. BANKR. P. 6006 AUTHORIZING DEBTORS TO SELL, ASSUME AND ASSIGN CERTAIN UNEXPIRED REAL PROPERTY LEASE TO BURLINGTON COAT FACTORY WAREHOUSE OF HIALEAH, INC. STORE NO. 1462/REH NO. 6775)
SUSAN P. SONDERBY, United States Bankruptcy Judge

Upon the motion dated October 10, 2002 (the “Motion”), wherein Kmart Corporation (“Kmart”) and certain of its domestic subsidiaries and affiliates, debtors and debtors-in-possession in the above-captioned cases (collectively, the “Debtors”), moved this Court for entry of an order, pursuant to 11 U.S.C. § 363 and 365 and Rule 6006 of the Federal Rules of Bankruptcy Procedure, authorizing the Debtors to assume, sell and assign to Burlington Coat Factory Warehouse of Hialeah, Inc. and its successors and assigns (“Assignee”), all of the Debtors’ right, title and interest (the “Assignment”) in and to (i) that certain real estate consisting, inter alia, of certain real property described by the legal description attached to this Order as Exhibit A, together with an approximately 128,048 square foot two-story building with outdoor selling facilities and storage area located thereon which is currently occupied by Assignee, located at West 49th Street between West 6th Avenue and West 4th Avenue in Hialeah, Dade County, Florida, Store No. 1462, Real Estate Holding No. 6775 (collectively, the “Premises”); (ii) that certain Master Lease (as defined below); and (iii) that certain Sublease (as defined below); all pursuant to that certain Lease Sale, Assignment and Assumption Agreement dated as of September 11, 2002, attached hereto as Exhibit B-1 (the “Lease Sale, Assignment and Assumption Agreement”) and that certain Sale, Assignment and Assumption of Lease, dated as of September 11, 2002 attached hereto as Exhibit B-2 (collectively, the “Assignment Agreement”), free and clear of all liens, claims and encumbrances pursuant to Section 363(f) of the Bankruptcy Code; the Court having reviewed the Motion and having heard the statements of counsel in support of the relief requested therein at a hearing before the Court on October 30, 2002 (the “Approval Hearing”); all parties in interest having been heard, or having had the opportunity to be heard at the Approval Hearing regarding the approval of the Assignment Agreement; 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; all parties in interest having been heard or having had the opportunity to be heard; 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 Leases (as defined below) and that no other or further notice of the Motion or of the entry of this Order need be provided; and upon the entire record herein,

IT APPEARING TO THE COURT AS FOLLOWS:

A. The Court has jurisdiction over the Motion 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.

B. As evidenced by the affidavits of service previously filed with the Court, and based on the representations of counsel, (i) proper, timely, adequate and sufficient notice of the Motion, the Assignment Agreement and the Approval Hearing has been provided to all parties to the Lcases, and was otherwise provided in accordance with §§ 102(1) and 363 of the Bankruptcy Code and Bankruptcy Rules 2002, 6004 a and 9O14, (ii) such notice was good and sufficient, and appropriate under the particular circumstances, and (iii) no other or further notice of the Motion, the Assignment Agreement and the Approval 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.

C. By lease dated August 4, 1969, a memorandum of which is recorded at Book 12934, Page 306 of the Public Records of Dade County, Florida (the “Official Records”), Clifford Russell, joined by his wife, Patricia Russell, S.W. Raulerson, single man, Bernard Schoninger, joined by his wife Alexandra Schoninger, trading as “Palm Springs Investment Co.” (collectively, “Palm Springs lnvestment”), as landlord, leased the Premises to Almart Stores, Inc. (“Almart”), as tenant, who assigned its interest in the lease to Montgomery Ward Co. (“MW”) by Assignment dated April 14, 1974 and recorded at Book 8652, Page 819 of the Official Records. The lease was amended by Supplemental Agreement dated April 15, 1974 between Palm Springs Investment and MW, and MW assigned its interest in the lease to Kmart by Assignment and Assumption of Lease dated June 24, 1986 and recorded at Book 12934, Page 368 of the Official Records. The lease was subsequently amended by Consent of Palm Springs Mile Associates Agreement dated April 20, 1988 between Phillips International Holding Corp., as agent for Palm Springs Mile Associates, Ltd, and Kmart By letter dated 1/16/01, Kmart extended the term of the lease for an additional 10 years, from 2/1/02 through 1/31/12. (As so amended and assigned, the “Master Lease”).

D. Kmart sublet the Premises to Assignee, as sablessee, by Sublease dated August 22, 1994 (the “Sublease”);

E. Intentionally Deleted.

F. Intentionally Deleted.

C. The Master Lease and the Sublease constitute property of the Debtors’ estates pursuant to Section 541(a) of the Bankruptcy Code.

H. The Master Lease and the Sublease, together with any easements, licenses, non-disturbance agreements, and agreements related to the use and occupancy of the Premises and any agreements related thereto, are identified in the schedule annexed to this Order as Exhibit C (collectively, the “Leases”), and are in full force and effect and have not been thither modified or amended, and the Debtors have validly exercised all rights to option, extension or renewal terms under the Leases with respect to which, as of the Assignment Date (as defined in the Assignment Agreement), the time for exercise has passed.

I. There are no outstanding monetary or non-monetary defaults by the Debtors, offsets or encumbrances which otherwise would allow the Landlord to terminate or modify the Master Lease or the Sublease, except as will be cured by the Debtors, payment in accordance with Section 365(b)(I)(A) of the Bankruptcy Code and pursuant to the terms of the Assignment Agreement.

J. The sale and assignment of the Debtors’ interest in the Premises and assignment of the Leases by the Debtors, and assumption of the obligations which arise after the closing thereunder by Assignee, all in accordance with the terms of the Assignment Agreement and this Order, are in the best interests of the Debtors, their estates and their creditors.

K. While the Court does not expressly decide the issue of whether the Premises is part of a “shopping center” within the meaning of Section 365
of the Bankruptcy Code, all of the so called “shopping center provisions” of the Bankruptcy Code have been satisfied in connection with the assumption and assignment of the Leases. As required by Section 365(b)(1)(C), Section 365(f)(2)(B) and Section 365(b)(3), if applicable, of the Bankruptcy Code, the Debtors and Assignee have provided adequate assurance of future performance of the tenant’s obligations under the Leases.

L. In connection with the opening and operation of a retail store at the Premises, Assignee and its sublessees are authorized to perform alterations and remodeling to the extent deemed necessary by Assignee to operate and utilize the Premises in accordance with the Leases and to replace and modify existing signage, notwithstanding any provision in the Leases to the contrary.

M. The terms and conditions of the Leases (including any related agreements) remain in full force and effect, except as expressly provided by this Order.

N. All of the applicable provisions under Section 365 of the Bankruptcy Code have been satisfied.

O. The terms of the conveyance of the Debtors’ interest in the Leases pursuant to the Assignment Agreement are the result of good faith and arm’s length negotiations between the parties, the Debtors have determined in the exercise of their sound and reasonable business judgment that the Leases should be assigned to Assignee and the consideration to be realized by the Debtors is fair and reasonable.

P. The Assignment Agreement was negotiated, proposed and entered into by the Debtors and Assignee without collusion and in good faith. It is the product of arm’ s length bargaining between sophisticated commercial entities represented by counsel. Assignee has not engaged in any action or inaction that would cause or permit the Assignment Agreement to be avoided under Section 363(n) of the Bankruptcy Code or any party to maintain an action for damages or other relief under Section 363(n) of the Bankruptcy Code. Assignee is a third-party purchaser unrelated to the Debtors. Assignee is a qualified purchaser of the Debtors’ leasehold interest in the Premises pursuant to Section 363 of the Bankruptcy Code, and its purchase from the Debtors is in good faith. Assignee is a good faith purchaser within the meaning of Section 363(m) of the Bankruptcy Code and is entitled to the protections thereof. Assignee will be acting in good faith within the meaning of Section 363(n) of the Bankruptcy Code in closing the transaction contemplated by the Assignment Agreement at any time after the entry of this Order, including immediately after its entry.

Q. The Assignment Agreement constitutes a valid and binding contract between the Debtors and Assignee, each having all of the corporate power and authority necessary to consummate the transactions contemplated by the Assignment Agreement.

R. All objections to the sale and assignment of the Leases pursuant to the Assignment Agreement have either been resolved, withdrawn or overruled by the Court after a hearing and opportunity to be heard.

S. The sale and assignment of the Leases pursuant to the Assignment Agreement is a reasonable and valid exercise of the Debtors’ business judgment and is otherwise appropriate under Section 363 of the Bankruptcy Code.

T. The Court has statutory authority to approve the transactions contemplated herein pursuant to Sections 105, 363, 365 and 1146(c) of the Bankruptcy Code and Bankruptcy Rules 2002, 6004 and 9014.

U. It is necessary and appropriate for the Court to retain jurisdiction to interpret and enforce the terms of this Order and to adjudicate, if necessary, any and all disputes concerning any provision hereof.

THEREFORE, THE RELIEF SHOULD BE AND IS GRANTED AS SET FORTH BELOW:

(a) The Debtors are authorized to enter into the Assignment Agreements and the terms of the Assignment Agreement (as may be subsequently modified in accordance with the terms of the Assignment Agreement) are hereby approved pursuant to Sections 105, 363, 365 and 1146(c) of the Bankruptcy Code. The terms of the Assignment Agreement are incorporated herein by reference.
(b) Subject to the terms of the Assignment Agreement the Debtors are hereby authorized and empowered to sell and assign all right, title and interest in the Premises and any appurtenant rights thereto (including without limitation any related agreements) to Assignee on the terms and subject to the conditions set forth in the Assignment Agreement, and such assumption, assignment, sale and transfer of the Leases for the Premises shall be in accordance with the terms and conditions of the Assignment Agreement and be deemed free and clear of all liens, claims (as that term is defined in Section 101(5) of the Bankruptcy Code), interests, encumbrances and other charges, including, without limitation, claims arising from or rights asserted under collective bargaining agreements, real estate taxes, rights of first refusal or option to purchase, assessments, and governmental imposition of liens of any and every nature (collectively, the “Liens”), pursuant to Sections 363(b) and (f) of the Bankruptcy Code, with all Liens (if any) to attach to the net proceeds of the sale, and Assignee shall be entitled to the full and free enjoyment and use of the Premises subject to the terms of the applicable Leases and this Order. There shall be no assumption of the Leases absent the concurrent assignment to Assignee.
(c) The Debtors and Assignee are authorized, empowered and directed to execute such documents and do such other things as may be reasonably necessary to implement and effectuate the Assignment Agreement. Payment of and objections to any stated cure amounts (and cure of other defaults, if any), shall be satisfied in full by the Debtors paying Landlord the cure amount (“Cure Amount”) upon consummation of the assumption and assignment of the Leases. The Debtors, Assignee and the Landlord shall cooperate to determine the Cure Amount. Any of the foregoing parties wishing to dispute the Cure Amount shall file a written objection setting forth the basis for the dispute and shall serve such objection on the other parties, such that such objection is filed and served so as to be received on or before November 14, 2002. Any disputes relating to the Cure Amount will be resolved by the Court at the Omnibus Hearing scheduled for November 19, 2002. Pursuant to Section 365(k) of the Bankruptcy Code, and effective as of Assignment Date (as defined in the Assignment Agreement), the Debtors shall have no further obligations under the Leases, including without limitation the payment of any other cure amounts. Assignee shall have no liability related to events, conditions and occurrences existing or occurring prior to the Assignment Date. Notwithstanding anything to the contrary contained herein, the Debtors’ decision to assume the Leases, however, remains subject to (i) resolution of the amount of any cure claims satisfactory to the Debtors in their sole discretion and (ii) satisfaction of any and all conditions as set forth in the Assignment Agreement.
(d) Upon the closing of the sale and assignment of the Leases, the Debtors and Assignee shall cooperate and execute such additional documents as may be reasonably required to effect the transaction contemplated hereby and by the Assignment Agreement.
(e) No amount payable (including the Cure Amount) with respect to a preassignment period shall be payable by Assignee and Assignee shall not be obligated to cure any non-monetary defaults, or matters or events which would constitute defaults under any of the Leases with the passage of time, giving of notice, or both, which existed as of the Assignment Date, except to the extent that Assignee would otherwise be obligated under the Sublease.
(f) Any portions of the Leases with respect to the Premises which purport to permit the Landlord to cancel the remaining term of any of the Leases if Debtors discontinue their use or operation of the Premises are void and of no force and effect, and shall not be enforceable against Assignee, its assignees and sublessees and the Landlord under the Master Lease shall not have the right to cancel or otherwise modify the Master Lease or increase the rent, assert any claim or impose any penalty by reason of such discontinuation, the Debtors’ cessation of operations, or the assignment of the Master Lease to Assignee.

(g) Intentionally Deleted.

(h) Assignee’s and its sublessees’ occupancy and use of the Premises for any lawful use(s), and/or the Assignee’s, its assignees’ and/or sublessees’ occupancy of the Premises for any lawful use(s) shall not constitute (i) a breach or default under the Leases or (ii) any other ground to terminate the Leases.
(i) Assignee is a good faith purchaser entitled to the protection of Section 363(m) of the Bankruptcy Code.
(j) Assignee is not, nor shall Assignee be deemed to be, a successor to the Debtors or their estates by reason of any theory of law or equity as a result of the consummation of the transactions contemplated in the Assignment Agreement or otherwise.
(k) No employee of the Debtors shall be deemed to be an employee of Assignee and Assignee shall not be deemed to be a joint employer, single employer, co-employer or successor employer with the Debtors or any liquidator designated by the Debtors by virtue of the Assignment Agreement or the performance thereof or the entry of this Order, and the assumption and assignment and the conveyance of the Premises shall not constitute an assumption, either expressed or implied, of any employment or collective bargaining obligations of the Debtors under any statute or common law.
(l) Assignee shall have no obligation to pay wages, severance pay, benefits (including, without limitation, contributions or payments on account of any under-funding with respect to any and all pension plans) or any other payment to employees of the Debtors or any liquidator retained by the Debtors. Assignee shall have no liability with respect to any collective bargaining agreement to which any Kmart entity is a party and relating to the Premises (including, without limitation, arising from or related to the rejection or other termination of any such agreement), and Assignee shall in no way be deemed a party to or assignee of any such agreement, and no employee of Assignee shall be deemed in any way covered by or a party to any such agreement, and all parties to any such agreement are hereby enjoined from asserting against Assignee any and all claims arising from or relating to such agreement.
(m) The Landlord shall not interfere with the transfer of occupancy to Assignee and, upon the reasonable request of Assignee and at Assignee’s expense, the Landlord shall execute and deliver any instruments, applications, consents or other documents which may be required by any public or quasi-public authority or other party or entity, for the purpose of obtaining any permits, approvals or other necessary documentation required for Assignee’s occupancy of the Premises or the Premises’ subdivision or any subleasing of any portion of the Premises by Assignee as contemplated under the Assignment Agreement and as permitted by this Order.
(n) Pursuant to Section 365(f) of the Bankruptcy Code, no section of the Leases that purports to prohibit, restrict or condition the Debtors’ assignment of the Leases shall have any force or effect with respect to the assignment authorized by this Order,
(o) The transfers contemplated by the Assignment Agreement, including but not limited to the transfer of the leasehold interests under the Leases, are hereby deemed exempt from state and local transfer taxes pursuant to 11 U.S.C. § 1146(c) or otherwise, and the recordation of any and all instruments (including any leases and amendments thereto) to evidence the transfers shall not be subject to transfer, recordation, stamp or similar tax.
(p) 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 the sale/assignment of the Leases pursuant to the Assignment Agreement. 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 Leases in the appropriate public records.
(q) All persons and entities, including, without limitation, all debt security holders, equity security holders, governmental, tax, and regulatory authorities, lenders, holders of bond debt and claims under guarantees to receive repayment of bond debt issues in connection with the financing of the Premises, trade and other creditors, that hold an interest of any kind or nature whatsoever against or in the Debtors, the Leases (whether legal or equitable, secured or unsecured, matured or unmatured, contingent or noncontingent, senior or subordinated), arising under or, out of in connection with or in any way relating to the Debtors, the Leases, the operation of the Debtors’ businesses prior to the Closing, or the transfer of the Leases to Assignee, hereby are and will be forever barred, estopped and permanently enjoined from asserting against Assignee and any designee, or sublessee their successors or assigns, their property, or the Leases, such persons’ or entities’ claims, causes of action or interest.
(r) The failure specifically to include any particular provisions of the Assignment Agreement in this Order shall not diminish or impair the effectiveness of such provision, it being the intent of the Court that the Assigmnent Agreement be authorized and approved in its entirety.
(s) The Court retains jurisdiction over the Debtors, Assignee and the Landlord with respect to the Premises and all parties asserting Liens in order to implement and effectuate the provisions of this Order and the Assignment Agreement.
(t) The provisions set forth in F.R.Bankr.P. 6004(g) and 6006(d) providing a 10-day stay pending possible appeal shall not apply to this Order.
(u) Any conclusions of law contained in the foregoing paragraphs which may be construed as findings of fact, shall be treated as findings of fact as if set forth above.

EXHIBIT A TO THE ORDER Legal Description of Land Coustituting the Premises EXHIBIT A
A portion of Tract “C,” “FIFTH ADDITION TO PALM SPRINGS SUBDIVISION SECTION FIVE”, according to tevlat thereof as recorded In Plat Book 70 at Page 95, of the Public Records of Miami-Dade Gounty Florida, being more particularly described as follows:

Commence at the Intersection of the South right-of-way line of West 4th Street (N.W. 103rd St.) as shown on that certain Right-of-Way Map, as recorded in P1at Book 80 at Page 53, of the Public Records of Miami-Dade County, Florida. and the West right-of-way line of West 4th Avenue (Red Road), as shown on the certain Right-of-Way Map, as recorded in Plat Book 85 at Page 70, of the Public Records of Miami-Dade County, Florida; thence South 0° `54’40” West, along said West right-of-way line, for 24.41 feet to the Point of Beginning of the parcel hereinafter described; thence continue South 0° 54’40” West, along the last mentioned course, for 598.45 feet; thence, North 87° 42’52” West for 165.00 feet, thence South 0° 55’11” West, for 155,00 feet; thence North 87 @deg; 42’52” West, for 1031.33 feet; thence South 0° 5’28” West, for 0.84 feet; thence North 89° 04’32” West, for 124.97 feet (last mentioned six courses being coincident with the boundaries of said Tract “C”); thence North 0° 55’28” East. along a boundary line of said Tract “C” end its Northerly prolongation, for 761,32 lest thence South 87° 43’14” East, along the Northerly boundary line of said tract “C” for 1295.58 feet to a point of curvature; thence Southeasterly and Southerty, elong a circular curve to the right, having a radius of 25.00 feet end a central angle of 80° 37’54” for an arc distance of 38.87 teotto the Point of Beginning. Lying end being In Section 1, Township 53 South, Range 40 East, City of Hialeah, Miami-Dade County, Florida.

EXHIBIT B Assignment Agreement
[EDITORS’ NOTE: THIS PAGE IS BLANK.]

Exhibit B-1 LEASE SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT THIS LEASE SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement) is made as of this 11th day of September 2002 between KMART CORPORATION,
a Michigan corporation having its office at 3100 W. Big Beaver Road, Troy, Michigan 48084-3163 (“Assignor”) and BURLINGTON COAT FACTORYWAREHOUSE 0F HIALEAH, INC., a Florida corporation having its office at 1830 Route 130, Burlington, New Jersey 08016-2995 (“Assignee”)

WITNESSETH WHEREAS, Palm Springs Mile Associates, Ltd., as successor in interest to the original landlord Clifford Russell, joined by his wife, Patricia Russell, S.W. Raulerson, single man, Bernard Schoninger, joined by his wife Alexandra Schoninger, trading as “Palm Springs Investment Co. (unincorporated) (“Master Landlord”) and Assignor, as successor in interest to Almart Stores, Inc. the original tenant, entered into that certain lease dated August 4, 1969 (as the same has been amended, modified, supplemented or extended as set forth in Paragraph C of the Order (hereinafter defined), the “Master Lease”), whereby Assignor leases from Master Landlord certain real property known as Kmart Store No. 1462/REH No. 6775 located on the real property described in Exhibit A to the Assignment (hereinafter defined), together with the buildings and improvements thereon, as more particularly described in the Master Lease (collectively, the “Premises”); and

WHEREAS, Assignor is the owner end holder of the sublandlord’s interest in and to that certain Sublease dated August 22, 1994, between Assignor and Assignee (as the same has been amended, modified, supplemented or extended as set forth in Paragraph D of the Order, the “Burlington Sublease”), whereby Assignor subleases to Assignee a portion of the Premises; and

WHEREAS, the Premises are benefited and encumbered by certain Easements described in Exhibit C to the Order (collectively with the Master Lease and the Burlington Sublease, and Assignor’s rights in all other restrictions, covenants, easements and agreements of record related to the Premises arid Assignor’s interest therein, the “Leases”); and

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, subject to the terms and conditions of this Agreement, Assignor desires to assign and transfer all of its right, title and interest in the Leases and the estates created thereby to Assignee and Assignee desires to purchase and accept such assignment and assume all rights, duties and obligations of the Assignor under the Leases arising on and after the Assignment Date (as hereinafter defined), free and clear of all liens, claims and encumbrances pursuant to Sections 363 and 365 of the Bankruptcy Code.

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. Conditions to Assignment. Assignor and Assignee have executed (i) the Sale, Assignment and Assumption of Leases attached hereto as Exhibit A (the “Assignment”); (ii) the Quitclaim Bill of Sale and Assignment of Rights attached hereto as Exhibit B; and (iii) the FIRPTA Affidavit attached hereto as Exhibit C (i), (ii) and (iii) collectively, the “Transaction Documents”) and Assignor and Assignee acknowledge and agree that the Transaction Documents shall be deemed delivered and shall become effective only upon the satisfaction of the conditions set forth in this Paragraph 1;

(a) the Bankruptcy Court shall have approved of the sale, assignment and assumption of the Leases, following notice to creditors and panics in interest, including but not limited to the non-debtor panics to the Leases, under the Bankruptcy Code and the rules promulgated thereunder, by entry of an order approving the Assignment on the docket of the Bankruptcy Court substantially in the form attached hereto as Exhibit D and incorporated by reference, which shall not be subject to stay or injunction (the “Approval Order), all as set forth more fully in the motion filed with the Bankruptcy Court to approve this Assignment under Sections 363, 365 and 1146(c) of the Bankruptcy Code;

(b) Assignor, at its sole cost, having (I) cured any pro-petition default of Assignor in base rental or additional rental payments arising under the Leases sad outstanding as of the Assignment Date and required to be paid under Sections 363 and 365 of the Bankruptcy Code; and (II) cured any and all other defaults of Assignor with respect to the Leases as required to be cured pursuant to Sections 363 and 365 of the Bankruptcy Code so that such Assigned Agreements may he assigned to Assignee in accordance with the provisions of Sections 363 and 365 of the Bankruptcy Code; provided, however, that Assignee shall be solely responsible for the payment ofany cure amounts that are attributable to Assignee’s Failure to perform its obligations under the Burlington Sublease;

(c) First American Title Insuranec Company shall commit to issue a policy of title insurance insuring Assignee of good and marketable leasehold title under the Master Lease (the premium and any other costs for which Assignee shall pay); and

(d) No casualty or condemnation shall have occurred with respect to the Premises between the date hereof and the Assignment Date.

2. Adjustments. At closing, (a) Assignee shall pay to Assignor any amounts Assignee owes Assignor through the Assignment Date pursuant to the Burlinton Sublease, which obligation shall not survive the closing and (b) Assignor shall pay to Assignee any amounts Assignee has prepaid wider the Burlington Sublease allocable to any period from and after the Assignment Date, which obligation shall not survive the closing.

3. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state where the Premises is located.

4. Assignment Date. The “Assignment Date” shall mean the day that is the later of (i) two (2) business days following the date the Approval Order is entered on the docket of the Bankruptcy Court and all condition; set forth in Paragraph 1 hereto have been satisfied and (ii) two (2) business days following the lift of any stay and/or injunction affecting the Approval Order and all conditions set forth in Paragraph 1 hereto have been satisfied.

5. Counterparts. This Agreement 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 Agreement to present any copy, copies or facsimiles signed by tha parties to be charged.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first written above.

WITNESS ASSIGNOR
____________________ KMART CORPORATION
Printed Name: ____________________ By:______________ Printed Name:

WITNESS ASSIGNEE:

___________________ BURLINGTON COAT FACTORYPrinted Name: WAREHOUSE OF HIALEAH, INC.
___________________ By:________________ Printed Name:

EXHIBIT A LEASE SALE ASSIGNMENT AND ASSUMPTION AGREEMENT
AFTER RECORDING MAIL TO:

First American Title Insurance Co. 633 3rd Avenue — 16th Floor New York, N.Y. 10017 Attention: Debra M. Hochman

SALE, ASSIGNMENT AND ASSUMPTION OF LEASESTHIS SALE, ASSIGNMENT AND ASSUMPTION OF LEASES (this “Assignment”) is made as of this _____ day of _____________, 200__ (the “Assignment Date”) between KMART CORPORATION, a Michigan corporation, having its office at 3100 W. Big Beaver Road, Troy, Michigan 48084-3163 (“Assignor”) and BURLINGTON COAT FACTORY WAREHOUSE OF HIALEAH, INC., a Florida corporation having its office at 1830 Route 130, Burlington, New Jersey O801-2995 (“Assignee”).

WITNESSETH WHEREAS, Palm Springs Mile Associates, Ltd, as successor in interest to the original landlord Clifford Russell, joined by his wife, Patricia Russell, S.W. Raulerson, single man, Bernard Schoninger, joined by his wife Alexandra Schoninger, trading as “Palm Springs Investment Co.” (unincorporated) (“Master Landlord”) and Assignor. as successor in interest to Almart Stores, Inc., the original tenant, entered into that certain lease dated August 4, 1969 (as the same has beca amended, modified, supplemented or extended as set forth in Paragraph C of the Order (hereinafter defined). the “Master Lease”), whereby Assignor leases from Master Landlord certain real property known as Kmart Store No. 1462/REH No. 6775 located on the real property described in Exhibit A to the Assignment (hereinafter defined) together with the buildings and improvements thereon, as more particularly described in the Master Lease (collectively, the “Premises”); and

WHEREAS. Assignor is the owncr and holder of the sublandlord’s interest in and to that certain Sublease dated August 22, 1994, between Assignor and Assignee (as the same has been amended, modified. supplemented
extended as set forth in Paragraph D of the Order, the “Burlington Sublease”), whereby Assignor subleases to Assignee a portion of the Premises; and

WHEREAS, the Premises are benefited and encumbered by certain Easements described Exhibit C to the Order (collectively with the Master Lease and the Burlington Sublease, and Assignor’s rights in all other restrictions, covenants, easements and agreements of record related to the Premises and Assignor’s interest therein, the “Leases”); and

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”).

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 Leases by Assignor. Assignor hereby assumes the Leases pursuant to 11 U.S.C. § 365.

2. Assignment of Leases. Assignor hereby sells, assigns, wanders, and acts over unto Assignee, its successors and assigns, all of Assignor’s right. title and interest in, to and under the Leases, free and clear of all liens, claims and cuncumbrances pursuant to Sections 363 and 365 of the Bankruptcy Code.

3. Assumption of Leasehold Obligations. Assignee hereby accepts the foregoing assignment and covenants with Assignor, that, on and after the date hereof, 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 leases, which, by the respective terms therein, are imposed upon Assignor, as tenant, including, without limitations, the payment of any and all rents due thereunder.

4. Ratification of Leases. Assignor and Assignee hereby ratify, reafirm and adopt and agree that the Leases 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 Leases and relating to the period subsequent to the date hereof.

6. Governing Law — This Assignment shall be governed by and construed in accordance with the laws of the state what the Premises is located

7. 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 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.

WITNESS ASSIGNOR

___________________________ KMART CORPORATION
Printed Name:

___________________________ By:______________________ Printed Name

WITNESS ASSIGNEE:

___________________________ BURLINGTON COAT FACTORYPrinted Name: WAREHOUSE OF HIALEAH, INC.

___________________________ By:__________________________ Printed Name

STATE OF ) )SS. COUNTY OF )

On the day ___ of _______ in the year 2002, before me, the undersigned, a notary public 1cm and for said State, personally appeared personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his capacity, and that by his/her signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument. ______________________ Notary Public

STATE OF ) )SS COUNTY OF )

On the ___ day of _________ in the year 2002 before me, the undersigned, a notary public in and for said State, personally appeared personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his capacity and that by his/her signature on the instrument, the individual. or the person upon behalf of which the individual acted, executed the instrument.

______________________ Notary Public

EXHIBIT A TO SALE, ASSIGNMENT AND ASSUMPTION OF LEASES [Legal Description]
[EDITORS’ NOTE: THIS PAGE IS BLANK.]

EXHIBIT B LEASE SALE, ASSiGNMENT AND ASSUMPTION AGREEMENT QUITCLAIM BILL OF SALE AND ASSIGNMENT OF RIGHTS
For good and valuable consideration in hand paid, the receipt and sufficiency of which are hereby acknowledged, KMART CORPORATION, a Michigan corporation (“Seller”), hereby remises, releases, quitclaims and forever discharges (to the extent assignable or transferable) toBURLINGTON COAT FACTORY WAREHOUSE OF HIALEAH, INC., a Florida corporation (“Buyer”) all of Seller’s right, title and interest, if any, in the following:

(i) all tangible personal property presently upon or related to the real property described in Exhibit A attached hereto (the “Site”). including without limitation all fixtures, machinery, equipment and other articles of personal property attached or appurtenant to the Site and/or the building and improvements located thereon, or used in connection therewith, owned by Seller and located at the Site;

(ii) all licenses, permits and other “written authorizations (collectively, the “Permits”) required for the use, operation or ownership of the Site, the building and improvements located Thereon, and all personal property located thereat, or now or hereafter issued in connection with the demolition, construction, development, occupation and/or operation of the building and other improvements located at the Site;

(iii) all contract rights, guaranties and warranties of any nature relating to the Site, the building and other improvements thereon and the personalty located thereat;

(iv) all books, records and files relating to the Site and the building and improvements located thereon and the use and operation thereof, and

(v) all architects’, engineers’. surveyors’ and other real estate professionals’ plans. specifications, certifications, contracts, reports, data or other technical descriptions, reports or audits relating to the Site, the building and improvements located thereon (including without limitation a) environmental, structural and mechanical inspection reports).

The foregoing shall be referred to herein collectively as the “Personal Property.”

Seller hereby irrevocably constitutes and appoints Buyer with full power of substitution for Seller. and in its name, place and stead, to demand and enforce payment and performance of any and all obligations, claims and demands of every conceivable kind included among the Personal Property; to demand, receive and enjoy the Personal Property; to give receipts and releases in respect to the same; to institute, prosecute. defend and compromise any and all proceedings at law, in equity, or otherwise, which Buyer may deem desirable in order to collect, assert, enforce, defend or enjoy the benefit of any claim, demand, right, title or interest of every conceivable kind with respect to the Personal Property; and to do any and all such acts und things in connection therewith as Buyer shall deem desirable. Seller hereby declaim that die appointment of Buyer so made, and any and all powers so granted to it, are coupled with an interest, shall be irrevocable by Seller, and shall survive its dissolution or liquidation;

This Bill of Sale shall be binding upon and enforceable against Seller, its successors end assigns.

This Bill of Sale shall be governed by and construed in accordance with the laws of the State in which the Site is located.

IN WITNESS WHEREOF. intending to be legally bound hereby, Seller has duly executed and delivered this Bill of Sale of the day first above written.

WITNESS
__________________________ KMART CORPORATION
Printed Name: __________________________ Printed Name: By:_________________

EXHIBIT A QUITCLAIM BILL OF SALE AND ASSIGNMENT OF RIGHTS [LEGAL DESCRIPTION OF SITE]
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EXHIBIT C LEASE SALE. ASS1GNMENT AND ASSUMPTION AGREEMENT FIRPTA Affidavit
Section 1445 of the Internal Revenue Code povidcs that a transferee of U.S. real property interest must withold tax if the transferor is a foreign person. To inform BURLINGTON COAT FACTORY WAREHOUSE OF HIALEAH,INC. (‘Assignee”) that withholding of tax is not required upon the disposition of its interest in the leases, subleases and other property described in that certain Sale, Assignment and Assumption of Leases dated September___, 2002 between KMART CORPORATION and Assignee, the undersigned hereby certifies the following on behalf of KMARTCORPORATION (“Assignor”):

1. Assignor is not a foreign corporation, foreign partnership. foreign trust or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations)

2. Assignor’s U.S. employer identification number is _______________.

3. Assigner’s principal business office address is 3100 W. Big Beaver Road, Troy, Michigan 48084-3163.

4. Assignor understands that this Certification may be disclosed to the Internal Revenue Service by Assignee and that any false statement contained herein could be punished by fine, imprisonment, or both.

Under penalties of perjury I declare that I have examined this Certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of Assignor

WITNESS
_____________________________ KMART CORPORATION
Printed Name: By:_______________________ _____________________________ Printed Name:

Sworn to and subscribed before me this day of___________ 2002.

Notary Public My Commission Expires:

EXHIBIT C TO THE ORDER LEASES
Those documents comprising the Master Lease, as described in Paragraph C;

Those documents comprising the Sublease as deseribed in Paragraph D;

Declaration of Easement by Palm Springs Mile Associates, Ltd. recorded April 16, 1993 in Book 15881 Page 3796 Miami Dade County Records;

Consent by Mortgagee and Subordination, Non-Disturbance and Attornment Agreement by State of Wisconsin Investment Board recorded June 15, 1986 in Book 12934 Page 373; and

Subordination. Non-Disturbance and Attornment Agreement between Kmart Corporation, f/k/a S.S. Kieage Company, and First Union National Bank of North Carolina recorded January 6, 1998 in Book 17931 Page 3395.