IN RE SERVICE MERCHANDISE COMPANY, INC. (Bankr.M.D.Tenn. 2002)

In Re: SERVICE MERCHANDISE COMPANY, INC., et al., Chapter 11, Debtors.

Case No. 399-02649, Jointly AdministeredUnited States Bankruptcy Court, M.D. Tennessee, Nashville Division.
October 31, 2002

Paul G. Jennings, Beth A. Dunning, BASS, BERRY SIMS PLC, Nashville, TN; John Wm. Butler, Jr., George N. Panagakis, SKADDEN, ARPS, SLATE, MEAGHER FLOM (ILLINOIS) Chicago, IL, for Debtors and Debtors-in-Possession.

John H. Rowland, Baker Donelson Bearman Caldwell Commerce Center, Nashville, TN, for Hawley Management, Inc.

Samuel K. Crocker, Nashville, Tennessee; Matthew J. Botica, Daniel J. McGuire, WINSTON STRAWN, Chicago, IL, for KLA/SM, LLC.

AGREED ORDER RESOLVING OBJECTION OF HAWLEY MANAGEMENT, INC. TO DEBTORS’ NOTICE OF PROPOSED ASSIGNMENT
GEORGE C. PAINE II, United States Bankruptcy Judge

This matter having come before the Court on the Objection of Hawley Management, Inc. (the “Landlord”), as landlord under that certain Lease dated May 5, 1972 between Landlord and Supermarkets General Corporation (assignor to Service Merchandise Company, Inc.), as tenant (as modified, the “Lease”), dated September 6, 2002 (the “Objection”) (Docket No. 7556) to the September 27, 2002 Lease Notice proposing to transfer the property known as the Debtors’ Store No. 820 at the Berkshire Shopping Center in Dadbury, Connecticut (the “Property”) to SM Newco Danbury, LLC (the “Designee”) sent pursuant to this Court’s March 16, 2002 Order Pursuant to 11 U.S.C. § 363 and Bankruptcy Rule 6004(A) Authorizing and Approving the Sale of Designation Rights with Respect to Substantially All of the Debtors’ Real Estate Assets; and (B) Granting Related Relief (the “Order”);[1] and the parties having agreed, as signified by the signatures of counsel below, to a resolution of the issues raised in the Objection; and the Court being satisfied that the relief herein is appropriate under the circumstances; and the court being otherwise sufficiently advised,

IT IS HEREBY ORDERED THAT:

1. The Objection is hereby withdrawn.

2. The Stipulation among the Designation Rights Purchaser, Landlord, and the Debtors dated March 14, 2002 concerning the property shall remain in full force and effect following the assignment of the Lease to the Designee, including without limitation Landlord’s reservation of rights to object under Section 365(b) of the Bankruptcy Code to any proposed assignment of the Lease to an end user as provided in Paragraph 1 of such Stipulations.

[1] All initially capitalized terms used, but not defined, herein shall have the meanings ascribed to such terms in the Order or the Designation Rights Agreement, as applicable. Attached as Exhibit I to the Order is that certain Asset Purchase Agreement dated as of March 4, 2002 (the “Designation Rights Agreement”) by and among Service Merchandise Company, Inc., a Tennessee corporation, and each of the affiliated entities listed on “Exhibit A” to the Designation Rights Agreement (collectively, “Debtors”) and KLA/SM, L.L.C., a Delaware limited company (“Designation Rights Purchaser”).