SUSAN PIERSON SONDERBY, United States Bankruptcy Judge
In accordance with the Order (A) Establishing Bidding Procedures In Connection With the Sale of Certain Leases Including, Without Limitation, Termination Fee Provisions, (B) Approving the Form and Manner of Notice of Sale. (C) Approving Forms of Purchase Agreement and Termination Agreement, (D) Setting a Hearing Date to Consider Approval of the Sale, and (E) Granting Related Relief (Docket No. 2978) and the Order Approving Designation Rights Agreement and Related Relief (Docket No. 4653), and upon the agreement of Kmart Corporation and certain of its domestic subsidiaries and affiliates, debtors and debtors-in-possession in the above-captioned cases (the "Debtors"), Kimart, L.P. ("Kimart"), the assignee of the joint venture comprised of Kimco Realty Corporation, Schottenstein Stores Corporation and Klaff Realty, LP, and James and Barbara Sampson Family Trust ("Landlord");
1. The lease termination agreement, dated as of April 7, 2003, by and between Kmart Corporation, Landlord and Kimart, attached hereto asExhibit A (the "Termination Agreement"), is approved, and the Debtors are authorized to implement the transactions set forth therein.
2. The Court shall retain exclusive jurisdiction to resolve any dispute arising from the matters set forth herein. The dispute as to cure claims under the Lease in the amount set forth on Schedule 1 attached hereto shall be set for status at the May 30, 2003 omnibus hearing.
3. To the extent that this Order is inconsistent with any prior order or pleading with respect to this matter, the terms of this Order shall govern.
4. Notwithstanding anything to the contrary in the Federal Rules of Bankruptcy Procedure, this Order shall take effect immediately upon being signed and entered.
5. The transactions contemplated by the Termination Agreement were negotiated by the parties in good faith and are entitled to the full protections of section 363(m) of the Bankruptcy Code. EXHIBIT 1 LEASE TERMINATION AGREEMENT THIS LEASE TERMINATION AGREEMENT (this "Agreement") is made as of this ____ day of April, 2003, by and among the JAMES AND BARBARA SAMPSON FAMILY TRUST dated July 21, 1982 ("Landlord"), KMART CORPORATION, a Michigan corporation ( "Tenant"), and KIMART, L.P., a Delaware limited partnership ( "Kimart"). WITNESSETH WHEREAS, Landlord, as ultimate successor in interest to EGS of Alabama, a California general partnership, and Tenant, as ultimate successor in interest to Kmart Enterprises of Alabama, Inc., are parties to a certain lease dated November 14, 1977 (as the same may have been amended from time to time, and together with any and all other agreements affecting the Premises, the "Lease"), covering certain premises known as Kmart Store No. 3356 located in Birmingham, Alabama, and more particularly described in the Lease (the "Premises"); and WHEREAS, on January 22, 2002, Tenant 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 "Code"), in the United States Bankruptcy Court for the Northern District of Illinois (the " Bankruptcy Court"); and WHEREAS, this Agreement is being entered into in accordance with, pursuant to the authority granted by, and subject to all of the terms and provisions of that certain order entered by the Bankruptcy Court on June 28, 2002 (the "Designation Rights Order"), which Designation Rights Order, among other things, authorized and approved that certain Designation Rights Agreement dated as of June 7, 2002 (the "Designation Rights Agreement") between Tenant and certain of its affiliates and a Joint Venture comprised of Kimco Realty Corporation, Schottenstein Stores Corporation and Klaff Realty, LP, or their affiliates (collectively, "Kimco"); and WHEREAS, Kimco assigned its rights and obligations pursuant to the Designation Rights Agreement to Kimart pursuant to that certain Assignment and Assumption Agreement dated as of July 1, 2002; and WHEREAS, except as otherwise provided herein, and subject to the conditions set forth herein including, without limitation the payment of the Termination Fee (hereafter defined), the parties desire to terminate the Lease, effective as of March 31, 2003 (the "Termination Date"), and release and discharge each other from any and all obligations and liability under the Lease. NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby covenant and agree as follows: 1. Termination. The Lease shall terminate effective as of the Termination Date and Tenant shall, on or before the Termination Date, vacate the Premises. As of the Termination Date, Tenant hereby gives, grants and surrenders unto Landlord all of Tenant's right, title and interest in and to the Lease and the Premises, and Landlord hereby accepts such surrender. Except as otherwise provided herein, each of the parties hereto acknowledge performance of all obligations of the other party under this Lease or otherwise in connection with the Premises through and including the date of this Agreement, and agree that, from and after the Termination Date, the Lease and all rights and obligations of the parties thereunder shall be deemed to have expired and terminated as fully and completely and with the same force and effect as if such date were the expiration date set forth in the Lease. In addition, any and all fights and obligations of' the parties which may have arisen in connection with the Premises shall be deemed to have expired and terminated as of the Termination Date. 2. Condition of Premises. Landlord agrees to accept on the Termination Date the Premises in their then "AS IS" and "WHERE IS" physical and environmental condition, free and clear of all liens resulting from any act or omission of Tenant. Landlord acknowledges and agrees that neither Tenant nor its employees or agents has made any express representation or warranty regarding the condition of the Premises. Landlord further agrees that, notwithstanding any provision to the contrary contained in the Lease, Tenant shall have no obligation under the Lease or this Agreement to restore the Premises to any condition which existed prior to the Termination Date, nor to remove any additions or alterations to the Premises. This Section 2 shall survive the termination of the Lease and the performance of this Agreement. Notwithstanding the foregoing, Tenant shall have the right, but not the obligation, to remove by sale or otherwise prior to the Termination Date any trade fixtures, signs and other personal property of Tenant including, without limitation, track lights, track fixtures, modular wall systems and hardware, portable wood fixtures, counters, shelving, showcases, mirrors and other movable personal property, external signage and any other items that Tenant is permitted to remove under the Lease. 3. Right to "Go Dark" and Conduct GOB Sale; Post-Petition Rent. Notwithstanding anything to the contrary contained in the Lease including, without limitation, any covenant to operate continuously or not "go dark," Tenant may discontinue its operations at the Premises prior to the Termination Date. Notwithstanding anything to the contrary contained in the Lease, Tenant shall have the right to conduct a "going out of business" or similar sale at the Premises at any time prior to the Termination Date in accordance with the terms and conditions of that certain Order (A) Authorizing the Debtors and/or Their Agent to Conduct Store Closing Sales Pursuant to Sections 105 and 363 of the Bankruptcy Code, (B) Authorizing Debtors to Enter into Agency Agreement with Store Closing Agent to Conduct Store Closing Sales, and (C) Granting Other Relief entered March 20, 2002. 4. Bankruptcy Court Approval. This Agreement is expressly conditioned upon, and subject to, Bankruptcy Court approval ( "Bankruptcy Court Approval"). 5. Termination Fee. In consideration of each party's entering into this Agreement, Landlord agrees to pay to Kimart the sum of $1,500,000 (the "Termination Fee"). The Termination Fee shall be paid to Kimart on the date (We "Closing Date") which is the later to occur of (i) the date which is one (1) business day after Bankruptcy Court Approval or (ii) April 30. 2003. Notwithstanding anything contained in this Agreement Tenant's and Kimart's respective obligations under this Agreement, if any, and the effectiveness of the termination of the Lease as of the Termination Date as provided for in this Agreement are expressly conditioned upon, and subject to, the payment by Landlord to Kimart of the Termination Fee as and when required pursuant to this Section 5. Notwithstanding the foregoing, each of the following amounts shall be set off and credited against the amount of the Termination Fee payable by Landlord (collectively, the "Credit Items"): (i) rent under the Lease for March, 2003 which was payable in arrears on April 1, 2003 in the amount of $15,571.83 and (ii) a real estate broker's commission payable to Eason, Graham Sanders, Inc. (the "Broker") in the amount of $30,000 (which amount Landlord agrees it shall remit to the Broker on or promptly after the Closing Date), provided, however that upon such set off and credit of the Credit Items against the Termination Fee, any obligations of either Kimart or Tenant to pay the Credit Items to Landlord or the Broker, whether arising under the Lease or otherwise, shall be deemed satisfied in full. 6. Payment of Prepaid or Unpaid Amounts. Any prepaid rents, common area maintenance fees, merchants' association fees, real estate taxes, utility expenses or any other amounts prepaid by Tenant pursuant to the terms of the Lease or otherwise in connection with the Premises shall be prorated as of the Termination Date and, on or prior to the Closing Date, Landlord shall pay to Tenant such amounts allocable to the period after the Termination Date. Any unpaid postpetition rents, common area maintenance fees, merchants' association fees, real estate taxes, utility expenses or any other amounts which are payable by Tenant to Landlord pursuant to the terms of the Lease or otherwise in connection with the Premises (other than any such amounts included in the Credit Items provided for in Section 5, above) shall be prorated as of the Termination Date and, on or prior to the Closing Date, Tenant shall pay to Landlord such amounts allocable to the period prior to the Termination Date. The parties acknowledge that neither Landlord nor Tenant is waiving any rights with regard to pre-petition rents, common area maintenance fees, merchants association fees, real estate taxes, utility expenses, or other amounts which may be payable by Tenant to Landlord pursuant to the terms of the Lease. The determination of responsibility for such amounts is reserved to the Bankruptcy Court for treatment as a cure claim subject to the Order (A) Establishing Bidding Procedures in Connection with the Sale of Certain Leases Including, without Limitation, Termination Fee Provisions, (B) Approving the Form and Manner of Notice of Sale, (C) Approving Forms of Purchase Agreement and Termination Agreement, (D) Setting a Hearing Date to Consider Approval of the Sale, and (E) Granting Related Relief (Docket No. 2978). Amounts payable either by Landlord to Tenant or by Tenant to Landlord pursuant to this Section 6 shall be paid directly by the applicable payor to the applicable payee and shall not be set off against or deducted from the Termination Fee. 7. Representations and Warranties. Each of the parties represents and warrants to the other that (i) it has not assigned or transferred any of its respective rights under the Lease to any other party except to the extent of the DRA and (ii) it has the corporate power and authority to execute and deliver this Agreement and such other documents contemplated by this Agreement without the consent of its mortgagee(s), if any, or any other third party. 8. Release. As of the Termination Date, except as to the obligations of Tenant pursuant to this Agreement or the matters specifically reserved for disposition by the Bankruptcy Court pursuant to Section 6, above, Landlord hereby releases and discharges Tenant and Kimart and their respective successors and assigns of and from all manner of actions, causes of action, suits, debts, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, controversies, agreements, promises, variances, trespasses, damages, judgments, claims and demands whatsoever, in law or in equity which Landlord ever had, now has or hereafter can, shall or may have against Tenant or Kimart or their successors or assigns for, upon or by reason of any matter, cause or thing whatsoever relating to or arising out of the Lease, this Agreement or the Premises including, without limitation, any and all lease rejection claims (whether under Section 502 of the Code or otherwise), administrative expense claims, or claims relating to Tenant's prepetition or postpetition use and occupancy of the Premises. To the extent Landlord has filed, or does file any proof(s) of claim with respect to the Lease and/or the Premises, Landlord hereby consents to the expungement of such claims, with prejudice. 9. Successors-In-Interest/Governing Law. This Agreement shall be binding upon and shall inure to the benefit of each party and its respective successors and assigns and shall be governed by and construed in accordance with the laws of the state where the Premises are located. 10. Entire Agreement/Modifications. This Agreement, and any agreement and/or Instruments delivered in connection herewith, contain the entire agreement between the parties hereto and except as otherwise specifically set forth herein, supersede all prior agreements and undertakings between the parties hereto or any of them or any of their affiliates relating to the subject matter hereof No modification, amendment, waiver or release of any provision of this Agreement or of any right, obligation, claim or cause of action arising hereunder shall be valid or binding for any purpose whatsoever unless in writing and duly executed by the party against whom the same is sought to be asserted. 11. Counterparts; Facsimile Signature. This Agreement may be executed in one or more counterparts, each of which shall be deemed art original, but all of which together shall constitute one and the same instrument. This Agreement may be executed and delivered by means of facsimile transmission and facsimile signatures of this Agreement shall be deemed binding as original signatures. 12. Severability. Should any provision of this Agreement be declared invalid or unenforceable, whether in whole or in part, by any court of competent jurisdiction, the remaining provisions and/or portions of the affected provisions which remain valid or enforceable shall not be affected thereby. 13. Discharge of Memorandum. If the parties have previously executed and recorded a memorandum of the Lease, upon Bankruptcy Court Approval, Tenant shall execute and acknowledge a recordable Termination of Lease in the form attached hereto as Exhibit A on or prior to the Closing Date. Landlord, at its sole cost and expense, shall have the right to cause the Termination of Lease to be filed or recorded in the applicable recorder's office. 14. Jurisdiction. The Bankruptcy Court shall retain exclusive jurisdiction over any matter, claim or dispute arising from or relating to this Agreement and Landlord hereby consents to such exclusive jurisdiction. [Remainder of Page Intentionally Blank; Signature Page Follows] IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date and year first written above. LANDLORD JAMES AND BARBARA SAMPSON FAMILY TRUST DATED JULY 21, 1982 By: ___________________ Name: James K. Sampson Its: Trustee TENANT KMART CORPORATION, a Michigan Corporation By: __________________ Name: ________________ Its: _________________ KIMART KIMART, L.P., a Delaware limited liability company By: KIMART, LLC. a Delaware limited liability company Its: General Partner By: Kimco Realty Services, Inc., a Delaware corporation Its: Managing Member By: ________________ Name: ______________ Its: _______________ EXHIBIT A FORM OF TERMINATION OF LEASE This Instrument Prepared By and After Recording Return To: Roderick A. Rodewald Diehl Rodewald 1043 Pacific Street San Luis Obispo, CA 93401 TERMINATION OF LEASE THIS TERMINATION OF LEASE is made as of the ___ day of ___, 2003, by and between the JAMES AND BARBARA SAMPSON FAMILY TRUST dated July 21, 1982 ("Landlord"), and KMART CORPORATION, a Michigan corporation ("Tenant"). WITNESSETH: WHEREAS, Landlord's predecessor in interest EGS of Alabama, a California General Partnership, and Tenant's predecessor in interest, Kmart Enterprises of Alabama, Inc., entered into a lease dated as of November 14, 1977 and recorded in the Office of the Judge of Probate of Jefferson County, Alabama in Real 1528, Page 376 et seq. (the "Lease"), for certain real property located in Birmingham, Alabama and more particularly described in the Lease and also more particularly described on Exhibit A attached hereto and made a part hereof; and WHEREAS, Landlord and Tenant have terminated the Lease effective as of March 31, 2003, and Landlord and Tenant now desire to evidence such termination of the Lease. NOW THEREFORE, Landlord and Tenant hereby agree that the Lease was terminated by both parties effective as of March 31, 2003. This Termination of Lease may be executed in one (1) or more counterparts, all of which together shall constitute a single agreement and each of which shall be an original for all purposes. [Signature Page Follows] IN WITNESS WHEREOF, Landlord and Tenant have executed as of the date first above written. LANDLORD JAMES AND BARBARA SAMPSON FAMILY TRUST DATED JULY 21, 1982 By: ____________________ Name: James K. Sampson Its: Trustee TENANT KMART CORPORATION, a Michigan corporation By: ____________________ Name: __________________ Its: STATE OF _________ SS: COUNTY OF _________ BEFORE ME, a Notary Public in and for said County and State, personally appeared _____________ who acknowledged that he did execute the foregoing instrument on behalf of _____________________________, and that the same was his free act and deed individually and in his capacity indicated above, and the free act and deed of the trust. IN WITNESS WHEREOF, I have hereunto set my hand and seal at this ___ day of ______________, 2003. Notary Public Name: ________________________________ My Commission Expires: _______________ ====================================================================== STATE OF _________ SS: COUNTY OF _________ BEFORE ME, a Notary Public in and for said County and State, personally appeared _____________ who acknowledged that he did execute the foregoing instrument on behalf of _____________________________, and that the same was his free act and deed individually and in his capacity indicated above, and the free act and deed of the trust. IN WITNESS WHEREOF, I have hereunto set my hand and seal at this ___ day of ______________, 2003. Notary Public Name: ________________________________ My Commission Expires: _______________ EXHIBIT A Real Property [To Be Attached]