In re Kmart Corporation

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United States Bankruptcy Court, N.D. Illinois, Eastern DivisionMar 20, 2002
Case No. 02-B02474, (Jointly Administered) (Bankr. N.D. Ill. Mar. 20, 2002)

Case No. 02-B02474, (Jointly Administered)

March 20, 2002


ORDER UNDER 11 U.S.C. § 105(a), 363(b)(1) AND 365(a) AUTHORIZING DEBTORS TO IMPLEMENT CERTAIN ASPECTS OF THE KEY EMPLOYEE RETENTION PLAN WITH RESPECT TO EMPLOYEES INCLUDED IN TIER III THAT WERE NOT SUBJECT TO PREPETITION RETENTION AGREEMENTS


Upon the motion dated January 22, 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" or the "Company"), moved this Court for entry of an order, pursuant to sections 105(a), 363(b)(1) and 365(a) of the Bankruptcy Code, authorizing the implementation of a Key Employee Retention Plan; the Court finds 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); (iii) the relief requested in the Motion to the extent addressed in this Order is in the best interests of the Debtors, their estates and their creditors (the Court hereby deferring consideration of other aspects of the Motion); (iv) proper and adequate notice of the Motion and the hearing thereon has been given and that no other or further notice is necessary; (v) upon the Order entered by the Court on March 6, 2002 (the "Prior Order") with respect to certain of the relief requested in the motion as it relates to Tiers IV through IX; (vi) upon the Summary of the Key Employee Retention Program attached to the Prior Order; and (vii) upon the record herein including, without limitation, the record adduced at the hearing on the Prior Order and after due deliberation thereon; and any objections to the portion of the relief requested in the Motion that is being granted herein having been withdrawn or overruled; and, upon the foregoing, the Court finding sufficient cause exists for the granting of the relief as set forth herein,

Unless otherwise defined herein, all capitalized terms shall have the meaning ascribed to them in the Motion.

IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:

1. The Debtors are authorized to implement that portion of the Key Employee Retention Program with respect to those participants included in Tier III who were not the subject to a prepetition retention agreement ("Tier III B Employee(s)") as follows:

a. The Debtors are authorized to implement the Stay Bonus program as described in the Motion as to Tier III B Employees (all of whom the Debtors represent and warrant do not have separate retention agreements of any kind, nature or description); provided, however, that notwithstanding anything contained in the Motion:

(i) The payments to be made to such participants shall not exceed the amounts previously represented by the Debtors to the Committees without either the consent of both Committees or, absent such consent, further Order of the Court;

(ii) The first Stay Bonus payment will be made on September 30, 2002 (not June 30, 2002 as described in the Motion) and shall be in the amount of thirty (30%) percent of a participant's total Stay Bonus award pursuant to the Stay Bonus program (the "First Payment ") and the second Stay Bonus payment will be made on January 1, 2003 (as originally described in the Motion) and shall be in the amount of twenty (20%) percent of a participant's total Stay Bonus pursuant to the Stay Bonus program (not thirty percent (30%) as set forth in the Motion);

(iii) With respect to Stay Bonuses payable for the service during the period from January 22, 2002 through September 30, 2002 (the "First Accrual Period"), a participant shall be entitled to a pro rated portion of the First Payment based upon a fraction the numerator of which is equal to the number of days from January 22, 2002 through the date of such participant's termination and the denominator of which is equal to the total number of days in the First Accrual Period;

(iv) No employee who is to receive a retention bonus pursuant to the Stay Bonus program may also receive a bonus as a part of the Debtors' store closing program; and

(v) No new employees shall be included in the Stay Bonus program, however, new employees may be given other forms of bonuses or retention payments consistent with the Debtors past practices and current financial condition.

2. To the extent that the Motion sought relief with respect to Tier III B Employees different than or in excess of that relief granted in paragraph I above, the Motion is continued. The relief requested in the Motion as it pertains to Tiers I, II and Tier III which are not dealt with herein or in the Prior Order (the "Remaining Matters") is hereby continued until the next omnibus hearing which is scheduled for April 24, 2002 at 11:00 a.m. (Chicago time). Objections to the Remaining Matters by the official unsecured creditors committee and the official financial institutions committee (collectively, the "Committees") are extended to April 17, 2002 at 12:00 noon (Chicago time) (the objection deadline with respect to all other parties in interest having since expired).

3. To the extent the terms of this Order conflict with the terms of the Summary, the terms set forth in this Order shall control.