Case No. 02-B02474 (Jointly Administered)
March 20, 2002
Upon the motion dated March 11, 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 (the "Order"), pursuant to 11 U.S.C. § 363 and Rule 6004 of the Federal Rules of Bankruptcy Procedure, authorizing the Debtors to enter into an agreement (the "Termination Agreement") to terminate that certain Purchase and Sale Agreement, dated August 27, 2001 (as amended, the "Purchase Agreement"), between Little Britain ("Little Britain") and Kmart with respect to certain unimproved real property consisting of approximately 10.91 acres located in Honolulu, Hawaii (the "Property) pursuant to that certain Settlement and Termination of Purchase and Sale Agreement attached hereto as Exhibit 1 (the "Termination Agreement") and as more fully described in the Motion; 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; and all parties in interest having been heard or having had the opportunity to be heard; and 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, 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; and good and sufficient cause appearing therefor,
1. The Debtors' business judgment to enter into the Termination Agreement is reasonable and appropriate under the circumstances and is hereby approved.
2. The Debtors are authorized to enter into the Termination Agreement attached hereto as Exhibit 1 and the Termination Agreement is hereby approved. The Debtors are authorized to enter into and to consummate the transactions contemplated by the Termination Agreement and such other documents as may be necessary to effectuate the transactions contemplated by the Termination Agreerment.
3. The Debtors are authorized to take any and all actions necessary or desirable to perform the obligations and the transaction contemplated under the Termination Agreement.
4. The Debtors and their respective officers, employees and agents, are authorized to perform all of their obligations, take whatever actions necessary, and issue, execute and deliver whatever documents may be necessary or appropriate to implement and effectuate the Termination Agreement as contemplated hereby. Title Guaranty Escrow Services, Inc. is directed to release $200,000 from the funds held by it pursuant to the Purchase Agreement to the Debtors and the remaining balance of the funds held by it pursuant to the Purchase Agreement to Little Britain, all as provided in the Termination Agreement.
5. This Order shall survive and remain in full force and effect notwithstanding any of the termination or rejection of any document related to the Property, the rejection of the Termination Agreement and any of the dismissal, conversion, appointment of a trustee or confirmation of a plan of or in these chapter 11 cases. The Court shall retain jurisdiction to enforce the terms of this Order.
6. The transactions contemplated herein are entitled to the full protections of section 363(m) of the Bankruptcy Code.
7. Notwithstanding Rule 6004(g) of the Federal Rules of Bankruptcy Procedure, this Order shall take effect immediately upon its entry.
Settlement And Termination Of Purchase And Sale Agreement
This Settlement and Termination of Purchase and Sale Agreement (the "Termination Agreement") is made by and between Little Britain Holdings, LLC, a Hawaii limited liability company ("Little Britain") and Kmart Corporation, a Michigan corporation ("Kmart").
This Termination Agreement is entered into based upon the following facts:
A. Effective August 27, 2001, Little Britain and Kmart entered into a "Purchase and Sale Agreement" (the "Purchase Agreement") under which Little Britain is the seller and Kmart is the buyer of approximately 10.91 acres of unimproved land, more particularly described in Exhibit "A" attached thereto (the "Property")
B. Pursuant to the terms of the Purchase Agreement, Kmart paid to Little Britain $70,000 During September and October of 2001 as monthly payments. In addition, Kmart made a deposit of $1,000,000 less the monthly payments made for September and October, i.e., a deposit of $930,000, with Title Guaranty Escrow Services, Inc. (the "Escrow Agent") on or about. November 2, 2001, and additional monthly payments to Little Britain were made from these funds in accordance with the terms of the Purchase Agreement. The Purchase Agreement provides that the monthly payments shall, in any event, be retained by Little Britain and that the deposit, together with additional amounts deposited by Kmart to extend the Purchase Agreement, will constitute liquidated damages in the event that Kmart elects not to proceed with the purchase transaction.
C, On January 22, 2002 (the "Petition Date"), Kmart filed a voluntary petition for relief under chapter 11 before the United States Bankruptcy Court for the Northern District of Illinois (the "Bankruptcy Court"). Kmart has failed to make additional deposits to extend the Purchase Agreement; Kmart has failed to make any additional monthly payments since the Petition Date; and Kmart does not wish to proceed with the purchase transaction.
D. The parties wish to resolve any and all disputes regarding Little Britain's right to retain the payments received to date and to receive and retain the deposit amount from escrow, and any and all damages to either party arising directly or indirectly from the Purchase Agreement.
NOW, THEREFORE, it is hereby stipulated and agreed as follows:
1. Kmart shall receive from the funds held by the Escrow Agent the sum of $200,000 on the Effective Date.
2. The remaining balance held by the Escrow Agent, including all interest earned on the funds in escrow, shall be disbursed to Little Britain on the Effective Date.
3. Little Britain agrees to accept the funds released from escrow, plus the monthly payments made by Kmart, as liquidated damages for all harm caused by Kmart's decision not to proceed with the purchase pursuant to the Purchase Agreement. Kmart agrees to accept the $200,000 disbursement from escrow in full and final satisfaction of any claims Kmart might otherwise have to the funds in escrow or the Property. The parties mutually agree that the Purchase Agreement shall be terminated on the Effective Date and shall have no further force or effect thereafter; provided, however that as provided in clause (e) of paragraph 7 of the Purchase Agreement, if requested by Little Britain following rite Effective Date, Kmart at Kmart's sole expense, shall cause the termination of any permits obtained by Kmart as contemplated by the Purchase Agreement or otherwise.
4. On the effective Date, Kmart and each of its affiliates, on behalf of themselves, their respective direct and indirect subsidiaries and, to the extent of any claim or right held by Kmart, any person or entity who claims by, through or under Kmart, each hereby fully and unconditionally releases and discharges Little Britain and its members, managers, directors, officers, employees agents, attorneys, financial advisors, representatives, successors and assigns, from any and all liabilities, obligations, indebtedness, rights, claims, demands, elections, in law or in equity, whether known or unknown, that directly or indirectly arise out of or are based upon the Purchase Aggeement, whether known or unknown, and covenants not to pursue any such claim against the released parties including, without limitation, any claim to recover any of the deposits or other payments made pursuant to the Purchase Agreement or under any provision of the Bankruptcy Code.
5. On the Effective Date, Little Britain and each of its affiliates, on behalf of themselves, their respective direct and indirect subsidiaries and, to the extent of any claim or right held by Little Britain, any person or entity who claims by, through or under Little Britain, each hereby fully and unconditionally release and discharge Kmart and its members, managers, directors, officers, employees, agents, attorneys, financial advisors, representatives, successors and assigns, from any and all liabilities, obligations. indebtedness, rights, claims, demands, actions, in law or in equity, whether known or unknown, that directly or indirectly arise out of or are based upon the Purchase Agreement, whether known or unknown, and covenants not pursue any such claim against the released parties including, without limitation, any claim to recover any of the deposits or other payments made pursuant to the Purchase Agreement.
6. As of the Effective Date, Kmart shall have no further right to purchase the Property and no interest of any kind, equitable, legal, or otherwise, in the Property or any estate in the Property.
7, The "Effective Date" shall mean the first business day after the entry of an order approving this Termination Agreement by the Bankruptcy Court (the "Bankruptcy Court Approval"). Kmart agrees to use its best efforts to obtain all necessity corporate approvals and such an order of the Bankruptcy Court on or before March 20, 2002. and Little Britain agrees to support any request Kmart makes to the Bankruptcy Court consistent with the terms of this Termination Agreement.
8. Any notices under this Termination Agreement shall be served upon the parties entitled to notice under the Purchase Agreement.
9. If any term, provision, covenant or condition of this Termination Agreement should be held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of this Termination Agreement shall continue in full force and effect and shall in no way be affected, impaired or invalidated thereby.
10. Time is specifically declared to be of the essence of this Termination Agreement, and of acts required to be done and performed by Little Britain and Kmart.
11. This Termination Agreement shall be governed by and constructed in accordance with the laws of the state of Hawaii.
12. Should either party hereto reasonably retain counsel for the purpose of enforcing or preventing the breach of any provision hereof, including but not limited to instituting any action or proceeding to enforce any prevision hereof, for damages by reason of any alleged breach of any provision of this Termination Agreement, for a declaration of each party's rights or obligations hereunder, or for any other judicial remedy, then the prevailing party shall be entitled to be reimbursed by the other party for all costs and expenses incurred in connection therewith, including but not limited to reasonable attorneys' fees for the services rendered to such prevailing party. Notwithstanding the foregoing, each party shall bear its own costs and attorneys' fees in connection with the negotiation of this Termination Agreement and obtaining Bankruptcy Court approval of this Termination Agreement.
13. The parties agree that no party shall be deemed to be the drafter of this Termination Agreement and further that In the event that this Termination Agreement is ever construed by a court of law, such court shall not construe this Termination Agreement or any provision of this Termination Agreement against any party as the drafter of this Termination Agreement.
14. This Termination Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same' instrument.
15. Faxed copies of this executed Termination Agreement shall be fully binding and effective for all purposes, whether or not originally executed documents are transmitted to the other party. Faxed signatures on documents will be treated the same as original signatures. However, each party agrees that it will promptly forward original executed documents to the other party.
16. This Termination Agreement constitutes and contain the entire agreement between Little Britain and Kmart and supersedes any and all prior negotiations, correspondence, understandings and agreements between the parties respecting the subject matter hereof.
17. This Termination Agreement may be amended or modified only by a writing signed by each of the parties hereto.
18. Little Britain and Kmart hereby direct the Escrow Agent to disburse any and all amounts held by the Escrow Agent in connection with the Purchase Agreement in accordance with the terms and conditions of this Termination Agreement within five (5) days of entry of the Bankruptcy Court Approval. Notwithstanding anything to the contrary contained in the Purchaser Agreement or the escrow agreement entered into in connection with the Purchase Agreement, Escrow Agent hereby agrees to comply with this Section 18.
IN WITNESS WHEREOF, the parties have executed this Termination Agreement as of the date first above written.
LITTLE BRITIAN HOLDINGS, LLC, a Hawaii limited liability company
By: /s/ Holbrook Wichman Goodale, its Manager
By: /s/ Charles Rice Wichman, its Manager
By: /s/ Frederick Bruce Wichman, its Manager
KMART CORPORATION, a Michigan corporation
By: /s/ Lorrence T. Keller
Title Guaranty Escrow Services, Inc.
By: /s/ Assistant Vice President