EXHIBIT 2.1
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
- ----------------------------------------------
x
In re : Case No. 02-02474
: Jointly Administered
KMART CORPORATION, et al., : Chapter 11
-- --
: Hon. Susan Pierson Sonderby
Debtors. :
:
x
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JOINT PLAN OF REORGANIZATION OF
KMART CORPORATION AND ITS AFFILIATED
DEBTORS AND DEBTORS-IN-POSSESSION
John Wm. Butler, Jr.
J. Eric Ivester
Mark A. McDermott
Samuel S. Ory
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM (ILLINOIS)
333 West Wacker Drive, Suite 2100
Chicago, Illinois 60606-1285
(312) 407-0700
Attorneys for Debtors and Debtors-in-Possession
Dated: January 24, 2003
TABLE OF CONTENTS
Page
INTRODUCTION....................................................................................................A-1
ARTICLE I DEFINITIONS, RULES OF
INTERPRETATION, AND COMPUTATION OF TIME.......................................................A-1
A. Scope of Definitions..........................................................................A-1
B. Definitions...................................................................................A-1
1.1 "Administrative Claim"...............................................................A-1
1.2 "Administrative Claims Bar Date".....................................................A-1
1.3 "ADR Procedures".....................................................................A-2
1.4 "Affiliate Debtors"..................................................................A-2
1.5 "Affiliates".........................................................................A-2
1.6 "Allowed Claim" or "Allowed Interest"................................................A-2
1.7 "Allowed . . . Claim" or "Allowed . . . Interest"....................................A-2
1.8 "Avoidance Claims"...................................................................A-2
1.9 "Ballot".............................................................................A-2
1.10 "Bankruptcy Code"....................................................................A-2
1.11 "Bankruptcy Court"...................................................................A-2
1.12 "Bankruptcy Rules"...................................................................A-2
1.13 "Bar Date"...........................................................................A-3
1.14 "Bar Date Orders"....................................................................A-3
1.15 "Big Beaver Caguas"..................................................................A-3
1.16 "Big Beaver Development".............................................................A-3
1.17 "Big Beaver Florida".................................................................A-3
1.18 "Big Beaver Guaynabo"................................................................A-3
1.19 "Bluelight"..........................................................................A-3
1.20 "Business Day".......................................................................A-3
1.21 "Cash"...............................................................................A-3
1.22 "Causes of Action"...................................................................A-3
1.23 "Certificates of Incorporation and Bylaws"...........................................A-3
1.24 "Chapter 11 Cases"...................................................................A-4
1.25 "Claim"..............................................................................A-4
1.26 "Claimholder"........................................................................A-4
1.27 "Claims Agent".......................................................................A-4
1.28 "Claims/Interests Objection Deadline"................................................A-4
1.29 "Class"..............................................................................A-4
1.30 "Confirmation Date"..................................................................A-4
1.31 "Confirmation Hearing"...............................................................A-4
1.32 "Confirmation Order".................................................................A-4
1.33 "Continuing Indemnification Rights"..................................................A-4
1.34 "Convenience Class Election".........................................................A-4
1.35 "Coolidge"...........................................................................A-4
1.36 "Creditor Shares"....................................................................A-4
1.37 "Creditors' Committees"..............................................................A-5
1.38 "Cure"...............................................................................A-5
1.39 "Debtor" or "Debtors"................................................................A-5
1.40 "DIP Agent"..........................................................................A-5
1.41 "DIP Credit Agreement"...............................................................A-5
1.42 "DIP Facility".......................................................................A-5
1.43 "DIP Facility Claim".................................................................A-5
1.44 "DIP Facility Order".................................................................A-5
1.45 "DIP Lenders"........................................................................A-5
1.46 "Disallowed Claim" or "Disallowed Interest"..........................................A-5
1.47 "Disbursing Agent"...................................................................A-6
1.48 "Disclosure Statement"...............................................................A-6
1.49 "Disputed Claim" or "Disputed Interest"..............................................A-6
1.50 "Distribution Date"..................................................................A-6
1.51 "Distribution Reserve"...............................................................A-6
1.52 "Effective Date".....................................................................A-6
1.53 "Employee-Related Agreements"........................................................A-6
1.54 "Equity Committee"...................................................................A-6
1.55 "Estates"............................................................................A-7
1.56 "Exchange Act".......................................................................A-7
1.57 "Exhibit"............................................................................A-7
1.58 "Exhibit Filing Date"................................................................A-7
1.59 "Existing Common Stock"..............................................................A-7
1.60 "Existing Securities"................................................................A-7
1.61 "Exit Financing Facility"............................................................A-7
1.62 "Face Amount"........................................................................A-7
1.63 "Final Order"........................................................................A-7
1.64 "Financial Institutions' Committee"..................................................A-7
1.65 "General Unsecured Convenience Claim"................................................A-7
1.66 "Holdback Amount"....................................................................A-8
1.67 "Holdback Escrow Account"............................................................A-8
1.68 "Impaired"...........................................................................A-8
1.69 "Indemnification Rights".............................................................A-8
1.70 "Indemnitee".........................................................................A-8
1.71 "Insurance Coverage".................................................................A-8
1.72 "Insured Claim"......................................................................A-8
1.73 "Intercompany Claim".................................................................A-8
1.74 "Intercompany Executory Contract"....................................................A-8
1.75 "Intercompany Unexpired Lease".......................................................A-8
1.76 "Interest"...........................................................................A-8
1.77 "Interestholder".....................................................................A-9
1.78 "Investment Agreement"...............................................................A-9
1.79 "Key Ordinary Course Professional"...................................................A-9
1.80 "Key Ordinary Course Professional Claim".............................................A-9
1.81 "Kmart"..............................................................................A-9
1.82 "Kmart Amsterdam"....................................................................A-9
1.83 "Kmart Financing"....................................................................A-9
1.84 "Kmart Holdings".....................................................................A-9
1.85 "Kmart-IN"...........................................................................A-9
ii
1.86 "Kmart-MI"...........................................................................A-9
1.87 "Kmart-MPS"..........................................................................A-9
1.88 "Kmart-NC"...........................................................................A-9
1.89 "Kmart-PA"...........................................................................A-9
1.90 "Kmart-TX"..........................................................................A-10
1.91 "Kmart Creditor Trust"..............................................................A-10
1.92 "Management Compensation Plan"......................................................A-10
1.93 "New Holding Company"...............................................................A-10
1.94 "New Holding Company Common Stock"..................................................A-10
1.95 "New Holding Company Preferred Stock"...............................................A-10
1.96 "New Operating Company".............................................................A-10
1.97 "New Operating Company Common Stock"................................................A-10
1.98 "Non-Lender Claims".................................................................A-10
1.99 "Ordinary Course Professional Order"................................................A-10
1.100 "Other Executory Contract or Unexpired Lease".......................................A-10
1.101 "Other Priority Claim"..............................................................A-11
1.102 "Other Unsecured Claim".............................................................A-11
1.103 "Other Unsecured Claim Cash Payment Amount".........................................A-11
1.104 "Other Unsecured Claim Senior Note".................................................A-11
1.105 "Other Unsecured Claim Election"....................................................A-11
1.106 "Other Unsecured Claim Estimation Procedure"........................................A-11
1.107 "PBGC"..............................................................................A-11
1.108 "PBGC Claims".......................................................................A-11
1.109 "Periodic Distribution Date"........................................................A-11
1.110 "Person"............................................................................A-11
1.111 "Petition Date".....................................................................A-12
1.112 "Plan"..............................................................................A-12
1.113 "Post-Confirmation Committee".......................................................A-12
1.114 "Plan Investors"....................................................................A-12
1.115 "Plan Investor Claim"...............................................................A-12
1.116 "Prepetition Agent" ................................................................A-12
1.117 "Prepetition Credit Agreements".....................................................A-12
1.118 "Prepetition Lender Claims".........................................................A-12
1.119 "Prepetition Lenders"...............................................................A-12
1.120 "Prepetition Note Claims"...........................................................A-12
1.121 "Prepetition Notes".................................................................A-12
1.122 "Priority Tax Claim"................................................................A-13
1.123 "Pro Rata"..........................................................................A-13
1.124 "Professional"......................................................................A-13
1.125 "Professional Claim"................................................................A-13
1.126 "Professional Fee Order"............................................................A-13
1.127 "Qualifying Real Estate"............................................................A-14
1.128 "Record Date".......................................................................A-14
1.129 "Registration Rights Agreement".....................................................A-14
1.130 "Reinstated" or "Reinstatement".....................................................A-14
1.131 "Released Parties"..................................................................A-14
1.132 "Reorganized Debtor" or "Reorganized Debtors".......................................A-14
iii
1.133 "Reorganized . . . "................................................................A-14
1.134 "Responsible Officer"...............................................................A-15
1.135 "Restructuring Debtors".............................................................A-15
1.136 "Restructuring Transaction(s)"......................................................A-15
1.137 "Restructuring Transactions Notice".................................................A-15
1.138 "Retained Actions"..................................................................A-15
1.139 "Scheduled".........................................................................A-15
1.140 "Schedules".........................................................................A-15
1.141 "Secured Claim".....................................................................A-15
1.142 "Securities Act"....................................................................A-16
1.143 "Securities Action".................................................................A-16
1.144 "Security"..........................................................................A-16
1.145 "Servicer"..........................................................................A-16
1.146 "SFPR"..............................................................................A-16
1.147 "Statutory Committees"..............................................................A-16
1.148 "Subordinated Securities Claim".....................................................A-16
1.150 "Trade Vendor/Lease Rejection Claim"................................................A-16
1.151 "Trade Vendors Collateral Agent"....................................................A-16
1.152 "Trade Vendors' Lien................................................................A-16
1.153 "Trust Advisory Board"..............................................................A-16
1.154 "Trust Agreement"...................................................................A-17
1.155 "Trust Assets"......................................................................A-17
1.156 "Trust Claims"......................................................................A-17
1.157 "Trust Preferred Obligations".......................................................A-17
1.158 "Trust Recoveries"..................................................................A-17
1.159 "Trust Preferred Securities"........................................................A-17
1.160 "Trustee"...........................................................................A-17
1.161 "Unimpaired"........................................................................A-17
1.162 "Unsecured Creditors' Committee"....................................................A-17
1.163 "Voting Deadline"...................................................................A-17
C. Rules of Interpretation......................................................................A-17
D. Computation of Time..........................................................................A-18
E. References to Monetary Figures...............................................................A-18
F. Exhibits.....................................................................................A-18
ARTICLE II ADMINISTRATIVE EXPENSES
AND PRIORITY TAX CLAIMS......................................................................A-18
2.1 Administrative Claims...............................................................A-18
2.2 Priority Tax Claims.................................................................A-19
ARTICLE III CLASSIFICATION OF CLAIMS AND INTERESTS.......................................................A-19
3.1 Class 1.............................................................................A-20
3.2 Class 2.............................................................................A-20
3.3 Class 3.............................................................................A-20
3.4 Class 4.............................................................................A-20
3.5 Class 5.............................................................................A-20
3.6 Class 6.............................................................................A-20
iv
3.7 Class 7.............................................................................A-20
3.8 Class 8.............................................................................A-20
3.9 Class 9.............................................................................A-20
3.10 Class 10............................................................................A-20
3.11 Class 11............................................................................A-20
3.12 Class 12............................................................................A-20
ARTICLE IV IDENTIFICATION OF CLASSES OF CLAIMS
AND INTERESTS IMPAIRED AND UNIMPAIRED BY THE PLAN............................................A-21
4.1 Classes of Claims That Are Unimpaired...............................................A-21
4.2 Impaired Classes of Claims and Interests............................................A-21
ARTICLE V PROVISIONS FOR TREATMENT
OF CLAIMS AND INTERESTS......................................................................A-21
5.1 Class 1 (Secured Claims)............................................................A-21
5.2 Class 2 (Other Priority Claims).....................................................A-22
5.3 Class 3 (PBGC Claims). ............................................................A-22
5.4 Class 4 (Prepetition Lender Claims). ...............................................A-22
5.5 Class 5 (Prepetition Note Claims). .................................................A-22
5.6 Class 6 (Trade Vendor/Lease Rejection Claims).......................................A-23
5.7 Class 7 (Other Unsecured Claims)....................................................A-24
5.8 Class 8 (General Unsecured Convenience Claims)......................................A-24
5.9 Class 9 (Trust Preferred Obligations)...............................................A-24
5.10 Class 10 (Intercompany Claims)......................................................A-25
5.11 Class 11 (Subordinated Securities Claims)...........................................A-25
5.12 Class 12 (Interests)................................................................A-26
ARTICLE VI ACCEPTANCE OR REJECTION OF THE PLAN;
EFFECT OF REJECTION BY ONE OR MORE
IMPAIRED CLASSES OF CLAIMS OR INTERESTS......................................................A-26
6.1 Impaired Classes of Claims Entitled to Vote.........................................A-26
6.2 Classes Deemed to Accept the Plan...................................................A-26
6.3 Acceptance by Impaired Class........................................................A-26
6.4 Confirmation Pursuant to Section 1129(b) of the Bankruptcy Code.....................A-26
ARTICLE VII MEANS FOR IMPLEMENTATION OF THE PLAN.........................................................A-27
7.1 Continued Corporate Existence.......................................................A-27
7.2 Substantive Consolidation...........................................................A-27
7.3 Restructuring Transactions..........................................................A-28
7.4 Certificates of Incorporation and Bylaws............................................A-28
7.5 Directors and Officers of New Holding Company.......................................A-29
7.6 Directors and Officers of Affiliate Debtors.........................................A-30
7.7 Employment, Retirement, Indemnification and Other Agreements and Incentive
Compensation Programs...............................................................A-30
7.8 Issuance of New Holding Company Stock...............................................A-30
7.9 Reinstatement of Common Stock of Affiliate Debtors..................................A-31
7.10 Cancellation of Existing Securities and Agreements..................................A-31
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7.11 Plan Investor Contribution..........................................................A-32
7.12 Post-Effective Date Financing.......................................................A-32
7.13 Trade Vendors' Lien Program.........................................................A-32
7.14 Preservation of Causes of Action....................................................A-33
7.15 Exclusivity Period..................................................................A-33
7.16 Corporate Action....................................................................A-33
7.17 Effectuating Documents; Further Transactions........................................A-33
7.18 Exemption From Certain Transfer Taxes and Recording Fees............................A-33
ARTICLE VIII UNEXPIRED LEASES AND EXECUTORY CONTRACTS.....................................................A-34
8.1 Assumed Contracts and Leases........................................................A-34
8.2 Rejected Contracts and Leases.......................................................A-35
8.3 Payments Related to Assumption of Executory Contracts and Unexpired Leases..........A-36
8.4 Rejection Damages Bar Date..........................................................A-36
ARTICLE IX PROVISIONS GOVERNING DISTRIBUTIONS...........................................................A-36
9.1 Time of Distributions...............................................................A-36
9.2 No Interest on Claims or Interests..................................................A-36
9.3 Disbursing Agent....................................................................A-36
9.4 Surrender of Securities or Instruments..............................................A-37
9.5 Services of Indenture Trustees, Agents and Servicers................................A-37
9.6 Claims Administration Responsibility................................................A-37
9.7 Delivery of Distributions...........................................................A-38
9.8 Procedures for Treating and Resolving Disputed and Contingent Claims................A-38
9.9 Fractional Securities; Fractional Dollars...........................................A-40
ARTICLE X ALLOWANCE AND PAYMENT OF CERTAIN ADMINISTRATIVE CLAIMS.......................................A-40
10.1 DIP Facility Claim/Plan Investor Claim..............................................A-40
10.2 Professional Claims.................................................................A-40
10.3 Substantial Contribution Compensation and Expenses Bar Date.........................A-41
10.4 Other Administrative Claims.........................................................A-41
ARTICLE XI KMART CREDITOR TRUST.........................................................................A-42
11.1 Appointment of Trustee..............................................................A-42
11.2 Transfer of Trust Assets to the Kmart Creditor Trust................................A-42
11.3 The Kmart Creditor Trust............................................................A-42
11.4 The Trust Advisory Board............................................................A-44
11.5 Distributions of Trust Assets.......................................................A-45
ARTICLE XII EFFECT OF THE PLAN ON CLAIMS AND INTERESTS...................................................A-45
12.1 Revesting of Assets.................................................................A-45
12.2 Discharge of the Debtors............................................................A-46
12.3 Compromises and Settlements.........................................................A-46
12.4 Release by Debtors of Certain Parties...............................................A-46
12.5 Release by Holders of Claims and Interests..........................................A-46
12.6 Setoffs.............................................................................A-47
12.7 Subordination Rights................................................................A-47
vi
12.8 Exculpation and Limitation of Liability.............................................A-47
12.9 Indemnification Obligations.........................................................A-48
12.10 Limitation on Releases/Exculpation..................................................A-48
12.11 Injunction..........................................................................A-48
ARTICLE XIII CONDITIONS PRECEDENT.........................................................................A-49
13.1 Conditions to Confirmation..........................................................A-49
13.2 Conditions to the Effective Date....................................................A-49
13.3 Waiver of Conditions to Confirmation or Consummation................................A-50
ARTICLE XIV RETENTION OF JURISDICTION....................................................................A-50
ARTICLE XV MISCELLANEOUS PROVISIONS.....................................................................A-52
15.1 Binding Effect......................................................................A-52
15.2 Modification and Amendments.........................................................A-52
15.3 Withholding and Reporting Requirements..............................................A-52
15.4 Committees/Responsible Officer/Qualifying Real Estate...............................A-52
15.5 Post-Confirmation Committee.........................................................A-52
15.6 Revocation, Withdrawal or Non-Consummation..........................................A-53
15.7 Notices.............................................................................A-53
15.8 Term of Injunctions or Stays........................................................A-54
15.9 Governing Law.......................................................................A-54
15.10 No Waiver or Estoppel...............................................................A-54
15.11 Conflicts...........................................................................A-55
vii
EXHIBITS
Exhibit A -- Form of Certificate of Incorporation and
By-Laws of New Holding Company
Exhibit B -- Form of Certificate of Incorporation and
By-Laws of New Operating Company
Exhibit C -- Form of Certificate of Incorporation and
By-Laws of Other Reorganized Debtors
Exhibit D-1 -- Exit Financing Facility Commitment Letter
Exhibit D-2 -- Exit Financing Facility Agreement
Exhibit E -- Investment Agreement
Exhibit F -- Summary of Management Compensation Plan
Exhibit G -- Form of Registration Rights Agreement
Exhibit H -- Restructuring Transaction Notice
Exhibit I -- Corporate Structure of Reorganized Debtors
Exhibit J -- List of Retained Actions
Exhibit K -- Post-Effective Date Trade Vendors' Lien
Program Documents
Exhibit L -- Form of Kmart Creditor Trust Agreement
Exhibit M-1 -- List of Assumed Intercompany Executory
Contracts and Intercompany Unexpired Leases
Exhibit M-2 -- List of Employee-Related Agreements
Exhibit M-2 -- List of Other Executory Contracts and
Unexpired Leases
Exhibit N -- Administrative Claim Request Form
Exhibit O -- Other Unsecured Claim Senior Note
viii
INTRODUCTION
Kmart Corporation and certain of its direct and indirect
subsidiaries, as debtors and debtors-in-possession in the above-captioned
jointly administered Chapter 11 Cases, hereby propose the following Joint Plan
of Reorganization for the resolution of the outstanding Claims against and
Interests in the Debtors. Capitalized terms used herein shall have the meanings
ascribed to such terms in Article I.B. of this Plan. The Debtors are the
proponents of this Plan within the meaning of section 1129 of the Bankruptcy
Code.
The direct and indirect subsidiaries of Kmart incorporated
outside of the United States have not commenced cases under Chapter 11 of the
Bankruptcy Code. These subsidiaries continue to operate their businesses outside
of bankruptcy.
This Plan contemplates the reorganization of the Debtors and
the resolution of the outstanding Claims against and Interests in the Debtors
pursuant to sections 1121(a) and 1123 of the Bankruptcy Code. Under the Plan,
holders of Prepetition Lender Claims are entitled to receive certain New Holding
Company Common Stock on account of their Claims. However, the Reorganized
Debtors shall purchase such Stock from such holders for an amount equal to forty
percent (40%) of the principal amount of the Prepetition Lender Claims utilizing
cash to be contributed by two Plan Investors. The Plan Investors shall receive
such Stock in exchange for their cash investment.
As a general matter, most other obligations owed to other
unsecured creditors of the Debtors, including holders of Prepetition Note Claims
and Trade Vendor/Lease Rejection Claims, will be converted into New Holding
Company Common Stock in exchange for their Claims against the Debtors. Existing
holders of Kmart equity interests will not receive any distribution of New
Holding Company Common Stock on account of their existing equity interests in
Kmart. However, subject to the terms and conditions hereof, such holders are
entitled to receive a distribution of a portion of the Trust Recoveries, if any,
on account of the Trust Claims under the Plan. Similarly, holders of certain
Trust Preferred Obligations also are entitled to share in a portion of such
Trust Recoveries, if any.
This Plan provides for the substantive consolidation of the Estates,
but only for purposes of effectuating the settlements contemplated by, and
making distributions to holders of Claims under, this Plan, and not for voting
purposes. For such limited purposes, on the Effective Date, (a) all guaranties
of any Debtor of the payment, performance, or collection of another Debtor with
respect to any Class of Claims or Interests shall be deemed eliminated and
cancelled; (b) any obligation of any Debtor and all guaranties with respect to
any Class of Claims or Interests executed by one or more of the other Debtors
and any joint or several liability of any of the Debtors shall be treated as a
single obligation, and any obligation of two or more Debtors, and all multiple
Impaired Claims against Debtors on account of such joint obligations, shall be
treated and Allowed only as a single Claim against the consolidated Debtors; and
(c) each Claim filed in the Chapter 11 Cases of any Debtor shall be deemed filed
against the consolidated Debtors and shall be deemed a Claim against and an
obligation of the consolidated Debtors.
Except as set forth in this Article, such substantive consolidation
will not (other than for purposes related to this Plan) (a) affect the legal and
corporate structures of the Debtors or Reorganized Debtors, subject to the right
of the Debtors or Reorganized Debtors to effect the Restructuring Transactions
contemplated by this Plan, (b) cause any Debtor to be liable for any Claim or
Interest under this Plan for which it otherwise is not liable, and the liability
of any Debtor for any such Claim or Interest will not be affected by such
substantive consolidation, (c) except as otherwise stated in this Plan, affect
Intercompany Claims of Debtors against Debtors, and (d) affect Interests in the
Affiliate Debtors except as otherwise may be required in connection with the
Restructuring Transactions contemplated by this Plan. Notwithstanding anything
herein to the contrary, the Debtors may elect in their sole and absolute
discretion, at any time through and until the Effective Date, to substantively
consolidate the Estates for additional purposes, including for voting purposes,
provided, however, that nothing herein shall impair the Plan Investors' rights
under the Investment Agreement. Should the Debtors make such election, the
Debtors will not, nor will they be required to, resolicit votes with respect to
this Plan.
A complete list of the Debtors is set forth below. The list
identifies each Debtor by its case number in these Chapter 11 Cases. The
jurisdiction of incorporation or formation of each Debtor is also designated.
DEBTORS
- - Kmart Corporation (Michigan), 02-02474
("Kmart")
- - Kmart Corporation of Illinois, Inc. (Illinois),
02-02462 ("KM-IL")
- - Kmart of Indiana (Indiana), 02-02463 ("KM-IN")
- - Kmart of Pennsylvania LP (Pennsylvania),
02-02464 ("KM-PA")
- - Kmart of North Carolina LLC (North Carolina),
02-02465 ("KM-NC")
- - Kmart of Texas LP (Texas), 02-02466 ("KM-TX")
- - Bluelight.com LLC (Delaware), 02-02467
("Bluelight")
- - Big Beaver of Florida Development, LLC
(Florida), 02-02468 ("Big Beaver Florida")
- - The Coolidge Group, n/k/a, TC Group I LLC
(Michigan), 02-02469 ("Coolidge")
- - Kmart Michigan Property Services, L.L.C.
(Michigan), 02-02470 ("KM-MPS")
- - Kmart Financing I (Delaware), 02-02471 ("Kmart
Financing")
- - Troy CMBS Property, L.L.C. (Delaware),
02-02472 ("Troy CMBS")
- - Big Beaver Development Corporation (Michigan),
02-02473 ("Big Beaver Development")
- - Big Beaver of Guaynabo Development Corporation
(Michigan), 02-02475 ("Big Beaver Guaynabo")
- - Big Beaver of Caguas Development Corporation
(Michigan), 02-02476 ("Big Beaver Caguas")
- - Bluelight.com, Inc. (Delaware), 02-02477
("Bluelight, Inc.")
- - Kmart Holdings, Inc. (Delaware), 02-02478
("Kmart Holdings")
- - Kmart of Amsterdam, NY Distribution Center, Inc.
(Michigan), 02-02479 ("Kmart Amsterdam")
- - Kmart Stores of Indiana, Inc., f/k/a Kmart Logistics
Services, Inc. (Michigan), 02-02480 ("Kmart
Stores")
- - Kmart of Michigan, Inc. (Michigan), 02-02481
("KM-MI")
- - Kmart Stores of TCNP, Inc., f/k/a/ Kmart Trading
Services, Inc. (Michigan), 02-02482 ("TNCP")
- - Kmart Overseas Corporation (Nevada), 02-02483
("Overseas")
- - JAF, Inc. (Delaware), 02-02484 ("JAF")
- - VTA, Inc. (Delaware), 02-02485 ("VTA")
- - Big Beaver of Caguas Development Corporation II
(Michigan), 02-02486 ("Big Beaver Caguas II")
- - Big Beaver of Carolina Development Corporation
(Michigan), 02-02487 ("Big Beaver Carolina")
- - Kmart Pharmacies, Inc. (Michigan), 02-02488
("Michigan Pharmacies")
- - Builders Square, Inc. (Delaware), 02-02489
("Builders Square")
- - Kmart International Services, Inc. (Delaware),
02-02490 ("KM International")
- - Sourcing & Technical Services Inc. (Florida),
02-02491 ("Sourcing & Technical")
- - Kmart Pharmacies of Minnesota, Inc. (Minnesota),
02-02492 ("Minnesota Pharmacies")
- - STI Merchandising, Inc. (Michigan), 02-02493
("STI")
- - Kmart CMBS Financing, Inc. (Delaware),
02-02494 ("Kmart CMBS")
- - S.F.P.R., Inc. (Puerto Rico), 02-02499 ("SFPR")
- - PMB, Inc. (Texas), 02-02496 ("PMB")
- - ILJ, Inc. (Arkansas), 02-02497 ("ILJ")
- - KBL Holding Inc. (Delaware), 02-02498 ("KBL")
- - KLC, Inc. (Texas), 02-02495 ("KLC")
Under section 1125(b) of the Bankruptcy Code, a vote to accept
or reject this Plan cannot be solicited from a Claimholder or Interestholder
until such time as the Disclosure Statement has been
A-1
approved by the Bankruptcy Court and distributed to Claimholders and
Interestholders. In this case, the Disclosure Statement was approved by the
Bankruptcy Court by order entered on February __, 2003, and has been distributed
simultaneously with this Plan to all parties whose votes are being solicited.
The Disclosure Statement contains, among other things, a discussion of the
Debtors' history, business, properties and operations, projections for those
operations, risk factors associated with the business and Plan, a summary and
analysis of this Plan, and certain related matters including, among other
things, the securities to be issued under this Plan. ALL CLAIMHOLDERS AND
INTERESTHOLDERS ARE ENCOURAGED TO READ THIS PLAN AND THE DISCLOSURE STATEMENT IN
THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THIS PLAN.
Subject to certain restrictions and requirements set forth in section
1127 of the Bankruptcy Code and Bankruptcy Rule 3019 and those restrictions on
modifications set forth in Article XV of this Plan, each of the Debtors
expressly reserves its respective rights to alter, amend, modify, revoke or
withdraw this Plan with respect to such Debtor, one or more times, prior to this
Plan's substantial consummation.
ARTICLE I
DEFINITIONS, RULES OF
INTERPRETATION, AND COMPUTATION OF TIME
A. SCOPE OF DEFINITIONS
For purposes of this Plan, except as expressly provided or
unless the context otherwise requires, all capitalized terms not otherwise
defined shall have the meanings ascribed to them in Article I.B. of this Plan.
Any term used in this Plan that is not defined herein, but is defined in the
Bankruptcy Code or the Bankruptcy Rules, shall have the meaning ascribed to that
term in the Bankruptcy Code or the Bankruptcy Rules.
B. DEFINITIONS
1.1 "ADMINISTRATIVE CLAIM" means a Claim for payment of an
administrative expense of a kind specified in section 503(b) of the Bankruptcy
Code and entitled to priority pursuant to section 507(a)(1) of the Bankruptcy
Code, including, but not limited to, DIP Facility Claims, the actual, necessary
costs and expenses, incurred on or after the Petition Date, of preserving the
Estates and operating the business of the Debtors, including wages, salaries or
commissions for services rendered after the commencement of the Chapter 11
Cases, Professional Claims, Key Ordinary Course Professional Claims, all fees
and charges assessed against the Estates under chapter 123 of title 28, United
States Code, and all Allowed Claims that are entitled to be treated as
Administrative Claims pursuant to a Final Order of the Bankruptcy Court under
section 546(c)(2)(A) of the Bankruptcy Code.
1.2 "ADMINISTRATIVE CLAIMS BAR DATE" means the deadline for
filing proofs or requests for payment of Administrative Claims, which shall be
forty-five (45) days after the Effective Date, unless otherwise ordered by the
Bankruptcy Court and except with respect to Professional Claims and Key Ordinary
Course Professional Claims, which shall be subject to the provisions of Section
10.2 hereof.
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1.3 "ADR PROCEDURES" means any alternative dispute resolution
procedure approved by the Bankruptcy Court or as may be set forth in an Exhibit
to this Plan.
1.4 "AFFILIATE DEBTORS" means all of the Debtors other than
Kmart.
1.5 "AFFILIATES" has the meaning given such term by section
101(2) of the Bankruptcy Code.
1.6 "ALLOWED CLAIM" OR "ALLOWED INTEREST" means a Claim or any
portion thereof, or an Interest or any portion thereof, (a) that has been
allowed by a Final Order of the Bankruptcy Court (or such other court or forum
as the Reorganized Debtors and the holder of such Claim or Interest agree may
adjudicate such Claim or Interest and objections thereto), or (b) as to which,
on or by the Effective Date, (i) no proof of claim or interest has been filed
with the Bankruptcy Court and (ii) the liquidated and noncontingent amount of
which is Scheduled, other than a Claim or Interest that is Scheduled at zero, in
an unknown amount, or as disputed, or (c) for which a proof of claim or interest
in a liquidated amount has been timely filed with the Bankruptcy Court pursuant
to the Bankruptcy Code, any Final Order of the Bankruptcy Court or other
applicable bankruptcy law, and as to which either (i) no objection to its
allowance has been filed within the periods of limitation fixed by this Plan,
the Bankruptcy Code or by any order of the Bankruptcy Court or (ii) any
objection to its allowance has been settled or withdrawn, or has been denied by
a Final Order, or (d) that is expressly allowed in a liquidated amount in this
Plan.
1.7 "ALLOWED . . . CLAIM" OR "ALLOWED . . . INTEREST" means an
Allowed Claim or an Allowed Interest in the specified Class.
1.8 "AVOIDANCE CLAIMS" means Causes of Action against Persons
arising under any of sections 502, 510, 541, 542, 543, 544, 545, 547, 548
through 551 and 553 of the Bankruptcy Code, or under similar or related state or
federal statutes and common law, including fraudulent transfer laws, whether or
not litigation has been commenced as of the Confirmation Date to prosecute such
Avoidance Claims.
1.9 "BALLOT" means each of the ballot forms that are
distributed with the Disclosure Statement to Claimholders and Interestholders
included in Classes that are Impaired under this Plan and entitled to vote under
Article VI of this Plan to accept or reject this Plan.
1.10 "BANKRUPTCY CODE" means the Bankruptcy Reform Act of
1978, as amended and codified in title 11 of the United States Code, 11
U.S.C.ss.ss.101-1330, as in effect on the date hereof.
1.11 "BANKRUPTCY COURT" means the United States Bankruptcy
Court for the Northern District of Illinois (Eastern Division) or such other
court as may have jurisdiction over the Chapter 11 Cases.
1.12 "BANKRUPTCY RULES" means the Federal Rules of Bankruptcy
Procedure and the Official Bankruptcy Forms, as amended, the Federal Rules of
Civil Procedure, as amended, as applicable to the Chapter 11 Cases or
proceedings therein, and the Local Rules of the Bankruptcy Court, as applicable
to the Chapter 11 Cases or proceedings therein, as the case may be.
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1.13 "BAR DATE" means the deadlines set by the Bankruptcy
Court pursuant to the Bar Date Order or other Final Order for filing proofs of
claim or interest in the Chapter 11 Cases. For prepetition Claims and Interests,
the Bar Date was July 31, 2002, except that the Bar Date with respect to certain
personal injury and related claims was January 22, 2003.
1.14 "BAR DATE ORDERS" means the order entered by the
Bankruptcy Court on March 26, 2002, which established the July 31, 2002 Bar Date
and the order entered by the Bankruptcy Court on December 19, 2002, which
established the January 22, 2003 supplemental Bar Date.
1.15 "BIG BEAVER CAGUAS" means Big Beaver of Caguas
Development Corporation, a Michigan corporation, debtor-in-possession in Case
No. 02-02476 pending in the Bankruptcy Court.
1.16 "BIG BEAVER DEVELOPMENT" means Big Beaver Development
Corporation, a Michigan corporation, debtor-in-possession in Case No. 02-02473
pending in the Bankruptcy Court.
1.17 "BIG BEAVER FLORIDA" means Big Beaver of Florida
Development, LLC, a Florida limited liability company, debtor-in-possession in
Case No. 02-02468 pending in the Bankruptcy Court.
1.18 "BIG BEAVER GUAYNABO" means Big Beaver of Guaynabo
Development Corporation, a Michigan corporation, debtor-in-possession in Case
No. 02-02475 pending in the Bankruptcy Court.
1.19 "BLUELIGHT" means Bluelight.com, LLC, a Delaware limited
liability company, debtor-in-possession in Case No. 02-02467 pending in the
Bankruptcy Court.
1.20 "BUSINESS DAY" means any day, excluding Saturdays,
Sundays and "legal holidays" (as defined in Bankruptcy Rule 9006(a)), on which
commercial banks are open for business in New York City.
1.21 "CASH" means legal tender of the United States of America
and equivalents thereof.
1.22 "CAUSES OF ACTION" means any and all actions,
proceedings, causes of action, suits, accounts, controversies, agreements,
promises, rights to legal remedies, rights to equitable remedies, rights to
payment and claims, whether known, unknown, reduced to judgment, not reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured and whether asserted or assertable
directly or derivatively, in law, equity or otherwise, including Avoidance
Claims and Trust Claims, unless otherwise waived or released by the Debtors or
the Reorganized Debtors.
1.23 "CERTIFICATES OF INCORPORATION AND BYLAWS" means the
Certificates of Incorporation and Bylaws of New Holding Company, New Operating
Company, and the other Reorganized Debtors, in substantially the forms attached
hereto as Exhibit A, Exhibit B, and Exhibit C, respectively, which Certificates
of Incorporation and Bylaws shall be in a form reasonably acceptable to the Plan
Investors and the Creditors' Committees.
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1.24 "CHAPTER 11 CASES" means the chapter 11 cases of the
Debtors pending in the Bankruptcy Court and being jointly administered with one
another under Case No. 02-02474, and the phrase "Chapter 11 Case" when used with
reference to a particular Debtor shall mean the particular case under Chapter 11
of the Bankruptcy Code commenced by such Debtor in the Bankruptcy Court.
1.25 "CLAIM" means a claim against one of the Debtors (or all
or some of them) whether or not asserted, as defined in section 101(5) of the
Bankruptcy Code.
1.26 "CLAIMHOLDER" means a holder of a Claim.
1.27 "CLAIMS AGENT" means Trumbull Bankruptcy Services, P.O.
Box 426, Windsor, Connecticut 06095, Attn: Kmart Balloting Center.
1.28 "CLAIMS/INTERESTS OBJECTION DEADLINE" means that day
which is 180 days after the Effective Date (unless such day is not a Business
Day, in which case such deadline shall be the next Business Day thereafter), as
the same may be from time to time extended by the Bankruptcy Court, without
further notice to parties-in-interest.
1.29 "CLASS" means a category of Claimholders or
Interestholders described in Article III of this Plan.
1.30 "CONFIRMATION DATE" means the date of entry of the
Confirmation Order.
1.31 "CONFIRMATION HEARING" means the hearing before the
Bankruptcy Court held to consider confirmation of this Plan and related matters
under section 1128 of the Bankruptcy Code, as such hearing may be adjourned or
continued from time to time.
1.32 "CONFIRMATION ORDER" means the order entered by the
Bankruptcy Court confirming this Plan.
1.33 "CONTINUING INDEMNIFICATION RIGHTS" shall have the
meaning ascribed to it in Section 12.9 hereof.
1.34 "CONVENIENCE CLASS ELECTION" means an election by a
holder of a Trade Vendor/Lease Rejection Claim or Other Unsecured Claim on its
Ballot to be treated as a General Unsecured Convenience Claim.
1.35 "COOLIDGE" means The Coolidge Group, n/k/a TC Group I,
LLC, a Michigan limited liability company, debtor-in-possession in Case No.
02-02469 pending in the Bankruptcy Court.
1.36 "CREDITOR SHARES" means those shares of New Holding
Company Common Stock to be distributed to holders of Allowed Prepetition Note
Claims, Allowed Trade Vendor/Lease Rejection Claims, and holders of Other
Unsecured Claims who have made the Other Unsecured Claim Election, in the total
aggregate amount of (i) one-hundred million (100,000,000) shares of such New
Holding Company Common Stock minus (ii) a number determined by dividing (a) the
total Cash paid or, in the case of the Plan Investors, deemed paid, on account
of Prepetition Lender Claims under the Plan by (b) ten.
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1.37 "CREDITORS' COMMITTEES" means, collectively, the
Unsecured Creditors' Committee and the Financial Institutions' Committee
appointed pursuant to section 1102(a) of the Bankruptcy Code in the Chapter 11
Cases.
1.38 "CURE" means the distribution within a reasonable period
of time following the Effective Date of Cash, or such other property as may be
agreed upon by the parties or ordered by the Bankruptcy Court, with respect to
the assumption (or assumption and assignment) of an executory contract or
unexpired lease, pursuant to section 365(b) of the Bankruptcy Code, in an amount
equal to all unpaid monetary obligations, without interest, or such other amount
as may be agreed upon by the parties, under such executory contract or unexpired
lease, to the extent such obligations are enforceable under the Bankruptcy Code
and applicable non-bankruptcy law.
1.39 "DEBTOR" OR "DEBTORS" means, individually, any of Kmart
or the Affiliate Debtors and, collectively, all of Kmart and the Affiliate
Debtors.
1.40 "DIP AGENT" means the administrative agent for the DIP
Lenders as defined in the DIP Credit Agreement.
1.41 "DIP CREDIT AGREEMENT" means that certain Revolving
Credit and Guaranty Agreement, dated as of January 23, 2002 as amended,
supplemented or otherwise modified from time to time, and all documents executed
in connection therewith, among the Debtors, the DIP Agent, and the DIP Lenders,
which was executed by the Debtors in connection with the DIP Facility.
1.42 "DIP FACILITY" means the debtor in possession secured
financing facility provided to the Debtors by the DIP Lenders pursuant to the
DIP Credit Agreement as authorized by the Bankruptcy Court pursuant to the DIP
Facility Order.
1.43 "DIP FACILITY CLAIM" means all Administrative Claims of
the DIP Agent and the DIP Lenders arising under or pursuant to the DIP Facility,
including, without limitation, principal and interest on the DIP Facility, plus
all fees and expenses (including professional fees and expenses) arising under
the DIP Facility.
1.44 "DIP FACILITY ORDER" means, collectively, (i) the interim
order that was approved by the Bankruptcy Court from the bench on January 25,
2002 and entered by the Bankruptcy Court on January 25, 2002, (ii) the final
order that was approved by the Bankruptcy Court from the bench on March 6, 2002
and entered by the Bankruptcy Court on March 6, 2002, authorizing and approving
the DIP Facility and the agreements related thereto, and (iii) any and all
orders entered by the Bankruptcy Court authorizing and approving amendments to
the DIP Credit Agreement.
1.45 "DIP LENDERS" means the lenders from time to time party
to the DIP Credit Agreement.
1.46 "DISALLOWED CLAIM" OR "DISALLOWED INTEREST" means a Claim
or any portion thereof, or an Interest or any portion thereof, that (a) has been
disallowed by a Final Order, (b) is Scheduled at zero or as contingent, disputed
or unliquidated and as to which a proof of claim or interest bar date has been
established but no proof of claim or interest has been timely filed or deemed
timely
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filed with the Bankruptcy Court pursuant to either the Bankruptcy Code or any
Final Order of the Bankruptcy Court or otherwise deemed timely filed under
applicable law, or (c) is not Scheduled and as to which a proof of claim or
interest bar date has been set but no proof of claim or interest has been timely
filed or deemed timely filed with the Bankruptcy Court pursuant to either the
Bankruptcy Code or any Final Order of the Bankruptcy Court or otherwise deemed
timely filed under applicable law.
1.47 "DISBURSING AGENT" means New Holding Company or New
Operating Company, or any Person designated by them, in their sole discretion,
to serve as a disbursing agent under Section 9.3 of this Plan.
1.48 "DISCLOSURE STATEMENT" means the written disclosure
statement that relates to this Plan, as approved by the Bankruptcy Court
pursuant to section 1125 of the Bankruptcy Code and Bankruptcy Rule 3017, as
such disclosure statement may be amended, modified or supplemented from time to
time.
1.49 "DISPUTED CLAIM" OR "DISPUTED INTEREST" means a Claim or
any portion thereof, or an Interest or any portion thereof, that is neither an
Allowed Claim nor a Disallowed Claim, or an Allowed Interest or a Disallowed
Interest, as the case may be, and includes, without limitation, Claims or
Interests that (a) have not been Scheduled by the Debtors or have been Scheduled
at zero, or have been Scheduled as unknown, contingent, unliquidated or
disputed, whether or not such Claims or Interests are the subject of a proof of
claim or proof of interest in the Bankruptcy Court, (b) are the subject of a
proof of claim or interest that differs in nature, amount or priority from the
Schedules, or (c) are the subject of an objection filed with the Bankruptcy
Court, which has not been withdrawn or overruled by a Final Order of the
Bankruptcy Court.
1.50 "DISTRIBUTION DATE" means the date, selected by the
Debtors or Reorganized Debtors, occurring as soon as practicable after the
Administrative Claims Bar Date (unless determined by the Reorganized Debtors, in
their sole discretion, that an earlier date may be used), upon which
distributions to holders of Allowed Claims and Allowed Interests entitled to
receive distributions under this Plan shall commence.
1.51 "DISTRIBUTION RESERVE" means the New Holding Company
Common Stock for distribution to Claimholders in the Debtors' Chapter 11 Cases
to be reserved pending allowance of Disputed Claims in accordance with Section
9.8 of this Plan.
1.52 "EFFECTIVE DATE" means the Business Day determined by the
Debtors on which all conditions to the consummation of this Plan set forth in
Section 13.2 of this Plan have been either satisfied or waived as provided in
Section 13.3 of this Plan and is the day upon which this Plan is substantially
consummated.
1.53 "EMPLOYEE-RELATED AGREEMENTS" means those agreements
between any of the Debtors and any of their employees or any entity acting on
behalf of their employees.
1.54 "EQUITY COMMITTEE" means the Official Committee of Equity
Security Holders appointed pursuant to Section 1102(a) of the Bankruptcy Code in
the Chapter 11 Cases.
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1.55 "ESTATES" means the bankruptcy estates of the Debtors
created pursuant to section 541 of the Bankruptcy Code.
1.56 "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as now in effect or hereafter amended.
1.57 "EXHIBIT" means an exhibit annexed to either this Plan or
as an appendix to the Disclosure Statement.
1.58 "EXHIBIT FILING DATE" means the date on which Exhibits to
this Plan or the Disclosure Statement shall be filed with the Bankruptcy Court,
which date shall be at least five days prior to the Voting Deadline or such
later date as may be approved by the Bankruptcy Court without further notice.
1.59 "EXISTING COMMON STOCK" means, with respect to Kmart,
shares of common stock and all options, warrants and rights (whether fixed or
contingent, matured or unmatured, disputed or undisputed), contractual, legal,
equitable, or otherwise, to acquire any of the foregoing, that are authorized,
issued and outstanding prior to the Effective Date.
1.60 "EXISTING SECURITIES" means, collectively, the
Prepetition Notes, the Trust Preferred Securities, and the Existing Common
Stock.
1.61 "EXIT FINANCING FACILITY" means a new financing facility,
a copy of which will be attached hereto as Exhibit D-1, pursuant to the terms of
(a) that certain Commitment Letter, dated January 13, 2003, between Kmart, as
borrower, and General Electric Capital Corporation, Fleet Retail Finance, Inc.,
and Bank of America, N.A., as initial lenders, as the same may be amended,
modified, or supplemented from time to time, a copy of which is attached hereto
as Exhibit D-2, and (b) any and all additional documents related thereto filed
in accordance with Article 7.12 of this Plan.
1.62 "FACE AMOUNT" means, (a) when used in reference to a
Disputed or Disallowed Claim, the full stated liquidated amount claimed by the
Claimholder in any proof of claim timely filed with the Bankruptcy Court or
otherwise deemed timely filed by any Final Order of the Bankruptcy Court or
other applicable bankruptcy law, and (b) when used in reference to an Allowed
Claim, the allowed amount of such Claim.
1.63 "FINAL ORDER" means an order or judgment, the operation
or effect of which has not been stayed, reversed or amended and as to which
order or judgment (or any revision, modification or amendment thereof) the time
to appeal or seek review or rehearing has expired and as to which no appeal or
petition for review or rehearing was filed or, if filed, remains pending.
1.64 "FINANCIAL INSTITUTIONS' COMMITTEE" means the Official
Committee of Financial Institutions appointed pursuant to section 1102(a) of the
Bankruptcy Code in the Chapter 11 Cases.
1.65 "GENERAL UNSECURED CONVENIENCE CLAIM" means (i) a Trade
Vendor/Lease Rejection Claim or an Other Unsecured Claim if the Allowed amount
of such Claim is less than or equal to $30,000 and (ii) a Trade Vendor/Lease
Rejection Claim or Other Unsecured Claim if, in either
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instance, the Allowed amount of such Claim is greater than $30,000 and the
holder of such Claim has made the Convenience Class Election on the Ballot
within the time fixed by the Bankruptcy Court.
1.66 "HOLDBACK AMOUNT" means the amount equal to 10% of fees
billed to the Debtors in a given month to the extent retained by the Debtors as
of the Effective Date as a holdback on payment of Professional Claims pursuant
to the Professional Fee Order. The Holdback Amount shall not be considered
property of the Debtors, the Reorganized Debtors, or the Estates.
1.67 "HOLDBACK ESCROW ACCOUNT" means the escrow account
established by the Disbursing Agent into which Cash equal to the Holdback Amount
shall be deposited on the Effective Date for the payment of Allowed Professional
Claims to the extent not previously paid or disallowed.
1.68 "IMPAIRED" refers to any Claim or Interest that is
impaired within the meaning of section 1124 of the Bankruptcy Code.
1.69 "INDEMNIFICATION RIGHTS" means any obligations or rights
of the Debtors to indemnify, reimburse, advance, or contribute to the losses,
liabilities or expenses of an Indemnitee pursuant to the Debtor's certificate of
incorporation, bylaws, policy of providing employee indemnification, applicable
law, or specific agreement in respect of any claims, demands, suits, causes of
action or proceedings against an Indemnitee based upon any act or omission
related to an Indemnitee's service with, for, or on behalf of the Debtors.
1.70 "INDEMNITEE" means all present and former directors,
officers, employees, agents or representatives of the Debtors who are entitled
to assert Indemnification Rights.
1.71 "INSURANCE COVERAGE" shall have the meaning ascribed to
it in Article 12.9 hereof.
1.72 "INSURED CLAIM" means any Claim to the extent such Claim
arises prior to the Petition Date from an incident or occurrence that is covered
under any of the Debtors' insurance policies, but solely to the extent such
Claim is covered by such insurance policies.
1.73 "INTERCOMPANY CLAIM" means a Claim by a Debtor, an
Affiliate of a Debtor, or a non-Debtor against another Debtor, Affiliate of a
Debtor, or non-Debtor.
1.74 "INTERCOMPANY EXECUTORY CONTRACT" means an executory
contract solely between two or more Debtors or an executory contract solely
between one or more Debtors and one or more non-Debtors.
1.75 "INTERCOMPANY UNEXPIRED LEASE" means an unexpired lease
solely between two or more Debtors or an unexpired lease solely between one or
more Debtors and one or more non-Debtors.
1.76 "INTEREST" means (a) the legal, equitable, contractual
and other rights (whether fixed or contingent, matured or unmatured, disputed or
undisputed) of any Person with respect to Existing Common Stock or any other
equity securities of or ownership interests in the Debtors and (b) the legal,
equitable, contractual and other rights, whether fixed or contingent, matured or
unmatured,
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disputed or undisputed, of any Person to purchase, sell, subscribe to, or
otherwise acquire or receive (directly or indirectly) any of the foregoing.
1.77 "INTERESTHOLDER" means a holder of an Interest.
1.78 "INVESTMENT AGREEMENT" means that certain Investment
Agreement, dated as of January 24, 2003, between the Plan Investors and Kmart, a
copy of which is attached hereto as Exhibit E, as the same may be amended,
modified, or supplemented from time to time.
1.79 "KEY ORDINARY COURSE PROFESSIONAL" means those certain
Persons identified as key ordinary course professionals by the Debtors pursuant
to the Ordinary Course Professional Order.
1.80 "KEY ORDINARY COURSE PROFESSIONAL CLAIM" means an
Administrative Claim of a Key Ordinary Course Professional for compensation for
services rendered or reimbursement of costs, expenses or other charges and
disbursements in an amount in excess of $25,000 for any month relating to
services rendered or expenses incurred after the Petition Date and prior to and
including the Effective Date.
1.81 "KMART" means Kmart Corporation, a Michigan corporation,
debtor-in-possession in Case No. 02-02474 pending in the Bankruptcy Court.
1.82 "KMART AMSTERDAM" means Kmart of Amsterdam, NY
Distribution Center, Inc., a Michigan corporation, debtor-in-possession in Case
No. 02-02479 pending in the Bankruptcy Court.
1.83 "KMART FINANCING" means Kmart Financing I, a Delaware
trust, debtor-in-possession in Case No. 02-02471 pending in the Bankruptcy
Court.
1.84 "KMART HOLDINGS" means Kmart Holdings, Inc., a Delaware
corporation, debtor-in-possession in Case No. 02-02478 pending in the Bankruptcy
Court.
1.85 "KMART-IN" means Kmart of Indiana, an Indiana
partnership, debtor-in-possession in Case No. 02-02463 pending in the
Bankruptcy Court.
1.86 "KMART-MI" means Kmart of Michigan, Inc., a Michigan
corporation, debtor-in-possession in Case No. 02-02481 pending in the
Bankruptcy Court.
1.87 "KMART-MPS" means Kmart Michigan Property Services, LLC,
a Michigan limited liability company, debtor-in-possession in Case No. 02-02470
pending in the Bankruptcy Court.
1.88 "KMART-NC" means Kmart of North Carolina, LLC, a North
Carolina limited liability company, debtor-in-possession in Case No. 02-02465
pending in the Bankruptcy Court.
1.89 "KMART-PA" means Kmart of Pennsylvania, LP, a
Pennsylvania limited partnership, debtor-in-possession in Case No. 02-02464
pending in the Bankruptcy Court.
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1.90 "KMART-TX" means Kmart of Texas, LP, a Texas limited
partnership, debtor-in-possession in Case No. 02-02466 pending in the
Bankruptcy Court.
1.91 "KMART CREDITOR TRUST" means the trust created pursuant
to Article 11.3 of this Plan.
1.92 "MANAGEMENT COMPENSATION PLAN" means an executive
emergence and long-term incentive program approved by the board of directors of
the Debtors or Reorganized Debtors and implemented for the benefit of the
Reorganized Debtors' employees, members of management, and directors and
designed to (i) recognize the experience, qualifications, and proven track
record of the Reorganized Debtors' management team and (ii) provide incentives
for the beneficiaries thereof to maximize value for stockholders after the
Effective Date as set forth on Exhibit F hereto.
1.93 "NEW HOLDING COMPANY" means a corporation to be created
pursuant to the terms of this Plan, or, in the sole and absolute discretion of
Kmart's board of directors, a Reorganized Debtor, to hold 100% of the New
Operating Company Common Stock on and after the Effective Date.
1.94 "NEW HOLDING COMPANY COMMON STOCK" means the shares of
common stock of New Holding Company authorized under Article 7.8 of this Plan
and under the articles of incorporation of New Holding Company.
1.95 "NEW HOLDING COMPANY PREFERRED STOCK" means the shares of
preferred stock of New Holding Company authorized under Article 7.8 of this Plan
and under the articles of incorporation of New Holding Company.
1.96 "NEW OPERATING COMPANY" means a corporation or other
Person to be created pursuant to the terms of this Plan or, in the sole and
absolute discretion of Kmart's board of directors, a Reorganized Debtor, to be
wholly-owned, directly or indirectly, by New Holding Company.
1.97 "NEW OPERATING COMPANY COMMON STOCK" means shares of
common stock (or such other certificates designating ownership as are
appropriate) of New Operating Company authorized under Article 7.1 of this Plan
and under the Certificate of Incorporation of New Operating Company.
1.98 "NON-LENDER CLAIMS" means the Prepetition Note Claims,
the Trade Vendor/Lease Rejection Claims, the Trust Preferred Obligations, and
the Other Unsecured Claims as to which the holders thereof have made the Other
Unsecured Claim Election.
1.99 "ORDINARY COURSE PROFESSIONAL ORDER" means the Bankruptcy
Court's Order Pursuant to 11 U.S.C. ss.ss. 105(a), 327(e) and 331 Authorizing
Retention of Professionals Utilized by the Debtors in the Ordinary Course of
Business (Docket No. 682).
1.100 "OTHER EXECUTORY CONTRACT OR UNEXPIRED LEASE" means all
executory contracts and unexpired leases, other than Employee-Related
Agreements, Intercompany Executory Contracts, and Intercompany Unexpired Leases
to which any of the Debtors are a party.
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1.101 "OTHER PRIORITY CLAIM" means a Claim entitled to
priority pursuant to section 507(a) of the Bankruptcy Code other than a Priority
Tax Claim or an Administrative Claim.
1.102 "OTHER UNSECURED CLAIM" means, subject to Article 5.8
hereof, a Claim that is not an Administrative Claim, Intercompany Claim, Other
Priority Claim, PBGC Claim, Priority Tax Claim, Prepetition Lender Claim,
Prepetition Note Claim, Secured Claim, Subordinated Securities Claim, Trade
Vendor/Lease Rejection Claim, or Trust Preferred Obligation.
1.103 "OTHER UNSECURED CLAIM CASH PAYMENT AMOUNT" means the
Cash to be distributed by a representative of the Kmart Creditor Trust to each
holder of an Allowed Other Unsecured Claim on account of its Pro Rata interest
in the Other Unsecured Claim Senior Note.
1.104 "OTHER UNSECURED CLAIM SENIOR NOTE" means a senior
unsecured note in substantially for the form attached hereto as Exhibit O from
the Debtors to the Kmart Creditor Trust, payable on the third anniversary of the
Effective Date, in an amount equal to (i) the product of (a) the estimated,
mid-range value, as of the Effective Date, of the aggregate consideration to be
distributed to holders of Prepetition Note Claims and Trade Vendor/Lease
Rejection Claims multiplied by (b) a fraction, the numerator of which is equal
to the aggregate amount of all Allowed Other Unsecured Claims, and the
denominator of which is equal to the aggregate amount of all Allowed Prepetition
Note Claims, Allowed Trade Vendor/Lease Rejection Claims, and Allowed Other
Unsecured Claims, plus (ii) annual interest as provided for in such note.
1.105 "OTHER UNSECURED CLAIM ELECTION" means an election by an
Other Unsecured Claimholder on its Ballot to be treated as a Trade Vendor/Lease
Rejection Claimholder.
1.106 "OTHER UNSECURED CLAIM ESTIMATION PROCEDURE" means a
procedure approved by the Bankruptcy Court on or before the Effective Date
providing for the expedited estimation, for distribution purposes, of Other
Unsecured Claims held by Other Unsecured Claimholders who make the Other
Unsecured Claim Election.
1.107 "PBGC" means the Pension Benefit Guaranty Corporation.
1.108 "PBGC CLAIMS" means all Claims of the PBGC against any
of the Debtors and all claims of the PBGC against any non-Debtor Affiliate of
any Debtor.
1.109 "PERIODIC DISTRIBUTION DATE" means (a) the Distribution
Date, as to the first distribution made by the Reorganized Debtors, and (b)
thereafter, the first Business Day occurring on or immediately after each
January 1st, April 1st, July 1st, and October 1st, provided, however, that the
first Periodic Distribution Date after the Distribution Date shall be no less
than ninety (90) days after the Distribution Date.
1.110 "PERSON" means an individual, corporation, partnership,
joint venture, association, joint stock company, limited liability company,
limited liability partnership, trust, estate, unincorporated organization,
governmental unit (as defined in section 101(27) of the Bankruptcy Code) or
other entity.
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1.111 "PETITION DATE" means January 22, 2002, the date on
which the Debtors filed their petitions for relief in the Bankruptcy Court
commencing the Chapter 11 Cases.
1.112 "PLAN" means this joint plan of reorganization for the
resolution of outstanding Claims and Interests in the Chapter 11 Cases, as
herein proposed by the Debtors, including all supplements, appendices and
schedules hereto, either in their present form or as the same may be further
altered, amended or modified from time to time in accordance with the Bankruptcy
Code and Bankruptcy Rules.
1.113 "POST-CONFIRMATION COMMITTEE" has the meaning ascribed
to it in Article 15.5 of this Plan.
1.114 "PLAN INVESTORS" means ESL Investments, Inc., a Delaware
corporation, and Third Avenue Trust, on behalf of certain of its investment
series.
1.115 "PLAN INVESTOR CLAIM" means all Administrative Claims of
the Plan Investors under the Investment Agreement, including, without
limitation, all fees and expenses (including professional fees and expenses)
arising under the Investment Agreement.
1.116 "PREPETITION AGENT" means JPMorgan Chase Bank (f/k/a,
The Chase Manhatten Bank) as administrative agent under the Prepetition Credit
Agreements.
1.117 "PREPETITION CREDIT AGREEMENTS" means, collectively, (a)
that certain Three Year Credit Agreement, dated as of December 6, 1999, by and
among Kmart, J.P. Morgan Securities, Inc. (f/k/a Chase Securities, Inc.), as
Lead Arranger and Book Manager, JPMorgan Chase Bank (f/k/a The Chase Manhattan
Bank), as Administrative Agent, Bank of America, National Association, as
Syndication Agent, BankBoston, N.A., as Co-Documentation Agent, and Bank of New
York, as Co-Documentation Agent, as amended, supplemented or otherwise modified
from time to time, and all documents executed in connection therewith, and (b)
that certain 364 Day Credit Agreement, dated as of November 13, 2001, by and
among Kmart, JPMorgan Chase Bank (f/k/a The Chase Manhattan Bank), as
Administrative Agent, Credit Suisse First Boston, Fleet National Bank, and Bank
of New York, as Co-Documentation Agents, as amended, supplemented or otherwise
modified from time to time, and all documents executed in connection therewith.
1.118 "PREPETITION LENDER CLAIMS" means all Claims arising
under or pursuant to the Prepetition Credit Agreements.
1.119 "PREPETITION LENDERS" means the lenders from time to
time party to the Prepetition Credit Agreements.
1.120 "PREPETITION NOTE CLAIMS" means all Claims arising under
or pursuant to any of the Prepetition Notes.
1.121 "PREPETITION NOTES" means, collectively, (a)(i) the
12.5% Notes due March 1, 2005 in the aggregate principal amount of $100,000,000;
(ii) the 8.125% Notes due December 1, 2006 in the aggregate principal amount of
$200,000,000; (iii) the 7.75% Notes due October 1, 2012 in the aggregate
principal amount of $157,257,000; (iv) the 8.25% Notes due January 1, 2022 in
the aggregate
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principal amount of $68,055,000; (iv) the 8.375% Notes due July 1, 2022 in the
aggregate principal amount of $85,550,000; (v) the 7.95% Notes due February 1,
2023 in the aggregate principal amount of $259,800,000; and (vi) the Series C
Medium Term Notes and Series D Medium Term Notes in the aggregate principal
amount of $222,935,000, in each case issued by Kmart pursuant to that certain
indenture dated as of February 1, 1985, between Kmart and The Bank of New York,
as original indenture trustee, as thereafter succeeded in that capacity by
Wilmington Trust Company as successor indenture trustee, as such indenture may
have been amended, supplemented, or otherwise modified from time to time,
including, but not limited to, that certain First Supplemental Indenture, dated
as of March 1, 1991; (b)(i) the 8.375% Notes due December 1, 2004 in the
aggregate principal amount of $300,000,000; (ii) the 9.375% Notes due February
1, 2006 in the aggregate principal amount of $400,000,000; and (iii) the 9.875%
Notes due June 15, 2008 in the aggregate principal amount of $430,000,000; in
each case issued by Kmart pursuant to that certain indenture dated as of
December 13, 1999, between Kmart and The Bank of New York, as original indenture
trustee, as thereafter succeeded in that capacity by Wilmington Trust Company as
successor indenture trustee, as such indenture may have been amended,
supplemented, or otherwise modified from time to time, including, but not
limited to, that certain First Supplemental Indenture dated as of December 13,
1999; that certain Second Supplemental Indenture, dated as of January 30, 2001;
and that certain Third Supplemental Indenture dated as of June 19, 2001; and (c)
the Commercial Development Revenue Refunding Bonds (Kmart Corporation Project)
Series 1994 in the aggregate outstanding principal amount of $1,800,000.00,
issued under or in connection with the trust indenture dated as of November 1,
1994 by and between The County Commission of Harrison County, as issuer, and JP
Morgan Trust Company, N.A. (as successor to Society National Bank), as indenture
trustee, as thereafter succeeded in that capacity by Wilmington Trust Company as
successor indenture trustee, and all of the right, title and interest of
Harrison County in and under the Loan Agreement and the Promissory Note made
between Kmart and The County Commission of Harrison County.
1.122 "PRIORITY TAX CLAIM" means a Claim entitled to priority
pursuant to section 507(a)(8) of the Bankruptcy Code.
1.123 "PRO RATA" means, at any time, the proportion that the
Face Amount of a Claim in a particular Class or Classes bears to (ii) the
aggregate Face Amount of all Claims (including Disputed Claims, but excluding
Disallowed Claims) in such Class or Classes, unless this Plan provides
otherwise.
1.124 "PROFESSIONAL" means those Persons retained in the
Chapter 11 Cases by separate Bankruptcy Court orders pursuant to sections 327
and 1103 of the Bankruptcy Code or otherwise; provided, however, that
Professional does not include those Persons retained pursuant to the Ordinary
Course Professional Order.
1.125 "PROFESSIONAL CLAIM" means an Administrative Claim of a
Professional for compensation for services rendered or reimbursement of costs,
expenses or other charges and disbursements incurred relating to services
rendered or expenses incurred after the Petition Date and prior to and including
the Effective Date.
1.126 "PROFESSIONAL FEE ORDER" means the order entered by the
Bankruptcy Court on January 25, 2002, authorizing the interim payment of
Professional Claims subject to the Holdback Amount.
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1.127 "QUALIFYING REAL ESTATE" means any (i) real estate
lease, including a capital lease, under which a Debtor is a lessee or (ii) real
estate owned by a Debtor, in each case that is designated to remain in such
Debtor's Estate following the Effective Date and identified in a writing by such
Debtor filed and served on relevant parties in interest on or before the Exhibit
Filing Date.
1.128 "RECORD DATE" means the record date for purposes of
making distributions under this Plan on account of Allowed Claims, which date
shall be the earlier of the Voting Deadline or such other date established by
the Bankruptcy Court.
1.129 "REGISTRATION RIGHTS AGREEMENT" means the agreement, a
form of which will be attached to this Plan on or prior to the Exhibit Filing
Date as Exhibit G, whereby New Holding Company will be obligated to register
certain shares of New Holding Company Common Stock pursuant to the terms and
conditions of such agreement.
1.130 "REINSTATED" OR "REINSTATEMENT" means (a) leaving
unaltered the legal, equitable and contractual rights to which a Claim entitles
the Claimholder so as to leave such Claim Unimpaired in accordance with section
1124 of the Bankruptcy Code, or (b) notwithstanding any contractual provision or
applicable law that entitles the Claimholder to demand or receive accelerated
payment of such Claim after the occurrence of a default (i) curing any such
default that occurred before or after the Petition Date, other than a default of
a kind specified in section 365(b)(2) of the Bankruptcy Code; (ii) reinstating
the maturity of such Claim as such maturity existed before such default; (iii)
compensating the Claimholder for any damages incurred as a result of any
reasonable reliance by such Claimholder on such contractual provision or such
applicable law; and (iv) not otherwise altering the legal, equitable or
contractual rights to which such Claim entitles the Claimholder; provided,
however, that any contractual right that does not pertain to the payment when
due of principal and interest on the obligation on which such Claim is based,
including, but not limited to, financial covenant ratios, negative pledge
covenants, covenants or restrictions on merger or consolidation, "going dark"
provisions, and affirmative covenants regarding corporate existence prohibiting
certain transactions or actions contemplated by this Plan, or conditioning such
transactions or actions on certain factors, shall not be required to be cured or
reinstated in order to accomplish Reinstatement.
1.131 "RELEASED PARTIES" means, collectively, (i) all officers
of each of the Debtors, all members of the boards of directors of each of the
Debtors, and all employees of each of the Debtors, in each case, as of the date
of the commencement of the hearing on the Disclosure Statement, (ii) the
Statutory Committees and all members of the Statutory Committees in their
respective capacities as such, (iii) the DIP Agent in its capacity as such, (iv)
the DIP Lenders in their capacities as such, (v) the Plan Investors in their
capacities as such, (ii) the Prepetition Lenders in their capacities as such,
and (vii) with respect to each of the above-named Persons, such Person's
affiliates, principals, employees, agents, officers, directors, financial
advisors, attorneys and other professionals, in their capacities as such.
1.132 "REORGANIZED DEBTOR" OR "REORGANIZED DEBTORS" means,
individually, any of New Holding Company, New Operating Company, or any Debtor
and, collectively, all of New Holding Company, New Operating Company, and the
Debtors, in each case from and after the Effective Date.
1.133 "REORGANIZED . . . " means the applicable Debtor from
and after the Effective Date.
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1.134 "RESPONSIBLE OFFICER" means the person designated by the
board of directors of Kmart, after consultation with the Statutory Committees,
to serve as the chief responsible officer and decision-maker for the Estates of
the Debtors possessing Qualifying Real Estate from and after the Effective Date.
1.135 "RESTRUCTURING DEBTORS" means those Debtors that will be
the subject of a Restructuring Transaction under this Plan.
1.136 "RESTRUCTURING TRANSACTION(S)" means a dissolution or
winding up of the corporate existence of a Debtor or the consolidation, merger,
contribution of assets, or other transaction in which a Reorganized Debtor
merges with or transfers substantially all of its assets and liabilities to a
Reorganized Debtor or their Affiliates, on or after the Effective Date, as set
forth in the Restructuring Transaction Notice.
1.137 "RESTRUCTURING TRANSACTIONS NOTICE" means the notice
filed with the Bankruptcy Court on or before the Exhibit Filing Date as Exhibit
H to this Plan listing the Restructuring Debtors and briefly describing the
relevant Restructuring Transactions, including the corporate structure of the
Reorganized Debtors as described in Exhibit I to this Plan.
1.138 "RETAINED ACTIONS" means all Claims, Causes of Action,
rights of action, suits and proceedings, whether in law or in equity, whether
known or unknown, which any Debtor may hold against any Person, including,
without limitation, (a) Avoidance Claims, (b) Claims and Causes of Action
brought prior to the Confirmation Date, (c) Claims and Causes of Action against
any Persons for failure to pay for products or services provided or rendered by
any of the Debtors, (d) Claims and Causes of Action relating to strict
enforcement of any of the Debtors' intellectual property rights, including
patents, copyrights and trademarks, and (e) Claims and Causes of Action seeking
the recovery of any of the Debtors' or the Reorganized Debtors' accounts
receivable or other receivables or rights to payment created or arising in the
ordinary course of any of the Debtors' or the Reorganized Debtors' businesses,
including, without limitation, claim overpayments and tax refunds, including,
but not limited to, those listed in Exhibit J to the Plan; provided, however,
that the foregoing shall not include Trust Claims (including Avoidance Actions
that are Trust Claims), which will be transferred to the Kmart Creditor Trust,
Avoidance Claims (to the extent not listed in Exhibit J), or Claims explicitly
released under this Plan or by Final Order of the Bankruptcy Court prior to the
date hereof.
1.139 "SCHEDULED" means, with respect to any Claim or
Interest, the status, priority, and amount, if any, of such Claim or Interest as
set forth in the Schedules.
1.140 "SCHEDULES" means the schedules of assets and
liabilities and the statements of financial affairs filed in the Chapter 11
Cases by the Debtors, as such schedules or statements have been or may be
further modified, amended or supplemented from time to time in accordance with
Bankruptcy Rule 1009 or orders of the Bankruptcy Court.
1.141 "SECURED CLAIM" means a Claim secured by a security
interest in or a lien on property in which a Debtor's Estate has an interest or
that is subject to setoff under section 553 of the Bankruptcy Code, to the
extent of the value, as of the Effective Date or such other date as is
established by the Bankruptcy Court, of such Claimholder's interest in the
applicable Estate's interest in such property or to the extent of the amount
subject to setoff, as applicable, as determined by a Final Order of
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the Bankruptcy Court pursuant to section 506(a) of the Bankruptcy Code or in the
case of setoff, pursuant to section 553 of the Bankruptcy Code, or as otherwise
agreed upon in writing by the Debtors and the Claimholder.
1.142 "SECURITIES ACT" means the Securities Act of 1933, as
now in effect or hereafter amended.
1.143 "SECURITIES ACTION" means any Cause of Action against
any Person other than a Debtor arising out of or related to a Person's ownership
of Existing Common Stock.
1.144 "SECURITY" shall have the meaning ascribed to it in
section 101(49) of the Bankruptcy Code.
1.145 "SERVICER" has the meaning ascribed to it in Article
7.10 of this Plan.
1.146 "SFPR" means S.F.P.R., Inc., a Puerto Rico corporation,
debtor-in-possession in Case No. 02-02499 pending in the Bankruptcy Court.
1.147 "STATUTORY COMMITTEES" means, collectively, the
Unsecured Creditors' Committee, the Financial Institutions' Committee, and the
Equity Committee.
1.148 "SUBORDINATED SECURITIES CLAIM" means a Claim subject to
subordination under section 510(b) of the Bankruptcy Code, including, without
limitation, any Claim that arises from the rescission of a purchase or sale of a
Security of any of the Debtors (including, without limitation, Existing Common
Stock), or for damages arising from the purchase or sale of such a Security, or
for reimbursement, indemnification, or contribution allowed under section 502 of
the Bankruptcy Code on account of such Claim.
1.149 "TOTAL INVESTOR SHARES" means all shares of New Holding
Company Common Stock to be issued to the Plan Investors pursuant to the
Investment Agreement.
1.150 "TRADE VENDOR/LEASE REJECTION CLAIM" means, subject to
Article 5.8 hereof, a Claim arising as a result of (i) retail merchandise or
services provided by trade vendors or service providers, (ii) rejection of
unexpired real property leases, and (iii) Other Unsecured Claims that have made
the Other Unsecured Claim Election.
1.151 "TRADE VENDORS COLLATERAL AGENT" means the entity
appointed by the Creditors' Committee, which is reasonably acceptable to the
Debtors, which shall hold all liens with respect to the Post-Effective Date
Trade Vendors' Lien pursuant to Article 7.12 of this Plan.
1.152 "TRADE VENDORS' LIEN" means any liens granted to the
Trade Vendors' Collateral Agent, as of the Effective Date, pursuant to Article
7.12 of this Plan and Exhibit K to this Plan.
1.153 "TRUST ADVISORY BOARD" means the board that is to be
created pursuant to Article 11.4 of this Plan for the purpose of advising the
Trustee with respect to decisions affecting the Kmart Creditor Trust.
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1.154 "TRUST AGREEMENT" means that certain Trust Agreement
that will govern the Kmart Creditor Trust, a form of which is attached to this
Plan as Exhibit L.
1.155 "TRUST ASSETS" means those assets, including the Trust
Claims, to be transferred to and owned by the Kmart Creditor Trust pursuant to
Article 11.2 of this Plan.
1.156 "TRUST CLAIMS" means any and all Causes of Action
against any Person or entity arising from or relating to the Investigations
which, for purposes hereof, means the Accounting and Stewardship Investigations,
including all matters authorized by order entered by the Bankruptcy Court on
September 4, 2002 approving the participation, on a joint interest basis, of the
Statutory Committees in said Investigations, and including all matters arising
in connection with responding to Government Inquiries (as each of such terms is
defined in the Disclosure Statement).
1.157 "TRUST PREFERRED OBLIGATIONS" means all obligations of
the Debtors arising under or pursuant to the Trust Preferred Securities.
1.158 "TRUST RECOVERIES" means any and all proceeds received
by the Kmart Creditor Trust from (a) the prosecution to, and collection of, a
final judgment of a Trust Claim against a Person, or (b) the settlement or other
compromise of a Trust Claim against a Person.
1.159 "TRUST PREFERRED SECURITIES" means those certain
mandatorily redeemable convertible preferred securities issued by Kmart
Financing I, an Affiliate Debtor.
1.160 "TRUSTEE" means the trustee of the Kmart Creditor Trust
as contemplated by the Trust Agreement.
1.161 "UNIMPAIRED" refers to any Claim or Interest that is not
Impaired.
1.162 "UNSECURED CREDITORS' COMMITTEE" means the Official
Unsecured Creditors' Committee appointed pursuant to section 1102(a) of the
Bankruptcy Code in the Chapter 11 Cases.
1.163 "VOTING DEADLINE" means April __, 2003, at 4:00 p.m.
prevailing Eastern Time.
C. RULES OF INTERPRETATION
For purposes of this Plan, unless otherwise provided herein,
(a) whenever from the context it is appropriate, each term, whether stated in
the singular or the plural, will include both the singular and the plural; (b)
each pronoun stated in the masculine, feminine or neuter includes the masculine,
feminine and neuter; (c) unless otherwise provided in this Plan, any reference
in this Plan to a contract, instrument, release or other agreement or document
being in a particular form or on particular terms and conditions means that such
document will be substantially in such form or substantially on such terms and
conditions; (d) any reference in this Plan to an existing document or schedule
filed or to be filed means such document or schedule, as it may have been or may
be amended, modified or supplemented pursuant to this Plan; (e) any reference to
an entity as a holder of a Claim or Interest includes that entity's successors
and assigns; (f) all references in this Plan to Sections, Articles and Exhibits
are references to Sections, Articles and Exhibits of or to this Plan; (g) the
words "herein," "hereunder" and "hereto" refer to this Plan in its entirety
rather than to a particular portion of this Plan;
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(h) captions and headings to Articles and Sections are inserted for convenience
of reference only and are not intended to be a part of or to affect the
interpretation of this Plan; (i) subject to the provisions of any contract,
certificates of incorporation, by-laws, instrument, release or other agreement
or document entered into in connection with this Plan, the rights and
obligations arising under this Plan shall be governed by, and construed and
enforced in accordance with, federal law, including the Bankruptcy Code and
Bankruptcy Rules; and (j) the rules of construction set forth in section 102 of
the Bankruptcy Code will apply.
This Plan is the product of extensive discussions and negotiations
between and among, inter alia, the Debtors, the Creditors' Committees and
certain other creditors and constituencies. Each of the foregoing was
represented by counsel who either (a) participated in the formulation and
documentation of, or (b) was afforded the opportunity to review and provide
comments on, the Plan, Disclosure Statement, and the documents ancillary
thereto.
D. COMPUTATION OF TIME
In computing any period of time prescribed or allowed by this
Plan, unless otherwise expressly provided, the provisions of Bankruptcy Rule
9006(a) shall apply.
E. REFERENCES TO MONETARY FIGURES
All references in this Plan to monetary figures shall refer to
United States of America currency, unless otherwise expressly provided.
F. EXHIBITS
All Exhibits are incorporated into and are a part of this Plan
as if set forth in full herein and, to the extent not annexed hereto, such
Exhibits shall be filed with the Bankruptcy Court on or before the Exhibit
Filing Date. After the Exhibit Filing Date, copies of Exhibits can be obtained
upon written request to Skadden, Arps, Slate, Meagher & Flom (Illinois), 333 W.
Wacker Drive, Chicago, Illinois 60606 (Attn: John Wm. Butler, Jr., Esq.),
counsel to the Debtors, or by downloading such exhibits from the Court's website
at http:\\www.ilnb.uscourts.gov. To the extent any Exhibit is inconsistent with
the terms of this Plan, unless otherwise ordered by the Bankruptcy Court, the
non-Exhibit portion of this Plan shall control.
ARTICLE II
ADMINISTRATIVE EXPENSES
AND PRIORITY TAX CLAIMS
2.1 ADMINISTRATIVE CLAIMS. Subject to the provisions of
Article X of this Plan, on the first Periodic Distribution Date occurring after
the later of (a) the date an Administrative Claim becomes an Allowed
Administrative Claim or (b) the date an Administrative Claim becomes payable
pursuant to any agreement between a Debtor (or a Reorganized Debtor) and the
holder of such Administrative Claim, an Allowed Administrative Claimholder in
the Chapter 11 Cases shall receive, in full satisfaction, settlement, release,
and discharge of, and in exchange for, such Administrative Claim,
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(i) Cash equal to the unpaid portion of such Allowed Administrative Claim or
(ii) such other treatment as to which the Debtors (or the Reorganized Debtors)
and such Claimholder shall have agreed upon in writing; provided, however, that
(x) Claimholders of Claims arising under the DIP Facility shall be deemed to
have Allowed Claims as of the Effective Date in such amount as to which the
Debtors and such Claimholders shall have agreed upon in writing or as determined
by the Bankruptcy Court, which DIP Facility Claims shall be paid in accordance
with Article 10.1 of this Plan, (y) the Plan Investors shall be deemed to have
an Allowed Plan Investor Claim arising under the Investment Agreement in such
amount as to which the Debtors and the Plan Investors shall have agreed upon in
writing or as fixed by the Bankruptcy Court, which Plan Investor Claim shall be
paid in full in Cash on the Effective Date, and (z) Allowed Administrative
Claims with respect to liabilities incurred by the Debtors in the ordinary
course of business during the Chapter 11 Cases shall be paid in the ordinary
course of business in accordance with the terms and conditions of any agreements
relating thereto.
2.2 PRIORITY TAX CLAIMS. Commencing on the first Periodic
Distribution Date occurring after the later of (a) the date a Priority Tax Claim
becomes an Allowed Priority Tax Claim or (b) the date a Priority Tax Claim first
becomes payable pursuant to any agreement between a Debtor (or a Reorganized
Debtor) and the holder of such Priority Tax Claim, at the sole option of the
Debtors (or the Reorganized Debtors after the Effective Date), such Allowed
Priority Tax Claimholder shall be entitled to receive on account of such
Priority Tax Claim, in full satisfaction, settlement, release and discharge of,
and in exchange for, such Priority Tax Claim, (i) equal Cash payments on the
last Business Day of each three-month period following the Effective Date,
during a period not to exceed six years after the assessment of the tax on which
such Claim is based, totaling the principal amount of such Claim plus simple
interest on any outstanding balance from the Effective Date calculated at the
interest rate available on ninety (90) day United States Treasuries on the
Effective Date, (ii) such other treatment agreed to by the Allowed Priority Tax
Claimholder and the Debtors (or the Reorganized Debtors), provided such
treatment is on more favorable terms to the Debtors (or the Reorganized Debtors
after the Effective Date) than the treatment set forth in clause (i) hereof, or
(iii) payment in full in Cash.
ARTICLE III
CLASSIFICATION OF CLAIMS AND INTERESTS
Pursuant to section 1122 of the Bankruptcy Code, set forth
below is a designation of classes of Claims against and Interests in the
Debtors. A Claim or Interest is placed in a particular Class for the purposes of
voting on this Plan and of receiving distributions pursuant to this Plan only to
the extent that such Claim or Interest is an Allowed Claim or an Allowed
Interest in that Class and such Claim or Interest has not been paid, released,
or otherwise settled prior to the Effective Date. In accordance with section
1123(a)(1) of the Bankruptcy Code, Administrative Claims and Priority Tax Claims
of the kinds specified in sections 507(a)(1) and 507(a)(8) of the Bankruptcy
Code have not been classified and their treatment is set forth in Article II
above. This Plan, though proposed jointly, constitutes a separate plan proposed
by each of the Debtors. Therefore, except as expressly specified herein, the
classifications set forth below shall be deemed to apply separately with respect
to each plan proposed by each such Debtor. Each class for each Debtor is
identified by the designation "DD-NN," where "DD" is the abbreviation for the
name of each Debtor as specified on page 2 of the Plan, and "NN" is the class
number as identified below. Thus, for example, the class of Secured Claims
(Class 1), if any, against Kmart of Michigan, Inc. is identified by the
designation "KM-MI-1."
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3.1 CLASS 1. Class 1 consists of separate subclasses for all
Secured Claims that may exist against a particular Debtor.
3.2 CLASS 2. Class 2 consists of all Other Priority Claims
that may exist against a particular Debtor.
3.3 CLASS 3. Class 3 consists of all PBGC Claims that may
exist against a particular Debtor.
3.4 CLASS 4. Class 4 consists of all Prepetition Lender
Claims. THIS CLASS IS APPLICABLE ONLY TO THE CHAPTER 11 CASES OF THE FOLLOWING
DEBTORS: KMART, KMART AMSTERDAM, KMART HOLDINGS, KMART-IN, KMART-MI, KMART-MPS,
KMART-NC, KMART-PA, KMART-TX, BIG BEAVER CAGUAS, BIG BEAVER DEVELOPMENT, BIG
BEAVER FLORIDA, BIG BEAVER GUAYNABO, BLUELIGHT, AND SFPR.
3.5 CLASS 5. Class 5 consists of all Prepetition Note Claims.
THIS CLASS IS APPLICABLE ONLY TO THE CHAPTER 11 CASE OF KMART.
3.6 CLASS 6. Class 6 consists of all Trade Vendor/Lease
Rejection Claims that may exist against a particular Debtor.
3.7 CLASS 7. Class 7 consists of all Other Unsecured Claims
that may exist against a particular Debtor.
3.8 CLASS 8. Class 8 consists of all General Unsecured
Convenience Claims that may exist against a particular Debtor.
3.9 CLASS 9. Class 9 consists of all Trust Preferred
Obligations. THIS CLASS IS APPLICABLE ONLY TO THE CHAPTER 11 CASES OF THE
FOLLOWING DEBTORS: KMART AND KMART FINANCING I.
3.10 CLASS 10. Class 10 consists of all Intercompany Claims
that may exist against a particular Debtor.
3.11 CLASS 11. Class 11 consists of all Subordinated
Securities Claims. This Class is applicable only to the Chapter 11 Case of
Kmart.
3.12 CLASS 12. Class 12 consists of all Interests that may
exist with respect to a particular Debtor.
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ARTICLE IV
IDENTIFICATION OF CLASSES OF CLAIMS
AND INTERESTS IMPAIRED AND UNIMPAIRED BY THE PLAN
4.1 CLASSES OF CLAIMS THAT ARE UNIMPAIRED. The following
Classes are Unimpaired by the Plan:
Class 1 (Secured Claims)
Class 2 (Other Priority Claims)
Class 3 (PBGC Claims)
4.2 IMPAIRED CLASSES OF CLAIMS AND INTERESTS. The following
Classes are Impaired by the Plan:
Class 4 (Prepetition Lender Claims)
Class 5 (Prepetition Note Claims)
Class 6 (Trade Vendor/Lease Rejection Claims)
Class 7 (Other Unsecured Claims)
Class 8 (General Unsecured Convenience Claims)
Class 9 (Trust Preferred Obligations)
Class 10 (Intercompany Claims)
Class 11 (Subordinated Securities Claims)
Class 12 (Interests)
ARTICLE V
PROVISIONS FOR TREATMENT
OF CLAIMS AND INTERESTS
5.1 CLASS 1 (SECURED CLAIMS). Except as otherwise provided in
and subject to Article 9.8 of this Plan, at the sole option of the Debtors or
Reorganized Debtors, (i) the legal, equitable, and contractual rights of each
Allowed Secured Claimholder shall be Reinstated or (ii) each Allowed Secured
Claimholder shall receive, in full satisfaction, settlement and release of, and
in exchange for, its Allowed Secured Claim (A) Cash in an amount equal to the
value of the Secured Claimholder's interest in the property of the Estate which
constitutes collateral for such Allowed Secured Claim, or (B) the property of
the Estate which constitutes collateral for such Allowed Secured Claim, or (C)
such other treatment as to which the Debtors (or the Reorganized Debtors) and
the holder of such Allowed Secured Claim have agreed upon in writing, provided
that such treatment is not more favorable than the treatment in clause (A) or
clause (B) above. The Debtors' failure to object to such Secured Claims in their
Chapter 11 Cases shall be without prejudice to the Reorganized Debtors' right to
contest or otherwise defend against such Claims in the Bankruptcy Court or other
appropriate non-bankruptcy forum (at the option of the Debtors or the
Reorganized Debtors) when and if such Claims are sought to be enforced by the
Secured Claimholder. Notwithstanding section 1141(c) or any other provision of
the Bankruptcy Code, all prepetition liens on property of the Debtors held by or
on behalf of the Secured Claimholders with respect to such Claims shall survive
the Effective Date and continue in accordance with the contractual
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terms of the underlying agreements with such Claimholders until, as to each such
Claimholder, the Allowed Claims of such Secured Claimholder are paid in full.
5.2 CLASS 2 (OTHER PRIORITY CLAIMS). Except as otherwise
provided in and subject to Article 9.8 of this Plan, on the first Periodic
Distribution Date occurring after the later of (i) the date an Other Priority
Claim becomes an Allowed Other Priority Claim or (ii) the date an Other Priority
Claim becomes payable pursuant to any agreement between the Debtors (or the
Reorganized Debtors) and the holder of such Other Priority Claim, each Allowed
Other Priority Claimholder shall receive, in full satisfaction, settlement,
release, and discharge of, and in exchange for, such Other Priority Claim, (a)
Cash in an amount equal to the amount of such Allowed Other Priority Claim or
(b) such other treatment as to which the Debtors (or the Reorganized Debtors)
and such Claimholder shall have agreed upon in writing, provided that such
treatment is not more favorable than the treatment in clause (a) or clause (b)
above. The Debtors' failure to object to an Other Priority Claim in their
Chapter 11 Cases shall be without prejudice to the Reorganized Debtors' right to
contest or otherwise defend against such Claim in the Bankruptcy Court or other
appropriate non-bankruptcy forum (at the option of the Debtors or the
Reorganized Debtors) when and if such Claim is sought to be enforced by the
Other Priority Claimholder.
5.3 CLASS 3 (PBGC CLAIMS). Except as otherwise provided in and
subject to Article 9.8 of this Plan, the PBGC shall receive, in full
satisfaction, settlement, release, and discharge of, and in exchange for, all
PBGC Claims, whether asserted against Kmart or any Affiliate Debtor, the same
legal, equitable, and contractual rights to which it would be entitled with
respect to the PBGC Claims under applicable non-bankruptcy law. The legal,
equitable, and contractual rights of the PBGC with respect to all PBGC Claims,
whether against Kmart or any Affiliate Debtor, therefore shall be Reinstated.
The Debtors' failure to object to the PBGC Claims in their Chapter 11 Cases
shall be without prejudice to the Reorganized Debtors' right to contest or
otherwise defend against such Claims in the Bankruptcy Court or other
appropriate non-bankruptcy forum (at the option of the Debtors or the
Reorganized Debtors) when and if such Claims are sought to be enforced by the
PBGC.
5.4 CLASS 4 (PREPETITION LENDER CLAIMS). The Prepetition
Lender Claims are Allowed Prepetition Lender Claims in the aggregate amount of
$1,080,459,000. On the Distribution Date, the Prepetition Lenders shall receive,
in full satisfaction, settlement, release, and discharge of, and in exchange
for, their Prepetition Lender Claims, Cash in an amount equal to forty percent
(40%) of the principal amount of such Prepetition Lender Claims, with such
consideration representing a compromise and settlement, pursuant to section
1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019, of the Prepetition
Lender Claims, including such Claims relating to guarantees by certain Affiliate
Debtors of Kmart's obligations under the Prepetition Credit Agreements and
issues related to the substantive consolidation of the Debtors as contemplated
by this Plan, provided, however, that the Plan Investors shall be deemed to
utilize Cash that they are entitled to receive pursuant to this Article 5.4,
plus additional amounts to be paid by the Plan Investors pursuant to the
Investment Agreement, to purchase the Total Investor Shares pursuant to the
terms of the Investment Agreement. All distributions to Prepetition Lenders
other than the Plan Investors under this Article 5.4 shall be made to the
Prepetition Agent under the Prepetition Credit Agreements for immediate
distribution to the Prepetition Lenders in accordance with the terms of the
Prepetition Credit Agreements.
5.5 CLASS 5 (PREPETITION NOTE CLAIMS). The Prepetition Note
Claims are Allowed Prepetition Note Claims in the aggregate amount of
$2,272,611,000. Commencing on the Distribution
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Date, each Prepetition Note Claimholder shall receive, in full satisfaction,
settlement, release, and discharge of, and in exchange for, its Prepetition Note
Claims, (a) its Pro Rata share of (i) the Creditor Shares plus (ii) the Creditor
Shares allocable to holders of Trust Preferred Obligations under Section 5.9
pursuant to the subordination provisions of all documents pertaining to the
Trust Preferred Securities and evidencing the rights and obligations of the
Trust Preferred Obligations, in each case payable directly to the Servicer of
the Prepetition Note Claims for distribution to holders of the Prepetition Note
Claims, subject to dilution, with the amount of each Prepetition Note
Claimholder's Pro Rata share equal to the total number of such Creditor Shares
multiplied by a fraction, the numerator of which is equal to the amount of such
Prepetition Noteholder's Allowed Prepetition Note Claim, and the denominator of
which is equal to, in the case of clause (i), all Allowed Non-Lender Claims and,
in the case of clause (ii), all Allowed Prepetition Note Claims; and (b) its Pro
Rata Share of the Trust Recoveries, if any, other than the rights to such Trust
Recoveries to which holders of Subordinated Securities Claims and Existing
Common Stock may be entitled pursuant to Section 5.11 and Section 5.12 of the
Plan, with the amount of each Prepetition Note Claimholder's Pro Rata share
equal to the total amount of such rights multiplied by a fraction, the numerator
of which is equal to the amount of such Prepetition Note Claimholder's Allowed
Prepetition Note Claim, and the denominator of which is equal to the sum of all
Allowed Non-Lender Claims (excluding, in the event the Trust Preferred
Obligations are not entitled to participate in the Trust Recoveries pursuant to
Article 5.9 of this Plan, the amount of the Allowed Trust Preferred
Obligations), with such consideration representing a compromise and settlement,
pursuant to section 1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019,
of the Prepetition Lender Claims, including such Claims relating to guarantees
by certain Affiliate Debtors of Kmart's obligations under the Prepetition Credit
Agreements and issues related to the substantive consolidation of the Debtors as
contemplated by this Plan.
5.6 CLASS 6 (TRADE VENDOR/LEASE REJECTION CLAIMS). Except as
otherwise provided in and subject to Article 9.8 of this Plan, commencing on the
first Periodic Distribution Date occurring after the later of (i) the date a
Trade Vendor/Lease Rejection Claim becomes an Allowed Trade Vendor/Lease
Rejection Claim or (ii) the date a Trade Vendor/Lease Rejection Claim becomes
payable pursuant to any agreement between the Debtors (or the Reorganized
Debtors) and the holder of such Trade Vendor/Lease Rejection Claim, each Trade
Vendor/Lease Rejection Claimholder shall receive, in full satisfaction,
settlement, release, and discharge of, and in exchange for, such Trade
Vendor/Lease Rejection Claim, (a) its Pro Rata share of the Creditor Shares,
subject to dilution, with the amount of each Trade Vendor/Lease Rejection
Claimholder's Pro Rata share equal to the total number of Creditor Shares
multiplied by a fraction, the numerator of which is equal to the amount of such
Trade Vendor/Lease Rejection Creditor's Allowed Trade Vendor/Lease Rejection
Claim, and the denominator of which is equal to all Allowed Non-Lender Claims;
and (b) its Pro Rata Share of the Trust Recoveries, if any, other than the
rights to such Trust Recoveries to which holders of Subordinated Securities
Claims and Existing Common Stock may be entitled pursuant to Section 5.11 and
Section 5.12 of the Plan, with the amount of each Trade Vendor/Lease Rejection
Claimholder's Pro Rata share equal to the total amount of such rights multiplied
by a fraction, the numerator of which is equal to the amount of such Trade
Vendor/Lease Rejection Claimholder's Allowed Trade Vendor/Lease Rejection Claim,
and the denominator of which is equal to the sum of all Allowed Non-Lender
Claims (excluding, in the event that the Trust Preferred Obligations are not
entitled to participate in the Trust Recoveries pursuant to Article 5.9 of this
Plan, the amount of Allowed Trust Preferred Obligations), with such
consideration representing a compromise and settlement, pursuant to section
1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019, of the Prepetition
Lender Claims, including such Claims relating to guarantees by certain Affiliate
Debtors of Kmart's obligations under the Prepetition Credit Agreements and
issues
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related to the substantive consolidation of the Debtors as contemplated by this
Plan. The Debtors' failure to object to a Trade Vendor/Lease Rejection Claim in
their Chapter 11 Cases shall be without prejudice to the Reorganized Debtors'
right to contest or otherwise defend against such Claim in the Bankruptcy Court
or other appropriate non-bankruptcy forum (at the option of the Debtors or the
Reorganized Debtors) when and if such Claim is sought to be enforced by the
Trade Vendor/Lease Rejection Claimholder.
5.7 CLASS 7 (OTHER UNSECURED CLAIMS). Except as otherwise
provided in and subject to Article 9.8 of this Plan, commencing on the first
Periodic Distribution Date occurring after the later of (i) the date an Other
Unsecured Claim becomes an Allowed Other Unsecured Claim or (ii) the date an
Other Unsecured Claim becomes payable pursuant to any agreement between the
Debtors (or the Reorganized Debtors) and the holder of such Other Unsecured
Claim, each Other Unsecured Claimholder shall receive, in full satisfaction,
settlement, release, and discharge of, and in exchange for, such Other Unsecured
Claim, its Pro Rata interest in the Other Unsecured Claim Senior Note, thereby
entitling it to its Pro Rata share of the Other Unsecured Claim Cash Payment
Amount, with the amount of each Other Unsecured Claimholder's Pro Rata share
equal to the amount of the Other Unsecured Claim Senior Note multiplied by a
fraction, the numerator of which is equal to the amount of such Other Unsecured
Claimant's Allowed Other Unsecured Claim, and the denominator of which is equal
to all Allowed Other Unsecured Claims, provided, however, that, in the event an
Other Unsecured Claimholder makes the Other Unsecured Claim Election on its
Ballot, such Other Unsecured Claimholder shall be deemed (i) to be a Trade
Vendor/Lease Rejection Claimholder and shall receive, in lieu of its Pro Rata
share of the Other Unsecured Claim Cash Payment Amount, the Trade Vendor/Lease
Rejection Claimholder treatment as provided for in this Plan, and (ii) to
consent to the Other Unsecured Claim Estimation Procedure.
5.8 CLASS 8 (GENERAL UNSECURED CONVENIENCE CLAIMS). Except as
otherwise provided in and subject to Article 9.8 of this Plan, on the first
Periodic Distribution Date occurring after the later of (i) the date a General
Unsecured Convenience Claim becomes an Allowed General Unsecured Convenience
Claim or (ii) the date a General Unsecured Convenience Claim becomes payable
pursuant to any agreement between the Debtors (or the Reorganized Debtors) and
the holder of such General Unsecured Convenience Claim, the holder of an Allowed
General Unsecured Convenience Claim shall receive, in full satisfaction,
settlement, release, and discharge of, and in exchange for, such General
Unsecured Convenience Claim, Cash equal to (a) six and one-quarter percent
(6.25%) of the amount of such Allowed Claim if the amount of such Allowed Claim
is less than or equal to $30,000 or (b) $1,875 if the amount of such Allowed
Claim is greater than $30,000 and the holder of such Claim has made the
Convenience Class Election. Any Trade Vendor/Lease Rejection Claims or Other
Unsecured Claims that are treated as General Unsecured Convenience Claims shall
not otherwise be treated as Trade Vendor/Lease Rejection Claims or Other
Unsecured Claims under this Plan.
5.9 CLASS 9 (TRUST PREFERRED OBLIGATIONS). Except as otherwise
provided in and subject to Article 9.8 of this Plan, commencing on the first
Periodic Distribution Date occurring after the later of (i) the date a Trust
Preferred Obligation becomes an Allowed Trust Preferred Obligation or (ii)
the date a Trust Preferred Obligation becomes payable pursuant to any agreement
between the Debtors (or the Reorganized Debtors) and the holder of such Trust
Preferred Obligation, each Trust Preferred Obligation holder shall receive, in
full satisfaction, settlement, release, and discharge of, and in exchange for,
such Trust Preferred Obligation, (a) its Pro Rata share of the Creditor Shares,
with the amount of each Trust Preferred Obligation holder's Pro Rata share equal
to the total number of Creditor Shares
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multiplied by a fraction, the numerator of which is equal to the amount of such
holder's Allowed Trust Preferred Obligation, and the denominator of which is
equal to the sum of all Allowed Non-Lender Claims, with such distribution to be
made to holders of Allowed Prepetition Note Claims pursuant to the subordination
provisions of all documents pertaining to the Trust Preferred Securities and
evidencing the rights and obligations of the Trust Preferred Obligations; and
(b)(i) in the event that (y) the Class of Trust Preferred Obligations votes to
accept this Plan and (z) holders of Allowed Prepetition Note Claims actually
receive the Creditor Shares allocable to holders of Allowed Trust Preferred
Obligations pursuant to clause (a) hereof, their Pro Rata Share of the Trust
Recoveries, if any, other than the rights to such Trust Recoveries to which
holders of Subordinated Securities Claims and Existing Common Stock may be
entitled pursuant to Section 5.11 and Section 5.12 of the Plan, with the amount
of each Trust Preferred Obligation holder's Pro Rata share equal to the total
amount of such rights multiplied by a fraction, the numerator of which is equal
to the amount of such Trust Preferred Obligation holder's Allowed Trust
Preferred Obligation, and the denominator of which is equal to the sum of all
Allowed Non-Lender Claims, and (ii) in the event that either (y) the Class of
Trust Preferred Obligations votes to reject this Plan or (z) the holders of
Allowed Prepetition Note Claims do not actually receive the Creditor Shares
allocable to holders of Allowed Trust Preferred Obligations pursuant to clause
(a) hereof, Trust Preferred Obligation holders shall not be entitled to, and
shall not receive or retain any property or interest in property on account of
such Obligations under this Plan.
5.10 CLASS 10 (INTERCOMPANY CLAIMS). On the Effective Date, at
the option of the Debtors or the Reorganized Debtors in connection with the
Restructuring Transactions contemplated by the Plan, the Intercompany Claims of
any Debtor against any other Debtor shall either be (a) Reinstated, in full or
in part, or (b) discharged and satisfied, in full or in part, in which case such
discharged and satisfied portion shall be eliminated and the holders thereof
shall not be entitled to, and shall not receive or retain, any property or
interest in property on account of such portion under the Plan.
5.11 CLASS 11 (SUBORDINATED SECURITIES CLAIMS). Except as
otherwise provided in and subject to Article 9.8 of this Plan, (i) in the event
that all Classes of Impaired Claims and the Class of Trust Preferred Obligations
vote to accept this Plan, commencing on the first Periodic Distribution Date
occurring after the later of (a) the date a Subordinated Securities Claim
becomes an Allowed Subordinated Securities Claim or (b) the date a Subordinated
Securities Claim becomes payable pursuant to any agreement between the Debtors
(or the Reorganized Debtors) and the holder of such Claim, the holder of an
Allowed Subordinated Securities Claim shall receive, in full satisfaction,
settlement, release, and discharge of, and in exchange for, such Subordinated
Securities Claim, its Pro Rata Share of the right to 2.5% of the Trust
Recoveries, if any, with the amount of each Subordinated Securities
Claimholder's Pro Rata share equal to (y) the amount of such rights of all
holders of Subordinated Securities Claims multiplied by a fraction, the
numerator of which is equal to the total amount of such Subordinated Securities
Claimholder's Claim, and the denominator of which is equal to the sum of all
Allowed Subordinated Securities Claims and the aggregate number of shares
represented by all Allowed Interests, minus (z) the recoveries, if any, received
by such Subordinated Securities Claimholders from the Securities Actions,
provided that any amounts deducted from clause (z) of this Article 5.11 and
clause (z) from Article 5.12 shall be redistributed in accordance with each
Subordinated Securities Claimholder's Pro Rata share as defined above, and (ii)
in the event that any Class of Impaired Claims or the Class of Trust Preferred
Obligations votes to reject this Plan, holders of Subordinated Securities Claims
shall not be entitled to, and shall not receive or retain any property or
interest in property on account of such Claims under this Plan.
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5.12 CLASS 12 (INTERESTS). On the Effective Date, the Existing
Common Stock shall be cancelled. Except as otherwise provided in and subject to
Article 9.8 of this Plan, (i) in the event that all Classes of Impaired Claims
and the Class of Trust Preferred Obligations vote to accept this Plan, on the
first Periodic Distribution Date occurring after the later of (a) the date an
Interest becomes an Allowed Interest or (b) the date an Interest becomes payable
pursuant to any agreement between the Debtors (or the Reorganized Debtors) and
the holder of such Interest, the holder of an Allowed Interest shall receive, in
full satisfaction, settlement, release, and discharge of, and in exchange for,
such Interest, its Pro Rata Share of the right to 2.5% of the Trust Recoveries,
if any, with the amount of each Interestholder's Pro Rata share equal to (y) the
amount of such rights of all holders of Interests multiplied by a fraction, the
numerator of which is equal to the number of shares represented by such
Interest, and the denominator of which is equal to the sum of the aggregate
number of shares represented by all Allowed Interests and Allowed Subordinated
Securities Claims, minus (z) the recoveries, if any, received by such
Interestholders from the Securities Actions, provided that any amounts deducted
from clause (z) of this Article 5.12 and clause (z) from Article 5.11 shall be
redistributed in accordance with each Interestholder's Pro Rata share as defined
above, and (ii) in the event that any Class of Impaired Claims or the Class of
Trust Preferred Obligations votes to reject this Plan, holders of Interests
shall not be entitled to, and shall not receive or retain any property or
interest in property under this Plan on account of their Interests, provided,
however, that, subject to the Restructuring Transactions contemplated by this
Plan, and pursuant to Article 7.9 of this Plan, on the Effective Date, all
Interests in the Affiliate Debtors (other than the Trust Preferred Securities
with respect to Kmart Financing) shall be Reinstated.
ARTICLE VI
ACCEPTANCE OR REJECTION OF THE PLAN;
EFFECT OF REJECTION BY ONE OR MORE
IMPAIRED CLASSES OF CLAIMS OR INTERESTS
6.1 IMPAIRED CLASSES OF CLAIMS ENTITLED TO VOTE. Except as
otherwise provided in order(s) of the Bankruptcy Court pertaining to
solicitation of votes on this Plan and Article 6.2 of this Plan, Claimholders
and Interestholders in each Impaired Class are entitled to vote in their
respective classes as a class to accept or reject this Plan.
6.2 CLASSES DEEMED TO ACCEPT THE PLAN. Classes 1, 2, and 3 are
Unimpaired by this Plan. Pursuant to section 1126(f) of the Bankruptcy Code,
such Classes are conclusively presumed to have accepted this Plan, and the votes
of Claimholders in such Classes therefore will not be solicited. Because all
Debtors are proponents of this Plan, Class 8 Intercompany Claims and Class 12
Interests in Affiliated Debtors are deemed to have accepted this Plan. The votes
of holders of such Claims and Interests therefore will not be solicited.
6.3 ACCEPTANCE BY IMPAIRED CLASSES. Classes 4, 5, 6, 7 and 9,
10, 11, and 12 are Impaired under this Plan. Pursuant to section 1126(c) of the
Bankruptcy Code, and except as provided in section 1126(e) of the Bankruptcy
Code, an Impaired Class of Claims has accepted the Plan if the Plan is accepted
by the holders of at least two-thirds (2/3) in dollar amount and more than
one-half (1/2) in number of the Allowed Claims of such Class that have timely
and properly voted to accept or reject the Plan. Pursuant to section 1126(d) of
the Bankruptcy Code, and except as provided in section 1126(e) of the Bankruptcy
Code, an Impaired Class of Interests has accepted the Plan if the Plan is
accepted by at least
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least two-thirds (2/3) in amount of the Allowed Interests of such Class that
have timely and properly voted to accept or reject the Plan.
6.4 CONFIRMATION PURSUANT TO SECTION 1129(B) OF THE BANKRUPTCY
CODE. In the event any Class votes to reject the Plan, the Debtors will request
confirmation of the Plan, as it may be modified from time to time, under section
1129(b) of the Bankruptcy Code.
ARTICLE VII
MEANS FOR IMPLEMENTATION OF THE PLAN
7.1 CONTINUED CORPORATE EXISTENCE.
(a) THE DEBTORS. Subject to the Restructuring
Transactions contemplated by this Plan, each of the Debtors will continue to
exist after the Effective Date as a separate corporate entity, with all the
powers of a corporation under applicable law in the jurisdiction in which each
applicable Debtor is incorporated or otherwise formed and pursuant to its
certificate of incorporation and bylaws or other organizational documents in
effect prior to the Effective Date, except to the extent such certificate of
incorporation and bylaws or other organizational documents are amended by this
Plan, without prejudice to any right to terminate such existence (whether by
merger or otherwise) under applicable law after the Effective Date.
(b) NEW HOLDING COMPANY AND NEW OPERATING COMPANY.
Subject to the Restructuring Transactions contemplated by this Plan, on, or as
soon as reasonably practicable after, the Effective Date, all appropriate
actions shall be taken consistent with this Plan to (i) form New Holding Company
and New Operating Company pursuant to their respective Certificates of
Incorporation and By- Laws, (ii) contribute or transfer all of the assets of the
Debtors, other than the Qualifying Real Estate and the Trust Assets, to New
Operating Company and/or such other Reorganized Debtors as contemplated by the
Restructuring Transactions, and (iii) issue all of the New Operating Company
Common Stock to New Holding Company. The Qualifying Real Estate shall be treated
as specified in Article 12.1 of this Plan, and the Trust Assets shall be
transferred to the Kmart Creditor Trust as specified in Article 11.2 of this
Plan.
(c) NON-DEBTORS. There are certain Affiliates of the
Debtors that are not Debtors in these Chapter 11 Cases. The continued existence,
operation and ownership of such non-Debtor Affiliates is a material component of
the Debtors' businesses, and, as set forth in Article 12.1 of this Plan, all of
the Debtors' equity interests and other property interests in such non-Debtor
Affiliates shall revest in the applicable Reorganized Debtor or its successor on
the Effective Date.
7.2 SUBSTANTIVE CONSOLIDATION. This Plan provides for the
substantive consolidation of the Estates, but only for purposes of effectuating
the settlements contemplated by, and making distributions to holders of Claims
under, this Plan, and not for voting purposes. For such limited purposes, on the
Effective Date, (a) all guaranties of any Debtor of the payment, performance, or
collection of another Debtor with respect to any Class of Claims or Interests
shall be deemed eliminated and cancelled; (b) any obligation of any Debtor and
all guaranties with respect to any Class of Claims or Interests executed by one
or more of the other Debtors and any joint or several liability of any of the
Debtors shall be treated as a single obligation, and any obligation of two or
more Debtors, and all
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multiple Impaired Claims against Debtors on account of such joint obligations,
shall be treated and Allowed only as a single Claim against the consolidated
Debtors; and (c) each Claim filed in the Chapter 11 Cases of any Debtor shall be
deemed filed against the consolidated Debtors and shall be deemed a Claim
against and an obligation of the consolidated Debtors. Except as set forth in
this Article, such substantive consolidation will not (other than for purposes
related to this Plan) (a) affect the legal and corporate structures of the
Debtors or Reorganized Debtors, subject to the right of the Debtors or
Reorganized Debtors to effect the Restructuring Transactions contemplated by
this Plan, (b) cause any Debtor to be liable for any Claim or Interest under
this Plan for which it otherwise is not liable, and the liability of any Debtor
for any such Claim or Interest will not be affected by such substantive
consolidation, (c) except as otherwise stated in this Plan, affect Intercompany
Claims of Debtors against Debtors, and (d) affect Interests in the Affiliate
Debtors except as otherwise may be required in connection with the Restructuring
Transactions contemplated by this Plan. Notwithstanding anything herein to the
contrary, the Debtors may elect in their sole and absolute discretion, at any
time through and until the Effective Date, to substantively consolidate the
Estates for additional purposes, including for voting purposes, provided,
however, that nothing herein shall impair the Plan Investors' rights under the
Investment Agreement. Should the Debtors make such election, the Debtors will
not, nor will they be required to, resolicit votes with respect to this Plan.
Substantive consolidation shall not alter the distributions set forth herein. In
the event that the Debtors do elect to substantively consolidate the Estates,
the Disclosure Statement and this Plan shall be deemed to be a motion requesting
that the Bankruptcy Court approve such substantive consolidation.
7.3 RESTRUCTURING TRANSACTIONS. On or prior to the Effective
Date, the Debtors and Reorganized Debtors shall take such actions as may be
necessary or appropriate to effect the relevant Restructuring Transactions,
including, but not limited to, all of the transactions described in this Plan.
Such actions may also include: (a) the execution and delivery of appropriate
agreements or other documents of merger, consolidation or reorganization
containing terms that are consistent with the terms of this Plan and that
satisfy the requirements of applicable law; (b) the execution and delivery of
appropriate instruments of transfer, assignment, assumption or delegation of any
property, right, liability, duty or obligation on terms consistent with the
terms of this Plan; (c) the filing of appropriate certificates of incorporation,
merger or consolidation with the appropriate governmental authorities under
applicable law; and (d) all other actions that such Debtors and Reorganized
Debtors determine are necessary or appropriate, including the making of filings
or recordings in connection with the relevant Restructuring Transaction. The
form of each Restructuring Transaction shall be determined by the Boards of
Directors of a Debtor or Reorganized Debtor party to any Restructuring
Transaction. In the event a Restructuring Transaction is a merger transaction,
upon the consummation of such Restructuring Transaction, each party to such
merger shall cease to exist as a separate corporate entity and thereafter the
surviving Reorganized Debtor shall assume and perform the obligations of each
Reorganized Debtor under this Plan. In the event a Reorganized Debtor is
liquidated, the Reorganized Debtors (or the Reorganized Debtor which owned the
stock of such liquidating Debtor prior to such liquidation) shall assume and
perform such obligations. Implementation of the Restructuring Transactions shall
not affect the distributions under the Plan.
7.4 CERTIFICATES OF INCORPORATION AND BYLAWS. The Certificate
of Incorporation and Bylaws of New Holding Company and each of the other
Reorganized Debtors shall be adopted and amended as may be required in order
that they are consistent with the provisions of this Plan and the Bankruptcy
Code. The certificate of incorporation of New Holding Company shall, among other
things: (a) authorize five-hundred million (500,000,000) shares of New Holding
Company Common Stock, $0.01
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par value per share; (b) authorize 20 million shares of New Holding Company
Preferred Stock for future issuance upon terms to be designated from time to
time by the board of directors of New Holding Company; and (c) provide, pursuant
to section 1123(a)(6) of the Bankruptcy Code, for (i) a provision prohibiting
the issuance of non-voting equity securities for a period of two (2) years from
the Effective Date and, if applicable, (ii) a provision setting forth an
appropriate distribution of voting power among classes of equity securities
possessing voting power, including, in the case of any class of equity
securities having a preference over another class of equity securities with
respect to dividends, adequate provisions for the election of directors
representing such preferred class in the event of default in the payment of such
dividends. The Certificates of Incorporation and By-Laws of New Holding Company,
New Operating Company, and the other Reorganized Debtors are attached hereto as
Exhibit A, Exhibit B, and Exhibit C. Any modification to the certificate of
incorporation as originally filed may be filed after the Confirmation Date and
may become effective on or prior to the Effective Date.
7.5 DIRECTORS AND OFFICERS OF NEW HOLDING COMPANY.
(A) OFFICERS. The existing senior officers of the
Debtors in office on the Effective Date shall serve in their current capacities
after the Effective Date, subject to their employment contracts as assumed by
this Plan and subject to the authority of the board of directors of the
Reorganized Debtors.
(B) DIRECTORS OF NEW HOLDING COMPANY. On the
Effective Date, the term of the current members of the board of directors of
Kmart will expire upon the designation by such board, and the approval by the
Bankruptcy Court, of the Responsible Officer. The initial board of directors of
New Holding Company, whose term will commence upon the Effective Date, shall
consist of nine (9) members. One (1) member of senior management of the
Reorganized Debtors will serve on the initial board of directors of New Holding
Company. Other board members shall include (i) four (4) directors selected by
the Plan Investors, at least one of whom shall not be an officer or employee of
any of the Plan Investors or a family member of any of the foregoing, (ii) two
(2) directors selected by the Unsecured Creditors' Committee, and (iii) two (2)
directors selected by the Financial Institutions' Committee, neither of which
shall be an officer or employee of ESL Investments, Inc. or a family member
thereof; provided that the board of directors, collectively, including any
required committee thereof, shall comply with any other qualification,
experience, and independence requirements under applicable law, including the
Sarbanes-Oxley Act of 2002 and the rules then in effect of the stock exchange or
quotation system (including the benefit of any transition periods available
under applicable law) on which the New Holding Company Common Stock is listed or
is anticipated to be listed, when such Stock is listed. The Persons responsible
for designating board members shall designate their board members by written
notice filed with the Bankruptcy Court by a date that is at least twenty days
prior to the Voting Deadline, provided, however, that if they fail to file and
give such notice, the Debtors will initially designate such members by
announcing their identities at the Confirmation Hearing. Directors of New
Holding Company appointed in accordance with this Article shall serve an initial
term for a period from the Effective Date through the date of the first annual
meeting after the Effective Date. Thereafter, and subject to New Holding
Company's rights to amend its bylaws, directors shall serve one (1) year terms
(with such subsequent terms subject to election by shareholder vote) with each
such term expiring at the conclusion of the next annual meeting of shareholders.
In the event, prior to the Effective Date, a person designated to be a member of
New Holding Company's board of directors dies, is disabled, or otherwise becomes
unable to fulfill the role, the Person designating such member will designate a
replacement for such director. In the event, after the Effective Date and prior
to the first annual meeting
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that occurs after the Effective Date, of the death, disability, resignation, or
removal of a member of the board of directors, the directors designated by the
Person who designated the director whose vacancy is sought to be filled will
designate a replacement for such director, which replacement will be reasonably
satisfactory to New Holding Company.
7.6 DIRECTORS AND OFFICERS OF AFFILIATE DEBTORS. The existing
directors and officers of the Affiliate Debtors shall continue to serve in their
current capacities after the Effective Date, provided, however that the Debtors
reserve the right to identify new officers and members of the board of directors
of each of such Affiliate Debtors at any time prior to the Confirmation Hearing,
and provided further that New Holding Company reserves the right to identify new
officers and members of the board of directors of each such Affiliate Debtors at
any time thereafter.
7.7 EMPLOYMENT, RETIREMENT, INDEMNIFICATION AND OTHER
AGREEMENTS AND INCENTIVE COMPENSATION PROGRAMS. To the extent that any of the
Debtors have in place as of the Effective Date employment, retirement,
indemnification and other agreements with their respective active directors,
officers and employees who will continue in such capacities (or similar
capacities) after the Effective Date, or retirement income plans, welfare
benefit plans and other plans for such Persons, such agreements, programs and
plans shall remain in place after the Effective Date, and the Reorganized
Debtors will continue to honor such agreements, programs, and plans. Such
agreements and plans may include equity, bonus, and other incentive plans in
which officers and other employees of the Reorganized Debtors may be eligible to
participate; provided, however, that pursuant to the Management Compensation
Plan, there may be reserved for certain members of management, directors, and
other employees of the Reorganized Debtors a certain number of shares of New
Holding Company Common Stock and other securities all as more fully stated on
Exhibit F attached hereto, which is a summary of the Management Compensation
Plan and of components of compensation to be paid to management after the
Effective Date; and provided further that the Debtors' existing deferred
compensation plans shall be terminated and the funds held pursuant thereto shall
be distributed to the respective account holders other than any account holder
who Kmart has identified as a potential defendant in any Cause of Action arising
out of the Trust Claims, in which case the funds of such account holder shall be
held in escrow by the Kmart Creditor's Trust pending resolution of any Trust
Claims against such account holder. After the Effective Date, the Reorganized
Debtors shall each have the authority, consistent with the applicable
agreements, to terminate, amend or enter into employment, retirement,
indemnification and other agreements with their respective active directors,
officers and employees and to terminate, amend or implement retirement income
plans, welfare benefit plans and other plans for active employees.
7.8 ISSUANCE OF NEW HOLDING COMPANY STOCK.
(A) NEW HOLDING COMPANY COMMON STOCK. On the
Effective Date, New Holding Company will authorize up to five hundred million
(500,000,000) shares of New Holding Company Common Stock. On or before the
Distribution Date, New Holding Company will be deemed to have issued shares of
New Holding Company Common Stock for distribution as follows: (i) the Total
Investor Shares to the Plan Investors in accordance with the Investment
Agreement and (ii) the Creditor Shares to holders of Allowed Prepetition Note
Claims, Allowed Trade Vendor/Lease Rejection Claims, and holders of Other
Unsecured Claims who have made the Other Unsecured Claim Election. The issuance
of the New Holding Company Common Stock and the distribution thereof as
described above will be in compliance with applicable registration requirements
or exempt from registration under
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applicable securities laws pursuant to section 1145(a) of the Bankruptcy Code or
Section 4(2) of the Securities Act.
(B) NEW HOLDING COMPANY PREFERRED STOCK. On the
Effective Date, New Holding Company will authorize twenty million (20,000,000)
shares of New Holding Company Preferred Stock for future issuance upon terms to
be designated from time to time by the board of directors of New Holding Company
following the Effective Date. No shares of preferred stock shall be issued
pursuant to this Plan. The Certificates of Incorporation and By-Laws of New
Holding Company shall prohibit issuance of the New Holding Company Preferred
Stock earlier than six (6) months subsequent to the Effective Date, and in any
case only upon approval by a 2/3 majority of the board of directors of New
Holding Company.
(C) REGISTRATION RIGHTS AGREEMENT. Without limiting
the effect of section 1145 of the Bankruptcy Code, as of the Effective Date, New
Holding Company will enter into a Registration Rights Agreement with the Plan
Investors.
(D) LISTING ON SECURITIES EXCHANGE OR QUOTATION
SYSTEM. New Holding Company will use reasonable efforts to list, as promptly as
practicable after the Effective Date, the New Holding Company Common Stock on a
national securities exchange or for quotation on a national automated
interdealer quotation system but will have no liability if it is unable to do
so. Persons receiving distributions of New Holding Company Common Stock, by
accepting such distributions, will have agreed to cooperate with New Holding
Company's reasonable requests to assist New Holding Company in its efforts to
list the New Holding Company Common Stock on a national securities exchange or
quotation system.
7.9 REINSTATEMENT OF COMMON STOCK OF AFFILIATE DEBTORS.
Subject to the Restructuring Transactions, Interests in the Affiliate Debtors
(other than the Trust Preferred Securities with respect to Kmart Financing)
shall be Reinstated in exchange for New Holding Company's agreement to cause the
distribution of New Holding Company Common Stock and other consideration
provided for under this Plan to holders of Allowed Claims in accordance with the
terms of this Plan.
7.10 CANCELLATION OF EXISTING SECURITIES AND AGREEMENTS. On
the Effective Date, except as otherwise specifically provided for herein, (a)
the Existing Securities and any other note, bond, indenture, or other instrument
or document evidencing or creating any indebtedness or obligation of or
ownership interest in the Debtors, except such notes or other instruments
evidencing indebtedness or obligations of the Debtors that are Reinstated under
this Plan, will be cancelled, and (b) the obligations of, Claims against, and/or
Interests in the Debtors under, relating, or pertaining to any agreements,
indentures, certificates of designation, bylaws, or certificate or articles of
incorporation or similar documents governing the Existing Securities and any
other note, bond, indenture, or other instrument or document evidencing or
creating any indebtedness or obligation of the Debtors, except such notes or
other instruments evidencing indebtedness or obligations of the Debtors that are
Reinstated under this Plan, as the case may be, will be released and discharged;
provided, however, that any agreement that governs the rights of the Claimholder
and that is administered by an indenture trustee, an agent, or a servicer (each
hereinafter referred to as a "Servicer") will continue in effect solely for
purposes of (i) allowing such Servicer to make the distributions to be made on
account of such Claims under this Plan as provided in Article IX of this Plan
and (ii) permitting such Servicer to maintain any rights or liens it may have
for fees, costs, and expenses under such Indenture or other agreement; provided,
further, that the
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preceding proviso will not affect the discharge of Claims against or Interests
in the Debtors under the Bankruptcy Code, the Confirmation Order, or this Plan,
or result in any expense or liability to the Reorganized Debtors. The
Reorganized Debtors will not have any obligations to any Servicer (or to any
Disbursing Agent replacing such Servicer) for any fees, costs, or expenses
except as expressly provided in Article 9.5 hereof; provided, however, that
nothing herein will preclude any Servicer (or any Disbursing Agent replacing
such Servicer) from being paid or reimbursed for prepetition or postpetition
fees, costs, and expenses from the distributions being made by such Servicer (or
any Disbursing Agent replacing such Servicer) pursuant to such agreement in
accordance with the provisions set forth therein, all without application to or
approval by the Bankruptcy Court.
7.11 PLAN INVESTOR CONTRIBUTION. Pursuant to the terms and
conditions of the Investment Agreement, the Plan Investors shall pay to the
Debtors Cash in an amount equal to (i) Cash that the Plan Investors are entitled
to receive under the Plan on account of their Prepetition Lender Claims as
contemplated by the Investment Agreement plus (ii) no less than $140 million (to
be utilized exclusively by the Reorganized Debtors to make distributions to
Allowed Prepetition Lender Claimholders pursuant to Article 5.4 of the Plan), in
exchange for which the Plan Investors shall receive the Total Investor Shares
and, in certain circumstances, a convertible note as provided in the Investment
Agreement. The Plan Investors' rights to transfer the Total Investor Shares
shall be restricted pursuant to the terms and conditions of the Investment
Agreement.
7.12 POST-EFFECTIVE DATE FINANCING. On the Effective Date, the
Reorganized Debtors shall enter into the Exit Financing Facility in order to
obtain the funds necessary to repay the DIP Facility Claims, make other payments
required to be made on the Effective Date, and conduct their
post-reorganization operations. The Reorganized Debtors may enter into all
documents necessary and appropriate in connection with the Exit Financing
Facility. The principal documents with respect to such Facility, or commitment
letters with respect thereto, shall be filed by the Debtors with the Bankruptcy
Court no later than the Exhibit Filing Date and will be deemed attached hereto
as Exhibit D-1. In the Confirmation Order, the Bankruptcy Court shall approve
the terms of the Exit Financing Facility in substantially the form filed with
the Bankruptcy Court (and with such changes as to which the applicable Debtors
and respective agents and lenders parties thereto may agree) and authorize the
applicable Reorganized Debtors to execute the same together with such other
documents as the applicable Reorganized Debtors and the applicable lenders may
reasonably require in order to effectuate the treatment afforded to such parties
under the Exit Financing Facility.
7.13 TRADE VENDORS' LIEN PROGRAM. On the Effective Date, the
Reorganized Debtors shall grant to certain vendors who provide retail
merchandise to the Reorganized Debtors on credit after the Effective Date, or
who have provided merchandise to the Debtors after the Petition Date and before
the Effective Date on credit which is not paid for as of the Effective Date, a
Post-Effective Date Trade Vendors' Lien pursuant to the terms attached hereto as
Exhibit K. Each person or entity issuing securities under the Plan, any entity
acquiring property under the Plan, and any creditor and/or equity security
holder of the Debtors or Reorganized Debtors, shall be deemed to contractually
subordinate any present or future claim, right, or other interest it may have in
and to any proceeds received from the disposition, release, or liquidation of
any real properties leased by the Debtors or Reorganized Debtors, as lessees, to
the Secured Obligations (as defined in Exhibit K); provided, however, that in no
case shall (i) the lenders under the Exit Financing Facility or (ii) any
obligations to the Plan Investors under any notes issued pursuant to the
Investment Agreement be deemed subordinated to the Secured Obligations in this
regard and provided, further, that such subordination shall in no way
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affect any Debtor's or Reorganized Debtor's right to sell, lease, transfer or
otherwise dispose of any interest in such leases or to provide its interests in
such leases as collateral to one or more lenders (or their representatives)
after the Effective Date, and any such transferee, lessee or lender shall take
such leasehold interests free of any claim of the Trade Vendors' Lien and the
Trade Vendors Collateral Agent. Such contractual subordination shall terminate
upon termination or expiration of the Trade Vendors' Lien.
7.14 PRESERVATION OF CAUSES OF ACTION. In accordance with
section 1123(b)(3) of the Bankruptcy Code and except as otherwise provided in
this Plan with respect to the Kmart Creditor Trust, the Reorganized Debtors will
retain and may (but are not required to) enforce all Retained Actions, except
that with respect to Causes of Action pending on the Effective Date, and except
as otherwise described on Exhibit J to the Plan, the Debtors shall waive all
Avoidance Actions as of the Effective Date. The Debtors or the Reorganized
Debtors, in their sole and absolute discretion, will determine whether to bring,
settle, release, compromise, or enforce such Retained Actions (or decline to do
any of the foregoing), and will not be required to seek further approval of the
Bankruptcy Court for such action. The Reorganized Debtors or any successors may
pursue such litigation claims in accordance with the best interests of the
Reorganized Debtors or any successors holding such rights of action.
7.15 EXCLUSIVITY PERIOD. The Debtors will retain the exclusive
right to amend or modify this Plan, and to solicit acceptances of any amendments
to or modifications of this Plan, through and until the Effective Date.
7.16 CORPORATE ACTION. Each of the matters provided for under
this Plan involving the corporate structure of any Debtor or Reorganized Debtor
or corporate action to be taken by or required of any Debtor or Reorganized
Debtor shall, as of the Effective Date, be deemed to have occurred and be
effective as provided herein, and shall be authorized, approved and, to the
extent taken prior to the Effective Date, ratified in all respects without any
requirement of further action by stockholders, creditors, or directors of any of
the Debtors or the Reorganized Debtors, provided, however, that nothing herein
shall impair the Debtors' or Plan Investors' rights under the Investment
Agreement.
7.17 EFFECTUATING DOCUMENTS; FURTHER TRANSACTIONS. Each of the
Chief Executive Officer and President, Chief Financial Officer, Chief
Restructuring Officer, and General Counsel of the Debtors, or their respective
designees, will be authorized to execute, deliver, file, or record such
contracts, instruments, releases, indentures, and other agreements or documents,
and take such actions as may be necessary or appropriate to effectuate and
further evidence the terms and conditions of this Plan. The secretary or
assistant secretary of the Debtors will be authorized to certify or attest to
any of the foregoing actions.
7.18 EXEMPTION FROM CERTAIN TRANSFER TAXES AND RECORDING FEES.
Pursuant to section 1146(c) of the Bankruptcy Code, any transfers from a Debtor
to a Reorganized Debtor or to any other Person or entity pursuant to this Plan,
or any agreement regarding the transfer of title to or ownership of any of the
Debtors' real or personal property will not be subject to any document recording
tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax, stamp
act, real estate transfer tax, mortgage recording tax, Uniform Commercial Code
filing or recording fee, or other similar tax or governmental assessment, and
the Confirmation Order will direct the appropriate state or local governmental
officials or agents to forego the collection of any such tax or governmental
assessment and
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to accept for filing and recordation any of the foregoing instruments or other
documents without the payment of any such tax or governmental assessment.
ARTICLE VIII
UNEXPIRED LEASES AND EXECUTORY CONTRACTS
8.1 ASSUMED CONTRACTS AND LEASES.
(a) INTERCOMPANY EXECUTORY CONTRACTS AND UNEXPIRED
LEASES. Except as otherwise provided in this Article 8.1(a), each Intercompany
Executory Contract and Intercompany Unexpired Lease to which the Debtors are a
party shall be deemed automatically assumed in accordance with the provisions
and requirements of sections 365 and 1123 of the Bankruptcy Code as of the
Effective Date, unless such Intercompany Executory Contract or Intercompany
Unexpired Lease (i) shall have been previously rejected by the Debtors by order
of the Bankruptcy Court, (ii) is the subject of a motion to reject pending on or
before the Effective Date, (iii) is listed on the schedule of rejected
Intercompany Executory Contracts and Intercompany Unexpired Leases annexed
hereto as Exhibit M-1 or (iv) is otherwise rejected pursuant to the terms of the
Plan. Entry of the Confirmation Order by the Bankruptcy Court shall constitute
approval of such assumptions pursuant to sections 365 and 1123 of the Bankruptcy
Code. Each Intercompany Executory Contract and Intercompany Unexpired Lease
assumed pursuant to this Article 8.l(a) shall vest in and be fully enforceable
by the applicable Reorganized Debtor in accordance with its terms, except as
modified by the provisions of this Plan or any order of the Bankruptcy Court
authorizing or providing for its assumption or applicable federal law. The
Debtors reserve the right to file a motion on or before the Confirmation Date to
assume or reject any Intercompany Executory Contract or Intercompany Unexpired
Lease.
(b) EMPLOYEE-RELATED AGREEMENTS. Each
Employee-Related Agreement as to which any of the Debtors is a party shall be
deemed automatically rejected in accordance with the provisions and requirements
of sections 365 and 1123 of the Bankruptcy Code as of the Effective Date, unless
such Employee-Related Agreement (i) shall have been previously assumed by the
Debtors by order of the Bankruptcy Court, (ii) is the subject of a motion to
assume pending on or before the Effective Date, (iii) is listed on the schedule
of assumed Employee-Related Agreements annexed hereto as Exhibit M-2 or (iv) is
otherwise assumed pursuant to the terms of this Plan. Entry of the Confirmation
Order by the Bankruptcy Court shall constitute approval of the rejections and
assumptions contemplated hereby pursuant to sections 365 and 1123 of the
Bankruptcy Code. Notwithstanding the foregoing, all collective bargaining
agreements, as modified and/or amended from time to time, shall be deemed
automatically assumed in accordance with the provisions and requirements of
sections 365 and 1123 of the Bankruptcy Code as of the Effective Date. The
assumption of the collective bargaining agreements and the cure of all amounts
owed under such agreements in the ordinary course by the Reorganized Debtors
shall be in full satisfaction of all Claims and Interests arising under all
previous collective bargaining agreements between the parties thereto or their
predecessors-in-interest. Upon assumption, all proofs of claim filed by the
Debtors' unions will be deemed withdrawn, without prejudice to their pursuit in
the ordinary course by the unions and/or individuals and payment or satisfaction
in the ordinary course by the Reorganized Debtors of obligations under the
assumed collective bargaining agreements. Each Employee-Related Agreement
assumed pursuant to this Article 8.l(b) shall vest in and be fully enforceable
by the applicable Reorganized Debtor in accordance with its terms, except as
modified by the provisions of this Plan, or any order of the Bankruptcy Court
authorizing or providing for its assumption
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or applicable federal law. The Debtors reserve the right to file a motion on or
before the Confirmation Date to assume or reject any Employee-Related Agreement.
(c) OTHER EXECUTORY CONTRACTS AND UNEXPIRED LEASES.
Except as otherwise provided in this Article 8.1(c), each Other Executory
Contract and Unexpired Lease as to which any of the Debtors is a party that is
listed on Exhibit M-3 hereto shall be deemed automatically assumed in accordance
with the provisions and requirements of sections 365 and 1123 of the Bankruptcy
Code as of the Effective Date, unless such Other Executory Contract or Unexpired
Lease (i) shall have been previously rejected by the Debtors by order of the
Bankruptcy Court, (ii) is the subject of a motion to reject pending on or before
the Effective Date or (iii) is otherwise rejected pursuant to the terms of this
Plan. Entry of the Confirmation Order by the Bankruptcy Court shall constitute
approval of such assumptions pursuant to sections 365 and 1123 of the Bankruptcy
Code. Each Other Executory Contract and Unexpired Lease assumed pursuant to this
Article 8.l(c) shall vest in and be fully enforceable by the applicable
Reorganized Debtor in accordance with its terms, except as modified by the
provisions of this Plan, or any order of the Bankruptcy Court authorizing or
providing for its assumption or applicable federal law. The Debtors reserve the
right to file a motion on or before the Confirmation Date to assume or reject
any Other Executory Contract or Unexpired Lease, including any Other Executory
Contract or Unexpired Lease on Exhibit M-3.
(d) REAL PROPERTY AGREEMENTS. Each executory contract
and unexpired lease that is assumed and relates to the use, ability to acquire,
or occupancy of real property shall include (a) all modifications, amendments,
supplements, restatements, or other agreements made directly or indirectly by
any agreement, instrument, or other document that in any manner affect such
executory contract or unexpired lease and (b) all executory contracts or
unexpired leases appurtenant to the premises, including all easements, licenses,
permits, rights, privileges, immunities, options, rights of first refusal,
powers, uses, reciprocal easement agreements, and any other interests in real
estate or rights in rem related to such premises, unless any of the foregoing
agreements has been rejected pursuant to a Final Order of the Bankruptcy Court
or is otherwise rejected as a part of this Plan.
8.2 REJECTED CONTRACTS AND LEASES. Except with respect to
executory contracts and unexpired leases that have previously been rejected or
are the subject of a motion to reject filed, or a notice of rejection served
pursuant to order of the Bankruptcy Court, on or before the Effective Date, all
executory contracts and unexpired leases not assumed pursuant to Article 8.1
hereof, including, but not limited to, any guaranties by any of Debtors with
respect to real estate leases of former subsidiaries and businesses of any of
such Debtors, shall be deemed automatically rejected as of the Effective Date or
such earlier date as the Debtors may have unequivocally terminated their
performance under such lease or contract; provided, however, that neither the
exclusion nor the inclusion by the Debtors of a contract or lease on Exhibit
M-1, Exhibit M-2, or Exhibit M-3, nor anything contained in this Plan shall
constitute an admission by the Debtors that such lease or contract is an
unexpired lease or executory contract or that any Debtor, or its respective
Affiliates, has any liability thereunder. The Confirmation Order shall
constitute an order of the Bankruptcy Court approving such rejections pursuant
to sections 365 and 1123 of the Bankruptcy Code. The Debtors reserve the right
to (a) file a motion on or before the Confirmation Date (i) to reject any
Intercompany Executory Contract or Intercompany Unexpired Lease not listed on
Exhibit M-1 hereto, (ii) to reject any Employee-Related Agreement not listed on
Exhibit M-2 hereto, or (iii) to reject any Other Executory Contract or Unexpired
Lease listed on Exhibit M-3 hereto, and (b) modify or supplement Exhibit M-1,
Exhibit M-2, or Exhibit M-3 hereto at any time prior to the Effective Date,
including, without limitation, the right to (i) add any Intercompany Executory
Contract or
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Intercompany Unexpired Lease to, or delete any Intercompany Executory Contract
or Intercompany Unexpired Lease from, Exhibit M-1 hereto, (ii) to add any
Employee-Related Agreement to, or delete any Employee-Related Agreement from,
Exhibit M-2 hereto, or (iii) to add any Other Executory Contract or Unexpired
Lease to, or delete any Other Executory Contract or Unexpired Lease from,
Exhibit M-3 hereto.
8.3 PAYMENTS RELATED TO ASSUMPTION OF EXECUTORY CONTRACTS AND
UNEXPIRED LEASES. The provisions (if any) of each Intercompany Executory
Contract, Intercompany Unexpired Lease, Employee-Related Agreement, or Other
Executory Contract or Unexpired Lease to be assumed under this Plan which are or
may be in default shall be satisfied solely by Cure. In the event of a dispute
regarding (a) the nature or the amount of any Cure, (b) the ability of the
Reorganized Debtors or any assignee to provide "adequate assurance of future
performance" (within the meaning of section 365 of the Bankruptcy Code) under
the contract or lease to be assumed, or (c) any other matter pertaining to
assumption, Cure shall occur as soon as practicable following the entry of a
Final Order resolving the dispute and approving the assumption and, as the case
may be, assignment. The provisions (if any) of each Intercompany Executory
Contract and Intercompany Unexpired Lease to be assumed under the Plan which are
or may be in default shall be satisfied in a manner to be agreed to by the
relevant Debtors and/or non-Debtors.
8.4 REJECTION DAMAGES BAR DATE. If the rejection by the
Debtors (pursuant to this Plan or otherwise) of an Intercompany Executory
Contract, Intercompany Unexpired Lease, Employee-Related Agreement, or Other
Executory Contract or Unexpired Lease results in a Claim, then such Claim shall
be forever barred and shall not be enforceable against the Debtors, the
Reorganized Debtors, the Plan Investors, or such entities' properties unless a
proof of claim is filed with the Claims Agent and the Post-Confirmation
Committee and served upon counsel to the Debtors, the Plan Investors, and the
Creditors' Committees within thirty (30) days after service of the earlier of
(a) notice of the Confirmation Order or (b) other notice that the executory
contract or unexpired lease has been rejected.
ARTICLE IX
PROVISIONS GOVERNING DISTRIBUTIONS
9.1 TIME OF DISTRIBUTIONS. Except as otherwise provided for
herein or ordered by the Bankruptcy Court, distributions under this Plan shall
be made on a Periodic Distribution Date.
9.2 NO INTEREST ON CLAIMS OR INTERESTS. Unless otherwise
specifically provided for in this Plan, Confirmation Order, or the DIP Credit
Agreement or a postpetition agreement in writing between the Debtors and a
Claimholder, postpetition interest shall not accrue or be paid on Claims or
Interests, and no Claimholder or Interestholder shall be entitled to interest
accruing on or after the Petition Date on any Claim, right, or Interest.
Additionally, and without limiting the foregoing, interest shall not accrue or
be paid on any Disputed Claim or Disputed Interest in respect of the period from
the Effective Date to the date a final distribution is made when and if such
Disputed Claim or Disputed Interest becomes an Allowed Claim or Allowed
Interest.
9.3 DISBURSING AGENT. The Disbursing Agent shall make all
distributions required under this Plan except with respect to a holder of a
Claim whose distribution is governed by an agreement and is administered by a
Servicer, which distributions shall be deposited with the appropriate
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Servicer, who shall deliver such distributions to the holders of Claims in
accordance with the provisions of this Plan and the terms of the governing
agreement; provided, however, that if any such Servicer is unable to make such
distributions, the Disbursing Agent, with the cooperation of such Servicer,
shall make such distributions.
9.4 SURRENDER OF SECURITIES OR INSTRUMENTS. On or before the
Distribution Date, or as soon as practicable thereafter, each holder of an
instrument evidencing a Claim (a "Certificate") shall surrender such Certificate
to the Disbursing Agent, or, with respect to indebtedness that is governed by an
agreement and administered by a Servicer, the respective Servicer, and such
Certificate shall be cancelled solely with respect to the Debtors and such
cancellation shall not alter the obligations or rights of any non-Debtor third
parties vis-a-vis one another to such instruments; provided, however, that this
Article 9.4 shall not apply to any Claims Reinstated pursuant to the terms of
this Plan. No distribution of property hereunder shall be made to or on behalf
of any such holder unless and until such Certificate is received by the
Disbursing Agent or the respective Servicer or the unavailability of such
Certificate is reasonably established to the satisfaction of the Disbursing
Agent or the respective Servicer. Any holder who fails to surrender or cause to
be surrendered such Certificate, or fails to execute and deliver an affidavit of
loss and indemnity reasonably satisfactory to the Disbursing Agent or the
respective Servicer prior to the second anniversary of the Effective Date, shall
be deemed to have forfeited all rights and Claims in respect of such Certificate
and shall not participate in any distribution hereunder, and all property in
respect of such forfeited distribution, including any dividends or interest
attributable thereto, shall revert to the Reorganized Debtors notwithstanding
any federal or state escheat laws to the contrary.
9.5 SERVICES OF INDENTURE TRUSTEES, AGENTS AND SERVICERS. The
services, with respect to consummation of this Plan, of Servicers under the
relevant agreements that govern the rights of Claimholders shall be as set forth
elsewhere in this Plan, and the Reorganized Debtors shall reimburse any Servicer
for reasonable and necessary services performed by it (including reasonable
attorneys' fees) as contemplated by, and in accordance with, this Plan, without
the need for the filing of an application with, or approval by, the Bankruptcy
Court.
9.6 CLAIMS ADMINISTRATION RESPONSIBILITY.
(a) REORGANIZED DEBTORS. The Reorganized Debtors will
retain responsibility for administering, disputing, objecting to, compromising,
or otherwise resolving and making distributions (if any) with respect to all
Claims against and Interests in the Debtors.
(b) FILING OF OBJECTIONS. Unless otherwise extended
by the Bankruptcy Court, any objections to Claims or Interests shall be served
and filed on or before the Claims/Interests Objection Deadline. Notwithstanding
any authority to the contrary, an objection to a Claim or Interest shall be
deemed properly served on the Claimholder or Interestholder if the Debtors or
the Reorganized Debtors effect service in any of the following manners: (i) in
accordance with Federal Rule of Civil Procedure 4, as modified and made
applicable by Bankruptcy Rule 7004; (ii) to the extent counsel for a Claimholder
or Interestholder is unknown, by first class mail, postage prepaid, on the
signatory on the proof of claim or interest or other representative identified
on the proof of claim or interest or any attachment thereto; or (iii) by first
class mail, postage prepaid, on any counsel that has appeared on the
Claimholder's or Interestholder's behalf in the Chapter 11 Cases.
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(c) DETERMINATION OF CLAIMS. Except as otherwise agreed by the
Debtors, any Claim or Interest as to which a proof of claim or proof of interest
was timely filed in the Chapter 11 Cases may be determined and liquidated in
accordance with the ADR Procedures. Any Claim or Interest determined and
liquidated pursuant to (i) the ADR Procedures, (ii) an order of the Bankruptcy
Court, or (iii) applicable non-bankruptcy law (which determination has not been
stayed, reversed or amended and as to which determination (or any revision,
modification or amendment thereof) the time to appeal or seek review or
rehearing has expired and as to which no appeal or petition for review or
rehearing was filed or, if filed, remains pending) shall be deemed, to the
extent applicable and subject to any provision in the ADR Procedures to the
contrary, an Allowed Claim or an Allowed Interest, as the case may be, in such
liquidated amount and satisfied in accordance with this Plan (provided that, to
the extent a Claim is an Allowed Insured Claim, such Allowed Claim shall be paid
from the insurance proceeds available to satisfy such liquidated amount).
Nothing contained in this Article 9.6 shall constitute or be deemed a waiver of
any claim, right, or Cause of Action that the Debtors or the Reorganized Debtors
may have against any Person in connection with or arising out of any Claim or
Claims, including, without limitation, any rights under section 157(b) of title
28 of the United States Code.
9.7 DELIVERY OF DISTRIBUTIONS. Distributions to Allowed
Claimholders or Interestholders shall be made by the Disbursing Agent or the
appropriate Servicer (a) at the addresses set forth on the proofs of claim filed
by such Claimholders or Interestholders (or at the last known addresses of such
Claimholders or Interestholders if no proof of claim is filed or if the Debtors
have been notified in writing of a change of address), (b) at the addresses set
forth in any written notices of address changes delivered to the Disbursing
Agent after the date of any related proof of claim, (c) at the addresses
reflected in the Schedules if no proof of claim has been filed and the
Disbursing Agent has not received a written notice of a change of address, or
(d) in the case of a Claimholder whose Claim is governed by an agreement and
administered by a Servicer, at the addresses contained in the official records
of such Servicer. If any Claimholder's or Interestholder's distribution is
returned as undeliverable, no further distributions to such Claimholder or
Interestholder shall be made unless and until the Disbursing Agent or the
appropriate Servicer is notified of such Claimholder's or Interestholder's
then-current address, at which time all missed distributions shall be made to
such Claimholder or Interestholder without interest. Amounts in respect of
undeliverable distributions shall be returned to the Reorganized Debtors until
such distributions are claimed. All funds or other undeliverable distributions
returned to the Reorganized Debtors and not claimed within six months of return
shall be distributed to the other creditors of the Class of which the creditor
to whom the distribution was originally made is a member in accordance with the
provisions of the Plan applicable to distributions to that Class. If, at the
conclusion of distributions to a particular Class under the Plan and after
consultation with the Post-Confirmation Committee (solely with respect to Trade
Vendor/Lease Rejection Claims), the Reorganized Debtors reasonably determine
that any remaining New Holding Company Common Stock or Cash allocated for such
class is immaterial and would thus be too impractical to distribute or would be
of no benefit to its respective distributees, any such remaining New Holding
Company Common Stock or Cash will revert to the Reorganized Debtors. Upon such
reversion, the claim of any Claimholder or their successors with respect to such
property shall be discharged and forever barred notwithstanding any federal or
state escheat laws to the contrary.
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9.8 PROCEDURES FOR TREATING AND RESOLVING DISPUTED AND
CONTINGENT CLAIMS.
(a) NO DISTRIBUTIONS PENDING ALLOWANCE. No payments
or distributions will be made with respect to all or any portion of a Disputed
Claim or Disputed Interest unless and until all objections to such Disputed
Claim or Disputed Interest have been settled or withdrawn or have been
determined by a Final Order, and the Disputed Claim or Disputed Interest has
become an Allowed Claim or Allowed Interest. All objections to Claims or
Interests must be filed on or before the Claims/Interests Objection Deadline.
(b) DISTRIBUTION RESERVE. The Disbursing Agent will
create a separate Distribution Reserve from the property to be distributed in
the Chapter 11 Cases. The amount of New Holding Company Common Stock withheld as
a part of the Distribution Reserve shall be equal to the number of shares the
Reorganized Debtors reasonably determine is necessary to satisfy the
distributions required to be made to Claimholders in the Chapter 11 Cases, when
the allowance or disallowance of each Disputed Claim is ultimately determined.
The Disbursing Agent, the Debtors, or the Reorganized Debtors may request
estimation for any Disputed Claim that is contingent or unliquidated (but is not
required to do so). The Disbursing Agent also shall place in the Distribution
Reserve any dividends, payments, or other distributions made on account of, as
well as any obligations arising from, the property initially withheld in the
Distribution Reserve, to the extent that such property continues to be withheld
in the Distribution Reserve at the time such distributions are made or such
obligations arise. The Claimholder or Interestholder shall not be entitled to
receive or recover any amount in excess of the amount provided in the
Distribution Reserve to pay such Claim or Interest. Nothing in this Plan or
Disclosure Statement will be deemed to entitle the Claimholder or Interestholder
of a Disputed Claim or Disputed Interest to postpetition interest on such Claim
or Interest.
(c) DISTRIBUTIONS AFTER ALLOWANCE. Payments and
distributions from the Distribution Reserve to each respective Claimholder or
Interestholder on account of a Disputed Claim or Disputed Interest, to the
extent that it ultimately becomes an Allowed Claim or Allowed Interest, will be
made in accordance with provisions of this Plan that govern distributions to
such Claimholders or Interestholder. On the first Periodic Distribution Date
following the date when a Disputed Claim or Disputed Interest becomes
undisputed, noncontingent and liquidated, the Disbursing Agent will distribute
to the Claimholder or Interestholder any Cash, New Holding Company Common Stock,
or other property, from the Distribution Reserve that would have been
distributed on the dates distributions were previously made to Claimholders and
Interestholders had such Allowed Claim or Allowed Interest been an Allowed Claim
or Allowed Interest on such dates. After a Final Order has been entered, or
other final resolution has been reached with respect to all Disputed Claims or
Interests, any remaining Cash, New Holding Company Common Stock, or other
Property in the Distribution Reserve will be distributed Pro Rata to Allowed
General Unsecured Claimholders and Interestholders in accordance with the other
provisions of this Plan. Subject to Article 9.2 hereof, all distributions made
under this Article of this Plan on account of an Allowed Claim or Allowed
Interest will be made together with any dividends, payments, or other
distributions made on account of, as well as any obligations arising from, the
distributed property as if such Allowed Claim or Allowed Interest had been an
Allowed Claim or Allowed Interest on the dates distributions were previously
made to Allowed Claimholders and Allowed Interestholders included in the
applicable class. The Disbursing Agent shall be deemed to have voted any New
Holding Company Common Stock held in the Distribution Reserve in the same
proportion as shares previously disbursed by the Disbursing Agent. The Servicers
shall be deemed to have voted any New Holding Company
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Common Stock held by such Servicer in the same proportion as shares previously
disbursed by such Servicer.
(d) DE MINIMIS DISTRIBUTIONS. Neither the
Distribution Agent nor any Servicer shall have any obligation to make a
distribution on account of an Allowed Claim or Allowed Interest from any
Distribution Reserve or otherwise if (i) the aggregate amount of all
distributions authorized to be made from such Distribution Reserve or otherwise
on the Periodic Distribution Date in question is or has a value less than
$250,000, or (ii) if the amount to be distributed to the specific holder of the
Allowed Claim or Allowed Interest on the particular Periodic Distribution Date
does not constitute a final distribution to such holder and is or has a value
less than $50.00, provided that this Article 9.8(d) shall not apply to
distributions to be made pursuant to Article 5.11 and Article 5.12.
9.9 FRACTIONAL SECURITIES; FRACTIONAL DOLLARS. Any other
provision of this Plan notwithstanding, payments of fractions of shares of New
Holding Company Common Stock will not be made and shall be deemed to be zero.
Any other provision of this Plan notwithstanding, neither the Reorganized
Debtors nor the Disbursing Agent or Servicer shall be required to make
distributions or payments of fractions of dollars. Whenever any payment of a
fraction of a dollar under this Plan would otherwise be called for, the actual
payment shall reflect a rounding of such fraction to the nearest whole dollar
(up or down), with half dollars or less being rounded down.
ARTICLE X
ALLOWANCE AND PAYMENT OF CERTAIN ADMINISTRATIVE CLAIMS
10.1 DIP FACILITY CLAIM/PLAN INVESTOR CLAIM. On the Effective
Date, the DIP Facility Claim and Plan Investor Claim shall be allowed in an
amount to be agreed upon by the Debtors and, as applicable, the DIP Lenders, and
the Plan Investors, or as ordered by the Bankruptcy Court with notice to the
Creditors' Committees, not less than five (5) Business Days prior to the
Effective Date, and all obligations (other than contingent indemnity
obligations) of the Debtors under the DIP Facility and with respect to the Plan
Investor Claim shall be paid in full in Cash on the Effective Date; provided,
however, that with respect to letters of credit issued under the DIP Facility,
such claims may be satisfied in full by the cash collateralization of such
letters of credit or by procuring back-up letters of credit. Upon compliance
with the foregoing sentence, all liens and security interests granted to secure
such obligations shall be deemed cancelled and shall be of no further force and
effect. To the extent that the DIP Lenders or the DIP Agent have filed or
recorded publicly any liens and/or security interests to secure the Debtors'
obligations under the DIP Facility, the DIP Lenders or the DIP Agent, as the
case may be, shall take any commercially reasonable steps requested by the
Debtors that are necessary to cancel and/or extinguish such publicly filed liens
and/or security interests.
10.2 PROFESSIONAL CLAIMS.
(A) FINAL FEE APPLICATIONS. All final requests for
payment of Professional Claims and Key Ordinary Course Professional Claims must
be filed no later than sixty (60) days after the Effective Date. After notice
and a hearing in accordance with the procedures established by the Bankruptcy
Code and prior orders of the Bankruptcy Court, the allowed amounts of such
Professional Claims and Key Ordinary Course Professional Claims shall be
determined by the Bankruptcy Court.
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(b) PAYMENT OF INTERIM AMOUNTS. Subject to the
Holdback Amount, on the Effective Date, the Debtors or Reorganized Debtors shall
pay all amounts owing to Professionals and Key Ordinary Course Professionals for
all outstanding amounts payable relating to prior periods through the Effective
Date. In order to receive payment on the Effective Date for unbilled fees and
expenses incurred through such date, the Professionals and Key Ordinary Course
Professionals shall estimate fees and expenses due for periods that have not
been billed as of the Effective Date and shall deliver such estimate to the
Debtors, counsel for the Statutory Committees. Within forty-five (45) days after
the Effective Date, a Professional receiving payment for the estimated period
shall submit a detailed invoice covering such period in the manner and providing
the detail as set forth in the Professional Fee Order or the Ordinary Course
Professional Order, as applicable. Should the estimated payment received by any
Professional exceed the actual fees and expenses for such period, this excess
amount will be credited against the Holdback Amount for such Professional or, if
the award of the Holdback Amount for such matter is insufficient, disgorged by
such Professional.
(c) HOLDBACK AMOUNT. On the Effective Date, the
Debtors or the Reorganized Debtors shall pay to the Disbursing Agent, in order
to fund the Holdback Escrow Account, Cash equal to the aggregate Holdback Amount
for all Professionals. The Disbursing Agent shall maintain the Holdback Escrow
Account in trust for the Professionals with respect to whom fees have been held
back pursuant to the Professional Fee Order. Such funds shall not be considered
property of the Debtors, the Reorganized Debtors or the Estates. The remaining
amount of Professional Claims owing to the Professionals shall be paid to such
Professionals by the Disbursing Agent from the Holdback Escrow Account when such
claims are finally allowed by the Bankruptcy Court. When all Professional Claims
and Key Ordinary Course Professional Claims have been paid in full, amounts
remaining in the Holdback Escrow Account, if any, shall be paid to the
Reorganized Debtors.
(d) POST-EFFECTIVE DATE RETENTION. Upon the Effective
Date, any requirement that Professionals or Key Ordinary Course Professionals
comply with sections 327 through 331 of the Bankruptcy Code in seeking retention
or compensation for services rendered after such date will terminate, and the
Reorganized Debtors will employ and pay Professionals and Key Ordinary Course
Professionals in the ordinary course of business.
10.3 SUBSTANTIAL CONTRIBUTION COMPENSATION AND EXPENSES BAR
DATE. Any Person who requests compensation or expense reimbursement for making a
substantial contribution in the Chapter 11 Cases pursuant to sections 503(b)(3),
(4), and (5) of the Bankruptcy Code must file an application with the clerk of
the Bankruptcy Court on or before the forty-fifth (45th) day after the Effective
Date (the "503 Deadline"), and serve such application on counsel for the
Debtors, and the Plan Investors, and the Statutory Committees and as otherwise
required by the Bankruptcy Court and the Bankruptcy Code on or before the 503
Deadline, or be forever barred from seeking such compensation or expense
reimbursement.
10.4 OTHER ADMINISTRATIVE CLAIMS. All other requests for
payment of an Administrative Claim (other than as set forth in Articles 10.2 or
10.3 of this Plan) must be filed, in substantially the form of the
Administrative Claim Request Form attached hereto as Exhibit N, with the Claims
Agent and served on counsel for the Debtors and the Plan Investors no later than
forty-five (45) days after the Effective Date. Any request for payment of an
Administrative Claim pursuant to this Article 10.3 that is not timely filed and
served shall be disallowed automatically without the need for any objection from
the Debtors or the Reorganized Debtors. The Debtors or the Reorganized Debtors
may
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settle an Administrative Claim without further Bankruptcy Court approval,
subject to review by the Post-Confirmation Committee. Unless the Debtors or the
Reorganized Debtors object to an Administrative Claim by the Claims/Interests
Objection Deadline, such Administrative Claim shall be deemed allowed in the
amount requested. In the event that the Debtors or the Reorganized Debtors
object to an Administrative Claim, the Bankruptcy Court shall determine the
allowed amount of such Administrative Claim. Notwithstanding the foregoing, no
request for payment of an Administrative Claim need be filed with respect to an
Administrative Claim which is paid or payable by the Debtors in the ordinary
course of business.
ARTICLE XI
KMART CREDITOR TRUST
11.1 APPOINTMENT OF TRUSTEE. The Trustee for the Kmart
Creditor Trust shall be designated by the Unsecured Creditors' Committee,
subject to the approval of the Bankruptcy Court and the consent of the Debtors,
which consent shall not be unreasonably withheld. The Trustee shall be
independent of the Debtors. The Unsecured Creditors' Committee shall file a
notice on a date that is not less than ten (10) days prior to the Confirmation
Hearing designating the Person who it has selected as Trustee and seeking
approval of such designation. The Person designated as Trustee shall file an
affidavit demonstrating that such Person is disinterested as defined by section
101(14) of the Bankruptcy Code. If approved by the Bankruptcy Court, the Person
so designated shall become the Trustee on the Effective Date. The Trustee shall
have and perform all of the duties, responsibilities, rights and obligations set
forth in the Trust Agreement.
11.2 TRANSFER OF TRUST ASSETS TO THE KMART CREDITOR TRUST.
(a) On the Effective Date, the Debtors shall transfer
and shall be deemed to have irrevocably transferred to the Kmart Creditor Trust,
for and on behalf of the beneficiaries of the Trust, with no reversionary
interest in the Debtors, the Trust Assets (subject to any obligation of the
Kmart Creditor Trust to repay any amounts as set forth in this Article);
provided, however, that nothing herein is intended to transfer all or any
portion of any Retained Action to the Kmart Creditor Trust.
(b) Upon such transfer, the Debtors, the Disbursing
Agent and the Reorganized Debtors shall have no other further rights or
obligations with respect thereto. Notwithstanding the foregoing, the Reorganized
Debtors shall make available to the Trustee reasonable access during normal
business hours, upon reasonable notice, to personnel and books and records of
the Reorganized Debtors to representatives of the Kmart Creditor Trust to enable
the Trustee to perform the Trustee's tasks under the Trust Agreement and this
Plan, and the Debtors and the Reorganized Debtors shall cooperate with the
Trustee and the Trust Advisory Board with respect to access to all work product
developed during the stewardship investigation, as more specifically set forth
in the Trust Agreement; provided, however, that the Reorganized Debtors will not
be required to make expenditures in response to such requests determined by them
to be unreasonable. The Reorganized Debtors shall not be entitled to
compensation or reimbursement (including reimbursement for professional fees)
with respect to fulfilling their obligations as set forth in this Article. The
Bankruptcy Court retains jurisdiction to determine the reasonableness of either
a request for assistance and/or a related expenditure. Any requests for
assistance shall not interfere with the Reorganized Debtors' business
operations.
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11.3 THE KMART CREDITOR TRUST.
(a) Without any further action of the directors or
shareholders of the Debtors, on the Effective Date, the Trust Agreement,
substantially in the form of Exhibit L to this Plan, shall become effective. The
Trustee shall accept the Kmart Creditor Trust and sign the Trust Agreement on
the Effective Date and the Kmart Creditor Trust will then be deemed created and
effective.
(b) Interests in the Kmart Creditor Trust shall be
uncertificated and shall be non-transferable except upon death of the interest
holder or by operation of law. Holders of interests in the Kmart Creditor Trust
shall have no voting rights with respect to such interests. The Kmart Creditor
Trust shall have a term of three (3) years from the Effective Date, without
prejudice to the rights of the Trust Advisory Board to extend such term
conditioned upon the Kmart Creditor Trust's not then becoming subject to the
Exchange Act. The terms of the Trust may be amended by the Trustee or the
Debtors to the extent necessary to ensure that the Trust will not become subject
to the Exchange Act.
(c) The Trustee shall have full authority to take any
steps necessary to administer the Trust Agreement, including, without
limitation, the duty and obligation to liquidate Trust Assets, to administer the
Other Unsecured Claim Senior Note and Other Unsecured Claim Cash Payment Amount
(including pursuant to a services agreement with the Reorganized Debtors), to
make distributions therefrom in accordance with the provisions of this Plan and,
if authorized by majority vote of those members of the Trust Advisory Board
authorized to vote, to pursue and settle any Trust Claims. Upon such assignment,
the Trustee, on behalf of the Kmart Creditor Trust, will assume and be
responsible for all of the Debtors' responsibilities, duties, and obligations
with respect to the subject matter of the assignments, and the Debtors, the
Disbursing Agent, and the Reorganized Debtors will have no further rights or
obligations with respect thereto.
(d) All costs and expenses associated with the
administration of the Kmart Creditor Trust, including those rights, obligations
and duties described in this Plan, shall be the responsibility of and paid by
the Kmart Creditor Trust. Notwithstanding the preceding sentence, on the
Effective Date, the Reorganized Debtors shall contribute $5 million to the Kmart
Creditor Trust to be utilized to pay the costs and expenses associated with the
administration of the Kmart Creditor Trust.
(e) The Trustee may retain such law firms, accounting
firms, experts, advisors, consultants, investigators, appraisers, auctioneers or
other professionals as it may deem necessary (collectively, the "Trustee
Professionals"), in its sole discretion, to aid in the performance of its
responsibilities pursuant to the terms of this Plan including, without
limitation, the liquidation and distribution of Trust Assets.
(f) For federal income tax purposes, it is intended
that the Kmart Creditor Trust be classified as a liquidating trust under section
301.7701-4 of the Procedure and Administration Regulations and that such trust
is owned by its beneficiaries. Accordingly, for federal income tax purposes, it
is intended that the beneficiaries be treated as if they had received a
distribution of an undivided interest in the Trust Assets and then contributed
such interests to the Kmart Creditor Trust.
(g) The Trustee shall be responsible for filing all
federal, state and local tax returns for the Kmart Creditor Trust. The Trustee
shall provide to holders of interests in the Kmart
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Creditor Trust with copies of annual, audited financial statements, with such
copies to be made available on an Internet website to be maintained by the
Trustee and notice of which shall be given by the Trustee to such interest
holders.
11.4 THE TRUST ADVISORY BOARD.
(a) The Trust Advisory Board shall be comprised of
three (3) members, two (2) of which shall be designated by the Unsecured
Creditors' Committee, and one (1) of which shall be designated by the Financial
Institutions' Committee. The Unsecured Creditors' Committee and the Financial
Institutions' Committee shall give the Debtors written notice of the identities
of such members and file such notice with the Bankruptcy Court on a date that is
not less than ten (10) days prior to the Confirmation Hearing; provided,
however, that if said Committees fail to file and give such notice, Kmart shall
designate the members of the Trust Advisory Board by announcing their identities
at the Confirmation Hearing. The Trustee shall consult regularly with the Trust
Advisory Board when carrying out the purpose and intent of the Kmart Creditor
Trust. Members of the Trust Advisory Board shall be entitled to compensation in
accordance with the Trust Agreement and to reimbursement of the reasonable and
necessary expenses incurred by them in carrying out the purpose of the Trust
Advisory Board. Reimbursement of the reasonable and necessary expenses of the
members of the Trust Advisory Board and their compensation to the extent
provided for in the Trust Agreement shall be payable by the Kmart Creditor
Trust.
(b) In the case of an inability or unwillingness of
any member of the Trust Advisory Board to serve, such member shall be replaced
by designation of the remaining members of the Trust Advisory Board. If any
position on the Trust Advisory Board remains vacant for more than thirty (30)
days, such vacancy shall be filled within fifteen (15) days thereafter by the
designation of the Trustee without the requirement of a vote by the other
members of the Trust Advisory Board.
(c) Upon the certification by the Trustee that all
Trust Assets have been distributed, abandoned or otherwise disposed of, the
members of the Trust Advisory Board shall resign their positions, whereupon they
shall be discharged from further duties and responsibilities.
(d) The Trust Advisory Board shall, by majority vote,
approve all settlements of Trust Claims which the Trustee or any member of the
Trust Advisory Board may propose, provided, however, that (i) no member of the
Trust Advisory Board may cast a vote with respect to any Trust Claim to which it
is a party; and (ii) the Trustee may seek Bankruptcy Court approval of a
settlement of a Trust Claim if the Trust Advisory Board fails to act on a
proposed settlement of such Trust Claim within thirty (30) days of receiving
notice of such proposed settlement by the Trustee or as otherwise determined by
the Trustee.
(e) The Trust Advisory Board may, by majority vote,
authorize the Trustee to invest the corpus of the Trust in prudent investments
other than those described in section 345 of the Bankruptcy Code.
(f) The Trust Advisory Board may remove the Trustee
in its discretion. In the event the requisite approval is not obtained, the
Trustee may be removed by the Bankruptcy Court for cause shown. In the event of
the resignation or removal of the Trustee, the Trust Advisory Board shall, by
majority vote, designate a person to serve as successor Trustee. The successor
Trustee shall file an
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affidavit demonstrating that such Person is disinterested as defined by section
101(14) of the Bankruptcy Code.
(g) Notwithstanding anything to the contrary in this
Plan, neither the Trust Advisory Board nor any of its members, designees,
counsel, financial advisors or any duly designated agent or representatives of
any such party shall be liable for the act, default or misconduct of any other
member of the Trust Advisory Board, nor shall any member be liable for anything
other than such member's own gross negligence or willful misconduct. The Trust
Advisory Board may, in connection with the performance of its duties, and in its
sole and absolute discretion, consult with its counsel, accountants or other
professionals, and shall not be liable for anything done or omitted or suffered
to be done in accordance with such advice or opinions. If the Trust Advisory
Board determines not to consult with its counsel, accountants or other
professionals, it shall not be deemed to impose any liability on the Trust
Advisory Board, or its members and/or designees.
(h) The Trust Advisory Board shall govern its
proceedings through the adoption of by-laws, which the Trust Advisory Board may
adopt by majority vote. No provision of such by-laws shall supersede any express
provision of this Plan.
11.5 DISTRIBUTIONS OF TRUST ASSETS. Distributions of the Trust
Recoveries to Claimholders and Interestholders in accordance with their
interests in the Kmart Creditor Trust as set forth in this Plan shall be made at
least semi-annually beginning with a calendar quarter that is not later than the
end of the second calendar quarter after the Effective Date; provided, however,
that the Trustee shall not be required to make any such semiannual distribution
in the event that the aggregate proceeds and income available for distribution
to such Claimholders is not sufficient, in the Trustee's discretion (after
consultation with the Trust Advisory Board) to economically distribute monies.
The Trustee will make continuing efforts to prosecute or settle the Trust
Claims, make timely distributions, and not unduly prolong the duration of the
Kmart Creditor Trust.
ARTICLE XII
EFFECT OF THE PLAN ON CLAIMS AND INTERESTS
12.1 REVESTING OF ASSETS. Except as otherwise explicitly
provided in this Plan, on the Effective Date, all property comprising the
Estates (including Retained Actions, but excluding property that has been
abandoned pursuant to an order of the Bankruptcy Court) shall revest in each of
the Debtors that owned such property or interest in property as of the Effective
Date, free and clear of all Claims, liens, charges, encumbrances, rights and
Interests of creditors and equity security holders, provided, however, that (i)
the Trust Claims shall be transferred to the Kmart Creditor Trust pursuant to
Article 11.2 of this Plan and (ii) Qualifying Real Estate shall remain property
of the Estate of the Debtor that owns such Qualifying Real Estate. The
Responsible Officer of the Estates of such Debtors shall have full authority to
dispose of the Qualifying Real Estate consistent with procedures approved by the
Bankruptcy Court and sections 363 and 365 of the Bankruptcy Code. All liens and
security interests, if any, in the Qualifying Real Estate shall remain intact
and attach to the net proceeds therefrom to the same extent, validity, and
relative priority as existed on the Effective Date, and all proceeds remaining
in the Estates of such Debtors after satisfaction of all Allowed Secured Claims,
if any, shall be transferred to the New Operating Company. As of the Effective
Date, the Reorganized Debtors may operate their business and use, acquire, and
dispose of property and settle and compromise Claims or Interests without
supervision
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of the Bankruptcy Court, free of any restrictions of the Bankruptcy Code or
Bankruptcy Rules, other than those restrictions expressly imposed by this Plan
and Confirmation Order.
12.2 DISCHARGE OF THE DEBTORS. Pursuant to section 1141(d) of
the Bankruptcy Code, except as otherwise specifically provided in this Plan or
in the Confirmation Order, the distributions and rights that are provided in
this Plan shall be in complete satisfaction, discharge, and release, effective
as of the Confirmation Date (but subject to the occurrence of the Effective
Date), of Claims and Causes of Action, whether known or unknown, against,
liabilities of, liens on, obligations of, rights against, and Interests in the
Debtors or any of their assets or properties, regardless of whether any property
shall have been distributed or retained pursuant to this Plan on account of such
Claims, rights, and Interests, including, but not limited to, Claims and
Interests that arose before the Confirmation Date, any liability (including
withdrawal liability) to the extent such Claims relate to services performed by
employees of the Debtors prior to the Petition Date and that arise from a
termination of employment or a termination of any employee or retiree benefit
program, regardless of whether such termination occurred prior to or after the
Confirmation Date, and all debts of the kind specified in sections 502(g),
502(h) or 502(i) of the Bankruptcy Code, in each case whether or not (a) a proof
of claim or interest based upon such Claim, debt, right, or Interest is filed or
deemed filed under section 501 of the Bankruptcy Code, (b) a Claim or Interest
based upon such Claim, debt, right, or Interest is allowed under section 502 of
the Bankruptcy Code, or (c) the holder of such a Claim, right, or Interest
accepted this Plan. The Confirmation Order shall be a judicial determination of
the discharge of all Claims against and Interests in the Debtors, subject to the
Effective Date occurring.
12.3 COMPROMISES AND SETTLEMENTS. In accordance with Article
9.6 of this Plan, pursuant to Bankruptcy Rule 9019(a), the Debtors may
compromise and settle various (a) Claims against them and (b) Causes of Action
that they have against other Persons up to and including the Effective Date.
After the Effective Date, such right shall pass to the Reorganized Debtors as
contemplated in Article 11.1 of this Plan, without the need for further approval
of the Bankruptcy Court.
12.4 RELEASE BY DEBTORS OF CERTAIN PARTIES. Pursuant to
section 1123(b)(3) of the Bankruptcy Code, and except as otherwise provided for
in the Plan, including Section 12.10, effective as of the Effective Date, each
Debtor, in its individual capacity and as a debtor-in-possession for and on
behalf of its Estate, shall release and discharge and be deemed to have
conclusively, absolutely, unconditionally, irrevocably and forever released and
discharged all Released Parties for and from any and all claims or Causes of
Action existing as of the Effective Date in any manner arising from, based on or
relating to, in whole or in part, the Debtors, the subject matter of, or the
transactions or events giving rise to, any Claim or Interest that is treated in
this Plan, the business or contractual arrangements between any Debtor or any
Released Party, the restructuring of Claims and Interests prior to or in the
Chapter 11 Cases, or any act, omission, occurrence or event in any manner
related to any such Claims, Interests, restructuring or the Chapter 11 Cases.
The Reorganized Debtors, the Kmart Creditor Trust, and any newly-formed entities
that will be continuing the Debtors' businesses after the Effective Date shall
be bound, to the same extent the Debtors are bound, by all of the releases set
forth above. Notwithstanding the foregoing, nothing in this Plan shall be deemed
to release any of the Debtors or the Plan Investors or their Affiliates from
their obligations under the Investment Agreement or the transactions
contemplated thereby.
12.5 RELEASE BY HOLDERS OF CLAIMS AND INTERESTS. ON THE
EFFECTIVE DATE, AND EXCEPT AS OTHERWISE PROVIDED FOR IN THE PLAN, INCLUDING
ARTICLE 12.10, (A) EACH PERSON THAT VOTES TO
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ACCEPT THIS PLAN; (B) TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, AS
SUCH LAW MAY BE EXTENDED OR INTERPRETED SUBSEQUENT TO THE EFFECTIVE DATE, EACH
ENTITY (OTHER THAN A DEBTOR) THAT HAS HELD, HOLDS OR MAY HOLD A CLAIM OR
INTEREST, AS APPLICABLE, IN CONSIDERATION FOR THE OBLIGATIONS OF THE DEBTORS AND
THE REORGANIZED DEBTORS UNDER THIS PLAN AND THE CASH, NEW HOLDING COMPANY COMMON
STOCK, AND OTHER CONTRACTS, INSTRUMENTS, RELEASES, AGREEMENTS OR DOCUMENTS TO BE
DELIVERED IN CONNECTION WITH THIS PLAN (EACH, A "RELEASE OBLIGOR"), SHALL HAVE
CONCLUSIVELY, ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND FOREVER, RELEASED AND
DISCHARGED EACH RELEASED PARTY FROM ANY CLAIM OR CAUSE OF ACTION EXISTING AS OF
THE EFFECTIVE DATE ARISING FROM, BASED ON OR RELATING TO, IN WHOLE OR IN PART,
THE SUBJECT MATTER OF, OR THE TRANSACTION OR EVENT GIVING RISE TO, THE CLAIM OR
INTEREST OF SUCH RELEASE OBLIGOR, AND ANY ACT, OMISSION, OCCURRENCE OR EVENT IN
ANY MANNER RELATED TO SUCH SUBJECT MATTER, TRANSACTION OR OBLIGATION; PROVIDED,
HOWEVER, THAT THIS ARTICLE 12.5 SHALL NOT RELEASE ANY RELEASED PARTY FROM ANY
CAUSE OF ACTION EXISTING AS OF THE EFFECTIVE DATE, BASED ON (I) THE INTERNAL
REVENUE CODE OR OTHER DOMESTIC STATE, CITY OR MUNICIPAL TAX CODE, (II) THE
ENVIRONMENTAL LAWS OF THE UNITED STATES OR ANY DOMESTIC STATE, CITY OR
MUNICIPALITY, (III) ANY CRIMINAL LAWS OF THE UNITED STATES OR ANY DOMESTIC
STATE, CITY OR MUNICIPALITY, OR (IV) SECTIONS 1104-1109 AND 1342(D) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED.
12.6 SETOFFS. The Debtors may, but shall not be required to,
set off against any Claim, and the payments or other distributions to be made
pursuant to this Plan in respect of such Claim, claims of any nature whatsoever
that the Debtors may have against such Claimholder; but neither the failure to
do so nor the allowance of any Claim hereunder shall constitute a waiver or
release by the Debtors or the Reorganized Debtors of any such claim that the
Debtors or the Reorganized Debtors may have against such Claimholder.
12.7 SUBORDINATION RIGHTS. Except as otherwise specifically
provided for in the Plan (including with respect to the subordination provisions
of all documents pertaining to the Trust Preferred Securities, which such
provisions shall be specifically enforced), all Claims against the Debtors and
all rights and claims between or among Claimholders relating in any manner
whatsoever to distributions on account of Claims against or Interests in the
Debtors, based upon any claimed subordination rights, whether asserted or
unasserted, legal or equitable, shall be deemed satisfied by the distributions
under the Plan to Claimholders or Interestholders having such subordination
rights, and such subordination rights shall be deemed waived, released,
discharged, and terminated as of the Effective Date. Except as otherwise
specifically provided for in the Plan, distributions to the various Classes of
Claims and Interests hereunder shall not be subject to levy, garnishment,
attachment, or like legal process by any Claimholder or Interestholder by reason
of any subordination rights or otherwise, so that each Claimholder and
Interestholder shall have and receive the benefit of the distributions in the
manner set forth in the Plan.
12.8 EXCULPATION AND LIMITATION OF LIABILITY. Except as
otherwise specifically provided for in this Plan, the Debtors, the Reorganized
Debtors, the Statutory Committees, the members of the Statutory Committees in
their capacities as such, the DIP Lenders in their capacities as such, the DIP
Agent in its capacity as such, the Plan Investors in their capacities as such,
the Prepetition Lenders in their capacities as such, and any of such parties'
respective present or former members, officers, directors, employees, advisors,
attorneys, representatives, financial advisors, investment bankers, or agents
and any of such parties' successors and assigns, shall not have or incur, and
are hereby released from, any claim, obligation, Cause of Action, or liability
to one another or to any Claimholder or
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Interestholder, or any other party-in-interest, or any of their respective
agents, employees, representatives, financial advisors, attorneys or Affiliates,
or any of their successors or assigns, for any act or omission in connection
with, relating to, or arising out of the Debtors' Chapter 11 Cases, negotiation
and filing of this Plan, filing the Chapter 11 Cases, the pursuit of
confirmation of this Plan, the consummation of this Plan, or the administration
of this Plan or the property to be distributed under this Plan, except for their
willful misconduct, and in all respects shall be entitled to reasonably rely
upon the advice of counsel with respect to their duties and responsibilities
under this Plan. Notwithstanding any other provision of this Plan, no
Claimholder or Interest holder, or other party in interest, none of their
respective agents, employees, representatives, financial advisors, attorneys or
affiliates, and no successors or assigns of the foregoing, shall have any right
of action against the parties listed in this Article for any act or omission in
connection with, relating to or arising out of the Chapter 11 Cases, the pursuit
of confirmation of this Plan, the consummation of this Plan, or the
administration of this Plan or the property to be distributed under this Plan,
except for their willful misconduct. Notwithstanding the foregoing, nothing in
this Plan shall be deemed to release any of the Debtors or this Plan Investors
or their Affiliates from their obligations under the Investment Agreement or the
transactions contemplated thereby.
12.9 INDEMNIFICATION OBLIGATIONS. Except as specifically
provided otherwise in this Plan, in satisfaction and compromise of the
Indemnitees' Indemnification Rights: (a) all Indemnification Rights, except (i)
those based upon any act or omission arising out of or relating to any
Indemnitee's service with, for, or on behalf of any of the Debtors on or after
the Petition Date who remain in the Debtors' service as of the Effective Date,
and (ii) those held by any Indemnitee who served in the Chapter 11 Cases as of
the commencement of the Disclosure Statement Hearing as the Debtors' respective
officers, directors, or employees and/or serve in such capacities (or similar
capacities) after the Effective Date (the "Continuing Indemnification Rights"),
shall be released and discharged on and as of the Effective Date, provided that
the Indemnification Rights excepted in subparts (i) and (ii) shall remain in
full force and effect to the fullest extent allowed by law or contract on and
after the Effective Date and shall not be modified, reduced, discharged, or
otherwise affected in any way by the Chapter 11 Cases; (b) the Debtors or the
Reorganized Debtors, as the case may be, covenant to purchase and maintain
director and officer insurance providing coverage for those Indemnitees
currently covered by such policies for a period of two years after the Effective
Date, and also agree to purchase tail coverage under policies in existence as of
the Effective Date, to the fullest extent permitted by such provisions, in each
case insuring such parties in respect of any claims, demands, suits, Causes of
Action, or proceedings against such Persons based upon any act or omission
related to such Person's service with, for, or on behalf of the Debtors in at
least the scope and amount as currently maintained by the Debtors (the
"Insurance Coverage"); (c) the insurers who issued the Insurance Coverage are
authorized to pay any professional fees and expenses incurred in connection with
any action relating to any Continuing Indemnification Rights; and (d) the
Debtors or the Reorganized Debtors, as the case may be, hereby indemnify
Indemnitees with Continuing Indemnification Rights and agree to pay for any
deductible or retention amount that may be payable in connection with any claim
covered under either the foregoing Insurance Coverage or any prior similar
policy.
12.10 LIMITATION ON RELEASES/EXCULPATION. Notwithstanding
anything in this Plan to the contrary, no provision of this Plan or of the
Confirmation Order, including, without limitation, any release or exculpation
provision, shall modify, release or otherwise limit the liability of any Person
not specifically released hereunder, including, without limitation, any Person
that is a co-obligor or joint
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tortfeasor of a Released Party, that otherwise is liable under theories of
vicarious or other derivative liability, or that is or becomes the subject of a
Trust Claim.
12.11 INJUNCTION. The satisfaction, release, and discharge
pursuant to this Article XI shall act as an injunction against any Person
commencing or continuing any action, employment of process, or act to collect,
offset, or recover any Claim or Cause of Action satisfied, released, or
discharged under this Plan to the fullest extent authorized or provided by the
Bankruptcy Code, including, without limitation, to the extent provided for or
authorized by sections 524 and 1141 thereof.
ARTICLE XIII
CONDITIONS PRECEDENT
13.1 CONDITIONS TO CONFIRMATION. The following are conditions
precedent to confirmation of this Plan that may be satisfied or waived in
accordance with Article 13.3 of this Plan:
(a) The Bankruptcy Court shall have approved by Final
Order a Disclosure Statement with respect to this Plan in form and substance
acceptable to the Debtors, in their sole and absolute discretion, and reasonably
acceptable to the Plan Investors.
(b) The Confirmation Order shall be in form and
substance acceptable to the Debtors, in their sole and absolute discretion, and
reasonably acceptable to the Plan Investors.
13.2 CONDITIONS TO THE EFFECTIVE DATE. The following are
conditions precedent to the occurrence of the Effective Date, each of which may
be satisfied or waived in accordance with Article 13.3 of this Plan:
(a) The Reorganized Debtors shall have entered into
the New Kmart Exit Financing Facility and all conditions precedent to the
consummation thereof shall have been waived or satisfied in accordance with the
terms thereof.
(b) All conditions precedent to the funding
obligations under the Investment Agreement shall have been satisfied or waived
in accordance with the terms thereof and the funding under the Investment
Agreement shall have occurred.
(c) The Reorganized Debtors shall have entered into
the documents evidencing the Trade Vendors' Lien and all conditions precedent to
the consummation thereof shall have been waived or satisfied in accordance with
the terms thereof.
(d) The Bankruptcy Court shall have entered one or
more orders (which may include the Confirmation Order) authorizing the
assumption of unexpired leases and executory contracts by the Debtors as
contemplated by Article 8.1 of this Plan.
(e) The Confirmation Order shall have been entered by
the Bankruptcy Court and shall be a Final Order, the Confirmation Date shall
have occurred, and no request for revocation of the Confirmation Order under
section 1144 of the Bankruptcy Code shall have been made, or, if made, shall
remain pending.
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(f) Each Exhibit, document or agreement to be
executed in connection with this Plan shall be in form and substance reasonably
acceptable to the Debtors.
13.3 WAIVER OF CONDITIONS TO CONFIRMATION OR CONSUMMATION. The
conditions set forth in Articles 13.1 and 13.2 of this Plan may be waived, in
whole or in part, by the Debtors, after consultation with the Plan Investors and
the Creditor's Committees, without any notice to any other parties in interest
or the Bankruptcy Court and without a hearing. The failure to satisfy or waive
any condition to the Confirmation Date or the Effective Date may be asserted by
the Debtors in their sole discretion regardless of the circumstances giving rise
to the failure of such condition to be satisfied (including any action or
inaction by the Debtors in their sole discretion). The failure of the Debtors in
their sole discretion to exercise any of the foregoing rights shall not be
deemed a waiver of any other rights, and each such right shall be deemed an
ongoing right, which may be asserted at any time.
ARTICLE XIV
RETENTION OF JURISDICTION
Pursuant to sections 105(a) and 1142 of the Bankruptcy Code,
the Bankruptcy Court shall have exclusive jurisdiction of all matters arising
out of, and related to, the Chapter 11 Cases and this Plan, including, among
others, the following matters:
(a) to hear and determine pending motions for (i) the
assumption or rejection or (ii) the assumption and assignment of executory
contracts or unexpired leases to which any of the Debtors are a party or with
respect to which any of the Debtors may be liable, and to hear and determine the
allowance of Claims resulting therefrom including the amount of Cure, if any,
required to be paid;
(b) to adjudicate any and all adversary proceedings,
applications and contested matters that may be commenced or maintained pursuant
to the Chapter 11 Cases or this Plan, proceedings to adjudicate the allowance of
Disputed Claims and Disputed Interests and all controversies and issues arising
from or relating to any of the foregoing;
(c) to adjudicate any and all disputes arising from
or relating to the distribution or retention of the New Holding Company Common
Stock or other consideration under this Plan;
(d) to ensure that distributions to Allowed
Claimholders and Allowed Interestholders are accomplished as provided herein;
(e) to hear and determine any and all objections to
the allowance or estimation of Claims and Interests filed, both before and after
the Confirmation Date, including any objections to the classification of any
Claim or Interest, and to allow or disallow any Claim or Interest, in whole or
in part;
(f) to enter and implement such orders as may be
appropriate if the Confirmation Order is for any reason stayed, revoked,
modified and/or vacated;
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(g) to issue orders in aid of execution,
implementation, or consummation of this Plan;
(h) to consider any modifications of this Plan, to
cure any defect or omission, or to reconcile any inconsistency in any order of
the Bankruptcy Court, including, without limitation, the Confirmation Order;
(i) to hear and determine all applications for
allowance of compensation and reimbursement of Professional Claims under this
Plan or under sections 330, 331, 503(b), 1103 and 1129(a)(4) of the Bankruptcy
Code;
(j) to determine requests for the payment of Claims
entitled to priority under section 507(a)(1) of the Bankruptcy Code, including
compensation of and reimbursement of expenses of parties entitled thereto;
(k) to hear and determine disputes arising in
connection with the interpretation, implementation or enforcement of this Plan
or the Confirmation Order including disputes arising under agreements, documents
or instruments executed in connection with this Plan;
(l) to hear and determine all suits or adversary
proceedings to recover assets of any of the Debtors and property of their
Estates, wherever located;
(m) to hear and determine matters concerning state,
local and federal taxes in accordance with sections 346, 505 and 1146 of the
Bankruptcy Code;
(n) to hear any other matter not inconsistent with
the Bankruptcy Code;
(o) to hear and determine all disputes involving the
existence, nature or scope of the Debtors' discharge, including any dispute
relating to any liability arising out of the termination of employment or the
termination of any employee or retiree benefit program, regardless of whether
such termination occurred prior to or after the Effective Date;
(p) to hear and determine disputes arising in
connection with the interpretation, implementation or enforcement of the Kmart
Creditor Trust;
(q) to enter a final decree closing the Chapter 11
Cases; and
(r) to enforce all orders previously entered by the
Bankruptcy Court.
Notwithstanding anything contained herein to the contrary, the Bankruptcy Court
retains exclusive jurisdiction to hear and determine disputes concerning
Retained Actions and Trust Claims and any motions to compromise or settle such
disputes. Despite the foregoing, if the Bankruptcy Court is determined not to
have jurisdiction with respect to the foregoing, or if the Reorganized Debtors
or the Kmart Creditor Trust chooses to pursue any Retained Action or Trust Claim
(as applicable) in another court of competent jurisdiction, the Reorganized
Debtors or the Kmart Creditor Trust (as applicable) will have authority to bring
such action in any other court of competent jurisdiction.
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ARTICLE XV
MISCELLANEOUS PROVISIONS
15.1 BINDING EFFECT. Upon the Effective Date, this Plan shall
be binding upon and inure to the benefit of the Debtors, the Reorganized
Debtors, all present and former Claimholders, all present and former Interest
holders, other parties-in-interest and their respective heirs, successors, and
assigns.
15.2 MODIFICATION AND AMENDMENTS. The Debtors may alter, amend
or modify this Plan or any Exhibits thereto under section 1127(a) of the
Bankruptcy Code at any time prior to the Confirmation Hearing. After the
Confirmation Date and prior to substantial consummation of this Plan with
respect to any Debtor as defined in section 1101(2) of the Bankruptcy Code, any
Debtor may, under section 1127(b) of the Bankruptcy Code, institute proceedings
in the Bankruptcy Court to remedy any defect or omission or reconcile any
inconsistencies in this Plan, the Disclosure Statement, or the Confirmation
Order, and such matters as may be necessary to carry out the purposes and
effects of this Plan.
15.3 WITHHOLDING AND REPORTING REQUIREMENTS. In connection
with this Plan and all instruments issued in connection therewith and
distributions thereunder, the Debtors shall comply with all withholding and
reporting requirements imposed by any federal, state, local or foreign taxing
authority, and all distributions hereunder shall be subject to any such
withholding and reporting requirements.
15.4 COMMITTEES/RESPONSIBLE OFFICER/QUALIFYING REAL ESTATE..
Effective on the Effective Date, the Statutory Committees shall dissolve
automatically, whereupon their members, professionals and agents shall be
released from any further duties and responsibilities in the Chapter 11 Cases
and under the Bankruptcy Code, except with respect to applications for
Professional Claims, requests for compensation and reimbursement of expenses
pursuant to section 503(b) of the Bankruptcy Code for making a substantial
contribution in any of the Chapter 11 Cases, and any motions or other actions
seeking enforcement or implementation of the provisions of this Plan or the
Confirmation Order. The Professionals retained by the Statutory Committees and
the respective members thereof shall not be entitled to compensation and
reimbursement of expenses for services rendered after the Effective Date, except
for services rendered in connection with any applications for allowance of
compensation and reimbursement of expenses pending on the Effective Date or
filed after the Effective Date. This Section shall apply for all purposes and
with respect to all Debtors and their respective Estates under the Plan,
including with respect to any Debtor that owns Qualifying Real Estate that will
remain in the Estate of such Debtor under the Plan until final disposition
thereof, provided, however, that the Bankruptcy Court shall retain jurisdiction
over the Responsible Officer and may impose such requirements with respect to
the continued monitoring of the Estate of any such Debtor, including the
imposition of supplemental fee application requirements with respect to any
professionals of the Responsible Officer.
15.5 POST-CONFIRMATION COMMITTEE. On the Effective Date, there
shall be formed a Post-Confirmation Committee (the "Post-Confirmation
Committee") with its duties limited to: overseeing the general unsecured claims
reconciliation and settlement process conducted by or on behalf of the
Reorganized Debtors; formulating with the Reorganized Debtors appropriate
procedures for the settlement of claims; overseeing (i) the establishment,
(including the determination of the amount of New
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Holding Company Common Stock to be withheld) and (ii) the maintenance of, the
Distribution Reserve; overseeing the distributions to the holders of Prepetition
Note Claims and Trade Vendor/Lease Rejection Claims under the Plan; to appear
before and be heard by the Bankruptcy Court and other courts of competent
jurisdiction in connection with the above limited duties; and such other matters
as may be agreed upon between the Reorganized Debtors and the Post-Confirmation
Committee or specified in this Plan. The Post-Confirmation Committee shall
consist of three (3) members, with two (2) of such members to be appointed by
the Unsecured Creditors' Committee, and one (1) member to be appointed by the
Financial Institutions' Committee, that may adopt by-laws governing its conduct.
For so long as the claims reconciliation process shall continue, the Reorganized
Debtors shall make regular reports to the Post-Confirmation Committee as and
when the Reorganized Debtors and the Post-Confirmation Committee may reasonably
agree upon. The Post-Confirmation Committee may employ, without further order of
the Court, professionals to assist it in carrying out its duties as limited
above, including any professionals retained in these Reorganization Cases, and
the Reorganized Debtors shall pay the reasonable costs and expenses of the
Post-Confirmation Committee, including reasonable professional fees, in the
ordinary course without further order of the Court.
15.6 REVOCATION, WITHDRAWAL OR NON-CONSUMMATION.
(A) RIGHT TO REVOKE OR WITHDRAW. Each of the Debtors
reserves the right to revoke or withdraw this Plan with respect to such Debtor
at any time prior to the Effective Date.
(B) EFFECT OF WITHDRAWAL, REVOCATION OR
NON-CONSUMMATION. If any of the Debtors revokes or withdraws this Plan as to
such Debtor prior to the Effective Date, or if the Confirmation Date or the
Effective Date does not occur, then this Plan, any settlement or compromise
embodied in this Plan with respect to such Debtor or Debtors (including the
fixing or limiting to an amount certain any Claim or Class of Claims with
respect to such Debtor or Debtors), the assumption or rejection of executory
contracts or leases effected by this Plan with respect to such Debtor or
Debtors, and any document or agreement executed pursuant to this Plan with
respect to such Debtor or Debtors shall be null and void as to such Debtor or
Debtors. In such event, nothing contained herein or in the Disclosure Statement,
and no acts taken in preparation for consummation of this Plan, shall be deemed
to constitute a waiver or release of any Claims by or against such Debtor or
Debtors or any other Person, to prejudice in any manner the rights of any such
Debtor or Debtors, the holder of a Claim or Interest, or any Person in any
further proceedings involving such Debtor or Debtors or to constitute an
admission of any sort by the Debtors or any other Person.
15.7 NOTICES. Any notice required or permitted to be provided
to the Debtors or Statutory Committees, or the Plan Investors, shall be in
writing and served by (a) certified mail, return receipt requested, (b) hand
delivery, or (c) overnight delivery service, to be addressed as follows:
If to the Debtors: If to the Unsecured Creditors' Committee:
Kmart Corporation Otterbourg, Steindler, Houston & Rosen P.C.
3100 West Big Beaver Road 230 Park Avenue
Troy, Michigan 48084 New York, New York 10169
Attention: General Counsel Attention: Scott L. Hazan, Esq.
Glenn B. Rice, Esq.
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with a copy to: If to the Financial Institutions' Committee:
Skadden, Arps, Slate, Meagher & Jones, Day, Reavis & Pogue
Flom (Illinois) 77 West Wacker Drive
333 West Wacker Drive, Suite 2100 Chicago, Illinois 60601
Chicago, Illinois 60606-1285 Attention: Paul E. Harner, Esq.
Attention: John Wm. Butler, Jr., Esq. Roy C. Schrock, Esq.
Eric J. Ivester, Esq.
If to the Equity Committee: If to the Plan Investors
Goldberg, Kohn, Bell, Black, Wachtell, Lipton, Rosen & Katz
Rosenbloom & Moritz, Ltd. 51 West 52nd Street
55 East Monroe Street New York, New York 10019
Suite 3700 Attention: Scott K. Charles, Esq.
Chicago, Illinois 60603
Attention: Randall L. Klein, Esq.
If to the Prepetition Agent:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Peter V. Pantaleo, Esq.
15.8 TERM OF INJUNCTIONS OR STAYS. Unless otherwise provided
herein or in the Confirmation Order, all injunctions or stays provided for in
the Chapter 11 Cases under sections 105 or 362 of the Bankruptcy Code or
otherwise, and extant on the Confirmation Date, shall remain in full force and
effect until the Effective Date.
15.9 GOVERNING LAW. Unless a rule of law or procedure is supplied
by federal law (including the Bankruptcy Code and Bankruptcy Rules) or unless
otherwise specifically stated, the laws of the State of Michigan shall govern
the construction and implementation of this Plan, any agreements, documents and
instruments executed in connection with this Plan (except as otherwise set forth
in those agreements, in which case the governing law of such agreements shall
control), and, with respect to Debtors incorporated in Michigan, corporate
governance matters. Corporate governance matters relating to Debtors not
incorporated in Michigan shall be governed by the laws of the state of
incorporation of the applicable Debtor.
15.10 NO WAIVER OR ESTOPPEL. Each Claimholder or Interest holder
shall be deemed to have waived any right to assert that its Claim or Interest
should be Allowed in a certain amount, in a certain priority, secured, or not
subordinated by virtue of an agreement made with the Debtors and/or their
counsel, the Statutory Committees and/or their counsel, or any other party, if
such agreement was not disclosed in this Plan, the Disclosure Statement or
papers filed with the Bankruptcy Court.
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15.11 CONFLICTS. In the event that the provisions of the
Disclosure Statement and the provisions of the Plan conflict, the terms of the
Plan shall govern.
Dated: January 24, 2003
Chicago, Illinois
Respectfully submitted,
KMART CORPORATION AND THE
DEBTOR AFFILIATES
By: /s/ Julian C. Day
-------------------------------------------
Julian C. Day
Chief Executive Officer of Kmart
Corporation and authorized signatory for
each of the other Debtors
John Wm. Butler, Jr.
J. Eric Ivester
Mark A. McDermott
Samuel S. Ory
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM (ILLINOIS)
333 West Wacker Drive, Suite 2100
Chicago, Illinois 60606-1285
(312) 407-0700
ATTORNEYS FOR KMART CORPORATION
AND THE DEBTOR AFFILIATES
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EXHIBIT A
FORM OF CERTIFICATE OF INCORPORATION
AND BY-LAWS OF NEW HOLDING COMPANY
TO BE FILED BY THE EXHIBIT FILING DATE
EXHIBIT B
FORM OF CERTIFICATE OF INCORPORATION
AND BY-LAWS OF NEW OPERATING COMPANY
TO BE FILED BY THE EXHIBIT FILING DATE
EXHIBIT C
FORM OF CERTIFICATE OF INCORPORATION
AND BY-LAWS OF OTHER REORGANIZED DEBTORS
TO BE FILED BY THE EXHIBIT FILING DATE
EXHIBIT D-1
EXIT FINANCING FACILITY AGREEMENT
TO BE FILED BY THE EXHIBIT FILING DATE
EXHIBIT D-2
EXIT FINANCING FACILITY COMMITMENT LETTER
PREVIOUSLY FILED BY KMART
EXHIBIT E
INVESTMENT AGREEMENT
SEE EXHIBIT 4.1
EXHIBIT F
SUMMARY OF MANAGEMENT COMPENSATION PLAN
TO BE FILED BY THE EXHIBIT FILING DATE
EXHIBIT G
FORM OF REGISTRATION RIGHTS AGREEMENT
TO BE FILED BY THE EXHIBIT FILING DATE
EXHIBIT H
RESTRUCTURING TRANSACTION NOTICE
TO BE FILED BY THE EXHIBIT FILING DATE
EXHIBIT I
CORPORATE STRUCTURE OF REORGANIZED DEBTORS
TO BE FILED BY THE EXHIBIT FILING DATE
EXHIBIT J
LIST OF RETAINED ACTIONS
TO BE FILED BY THE EXHIBIT FILING DATE
THE DEBTORS AND THEIR STATUTORY COMMITTEES
CURRENTLY ARE NEGOTIATING TO WHAT EXTENT, IF ANY,
AND UNDER WHAT CIRCUMSTANCES, AVOIDANCE ACTIONS
WILL BE RETAINED ON THE EFFECTIVE DATE
EXHIBIT K
POST-EFFECTIVE DATE TRADE VENDORS' LIEN PROGRAM DOCUMENTS
TO BE FILED BY THE EXHIBIT FILING DATE
EXHIBIT L
FORM OF KMART CREDITOR TRUST AGREEMENT
TO BE FILED BY THE EXHIBIT FILING DATE
EXHIBIT M-1
LIST OF ASSUMED INTERCOMPANY EXECUTORY CONTRACTS
AND INTERCOMPANY UNEXPIRED LEASES
TO BE FILED BY THE EXHIBIT FILING DATE
EXHIBIT M-2
LIST OF EMPLOYEE-RELATED AGREEMENTS
TO BE FILED BY THE EXHIBIT FILING DATE
EXHIBIT M-2
LIST OF OTHER EXECUTORY CONTRACTS AND UNEXPIRED LEASES
TO BE FILED BY THE EXHIBIT FILING DATE
EXHIBIT N
ADMINISTRATIVE CLAIM REQUEST FORM
TO BE FILED BY THE EXHIBIT FILING DATE
EXHIBIT O
OTHER UNSECURED CLAIM SENIOR NOTE
TO BE FILED BY THE EXHIBIT FILING DATE