EXHIBIT 10.3
FIRST AMENDMENT TO CREDIT AGREEMENT
FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of August 28,
2003 (this "Amendment"), with respect to that certain Credit Agreement, dated as
of May 6, 2003 (as amended, the "Credit Agreement"), among Kmart Corporation, a
Michigan corporation ("Borrower"), the other Credit Parties (as defined therein)
signatory thereto, the lenders from time to time signatory thereto (each a
"Lender" and collectively, "Lenders") and General Electric Capital Corporation,
a Delaware corporation ("GE Capital"), as the administrative agent for the
Lenders (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, Borrower, the other Credit Parties, Lenders and
Administrative Agent are parties to the Credit Agreement;
WHEREAS, the Credit Parties have requested that the Lenders
amend the Credit Agreement to permit the Credit Parties to (i) purchase up to
$10,000,000 of Holdings' Stock and (ii) maintain Marketable Securities outside
of Investment Accounts subject to Investment Account Control Agreements;
WHEREAS, the Majority Lenders are willing to agree to the
requested amendments on the terms and conditions contained herein;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
1. Definitions. Unless otherwise defined herein, terms defined
in the Credit Agreement shall have their defined meanings when used herein.
2. Amendments to Credit Agreement.
(a) Section 6.13 of the Credit Agreement shall be amended to
(i) delete the "and" that appears after the final ";" of clause (f),
(ii) to delete the ".." that appears at the end of clause (g) and to
substitute "; and" in lieu thereof and (iii) insert the following new
clause (h) immediately following clause (g):
"(h) the payment by the Credit Parties of up to
$10,000,000 in the aggregate to purchase the unrestricted
Stock of Holdings freely traded on a national securities
exchange (the "Incentive Stock"); provided, that Incentive
Stock may be used solely as incentives for officers,
executives or other employees of the Credit Parties."
(b) Section 6.2(d) of the Credit Agreement shall be deleted in
it its entirety and the following shall be substituted in lieu thereof:
"(d) Cash, Cash Equivalents and Marketable
Securities; provided, that any cash and Cash Equivalents,
other than Store Cash, must be (i) maintained in a
Concentration Account or Excluded Account, as applicable or
(ii) otherwise invested in accordance with this Section 6.2;
provided, further, that Marketable Securities must either (i)
be maintained in an Investment Account covered by an
Investment Account Control Agreement or (ii) otherwise be
subject to a first-priority, perfected security interest in
favor of Administrative Agent (including both a financing
statement and a control agreement in form and substance
satisfactory to Administrative Agent);"
(c) Annex A to the Credit Agreement shall be amended by adding
in its proper alphabetical place the following new definition:
"`Incentive Stock' has the meaning ascribed to it in
Section 6.13(h)."
3. Representations and Warranties. In order to induce
Administrative Agent and Lenders to enter into this Amendment, the Credit
Parties hereby represent and warrant to Administrative Agent and Lenders that
the representations and warranties of the Credit Parties contained in the Credit
Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date hereof (after giving effect hereto), except where
such representations and warranties expressly relate to an earlier date in which
case such representations and warranties were true and correct in all material
respects as of such earlier date.
4. Conditions to Effectiveness. This Amendment shall be
effective on the date when the following conditions shall have occurred (the
"First Amendment Effective Date"):
(a) Administrative Agent shall have executed this Amendment
and shall have received counterparts hereof, duly executed and
delivered by each Credit Party and Majority Lenders; and
(b) Administrative Agent shall have executed the First
Amendment to the Security Agreement attached hereto as Exhibit A and
shall have received counterparts thereof, duly executed and delivered
by the Borrower and Majority Lenders.
5. Amendment to Security Agreement. By their execution hereof,
Lenders hereby agree to the amendment of the Security Agreement in the form
attached hereto as Exhibit A.
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6. Reference to Credit Agreement. Upon the effectiveness of
this Amendment, each reference in the Credit Agreement to "this Agreement,"
"hereunder," or words of like or similar import shall mean and be a reference to
the Credit Agreement, as modified and amended by this Amendment.
7. Acknowledgement and Consent. Each Credit Party by their
execution of this Amendment hereby:
(a) acknowledges and consents to this Amendment; and
(b) ratifies and confirms that all guaranties, assurances,
obligations and liens under the Loan Documents are not released,
diminished, impaired, reduced or otherwise adversely affected and
agrees that the execution, delivery and performance of this Amendment
shall not in any way affect such Person's obligations under any Loan
Document to which such Person is a party, which obligations on the date
hereof remain absolute and unconditional and are not subject to any
defense, set-off or counterclaim whatsoever.
8. Governing Law and Jurisdiction. THIS AMENDMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
9. Expenses. Borrower agrees to pay and reimburse
Administrative Agent for all its reasonable costs and expenses incurred in
connection with the preparation and delivery of this Amendment, including,
without limitation, the reasonable fees and disbursements of counsel to
Administrative Agent.
10. Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
11. Counterparts. This Amendment may be executed by the
parties hereto in any number of separate counterparts (including by facsimile
transmission) and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
12. Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of Borrower and its successors and assigns, and
upon Administrative Agent and the Lenders and their respective successors and
assigns.
13. Continuing Effect. Except as expressly amended hereby, the
Credit Agreement shall continue to be and shall remain in full force and effect
in accordance with its terms. This Amendment shall not constitute an amendment
or waiver of any provision of the Credit Agreement not expressly referred to
herein and shall not be
3
construed as an amendment, waiver or consent to any action on the part of
Borrower that would require an amendment, waiver or consent of Administrative
Agent or the Lenders except as expressly stated herein. Any reference to the
"Credit Agreement" in the Loan Documents or any related documents shall be
deemed to be a reference to the Credit Agreement as amended by this Amendment.
14. NO ORAL AGREEMENTS. THIS AMENDMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Amendment to
be executed and delivered by their respective duly authorized officers as of the
day and year first above written.
KMART CORPORATION,
as a Borrower
By: /s/ James Gooch
---------------
Name: James Gooch
-----------
Title: VP - Treasurer
--------------
[SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT]
KMART HOLDING CORPORATION
KMART MANAGEMENT CORPORATION
BIG BEAVER DEVELOPMENT CORPORATION
BIG BEAVER OF FLORIDA DEVELOPMENT,
LLC
BIG BEAVER OF GUAYNABO
BLUELIGHT.COM, INC.
BLUELIGHT.COM LLC
KBL HOLDING INC.
KMART CORPORATION OF ILLINOIS, INC.
KMART EXPRESS LLC,
KMART INTERNATIONAL SERVICES, INC.
KMART OF FLORIDA LLC
KMART STORES OF ILLINOIS LLC
KMART OF MICHIGAN, INC.
KMART OF NORTH CAROLINA LLC
KMART OF NY HOLDINGS, INC.
KMART OF OHIO LLC
KMART STORES OF TEXAS LLC
KMART OF WASHINGTON LLC
KMART OVERSEAS CORPORATION
KMART STORES OF INDIANA, INC.
KMART STORES OF TNCY, INC.
MEDIA MOMENTUM, INC.
STI MERCHANDISING, INC.,
as Credit Parties
By: /s/ James Gooch
---------------------------------
Name: James Gooch
-------------------------------
Title: VP - Treasurer
------------------------------
[SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT]
KLC INC.,
as a Credit Party
By: /s/ James Gooch
---------------------------------
Name: James Gooch
-------------------------------
Title: VP - Treasurer
------------------------------
KMART OF INDIANA
KMART OF PENNSYLVANIA LP
KMART OF TEXAS L.P.
THE COOLIDGE GROUP LLC,
as Credit Parties
By: KMART CORPORATION, its sole
member, partner or general
partner, as applicable
By: /s/ James Gooch
---------------------------
Name: James Gooch
-------------------------
Title: VP - Treasurer
------------------------
KMART TRINIDAD, INC.
as a Credit Party
By: /s/ James Gooch
---------------------------------
Name: James Gooch
-------------------------------
Title: VP - Treasurer
------------------------------
MARIN ACCESS LLC,
as a Credit Party
By: /s/ James Gooch
---------------------------------
Name: James Gooch
-------------------------------
Title: VP - Treasurer
------------------------------
[SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT]
GENERAL ELECTRIC CAPITAL
CORPORATION, as Administrative Agent
By: /s/ Lynn Gosselin
---------------------------------
Name: Lynn Gosselin
-------------------------------
Title: Duly Authorized Signatory
------------------------------
FLEET RETAIL FINANCE, INC.,
as a Lender
By: /s/ James R. Dore
---------------------------------
Name: James R. Dore
-------------------------------
Title: Managing Director
------------------------------
BANK OF AMERICA BUSINESS CREDIT,
as a Lender
By: /s/ Robert Scalzitti
---------------------------------
Name: Robert Scalzitti
-------------------------------
Title: Vice President
------------------------------
GMAC COMMERCIAL FINANCE LLC,
as a Lender
By: /s/ Thomas Maiale
---------------------------------
Name: Thomas Maiale
-------------------------------
Title: Director
------------------------------
BANK ONE, NA,
as a Lender
By: /s/ Joseph R. Heskett
---------------------------------
Name: Joseph R. Heskett
-------------------------------
Title: Associate
------------------------------
NATIONAL CITY COMMERCIAL FINANCE,
INC.,
as a Lender
By: /s/ Kathryn C. Ellero
---------------------------------
Name: Kathryn C. Ellero
-------------------------------
Title: Vice President
------------------------------
ORIX FINANCIAL SERVICES, INC.,
as a Lender
By: /s/ Jonathan M. Millard
---------------------------------
Name: Jonathan M. Millard
-------------------------------
Title: Vice President
------------------------------
PB CAPITAL CORPORATION,
as a Lender
By: /s/ Tyler J. McCarthy
---------------------------------
Name: Tyler J. McCarthy
-------------------------------
Title: Vice President
------------------------------
By: /s/ Andrew L. Shipman
---------------------------------
Name: Andrew L. Shipman
-------------------------------
Title: Assistant Vice President
------------------------------
TEXTRON FINANCIAL CORPORATION,
as a Lender
By: /s/ Eric R. Hubbard
---------------------------------
Name: Eric R. Hubbard
-------------------------------
Title: Vice President
------------------------------
TRANSAMERICA BUSINESS CAPITAL
CORPORATION,
as a Lender
By: /s/ Perry Vavoules
---------------------------------
Name: Perry Vavoules
-------------------------------
Title: EVP
------------------------------
UPS CAPITAL CORPORATION,
as a Lender
By: /s/ Catherine M. Hilton
---------------------------------
Name: Catherine M. Hilton
-------------------------------
Title: Vice President
------------------------------
RZB FINANCE LLC,
as a Lender
By: /s/ John A. Valiska
---------------------------------
Name: John A. Valiska
-------------------------------
Title: Group Vice President
------------------------------
By: /s/ Christoph Hoedl
---------------------------------
Name: Christoph Hoedl
-------------------------------
Title: Vice President
------------------------------
THE PROVIDENT BANK,
as a Lender
By: /s/ Marshall M. Stuart
---------------------------------
Name: Marshall M. Stuart
-------------------------------
Title: Vice President
------------------------------
KZH ING-2 LLC,
as a Lender
By: /s/ Dorian Herrera
---------------------------------
Name: Dorian Herrera
-------------------------------
Title: Authorized Agent
------------------------------
KZH CYPRESSTREE-1 LCC,
as a Lender
By: /s/ Dorian Herrera
---------------------------------
Name: Dorian Herrera
-------------------------------
Title: Authorized Agent
------------------------------
KZH STERLING LLC,
as a Lender
By: /s/ Dorian Herrera
---------------------------------
Name: Dorian Herrera
-------------------------------
Title: Authorized Agent
------------------------------
AMERICAN EXPRESS CERTIFICATE
COMPANY,
as a Lender
By: /s/ Yvonne Stevens
---------------------------------
Name: Yvonne Stevens
-------------------------------
Title: Senior Managing Director
------------------------------
IDS LIFE INSURANCE COMPANY,
as a Lender
By: /s/ Yvonne Stevens
---------------------------------
Name: Yvonne Stevens
-------------------------------
Title: Senior Managing Director
------------------------------
LONGACRE MASTER FUND, LTD.,
as a Lender
By: /s/ Steven S. Weissman
---------------------------------
Name: Steven S. Weissman
-------------------------------
Title: Director
------------------------------
EXHIBIT A
FIRST AMENDMENT TO SECURITY AGREEMENT
FIRST AMENDMENT TO SECURITY AGREEMENT, effective as of August
28, 2003 (this "Amendment"), with respect to that certain Security Agreement,
dated as of May 6, 2003 (as amended prior to the date hereof, the "Security
Agreement"), among Kmart Corporation, a Michigan corporation ("Borrower"), the
other Grantors (as defined therein) signatory thereto and General Electric
Capital Corporation, a Delaware corporation ("GE Capital"), individually and in
its capacity as the administrative agent for the Lenders (in such capacity, the
"Administrative Agent").
W I T N E SS E T H:
WHEREAS, Borrower, the other Credit Parties, Lenders and
Administrative Agent are parties to the Credit Agreement;
WHEREAS, the Credit Parties have requested that the Lenders
agree to amend the Credit Agreement to permit the Credit Parties to (i) purchase
up to $10,000,000 of Holdings' Stock and (ii) maintain Marketable Securities
outside of Investment Accounts subject to Investment Account Control Agreements;
WHEREAS, in order to induce Lenders to agree to such
amendments to the Credit Agreement, Grantors have agreed to amend the Security
Agreement to grant a first-priority, perfected security interest in favor of
Administrative Agent in Marketable Securities held by any Credit Party;
WHEREAS, the Majority Lenders are willing to agree to the
requested amendments on the terms and conditions contained herein;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
1. Definitions. Unless otherwise defined herein, terms defined
in the Credit Agreement shall have their defined meanings when used herein.
2. Amendments to Security Agreement. Section 2 of the Security
Agreement shall be amended to (i) delete the "and" that appears after the ";" in
clause (xi), (ii) renumber existing clause "(xii)" as clause "(xiii)", and (iii)
insert the following new clause (xii) immediately following clause (xi) and
immediately preceding clause (xiii):
"(xii) Marketable Securities; and"
3. Representations and Warranties. In order to induce
Administrative Agent and Lenders to enter into this Amendment, Grantors hereby
represent and warrant to Administrative Agent and Lenders that the
representations and warranties of Grantors contained in the Security Agreement
and the other Loan Documents are true and correct in all material respects on
and as of the date hereof (after giving effect hereto), except where such
representations and warranties expressly relate to an earlier date in which case
such representations and warranties were true and correct in all material
respects as of such earlier date.
4. Conditions to Effectiveness. This Amendment shall be
effective on the date when the following conditions shall have occurred (the
"First Amendment Effective Date"):
(a) Administrative Agent shall have executed this Amendment
and shall have received counterparts hereof, duly executed and
delivered by each Grantor; and
(b) Administrative Agent shall have executed the First
Amendment to the Credit Agreement referred to in the recitals to this
Amendment and shall have received counterparts thereof, duly executed
and delivered by the Borrower and Majority Lenders.
5. Reference to Security Agreement. Upon the effectiveness of
this Amendment, each reference in the Security Agreement to "this Agreement,"
"hereunder," or words of like or similar import shall mean and be a reference to
the Security Agreement, as modified and amended by this Amendment.
6. Governing Law and Jurisdiction. THIS AMENDMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
7. Expenses. Borrower agrees to pay and reimburse
Administrative Agent for all its reasonable costs and expenses incurred in
connection with the preparation and delivery of this Amendment, including,
without limitation, the reasonable fees and disbursements of counsel to
Administrative Agent.
8. Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
9. Counterparts. This Amendment may be executed by the parties
hereto in any number of separate counterparts (including by facsimile
transmission) and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
10. Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of Borrower and its successors and assigns, and
upon Administrative Agent and the Lenders and their respective successors and
assigns.
11. Continuing Effect. Except as expressly amended hereby, the
Security Agreement, as amended by this Amendment, and the security interests
granted thereunder, shall continue to be and shall remain in full force and
effect in accordance with its terms. This Amendment shall not constitute an
amendment or waiver of any provision of the Security Agreement not expressly
referred to herein and shall not be construed as an amendment, waiver or consent
to any action on the part of Borrower that would require an amendment, waiver or
consent of Administrative Agent or the Lenders except as expressly stated
herein. Any reference to the "Security Agreement" in the Loan Documents or any
related documents shall be deemed to be a reference to the Security Agreement as
amended by this Amendment.
12. NO ORAL AGREEMENTS. THIS AMENDMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have caused this Amendment to
be executed and delivered by their respective duly authorized officers as of the
day and year first above written.
KMART CORPORATION
KMART HOLDING CORPORATION
KMART MANAGEMENT CORPORATION
BIG BEAVER DEVELOPMENT CORPORATION
BIG BEAVER OF FLORIDA DEVELOPMENT,
LLC
BIG BEAVER OF GUAYNABO
BLUELIGHT.COM, INC.
BLUELIGHT.COM LLC
KBL HOLDING INC.
KMART CORPORATION OF ILLINOIS, INC.
KMART EXPRESS LLC,
KMART INTERNATIONAL SERVICES, INC.
KMART OF FLORIDA LLC
KMART STORES OF ILLINOIS LLC
KMART OF MICHIGAN, INC.
KMART OF NORTH CAROLINA LLC
KMART OF NY HOLDINGS, INC.
KMART OF OHIO LLC
KMART STORES OF TEXAS LLC
KMART OF WASHINGTON LLC
KMART OVERSEAS CORPORATION
KMART STORES OF INDIANA, INC.
KMART STORES OF TNCY, INC.
MEDIA MOMENTUM, INC.
STI MERCHANDISING, INC.,
as Grantors
By: /s/ James Gooch
--------------------------------
Name: James Gooch
------------------------------
Title: VP - Treasurer
-----------------------------
[SIGNATURE PAGE TO FIRST AMENDMENT TO SECURITY AGREEMENT]
KLC INC.,
as a Grantor
By: /s/ James Gooch
--------------------------------
Name: James Gooch
------------------------------
Title: VP - Treasurer
-----------------------------
[SIGNATURE PAGE TO FIRST AMENDMENT TO SECURITY AGREEMENT]
KMART OF INDIANA
KMART OF PENNSYLVANIA LP
KMART OF TEXAS L.P.
THE COOLIDGE GROUP LLC,
as Grantors
By: KMART CORPORATION, its sole
member, partner or general
partner, as applicable
By: /s/ James Gooch
----------------------------
Name: James Gooch
--------------------------
Title: VP - Treasurer
-------------------------
KMART TRINIDAD, INC.
as a Grantor
By: /s/ James Gooch
---------------------------------
Name: James Gooch
-------------------------------
Title: VP - Treasurer
------------------------------
MARIN ACCESS LLC,
as a Grantor
By: /s/ James Gooch
---------------------------------
Name: James Gooch
-------------------------------
Title: VP - Treasurer
------------------------------
GENERAL ELECTRIC CAPITAL
CORPORATION, as Administrative Agent
By: /s/ Lynn Gosselin
---------------------------------
Name: Lynn Gosselin
-------------------------------
Title: Duly Authorized Signatory
------------------------------
[SIGNATURE PAGE TO FIRST AMENDMENT TO SECURITY AGREEMENT]