EXHIBIT 10.1
FIRST AMENDMENT TO AMENDED AND RESTATED
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DEBTOR-IN-POSSESSION AND EXIT CREDIT AGREEMENT
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FIRST AMENDMENT TO AMENDED AND RESTATED DEBTOR-IN-POSSESSION AND EXIT
CREDIT AGREEMENT dated as of May 31, 2005 (this "Amendment"), among FOOTSTAR,
INC., a debtor and debtor-in-possession, a Delaware corporation, having its
chief executive office at 000 XxxXxxxxx Xxxxxxxxx, Xxxxxx, XX 00000, as Lead
Borrower for the Borrowers, being said FOOTSTAR, INC. and FOOTSTAR CORPORATION,
a debtor and debtor-in-possession, a Texas corporation, having its principal
place of business at 000 XxxXxxxxx Xxxxxxxxx, Xxxxxx, XX 00000; FLEET NATIONAL
BANK and the other financial institutions party to the Credit Agreement as
hereinafter defined (collectively, the "Lenders"); FLEET NATIONAL BANK, as
Administrative Agent and Swingline Lender, a national banking association having
a place of business at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000; FLEET
RETAIL GROUP, INC. (formerly known as Fleet Retail Finance Inc.), as Collateral
Agent for the Lenders, a Delaware corporation having its principal place of
business at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000; and GENERAL ELECTRIC
CAPITAL CORPORATION, as syndication agent (in such capacity, the "Syndication
Agent").
WHEREAS, the Borrowers, the Lenders, the Administrative Agent, the
Collateral Agent and the Syndication Agent are parties to a certain Amended and
Restated Debtor-In-Possession and Exit Credit Agreement dated as of June 25,
2004 (as amended and in effect from time to time, the "Credit Agreement"),
pursuant to which the Lenders have extended credit to the Borrowers on the terms
and subject to the conditions set forth therein;
WHEREAS, the Borrowers, the Lenders, the Administrative Agent, the
Collateral Agent and the Syndication Agent have agreed, on the terms and
conditions set forth herein, to amend certain provisions of the Credit
Agreement; and
WHEREAS, capitalized terms which are used herein without definition
and which are defined in the Credit Agreement shall have the same meanings
herein as in the Credit Agreement.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ss.1. Amendment to Section 1.1 of the Credit Agreement. Section 1.1
of the Credit Agreement is hereby amended by:
(a) deleting clause (iv) of the definition of "Borrowing Base" in its
entirety and substituting the following new clause (iv) in lieu thereof:
"(iv) the amount of the Kmart Reserve; minus";
(b) deleting the definitions of "DIP Facility Maturity Date", "Exit
Facility Maturity Date", "Financial Officer", "Kmart Assumption", "Maturity
Date", "Required Lenders" and "Total Exit Commitment" in their entirety and
substituting the following new definitions in proper alphabetical in lieu
thereof:
2
"DIP Facility Maturity Date" means the earlier to occur of (a)
October 31, 2006 and (b) the Exit Facility Date.
"Exit Facility Maturity Date" means the earlier to occur of (a)
March 4, 2009 and (b) the third anniversary of the Exit Facility Date.
"Financial Officer" means the treasurer, assistant treasurer,
senior vice president of financial reporting, senior vice president of
finance, chief financial officer, the chief administrative officer or
the controller of the Lead Borrower.
"Kmart Assumption" means pursuant to an order of the Bankruptcy
Court, the Borrowers' (a) assumption of the Kmart Agreement and (b)
payment of, or establishment of reserves to cover any cure amounts
necessary to allow the Borrowers to assume the Kmart Agreement based
upon such order of the Bankruptcy Court.
"Maturity Date" means (a) prior to the consummation of the
Bankruptcy Plan, the DIP Facility Maturity Date and (b) after the
consummation of the Bankruptcy Plan, the Exit Facility Maturity Date.
"Required Lenders" means, at any time, three (3) or more Lenders
having Commitments in excess of 50% of the Total Commitments, or if
the Commitments have been terminated, three (3) or more Lenders whose
percentage of the outstanding Credit Extensions (after settlement and
repayment of all Swingline Loans by the Lenders and after taking into
account each Lender's Commitment Percentage of the Letter of Credit
Outstandings) aggregate in excess of 50% of all such Credit
Extensions.
"Total Exit Commitment" means the sum of the Commitments of the
Lenders to make Loans on or after the Exit Facility Date in an
aggregate amount not to exceed $100,000,000 or such lesser amount as
may be determined by the Borrower from time to time in accordance with
Section 2.15(a).
(c) deleting the definition of "Documentation Agent" in its entirety.
Likewise, all references to the term "Documentation Agent" contained in the
Credit Agreement shall be deemed deleted.
(d) adding at the end of the last sentence of the definition of
"Availability Reserves" the following new sub part (viii):
"; and (viii) reserves in connection with any appeal, reversal or
modification of the Bankruptcy Court's order entered in connection
with the assumption of the Kmart Agreement."
ss.2. Amendment to Section 2.6 of the Credit Agreement. Section 2.6
of the Credit Agreement is hereby amended by deleting the reference to
"$75,000,000" contained in Section 2.6(a)(i) and substituting a reference to
"$40,000,000" in lieu thereof.
ss.3. Amendment to Section 2.12 of the Credit Agreement. Section 2.12
of the Credit Agreement is hereby amended by:
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(a) deleting Section 2.12(a) in its entirety and substituting the
following new Section 2.12(a) in proper numerical and alphabetical order in lieu
thereof:
"(a) In addition to any other fee provided herein or in the Fee
Letter to be paid by the Borrowers on account of the Revolving Loans,
the Borrowers shall pay to the Administrative Agent, for the account
of the Lenders, an unused line fee (the "Unused Line Fee") equal to
0.30% per annum (on the basis of actual days elapsed in a year of 360
days) of the average difference, during the calendar month just ended
(or relevant period with respect to the payment being made on the
Termination Date) between (i) the aggregate Commitments of the Lenders
and (ii) the aggregate outstanding amount of the Credit Extensions.
The Unused Line Fee so accrued in any calendar month shall be payable
in arrears on the first Business Day of the immediately succeeding
calendar quarter, except that all Unused Line Fees so accrued as of
the Termination Date shall be payable on the Termination Date."
(b) deleting Section 2.12(b) in its entirety and substituting the
following new Section 2.12(b) in proper numerical and alphabetical order in lieu
thereof:
"(b) [Intentionally omitted]."
ss.4. Amendment to Section 2.15 of the Credit Agreement. Section 2.15
of the Credit Agreement is hereby amended by deleting the reference to
"$160,000,000" contained in Section 2.15(a) and substituting a reference to
"100,000,000" in lieu thereof.
ss.5. Amendment to Section 5.2 of the Credit Agreement. Section 5.2
of the Credit Agreement is hereby amended by:
(a) deleting Section 5.2(d) in its entirety and substituting the
following new Section 5.2(d) in proper numerical and alphabetical order in lieu
thereof:
"(d) The Kmart Assumption shall have been authorized by order of
the Bankruptcy Court without modification to the Kmart Agreement or
otherwise on terms and conditions and documentation acceptable to the
Agents, eleven (11) days shall have expired and no stay of the order
shall be in effect, and all transactions contemplated by the Kmart
Assumption shall have been fully consummated.
(b) deleting the reference to "$50,000,000" contained in Section
5.2(e) and substituting a reference to "$40,000,000" in lieu thereof.
ss.6. Amendment to Section 6.1 of the Credit Agreement. Section 6.1
of the Credit Agreement is hereby amended by:
(a) deleting the references to "KPMG, LLP contained in Section 6.1(a)
therein and substituting a reference to Amper, Politziner & Xxxxxx PC in lieu
thereof.
(b) deleting the references to "$50,000,000" contained in Section
6.1(e) and substituting a reference to "$40,000,000" in lieu thereof.
ss.7. Amendment to Section 7.5 of the Credit Agreement. Section 7.5
of the Credit Agreement is hereby amended by deleting Section 7.5(c) in its
entirety and substituting the following new Section 7.5(c) in proper numerical
and alphabetical order in lieu thereof:
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"(c) provided that no Default or Event of Default exists or shall
result after giving effect thereto, sales or other dispositions of
other Inventory of the Loan Parties not in the ordinary course of
business in connection with the closure of up to 15% per annum of all
stores open on the first day of the relevant fiscal year; provided
that (i) any such sales or dispositions at any one time comprising
more than 5% of all stores open on the first day of any fiscal year
shall be on terms and conditions and for such consideration as shall
be reasonably acceptable to the Administrative Agent as consented to
in writing prior to such sale or disposition (such consent not to be
unreasonably withheld or delayed), (ii) any such sales or dispositions
shall be conducted by the Borrowers and/or professional liquidators
reasonably acceptable to the Administrative Agent pursuant to agency
agreements in form and substance reasonably satisfactory to the
Administrative Agent; and (iii) the Loan Parties shall cause all of
the net cash proceeds of such sale or disposition (and other
consideration) to be remitted to the Administrative Agent for
application to the Obligations in accordance with Section 5.2 or
Section 6.2 of the Security Agreements, as applicable; and"
ss.8. Amendment to Section 7.6 of the Credit Agreement. Section 7.6
of the Credit Agreement is hereby amended by:
(a) deleting Section 7.6(a)(iv) in its entirety and substituting the
following new Section 7.6(b)(iv) in proper numerical and alphabetical order in
lieu thereof:
"(iv) on or after the Exit Facility Date, the Lead Borrower may
pay dividends and/or repurchase its outstanding common stock, provided
that no Default or Event of Default shall exist or shall result after
giving effect thereto and further provided that (A) Excess
Availability (after satisfaction of the requirements set forth in
Section 7.11 herein) shall be in an amount greater than or equal to
forty percent (40%) of the Borrowing Base, both before and after
giving effect thereto, calculated on a pro forma basis for the
following twelve month period, (B) the Lead Borrower delivers to the
Agents an officers' certificate which certifies that the Lead Borrower
is solvent both before and after giving effect thereto, and (C) the
Lead Borrower delivers to the Agents an officers' certificate which
demonstrates, in form satisfactory to the Agents, that the Fixed
Charge Coverage Ratio for the period of four (4) consecutive fiscal
quarters most recently ended prior to any such repurchase is greater
than 1.10 to 1.00."; and
(b) deleting Section 7.6(b)(v) in its entirety and substituting the
following new Section 7.6(b)(v) in proper numerical and alphabetical order in
lieu thereof:
"(v) payments in respect of unsecured pre-petition claims made in
connection with the implementation of the Bankruptcy Plan, provided
that (i) at the time any such payments are made, the Kmart Assumption
shall have occurred, (ii) both before and immediately after giving
effect to any such payment made prior to the Exit Facility Date, no
Loans are outstanding and (iii) no Default or Event of Default shall
exist either before or immediately following any such payment;".
ss.9. Amendment to Section 7.14 of the Credit Agreement. Section 7.14
of the Credit Agreement is hereby amended by deleting Section 7.14(g) in its
entirety and substituting the following new Section 7.14(g) in proper numerical
and alphabetical order in lieu thereof:
"(g) Any Bankruptcy Plan, unless pursuant thereto, (i) the
Obligations are indefeasibly paid in full in cash and the Commitments
hereunder are terminated upon the effective date thereof, (ii) to the
extent any of the Credit Extensions are not indefeasibly paid in full
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in cash and all of the Commitments hereunder are not terminated upon
the effective date thereof, all of the Lenders whose Credit Extensions
have not been indefeasibly paid in full in cash and whose Commitments
have not been terminated shall have consented in writing to such
Bankruptcy Plan in advance of its submission to the Bankruptcy Court
or (iii) the Exit Facility Date occurs; or"
ss.10. Amendment to Section 7.11 of the Credit Agreement. Section
7.11 of the Credit Agreement is hereby amended by deleting such Section in its
entirety and substituting the following new Section 7.11 in proper numerical
order in lieu thereof:
"SECTION 7.11 Excess Availability.
The Lead Borrower and its Subsidiaries shall maintain at all times
Excess Availability in an amount greater than or equal to ten percent (10%) of
the Borrowing Base; provided, however, that at all times prior to the Exit
Facility Date that Loans are outstanding under this Agreement, the Lead Borrower
and its Subsidiaries shall maintain Excess Availability in an amount greater
than or equal to the sum of (a) ten percent (10%) of the Borrowing Base and (b)
$20,000,000."
ss.11. Amendment to Section 10.2 of the Credit Agreement. Section
10.2 of the Credit Agreement is hereby amended by deleting the reference to
"$160,000,000" contained in Section 10.2(b)(i) and substituting a reference to
"100,000,000" in lieu thereof.
ss.12. Amendment to Schedules to Credit Agreement. The Schedules to
the Credit Agreement are hereby amended by deleting Schedule 1.1(a) and Schedule
1.1(b) in their entirety and substituting the new Schedule 1.1(a) and Schedule
1.1(b) attached hereto as Exhibit A and Exhibit B, respectively, in lieu
thereof.
ss.13. Representations and Warranties. Each of the Loan Parties
hereby represents and warrants to the Agents and the Lenders as of the date
hereof, and as of any date on which the conditions set forth in Section 14 below
are met, as follows:
(a) The execution and delivery by each of the Loan Parties of this
Amendment and all other instruments and agreements required to be executed and
delivered by such Loan Party in connection with the transactions contemplated
hereby or referred to herein (collectively, the "Amendment Documents"), and the
performance by each of the Loan Parties of any of its obligations and agreements
under the Amendment Documents and the Credit Agreement and the other Loan
Documents, as amended hereby, are within the corporate or other authority of
such Loan Party, have been authorized by all necessary corporate proceedings on
behalf of such Loan Party and do not and will not contravene any provision of
law or such Loan Party's charter, other incorporation or organizational papers,
by-laws or any stock provision or any amendment thereof or of any indenture,
agreement, instrument or undertaking binding upon such Loan Party.
(b) Each of the Amendment Documents, the Credit Agreement and the
other Loan Documents, as amended hereby, to which any Loan Party is a party
constitute legal, valid and binding obligations of such Person, enforceable in
accordance with their terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting generally
the enforcement of creditors' rights.
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(c) No approval or consent of, or filing with, any governmental
agency or authority is required to make valid and legally binding the execution,
delivery or performance by the Loan Parties of the Amendment Documents, the
Credit Agreement or any other Loan Documents, as amended hereby, or the
consummation by the Loan Parties of the transactions among the parties
contemplated hereby and thereby or referred to herein.
(d) Except to the extent of changes resulting from transactions
contemplated or permitted by the Credit Agreement and the other Loan Documents,
changes occurring in the ordinary course of business and to the extent that such
representations and warranties relate expressly to an earlier date and after
giving effect to the provisions hereof, the representations and warranties
contained in Article IV of the Credit Agreement, after giving effect to this
Amendment, also are correct in all material respects as of the date hereof.
(e) Each of the Loan Parties has performed and complied in all
material respects with all terms and conditions herein required to be performed
or complied with by it prior to or at the time hereof, and as of the date
hereof, after giving effect to the provisions of this Amendment and the other
Amendment Documents, there exists no Default or Event of Default.
(f) Each of the Loan Parties hereby acknowledges and agrees that the
representations and warranties contained in this Amendment shall constitute
representations and warranties as referred to in Section 8.1(c) of the Credit
Agreement.
ss.14. Effectiveness. This Amendment shall become effective as of the
date first written above (the "Effective Date") upon the satisfaction of each of
the following conditions, in each case in a manner satisfactory in form and
substance to the Administrative Agent and the Lenders:
(a) This Amendment shall have been duly executed and delivered by
each of the Loan Parties, the Administrative Agent, the Collateral Agent, the
Syndication Agent and each of the Lenders and shall be in full force and effect;
(b) The Administrative Agent shall have received from the Borrowers,
for the pro rata accounts of the Lenders, an amendment fee in the amount of
$400,000;
(c) An amendment to the Final Order, in substantially the form
attached hereto as Exhibit C, shall have been entered by the Bankruptcy Court;
and
(d) The Administrative Agent shall have received such other items,
documents, agreements, items or actions as the Administrative Agent may
reasonably request in order to effectuate the transactions contemplated hereby.
ss.15. Miscellaneous Provisions.
(a) Each of the Loan Parties hereby ratifies and confirms all of its
Obligations to the Agents and the Lenders under the Credit Agreement, as amended
hereby, and the other Loan Documents, including, without limitation, the Loans,
and each of the Loan Parties hereby affirms its absolute and unconditional
promise to pay to the Lenders and the Agents the Loans, reimbursement
obligations and all other amounts due or to become due and payable to the
Lenders and the Agents under the Credit Agreement and the other Loan Documents,
as amended hereby. Except as expressly amended hereby, each of the Credit
Agreement and the other Loan Documents shall continue in full force and effect.
This Amendment and the Credit Agreement shall hereafter be read and construed
together as a single document, and all references in the Credit Agreement, any
other Loan Document or any agreement or instrument related to the Credit
Agreement shall hereafter refer to the Credit Agreement as amended by this
Amendment.
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(b) Without limiting the expense reimbursement requirements set forth
in Section 10.3 of the Credit Agreement, the Loan Parties agree to pay on demand
all costs and expenses, including reasonable attorneys' fees, of the Agents
incurred in connection with this Amendment.
(c) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK EXCLUDING THE LAWS APPLICABLE TO
CONFLICTS OR CHOICE OF LAW (EXCEPT SECTION 5.1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).
(d) This Amendment may be executed in any number of counterparts, and
all such counterparts shall together constitute but one instrument. In making
proof of this Amendment it shall not be necessary to produce or account for more
than one counterpart signed by each party hereto by and against which
enforcement hereof is sought.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
as a sealed instrument as of the date first set forth above.
FOOTSTAR, INC.,
as Lead Borrower and as a Borrower
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President and
Chief Administrative Officer
FOOTSTAR CORPORATION,
as a Borrower
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President and
Chief Administrative Officer
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FLEET NATIONAL BANK,
as Administrative Agent, as Swingline Lender
and as Issuing Bank
By: /s/ Xxxxx Xxxxxxxxxxx
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Name: Xxxxx Xxxxxxxxxxx
Title: Director
FLEET RETAIL GROUP, INC.,
as Collateral Agent
By: /s/ Xxxxx Xxxxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Director
GENERAL ELECTRIC CAPITAL CORPORATION,
as Syndication Agent and as a Lender
By: Xxxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Duly Authorized Signatory
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
10
AMSOUTH BANK,
as a Lender
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Attorney-In-Fact
NATIONAL CITY BUSINESS CREDIT, INC.,
as a Lender
By: /s/ Xxx Buoa
--------------------------------------
Name: Xxx Buoa
Title: Vice President
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Exhibit A
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SCHEDULE 1.1(a)
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PRICING GRID - REVOLVING LOANS
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---------------- ------------------------------------------- ------------------------ -----------------------
Level Average Excess Availability Applicable Margin Applicable Margin for
for Eurodollar Loans Base Rate Loans
---------------- ------------------------------------------- ------------------------ -----------------------
I Greater than or equal to $50,000,000 1.75% 0.0%
---------------- ------------------------------------------- ------------------------ -----------------------
II Greater than or equal to $35,000,000 and 2.00% 0.25%
less than $50,000,000
---------------- ------------------------------------------- ------------------------ -----------------------
III Greater than or equal to $20,000,000 and 2.25% 0.50%
less than $35,000,000
---------------- ------------------------------------------- ------------------------ -----------------------
IV Less than $20,000,000 2.50% 0.50%
---------------- ------------------------------------------- ------------------------ -----------------------
Exhibit B
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SCHEDULE 1.1(b)
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Lenders and Commitments
-----------------------
DIP Facility
--------------------------------------------- ------------------------------ --------------------------------
LENDERS COMMITMENTS COMMITMENT PERCENTAGES
--------------------------------------------- ------------------------------ --------------------------------
Fleet National Bank $28,424,202 28.4242%
--------------------------------------------- ------------------------------ --------------------------------
General Electric Capital Corporation $28,424,202 28.4242%
--------------------------------------------- ------------------------------ --------------------------------
The CIT Group/Business Credit, Inc. $18,949,468 18.9495%
--------------------------------------------- ------------------------------ --------------------------------
AmSouth Bank $13,264,628 13.2646%
--------------------------------------------- ------------------------------ --------------------------------
National City Business Credit, Inc. $10,937,500 10.9375%
--------------------------------------------- ------------------------------ --------------------------------
--------------------------------------------- ------------------------------ --------------------------------
TOTAL COMMITMENT $100,000,000 100.0%
--------------------------------------------- ------------------------------ --------------------------------
Exit Facility
--------------------------------------------- ------------------------------ --------------------------------
LENDERS COMMITMENTS COMMITMENT PERCENTAGES
--------------------------------------------- ------------------------------ --------------------------------
Fleet National Bank $28,424,202 28.4242%
--------------------------------------------- ------------------------------ --------------------------------
General Electric Capital Corporation $28,424,202 28.4242%
--------------------------------------------- ------------------------------ --------------------------------
The CIT Group/Business Credit, Inc. $18,949,468 18.9495%
--------------------------------------------- ------------------------------ --------------------------------
AmSouth Bank $13,264,628 13.2646%
--------------------------------------------- ------------------------------ --------------------------------
National City Business Credit, Inc. $10,937,500 10.9375%
--------------------------------------------- ------------------------------ --------------------------------
--------------------------------------------- ------------------------------ --------------------------------
TOTAL COMMITMENT $100,000,000 100.0%
--------------------------------------------- ------------------------------ --------------------------------
Exhibit C
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UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------------------------
In re Chapter 11 Case No.
04-22350 (ASH)
FOOTSTAR, INC/. et al., (Jointly Administered)
Debtors.
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SECOND AMENDED FINAL ORDER PURSUANT TO SECTION 364
OF THE BANKRUPTCY CODE AUTHORIZING THE
DEBTORS TO OBTAIN POSTPETITION AND EXIT FINANCING
-------------------------------------------------
Upon the Motion, dated __________, 2005, (the "Motion"), of Footstar,
Inc. and certain of its direct and indirect subsidiaries, as debtors and debtors
in possession (collectively, the "Debtors"), pursuant to section 364 of title 11
of the United States Code (the "Bankruptcy Code"), requesting authority to
obtain postpetition and exit financing, and after notice and a hearing (the
"Hearing") held on___________, 2005, and the Court having determined that the
legal and factual bases set forth in the Motion and in the record of the Hearing
establish just cause for the relief granted herein; and upon all of the
proceedings had before the Court and after due deliberation and sufficient cause
appearing therefor,
IT IS HEREBY FOUND AND DETERMINED THAT: (1)
A. The Court has jurisdiction to consider the Motion and the relief
requested therein pursuant to 28 U.S.C. xx.xx. 157 and 1334 and the
Standing Order of Referral of Cases to Bankruptcy Court Judges of the
District Court for the Southern District of New York, dated July 19,
1984 (Xxxx, Acting X.X.).
---------------------
(1) Findings of fact shall be construed as conclusions of law and conclusions
of law shall be construed as findings of fact when appropriate. See
Bankruptcy Rule 7052.
B. Consideration of the Motion and the relief requested therein is a core
proceeding under 28 U.S.C. xx.xx. 157(b). Venue of these cases and the
Motion in this district is proper under 28 U.S.C. xx.xx. 1408 and 1409. The
statutory predicate for the relief requested herein is section 364 of the
Bankruptcy Code.
C. As evidenced by the affidavits of service filed with the Court, and based
on the representations of counsel at the Hearing, (i) proper, timely,
adequate, and sufficient notice of the Motion and the Hearing has been
provided in accordance with Bankruptcy Rule 2002, (ii) such notice was good
and sufficient and appropriate under the circumstances of these cases, and
(iii) no other or further notice of the Motion or the Hearing or the entry
of this Order is required.
D. A reasonable opportunity to object or be heard regarding the relief
requested in the Motion has been afforded to all interested persons and
entities, including, without limitation, (i) the Office of the United
States Trustee for the Southern District of New York, (ii) the statutory
committee of unsecured creditors, (iii) the official committee of equity
security holders, (iv) the Debtors' secured creditors, and (v) all parties
who have requested notice pursuant to Bankruptcy Rule 2002.
E. Commencing on March 2, 2004, the Debtors each filed a voluntary petition
under chapter 11 of the Bankruptcy Code. The Debtors' chapter 11 cases have
been administratively consolidated. The Debtors have continued in the
management and operation of their businesses and properties as debtors in
possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. On
March 11, 2004, the United States Trustee for the Southern District of New
York (the "U.S. Trustee") appointed the statutory committee of unsecured
creditors (the "Creditors' Committee"). On June 22, 2004, the U.S. Trustee
appointed the official committee of equity security holders (the "Equity
Committee").
F. Based on the Debtors' motion for, inter alia, authorization to obtain
postpetition financing (the "Initial DIP Motion"), dated as of March 3,
2004, and the record made at a hearing held on March 3, 2004, the Court
entered an interim order on March 3, 2004 (Docket No. 51) (the "Interim DIP
Order") approving a postpetition credit facility (the "DIP Credit
Facility"). The Interim DIP Order, including, without limitation, the
findings made therein, is incorporated herein by reference as if fully set
forth herein. A copy of the Interim DIP order is annexed hereto as Exhibit
"A."
G. Having determined that a sale of the Debtors' athletic footwear business
(the "Athletic Business") was the best way to maximize the value of the
Athletic Business, the Debtors filed a motion on or about March 16, 2004 to
establish an orderly sale process for the remaining Footaction retail
stores in the Athletic Business (Docket No. 218) (the "Sale Motion").
H. Because of the pending Sale Motion, the Debtors and Creditors' Committee
requested an adjournment of the hearing to consider entry of the final
order approving the DIP Credit Facility (the "Final DIP Order"), and the
various parties in interest consented to such adjournment.
I. On or about April 16, 2004, the Court entered a second interim order
(Docket No. 371) extending the term of the DIP Credit Facility to May 25,
2004 (the "Second Interim DIP Order"). The Second Interim DIP Order,
including, without limitation, the findings made therein, is incorporated
herein by reference as if fully set forth herein. A copy of the Second
Interim DIP Order is annexed hereto as Exhibit "B."
J. On April 22 and 26, 2004, this Court entered Orders approving, inter alia,
the sale of a substantial portion of the assets of the Athletic Business to
Foot Locker free and clear of liens, claims, encumbrances and other
interests. The sale to Foot Locker was consummated on May 7, 2004.
K. After the sale to Foot Locker and the receipt of the proceeds of that sale,
the Debtors reassessed their needs for postpetition financing. Given the
reduced size and financing needs of their businesses resulting from the
sale to Foot Locker and the closure of a number of underperforming stores,
the Debtors determined they no longer required the DIP Credit Facility in
its original form to provide adequate financing for their ongoing
operations. At the request of the Debtors, the Agents (2) and the DIP
Lenders, in consultation with the Creditors' Committee and the Equity
Committee, negotiated in good faith and at arm's length certain amendments
to the DIP Credit Facility (the "Amended and Restated DIP Credit
Facility").
L. On or about May 11, 2004, the Court entered a third interim order (Docket
No. 531) amending certain terms of the DIP Credit Facility (the "Third
Interim DIP Order"). The Third Interim DIP Order, including, without
limitation, the findings made therein, is incorporated herein by reference
as if fully set forth herein. A copy of the Third Interim DIP Order is
annexed hereto as Exhibit "C."
M. On May 25, 2004, the Court entered a final order approving the Amended and
Restated DIP Credit Facility (Docket No. 621) (the "Amended and Restated
DIP Order"). The Amended and Restated DIP Order, including, without
limitation, the findings made therein, is incorporated herein by reference
as if fully set forth herein. A copy of the Amended and Restated DIP Order
is annexed hereto as Exhibit "D."
---------------
(2) Terms not otherwise defined herein shall have the meaning ascribed to them
in the Initial DIP Motion.
N. On July 22, 2004, the Court entered an amended final order authorizing and
approving a New DIP Credit Facility pursuant to which upon the effective
date of a confirmed chapter 11 plan of reorganization, as long as the New
DIP Credit Facility is not in default, the Debtors may elect to enter into
a three-year exit facility and increase the maximum amount of the facility
to as much as $160 million (the "Amended Final Order for Postpetition and
Exit Financing"). The Amended Final Order for Postpetition and Exit
Financing, including, without limitation, the findings made therein, is
incorporated herein by reference as if fully set forth herein. and a copy
is annexed hereto as Exhibit "E."
O. On [November 12] 2004, the Debtors filed a plan of reorganization and
accompanying disclosure statement which was approved by this Court on an
interim basis on December 13, 2004. Final approval of the disclosure
statement is contingent upon resolution of the Debtors' pending motion to
assume an agreement with Kmart Corporation (the "Kmart Agreement") and
Kmart Corporation's motion to terminate the Kmart Agreement.
P. Pursuant to the proposed plan of reorganization, unsecured creditors will
receive a cash distribution of the allowed amount of their claims, plus
interest. The proposed plan further provides that occurrence of the
effective date is conditioned upon, among other things, entry of an order
of assumption of the Kmart Agreement in form and substance acceptable to
the Debtors, which order shall not be stayed nor be the subject of an
injunction. The conditions to effectiveness of the plan may be waived in
the sole discretion of the Debtors.
Q. The Debtors have advised [Fleet National Bank] as administrative agent (the
"Administrative Agent") under the DIP Credit Facility that they may wish to
[proceed with distribution to the unsecured creditors] after confirmation
of the proposed plan after a decision by this Court respecting the Kmart
Agreement even if an appeal is pending.
R. The Administrative Agent has advised the Debtors that distribution to the
unsecured creditors under these circumstances entails greater risk to the
Debtors' business than the New DIP Credit Facility contemplates such that
modifications thereto are warranted.
S. The Debtors, the Administrative Agent and the DIP Lenders, in consultation
with the Creditors' Committee and the Equity Committee, negotiated in good
faith and at arms' length further amendments to the New DIP Credit Facility
(the "Amended New DIP Credit Facility"), including, without limitation, an
extension of the maturity thereof until the earlier of an effective date of
a plan of reorganization and October 30, 2006, an increase in the
availability block thereunder from $10 million to $40 million and a
requirement that should the Kmart Agreement be either rejected or
terminated, whether by order of this Court in resolution of the pending
motions or as the result of any appeal taken from the order of this Court,
the Debtors, the Collateral Agent under the Amended New DIP Credit Facility
or their agents (collectively, the "Liquidators") shall be afforded no
fewer than 90 days from the Liquidators entry into each of the Kmart stores
to liquidate the DIP Lenders' collateral.
T. Credit to be extended under the Amended New DIP Credit Facility will be
extended in good faith, and for valid business purposes and uses, such that
the Administrative and Collateral Agents and the DIP Lenders will be
entitled to the protections and benefits of section 364(e) of the
Bankruptcy Code.
U. Good and sufficient cause has been shown for the entry of a final order
authorizing the Debtors to enter into the Amended New DIP Credit Facility
(the "Second Amended Final Order"). Among other things, entry of the Second
Amended Final Order will increase the probability of a successful
reorganization and is in the best interests of the Debtors, their
creditors, and their estates.
NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:
1. The Motion is granted in its entirety.
2. All objections, if any, to the Motion that have not been withdrawn,
waived, settled, or specifically addressed in this Second Amended
Final Order, and all reservations of rights included in such
objections, are overruled in all respects on the merits.
3. In the event that the Kmart Agreement is rejected or terminated
whether by Order of this Court in resolution of the pending motions
related thereto or as the result of any appeal taken from the order of
or any mandamus to this Court, the Liquidators shall be afforded no
fewer than 90 days from the Liquidators entry into each of the Kmart
stores to liquidate the DIP Lenders' collateral.
4. In any such liquidation of the DIP Lenders' collateral, Kmart
Corporation and its affiliates, agents, officers, directors, employees
and attorneys shall not interfere with or impede the liquidation.
5. The Amended New DIP Credit Facility and all terms and conditions
thereof and all transactions contemplated thereby are hereby
authorized and approved in all respects, pursuant to section 364 of
the Bankruptcy Code. The Debtors are authorized [and directed] to
enter into the Amended New DIP Credit Facility.
6. The failure specifically to include any particular provisions of the
Amended New DIP Credit Facility in this Amended Final Order shall not
diminish or impair the effectiveness of such provisions, it being the
intent of the Court that the Amended New DIP Credit Facility be
authorized and approved in its entirety.
7. The terms and provisions of the Interim DIP Order, the Second Interim
DIP Order, the Third Interim DIP Order, the Amended and Restated DIP
Order and the Amended Final Order are ratified and continued by this
Second Amended Final Order and remain in full force and effect except
as otherwise provided herein.
8. The provisions of this Amended Final Order are nonseverable and
mutually dependent.
9. The requirement pursuant to Local Rule 9013-1(b) that the Debtors file
a memorandum of law in support of the Motion is satisfied by the
Motion.
Dated: White Plains, New York
________, 2005
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UNITED STATES BANKRUPTCY JUDGE
