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EXHIBIT 99.42
FIRST AMENDMENT TO LOAN AGREEMENT
This First Amendment to Loan Agreement (this "Amendment") is dated as
of December 20, 1994 and is made by and among the "Borrowers" (as hereinafter
defined), the undersigned financial institutions (collectively, the "Banks")
and XXXXXXXXXX, as Managing Agent (the "Agent").
W I T N E S S E T H:
WHEREAS, Kmart Corporation and certain other entities (collectively,
the "Borrowers"), the Banks and the Agent are parties to that certain Loan
Agreement dated as of August 7, 1992 (as amended, modified or supplemented and
in effect from time to time, the "Loan Agreement") pursuant to which the Banks
have provided to the Borrowers certain credit facilities; and
WHEREAS, the Borrowers have requested that the Loan Agreement be
amended in certain respects set forth herein and the Banks and the Agent are
agreeable to the same, subject to the terms and conditions hereof;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, and other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Definitions. Terms capitalized herein and not otherwise defined
herein are used with the meanings ascribed to such terms in the Loan Agreement.
2. Amendment of Loan Agreement. The Loan Agreement is hereby
amended, effective on the First Amendment Effective Date, as follows:
(A) Amendments to Definitions. Section 1.1 of the Loan
Agreement is amended by amending and restating the definitions of
"Guarantor Restructuring" in its entirety as follows:
"Guarantor Restructuring" means any of: (a) any
merger or consolidation of the Guarantor with any other
Person, but excluding any merger or consolidation:
(i) in which the successor formed by or
resulting from such merger or consolidation is Kmart
Corporation or a Subsidiary of Kmart Corporation and,
if the survivor is a Subsidiary of Kmart Corporation,
such Subsidiary shall affirm the obligations of Kmart
Corporation under the Loan Documents in writing; and
(ii) occurring while no Unmatured Guarantor
Event of Default or Guarantor Event of Default
exists; and
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(iii) which will not otherwise give rise
to or cause an Unmatured Guarantor Event of Default
or a Guarantor Event of Default;
and (b) any sale, assignment, lease, conveyance, transfer or
other disposition (whether in one or a series of transactions)
of any property (including accounts and notes receivable, with
or without recourse), but excluding any Permitted Disposition
of a Specialty Retail Subsidiary and also excluding any of the
following:
(i) dispositions of inventory, or used,
wornout or surplus equipment, all in the ordinary
course of business; and/or
(ii) the sale of equipment to the extent
that such equipment is exchanged for credit against
the purchase price of similar replacement equipment,
or the proceeds of such sale are reasonably promptly
applied to the purchase price of such replacement
equipment; and/or
(iii) dispositions of inventory or
equipment by Kmart Corporation to any Subsidiary
pursuant to reasonable business requirements; and/or
(iv) other dispositions of assets having,
in any fiscal year of Kmart Corporation, an aggregate
book value not exceeding 10% of Kmart Corporation's
consolidated total assets as of the end of the most
recently ended fiscal year of Kmart Corporation, as
reflected in Kmart Corporation's balance sheet
contained in its audited financial statements for
such fiscal year.
(B) New Definitions Added to Section 1.1. Section 1.1 of the
Loan Agreement is further amended by adding the following additional
definitions thereto in their proper alphabetical places:
"Consolidated Net Worth" means as of the date of any
determination thereof, the consolidated net worth of the
Guarantor, determined in accordance with generally accepted
accounting principles consistently applied; provided, however,
that any gains or losses from the disposition of any Specialty
Retail Subsidiary and any changes after October 7, 1994 in the
foreign currency translation adjustment account as presented
in the Guarantor's financial statements (and in accordance
with generally accepted accounting principles consistently
applied) shall be excluded from the determination of
Consolidated Net Worth.
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"EBITDAR" means, for any applicable period, for the
Guarantor the aggregate of the following, without duplication:
(a) consolidated net income for such period, plus (b)
consolidated interest expense (net of any interest income) for
such period, plus (c) consolidated provision for taxes for
such period, plus (d) consolidated depreciation expense for
such period, plus (e) consolidated amortization expense for
such period, plus (f) consolidated Rent Expenses for such
period, minus (or plus, as applicable) (g) on a
consolidated basis, any extraordinary gains (or plus
extraordinary losses) for such period, minus (or plus, as
applicable) (h) any gains (or plus any losses) attributable to
the Specialty Retail Subsidiaries for such period other than
results of operations in the ordinary course of business, plus
(i) solely with respect to the four fiscal quarter period
ending in October, 1994, the $1.348 billion restructuring
charge recorded in the fourth fiscal quarter of the Guarantor's
fiscal year ending January 26, 1994.
"Permitted Disposition of a Specialty Retail
Subsidiary" means any sale or all, substantially all, or a
part of the capital stock of, or of all, substantially all or
a part of the assets of, any Specialty Retail Subsidiary, even
if such an entity is no longer a Subsidiary of Kmart
Corporation at the time in question, if (a) consideration
received is fair market value (as determined by Kmart
Corporation), or (b) Kmart Corporation's board of directors
deems such transaction to be necessary by reason of applicable
laws, regulations or governmental policies applicable to Kmart
Corporation.
"Rent Expenses" means, for any period, consolidated
rent expense of the Guarantor for such period, determined in
accordance with generally accepted accounting principles
consistently applied, less consolidated rental income for such
period.
"First Amendment" means that certain First Amendment
to Loan Agreement dated as of December 20, 1994, by and among
the Borrowers, the Banks and the Managing Agent.
"First Amendment Effective Date" means the date upon
which each of the conditions precedent set forth in Section 4
of the First Amendment have been met.
"Specialty Retail Subsidiary" means any of the
following Subsidiaries of the Guarantor (or the continuing
investment of the Guarantor in any such entity): Builders
Square, Inc.; Borders Group, Inc.; Coles Xxxx Ltd.; OfficeMax,
Inc.; PACE Membership
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Warehouse, Inc.; PayLess Drug Stores Northwest, Inc.; and The
Sports Authority, Inc.
(C) Amendment of Subsection 6.2(d). Subsection 6.2(d) of the
Loan Agreement is amended and restated in its entirety as follows:
(d) The long-term Indebtedness of the Guarantor
shall be rated BBB- or above by Standard & Poor's Corporation
and Baa3 or above by Xxxxx'x Investors Service, Inc.
(D) Amendment of Subsection 7.1(a). Subsection 7.1(a) of the
Loan Agreement is amended and restated in its entirety as follows:
(a) Indebtedness of the Guarantor shall be rated
BB+ or lower by S&P or Bal or lower by Moody's, or shall not
be rated by either S&P or Moody's.
(E) Amendment of Subsection 7.1(b). Subsection 7.1(b)
of the Loan Agreement is amended by deleting the references therein to
"$40 million" and substituting in lieu thereof references to "$100
million".
(F) Amendment of Subsection 7.1(f). Subsection 7.1(f) of the
Loan Agreement is amended and restated in its entirety as follows:
(f) Any Guarantor Restructuring shall occur; or
(G) Addition of New Subsections to Section 7.1. Section
7.1 of the Loan Agreement is further amended by the addition thereto
of new subsections (h), (i) and (i) thereto as follows:
(h) A final judgment or judgments in excess of
One Hundred Million Dollars ($100,000,000) shall be entered
against the Guarantor by a court of record and not discharged
in accordance with its terms or, within sixty (60) days from
the date of entry thereof, stayed from execution and (within
said period of sixty (60) days or such longer period during
which execution of such judgment(s) shall have been stayed)
appeal taken therefrom and execution thereof stayed during
such appeal;
(i) The Guarantor shall permit its ratio of
(A) EBITDAR (measured as of the end of
any fiscal quarter of the Guarantor ending after October 7,
1994 for the four fiscal quarters then ended)
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to
(B) the sum of (1) consolidated net interest
expense of the Guarantor for such four fiscal quarter period
plus (2) consolidated Rent Expense for such four fiscal
quarter period
to be less than 1.50 to 1.00; or
(j) The Guarantor shall permit its Consolidated Net Worth
at any time to be less than Four Billion Five Hundred Million Dollars
($4,500,000,000).
3. Borrowers' Representations and Warranties. In order to induce
the Banks and the Managing Agent to enter into this Amendment, each Borrower
hereby severally represents and warrants, solely as to itself that:
(a) such Borrower has the right, power and capacity and
has been duly authorized and empowered by all requisite corporate and
shareholder action to enter into, execute, deliver and perform this
Amendment;
(b) this Amendment constitutes such Borrower's legal,
valid and binding obligation, enforceable against it, except as
enforcement thereof may be subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and general principles of equity
(regardless of whether such enforcement is sought in a proceeding in
equity or at law or otherwise);
(c) such Borrower's execution, delivery and performance
of this Amendment do not and will not violate its Organizational
Documents or any law, rule, regulation, order, writ, judgment, decree
or award applicable to it or any contractual provision to which it is
a party or to which it or any of its property is subject;
(d) no authorization or approval or other action by, and
no notice to or filing or registration with, any governmental
authority or regulatory body (other than those which have been
obtained and are in force and effect) is required in connection with
its execution, delivery and performance of this Amendment; and
(e) No Borrower Event of Default or Unmatured Borrower
Event of Default exists as to such Borrower as of the date hereof
under the Loan Agreement or would exist after giving effect to the
transactions contemplated by this Amendment.
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4. Conditions to First Amendment's Effectiveness. The
effectiveness of this First Amendment is specifically subject to the
satisfaction of the following conditions precedent or concurrent:
(a) No Defaults. No Unmatured Guarantor Event of Default
or Guarantor Event of Default under the Loan Agreement (as amended
hereby) shall have occurred and be continuing.
(b) Execution of Amendment. Each Borrower and each Bank
shall have delivered to the Agent a counterpart of this Amendment duly
executed by such Borrower or Bank.
(c) Guaranty Reaffirmation. The Guarantor shall have
executed and delivered to the Agent a Reaffirmation Agreement in
substantially the form of Exhibit A hereto.
5. MISCELLANEOUS. The parties hereto hereby further agree as
follows:
(a) Costs, Expenses and Taxes. Kmart Corporation hereby agrees
to pay all reasonable fees, costs and expenses of the Agent incurred in
connection with the negotiation, preparation and execution of this Amendment
and the transactions contemplated hereby, including, without limitation, the
reasonable fees and expenses of XXXXXXXXXX, counsel to the Agent and the Banks.
(b) Counterparts. This Amendment may be executed in one or more
counterparts, each of which, when executed and delivered, shall be deemed to be
an original and all of which counterparts, taken together, shall constitute but
one and the same document with the same force and effect as if the signatures
of all of the parties were on a single counterpart, and it shall not be
necessary in making proof of this Amendment to produce more than one (1) such
counterpart.
(c) Headings. Headings used in this Amendment are for
convenience of reference only and shall not affect the construction of this
Amendment.
(d) Integration. This Amendment and the Loan Agreement (as
amended hereby) and the Guaranty (as amended by the Guaranty Amendment and
Reaffirmation Agreement) constitute the entire agreement among the parties
hereto with respect to the subject matter hereof.
(e) GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS AND DECISIONS OF
THE STATE OF NEW YORK (WITHOUT REFERENCE TO CONFLICT OF LAWS PRINCIPLES).
(f) Binding Effect. This Amendment shall be binding upon and
inure to the benefit of and be enforceable by the Borrowers, the
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Agent and the Banks and their respective successors and permitted assigns. This
Amendment shall not be construed so as to confer any right or benefit upon any
Person other than the Borrowers, the Agent and the Banks and their respective
successors and permitted assigns.
(g) Amendment; Waiver. The parties hereto agree and acknowledge that
nothing contained in this Amendment in any manner or respect limits or
terminates any of the provisions of the Loan Agreement other than as expressly
set forth herein and further agree and acknowledge that the Loan Agreement (as
amended hereby) remains and continues in full force and effect and is hereby
ratified and confirmed. Except to the extent expressly set forth herein, the
execution, delivery and effectiveness of this Amendment shall not operate as a
waiver of any rights, power or remedy of the Banks or the Agent under the Loan
Agreement, nor constitute a waiver of any provision of the Loan Agreement. No
delay on the part of any Bank or the Agent in exercising any of their
respective rights, remedies, powers and privileges under the Loan Agreement or
partial or single exercise thereof, shall constitute a waiver thereof. None of
the terms and conditions of this Amendment may be changed, waived, modified or
varied in any manner, whatsoever, except in accordance with Section 9.1 of the
Loan Agreement.
[Balance of page left intentionally blank; signature pages follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first written above.
THE BORROWERS:
KMART CORPORATION
By:____________________________
Title:_________________________
BIG BEAVER OF CAGUAS DEVELOPMENT
CORPORATION
By:_____________________________
Title:__________________________
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[Additional Borrower Signature Pages
Intentionally Omitted]
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[BANK SIGNATURE PAGES INTENTIONALLY OMITTED]
