Case No. 00-10533-LBR, Case No. 00-10535-LBR, Case No. 00-10537-LBR Case No. 00-10536-LBR, Case No. 00-10534-LBR, (Jointly Administered)United States Bankruptcy Court, D. Nevada
February 24, 2000
Vernon O. Teofan, Linda D. Sartin, JENKENS GILCHRIST, A Professional Corporation, Dallas, Texas, and STREICH LANG, P.A., Phoenix, Arizona, Attorneys for Lenders.
William P. Weintraub, Jeffery N. Pomerantz, Patchulski, Stang, Ziehl Young, P.C., Attorneys for Debtors and Debtors in Possession.
Deborah D. Williamson, Patrick L. Huffstickler, San Antonio, TX., E-mail: ddwillia@coxsmith.com and Jeanette E. McPherson, Las Vegas, NV., HALE LAND PEEK DENNISON HOWARD ANDERSON, E-mail: jmcpherson@ halelane.com, Proposed Counsel for the Official Committee of Unsecured Creditors.
INTERIM ORDER AUTHORIZING DEBTORS TO OBTAIN SECURED CREDIT AND GRANTING SENIOR LIENS AND RELATED RELIEF
LINDA B. RIEGLE, United States Bankruptcy Judge.
THIS MATTER CAME BEFORE THE COURT on this day for an interim hearing on the Amended Emergency Motions for Authority to Obtain Secured Credit and for an Order Granting Senior Liens and Related Relief (the “Amended Motion”) filed by AgriBio Tech, Inc. (“ABT”), Las Vegas Fertilizer Co, Inc. (“LVF”), Geo. W. Hill Co., Inc. (“GWH”), AgriBio Tech Canada, Inc. (“ABT Canada”) and Garden West Distributors, Inc. (“GWD”), debtors and debtors in possession (collectively, the “Debtors”). The Court, having examined the Amended Motion and the exhibits attached thereto, having conducted an interim hearing as provided under Section 364(c) of the Bankruptcy Code, having heard argument of the respective counsel for the Debtors, Bank of America, N.A. (“Bank of America”), Deutsche Financial Services Corporation (“DFSC”) and Branch Banking And Trust Company (“BBT”) (collectively the “Lenders”), the Official Committee of Unsecured Creditors (the “Committee”), and other parties that made an appearance at the interim hearing, and having considered the evidence, including the immediate financial needs of each of the Debtors, and considering the responses of parties in interest in Debtors’ cases, hereby makes the following findings of fact and conclusions of law:
A. Debtors filed their petitions for relief under Chapter 11 of the United States Bankruptcy Code on January 25, 2000 (the “Petition Date”). Pursuant to Sections 1107 and 1108 of the Bankruptcy Code, Debtors have retained possession of their assets and have continued the operation and management of their businesses.
B. On January 27, 2000, the Debtors filed their Emergency Motion for Authority To Obtain Secured Credit and for an Order Senior Liens and Related Relief (the “Motion”) accompanied by a copy of a proposed agreement for debtor-in-possession financing from Lenders (the “Initial DIP Agreement”). The Motion was set for interim hearing on January 28, 2000. The Debtors provided actual notice of the terms of the Motion and the relief requested and of the hearing thereon by telefax to those of the twenty (20) largest unsecured creditors of each of the Debtors for whom telefax numbers were available and by personal delivery to the Lenders and the United States Trustee.
C. At the January 28, 2000 hearing, the Debtors in open court orally made an Emergency Motion For Authority to Use Cash Collateral and For Order Granting Replacement Liens and Related Relief (the “Emergency Cash Collateral Motion”). After hearing, the Court entered its “Interim OrderAuthorizing Debtors To Use Cash Collateral and Granting Replacement Liensand Related Relief” (the “Interim Cash Collateral Order”) and set the final hearing on the Emergency Cash Collateral Motion for February 15, 2000. Debtors served a copy of the Interim Cash Collateral Order and notice of the final hearing thereon upon all parties entitled to notice under Bankruptcy Rule 4001, as well as upon all parties required to be served by the Court’s Supplemental Order Establishing Certain Administrative Procedures for Jointly Administered Cases (the “Supplemental Procedures Order”).
D. On February 15, 2000, the Court conducted the final hearing on the Interim Cash Collateral Order. At the February 15, 2000 final hearing on the Interim Cash Collateral Order, the Court received argument for counsel for the Debtors, for the Lenders, for the Committee, and for a number of other parties in interest in the cases. At the conclusion of the February 15, 2000 hearing, the Court granted final approval of the Interim Cash Collateral Order, and the Court entered the “Second InterimOrder Authorizing Debtors To Use Cash Collateral and Granting ReplacementLiens and Related Relief” (the “Second Cash Collateral Order”). At the Omniubus Hearing held February 23, 2000, the Court set an emergency hearing on the Amended Motion for February 24, 2000. Thus, the parties in attendance at the February 23, 2000 Omnibus Hearing, including counsel for the Committee, counsel for various seed growers, and other creditors and parties in interest who appeared on the record at the hearing, had actual notice of the emergency hearing on the DIP Loan Agreement (defined below). On February 24, 2000 Debtors filed herein their Amended Motion accompanied by a copy of a revised Amended and Restated Loan Agreement (identified below as the “DIP Loan Agreement”). The Amended Motion was set for interim hearing on February 24, 2000. Debtors delivered a copy of the Amended Motion and an accompanying Notice of the interim hearing thereon upon all parties required to be served under Bankruptcy Rule 4001
and the Supplemental Procedures Order, as well as on all parties that appeared on the record at the February 24, 2000 hearing in these cases.
E. Consequently, the Court concludes that: (a) adequate notice of the emergency hearing on the Amended Motion and the opportunity for a hearing are appropriate under the exigent circumstances of this matter, and have been given in accordance with the provisions of 11 U.S.C. § 102, 105, 361, 362, 363 and 364 and the Federal Rules of Bankruptcy Procedure; (b) the Lenders, the Debtors, and the Committee have agreed to the terms of this Interim Order Authorizing Debtors To Obtain Secured Credit And Granting Senior Liens and Related Relief: and (c) upon Debtors’ completion of service pursuant to paragraph D above, except for notice of the final hearing on this matter, no further notice relating to this proceeding is necessary or required.
F. This Court has jurisdiction over the Amended Motion pursuant to 28 U.S.C. § 1334. It is a core proceeding pursuant to 28 U.S.C. § 157 (b)(2)(A), (G), (M), and (O), involving matters under 11 U.S.C. § 361, 362, 363 and 364. Venue is proper in this district pursuant to 28 U.S.C. § 1408.D.
G. Since 1994, ABT and ABT Canada have been, and continue to be, engaged in the business of developing, processing, packaging and distributing proprietary and public varieties of forage, turf grass seeds and opportunistic crop seeds such as corn, soybeans, vegetable, and small grains. ABT distributes seeds in forty-five (45) states and in twenty-six (26) foreign countries. LVF, GWH and GWD have been, and continue to be, engaged in the specialty distribution of fertilizer, seed, farm and gardening implements and tools and related products. The Debtors’ seed businesses are cyclical in nature and subject to wide seasonal fluctuations. The Debtors’ businesses are complimentary to each other.
H. Subject to the terms of Paragraph 16 below, each Debtor stipulates to the debts owed by the Debtors to Lenders and to the validity, perfection, priority, and extent of the liens in favor of Lenders on the Collateral (as defined below) and to certain other matters, all as summarized below:
1. Prior to the filing of the petition herein, ABT and LVF and affiliated companies, as “Borrowers” and BankAmerica Business Credit, Inc. (“BABC”) and Deutsch Financial Services Corporation (“DFSC”) as “Lenders” and BABC as “Agent” and DFSC as “Administrative Agent” entered into that certain Loan and Security Agreement dated as of June 28, 1993, as amended[1] (the “Loan Agreement”) whereby Lenders agreed to make loans and provide financial accommodations to the Borrowers. Thereafter, Branch Bank And Trust Company (“BBT”) became a party to the Loan Agreement as a Lender. Upon their acquisition by ABT, GWH and GWD and various other affiliated companies each became a party to the Loan Agreement as a Borrower. Effective April 1, 1999, Bank of America, N.A. (f/k/a Bank of America National Trust and Savings Association) became the successor in interest to BABC as Agent and Lender under the Loan Agreement. The Obligations of the Borrowers under the Loan Agreement are guaranteed by and secured with assets of ABT Canada successor by merger to Rockwell Seeds International Company and Oseco, Inc. (the “Guarantor”) pursuant to guarantees and general security agreements executed and delivered by Guarantors to Lenders in June and July, 1998 (the “Canadian Loan Documents”). All Borrowers under the Loan Agreement, save and except the Debtors herein, have been either merged into ABT or liquidated and their assets distributed to ABT. Therefore, the only Borrowers remaining under the Loan Agreement are the Debtors ABT, LVR, GWH and GWD.
2. Each of the Debtors are jointly and severally liable to Lenders pursuant to the Loan Agreement and the Canadian Loan Documents. As of the Petition Date, the aggregate outstanding indebtedness owing to Lenders by the Debtors pursuant the Loan Agreement (collectively, the “Pre-Petition Indebtedness”) was at least $69,000,000 exclusive of interest and costs.
3. As security and collateral for the repayment of the Pre-Petition Indebtedness, Debtors granted to Lenders security interests and liens in and upon the “Collateral” described in Section 6.1 of the Loan Agreement and the Canadian Loan Documents (collectively, the “Pre-Petition Collateral”), which generally includes all or substantially all of the assets of the Debtors save and except certain real properties and certain equipment covered by certificates of title. Lenders’ liens and security interests thereunder were duly perfected by the filing of financing statements with the appropriate jurisdictions, the filing of PVP Certificate Security Agreements with the United States Department of Agriculture, the filing of Trademark and Tradename Security Agreements with the United States Patent and Trademark Office, by taking possession of stock certificates and instruments and/or by taking other appropriate action. The Loan Agreement, the Canadian Loan Documents and the other agreements, security agreements, pledges, certificates, subordinations, guaranties, waivers, financing statements and other documents executed in connection therewith including any amendments thereto are collectively referred to herein as the “Pre-Petition Loan Documents”. A true and correct copy of the closing binders containing the Loan Documents have been introduced into evidence as Lenders’ Exhibit __ and copies thereof are available for review during normal business hours on request at the law offices of James, Driggs, Walch, Ceinture, Kearney, Johnson and Thompson, 3773 Howard Hughes Parkway, Suite 290N, Las Vegas, NV 89109, attention Ronald J. Thompson, telephone (702) 971-0308.
4. By virtue of the foregoing, (a) all of the amounts owing to the Lenders pursuant to the Pre-Petition Loan Documents are due and owing, are a legal, binding and enforceable obligation of each of the Debtors and are not subject to any offset, defense, claims, counterclaim or any other diminution of any type, kind or nature whatsoever; (b) all of the Pre-Petition Loan Documents are valid and enforceable against the Debtors in accordance with their terms, are not subject to any offset, defense, claim, counterclaim or diminution of any type, kind or nature whatsoever, and are not subject to avoidance pursuant to applicable state or federal laws; (c) Lenders’ liens and security interest in, to and against all of the Pre-Petition Collateral are valid, enforceable and properly perfected, and are not subject to avoidance under applicable state and federal law; and (d) there are no existing claims, causes of action of the Debtors, breaches of contract or other liabilities, whether liquidated or unliquidated, direct or indirect, and whether arising under state or federal law (including the Bankruptcy Code) against Lenders, the Agent, the Administrative Agent or their respective agents, arising from the business relationships between the Debtors on the one hand and the Lenders, the Agent, the Administrative Agent or their respective agents, on the other hand.
5. As of the Petition Date, the value of the Pre-Petition Collateral currently exceeds the amount of the Pre-Petition Indebtedness, at a fair valuation.
6. Interest continues to accrue on the Pre-Petition Indebtedness at the variable rate of interest set forth in Article 3 of the Loan Agreement to the extent permitted by Section 506 of the Bankruptcy Code.
I. An immediate need exists for the Debtors to obtain emergency credit in an amount up to $23,000,000 to meet payroll, retain professionals, purchase operating supplies, and otherwise meet immediate Post-Petition financial demands. Without such financing, the Debtors will be unable to pay wages, salaries, professional fees and operating expenses or to purchase necessary inventory and supplies.
J. Unless Debtors are able to immediately obtain post-petition credit, their ability to maintain and preserve their assets and effect an orderly and efficient reorganization of their business affairs and liquidation of their assets will be seriously jeopardized, to the substantial detriment of Debtors, the estates and their creditors.
K. Debtors are unable to obtain (a) unsecured credit allowable under Section 503(b)(1) of the Bankruptcy Code as an administrative expense pursuant to Sections 364(a) or 364(b) of the Bankruptcy Code, or (b) priority or secured credit pursuant to Section 364(c) of the Bankruptcy Code in amounts necessary to finance and maintain anticipated operations other than that proposed in the Motion.
L. Debtors have requested that Lenders provide post-petition financing and have undertaken arms-length negotiations with Lenders, the Agent and Administrative Agent regarding such financing.
M. Lenders are willing to extend loans and other post-petition credit to Debtors for a period of up to July 31, 2000, pursuant to the terms and conditions set forth in the Amended and Restated Loan Agreement and the Term Notes (“DIP Loan Agreement”), a copy of which is attached to the Motion as Exhibit “B,” and this Order provided that (i) to secure such post-petition loans and other post-petition credit, Lenders are granted a valid, first and senior perfected security interest and lien in: (a) all of the Pre-Petition Collateral; and (b) in all other property other than Pre-Petition Collateral (including without limitation, all property described in Section 541 of the Bankruptcy Code in which the Debtors now have or acquired or acquire an interest upon or after the filing of the petitions herein (the “Post-Petition Collateral”), subject and inferior only to preexisting, perfected, indefeasible and unavoidable liens and security interests of Lenders and other secured creditors existing on the Petition Date to the extent that such security interests and liens are equal or superior to Lenders’ security interest and liens; (ii) Pre-Petition Collateral shall secure both the Pre-Petition Indebtedness and any and all Post-Petition Indebtedness incurred by Debtors to Lenders pursuant to the DIP Loan Agreement and this Order (the “Post-Petition Indebtedness”); (iii) the Debtors shall not use Cash Collateral except to cover the ordinary and necessary expenses of the Debtors; (iv) the Debtors shall be authorized to borrow money and seek other financial accommodations from Lenders only in order to pay their ordinary and necessary expenses except as otherwise permitted with the written consent of Lenders and the Committee; (v) that the Debtors shall pay interest and principal owing to Lenders with all proceeds of the Pre-Petition Collateral and Post-Petition Collateral collected by the Debtor; and (vi) that ABT Canada reaffirm the Canadian Loan Documents and guarantee repayment of and secure the obligations of the Borrower under DIP Loan Agreement and Related Documents.
N. The DIP Loan Agreement and this Order provide for each estate to be jointly and severally liable for all Post-Petition Indebtedness and to grant to Lender an interest in all Pre-Petition Collateral and Post-Petition Collateral to secure the repayment of Post-Petition Indebtedness. Thus, the DIP Loan Agreement and the Proposed Orders contemplate “cross-collateralization.” i.e. the assets of all of the Debtors will secure all of the Post-Petition Indebtedness. Cross-collateralization is justified because the Debtors have previously conducted business with Lenders under such an arrangement and cross-collateralization is an element of adequate protection necessary in order to induce Lenders to make advances to the Debtors on a post-petition basis.
O. Advances to the Debtors shall be pursuant to the DIP Loan Agreement and this Interim Order, and any final order entered by the Court in relation to the matter. Generally, in addition to the “Term Loan” provided for in the DIP Loan Agreement (which Term Loan is described below), Lenders will advance to Debtors from time to time on a revolving basis the aggregate amount of “Availability” as that term is defined in the DIP Loan Agreement. Generally, Availability is calculated on an aggregate basis taking into consideration all of the loans and obligations outstanding and reserves established pre-petition and post-petition and the collateral values as determined pursuant to the terms of the DIP Loan Agreement of all Collateral, whether pre-petition or post-petition. The Term Loan will be in the amount of $5,000,000.00 for general operating needs plus $3,600,000 for Home Depot related transactions plus the amount of cash collateral used by the Debtors pursuant to Orders of the Bankruptcy Court authorizing the Debtors to use cash collateral pursuant to Section 363 of the Bankruptcy Code. In no event whatsoever will Lenders make an advance if the aggregate amount of the Revolving Loan and Term Loan to and Letters of Credit (as defined in the DIP Loan Agreement) issued for the Debtors Pre-Petition and the Debtors in Possession Post-Petition would exceed $90,000,000.00. All collections by Debtor will be applied to the satisfaction of Pre-Petition Indebtedness and to Post-Petition Indebtedness as hereinafter provided.
P. As additional adequate protection, and in addition to any other reports required under the Pre-Petition Loan Documents, Debtors have agreed to provide the Agent and Administrative Agent weekly budgets and reports reflecting actual revenues and expenses.
Q. The terms and conditions of the proposed secured Post-Petition financing from Lenders as evidenced by the DIP Loan Agreement and this Order are fair and reasonable, were negotiated by the parties in good faith at arms length, and the parties otherwise acted in good faith within the meaning of Section 364(e). The terms and conditions contained in the DIP Loan Agreement and this Order are the best available under present market conditions and the financial circumstances of Debtors.
R. It is in the best interests of Debtors and the estates that Debtors be given authority to execute, deliver, perform and consummate and that this Court approve the execution, delivery, performance and consummation by Debtors of the DIP Loan Agreement and any and all other documents and instruments reasonably requested by Lenders to execute, effectuate, carry out and consummate the terms and conditions of the DIP Loan Agreement and this Order.
S. Good cause has been shown for the entry of this Interim Order. Among other things, entry of this Interim Order will minimize the disruption of the Debtors’ existing business, will increase the possibility for a successful reorganization or orderly liquidation of the Debtors, and is in the best interest of the Debtor, its creditors and other parties in interest.
Based upon the foregoing findings of fact and conclusions of law, which are fully incorporated by reference into the Interim Order,
IT IS HEREBY ORDERED as follows:
1. Subject to the provisions of Paragraph 16 below, Debtors and Lenders consent and stipulate to, and are bound by the facts contained in the preamble and foregoing findings of this Order.
2. Debtors are hereby authorized to borrow money and seek other financial accommodations from Lenders in accordance with the terms set forth in the DIP Loan Agreement and this Order. ABT may disburse funds borrowed under the DIP Loan Agreement to the other Debtors who will repay ABT by delivering collections to the Lenders as required by the DIP Loan Agreement and this Order; provide however, that prior to the entry of a Final Order on the Motion, Debtors are only authorized pursuant to this Interim Order to borrow up to $23,000,000. Lenders have no obligation to extend credit except as provided in the DIP Loan Agreement, in this Order, and in the Final Order. Lenders are hereby granted the rights, liens, security interests and priorities set forth in the DIP Loan Agreement and summarized below. All of the Pre-Petition Loan Documents as amended and restated by the DIP Loan Agreement are hereby incorporated herein by reference and are ratified, reaffirmed and confirmed by each of the Debtors and are hereby deemed adopted in full by each of the Debtors, and (subject to paragraph 16 below) shall be construed and considered as valid and enforceable agreements between Debtors, the Lenders, the Agent and the Administrative Agent. Subject to paragraph 16 below, the terms and conditions of the Pre-Petition Loan Documents as amended and restated by the DIP Loan Agreement and this Order shall be deemed and held to be enforceable against Debtors as provided therein. This Order shall be sufficient and conclusive evidence of the adoption, ratification, reaffirmation and confirmation by Debtors of the Pre-Petition Loan Documents as amended and restated by the DIP Loan Agreement. All of the post-petitition loans, advances and other Post-Petition Indebtedness which may become owing by Debtors to Lenders pursuant to the financing contemplated herein shall be secured by a first and paramount security interest and lien upon the property of Debtors, except as more fully described in the DIP Loan Agreement and in Paragraph 4 below.
3. Debtors are authorized to comply with the terms of the DIP Loan Documents, the Canadian Loan Documents and this Order and, in connection with the Loans (including the payment to Lenders of all sums due thereunder), to execute the DIP Loan Agreement, the Term Notes and such documents as the Lenders, the Agent or the Administrative Agent may reasonably require including, but not limited to, guarantees, deeds of trust, security agreements, financing statements, assignments, and documents required to perfect a security interest or lien on property covered by a certificate of title or otherwise. Debtors are further authorized and empowered from time to time to borrow monies and/or obtain other financial accommodations from Lenders in accordance with the provisions of the DIP Loan Agreement and this Order. The terms of this Order control over any inconsistent provision of the DIP Loan Agreement. All Post-Petition Indebtedness and all other loans and advances and other financial accommodations by Lenders to Debtors are subject to the interest rate, terms of payment, and other terms and conditions provided for in the DIP Loan Agreement and this Order.
4. To secure all of the Post-Petition Indebtedness, the Debtors are authorized, ordered and directed to grant and by this Order the Lenders are hereby granted a first and prior lien, effective from the Petition Date of these Chapter 11 cases, upon all of the property of the estates, including both Pre-Petition Collateral and Post-Petition Collateral, subject only to perfected, indefeasible and unavoidable liens and security interests of Lender and other secured parties existing as of on the Petition Date to the extent that such security interests and liens are equal or superior to Lenders’ security interests and liens, whether now owned or existing or hereafter created or acquired by any of the Debtors, wherever located. Except to the extent that the Post-Petition Collateral consists of proceeds, products, offspring, rents or profits of the Pre-Petition Collateral, the Post-Petition Collateral shall not secure the Pre-Petition Indebtedness; provided however, and based on the equities of the case as provided in Section 552 of the Bankruptcy Code, the Court hereby orders that the Pre-Petition Collateral includes all proceeds (including cash and non-cash proceeds and including insurance proceeds), product, offspring, rents or profits of the Pre-Petition Collateral.
5. All Post-Petition Indebtedness, post-petition financial accommodations, and any other post-petition obligations which may from time to time hereafter be owing by the Debtors to Lenders are hereby granted superpriority claim status under Section 364(c)(1) of the Bankruptcy Code, with priority over all administrative expenses incurred in this case of any kind, including such administrative expenses of the kinds specified in, or allowable under, Sections 105, 326, 330, 331, 503(b), 506(c), 507(a), 507(b) or 726 of the Bankruptcy Code. No costs or expenses of administration which have been or may be incurred in these proceedings, any conversion of these proceedings pursuant to Section 1112 of the Bankruptcy Code, or in any other proceeding related hereto, and no priority claims are, or will be, prior to or on a parity with the claim of Lenders against the Debtors arising out of Post-Petition Indebtedness, or with the security interests and liens of Lenders in and upon the Pre-Petition Collateral and Post-Petition Collateral, and no such costs and expenses of administration shall be imposed on, or surcharged against Lenders, their claims or their collateral, save and except as provided in the Carve Out Agreement attached to the DIP Loan Agreement as Exhibit “H,” which is incorporated in and made a part of this Order. If and to the extent that the Court approves establishment of a trust account for payment of professional fees and expenses for the Debtors’ and Committee’s professionals pending allowance of such fees and expenses, the DIP Loans may be used to fund such trust account, and if such trust account is authorized by the Court, the funds deposited into such trust account will be held for the exclusive benefit of the firms who are designated in the Amended and Restated Carve Out Agreement as beneficiaries of such trust account, and the funds on deposit in such trust account shall not be property of the estate and shall not be subject to the Pre-Petition or Post-Petition liens or claims of the Lenders or any other creditors to the extent payment of such fees and expenses are allowed by final order of the Bankruptcy Court.
6. In relation to the obligations, rights, and remedies of the Debtors and the Lenders under the DIP Loan Agreement:
(i) This Order shall be sufficient and conclusive evidence of the granting, creation, validity, perfection and priority of Lenders’ security interests and liens upon the Post-Petition Collateral and Pre-Petition Collateral (to the extent it secures Post-Petition Indebtedness) without the necessity of filing or recording any financing statements, mortgages, deeds of trust, notices or other documents which may otherwise be required under the law of any jurisdiction or the taking of any other action to validate or perfect the security interests and liens granted to Lenders in the DIP Loan Agreement or this Interim Order, or to entitle Lenders to the priority granted herein. If, however, Lenders, the Agent or the Administrative Agent shall, in their sole discretion, elect for any reason to file or record any such financing statements, mortgages, deeds of trust, notices or other documents with respect to such security interests and liens, Debtors shall execute the same upon request and the filing or recording thereof shall be deemed to have been made at the time and on the date of the commencement of these Chapter 11 cases and shall not constitute a violation of the automatic stay. Lenders, the Agent or the Administrative Agent may, also in their discretion, file a certified copy of this Order in any jurisdiction in which any of the Debtors has real or personal property, and in such event, the subject filing or recording officer is authorized and directed to file or record such certified copy of this Order.
(ii) The Debtors are authorized and empowered to borrow the Post-Petition Indebtedness from Lenders, pursuant to the DIP Loan Agreement and this Interim Order, from time to time.
(iii) The terms and conditions of the DIP Loan Agreement shall govern the Post-Petition Loans except to the extent otherwise provided in this Order.
(iv) Each of the Debtors is authorized and directed to perform all acts, and execute and comply with the terms of such other documents, instruments and agreements which Lenders, the Agent or the Administrative Agent may reasonably require.
7. In relation to advances and collections under the DIP Loan Agreement:
(i) Bank of America is authorized to receive and Debtors are authorized and directed to remit or cause to be remitted to the Cash Collateral Account maintained under the Initial Cash Collateral Order (or to such other lockbox account which Bank of America may designate) all cash collateral, including the proceeds of accounts receivable, Disposition Proceeds (as defined in the DIP Loan Agreement), and other payments made to or monies received by Debtors, now in any of Debtor’s possession or hereafter coming into any of Debtor’s possession or becoming due and payable to any of Debtors, and Bank of America is authorized to conditionally apply such cash collateral and the proceeds thereof as set forth in the DIP Loan Agreement and this Order. Except as otherwise provided in the DIP Loan Agreement, proceeds or payments received by Bank of America with respect to the Pre-Petition Collateral shall be applied, first, to the Pre-Petition Indebtedness (including without limitation all accrued and to the extent allowed by applicable law, accruing interest and expenses), and then, after full repayment of the Pre-Petition Indebtedness, to the Post-Petition Indebtedness. Proceeds or payments received by Bank of America with respect to the Post-Petition Collateral shall be applied to the Post-Petition Indebtedness (including without limitation all accrued interest and to the extent allowed by applicable law, accruing interest and expenses). If the source of any such proceeds or payments is not clearly identified or identifiable (by consent of Debtors, Lenders, and the Committee, or otherwise) as attributable to Post-Petition Collateral, such proceeds or payments shall be deemed conditionally to be proceeds of Pre-Petition Collateral, subject to further order of the Bankruptcy Court.
(ii) Such cash collateral and proceeds shall be received and conditionally applied by Bank of America subject to all indefeasible and unavoidable liens and security interests of other secured parties perfected or deemed perfected on or as of the Petition Date which are senior to the liens and security interests of Lenders.
(iii) In the event that the Lenders acknowledge in writing or the Bankruptcy Court by final order finds that a lien or security interest in such cash collateral and proceeds (or the collateral from which such cash collateral and proceeds was derived) is unavoidable, indefeasible and superior to the liens and security interests of Lenders, Lenders shall promptly pay over to the holder of such senior lien or security interest the lesser of: (a) the amount of the holder’s secured claim; or (b) the amount of the cash collateral or proceeds received by Lenders subject to such superior lien or security interest.
(iv) In the event Lenders are required to disgorge and pay over to a senior secured party any amount of money which was received and conditionally applied to the reduction of the indebtedness and obligations of the Debtors to Lenders, such indebtedness and obligations shall be reinstated in such amount and shall have the same rights and priority as if it had never been paid.
8. Debtors shall provide the Agent and Administrative Agent weekly budgets and reports reflecting actual revenues. In addition, the Debtors shall promptly provide to Lenders all other financial information reasonably requested by Lenders or their attorneys or other representatives, including all such information which was required to be provided by Debtors to Lenders under the Pre-Petition Loan Documents and the DIP Loan Agreement. Notwithstanding the expiration or termination of DIP Loan Agreement or this Interim Order, the requirement of the Debtors to provide Lenders all other financial information requested by Lenders or their attorneys or other representatives, including all such information which was required to be provided by Debtors to Lenders under the Pre-Petition Loan Documents, will continue so long as the Debtors remain as debtors-in-possession in these cases.
9. Each of the Debtors is hereby authorized in accordance with this Order and without further order of this Court to pay to Lenders all audit fees in connection with the Post-Petition Indebtedness and to reimburse Lenders for all filing and recording fees and the reasonable attorneys’ fees and expenses incurred by Lenders in connection with the Post-Petition Indebtedness, the preparation of the papers related thereto, and the representation of Lenders, the Agent and the Administrative Agent in these Chapter 11 cases and all matters related thereto; provided, that Lenders shall first serve a copy of any invoice for their attorneys’ fees and expenses upon counsel for the Debtors, the Committee, and the U.S. Trustee. The Debtors, the Committee, and the U.S. Trustee shall have ten (10) days to interpose a written objection to the reasonableness of any attorneys’ fees and expenses on the invoices furnished by Lenders. If no timely written objections are interposed, the invoiced attorneys’ fees and expenses of Lenders will be paid immediately. If a timely written objection is interposed, the disputed attorneys’ fees and expenses will be presented to the Bankruptcy Court for resolution at the next Omnibus Hearing conducted pursuant to the Supplemental Procedures Order.
10. The automatic stay presently in effect in these reorganization cases pursuant to Section 362 of the Bankruptcy Code is hereby modified by the terms and conditions of, and to the extent necessary to effect the provisions of this Order; provided however, that the automatic stay is not modified presently to allow Lenders to proceed with any enforcement rights against the Debtors or the Collateral.
11. The signature of William Brandt, Brad Sharp, or any other person designated by the Debtors as an authorized officer or agent, whether by letter to Lenders, the Agent, or the Administrative Agent or appearing on any documents, shall bind the Debtors with respect to the documents and agreements executed pursuant to this Order and the DIP Loan Agreement.
12. In the event of (i) failure of any of the Debtors to perform any of their obligations as provided in the DIP Loan Agreement and this Order, (ii) the occurrence of any Event of Default under the DIP Loan Agreement, (iii) the appointment of a trustee of any of the Debtors and/or the property of any of the Debtors without the prior written consent of Lenders, (iv) the conversion of any Debtor’s Chapter 11 cases to a case under Chapter 7 of the Bankruptcy Code or the filing by any Debtor of, or consent to, a motion to convert any of the Debtors’ cases to a case under Chapter 7 of the Bankruptcy Code without Lenders’ prior written consent, (v) the dismissal of any Debtor’s Chapter 11 case or the filing of, or consent to, a motion to dismiss any of the Debtors’ cases by Debtor without Lenders’ prior written consent, or (vi) any Debtor’s failure to pay any of Lenders’ professional fees and expenses within thirty (30) days after such fees and expenses become due and payable pursuant to paragraph 9 above (individually, an “Event of Default” and, collectively, “Default Events”), then and upon the occurrence of any of the foregoing, at the option of the Lenders, Lenders’ obligation to extend Loans and other Post-Petition financial accommodations to Debtors hereunder shall terminate immediately. With respect to cash collateral, including accounts receivable and proceeds thereof, prior and subsequent to any Event of Default and without the need for notification to the Debtors, Bank of America as Agent is authorized to collect and the Debtors are directed to continue to remit to Bank of America all cash collateral, including accounts receivable and the proceeds thereof, to which Lenders are entitled pursuant to the Pre-Petition Loan Documents, the DIP Loan Agreement and this Order. With respect to the lien granted to Lenders under and pursuant to this Order and the DIP Loan Agreement, Lenders will enforce their rights and remedies following the termination of the DIP Loan Agreement first against Collateral which is not Real Estate; provided however, that, if and to the extent the full amount of the indebtedness and obligations owing from Debtors to Lenders is not satisfied within ninety (90) days from the termination of the DIP Loan Agreement, then Lenders are free to exercise their rights and remedies against all components of the Collateral including Real Estate. If an Event of Default has occurred and is continuing, Debtors shall not have the right to use cash collateral of Lenders under section 363 of the Bankruptcy Code without the express written consent of Lenders.
13. The obligations and rights of the Lenders, the Agent and the Administrative Agent, and the Debtors with respect to all transactions occurring prior to such termination, including without limitation each Debtor’s obligation to repay the Pre-Petition Indebtedness and the Post-Petition Indebtedness and each Debtor’s obligation to deliver to Bank of America, and Bank of America’s right to receive and apply, cash collateral proceeds, shall remain unimpaired and unaffected by any such termination and shall survive any termination of Lenders’ obligations to make advances.
14. The provisions of this Order and any actions taken pursuant hereto shall survive entry of any order confirming any Plan of Reorganization or converting any Debtor’s case from Chapter 11 to Chapter 7, and the terms and provisions of this Order as well as the priorities in payment, liens and security interests granted pursuant to this Order, the DIP Loan Agreement and the Pre-Petition Loan Documents shall continue in these cases or any superseding or converted case or cases under the Bankruptcy Code, and such priorities in payment, liens and security interests shall maintain their priority as provided by this Order until all indebtedness due and owing to Lenders is indefeasibly satisfied and repaid in full.
15. The provisions of this Order shall be binding upon and inure to the benefit of the Lenders, the Agent, the Administrative Agent, and the Debtors and their respective successors and assigns, including but not limited to any trustee in bankruptcy hereinafter appointed as a representative of any of the Debtor’s estates.
16. This Interim Order does not presently operate as a final adjudication of the validity, perfection, enforceability, priority, or amount of the secured claim of the Lenders in these cases. Nevertheless, the Debtors have waived and released any right to object to, challenge or seek to avoid, the amount, validity, or enforceability of the Pre-Petition Indebtedness or the validity, perfection, and enforceability of Lenders’ liens and security interests in the Pre-Petition Collateral securing the Pre-Petition Indebtedness. The Creditors Committee and any other party in interest (other than the Debtors) will have until April 1, 2000 (the “Lookback Period”), to object to, challenge, or seek to avoid the amount, validity, or enforceability (but not the priority) of the Pre-Petition Indebtedness or the validity, perfection, and enforceability of Lenders’ liens and security interests in the Pre-Petition Collateral securing the Pre-Petition Indebtedness. If no such action, objection, or other challenge is commenced by the Creditors Committee or other party in interest (other than the Debtors) within the Lookback Period, the Pre-Petition Indebtedness will be deemed and adjudicated finally and indefeasibly as valid and enforceable, and Lenders’ liens and security interests in the Pre-Petition Collateral securing the Pre-Petition Indebtedness will be deemed and adjudicated finally and indefeasibly as valid, enforceable, and perfected liens and security interests in that Collateral. The Lookback Period may be extended through a written stipulation signed by the Creditors Committee and Lenders.
17. A copy of this Order, together with a notice of the Final Hearing on the Motion, shall be mailed immediately by Debtors’ counsel to the U.S. Trustee, the Committee, all parties who have filed notices of appearances and all counsel of record in this case. All parties in interest shall have until 4:00 p.m. on March 14, 2000 (the “Objection Deadline”), to file written objections to this Order or the entry of the Final Order on the Motion. The failure of any party to file a written objection by the Objection Deadline result in a permanent waiver and bar of any and all Objections to any of the terms and conditions of the financing provided by Lenders to Debtors under the DIP Loan Agreement and this Interim Order. Any objections shall be in writing and copies thereof shall be served upon the following persons or parties:
Counsel for the Debtors: PACHULSKI, STANG, ZIEHL, YOUNG JONES P.C. Attn: William P. Weintraub 650 California Street, 15th Floor San Francisco, CA 94108 Phone: (415)263-7000 Fax: (415)263-7010 E-mail: wweintraub@pszy.com
-and-
SHEA CARLYON, LTD. Attn: James Patrick Shea 233 South Fourth Street, Suite 200 Las Vegas, NV 89101 Phone: (702)471-7432 Fax: (702)471-7435 E-mail: shealawgen@aol.com
Counsel for Bank of America, N.A.: JENKENS GILCHRIST, P.A. Attn: Linda Sartin 1445 Ross Avenue, Suite 3200 Dallas, TX 75202-2799 Phone: (214)855-4799 Fax: (214)855-4300 E-mail: lsartin@jenkens.com
-and-
STREICH LANG, P.A. Attn: John R. Clemency 2 North Central Avenue Phoenix, Arizona 85004 Phone: (602)229-5412 Fax (602)229-5690 E-mail: jclemency@sllaw.com
Counsel for the Creditors’ Committee COX SMITH, INC. Attn: Deborah D. Williamson 112 East Pecan Street, Suite 1800 San Antonio, TX 78205-1521 Phone: (210)554-5275 Fax: (210)226-8395 E-mail: ddwillia@coxsmith.com
-and-
Hale, Lane, Peek, Dennison, Howard Anderson Attention: Jeanette E. McPherson 2300 West Sahara Avenue, Suite 800 Las Vegas, Nevada 89102 Phone: (702) 362-5118 Fax: (702) 365-6940 E-mail: jmcpherson@halelane.com
Office of the United States Trustee Attn: Barry Jenkins 600 Las Vegas Boulevard South, Suite 430 Las Vegas, NV 89101 Phone: (702)388-6723 Fax: (702)388-6658 Email: BarryJenkins@usdoj.gov
18. A final hearing on the Amended Motion shall be held before this Court on March 22, 2000, at 9:30 o’clock 9 a.m. (the “Final Hearing”). Prior to the Final Hearing, each Debtor is authorized to execute and comply with the terms of this Order and the DIP Loan Agreement, and is further authorized and empowered from time to time to borrow monies and/or obtain financial accommodations from Lenders under all of the terms and conditions provided in the DIP Loan Agreement and this Order.
19. Subject to the provisions of the foregoing paragraph 16, this Court reserves the right to alter or supplement the findings of fact contained in this Order upon final hearing. At such final hearing, this Court may ratify and confirm all findings herein and provisions hereof and make them final for all purposes.
20. If any provision of this Order is hereafter modified, vacated or stayed by subsequent order of this or any other Court for any reason, including but not limited to objections of creditors, such modification, vacation or stay shall not affect the validity of any Post-Petition Indebtedness incurred pursuant to the DIP Loan Agreement and/or this Order, prior to the effective date of any such modification, vacation or stay or the validity, enforceability or priority of the liens and security interests authorized by this Order with respect to any such Post-Petition Indebtedness, all of which shall be governed in all respects by the original provisions of this Order, and Lenders shall be entitled to all of the rights, privileges, benefits, and protections provided under § 364(e) of the Bankruptcy Code, including the preservation of the liens and security interests and priority granted herein with respect to the Post-Petition Indebtedness. In addition, and without limiting the foregoing, if any provision of this Order is hereafter modified, vacated or stayed by reason of a determination that this Court lacked jurisdiction to enter this Order, all loans and advances made by Lenders to the Debtors from and after the date of this Order shall, at Lenders’ election, be deemed to have been made under the Pre-Petition Loan Documents, in which case the Pre-Petition Loan Documents shall be deemed to have remained in full force and effect prior to and after the filing of this case notwithstanding any purported termination or cancellation thereof. The provisions of this Order shall be binding upon and inure to the benefit of the Lenders, the Agent, the Administrative Agent, the Debtors and each of their respective successors, assigns and participants, including but not limited to any trustee hereafter appointed in any of the Debtor’s cases while proceeding under Chapter 11 of the Bankruptcy Code or in any subsequent Chapter proceeding.
22. This Order shall be effective immediately notwithstanding the provisions of Rule 4001(a)(3) of the Federal Rules of Bankruptcy Procedure.