Opinion
Case No. 02-83984-SSM, (Jointly Administered)
November 8, 2002
John Wm. Butler, Jr., John K. Lyons, SKADDEN, APRS, SLATE, MEAGHER FLOM (ILLINOIS), Chicago, Illinois, Lawrence E. Rifken (VSB No. 29037), Douglas M. Foley (VSB No. 34364), McGUIREWOODS LLP, McLean, Virginia, Attorneys for Debtors and Debtors-in-Possession.
Upon the motion, dated September 24, 2002 (the "Motion") filed with the United States Bankruptcy Court for the Eastern District of Virginia (the "Court"), of US Airways Group, Inc. (the "Borrower"), and each of the other above-captioned debtors and debtors-in-possession in the jointly administered Chapter 11 cases (collectively, the "Guarantors" and, together with the Borrower, the "Debtors") pursuant to sections 105(a), 362, 364(c)(1), 364(c)(2) and 364(c)(3) of title 11, United States Code (the "Bankruptcy Code"), and Rules 2002, 4001 and 9014 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules") seeking this Court's authorization, among other things:
(a) For the Borrower to obtain and each of the Guarantors to guaranty up to $500,000,000 in principal amount of postpetition senior secured financing in accordance with the terms and conditions set forth in (i) that certain Commitment Letter attached to the Motion as Exhibit A (including, without limitation, the term sheet attached thereto and as amended, the "Commitment Letter") and pursuant to that certain credit agreement, a copy of which was attached to the Motion as Exhibit B, both of which were among the Borrower, the Guarantors, The Retirement Systems of Alabama or any affiliate thereof ("RSA"), for itself and on behalf of an administrative agent to be designated by RSA (in such capacity, the "Administrative Agent"), and on behalf of a collateral agent to be designated by RSA (in such capacity, the "Collateral Agent", and together with the Administrative Agent, the "Agents,") and RSA or another Lender acceptable to RSA, as Initial L/C Issuer (the "Initial L/C Issuer"), and certain other banks, financial institutions and institutional lenders acceptable to RSA (together with the Initial L/C Issuer, the "Lenders") to be arranged by RSA or its designated agent, and to incur the loans, advances, interest obligations, letter of credit reimbursement obligations, fees, expenses and other obligations, liabilities and indebtedness (including, without limitation, overdrafts (and related liabilities) and automated clearing house transfer obligations) described in the Commitment Letter and set forth in the DIP Loan Documents (collectively, the "Obligations"), and (ii) the Agreement Relating to Participation in the RSA DIP Credit Facility (as defined below) and Investment in US Airways Group, Inc., dated September 26, 2002, by and between RSA and the Borrower (the "Investment Agreement") pursuant to which RSA has agreed to participate in the RSA DIP Credit Facility (as defined below) either (A) as a Lender or (B) by providing credit support by guarantying and arranging for funding of a "RSA Substitute Lender" in accordance with the terms and conditions set forth therein;
(b) pursuant to sections 364(c)(2) and 364(c)(3) of the Bankruptcy Code, for the Debtors to provide the Collateral Agent (for the ratable benefit of itself, the Administrative Agent, RSA and the Lenders) security interests upon certain property of the Debtors' estates to secure repayment of the Obligations as provided in, and as contemplated by, the Commitment Letter and set forth in the RSA DIP Credit Agreement (as defined below), as supplemented by this Final Order, subject to the Carve-Out (as defined below);
(c) seeking this Court's authorization, pursuant to section 364(c)(1) of the Bankruptcy Code, for the Debtors to grant to the Collateral Agent (for the ratable benefit of itself, the Administrative Agent, RSA and the Lenders) a Super-Priority Claim (as defined below) in respect of the Obligations with priority over any and all administrative expenses, subject to the Carve-Out and any administrative expenses granted under the First DIP Agreement (as defined below); and
(d) setting the date for the hearing (the "Final Hearing") to consider the entry of a final order (the "Final Order") authorizing and approving, on a final basis, the transactions described in the foregoing clauses (a) through (c) and to be described in the DIP Loan Documents; and it appearing that the relief requested therein is necessary to provide the Debtors with sufficient capital to continue operations and to preserve the going concern value of their businesses; and it further appearing that notice of the Motion is sufficient and complies with the requirements of Bankruptcy Rules 4001(c) and 4001(d); and for good cause shown;
THE COURT HEREBY FINDS THAT:
A. On August 11, 2002 (the "Petition Date"), the Debtors commenced these chapter 11 cases (the "Cases") by filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code in the Court.
B. The Debtors have continued in the management and operation of their businesses as debtors in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed in these Cases, and on August 20, 2002, the United States Trustee appointed an Official Committee of Unsecured Creditors (the "Creditors' Committee") for these cases.
C. This Court has jurisdiction, pursuant to 28 U.S.C. § 157(b) and 1334, over these Cases, and over the persons and property affected hereby. Consideration of the Motion constitutes a core proceeding as defined in 28 U.S.C. § 157(b)(2). The statutory predicates for the relief sought herein are sections 105, 362, 364 and 507 of the Bankruptcy Code and Rule 4001(c) and (d) of the Federal Rules of Bankruptcy Procedure. Venue of the Cases in this Court is proper pursuant to 28 U.S.C. § 1408 and 1409.
D. On August 31, 2002, the Borrower and the Guarantors, as applicable, entered into a post-petition credit agreement with Credit Suisse First Boston, Cayman Islands Branch ("CSFB") and Banc of America Securities LLC, as Joint Lead Arrangers and Joint Book Managers and TPG Partners III, L.P. ("TPG") (as amended by that certain Amendment and Waiver No. 1 to the Senior Secured Super Priority Debtor-In-Possession Credit Agreement, dated as of September 6, 2002, and as further amended, supplemented, or otherwise modified in accordance with the terms thereof, the "First DIP Agreement").
E. Also on August 31, 2002, the Borrower and the Guarantors, as applicable, entered into various agreements and instruments, and executed and delivered various documents, in connection with the First DIP Agreement and the provision of security interests to secure their respective obligations thereunder and the interim order approving the First DIP Agreement, including without limitation, an Intellectual Property Security Agreement, the Aircraft Mortgages and Supplements and the Slot Security Agreement (the First DIP Agreement, together with all other instruments and documents as have been or may be executed and delivered in connection with the First DIP Agreement or such order or which are related thereto, are referred to herein collectively as the "First DIP Loan Documents").
F. In the exercise of the Debtors' sound business judgment, the Debtors determined to replace the postpetition credit facility provided in the First DIP Loan Documents in order to maximize the success of their reorganization efforts and the value of their estates for all stakeholders and to that end filed the Motion. The replacement of the first postpetition credit facility on the terms set forth in the DIP Loan Documents (as defined below) will not result in any material additional cost to the estates, if any, and will not prejudice any party in interest, including, without limitation, the lenders under the First DIP Loan Documents (the "CSFB Lenders").
G. On September 26, 2002, a hearing was held to consider granting the Motion on an interim basis pursuant to Bankruptcy Rule 4001 (the "Interim Hearing" and together with the Final Hearing, the "Hearings"). This Court stated on the record at the Interim Hearing that it would enter an interim order approving the Motion. At the Interim Hearing, the Debtors also withdrew their request for entry of a final order with respect to the First DIP Agreement. On October 1, 2002, this Court entered the Interim Order (I) Authorizing Postpetition Secured Super-Priority Financing Pursuant To Sections 105(a), 362, 364(c)(1), 364(c)(2), 364(c)(3) and 507 of the Bankruptcy Code and (II) Scheduling a Final Hearing Pursuant to Bankruptcy Rules 4001(c) And 4001(d) (the "Interim Order"). Pursuant to the Interim Order, this Court, among other things, (a) authorized the Borrower to borrow, and the Guarantors to guarantee, up to $300,000,000 in financing on the terms and conditions set forth in the Commitment Letter and the Interim Order and (b) authorized the Borrower and the Guarantors to execute and deliver the RSA DIP Credit Agreement (as defined below) and the other DIP Loan Documents (as defined below) and all instruments and documents as required or necessary for the performance by the Debtors of the terms and conditions under the Commitment Letter and such loan documents and other documents related to the creation and perfection of the security of the Obligations described in and provided for by the Commitment Letter and such loan documents.
H. On September 26, 2002, the Borrower, the Guarantors, the Lenders, RSA for itself and as Administrative Agent and Collateral Agent entered into a credit agreement on terms consistent with the Commitment Letter.
I. On September 27, 2002, the Borrower paid in full all obligations in connection with the postpetition credit facility provided in the First DIP Loan Documents. Concomitant with such payment, the Borrower and the Guarantors and the CSFB Lenders executed, on September 27, 2002, a mutual release of all obligations and interests in connection with the certain postpetition credit facility provided in the First DIP Loan Document, including the release of all collateral provided under the First DIP Loan Documents.
J. On October 25, 2002, the Borrower and the Guarantors, RSA and Retirement Systems of Alabama Holdings LLC entered into that certain Senior Secured Superpriority Debtor-In-Possession Credit Agreement (the "RSA DIP Credit Agreement"), dated as of September 26, and amended and restated as of October 18, 2002. The RSA DIP Credit Agreement provided for the assignment of RSA's interest under the RSA DIP Credit Agreement to Retirement Systems of Alabama Holdings LLC. In addition, on October 25, 2002, The Teachers' Retirement System of Alabama (the "TRSA") and The Employees' Retirement System of Alabama (the "ERSA") delivered to the Borrower and the Guarantors a guaranty (the "RSA Guaranty") pursuant to which the TRSA and the ERSA guaranteed the obligations of Retirement Systems of Alabama Holdings LLC under the DIP Loan Documents (as defined below). Capitalized terms used but not defined in this Final Order shall have the same meanings given to such terms in the RSA DIP Credit Agreement.
K. On October 25, 2002, the Borrower and the Guarantors, as applicable, entered into various agreements and instruments, and executed and delivered various documents, in connection with the RSA DIP Credit Agreement and the provision of security interests to secure their respective Obligations thereunder and under this Final Order including, without limitation, the Intellectual Property Security Agreement, the Aircraft Mortgages and Supplements and the Slot Security Agreement (the RSA DIP Credit Agreement, together with all other instruments and documents as have been or may be executed and delivered in connection with the RSA DIP Credit Agreement or this Final Order or which are related thereto, including the Commitment Letter, are referred to herein collectively as the "DIP Loan Documents").
L. At the time of the Interim Hearing, an immediate need existed, and a need continues to exist, for the Debtors to obtain funds and financial accommodations with which to continue their operations, meet their payroll and other necessary, ordinary course business expenditures, acquire goods and services, and administer and preserve the value of their estates, and maintain adequate cash balances customary and necessary for companies of this size in this industry to maintain customer confidence. The ability of the Debtors to finance their operations requires the availability of additional working capital, the absence of which would harm the Debtors, their estates, and their creditors. The Debtors need the working capital to preserve the confidences of vendors, suppliers and customers and to preserve the going concern value of their business.
M. The Debtors have attempted, in good faith, to obtain financing from sources other than the Lenders. The Debtors are unable to obtain unsecured credit allowable only as an administrative expense allowable under section 503(b)(1) of the Bankruptcy Code pursuant to section 364(b) of the Bankruptcy Code. In addition, there was a risk, unacceptable to the Debtors in the exercise of their sound business judgment, that the credit under the First DIP Loan Documents would not continue to be available to the Debtors on terms and conditions satisfactory to the Debtors and beneficial to the estates.
N. The Debtors are able to obtain sufficient credit, on acceptable terms and conditions, only pursuant to a combination of sections 364(c)(1), 364(c)(2) and 364(c)(3) of the Bankruptcy Code and under the terms and conditions provided in the DIP Loan Documents and this Final Order. Specifically, the Debtors are unable to borrow money, procure letters of credit and obtain other needed financial accommodations without the Debtors' granting to the Collateral Agent (for the ratable benefit of itself, the Administrative Agent and the Lenders) (i) security interests in various of the assets of the Debtors pursuant to sections 364(c)(2) and 364(c)(3) of the Bankruptcy Code and (ii) super-priority administrative expense claims status with priority over all other administrative expense claims pursuant to section 364(c)(1) of the Bankruptcy Code, in each case as provided by this Final Order.
O. The ability of the Debtors to finance their operations and the availability of sufficient working capital through the incurrence of indebtedness for borrowed money and other financial accommodations is vital to the Debtors' ability to preserve and maintain their going concern value.
P. The relief requested in the Motion is necessary, essential, and appropriate for the continued operation of the Debtors' businesses and the preservation of their estates.
Q. It is in the best interest of Debtors' estates to establish the credit facility contemplated by the DIP Loan Documents (the "RSA DIP Credit Facility").
R. The terms and conditions of the RSA DIP Credit Facility, as described in the DIP Loan Documents and the Motion, and as described to the Court at the Hearings, including those which provide for the payment of interest to, and fees of, the Agents, RSA and the Lenders at the times and in the manner provided under the DIP Loan Documents are fair, reasonable and the best available under the circumstances, reflect the Debtors' exercise of prudent business judgment and are supported by reasonably equivalent and fair value.
S. Based on the record presented to the Court by the Debtors at the Hearings, the DIP Loan Documents were negotiated in good faith and at arm's length between the Debtors, on the one hand, and the Agents, the Lenders, and RSA on the other hand. Credit to be extended under the DIP Loan Documents has been and will be so extended in good faith, in consequence of which the Agents, the Lenders, and RSA are entitled to the protection and benefits of section 364(e) of the Bankruptcy Code.
T. Pursuant to the terms of the Interim Order, notice of the Final Hearing and the relief requested in the Motion was given to: (i) the United States Trustee for the Eastern District of Virginia (the "U.S. Trustee"); (ii) Orrick, Herrington Sutcliffe LLP Attorneys for RSA, 666 Fifth Avenue, New York, New York 10103, Attn: Lorraine McGowen, Esq.; (iii) Shearman Sterling, Attorneys for CSFB, 599 Lexington Avenue, New York, New York 10022, Attn: Constance A. Fratianni, Esq. and Andrew V. Tenzer, Esq.; (iv) Moore Van Allen, PLLC, Attorneys for Bank of America, N.A. ("BofA"), David L. Eades, Esq. and Stephen E. Gruendel, Esq.; (v) Arnold Porter, 370 Seventeenth Street, Suite 4500, Denver, Colorado 80202-1307, Attention: Brian P. Leitch, and Cleary, Gottlieb, Steen Hamilton, Attorneys for TPG, One Liberty Plaza New York, N.Y. 10006, Attn: Michael L. Ryan, Esq. and Filip Moerman Esq.; (vi) Otterbourg, Steindler, Houston Rosen, P.C., lead counsel to the Creditors' Committee, Attn: Scott L. Hazan, Esq.; (vii) the Air Transportation Stabilization Board; (vii) the Debtors' 10 largest secured creditors and lessors; and (ix) all unions representing employees of the Debtors; (x) parties who have filed, prior to October 2, 2002, a request for service of notices in the Cases; and (xi) applicable state and local taxing authorities, to the extent practicable. Such notice constitutes good and sufficient notice of the Interim Hearing under the circumstances in accordance with Bankruptcy Rules 4001(c) and 4001(d) and section 102(1) of the Bankruptcy Code, as required by section 364(c) of the Bankruptcy Code in light of the nature of the relief requested in the Motion. No other notice need be given for entry of this Final Order.
U. Based upon the record presented to the Court by the Debtors at the Hearings, good and sufficient cause has been shown for the entry of this Final Order. Among other things, the entry of this Final Order is in the best interests of the Debtors, their creditors and their estates because it will enable the Debtors to: (i) continue the operation of their businesses; (ii) meet their obligations for payroll, necessary ordinary course expenditures, and other operating expenses; (iii) obtain needed goods and services; (iv) retain customer, supplier and employer confidence by demonstrating that they have the financial ability to maintain normal operations; (v) acquire and maintain adequate cash balances customary and necessary for companies of this size and in the industries in which they operate to maintain customer confidence, thereby avoiding harm to the Debtors' estates and allowing the orderly continuation of the Debtors' businesses; and (vi) retire the indebtedness under the First DIP Loan Documents.
NOW, based upon the Motion of the Debtors and the record before this Court with respect to the Motion made by the Debtors at the Hearings, and good cause appearing therefore,
IT IS ORDERED that:
APPROVAL OF AND AUTHORIZATION AS TO BORROWING AND SECURITY
1. Each of the Debtors is authorized to (and to the extent previously authorized in the Interim Order, such authorization is hereby reaffirmed as set forth herein) to:
(a) establish the RSA DIP Credit Facility on terms and conditions that are consistent with the DIP Loan Documents;
(b) execute and deliver to the Agents and any other party thereto each of the DIP Loan Documents to which such Debtor is a party;
(c) with respect to the Borrower, borrow up to $500,000,000 (the "Borrowing Amount"), with a sublimit of $50,000,000 with respect to letters of credit issued under the RSA DIP Credit Facility and, with respect to each Guarantor, to guaranty the Borrowing Amount, in each case on terms and conditions that are consistent with the DIP Loan Documents;
(d) make the non-refundable payments to the Agents, the Lenders, RSA and their respective affiliates, as the case may be, of the fees provided for in, and in accordance with, the DIP Loan Documents;
(e) pay all interest, fees and expenses payable to or on behalf of the Agents, as described in the Motion or the DIP Loan Documents; and
(f) use the proceeds of the DIP Loan Documents first to repay outstanding indebtedness under the First DIP Agreement.
2. The obligations of the Debtors hereunder and under the DIP Loan Documents shall be joint and several.
3. The RSA DIP Credit Agreement and each of the other DIP Loan Documents are hereby approved. The Debtors are hereby authorized and empowered (and to the extent previously authorized in the Interim Order, such authorization is hereby reaffirmed as set forth herein) to do and perform all acts and to make, execute and deliver the DIP Loan Documents and all instruments and documents which may be required or necessary for the performance by the Debtors under the DIP Loan Documents and the creation and perfection of the security for the Obligations described in and provided for by the DIP Loan Documents. The DIP Loan Documents shall be valid and enforceable against the Debtors and all other parties in accordance with the terms thereof. The Debtors are further authorized and empowered, without further approval of this Court, to execute and deliver one or more amendments to the DIP Loan Documents and shall provide five (5) business days prior written notice of any amendment to the Creditors' Committee and any other statutory committee that may be appointed in the Cases (each, a "Committee").
4. Subject to the Carve-Out, the Debtors are hereby authorized (and to the extent previously authorized in the Interim Order, such authorization is hereby reaffirmed as set forth herein) to grant to the Collateral Agent (for the ratable benefit of itself, the Administrative Agent and the Lenders), and, subject to the Carve-Out, the Collateral Agent is hereby granted (for the ratable benefit of itself, the Administrative Agent and the Lenders), pursuant to sections 364(c)(2) and 364(c)(3) of the Bankruptcy Code, valid, binding, enforceable and perfected security interests in and liens upon (collectively, the "Liens") all Collateral (as defined in the DIP Loan Documents whether or not such Collateral is specifically described in the term "Borrowing Base") to secure all of the Obligations, including, without limitation, (i) valid, perfected and enforceable first priority liens and security interests in all present and future assets (including, without limitation, tangible, intangible, real, personal, and mixed property, regardless of where located, and cash and cash equivalents) of the Debtors and their estates that are not subject to valid and perfected liens, other than Excluded Assets and Section 1110 Assets (as each is defined below), and (ii) valid, perfected and enforceable best priority available junior liens and security interests in all present and future assets of the Debtors and their estates that are subject to valid, perfected and nonavoidable liens other than (x) Excluded Assets and (y) any equipment of the type described in section 1110(a)(3)(A)(i) of the Bankruptcy Code with respect to which, and to the extent that, the lease, security agreement, mortgage, trust agreement or other instrument applicable to such equipment would prohibit such Debtor from granting a Lien to the Collateral Agent or the Lenders on such equipment ("Section 1110 Assets"). For the purposes hereof, the term "Excluded Assets" shall have the meaning specified in the RSA DIP Credit Agreement, it being understood that, if at any time any property of the Debtors that constituted an Excluded Asset ceases to constitute an Excluded Asset but continues to be property of the Debtors, then all of Debtors' right, title and interest in such property shall be deemed to be Collateral. Notwithstanding anything to the contrary in this Final Order, the RSA DIP Credit Agreement or any other Loan Document, the term Excluded Assets shall include (i) any passenger facilities charges ("PFCs") collected by the Debtors or the Debtors' Agents pursuant to 49 U.S.C. § 158, whether or not such PFCs are held in a trust account, (ii) any Security Service Fees collected by the Debtors or the Debtors' Agents constituting trust funds pursuant to 49 C.F.R. § 1510, whether or not such Security Service Fees are held in a trust account, and (iii) any passenger inspection user fees ("User Fees") collected by the Debtors or the Debtors' Agents pursuant to 21 U.S.C. § 136a; 8 U.S.C. § 1356; and/or 19 U.S.C. § 58c, whether or not such user fees are held in a trust account.
5. In order to facilitate a timely transfer, if any, of any Collateral comprised of operational authority conferred by the Federal Aviation Administration of the United States of America or any successor governmental authority (the "FAA") on the Borrower or any of its direct or indirect subsidiaries to conduct landing or takeoff operations each day during specific hour or 30 minute periods at Ronald Reagan Washington National Airport, Arlington, Virginia, and La Guardia Airport, New York, New York, pursuant to FAA regulations held by the Debtors (or substantially similar Collateral) (collectively, the "Slots"), the applicable Debtor is hereby authorized and directed (and to the extent previously authorized in the Interim Order, such authorization is hereby reaffirmed as set forth herein) to execute and deliver the Slot Security Agreement to the Collateral Agent and to execute and deliver, from time to time, blank, undated transfer documents with respect to each of the Slots, to be held in escrow by the Collateral Agent pending exercise by the Collateral Agent or the Lenders of any of their rights upon the occurrence and during the continuance of an Event of Default to foreclose upon or otherwise transfer or exercise rights or remedies with respect to any of the Slots in the manner set forth in Paragraph 23 below or establish such other structure as the Debtors and the Lenders may agree.
6. Subject to the Carve-Out and the Permitted Senior Liens (as defined in the RSA DIP Credit Agreement), the Liens to be created and granted to the Collateral Agent (for the ratable benefit of itself, the Administrative Agent and the Lenders), as provided in Paragraph 4 above, are (a) first priority Liens created pursuant to section 364(c)(2) of the Bankruptcy Code on all property of any Debtor's estate that on the Petition Date was not subject to a valid, perfected and nonavoidable lien on the Petition Date, other than the Excluded Assets and Section 1110 Assets, and (b) junior Liens created pursuant to section 364(c)(3) of the Bankruptcy Code on all property of any Debtor's estate that, on the Petition Date, was subject to a valid, perfected and nonavoidable lien on or becomes subject to a valid, nonavoidable lien perfected (but not granted) after the Petition Date to the extent such post-Petition Date perfection in respect of pre-petition claims is expressly permitted under the Bankruptcy Code and the DIP Loan Documents, other than the Excluded Assets and Section 1110 Assets; provided, however, that the Debtors, the Collateral Agent (on behalf of the Administrative Agent and the Lenders) acknowledge that (i) Goodrich Corporation Commercial Wheels and Brakes Division, Goodrich-Messier, Inc. (together, "Goodrich Wheels and Brakes") and Delavan Inc. ("Delavan"), claim that any property (the "Goodrich Spare Parts") provided to or delivered to the premises of any of the Debtors under the terms of any of the following agreements prior to or subsequent to the commencement of this Bankruptcy Case (a) is the property of Goodrich Wheels and Brakes and/or Delevan, (b) is not property of the estate, (c) is property that falls within the definition of Section 1110 Assets, and (d) is properly perfected under any relevant laws:
(a) Wheel and Brake Program Agreement, dated December 15, 1988, between US Air, Inc. and The BFG Goodrich Company Aerospace Division), as extended.
(b) B757 Wheel and Brake Program Agreement, dated December 1, 1993, between US Airways and The B.F. Goodrich Company (BF Goodrich Aerospace Commercial Wheel Brake Division), as extended.
(c) Airbus A319 and A320 Wheel and Brake Program Agreement, dated September 8, 1998 and expiring on September 8, 2008, between US Airways and The B.F. Goodrich Company (B.F. Goodrich Aerospace Commercial Wheel Brake Division).
(d) Airbus A321, A330 and A340 Wheel and Brake Program Agreement, dated September 1, 1999 and expiring on April 15, 2010, between US Airways and BFGoodrich-Messier, Inc.
(e) Fuel Nozzle Contract between Delavan Inc. and US Airways Express dated June 1, 1998.
and (ii) that Rohr Aero Services, Inc. ("Rohr Aero") claims to hold mechanics liens in property (the "Rohr Aero Spare Parts") delivered to the Debtors prior to and subsequent to the commencement of this Bankruptcy Case. The Debtors and the Collateral Agent, Goodrich Wheels and Brakes, Delavan and Rohr Aero agree that (i) neither the entry of this Order nor the relief otherwise granted under adjudicates, estops, or precludes Goodrich Wheels and Brakes, Delavan or Rohr Aero from seeking a determination by the Court that the Goodrich Spare Parts and Rohr Aero Spare Parts are not subject to or subordinate to the Lien granted under this Order or from seeking further relief, adequate protection or any other relief with regard to any goods or services provided to the Debtors after August 11, 2002 and (ii) neither entry of this order nor the acknowledgment made by the Debtors and the Collateral Agent in this paragraph 6 prohibits the Collateral Agent or the Debtors from raising any defense or counter-argument to any such claim. In addition, the Liens granted to the Collateral Agent (for the ratable benefit of itself, the Administrative Agent and the Lenders) are senior to any liens (other than Permitted Senior Liens, any post petition liens granted to Goodrich Wheels and Brakes for goods or services provided to the Debtors pursuant to the Goodrich Wheels and Brakes Agreements (which liens the Debtors are hereby authorized and permitted to grant under the terms of those agreements) and liens described in the last sentence of this Paragraph 6) arising after the date of the RSA DIP Credit Agreement (including, without limitation, any liens or security interests granted in favor of any domestic or foreign federal, state, municipal or other governmental unit, commission, board or court for any liability of the Debtors). No other claim or lien having a priority superior to or pari passu with those granted by this Final Order and the DIP Loan Documents to the Collateral Agent and the Lenders shall be granted or allowed while any portion of the Obligations arising under the RSA DIP Credit Facility remain outstanding, except for Permitted Senior Liens, the Carve-Out and for any other liens which are approved by order of the Court and which are expressly permitted by the DIP Loan Documents. Notwithstanding the foregoing, a possessory lien arising postpetition shall be entitled to the priority afforded such possessory lien under applicable non-bankruptcy law.
7. (a) Nothing in the DIP Loan Documents or in this or any other order entered in connection with the DIP Loan Documents (any such order, a "Financing Order"), (i) shall constitute a waiver, forbearance or adjudication of the rights of any secured party, lessor or vendor, or of any agent for any such entity (including, without limitation, any servicer or beneficial owner of any lessor and including, to the extent applicable, RSA in its capacity as a secured party, lessor or vendor under any aircraft lease or mortgage) (in each case, an "1110 Beneficiary") under section 1110 of the Bankruptcy Code; or (ii) shall prejudice, limit, or otherwise affect any rights of any 1110 Beneficiary or other entity under section 1110 of the Bankruptcy Code, all of which rights are expressly preserved.
(b) Notwithstanding any provision to the contrary in any Financing Order or in the DIP Loan Documents, to the extent prohibited or restricted under an applicable lease, security agreement, conditional sales agreement or other agreement (an "1110 Agreement") with respect to 1110 Property (as defined below), neither the Agents, the Lenders nor any participant with or successor to the Agents or the Lenders (i) shall be granted or shall have, and the Debtors likewise shall not grant, a security interest in or lien on (A) any Section 1110 Assets, as defined in the DIP Agreement (including, without limitation, parts and spare parts which are or become the property of, or subject to a lien or security interest in favor of, the relevant 1110 Beneficiary in accordance with the applicable 1110 Agreement), (B) any lease of, or any Debtor's leasehold interest in, any such Assets, or (C) any other property which is subject to the rights of an 1110 Beneficiary under Section 1110 of the Bankruptcy Code (the property described in this clause (i) being herein collectively referred to as "1110 Property"); (ii) shall be listed as loss payee or as additional insured on any insurance policy which the Debtors are obligated to any 1110 Beneficiary to obtain or maintain on or with respect to any 1110 Property; (iii) shall be entitled to exercise, assert or otherwise have the benefit of any rights or interests of any Debtor under any lease of 1110 Property, including rights, or interests in, or to any sums payable to, any Debtor under any lease of 1110 Property and rights or interests in or to any property held under such lease; or (iv) shall be given, and the Debtors likewise shall not place, placards or other indicia of security interests or liens in or on any 1110 Property in favor of the Agents, the Lenders or any participant with or successor to the Agents or the Lenders.
(c) Notwithstanding the provisions of subparagraph (b) of this paragraph 7, to the extent permitted by the terms of the applicable 1110 Agreement, the Agents, the Lenders and any participant with or successor to the Agents or the Lenders shall have a lien on all parts and spare parts which become property of the Debtors, or are released from a lien or security interest in favor of an 1110 Beneficiary, upon or after removal from any 1110 Property in accordance with the applicable 1110 Agreement.
(d) As promptly as reasonably practicable, the Agents and the Lenders shall remove any liens of record which have been filed on their behalf against any 1110 Property (including, without limitation, any filings under the Uniform Commercial Code of any state or with the Federal Aviation Administration).
(e) The terms of this paragraph may not be amended or superseded without the prior written consent of any affected 1110 Beneficiary.
8. To the extent that the Debtors receive or have received payments from the Transportation Security Administration (the "TSA") for security and related services provided by third parties (including Argenbright Security, Inc.) contracted for by the Debtors to which the TSA is responsible for payment under Title 49 of the Code of Federal Regulations of 2002, Chapter XII, Part 1510 and/or an agreement with the Debtors for which the Debtors have not paid such third parties, the Debtors recognize and agree that such payments by the TSA are not property of these estates and, therefore, do not constitute Collateral and are not included in the property upon which the Debtors' post-petition lenders have been granted liens and security interests. In accordance with this understanding, the Debtors, therefore, agree that they will remit amounts received and to be received from the TSA to the third parties (including Argenbright) promptly after entry of this order to the extent payment has already been received or promptly after any future payment is received from the TSA irrespective of whether the services were rendered by such third party prior to or since the commencement of these cases. To the extent that the TSA remits a payment to the Debtors that is insufficient to pay all invoices delivered to the TSA by the Debtors for which payment is due to third party providers for security and related services (including Argenbright), the Debtors shall pay each third party provider its pro rata share of such payment from the TSA on an invoice-by-invoice basis after first taking into account payments already made by the Debtors to such third party providers on account of such invoices. For the avoidance of doubt, and by way of example, if the Debtors are owed $3,000,000 by the TSA for the performance of security and related services by third parties and $300,000 is owed to one third party provider and the Debtors receive a payment of $1,000,000 from the TSA, then the Debtors shall remit to each party a pro rata payment and such third party provider shall receive $100,000 in partial payment of its outstanding invoices. This payment would be a partial payment and such third party provider would be entitled to receive further payments received by the Debtors from the TSA until its invoices are paid in full.
9. The automatic stay imposed under section 362(a) of the Bankruptcy Code is hereby lifted (and to the extent previously authorized in the Interim Order, such authorization is hereby reaffirmed as set forth herein) to the extent necessary to permit (i) the Debtors to grant the Liens and to perform the Debtors' liabilities and Obligations to the Agents, the Lenders and RSA under the DIP Loan Documents, (ii) the delivery by the Administrative Agent of an Enforcement Notice (as defined below), and (iii) the exercise of the rights or remedies by an Agent following an Event of Default in accordance with Paragraph 23 below.
(a) Except as otherwise agreed in writing between the Debtors and the Administrative Agent, the Debtors shall use advances under the RSA DIP Credit Facility or proceeds of any Collateral only as provided in the DIP Loan Documents, including, without limitation, to repay the outstanding indebtedness under the First DIP Agreement. For purposes of this Final Order, "proceeds" of any Collateral shall mean proceeds (as defined in the Uniform Commercial Code) of such Collateral as well as (i) any and all proceeds of any insurance, indemnity or warranty or guaranty payable to the Debtors from time to time with respect to any of such Collateral, (ii) any and all payments (in any form whatsoever) made or due and payable to the Debtors in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of such Collateral by any governmental body, authority, bureau or agency (or any person under color of governmental authority), and (iii) any other payments, dividends, interest or other distributions on or in respect of any of such Collateral.
(b) The Debtors shall not be permitted to make any payments on any pre-petition debt prior to the effective date of a plan of reorganization except (A) with respect to the pre-petition obligations as set forth and authorized to be paid in this Final Order and/or the Interim Order, in the orders entered with respect to the Debtors' motions filed on the Petition Date or on August 12, 2002, or as otherwise permitted and authorized by orders previously entered by this Court or subsequently entered with the Administrative Agent's consent, (B) as otherwise permitted by in the DIP Loan Documents or (C) to provide a cure payment to any third party, in each case to the extent permitted by the Bankruptcy Code or this Court.
10. In addition to being secured by the Liens granted herein, the Obligations under the RSA DIP Credit Facility shall be an allowed administrative expense claims with priority, subject only to the Carve-Out under section 364(c)(1) of the Bankruptcy Code, over all administrative expense claims and unsecured claims against the Debtors, now existing or hereafter arising, of any kind or nature whatsoever, including, without limitation, administrative expenses of the kinds specified in or ordered pursuant to sections 105, 326, 328, 330, 331, 503(a), 503(b), 507(a), 507(b), 546(c), and 1114 of the Bankruptcy Code (the "Super-Priority Claim"); provided, however, that such Super-Priority Claim shall not extend to the proceeds of avoidance actions under Chapter 5 of the Bankruptcy Code.
11. All amounts applied to the payment of the Obligations under the RSA DIP Credit Facility shall be applied thereto in the manner set forth in the DIP Loan Documents.
12. (a) This Order shall be sufficient and conclusive evidence of the validity, perfection, and priority of the Collateral Agent's Liens (for the ratable benefit of itself, the Administrative Agent and the Lenders) upon the Collateral to secure all Obligations, and any and all security interests and liens granted under this Final Order or the DIP Loan Documents are perfected immediately and without further act or deed, including the necessity of the execution by the Debtors, or the filings, recording or noticing, of financing statements, mortgages, deeds of trust, notices of lien, aircraft mortgages, security agreements, or other filing or recordings customarily made or which may otherwise be made or required under the law of any jurisdiction or the taking of any other action to validate or perfect the Liens of the Collateral Agent upon the Collateral, or to entitle the Collateral Agent and Lenders to the priority granted herein (including, in respect of cash or cash equivalents, any requirement that the Collateral Agent or a Lender have possession of, or dominion and control over, any such cash or cash equivalents in order to perfect an interest therein); provided that the Debtors may execute and the Collateral Agent may file or record financing statements, mortgages or other instruments to evidence and perfect the Liens authorized hereby; and provided further that no such filing or recordation shall be necessary or required in order to evidence, create or perfect any such Lien.
(b) The Debtors (i) hereby are authorized and directed (and to the extent previously authorized in the Interim Order, such authorization is hereby reaffirmed as set forth herein) to pay all reasonable costs, fees and out-of-pocket expenses of the Agents, including without limitation reasonable costs, fees and expenses incurred in connection with the negotiation, documentation and administration of the RSA DIP Credit Facility and the matters set forth in this Final Order and all other matters arising under or in connection with the Cases, and all reasonable attorneys' fees and expenses and financial advisors' fees and expenses incurred by the Agents in connection therewith, and (ii) shall promptly reimburse (and to the extent previously authorized in the Interim Order, such authorization is hereby reaffirmed as set forth herein) the Agents for such other costs and expenses provided for in the DIP Loan Documents. None of such costs and expenses shall be subject to the approval of this Court, and no recipient of any such payment shall be required to file with respect thereto any interim or final fee application with this Court.
13. Each officer or authorized signatory of the Debtors as may be so authorized by resolutions of the Board of Directors or shareholders of each of the Debtors, acting singly, is hereby authorized (and to the extent previously authorized in the Interim Order, such authorization is hereby reaffirmed as set forth herein) to execute and deliver each of the DIP Loan Documents, such execution and delivery to be conclusive of their respective authority to act in the name of and on behalf of the Debtors.
14. The Collateral Agent may file a xerographic copy of this Final Order as a mortgage, financing statement or similar perfection document with any recording officer designated to file financing statements or with any registry of deeds or similar office in any jurisdiction in which any of the Debtors have real or personal property.
15. The RSA DIP Credit Agreement and each of the DIP Loan Documents shall constitute and evidence the valid and binding Obligations of each of the Debtors, which Obligations shall be enforceable against each of the Debtors in accordance with the terms thereof and this Final Order.
16. Interest on the Obligations under the RSA DIP Credit Facility shall accrue at the rates (including applicable default rates) and shall be paid at the times as provided in the DIP Loan Documents. All Obligations under the RSA DIP Credit Facility shall become due and payable, without notice or demand, on the Termination Date (as defined below).
17. Other than as permitted by the Interim Order and the Final Order and the RSA DIP Credit Agreement (including, but not limited to, the Permitted Senior Liens and the Carve-Out (as defined below)), no costs or expenses of administration, including, without limitation, professional fees allowed and payable under sections 330 and 331 of the Bankruptcy Code that have been or may be incurred in these Cases, and no priority claims with respect to or relating to the Collateral are, or will be, prior to or on a parity with (a) the Obligations under the DIP Loan Documents or (b) the Super-Priority Claim.
18. (a) The term "Carve-Out" means a carveout from the Liens and Super-Priority Claim granted to the Administrative Agent and Collateral Agent and the Lenders pursuant to the DIP Loan Documents, the Interim Order and this Final Order for expenses arising from claims in the Cases of the following parties for the following amounts: (i) quarterly fees required to be paid to the United States Trustee pursuant to 28 U.S.C. § 1930(a)(6) and any fees payable to the Clerk of the Court and (ii) (A) allowed (whether by interim or final order or pursuant to monthly compensation procedures authorized by the Court) professional fees and disbursements incurred by the professionals retained, pursuant to section 327(a) or (e) of the Bankruptcy Code under a general retainer (excepting ordinary course professionals) or 1103(a), by the Debtors and any statutory committee, and expenses allowed under section 503(b)(3)(F) of the Bankruptcy Code, which collectively may not exceed $5,000,000 in the aggregate, inclusive of any holdbacks required by the Court for post-Event of Default services, plus unpaid professional fees and disbursements incurred or accrued prior to the occurrence and continuance of an Event of Default and the triggering of the Carve-Out as provided below, to the extent previously or subsequently allowed (whether by interim or final order or pursuant to monthly compensation procedures authorized by the Court); provided no fees or disbursements which are incurred or have accrued prior to the delivery to the Borrower, counsel to any Committee and the Court of a written notice by the Administrative Agent and the Collateral Agent of an Event of Default and the triggering of the Carve-Out shall reduce the gross amount of the Carve-Out.
(b) The Carve-Out shall not include, apply to or be available for any fees or expenses incurred by any party, including the Debtors, any Committee, or any of their respective professionals, in connection with the investigation (including discovery proceedings), initiation or prosecution of any claims, causes of action, adversary proceedings or other litigation against the Administrative Agent, the Collateral Agent, or the Lenders in connection with the DIP Loan Documents, the Interim Order and this Final Order including challenging the amount, validity, perfection, priority or enforceability of or asserting any defense, counterclaim or offset to, the obligations thereunder or the security interests granted thereby and Liens of the Administrative Agent, the Collateral Agent, and the Lenders in respect thereof.
(c) So long as no Event of Default shall have occurred and be continuing under the DIP Loan Documents, the Debtors shall be permitted to pay administrative expenses of the kind specified in section 503(b) of the Bankruptcy Code incurred in the ordinary course of business of the Debtors, subject to the limitations set forth in Paragraph 17 above, as the same may be due and payable.
19. No cost or expense which is incurred by the Debtors in connection with or on account of the preservation or disposition of any Collateral or which otherwise could be chargeable to the Agents or the Collateral pursuant to section 506(c) of the Bankruptcy Code or otherwise, shall be chargeable to the Agents or the Collateral, except for the Carve-Out.
20. Without limiting the provisions and protections of Paragraph 18 above, if at any time prior to (i) the indefeasible payment in full in cash of all Obligations under the RSA DIP Credit Facility (other than contingent indemnification obligations), and (ii) the termination of the Commitments, any Debtor or any trustee subsequently appointed shall obtain credit or incur debt pursuant to section 364(c) or 364(d) of the Bankruptcy Code and outside of the applicable Debtor's ordinary course of business, then, to the extent required by the DIP Loan Documents, all of the cash consideration for such credit or debt shall immediately be applied to the indefeasible payment in full in cash of the Obligations under the RSA DIP Credit Facility (including cash collateralization of outstanding Letters of Credit) in accordance with the DIP Loan Documents.
21. All Obligations of the Debtors to the Agents and the Lenders under the RSA DIP Credit Facility are due and payable, without notice and demand, upon the earliest of (the "Termination Date"):
(a) September 30, 2003 (unless such date is otherwise extended pursuant to and in accordance with the RSA DIP Credit Agreement);
(b) the date of termination in whole of the Term Commitments, the Revolving Credit Commitments and the Letter of Credit Sublimit pursuant to Section 2.06 or 8.02(b) of the RSA DIP Credit Agreement; or
(c) the effective date of a reorganization plan.
Unless and until the Obligations (other than contingent Obligations) under the DIP Loan Documents are unconditionally and indefeasibly paid in full in cash and the commitments thereunder have been terminated, the protections afforded to the Agents and the Lenders under the DIP Loan Documents and this Final Order, and any actions taken pursuant thereto and hereto, and the Carve-Out (as to pre-conversion or pre-plan effective date services), shall survive the entry of any order (a) confirming any plan of reorganization in any of the Chapter 11 Cases (and, to the extent not satisfied in full, the Obligations shall not be discharged by entry of any such order, or pursuant to the Bankruptcy Code section 1141(d)(4), each of the Debtors having waived such discharge), (b) converting any Case to a case under chapter 7 of the Bankruptcy Code, or (c) dismissing any Case, and the terms and provisions of this Final Order as well as the Super-Priority Claim and Liens granted pursuant to this Final Order and the DIP Loan Documents shall continue in full force and effect notwithstanding the entry of any such order, and such Super-Priority Claim and Liens shall maintain their priority as provided by this Final Order and to the maximum extent permitted by law until all Obligations are indefeasibly paid in full and discharged. This Order shall bind any trustee hereafter appointed for the estate of any of the Debtors, whether in any of the Cases or in the event of the conversion of any Case to a case under chapter 7 of the Bankruptcy Code.
22. The time and manner of payment of the Obligations pursuant to the DIP Loan Documents and the Liens upon the Collateral and the Super-Priority Claim provided for herein shall not be altered or impaired by any plan or plans of reorganization which hereafter may be confirmed or by any further order which hereafter may be entered, in each case without the prior written consent of the RSA.
REMEDIES UPON AN EVENT OF DEFAULT
23. Upon the occurrence and during the continuance of an Event of Default, the Required Lenders may, at their option, terminate the RSA DIP Credit Facility and declare all Obligations outstanding immediately due and payable and, upon five (5) business days prior written notice, unless an Event of Default arises as a result of a breach of the minimum Liquidity covenant in which case upon three (3) business days prior written notice (any such notice, an "Enforcement Notice") to the Debtors, the United States Trustee, any Committee, and RSA, shall be entitled to exercise any of their rights and remedies hereunder or under the DIP Loan Documents or applicable law in order to effect repayment of the Obligations or to receive any amounts or remittances due in connection therewith, including without limitation (1) foreclosing upon and selling all or a portion of the Collateral or (2) setting off amounts held in any deposit accounts with, subject to the control of, or the subject of a control agreement with, either of the Agents or any Lender and applying against amounts outstanding under the DIP Loan Documents and requiring all collected funds to be tendered to the Collateral Agent for application against such outstanding amounts, and without further Order of this Court, exercise such rights and remedies as to all or such part of the Collateral as the Collateral Agent and the Required Lenders (as defined in the RSA DIP Credit Agreement) may elect at their option. Such Enforcement Notice shall also be filed with this Court. Notwithstanding the occurrence of an Event of Default or the Termination Date or anything herein, all of the rights, remedies, benefits and protections provided to the Agents and the Lenders under this Final Order and the Loan Documents shall survive the Termination Date.
24. The Debtors hereby waive any right to seek relief under the Bankruptcy Code, including, without limitation, under section 105 of the Bankruptcy Code, to the extent such relief would restrict or impair the rights and remedies of the Agents or the Lenders set forth in this Final Order or in any of the DIP Loan Documents. In the event that any party requests a hearing seeking to prevent the Agents or the Lenders from exercising any of their rights and remedies that arise after an Event of Default, the sole issue that may be raised or argued by the Debtors before this Court at such hearing shall be whether an Event of Default has occurred and has not been cured. No other issue or argument of the Debtors shall be relevant to any opposition by the Debtors to enforcement of the Agents' and Lenders' rights.
25. Pursuant to the Interim Order and as reaffirmed in this Final Order, the Agent and the Lenders shall be and shall be deemed to be, without any further action or notice, named as additional insureds on each insurance policy maintained by the Debtors which in any way relates to the Collateral.
26. Without prejudice to the rights of any other party, including any Committee, the Debtors have waived any and all claims and causes of action against the Administrative Agent, the Collateral Agent and Lenders, and their respective affiliates, directly related to the RSA DIP Credit Facility or the negotiation of the terms thereof.
27. In no event shall the Agents be subject to the equitable doctrine of "marshaling" or any similar doctrine with respect to the Collateral. In addition, immediately following the occurrence and during the continuance of any Event of Default:
(a) the Debtors shall continue to deliver and cause the delivery of the proceeds of Collateral to the Collateral Agent, as provided in the DIP Loan Documents;
(b) the Collateral Agent shall continue to apply such proceeds in accordance with the provisions of the DIP Loan Documents and this Final Order; and
(c) subject to the giving of an Enforcement Notice and upon the request or consent of the Required Lenders, any obligation otherwise imposed on the Agents or the Lenders to provide any loan or advance pursuant to the DIP Loan Documents shall be terminated; provided, however, that the giving of an Enforcement Notice shall not be required to suspend or terminate the making of loans and/or advances under the DIP Loan Documents.
28. Without in any way limiting the rights of the Lenders and the Agents under the DIP Loan Documents, nothing included herein shall prejudice, impair, or otherwise affect the rights of the Agents or the Lenders to seek any other or supplemental relief in respect of the Debtors consistent with and subject to the provisions of this Final Order, including the Agents' or the Lenders' rights or remedies, as provided in the DIP Loan Documents during the continuance of a default or an Event of Default, to seek to limit the Debtors' use of cash collateral, or to suspend or terminate the making of loans and/or advances under the DIP Loan Documents.
MISCELLANEOUS PROVISIONS
29. If any provision of this Final Order is hereafter modified, vacated or stayed by subsequent order of this or any other Court for any reason, such modification, vacation, or stay shall not affect (i) the validity of any Obligation incurred pursuant to the DIP Loan Documents, the Interim Order or this Final Order and prior to the later of (a) the effective date of such modification, vacation, or stay, or (b) the entry of the order pursuant to which such modification, vacation, or stay was established, or (ii) the validity, priority, or enforceability of any Lien or Super-Priority Claim granted by the Debtors to the Collateral Agent or authorized herein. The validity, priority and enforceability of any credit extended or security interest or lien granted or perfected pursuant to the DIP Loan Documents, the Interim Order or this Final Order is subject to the protection accorded under section 364(e) of the Bankruptcy Code.
30. The Liens and Super-Priority Claim granted to the Collateral Agent under the DIP Loan Documents, the Interim Order and this Final Order, and the priority thereof, and any payments made pursuant thereto, shall be binding (subject to the terms of this Final Order) on the Debtors and any successor trustee for the Debtors to the fullest extent permitted by applicable law.
31. Any Agent's or any Lender's failure to seek relief or otherwise exercise its rights and remedies under the DIP Loan Documents, the Interim Order or this Final Order shall not constitute a waiver of any of the Agent's or any Lender's rights hereunder, thereunder, or otherwise.
32. In the event of any inconsistency between the terms and conditions of the DIP Loan Documents and the provisions of this Final Order, or between the Interim Order and this Final Order, the provisions of this Final Order shall govern and control.
33. Any existing or future direct or indirect subsidiary of the Borrower that is not a CFC (as defined in the RSA DIP Credit Agreement) and hereafter becomes a debtor in a case under chapter 11 of the Bankruptcy Code in this Court shall automatically, immediately upon the filing of a petition for relief for such subsidiary, be deemed to be one of the Guarantors hereunder in all respects, and all the terms and provisions of this Final Order, including, without limitation, those provisions granting security interests in, and Liens on, the Collateral, and Super-Priority Claims in each of the Debtor's chapter 11 cases, shall immediately be applicable in all respects to such subsidiary and its chapter 11 estate. Notwithstanding the foregoing, Airways Assurance Limited shall not be a Guarantor.
34. Notwithstanding anything in this Final Order, the RSA DIP Credit Agreement, or other DIP Loan Documents to the contrary, the Debtors may, in the ordinary course of their business, obtain letters of credit, surety bonds or other similar financial accommodations without further order of this Court. With respect to letters of credit, the Borrower or Guarantors may obtain letters of credit from BofA and PNC Bank, N.A. ("PNC") or other financial institution (each an "L/C Issuer" and collectively, the "L/C Issuers") in accordance with sections 7.03(c)(viii) and (xi) of the RSA DIP Credit Agreement on the following terms:
(a) Each L/C Issuer may in its discretion issue letters of credit in accordance with such L/C Issuer's business practice and may request or demand that such letters of credit (and any associated loss, cost, expense or unpaid premium) be secured by a perfected first priority lien on cash deposits (or other cash equivalents) ("L/C Cash Collateral");
(b) An L/C Issuer shall be entitled to the benefits of section 364(d) of the Bankruptcy Code and have a perfected first priority lien and security interest on L/C Cash Collateral held or under control of an L/C Issuer until such L/C Issuer is presented with competent written evidence satisfactory to such L/C Issuer of discharge of all letters of credit and no outstanding loss, cost, expense, or unpaid premium exists with regard to such letters of credit.
(c) The Debtors are authorized to execute and deliver all instruments and documents and pay all ordinary and customary fees that may be reasonably necessary or desirable to obtain or maintain the letters of credit authorized by this Final Order;
(d) To the extent of any draw upon any letter of credit, the automatic stay pursuant to section 362 of the Bankruptcy Code is vacated and the L/C Issuer that issued the drawn upon letter of credit is authorized to liquidate any L/C Cash Collateral held or under control of such L/C Issuer in order to repay obligations related to any such drawn upon letter of credit, whether incurred prior to or after the Petition Date without further order of the Court and regardless of whether the Letter of Credit was issued prior to or after the Petition Date (such payment obligations may include interest, commissions, charges and expenses, including attorneys' fees and costs related to each Letter of Credit, and such obligations shall be entitled to administrative priority under section 507(a) of the Bankruptcy Code);
(e) Each L/C Issuer shall be entitled to the full protection of section 364(e) of the Bankruptcy Code with respect to any obligations and/or liens created, adjudicated or authorized by this Final Order in the event that this Final Order or any portion of such Final Order is later stayed, vacated, reversed, or modified on appeal (it being further understood that if any or all of the provisions of this Final Order are hereafter modified, vacated, amended or stayed by subsequent order of this Court or any other court, such modification, vacation, amendment or stay shall not affect the validity of any obligation to an L/C Issuer that is or was incurred prior to the effective date of such modification, vacation, amendment or stay, or the validity and enforceability of any security interest, lien or priority authorized or created by this Final Order or any agreement between the Debtors and an L/C Issuer (an "L/C Agreement") and, notwithstanding any such modification, vacation, amendment or stay, any obligations of the Debtors pursuant to this Final Order or any L/C Agreement arising prior to the effective date of such modification, vacation, amendment or stay shall be governed in all respects by the original provisions of this Final Order and any L/C Agreement, and the validity of any such credit extended or security interest or lien granted pursuant to this Final Order or any L/C Agreement is entitled to the full protection accorded under section 364(e) of the Bankruptcy Code);
(f) Each L/C Agreement under which letters of credit are issued or renewed after the Petition Date pursuant to this paragraph 34 shall be Post-Petition Obligations (as defined in the RSA DIP Credit Agreement).
35. Notwithstanding anything in the RSA DIP Credit Agreement, other DIP Loan Documents or the provisions of Paragraph 6 above to the contrary, the Borrower and Guarantors are authorized to: (i) enter into and perform fuel hedging transactions ("Swap Transactions") under Master Agreements (as defined in the RSA DIP Credit Agreement); (ii) make periodic cash payments with respect to such Swap Transactions; (iii) post cash collateral (the "Swap Cash Collateral") to counterparties (each a "Swap Counterparty") pursuant to the provisions of any such Master Agreement and/or Credit Support Annex (as defined in the RSA DIP Credit Agreement), such Swap Cash Collateral to be held by each respective Swap Counterparty or an agent or custodian thereof, and (iv) grant each Swap Counterparty a first priority lien and security interest in Swap Cash Collateral pursuant to section 364(d) of the Bankruptcy Code senior to the lien granted to the Lenders hereunder, provided that such Swap Cash Collateral shall not exceed $45,000,000, in the aggregate, which amount shall be subject to further increase upon the written consent of the Lenders, and five (5) business days prior written notice to the Creditors' Committee, without further approval by this Court.
36. Any lien granted to the Agents or the Lenders hereunder shall be subject to the rights of the Massachusetts Port Authority ("MPA") to challenge any secondary pledge or assignment of any of the leases and/or licenses of MPA. Each of MPA, the Agents, the Lenders and the Debtors reserve all of their respective rights under any such leases or licenses. MPA shall be provided with notice of the Lenders' intent to exercise any remedies hereunder with respect to any such leases or licenses as required thereunder or under applicable bankruptcy or non-bankruptcy law.
37. This Order shall constitute findings of fact and conclusions of law and shall take effect and be fully enforceable immediately upon execution hereof.
SO ORDERED by the Court this day of November, 2002.
SEEN AND AGREED TO:
By: /s/ John K. Lyons John Wm. Butler, Jr. John K. Lyons SKADDEN, APRS, SLATE, MEAGHER FLOM (ILLINOIS) 333 West Wacker Drive, Suite 2100 Chicago, Illinois 60606-1285 (312) 407-0700
— and —
By: /s/ Douglas M. Foley Lawrence E. Rifken (VSB No. 29037) Douglas M. Foley (VSB No. 34364) McGUIREWOODS LLP 1750 Tysons Boulevard, Suite 1800 McLean, Virginia 22102-4215 (703) 712-5000 Attorneys for Debtors and Debtors-in-Possession
By: /s/ Lorraine S. McGowen Lorraine S. McGowen ORRICK, HERRINGTON SUTCLIFFE, LLP 666 Fifth Avenue New York, New York 10103 (212) 506-5000
By: /s/ James R. Schroll James R. Schroll (VSB No. 19646) BEAN, KINNEY KORMAN, P.C. 2000 North 14th Street, Suite 100 Arlington, Virginia 22201 (703) 525-4000
Attorneys for RETIREMENT SYSTEMS OF ALABAMA HOLDINGS LLC; THE RETIREMENT SYSTEMS OF ALABAMA; THE TEACHERS' RETIREMENT SYSTEM OF ALABAMA; and 34 THE EMPLOYEES' RETIREMENT SYSTEM OF ALABAMA