Opinion
Case Nos. 02-83984-SSM (Jointly Administered)
August 12, 2002
Upon the motion, dated August 11, 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"):
(a) seeking this Court's authorization 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 (the "DIP Credit Facility") in accordance with the terms and conditions set forth in (i) that certain Commitment Letter attached hereto as Exhibit A (including, without limitation, the term sheet attached thereto and as amended, the "Commitment Letter"; any capitalized term not otherwise defined herein shall have the meaning given to such term in the Commitment Letter) and pursuant to a Credit Agreement (the "DIP Loan Agreement") to be negotiated in accordance with, and to contain terms set forth in and not inconsistent with the Commitment Letter among the Borrower, the Guarantors, Credit Suisse First Boston, Cayman Islands Branch or any affiliate thereof ("CSFB"), for itself and as Administrative Agent (in such capacity, the "Administrative Agent"), Bank of America, N.A., for itself and as Collateral Agent (in such capacity, the "Collateral Agent", and together with the Administrative Agent, the "Agents"), and CSFB or another Lender acceptable to CSFB, as Initial L/C Issuer (the "Initial L/C Issuer"), and certain other banks, financial institutions and institutional lenders acceptable to the Administrative Agent (together with the Initial L/C Issuer, the "Lenders") to be arranged by CSFB, 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 Memorandum of Understanding Relating to Participation in the DIP Facilities of and Investment in US Airways Group, Inc., dated August 10, 2002, by and between TPG Partners III, L.P. ("TPG") and the Borrower (the "MOU") pursuant to which TPG has agreed to participate in the DIP Credit Facility either (A) as a Lender or (B) by providing credit support by guarantying and arranging for funding of a "TPG Substitute Lender" in accordance with the terms and conditions set forth therein;
(b) seeking this Court's authorization 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, TPG 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 DIP Loan Agreement (the DIP Loan Agreement, and all such instruments and documents as may be executed and delivered in connection therewith or which relate thereto are referred to herein collectively as the "DIP Loan Documents"), as supplemented by this 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, TPG 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
(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 no official committee of unsecured creditors has been formed as of the date hereof.
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. An immediate need exists 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 immediately and irreparably 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.
E. The Debtors have attempted, in good faith, to obtain interim 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.
F. The Debtors are able to obtain sufficient credit only pursuant to a combination of sections 364(c)(1), 364(c)(2) and 364(c)(3) of the Bankruptcy Code except under the terms and conditions provided in the Commitment Letter, the MOU and this 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 Order.
G. 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.
H. 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.
I. It is in the best interest of Debtors' estates to establish the DIP Credit Facility contemplated by the Commitment Letter.
J. The terms and conditions of the DIP Credit Facility, as described in the Commitment Letter and the Motion, and as described to the Court at the hearing on the Motion, including those which provide for the payment of interest to, and fees of, the Agents, TPG, Bank of America, N.A. and the Lenders at the times and in the manner provided under the Commitment Letter, the Fee Letter and that certain Letter Agreement, dated as of August 10, 2002, between the Borrower, Bank of America, N.A. and CSFB (the "BofA Letter Agreement") 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.
K. The Commitment Letter, the Fee Letter, the BofA Letter Agreement and the provisions of the MOU set forth in Paragraph 28 below were negotiated in good faith and at arm's length between the Debtors, on the one hand, and the Agents, the Lenders, and TPG on the other hand. Credit to be extended under the Commitment Letter and the DIP Credit Facility will be so extended in good faith, in consequence of which the Agents, the Lenders, and TPG are entitled to the protection and benefits of section 364(e) of the Bankruptcy Code.
L. Notice of the hearing (the "Interim 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) Shearman Sterling, Attorneys for the Administrative Agent (on behalf of themselves and the Lenders), 599 Lexington Avenue, New York, New York 10022, Attn: Constance A. Fratianni, Esq. and Andrew V. Tenzer, Esq.; (iii) Moore Van Allen, PLLC, Attorneys for the Collateral Agent, David L. Eades, Esq. and Stephen E. Gruendel, Esq.; (iv) 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.; (v) the thirty (30) largest unsecured creditors of the Debtors at their last known addresses; (vi) the Air Transportation Stabilization Board; (vii) the Debtors' 10 largest secured creditors and lessors; and (viii) all unions representing employees of the Debtors (collectively, the "Initial Notice Parties"). 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 emergency nature of the relief requested in the Motion. No other notice need be given for entry of this Order.
M. The Debtors have requested immediate entry of this Order pursuant to Bankruptcy Rule 4001(c)(2). Good and sufficient cause has been shown for the entry of this Order. Among other things, the entry of this 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; and (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 immediate and irreparable harm to the Debtors' estates and to allow the orderly continuation of the Debtors' businesses.
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 Interim Hearing, and good cause appearing therefor,
IT IS ORDERED that:
APPROVAL OF AND AUTHORIZATION AS TO BORROWING AND SECURITY
1. Each of the Debtors is authorized to:
(a) establish the DIP Credit Facility on terms and conditions that are consistent with the Commitment Letter;
(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 $75,000,000 (the "Interim Borrowing Amount") and, with respect to each Guarantor, to guaranty the Interim Borrowing Amount, in each case on terms and conditions that are consistent with the Commitment Letter and the DIP Loan Documents, pending the entry of a Final Order;
(d) make the non-refundable payments to the Agents, the Lenders, TPG and their respective affiliates, as the case may be, of the fees provided for in, and in accordance with, the Commitment Letter and the MOU, the DIP Loan Documents, the Fee Letter, and the BofA Letter Agreement; and
(e) pay all fees and expenses payable to or on behalf of the Agents, as described in the Motion, the Commitment Letter or the other documents referenced in the preceding clause (d).
2. The obligations of the Debtors hereunder and under the DIP Loan Documents shall be joint and several.
3. The Debtors are hereby authorized and empowered 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 Commitment Letter and the creation and perfection of the security for the Obligations described in and provided for by the Commitment Letter. 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 Commitment Letter and the DIP Loan Documents for, among other things, the purpose of (a) adding additional financial institutions as Lenders and (b) amending the provisions of the Commitment Letter to reflect agreements among the parties thereto in respect of matters deferred beyond the closing date thereunder; provided, however, such amendments shall not, without Court approval, increase the Interim Borrowing Amount.
The Debtors shall provide five (5) business days prior written notice of any amendment entered into pursuant to this Paragraph 3 to each statutory committee appointed in the Cases (each, a "Committee").
4. The Debtors are hereby authorized 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 security (the "DIP Collateral") to be provided pursuant to the Commitment Letter and 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) 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 mean (i) avoidance actions under Chapter 5 of the Bankruptcy Code, except to the extent of collateral or proceeds recovered pursuant to section 549 of the Bankruptcy Code, (ii) funds held in customary trust accounts established by the Debtors for the purpose of providing payment of taxes, governmental charges and employee-related taxes and charges, and (iii) the stock and assets of any existing or future subsidiary of the Borrower that is a "controlled foreign corporation" as such term is defined in section 957 of the Internal Revenue Code (each a "CFC"), solely to the extent that a tax liability would result from the pledge of such stock or assets to the Collateral Agent or the Lenders.
5. In order to facilitate a timely transfer, if any, of any DIP 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 DIP Collateral) (collectively, the "Slots"), the applicable Debtor is hereby authorized and directed to execute and deliver, from time to time, blank, undated transfer documents with respect to each of the Slots, to be held in escrow 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 21 below or establish such other structure as the Debtors and the Lenders may agree.
6. Subject to the Carve-Out, 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 Paragraphs 3 and 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) 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, the Commitment Letter and the DIP Loan Documents, other than the Excluded Assets and Section 1110 Assets. 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 arising after the Petition Date (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 Order, the Commitment Letter 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 DIP Credit Facility remain outstanding.
7. The automatic stay imposed under section 362(a) of the Bankruptcy Code is hereby lifted 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 TPG under the Commitment Letter and 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 21 below.
(a) Except as otherwise agreed in writing between the Debtors and the Administrative Agent, the Debtors shall use advances under the DIP Credit Facility or proceeds of any DIP Collateral only as provided in the Commitment Letter and the DIP Loan Documents. For purposes of this 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 in this Order, in the Orders entered with respect to the Debtors' motions filed on the Petition Date, or as otherwise provided in the Orders approved by this Court (with the Administrative Agent's consent), (B) as otherwise provided in the Commitment Letter and 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.
8. In addition to the Liens granted herein, the Obligations under the DIP Credit Facility shall be an allowed administrative expense claim with priority, subject only to the Carve-Out, under section 364(c)(1) of the Bankruptcy Code and otherwise, 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").
9. All amounts applied to the payment of the Obligations under the DIP Credit Facility shall be applied thereto in the manner set forth in the Commitment Letter and the DIP Loan Documents.
10. (a) This Order shall be sufficient and conclusive evidence of the validity, perfection, and priority of (i) the Collateral Agent's Liens (for the ratable benefit of itself, the Administrative Agent and the Lenders) upon the DIP Collateral to secure all Obligations and any and all security interests and liens granted under this 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 DIP Collateral, or to entitle the Collateral Agent and Lenders to the priority granted herein (including, in respect of cash or cash equivalent, any requirement that the Collateral Agent or a Lender have possession of or dominion and control over, any such cash or cash equivalent 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 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 DIP Credit Facility (including, without limitation, the Commitment Fee, the Letter of Credit Fee and the fees and expenses referenced in the Fee Letter, the BofA Letter Agreement and Paragraph 6 of the MOU) and the matters set forth in this 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 the Agents for such other costs and expenses provided for in Commitment Letter. 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.
11. Each officer of the Debtors as may be so authorized by the Board of Directors of each of the Debtors, acting singly, is hereby authorized 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.
12. The Collateral Agent may file a xerographic copy of this 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.
13. Prior to the execution and delivery of the DIP Loan Agreement and each of the DIP Loan Documents, the Commitment Letter (including, without limitation, the representations, warranties, affirmative and negative covenants, and Events of Default) and this Order 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 Commitment Letter and this Order. From and after the execution and delivery of the DIP Loan Agreement and each of the other DIP Loan Documents, such 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 and the terms thereof and this Order.
14. Interest on the Obligations under the DIP Credit Facility shall accrue at the rates (including applicable default rates) and shall be paid at the times as provided in the Commitment Letter and the DIP Loan Documents. All Obligations under the DIP Credit Facility shall become due and payable, without notice or demand, on the Termination Date (as defined below).
15. Except for the Carve-Out, 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 DIP Collateral are, or will be, prior to or on a parity with (a) the Obligations under the Commitment Letter and the DIP Loan Documents or (b) the Super-Priority Claim.
16. (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 Commitment Letter, the DIP Loan Documents, this Order and any Final Order of the Court 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 committees 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-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 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 Commitment Letter, the DIP Loan Documents, this Order and the 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 Commitment Letter or 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 16 above, as the same may be due and payable. 17. No cost or expense which is incurred by the Debtors in connection with or on account of the preservation or disposition of any DIP Collateral or which otherwise could be chargeable to the Agents or the DIP Collateral pursuant to section 506(c) of the Bankruptcy Code or otherwise, shall be chargeable to the Agents or the DIP Collateral, except for the Carve-Out.
18. Without limiting the provisions and protections of Paragraph 16 above, if at any time prior to (i) the indefeasible repayment in full in cash of all Obligations under the 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, except as permitted or contemplated by the Commitment Letter or the DIP Loan Documents, this Order, any other interim order or the Final Order, 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 DIP Credit Facility (including cash collateralization of outstanding Letters of Credit) in accordance with the Commitment Letter or the DIP Loan Documents.
19. All Obligations of the Debtors to the Agents and the Lenders under the DIP Credit Facility are due and payable, without notice and demand, upon the earliest to occur of (the "Termination Date"):
(a) the date of termination in whole of the commitments pursuant to the Commitment Letter; or
(b) September 30, 2003;
(c) the effective date of any plan of reorganization for any of the Debtors; or
(d) upon the occurrence of an Event of Default (including, but not limited to, the dismissal or the conversion to chapter 7 of any of the Cases of the Borrower or a Guarantor, or an order of this Court shall be entered without the Lenders' prior consent reversing, amending, supplementing, staying, vacating or otherwise modifying in a manner that is adverse to the Lenders either this Order or the Final Order) or a mandatory prepayment event, as applicable, subject in each case to the actions described in Paragraph 21 below.
Unless and until the Obligations (other than contingent indemnification Obligations) under the Commitment Letter and the DIP Loan Documents are unconditionally and indefeasibly repaid in full in cash, the protections afforded to the Agents, the Lenders and TPG under the Commitment Letter, the other DIP Loan Documents and this Order, and any actions taken pursuant thereto and hereto, and the Carve-Out (as to pre-conversion or pre-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 if 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 Order as well as the Super-Priority Claim and Liens granted pursuant to this 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 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 the any of the Cases or in the event of the conversion of any Case to a case under chapter 7 of the Bankruptcy Code.
20. The time and manner of payment of the Obligations pursuant to the DIP Credit Facility, the Liens upon the DIP Collateral and the Super-Priority Claim 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 consent of the Administrative Agent and the Lenders.
REMEDIES UPON AN EVENT OF DEFAULT
21. Upon the occurrence of an Event of Default, the Required Lenders may, at their option, terminate the 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 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 TPG and shall be entitled to exercise any of their rights and remedies hereunder or under the Commitment Letter, 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 DIP Collateral or (2) the ability to set off amounts held in any deposit accounts with, or subject to the control of, either of the Agents or any Lender and apply against amounts outstanding under the DIP Credit Facility and the ability to require 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 DIP Collateral as the Collateral Agent and the Lenders 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 Order and the Loan Documents shall survive the Termination Date.
22. 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 the Commitment Letter, this Order, the 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 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 shall be relevant to any opposition to enforcement of the Agents' and Lenders' rights.
23. Upon entry of this 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.
24. Without prejudice to the rights of any other party, including any Committee, the Debtors have waived (a) 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 DIP Credit Facility or the negotiation of the terms thereof, and (b) any and all claims and causes of action against Bank of America, N.A. and Banc of America Securities, LLC in connection with the previously negotiated debtor-in-possession financing facility that was to be led by Bank of America, N.A.
25. In no event shall the Agents be subject to the equitable doctrine of "marshaling" or any similar doctrine with respect to the DIP 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 DIP Collateral to the Collateral Agent, as provided in the Commitment Letter and the DIP Loan Documents;
(b) the Collateral Agent shall continue to apply such proceeds in accordance with the provisions of the Commitment Letter or the DIP Loan Documents and this 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 Commitment Letter or the DIP Loan Documents shall be terminated.
26. 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 Order, including the Agents' or the Lenders' rights or remedies, as provided in the Commitment Letter and 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 Commitment Letter and the DIP Loan Documents.
MISCELLANEOUS DIP CREDIT FACILITY PROVISIONS
27. Any subrogation or reimbursement claim that arises in favor of TPG in respect of the DIP Credit Facility pursuant to any guaranty issued by TPG or any other agreement to which TPG and a Lender is party (the "TPG Guaranty") shall be secured by the DIP Collateral and the Super-Priority Claim with TPG having all rights under this Order as if TPG were a Lender or Agent under the DIP Credit Facility and such subrogation or reimbursement claim shall be entitled to share, on a pari passu basis with the other Lenders, the DIP Collateral and the Super-Priority Claim. In no event will the sum of the amount so secured under this Paragraph 27 plus the amount secured under this Order owing to the TPG Substitute Lender exceed the aggregate amount of the Obligations owing to the TPG Substitute Lender before giving effect to any payments made to the TPG Substitute Lender by TPG under the TPG Guaranty.
28. Upon TPG's advancement to the Debtors of TPG's pro rata share of the $75 million or such lesser amount as is authorized by the Court under this Order, or provision of credit support in like amount and as provided in Paragraphs 1.A, 1.B, and 1.E of the MOU, TPG, in its capacity as a Lender or Guarantor, shall be entitled to the benefits of Paragraphs 1.G, 2, 6 and 10 of the MOU (excluding the final subparagraph of Paragraph 10). Notwithstanding the foregoing, nothing in this Order is intended to constitute an assumption of the MOU.
29. If any provision of this 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 the validity of any Obligation incurred pursuant to Commitment Letter, the DIP Loan Documents or this 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, nor 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 Commitment Letter, the DIP Loan Documents or this 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 Commitment Letter, the DIP Loan Documents and this Order, and the priority thereof, and any payments made pursuant thereto, shall be binding (subject to the terms of this 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 Commitment Letter, the DIP Loan Documents or this 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 Commitment Letter or the DIP Loan Documents and the provisions of this Order, the provisions of this Order shall govern and control.
33. Any existing or future direct or indirect subsidiary of the Borrower that is not a CFC 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 Order, including, without limitation, those provisions granting security interests in, and Liens on, the DIP 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.
34. This Order shall constitute findings of fact and conclusions of law and shall take effect and be fully enforceable immediately upon execution hereof.
NOTICE OF FINAL HEARING
35. Following entry of this Order, the Debtors shall, on or before September 5, 2002, provide notice of the Motion, this Order and the Final Hearing by telecopy, overnight delivery service, hand delivery or U.S. mail to each of the Initial Notice Parties and, without duplication, to (i) the Debtors' thirty (30) largest general unsecured creditors, (ii) if practicable, the applicable state and local taxing authorities, and (iii) parties who have filed a request for service prior to such date. Such notice shall constitute good and sufficient notice of the Final Hearing. The notice of approval of this Order shall state that any party in interest objecting to the DIP Credit Facility or the terms of the Final Order shall file written objections with the United States Bankruptcy Court Clerk for the Eastern District of Virginia no later than September 19, 2002, which objections shall be served so that same are received by no later than 4:00 p.m. (prevailing Eastern time) on such date by: (a) Skadden, Arps, Slate, Meagher Flom, Attorneys for the Debtors, 333 West Wacker Drive, Chicago, IL 60606, Attn: John Wm. Butler Jr., Esq. and John K. Lyons, Esq., (b) the Office of the United States Trustee, (c) Shearman Sterling, Attorneys for the Administrative Agent, 599 Lexington Avenue, New York, New York 10022, Attn: Constance A. Fratianni, Esq. and Andrew V. Tenzer, Esq., (d) Moore Van Allen, PLLC, Attorneys for the Collateral Agent, David L. Eades, Esq. and Stephen E. Gruendel, Esq., (e) Arnold Porter, 370 Seventeenth Street, Suite 4500, Denver, Colorado 80202-1307, Attention: Brian P. Leitch and Cleary, Gottlieb, Steen Hamilton, One Liberty Plaza New York, N.Y. 10006, Attn: Michael L. Ryan, Esq. and Filip Moerman, Esq., Attorneys for TPG and (f) attorneys for any Committee once appointed.
36. The Final Hearing to consider the Motion and Final Order shall be held on September 26, 2002, at 9:30 a.m. at United States Bankruptcy Court for the Eastern District of Virginia, 200 S. Washington St., Alexandria, Virginia 22314, before the Honorable Stephen S.