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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
In re Chapter 11 CANDI CONTROLS, INC.,1 Case No. 18-10679 (CSS) Debtor.
DEBTOR’S MOTION FOR INTERIM AND FINAL ORDERS AUTHORIZING DEBTOR TO OBTAIN POST-PETITION FINANCING AND GRANTING SECURITY INTERESTS AND ADEQUATE PROTECTION
Candi Controls, Inc., debtor-in-possession in this Chapter 11 case (the “Debtor”), respectfully moves the Court for interim and final orders, substantially in the form attached to this motion as Exhibit C (the “Proposed Interim Order”) under § 364(c)(1) and (2), (d), and (e) and Rule 40012 authorizing the Debtor to obtain debtor-in-possession financing from Altair
Engineering, Inc. (the “DIP Lender”) of up to $375,000 (subject to a reserve for the Carve-Out defined below and certain statutory fees due to the U.S. Trustee) under terms described below and set forth in the Debtor-In-Possession Credit and Security Agreement, a substantially final version of which is attached to this Motion as Exhibit A (the “DIP Facility”), including the granting to the DIP Lender of: (a) a superpriority administrative expense claim senior to all other administrative expenses of the estate under § 364(c)(1); (b) a first-priority security interest and lien on all property of the Debtor not otherwise subject to a lien under § 364(c)(2); and (c) a security interest ranking senior in priority on all property of the Debtor subject to a lien in favor of Nicholas Brown, Konstantinos Exarchos, Doug Harp, Steve Raschke, and Asher Waldfogel
1 The last four digits of the Debtor’s federal tax identification number are 4409. The Debtor’s principal place of business is 428 13th Street, Third Floor, Oakland, CA 94612.
2 Unless otherwise noted, section references are to the U.S. Bankruptcy Code, 11 U.S.C. §§ 101 et seq., and rule references are to the Federal Rules of Bankruptcy Procedure.
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(collectively, the “Bridge Loan Lenders”) under § 364(d). This Motion seeks expedited entry of the Proposed Interim Order in the form attached to this Motion as Exhibit C and is brought on an emergency basis under Local Bankruptcy Rule 4001-2(b) to avoid immediate and irreparable harm to the Debtor’s estate. This Motion is supported by the entire record before the Court, the
Declaration of Douglas Klein in Support of First Day Pleadings filed contemporaneously with this Motion (the “Klein Declaration”), and by the following:
BACKGROUND
Jurisdiction and Venue 1. On March 23, 2018 (the “Petition Date”), CGM Partners, LLC, Howard Elias, and Kelly
Yang Living Trust filed an involuntary petition in this Court under Chapter 11 of the Bankruptcy
Code against the Debtor filed an involuntary petition in this Court under Chapter 11 of the
United States Bankruptcy Code, 11 U.S.C. §§ 101 et seq. (the “Bankruptcy Code”) against the
Debtor. The Debtor filed its Certificate of Counsel Regarding Proposed Order for Relief in
Involuntary Case on March 23, 2018. The Court entered the Chapter 11 order for relief on March
27, 2018 (the “Relief Date”). The Debtor now operates its business and manages its assets as a debtor-in-possession under Bankruptcy Code §§ 1107 and 1108.
2. This Court has jurisdiction over this Chapter 11 case under 28 U.S.C. §§ 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the
District of Delaware dated February 29, 2012. This is a core proceeding under 28 U.S.C.
§ 157(b)(2). Under Rule 9013-1(f) of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the “Local Rules”), the Debtor consents to the Court’s entry of a final order on this Motion to the extent it is later determined that the Court, absent consent of the parties, cannot enter final orders or judgments in connection
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with this Motion consistent with Article III of the United States constitution. Venue is proper in this district under 28 U.S.C. §§ 1408 and 1409.
3. The statutory bases for the relief this Motion seeks are Bankruptcy Code §§ 105, 361, and 364(c), (d), and (e), Bankruptcy Rule 4001, and Local Rule 4001-2.
4. No official committees have been appointed in this case. No party has requested the appointment of a trustee or an examiner.
Background Facts Concerning the Debtor 5. In support of this Motion, the Debtor offers the factual statements contained in the Klein
Declaration.
The Debtor’s Need for Financing 6. As of the Petition Date, the Debtor had exceedingly little cash on hand, nowhere near enough to cover even one payroll for the Debtor’s employees. The Debtor does not currently have or expect in the foreseeable future to have any material revenue or source of operating capital other than the financing proposed to be obtained from the DIP Lender. Because the
Debtor intends, and is required by the DIP Lender (who is the proposed buyer of substantially all the Debtor’s assets), to continue operating by maintaining its payroll to ensure that its key employees remain employed to preserve the value of the Debtor’s assets pending the proposed sale to Altair, the Debtor has an immediate need for mission-critical operating funds to meet its relatively modest operating expenses and the administrative expenses of this chapter 11 case.
7. As demonstrated by the Debtor’s operating budget attached to this Motion as Exhibit B
(the “Budget”), which projects operating and administrative expenses for the next five weeks (at which time the Debtor hopes to close its asset sale with Altair), the Debtor’s need for the proposed financing is dire. Without it, this case, the Debtor’s prospects for completing a sale of
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its assets to Altair (or any other buyer), and essentially any hope for a meaningful return to the
Debtor’s creditors will collapse.
Prepetition Secured Obligations
8. In connection with providing the Debtor with mission-critical operational funding for
March 2018 in anticipation of the Altair sale, two existing unsecured creditors (i.e., holders of convertible notes), Nicholas Brown and Konstantinos Exarchos, loaned $200,000 to the Debtor on or about March 1, 2018, and obtained a security interest in all the Debtor’s assets, perfected by a UCC-1 financing statement filed with the Delaware Department of State on March 1, 2018.
This prepetition secured loan is identified in the APA as the “Bridge Period Funding” and
Messrs. Brown and Exarchos as the “Bridge Loan Lenders,” along with Asher Waldfogel, Doug
Harp, and Steve Raschke, all three of whom are insiders of the Debtor who, together with Mr.
Brown, extended an additional $23,000 in loans to the Debtor shortly before the Petition Date, secured by a UCC-1 financing statement filed with the Delaware Department of State. To the
Debtor’s knowledge, no other party other than the Bridge Loan Lenders claims a prepetition security interest in any of the Debtor’s assets.
Efforts to Obtain DIP Financing and the Debtor’s Liquidity Needs
9. To fund the operationally critical expenses reflected in the Budget, the Debtor requires new liquidity from a new, third-party source. Shortly before the Petition Date, the Debtor was facing an imminent reality that it would run out of cash and would be forced to terminate all employees and cease all operations. With no present revenue and no realistic prospects of revenue in the immediate or foreseeable future, the Debtor was without any ability to obtain debt financing from any third-party lender. Any rational lender would have perceived far too much risk of non-repayment of any loan in any amount from a borrower such as the Debtor without revenue or other sources of income and without demonstrably liquid assets to provide a basis for
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an asset-based loan. Even if the Debtor had time to pursue DIP financing from sources other than the DIP Lender—and the Debtor had no such time—any efforts would have surely been futile.
10. Further, as described in the Klein Declaration, the Debtor had already undertaken considerable efforts to raise debt financing for some two years before the Debtor began to run out of operating cash in early 2018. Most recently, the Debtor approached existing creditors— holders of the Debtor’s convertible notes—regarding financing a Chapter 11 proceeding and received no expressions of interest. As it is, the Bridge Loan Lenders were only willing to provide a modest loan to allow the Debtor to maintain core operations until the DIP financing proposed in the Motion was obtained. The DIP Lender, as the proposed buyer of substantially all the Debtor’s assets, is literally the only party that has indicated or would reasonably ever be expected to indicate a willingness to provide the liquidity the Debtor needs to maintain operations and meet administrative expenses until a closing of a § 363 sale. Consequently, the
Debtor has an immediate need to obtain postpetition financing and that immediate need can only be met by the financing the DIP Lender would provide under the DIP Facility.
DIP Financing Terms3
11. Within the timeframe required by the Debtor’s operations and its need to avoid immediate and irreparable harm to those operations and to the estate, the Debtor believes it can only obtain the needed financing in the required amounts under the following terms, which are summarized below in accordance with Bankruptcy Rule 4001(c)(1)(B) and Local Rule 4001-2(a):
a. Borrower. The Debtor is the sole borrower under the DIP Facility.
3 What follows is only a summary of the DIP Credit Agreement and Proposed Interim Order. The Court and all parties in interest should read the DIP Credit Agreement and the Proposed Interim Order in their entirety, copies of which are attached to this Motion as Exhibits A and C, respectively.
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b. Commitments. The DIP Facility provides for the extension of credit in a maximum aggregate amount of $345,000, subject to a reserve for the Carve-Out (defined below) and certain statutory fees due to the U.S. Trustee, to be extended in one or more advances, as, when, and in the amounts the Debtor reasonably needs for its expenses and other cash needs identified in the Budget. The DIP Lender and the Debtor anticipate that the first advance would be made on interim, emergency approval of this Motion in the amount of not to exceed $150,000 before entry of a final order on this motion, an amount needed to address the immediate cash needs reflected in the Budge for the first two weeks of this case before a final hearing.
c. Interest Rate. In the absence of an Event of Default (described below and defined in the DIP Facility), advances under the DIP Facility bear interest at 7%. From and after an Event of Default, the DIP Lender reserves the right to assess default interest on all amounts outstanding under the DIP Facility at 9%.
d. Maturity. All amounts owing under the DIP Facility become due and payable on the earliest of (i) the date that is 60 days from the Petition Date (only if the DIP Lender is the successful bidder for the sale of substantially all the Debtor’s assets), (ii) April 30, 2018; (iii) the closing of a sale of substantially all the Debtor’s assets, (iv) the date the Lender accelerates all the Debtor’s obligations under the DIP Facility following an Event of Default, (v) the date of the
Debtor’s filing of any plan of reorganization not approved by the DIP Lender, or (vi) the date on which the DIP Lender is granted relief from the automatic stay.
e. Use of Proceeds. Unless there is an Event of Default, the DIP Lender agrees to make advances to the Debtor amounts needed to operate within the confines of the Budget, as the
Debtor requests. Advances under the DIP Facility may only be used for the purpose of funding the Debtor’s post-petition operations and other items strictly in accordance with the Budget.
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Further, no proceeds of Advances can be used to pay (i) any professional fees or expenses to any professionals employed by the Debtor or any committee of unsecured creditors appointed in this case except if the Carve-Out (defined below) is required to be drawn on, or (ii) any severance payments or retention bonuses to the Debtor’s employees or contractors. The Debtor may not use any proceeds of the DIP Facility for any purpose adverse to or otherwise against the interests of the DIP Lender. See Proposed Interim Order ¶ 5; DIP Facility § 2.6.
f. Conditions. The DIP Lender’s obligation to make advances under the DIP Facility is conditioned on, among other things set forth in §§ 4.1 and 4.2 of the DIP Facility, the delivery of a certificate (a “Compliance Certificate”) by the Debtor’s chief financial officer confirming as of the date of the applicable advance that the Debtor’s representations and warranties under
Article V of the DIP Facility are true and correct in all material respects, that no Event of Default has occurred and is continuing, that the Debtor spent all prior advances solely in accordance with the Budget, and the requested advance does not exceed, on a weekly basis, the advances permitted under the Budget. Additionally, the DIP Lender’s obligation to make advances is further conditioned on the Court’s entry of an order approving bid procedures and certain bid protections for the DIP Lender in accordance with the Debtor’s motion to approve a sale of substantially all its assets under Bankruptcy Code § 363. See DIP Facility § 4.2(a).
g. Liens. The Debtor’s obligation to repay all loans and all amounts owing under the
DIP Facility is proposed to be secured by: (i) a superpriority administrative expense claim under
§ 364(c)(1), subject to the Carve-Out (defined below); (ii) a first-priority lien under § 364(c)(2) on any of the Debtor’s property not already subject to an unavoidable lien or security interest as of the Petition Date; and (iii) a lien under § 364(d) on all the Debtor’s property already subject to valid, perfected, and non-avoidable liens in existence on the Petition Date. See Proposed Interim
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Order ¶ 7; DIP Facility § 3.1. The Debtor’s property subject to the liens in favor of the DIP
Lender is defined in the recitals of the DIP Facility as the “DIP Collateral,” and includes any proceeds of any avoidance actions under Chapter 5 of the Bankruptcy Code, but only on entry of a final order granting this Motion. See Proposed Interim Order ¶ (vi); DIP Facility Recitals. The
Debtor is unaware that any party asserts a lien or security interest in any of its property other than the Bridge Loan Lenders; their liens on any of the DIP Collateral are proposed to be primed by the security interests granted to the DIP Lender under § 364(d) with the consent of the Bridge
Loan Lenders (substantiated by the exhibit to the Klein Declaration).
h. Carve-Out and Professional Fees. The DIP Lender has agreed to subordinate its rights, claims, and liens to the payment of a Carve-Out (defined below) and certain statutory fees due to the U.S. Trustee. Following an Event of Default under the DIP Facility or a default under the Proposed Interim Order (a “Carve-Out Trigger Event”), and after the DIP Lender’s notice of that Carve-Out Trigger Event, the Debtor’s counsel and counsel to any official committee of unsecured creditors appointed in this case are entitled to be paid under the DIP Facility the amount of accrued and unpaid professional fees and expenses accrued from the Petition Date through the date of the Carve-Out Trigger Event approved by Court order in an amount not exceeding $75,000 in total (the “Carve-Out”), and the U.S. Trustee is entitled to be paid all fees due under 28 U.S.C. § 1930(a). All professional fees and expenses will share pro rata in the
Carve-Out. See Proposed Interim Order ¶ 12; DIP Facility Recitals.
i. Events of Default. The following constitute Events of Default under the DIP Facility:
(1) failure to pay any amount due when due; (2) the Debtor’s breach of any term of the Court’s
DIP financing orders; (3) any of the Debtor’s representations or warranties made in the DIP
Facility, the Budget, or any Compliance Certificate proves materially incorrect when made; (4) a
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termination of the asset purchase agreement between the Debtor and the DIP Lender (the
“APA”); (5) the revocation or vacating of any of the Court’s DIP financing orders, the APA, or the order approving bidding procedures related to the APA (as further defined in the DIP Facility, the “Bidding Procedures Order”); (6) the filing of any motion to use DIP Collateral or to grant an interest in the DIP Collateral except as expressly permitted in the DIP Facility; (7) the failure of the Court to enter the Proposed Interim Order or the Bidding Procedures Order by a date certain; (8) the auction contemplated in the Bidding Procedures Order has not occurred by April
17, 2018; (9) the Debtor’s failure to pay all then-outstanding obligations under the DIP Facility on the closing of a sale transaction with a bidder other than the DIP Lender; (10) a final order granting this Motion acceptable to the DIP Lender has not been entered by April 11, 2018; (11) the appointment of a Chapter 11 trustee or other fiduciary of the estate other than the Debtor or an examiner with expanded powers; (12) the dismissal or conversion to chapter 7 of this case;
(13) entry of an order granting any creditor other than the DIP Lender relief from the automatic stay permitting that creditor to exercise a remedy with respect to any DIP Collateral; (14) any creditor receives any adequate protection payment in respect of advances under the DIP Facility not acceptable to the DIP Lender in its reasonable discretion or in respect of any lien senior to the liens granted to the DIP Lender; (15) any challenge of the validity, perfection, priority, or enforceability of the DIP Lender’s liens or loan documents or the assertion of any claim against the DIP Lender; or (16) the Debtor’s aggregate weekly disbursements exceed 110% of the aggregate disbursements set forth in the Budget for that week. The DIP Lender’s ability to exercise its remedies for an Event of Default enumerated in § 7.2 of the DIP Facility are restricted by the automatic stay only to the extent that the DIP Lender must give notice of an
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Event of Default and intention to exercise remedies as described in ¶ 14 of the Proposed Interim
Order.
j. Other Provisions. The Proposed Interim Order provides that the Debtor waives any right of marshaling. See Proposed Interim Order ¶ 25. Neither the DIP Facility nor the Proposed
Interim Order contains any provisions of the kind enumerated in Bankruptcy Rule 4001(c)(1)(B) or Local Rule 4001-2(a)(i) except that the DIP Facility and the Proposed Interim Order provide that the Debtor has waived on its behalf and its estate’s behalf any claims to surcharge the DIP
Collateral under § 506(c) but only on the entry of a final order on this Motion. See Proposed
Interim Order ¶ 24; DIP Facility § 2.10.
RELIEF REQUESTED a. By this Motion, the Debtor requests: (a) authority to enter into the DIP Facility;
(b) the entry of the Proposed Interim Order; and (c) the entry of a final order substantially consistent with the relief granted in the Proposed Interim Order.
Necessity of DIP Facility
12. As described above, it is essential to the success of the Debtor’s Chapter 11 case and the successful sale of the Debtor’s assets that the Debtor immediately obtain access to sufficient post-petition financing. Without it, the Debtor will be unable to sustain even skeleton operations pending a sale of its assets, will be unable to meet the administrative expenses of this case, and will ultimately have to abruptly and irreversibly cease operations. If that were to occur, the
Debtor’s estate and its creditors would be gravely and irreparably harmed. Any reasonable hope of a recovery for unsecured creditors would be all but lost.
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Negotiation of the DIP Facility
13. “Having recognized the natural reluctance of lenders to extend credit to a company in bankruptcy, Congress designed § 364 to provide ‘incentives to the creditor to extend postpetition credit.’” In re Defender Drug Stores, Inc., 126 B.R. 76, 81 (Bankr. D. Ariz. 1991).
14. The Debtor negotiated the DIP Facility’s terms with the DIP Lender in good faith and at arms’ length, with both parties represented by separate, independent counsel. As described above, the Debtor assessed its dire situation and peculiar circumstances and determined in its best business judgment that no reasonable alternative sources of post-petition financing existed other than the DIP Lender, who was motivated to provide financing principally because it is the proposed buyer of substantially all the Debtor’s assets. Given the urgency of obtaining financing and the imminence of an irreversible operational shutdown, shopping for financing would have been futile.
15. In requiring that the debtor prove that it is “unable to obtain unsecured credit allowable under section 503(b)(1) of this title as an administrative expense,” § 364(c) “imposes no duty to seek credit from every possible lender before concluding that such credit is unavailable.” Bray v.
Shenandoah Federal Savings and Loan Ass’n (In re Snowshoe Co.), 789 F.2d 1085, 1088 (4th
Cir. 1986). Where there are few lenders likely to be able or willing to extend the necessary credit to the debtor, “it would be unrealistic and unnecessary to require [the debtor] to conduct an exhaustive search for financing.” In re Sky Valley, Inc., 100 B.R. 107, 113 (Bankr. N.D. Ga.
1988), aff’d sub nom, Anchor Savings Bank FSB v. Sky Valley, Inc., 99 B.R. 117 (N.D. Ga. 1989).
16. The DIP Lender, precisely because of its agreement to acquire all the Debtor’s assets, is uniquely suited to provide highly risky post-petition financing under circumstances where no other lender would. Because of the Debtor’s inability to generate revenue or other income and the uncertain liquidity value of the Debtor’s intellectual property assets, the Debtor concluded in
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its best business judgment that the DIP Facility constituted the most favorable source of financing available to the Debtor. Accordingly, the Debtor has satisfied the requirement in
§ 364(c) that it is unable to obtain unsecured credit as an ordinary administrative expense.
The DIP Facility is Fair, Reasonable, and Necessary
17. The DIP Facility’s terms are favorable under the present circumstances and constitute the most advantageous financing (and only financing) available to the Debtor in light the Debtor’s peculiar circumstances. The advances under the DIP Facility bear interest at a rate commensurate with the relative risk undertaken by the DIP Lender and generally more advantageous than many debtor-in-possession loans approved in similar cases. When considering whether the terms of postpetition financing are fair and reasonable, courts must consider the circumstances affecting both the debtor and the lender. In re Farmland Indus., Inc., 294 B.R. 855 (Bankr. W.D. Mo.
2003). In light of the Debtor’s urgent need for working capital and the Debtor’s inability to offer a lender a source of revenue or obviously valuable unencumbered assets and collateral, the terms of the DIP Facility is in the best interests of the Debtor and its estate.
18. No party in interest can seriously contend that the Debtor does not require immediate access to working capital. The Debtor incurs daily operational expenses that must be paid with immediately-available cash, yet receives no appreciable revenue. Access to immediate working capital, which the DIP Facility provides, is critical to the Debtor’s utter immediate survival and is the only way the Debtor can survive long enough to realize a sale of its assets for the benefit of its creditors. Without the liquidity provided by the DIP Facility, this case will fail before it can begin and any possibility of recovery for the Debtor’s creditors will be irrevocably lost.
Debtor’s Business Judgment
19. As described above, after appropriate investigation and analysis, the Debtor has concluded that the DIP Facility is the best alternative available under the circumstances.
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Bankruptcy courts routinely defer to the debtor’s business judgment on most business decisions, including the decision to borrow money. See, e.g., Group of Institutional Investors v. Chicago
Mil. St. P. & Pac. Ry., 318 U.S. 523 (1943); Richmond Leasing Co. v. Capital Bank, N.A., 762
F.2d 1303, 1311 (5th Cir. 1985) (“More exacting scrutiny would slow the administration of the
Debtor’s estate and increase its cost, interfere with the Bankruptcy Code’s provision for private control of administration of the estate, and threaten the court’s ability to control a case impartially”).
20. The Debtor has exercised sound business judgment in determining that a post-petition credit facility is appropriate and has satisfied the legal prerequisites to borrow under the DIP
Facility. The terms of the DIP Facility are fair and reasonable and are in the best interests of the
Debtor’s estate. Accordingly, under § 364(c), the Debtor should be granted authority to enter into the DIP Facility and to borrow funds from the DIP Lender on the basis described above.
21. The Debtor and the DIP Lender negotiated the DIP Facility in good faith, at arm’s length, and without collusion, each represented separately by counsel of their choosing. Accordingly, the
DIP Lender is a “good faith” lender within the meaning of § 364(e) such that the provisions of the Proposed Interim Order conferring rights and benefits to the DIP Lender should not be affected by any reversal, modification, vacatur, or amendment of the Proposed Interim Order or any other order.
Priming Liens are Appropriate
22. Bankruptcy Code § 364(d)(1) permits a court to authorize the obtaining of postpetition credit secured by liens senior to existing liens only if “(A) the trustee is unable to obtain such credit otherwise; and (B) there is adequate protection of the interest of the holder of the lien on the property of the estate on which such senior or equal lien is proposed to be granted.” Here, as described above, the Debtor cannot obtain postpetition financing from any source other than the
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DIP Lender and the DIP Lender has insisted on receiving priming liens on the DIP Collateral as a non-negotiable condition to making advances under the DIP Facility. The Debtor’s good-faith, arm’s-length negotiations with the DIP Lender resulted in the DIP Lender insisting on the priming liens as security for the postpetition loans under the DIP Facility.
23. Courts consider several factors in considering whether to approve priming-lien financing under § 364(d), including: (a) whether the proposed financing is necessary to preserve estate assets and necessary and appropriate for continued operation of the debtor’s business; (b) whether the terms of the financing are reasonable under the circumstances of both the debtor and the proposed lender; and (c) whether the proposed financing was negotiated in good faith and at arm’s length and is the subject of the debtor’s reasonable business judgment and in the best interest of the estate and creditors. See, e.g., Ames Dep’t Stores, 115 B.R. at 37-39; Bland v.
Farmworker Creditors, 308 B.R. 109, 113-14 (S.D. Ga. 2003); 3 Collier on Bankruptcy ¶
364.04[1] (16th ed.). As explained extensively above, the DIP Facility satisfies each of these criteria. The Court should note that the Bridge Loan Lenders have consented to the priming of their liens in the DIP Collateral in favor of the DIP Lender.
24. The Bridge Loan Lenders’ interest in the DIP Collateral is adequately protected—as it must be under § 364(d)(1)(B)—by the presence of a substantial equity cushion. The DIP Lender has also proposed to purchase all the DIP Collateral at a sale under § 363 and has offered a cash purchase price of approximately $2.6 million. Because the Bridge Loan Lenders’ lien is on the same collateral and secures only $223,000 of debt, the Bridge Loan Lenders have an equity cushion, even with the addition of up to $375,000 in senior-secured financing under the DIP
Facility, of approximately $2 million. Even notwithstanding the Bridge Loan Lenders’ consent to the DIP Facility and the priming of their lien under § 364(d) (substantiated by the exhibit to the
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Klein Declaration), the presence of such an equity cushion constitutes adequate protection of the
Bridge Loan Lenders’ interest in the DIP Collateral under §§ 361 and 364(d)(1)(B). See, e.g., In re Phoenix Steel Corp., 39 B.R. 218, 224 (D. Del. 1984) (“an equity cushion may be a basis for finding the existence of adequate protection”); In re Melson, 44 B.R. 454, 456-57 (Bankr. D. Del.
1984) (“An equity cushion provides adequate protection if the equity is not eroding so rapidly that it is illusory”); In re Singer, 368 B.R. 435, 443 (Bankr. E.D. Pa. 2007); Baybank-Middlesex v. Ralar Distributors, Inc., 69 F.3d 1200, 1203 (1st Cir. 1995) (“A sufficient equity cushion is itself a recognized form of adequate protection”); In re Stanley Hotel, Inc., 15 B.R. 660 (D. Colo.
1981); Pistole v. Mellor (In re Mellor), 734 F.2d 1396 (9th Cir. 1984); Travelers Inc. Co. v. Plaza
Family Partnership (In re Plaza Family Partnership), 95 B.R. 116 (E.D. Cal. 1989).
NEED FOR IMMEDIATE RELIEF
25. The Debtor seeks immediate approval of the proposed DIP Facility on an interim basis to permit the Debtor to meet even its most basic operational expenses, including payroll, to preserve the value of the Debtor’s assets and to protect the interests of all stakeholders in the estate. Because the Debtor has no revenue or other source of income and possessed only a few thousand dollars of cash on the Petition Date (insufficient funds to cover even one payroll), the advances proposed under the DIP Facility must begin immediately or else the Debtor’s operations must cease immediately. A cessation of the Debtor’s operations—most significantly, a termination of the Debtor’s employed software engineers—occasioned by the Debtor’s failure to obtain immediate approval of the DIP Facility and the interim funding it contemplates would greatly diminish the value of the Debtor’s intellectual property assets and irreparably harm the estate.
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NOTICE 26. In accordance with Rule 4001(c), immediate email or overnight mail notice of the relief requested in this motion has been given to (a) the Office of the US Trustee; (b) the Debtor’s 20 largest unsecured creditors; (c) the Bridge Loan Lenders; (d) counsel to the DIP Lender; and (e) all parties requesting notice under Rule 2002. The Debtor submits that notice to these parties is sufficient under Rule 4001(c) and that this Court may authorize the initial advances under the
Proposed Interim Order to avoid immediate and irreparable harm to the estate pending a final hearing on this motion on no less than 14 days’ notice to all parties entitled to notice under Rule
4001(c).
CONCLUSION For the foregoing reasons, the Debtor requests that the Court enter interim and final orders, substantially the form attached to this Motion as Exhibit C, authorizing the Debtor to enter into and borrow under the DIP Facility and granting any appropriate additional relief.
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Dated: March 28, 2018 THE ROSNER LAW GROUP LLC Wilmington, Delaware /s/ Frederick B. Rosner Frederick B. Rosner (DE #3995) Scott J. Leonhardt (DE #4885) Jason A. Gibson (DE #6091) 824 N Market Street, Suite 810 Wilmington DE 19801 (302) 777-1111 Email: [email protected] [email protected] [email protected] /and/ PERKINS COIE LLP Jordan A. Kroop (Pro Hac Vice admission pending) 2901 N Central Ave | Suite 2000 Phoenix AZ 85012 (602) 351-8000 Email: [email protected]
Proposed Co-Counsel to Debtor-in-Possession
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EXHIBIT A
DIP FACILITY
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DEBTOR-IN-POSSESSION CREDIT AND SECURITY AGREEMENT
BY AND BETWEEN
CANDI CONTROLS, INC.,
the Borrower and Debtor and Debtor-in-Possession
-AND-
ALTAIR ENGINEERING, INC.,
the Lender
This document is intended solely to facilitate discussions amongst the parties identified herein. It is not intended to create, and will not be deemed to create, a legally binding or enforceable offer or agreement of any type or nature prior to the duly authorized and approved execution of this document by all such parties and the delivery of an executed copy hereof by all such parties to all other parties.
{00022694. } Case 18-10679-CSS Doc 18-1 Filed 03/28/18 Page 3 of 30 TABLE OF CONTENTS PAGE
ARTICLE I DEFINITIONS ...... 2
Section 1.1 Definitions...... 2 Section 1.2 Other Definitional Terms; Rules of Interpretation ...... 7
ARTICLE II AMOUNT AND TERMS OF THE CREDIT FACILITY ...... 8
Section 2.1 Advances ...... 8 Section 2.2 Procedures for Requesting Advances ...... 8 Section 2.3 Payment of the Advances...... 8 Section 2.4 Application of Payments ...... 8 Section 2.5 Timing of Payments ...... 9 Section 2.6 Use of Proceeds; Limitations on Advances ...... 10 Section 2.7 Single Loan ...... 10 Section 2.8 Grants, Rights and Remedies ...... 10 Section 2.9 Waiver of any Priming Rights Upon the DIP Closing Date ...... 10 Section 2.10 Waiver of Claims to Surcharge ...... 10 Section 2.11 Tax Forms ...... 10
ARTICLE III SECURITY INTEREST; OCCUPANCY; SETOFF ...... 11
Section 3.1 Grant of Security Interest ...... 11 Section 3.2 Lien Perfection; Further Assurances ...... 11 Section 3.3 Superpriority Administrative Expense Claims and Priming Lien ...... 11 Section 3.4 Financing Statement...... 11 Section 3.5 DIP Collateral ...... 12 Section 3.6 Survival ...... 12
ARTICLE IV CONDITIONS OF LENDING ...... 12
Section 4.1 Conditions Precedent to Each Advance ...... 12 Section 4.2 Additional Conditions Precedent to the Advances ...... 13
ARTICLE V REPRESENTATIONS AND WARRANTIES...... 13
Section 5.1 Existence and Power ...... 13 Section 5.2 Title ...... 14 Section 5.3 Intellectual Property Rights ...... 14
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Section 5.4 Environmental Matters; Compliance With Laws; Labor Matters; Employee Benefits; Insurance; Taxes ...... 14 Section 5.5 Administrative Priority; Lien Priority; Adequate Protection ...... 14
ARTICLE VI COVENANTS ...... 14
Section 6.1 Compliance with Budget; Updated Budget; Variance Reports ...... 14 Section 6.2 Liens; Financing Statements ...... 15 Section 6.3 Capital Expenditures: Indebtedness ...... 15 Section 6.4 DIP Collateral Examination and Inspection; Reporting ...... 16 Section 6.5 Financing Orders Administrative Priority; Lien Priority; Payment of Claims ...... 16 Section 6.6 Sale Transaction Deadlines ...... 16
ARTICLE VII EVENTS OF DEFAULT, RIGHTS AND REMEDIES ...... 16
Section 7.1 Events of Default ...... 16 Section 7.2 Rights and Remedies...... 18 Section 7.3 Certain Notices...... 20
ARTICLE VIII MISCELLANEOUS ...... 20
Section 8.1 No Waiver; Cumulative Remedies; Compliance with Laws ...... 20 Section 8.2 Amendments, Etc ...... 20 Section 8.3 Notices; Communication of Confidential Information; Requests for Accounting ...... 20 Section 8.4 Further Documents...... 21 Section 8.5 Costs and Expenses ...... 22 Section 8.6 Execution in Counterparts; Electronic Execution ...... 22 Section 8.7 Binding Effect; Assignment; Complete Agreement; Sharing Information ...... 22 Section 8.8 Severability of Provisions ...... 22 Section 8.9 Headings ...... 22 Section 8.10 Governing Law: Jurisdiction, Venue; Waiver of Jury Trial ...... 22 Section 8.11 Lender as Party-in-Interest ...... 23 Section 8.12 Waiver of Right to Obtain Alternative Financing...... 23 Section 8.13 Right to Credit Bid ...... 23
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TABLE OF EXHIBITS AND SCHEDULES
Exhibit A Asset Purchase Agreement
Exhibit B Budget
Exhibit C Compliance Certificate
Exhibit D Interim Borrowing Order
Exhibit E Form of Note
Schedule 6.2 Liens
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DEBTOR-IN-POSSESSION CREDIT AND SECURITY AGREEMENT
This Debtor-in-Possession Credit and Security Agreement (the “Agreement”) dated as of March __, 2018 is by and among Candi Controls, Inc. (“Candi”), a Delaware corporation, as a Chapter 11 debtor-in-possession (in such capacity, the “Debtor”) as borrower (in such capacity, the “Borrower”), and Altair Engineering, Inc. as the Lender, a Delaware corporation (the “Lender” or “Altair”).
RECITALS
WHEREAS, on March _____, 2018 (the “Petition Date”), an involuntary petition was commenced against the Borrower under Title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware (together with any other court which has jurisdiction over the Chapter 11 Case or any proceeding therein from time to time, the “Bankruptcy Court”), under Case No. 18-______(the “Bankruptcy Case” or “Chapter 11 Case”). Thereafter, the Borrower consented to the entry of an order for relief under Chapter 11 of the Bankruptcy Code. The Debtor is continuing to operate its business and manage its property as a debtor-in-possession under Sections 1107 and 1108 of the Bankruptcy Code;
WHEREAS, the Borrower is unable to obtain unsecured credit or other funds on similar or more favorable terms to those set forth herein;
WHEREAS, the Borrower has requested the Lender to make post-petition loans and advances to the Borrower consisting of a debtor-in-possession credit facility as Advances in an aggregate principal amount not to exceed $375,000 (subject to the Carve-Out in an amount not to exceed $75,000 as set forth herein) at any time outstanding, and Lender has agreed to provide Advances, subject in all respects to (i) approval of the Lender as the proposed “stalking horse purchaser” (the “Purchaser”) (subject to higher and better offers) for the purchase of the Purchased Assets (as defined in the Asset Purchase Agreement) pursuant to that certain Bidding Procedures Order (as defined below) and the terms of the Asset Purchase Agreement (as defined below); (ii) entry of the Financing Orders and Bidding Procedures Order; and (iii) the terms and conditions of this Agreement;
WHEREAS, the Debtor represents and states that, as of the Petition Date, it has no creditors who hold or assert a security interest, lien and/or judgment on any assets of Candi and no valid and perfected UCC-1 financing statements currently exist as to any of Candi’s assets except for the security interests granted to Nicholas J. Brown, Konstantinos Exarchos, Asher Waldfogel, Doug Harp and Steve Raschke (collectively, the “Bridge Loan Lender”) for the Bridge Period Funding, which security interest will be primed by DIP Liens and Obligations granted by this Agreement pursuant to section 364(d) of the Bankruptcy Code;
WHEREAS, the Lender is willing to provide such financing, subject to the terms and conditions set forth herein, including that all of the Obligations hereunder and under the other related Loan Documents constitute allowed superpriority administrative expense claims pursuant to Section 364(c)(1) of the Bankruptcy Code in the Bankruptcy Case as set forth herein and that all Obligations hereunder shall be and are secured by new liens and security interests in the DIP
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Collateral to be granted herein pursuant to Sections 364(c)(2) and 364(d)(1) of the Bankruptcy Code as follows:
perfected first priority security interests in and liens on (collectively, the “DIP Liens”) all of Borrower’s property that comprises (i) the Purchased Assets (as defined in the Asset Purchase Agreement), (ii) all other assets of the Debtor including but not limited to cash, accounts, deposit accounts, investment property, goods, general intangibles, tort claims, intellectual property, patents, trademarks, copyrights, licenses, inventory, furniture, fixtures, equipment, documents, chattel paper, and any other property rights, and (iii) upon entry of the Final Borrowing Order, proceeds of claims and causes of action brought pursuant to sections 502(d), 544, 545, 547, 548, 549, 550, and 553 of the Bankruptcy Code (the “Avoidance Action Proceeds”) (collectively, (i), (ii) and (iii), the “DIP Collateral”).
NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For all purposes of this Agreement, except as otherwise expressly provided, the following terms shall have the meanings assigned to them in this Section or in the Section referenced after such term:
“Action” means any action, suit, petition, plea, charge, claim (as defined in the Bankruptcy Code), demand, hearing, inquiry, arbitration, complaint, grievance, summons, litigation, mediation, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), prosecution, contest, inquest, audit, examination, investigation or similar matter by or before any Governmental Authority.
“Advance” has the meaning set forth in Section 2.1 hereof.
“Affiliate” or “Affiliates” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such Person. For purposes of this definition, “control” (including, with correlative meaning, the terms “controlling” and “controlled”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.
“Agreement” means this Debtor-in-Possession Credit and Security Agreement, as may be supplemented, amended, or modified from time to time in accordance with its terms.
“Asset Purchase Agreement” means the agreement attached hereto as Exhibit A among Altair (as Purchaser), and the Borrower (as Seller) that provides for the sale or disposition pursuant to Section 363 of the Bankruptcy Code of the Purchased Assets of the Borrower to Altair, subject to higher or better offers.
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“Bankruptcy Code” means Title 11 of the United States Code.
“Bankruptcy Court” has the meaning set forth in the Recitals of this Agreement.
“Bidding Procedures” means the Bidding Procedures attached as Exhibit A to the Bidding Procedures Order.
“Bidding Procedures Order” shall have the meaning ascribed to such term in the Asset Purchase Agreement.
“Bridge Loan Lender” has the meaning set forth in the Recitals of this Agreement.
“Bridge Period Funding” has the meaning set forth in the Asset Purchase Agreement.
“Budget” means the set of projections approved by the Lender showing all projected weekly Advances required hereunder and all projected cash disbursements of the Borrower (with detail as to identification of cash disbursements) attached hereto as Exhibit B.
“Business” has the meaning given to such term in the Asset Purchase Agreement.
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York City, New York or Oakland, CA are authorized or obligated to close under applicable Law.
“Capital Expenditures” means for a period, any expenditure of money during such period for the purchase, lease, or construction of assets, or for improvements or additions thereto, which are capitalized on the Borrower’s balance sheet.
“Carve-Out” means an amount not to exceed $75,000 in total as set forth in the Interim Financing Order.
“Chapter 11 Case” has the meaning set forth in the Recitals of this Agreement.
“Commitment” means the Lender’s commitment to make Advances to the Borrower.
“Competing Transaction” has the meaning given to such term in the Asset Purchase Agreement.
“Compliance Certificate” means a certificate of the Borrower’s chief financial officer, substantially in the form of Exhibit C hereto.
“Credit Facility” means the credit facility under which Advances may be made available to the Borrower by the Lender under Article II of this Agreement.
“Cut-Off Time” means 12:00 p.m. (prevailing Eastern Time).
“Debt” shall have the same meaning as Obligations.
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“Default” means an event that, but for the giving of notice or the passage of time, or both, would constitute an Event of Default.
“Default Period” means any period of time beginning on the day a Default or Event of Default occurs and ending on the date identified by the Lender in writing as the date that such Default or Event of Default has been cured or waived.
“Default Rate” means the annual interest rate, in effect during a Default Period or following the DIP Termination Date, of two percent (2%) per annum in excess of the Interest Rate.
“DIP Administrative Claim” has the meaning set forth in Section 3.3.
“DIP Closing Date” means the date upon which the Interim Borrowing Order has been entered and all conditions precedent to the Advances have been satisfied or waived in writing by the Lender.
“DIP Collateral” has the meaning set forth in the Recitals of this Agreement. For the avoidance of doubt, upon entry of the Final Borrowing Order, DIP Collateral shall include (and the DIP Liens granted hereunder shall attach to) Avoidance Action Proceeds.
“DIP Liens” has the meaning set forth in the Recitals section above.
“DIP Termination Date” means the earliest of (a) the Maturity Date (only in the event the Purchaser is the Successful Bidder (as defined in the Bidding Procedures)), (b) April 30, 2018; (c) the occurrence of the Closing Date (as defined in the Asset Purchase Agreement), (d) the date of the closing of any Competing Transaction, (e) the date the Lender accelerates the Obligations pursuant to Section 7.2 following an Event of Default, (f) the date of the filing of any Reorganization Plan by Borrower which does not meet the requirements of a plan acceptable to the Lender, or (g) the date on which the Lender is granted relief from the automatic stay.
“Environmental Law” has the meaning given to such term in the Asset Purchase Agreement.
“Estate” means the estate created in the Chapter 11 Case pursuant to Section 541 (a) of the Bankruptcy Code.
“Event of Default” has the meaning set forth in Section 7.1.
“Final Borrowing Order” means a final order of the Bankruptcy Court pursuant to Section 364 of the Bankruptcy Code approving this Agreement and the other Loan Documents, confirming the Interim Borrowing Order and authorizing the incurrence by the Borrower of permanent post-petition secured and super priority Debt in accordance with this Agreement, and as to which no stay has been entered and which has not been reversed, modified, vacated or overturned, in form and substance satisfactory to the Lender in its sole discretion and substantially similar to the Interim Borrowing Order.
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“Financing Order” means the Interim Borrowing Order or the Final Borrowing Order, as the context requires, and “Financing Orders” means the Interim Borrowing Order and the Final Borrowing Order.
“Full Payment” shall mean, with respect to the Obligations, full, final and indefeasible payment or repayment of such Debt in immediately available funds.
“GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time.
“Governmental Authority” means any domestic, foreign, federal, state, provincial or local authority, legislative body, court, government, regulatory agency, self-regulatory organization (including any securities exchange), commission, board, arbitral or other tribunal (public or private), or any political or other subdivision, department, branch or instrumentality of any of the foregoing.
“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or advances; (b) all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or similar instruments; (c) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person (even though the rights and remedies of the seller or lenders under such agreement in the event of default are limited to repossession or sale of such property); (d) all obligations of such Person issued or assumed as part of the deferred purchase price of property or services; (e) all indebtedness secured by any Encumbrance on property owned or acquired by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not the obligations secured thereby have been assumed; (f) any obligations with respect to bank guarantees, deferred compensation arrangements, workers’ compensation liabilities, employee medical liabilities, bonuses and any required statutory payments to employees; (g) all obligations of such Person for the reimbursement of any obligor in respect of letters of credit, letters of guaranty, bankers’ acceptances and similar credit transactions; and (h) all contingent obligations of such Person in respect of Indebtedness or obligations of others of the kinds referred to in clauses (a) through (g) above.
“Interest Payment Date” has the meaning set forth in Section 2.5.
“Intellectual Property Rights” has the meaning set forth in the Asset Purchase Agreement.
“Interest Rate” means with respect to any Advances seven percent (7%) per annum.
“Interim Borrowing Order” means that certain order to be entered by the Bankruptcy Court approving this Agreement and all transactions contemplated hereunder, substantially in the form of Exhibit D attached hereto and otherwise in form and substance satisfactory to the Lender in its sole discretion.
“Liability” means any liability, Indebtedness, guaranty, claim, loss, damage, deficiency, assessment, responsibility, “claim” (as defined in Section 101(5) of the Bankruptcy Code) or obligation of whatever kind or nature (whether known or unknown, whether asserted or
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unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, whether due or to become due, whether determined or determinable, whether choate or inchoate, whether secured or unsecured, whether matured or not yet matured) and including all costs, fees and expenses relating thereto.
“Lien” means (a) any lien, mortgage, pledge, assignment, security interest, judgment, charge, license, sublicense or encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease in the nature thereof) and any other preferential arrangement having the practical effect of any of the foregoing, and (b) in the case of securities, any purchase option, call or similar right of a third party with respect to such Securities.
“Loan Documents” means this Agreement, the Note, the Budget and the Financing Orders, together with every other agreement, note, document, contract or instrument executed and delivered by the Borrower for the benefit of the Lender in connection herewith, but, for the avoidance of doubt, shall not include the Asset Purchase Agreement.
“Material Adverse Effect” has the meaning set forth in the Asset Purchase Agreement.
“Maturity Date” means the Sale Termination Date.
“Maximum Line Amount” means $375,000.00, unless such amount is reduced for any reason hereunder, in which event it means such lower amount, subject to the Carve-Out.
“Note” means the Borrower’s promissory note in the form of Exhibit E hereto, as same may be renewed and amended from time to time with the consent of the Lender, and all replacements thereto.
“Obligations” means the Advances and each and every other debt, liability and obligation of every type and description which the Borrower may now or at any time hereafter owe to the Lender arising under any Loan Document between the Borrower and the Lender, whether now in effect or hereafter entered into, including the Carve-Out if and when paid.
“Order” means any administrative or judicial order, injunction, judgment, decree, decision, verdict, settlement, award, ruling, writ, assessment or arbitration award of a Governmental Authority.
“Person” means an individual, partnership, limited liability partnership, limited liability company, corporation, trust, joint venture, association, joint stock company, unincorporated organization, Governmental Authority or other entity, and the successors and assigns thereof or the heirs, executors, administrators or other legal representatives of an individual.
“Petition Date” has the meaning set forth in the Recitals of this Agreement.
“Prior Liens” means any Liens on assets of the Debtor that existed on or before the Petition Date.
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“Purchased Assets” has the meaning given to such term in the Asset Purchase Agreement.
“Sale Order” has the meaning set forth in the Asset Purchase Agreement.
“Sale Termination Date” shall have the meaning ascribed to the term “Outside Date” in the Asset Purchase Agreement, as such date may be extended in accordance with the terms of the Asset Purchase Agreement.
“Sale Transaction” means the sale of the Purchased Assets to Altair pursuant to Section 363 of the Bankruptcy Code pursuant to the terms and conditions of the Asset Purchase Agreement.
“Security Documents” means this Agreement and any other Loan Documents delivered to the Lender by or on behalf of the Borrower from time to time pursuant to this Agreement to perfect the security interests hereunder in the Obligations, but, for the avoidance of doubt, shall not include the Asset Purchase Agreement.
“Security Interest” has the meaning set forth in Section 3.1.
“Seller” has the meaning given to such term in the Asset Purchase Agreement.
“Specified Sale Transaction Termination Event” means the effectiveness of a termination under and pursuant to any Section of the Asset Purchase Agreement.
“UCC” means the Uniform Commercial Code as in effect in the State of Delaware, or in any other state whose laws are held to govern this Agreement or any portion of this Agreement.
Section 1.2 Other Definitional Terms; Rules of Interpretation. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP. All terms defined in the UCC and not otherwise defined herein have the meanings assigned to them in the UCC. References to Articles, Sections, subsections, Exhibits, Schedules and the like, are to Articles, Sections and subsections of, or Exhibits or Schedules attached to, this Agreement unless otherwise expressly provided. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. Unless the context in which used herein otherwise clearly requires, “or” has the inclusive meaning represented by the phrase “and/or”. Defined terms include in the singular number the plural and in the plural number the singular. Reference to any agreement (including the Loan Documents), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof (and, if applicable, in accordance with the terms hereof and the other Loan Documents), except where otherwise explicitly provided, and reference to any promissory note includes any promissory note which is an extension or renewal thereof or a substitute or replacement therefor. Reference to any law, rule, regulation, order, decree, requirement, policy, guideline, directive or interpretation means as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect on the determination date, including rules and regulations promulgated thereunder. Any reference
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herein or in any other Loan Document to the “Budget”, unless otherwise stated, shall be deemed to be a reference to the Budget, as of the date of determination, most recently submitted by the Borrower to the Lender and accepted in writing by the Lender it being understood that the Lender shall have no obligation to accept any Budget which is not reasonably satisfactory to the Lender.
ARTICLE II
AMOUNT AND TERMS OF THE CREDIT FACILITY
Section 2.1 Advances. The Lender agrees, subject to the terms and conditions of this Agreement and the Financing Orders, to make one or more weekly advances (“Advances”) to the Borrower from time to time from the date that all of the conditions set forth in Article IV are satisfied or waived through and until (but not including) the DIP Termination Date in an aggregate amount not in excess of (i) the Maximum Line Amount or (ii) the weekly Advance line item amount set forth in the Budget. The Lender shall have no obligation to make an Advance to the extent that (a) the amount of the requested Advance, together with all outstanding Advances previously funded, exceeds the (1) Maximum Line Amount; or (2) the weekly Advance amount set forth in the Budget; or (b) the Debtor has not used the entire Bridge Period Funding. The Borrower’s obligation to pay the Advances shall be evidenced by the Note and shall be secured by the DIP Liens granted in the DIP Collateral.
Section 2.2 Procedures for Requesting Advances. The Borrower shall comply with the following procedures in requesting Advances:
(a) Time for Requests. The Borrower shall request each Advance no more than one time each week and not later than the Cut-Off Time two (2) Business Days prior to the date the Advance is to be made, or such shorter time period as the Lender may agree. Each request that conforms to the terms of this Agreement shall be effective upon receipt by the Lender, shall be in writing by electronic mail or facsimile transmission, and shall be confirmed in writing by the Borrower if so requested by the Lender, by the Borrower’s chief financial officer. Any request for an Advance shall be deemed to be a representation by the Borrower that the conditions set forth in Sections 4.1 and 4.2 hereof have been satisfied as of the time of the request.
(b) Disbursements. Upon fulfillment of the applicable conditions set forth in Article IV, the Lender shall disburse the proceeds of the requested Advance to Borrower’s bank account maintained at Wells Fargo Bank.
Section 2.3 Payment of the Advances. On the DIP Termination Date, the entire unpaid principal balance of the Advances and all unpaid interest accrued thereon and any other Obligations owed hereunder shall be fully due and payable. Borrower may, from time to time, prepay the Obligations, in whole or in part, without premium or penalty.
Section 2.4 Application of Payments.
(a) Interest on Advances. The outstanding principal amount of each Advance shall bear interest at the Interest Rate.
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(b) Default Interest Rate. At any time during any Default Period or following the DIP Termination Date, in the Lender’s sole discretion and without waiving any of its other rights or remedies, the outstanding principal amount of each Advance shall bear interest at the Default Rate (or such lesser rate as the Lender may determine), effective as of the day such Default Period begins through the last day of such Default Period, or any shorter time period that the Lender may determine. The decision of the Lender to impose a rate that is less than the Default Rate or to not impose the Default Rate for the entire duration of the Default Period shall be made by the Lender in its sole discretion and shall not be a waiver of any of its other rights and remedies, including its right to retroactively impose the full Default Rate for the entirety of any such Default Period or following the DIP Termination Date.
(c) Application of Payments. Payments shall be applied to the Obligations on the Business Day of receipt by the Lender.
(d) Computation of Interest and Fees. Interest accruing on the outstanding principal balance of the Advances and fees hereunder outstanding from time to time shall be computed on the basis of actual number of days elapsed in a year of 360 days.
(e) Usury. No rate change shall be put into effect which would result in a rate greater than the highest rate permitted by law. Notwithstanding anything to the contrary contained in any Loan Document, all agreements which either now are or which shall become agreements between the Borrower and the Lender are hereby limited so that in no contingency or event whatsoever shall the total liability for payments in the nature of interest, additional interest and other charges exceed the applicable limits imposed by any applicable usury laws.
(f) Fees and Costs. If an Event of Default occurs, the amount of the Obligations due by Borrower to Lender shall be increased by Lender’s reasonable attorneys’ fees, other professional fees and costs (including, for clarity, costs of enforcement as set forth in Section 8.5) until the Obligations due to the Lender have been indefeasibly paid in full.
Section 2.5 Timing of Payments.
(a) Time For Interest Payments. Accrued and unpaid interest shall be due and payable on the DIP Termination Date (the “Interest Payment Date”), or if any such day is not a Business Day, on the next succeeding Business Day. Interest will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of Advance(s) to the Interest Payment Date. If an Interest Payment Date is not a Business Day, payment shall be made on the next succeeding Business Day.
(b) Payment on Non-Business Days. Whenever any payment to be made hereunder shall be stated to be due on a day which is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest on the Advances or the fees hereunder, as the case may be.
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Section 2.6 Use of Proceeds; Limitations on Advances. The Borrower shall (a) use the proceeds of Advances only for the purpose of funding Borrower’s post-petition operations and other items all strictly in accordance with the allowed disbursements line item(s) set forth in the Budget and (b) not use any proceeds of Advances for (i) any purpose adverse to or otherwise against the rights, remedies or interests of Lender or (ii) any investigation or prosecution of any claim or challenge against Lender, subject to the Carve-Out. Further, no proceeds of Advances can be used to pay (i) any professional fees and/or expenses to any professionals retained by the Borrower or any committee of unsecured creditors appointed in the Borrower’s Chapter 11 Case, except in the event the Carve-Out is required to be drawn on, or (ii) any severance payments or retention bonuses to employees or contractors of the Borrower.
Section 2.7 Single Loan. All Advances to Borrower and all of the other Obligations of Borrower arising under this Agreement and the other Loan Documents shall constitute one general obligation of Borrower secured by the DIP Liens in the DIP Collateral.
Section 2.8 Grants, Rights and Remedies. The DIP Liens, Security Interests and the administrative priority granted as set forth in the recitals and granted in Article III to the Lender may be independently granted by the Loan Documents, other Loan Documents hereafter entered into, and/or the Financing Orders. This Agreement, the Interim Borrowing Order, the Final Borrowing Order and such other Loan Documents supplement each other, and the grants, priorities, rights and remedies of the Lender hereunder and thereunder are cumulative.
Section 2.9 Waiver of any Priming Rights Upon the DIP Closing Date. Upon the DIP Closing Date, and on behalf of itself and its estate, and for so long as any Obligation shall be outstanding, the Borrower hereby irrevocably waives any right pursuant to Sections 364(c) or 364(d) of the Bankruptcy Code or otherwise to grant any Lien of equal or greater priority than the DIP Liens securing the Obligations, or to approve a claim of equal or greater priority than the Obligations; provided, however, that the Borrower may seek to exercise the rights waived in this Section 2.9 with Lender's written consent.
Section 2.10 Waiver of Claims to Surcharge. Upon entry of a Final Borrowing Order, the Borrower and the Borrower’s bankruptcy estate hereby waive any claims to surcharge the DIP Collateral under section 506(c) of the Bankruptcy Code.
Section 2.11 Tax Forms. Prior to funding or otherwise acquiring an interest in any Advance, the Lender shall deliver to the Borrower an Internal Revenue Service Form W-9 or appropriate W-8, as applicable, and, upon reasonable request of the Borrower after funding or otherwise acquiring an interest in any Advance, the Lender shall deliver to the Borrower any other customary certificates or tax documentation, including to establish an exemption under the “portfolio interest exemption”. In the event that any form or certification previously delivered by the Lender expires or becomes obsolete or inaccurate in any respect, the Lender shall update such form or certification or promptly notify the Borrower in writing of its legal inability to do so.
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ARTICLE III
SECURITY INTEREST; OCCUPANCY; SETOFF
Section 3.1 Grant of Security Interest. The Borrower hereby pledges, assigns and grants to the Lender the DIP Liens on and security interests in the DIP Collateral (collectively referred to as the “Security Interest”), as security for the payment and performance of the Obligations and as an element of the consideration for the Advances pursuant to Section 364(c)(2) of the Bankruptcy Code. Pursuant to Section 364(d) of the Bankruptcy Code, the DIP Lien shall prime all Prior Liens including the liens and security interests granted to the Bridge Loan Lender.
Section 3.2 Lien Perfection; Further Assurances. The DIP Liens and Security Interest securing the Obligations, as set forth in the recitals and granted herein, shall be deemed valid and perfected by entry of the Interim Borrowing Order (subject to any limitations set forth therein) and entry of the Interim Borrowing Order shall have occurred on or before the date of any Advance. The Interim Borrowing Order, and, if and when it becomes effective, the Final Borrowing Order, shall be sufficient and conclusive evidence of the validity, perfection and priorities of the Lender’s DIP Liens upon the DIP Collateral, without the necessity of filing or recording any UCC financing statement, assignment, mortgage, deed of trust, trademark security agreement, copyright security agreement, patent security agreement or other instrument or document which may otherwise be required under the law of any jurisdiction or the taking of any other action to validate or perfect the DIP Liens of the Lender in and to the DIP Collateral or to entitle the Lender to the priorities granted herein; provided, however, that the Borrower shall, upon the request of the Lender, execute such instruments, assignments, mortgages, deeds of trust, trademark security agreements, copyright security agreements, patent security agreements or other documents as Lender reasonably requests. The Borrower agrees to furnish any information requested by Lender to perfect or maintain the perfection of Lenders’ DIP Liens to Lender promptly upon request. No filings or recordations shall be necessary or required in order to create or perfect any such DIP Liens. At the Lender’s request, the Borrower shall also promptly execute or cause to be executed and shall deliver to Lender any and all documents, instruments and agreements deemed necessary by Lender to give effect to or carry out the terms or intent of the Loan Documents.
Section 3.3 Superpriority Administrative Expense Claims and Priming Lien. The Obligations shall constitute, and the Lender shall have, in accordance with Section 364(c)(1) of the Bankruptcy Code, an administrative expense claim (the “DIP Administrative Claim”) that is senior to any and all administrative expenses of, and unsecured claims against the Borrower now existing or hereafter arising, of any kind or nature whatsoever, including, without limitation, all administrative expenses of the kind specified in, or arising or ordered under, Sections 105, 326, 328, 503(b), 506(c), 507(a), 507(b), 546(c), 726 and 1114 of the Bankruptcy Code. The DIP Administrative Claim and the Obligations shall be secured by liens pursuant to Sections 364(c)(2) and 364(d) of the Bankruptcy Code as provided herein on the DIP Collateral.
Section 3.4 Financing Statement. The Borrower authorizes the Lender to file from time to time, at its sole discretion, such financing statements against the DIP Collateral describing specific items of collateral as the Lender deems appropriate.
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Section 3.5 DIP Collateral. The Lender’s duty of care with respect to DIP Collateral in its possession (as imposed by law) shall be deemed fulfilled if it exercises reasonable care in physically keeping such DIP Collateral, or in the case of DIP Collateral in the custody or possession of a bailee or other third Person, exercises reasonable care in the selection of the bailee or other third Person, and the Lender need not otherwise preserve, protect, insure or care for any DIP Collateral. The Lender shall not be obligated to preserve any rights the Borrower may have against prior parties, to realize on the DIP Collateral at all or in any particular manner or order or to apply any cash proceeds of the DIP Collateral in any particular order of application. The Lender has no obligation to clean-up or otherwise prepare the DIP Collateral for sale. The Borrower waives any right it may have to require the Lender to pursue any third Person for any of the Obligations.
Section 3.6 Survival. The DIP Liens, lien priority, administrative priorities (including the DIP Administrative Claim) and other rights and remedies granted to the Lender pursuant to this Agreement, the Financing Orders and the other Loan Documents (specifically including, but not limited to, the existence, perfection and priority of the DIP Liens and Security Interest provided herein and therein, and the administrative priority and priming liens provided for herein and therein) shall not be modified, altered or impaired in any manner by any other financing or extension of credit or incurrence of indebtedness by the Borrower (pursuant to Section 364 of the Bankruptcy Code or otherwise), or by any dismissal or conversion of the Chapter 11 Case (or any related case, or by any other act or omission whatsoever). Without limitation, notwithstanding any such order, financing, extension, incurrence, dismissal, conversion, act or omission:
(a) no costs or expenses of administration which have been or may be incurred in the Chapter 11 Case or any conversion of the same or in any other proceedings related thereto, and no priority claims, are or will be prior to or on a parity with any claim of the Lender against the Borrower in respect of any Obligation, except as set forth in this Agreement and/or the Financing Orders; and
(b) the DIP Liens in favor of the Lender set forth in Section 3.1 and Section 3.2 hereof shall constitute valid and perfected Liens on and security interests in the DIP Collateral and shall be prior and senior to all other Liens and security interests, now existing or hereafter arising, in favor of any other creditor or any other Person whatsoever, including without limitation the Prior Liens.
ARTICLE IV
CONDITIONS OF LENDING
Section 4.1 Conditions Precedent to Each Advance. The Lender’s obligation to make each Advance shall be subject to the condition precedent that the Lender shall have received all of the following, each properly executed by the appropriate party and in form and substance reasonably satisfactory to the Lender in its sole discretion, unless otherwise waived by the Lender:
(a) this Agreement;
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(b) the Note;
(c) customary lien searches of appropriate filing offices showing that no Liens have been filed and remain in effect against the Borrower except for those set forth on Schedule 6.2 hereto;
(d) a certificate of the chief financial officer of the Borrower, in the form attached hereto as Exhibit C, confirming as of the date of the applicable Advance (i) the representations and warranties set forth in Article V are true and correct in all material respects, (ii) no Default or Event of Default has occurred and is continuing; (iii) the prior Advances (if any) funded by the Lender hereunder have been disbursed only in accordance with the Budget; (iv) the Advances requested do not exceed, on a weekly basis, the Advances permitted pursuant to the Budget; and (v) the Borrower has used all of the Bridge Period Funding; and
(e) such other documents as the Lender may require in its reasonable discretion.
Section 4.2 Additional Conditions Precedent to the Advances. In addition to the items described in Section 4.1, the Lender’s obligation to make the Advances to the Borrower shall be subject to the satisfaction of the following conditions precedent in a manner and pursuant to documentation reasonably acceptable to the Lender in its sole discretion:
(a) the Interim Borrowing Order and the Stalking Horse Approval Order shall have been entered by the Bankruptcy Court by March 28, 2018, and such orders and the Bidding Procedures Order shall be in full force and effect and shall not have been reversed, modified, amended, subject to a pending appeal, stayed or vacated absent the prior written consent of the Lender and the Borrower;
(b) the Borrower shall have entered into the Asset Purchase Agreement, and filed a motion with the Bankruptcy Court seeking the entry of the Bidding Procedures Order and the Sale Order;
(c) no Event of Default shall have occurred; and
(d) there shall not be pending any motion, application or other filing in the Bankruptcy Case or other Court of competent jurisdiction which, if granted by the Bankruptcy Court or other Court of competent jurisdiction, would result in an Event of Default.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender as follows:
Section 5.1 Existence and Power. Upon entry of the Interim Borrowing Order, the Borrower shall be deemed to have all requisite power and authority to conduct the Borrower’s
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business, to own its properties and to execute and deliver the Loan Documents to which it is a party and to perform all of the obligations herein and in the other Loan Documents and the transactions contemplated herein.
Section 5.2 Title. The Borrower owns the Purchased Assets free and clear of all Liens except for the Prior Liens and the liens granted to the Bridge Loan Lender.
Section 5.3 Intellectual Property Rights. All of the representations and warranties with respect to Intellectual Property Rights set forth in Section 4.1(k) of the Asset Purchase Agreement (including all Schedule 4.1(k) of the Disclosure Letter to the Asset Purchase Agreement) are true and correct as of the date hereof.
Section 5.4 Environmental Matters; Compliance With Laws; Labor Matters; Employee Benefits; Taxes. All of the representations and warranties made by the Borrower with respect to Environmental Law matters, Taxes, Compliance with Law, Labor Matters, Employee Benefits, Undue Influence, Financial Statements, and Absence of Certain Changes (and matters related thereto) each as set forth in Section 4.1 of the Asset Purchase Agreement (including all corresponding schedules to Disclosure Letter to the Asset Purchase Agreement, if any) are true and correct as and to the extent set forth therein as of the date hereof.
Section 5.5 Administrative Priority; Lien Priority; Adequate Protection.
(a) Pursuant to Sections 364(c)(2) and (d)(1) of the Bankruptcy Code and as set forth in the Financing Orders, all Obligations are secured by the first priority perfected DIP Liens on the DIP Collateral, senior to all other Liens and security interests, now existing or hereafter arising, in favor of any other creditor or any other Person whatsoever, including without limitation the Prior Liens.
(b) On the DIP Closing Date, the Interim Borrowing Order shall be, and from and after the entry of the Final Borrowing Order, the Final Borrowing Order shall be, in full force and effect, and neither Financing Order has been reversed, vacated, modified, amended or stayed, except for modifications and amendments that are reasonably acceptable to the Lender in its sole discretion and are not subject to a pending appeal or stayed in any respect.
ARTICLE VI
COVENANTS
The Borrower will comply with the following requirements, unless the Lender shall otherwise consent in writing:
Section 6.1 Compliance with Budget; Updated Budget; Variance Reports.
(a) Compliance with Budget. On each Tuesday of each week (no later than 5:00 p.m. (prevailing Eastern Time)), the chief financial officer of the Borrower shall provide to the Lender a completed Compliance Certificate, together with a report in form and detail satisfactory to the Lender in its reasonable discretion showing (a)
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disbursements, in each case on a weekly and cumulative basis through the previous Friday, and (b) a comparison/variance report to the same periods in the Budget, in form and detail satisfactory to the Lender in its reasonable discretion which fully and accurately describes the extent to which the Borrower complied with the Budget for the immediately preceding calendar week; provided that, the Borrower shall promptly deliver to Altair or its agent a copy of each such Compliance Certificate following delivery thereof to the Lender. The Budget will be tested on an aggregate basis each week. For any Budget period, aggregate disbursements may not exceed the amount budgeted by ten percent (10%), tested cumulatively. To the extent disbursements set forth in the Budget for a Budget period are not, in fact, disbursed during the Budget period, the budgeted disbursements for subsequent Budget periods shall be amended so that the Borrower may carry forward any unspent budgeted disbursements from prior periods.
Section 6.2 Liens; Financing Statements.
(a) The Borrower will not create, incur or suffer to exist any Lien upon or of any of the DIP Collateral to secure any indebtedness; excluding, however, from the operation of the foregoing, the following:
(i) the Prior Liens, which Prior Liens shall be subordinate to the DIP Liens granted to the Lender hereunder;
(ii) any other Liens in existence on the date hereof and listed in Schedule 6.2;
(iii) the DIP Liens and Security Interest created herein; and
(iv) such other Liens as Lender may hereafter approve in writing.
(b) The Borrower will not amend any financing statements in favor of the Lender except as permitted by law. Any authorization by the Lender to any Person to amend financing statements in favor of the Lender shall be in writing and not take place without the prior written consent of the Lender.
Section 6.3 Capital Expenditures: Indebtedness.
(a) The Borrower will not make or incur any Capital Expenditure without the prior written consent of the Lender, except for Capital Expenditures (a) as specifically contemplated by the Budget or (b) as approved by order of the Bankruptcy Court.
(b) The Borrower shall not incur any Indebtedness, except (a) the Obligations, (b) in connection with the repayment in full of the Obligations, (c) to the extent approved in writing by the Lender, (d) as specifically contemplated by the Budget or (e) as approved by order of the Bankruptcy Court.
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Section 6.4 DIP Collateral Examination and Inspection; Reporting.
(a) The Borrower will permit the Lender or its employees, accountants, attorneys or agents, to examine and inspect any DIP Collateral or any other property of the Borrower at any reasonable time during ordinary business hours.
(b) The Borrower shall furnish to Lender such financial and other information as to its business or property as Lender shall reasonably request.
Section 6.5 Financing Orders Administrative Priority; Lien Priority; Payment of Claims.
(a) The Borrower will not, at any time, seek, consent to or suffer to exist any reversal, modification, amendment, stay or vacation of any of the Financing Orders, except for modifications and amendments agreed to in writing by the Lender or otherwise in connection with the repayment in full of the Obligations.
(b) The Borrower will not, at any time, suffer to exist a priority for any administrative expense or unsecured claim against the Borrower or the Estate (now existing or hereafter arising of any kind or nature whatsoever, including without limitation any administrative expenses of the kind specified in, or arising or ordered under, Sections 105, 326, 328, 503(b), 506(c), 507(a), 507(b), 546(c) 726 and 1114 of the Bankruptcy Code) equal or superior to the priority of the Lender in respect of the Obligations.
(c) The Borrower will not, at any time, suffer to exist any Lien on the DIP Collateral having a priority equal or superior to the DIP Liens in favor of the Lender in respect of the DIP Collateral.
(d) The Borrower shall comply with the Interim Borrowing Order, the Final Borrowing Order and all other orders entered by the Bankruptcy Court in the Chapter 11 Case.
Section 6.6 Sale Transaction Deadlines. The Borrower agrees to use commercially reasonable efforts to comply with and satisfy the deadlines set forth in the Bidding Procedures Order with respect to the Purchased Assets and consummate the Sale Transaction or, if the Asset Purchase Agreement has been terminated, the Competing Transaction on or before the Sale Termination Date (or such later date as Lender and Borrower may agree upon), and, to the extent not terminated, the Asset Purchase Agreement, together with any order entered by the Bankruptcy Court approving such agreement, shall not be modified, amended, or superseded absent the prior written consent of the Lender.
ARTICLE VII
EVENTS OF DEFAULT, RIGHTS AND REMEDIES
Section 7.1 Events of Default. “Event of Default”, wherever used herein, means any one of the following events:
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(a) Failure by the Borrower to pay (i) the principal of, or interest on, any Advances due hereunder within three (3) Business Days after the same becomes due or (ii) any other amounts owing hereunder within three (3) Business Days after such amounts becoming due.
(b) the Borrower shall fail to comply or shall default in the performance of any term of any of the Financing Orders or fail to meet any deadlines in the Financing Orders or any other “Event of Default” under and as defined in either of the Financing Orders shall occur, unless the Lender consents in writing or as otherwise ordered by the Bankruptcy Court;
(c) any representation or warranty made by the Borrower in this Agreement, or by the Borrower (or any of its officers) in the Budget, any Compliance Certificate or any other agreement or certificate delivered in writing pursuant to or in connection with this Agreement shall prove to have been incorrect in any material respect as of the date made or deemed made;
(d) (i) a Specified Sale Transaction Termination Event shall occur or (ii) any other breach, violation or default shall occur under this Agreement or any other Loan Document;
(e) the Bankruptcy Court or any other court of competent jurisdiction enters an order modifying, reversing, revoking, staying, rescinding, vacating, or amending the Financing Orders, any of the Loan Documents, the Asset Purchase Agreement or the Bidding Procedures Order;
(f) the Borrower or any other Person shall file any motion or application which seeks approval for or allowance of (i) the authority to use any DIP Collateral, or (ii) any claim, Lien, or security interest ranking junior, equal or senior in priority to the claims, DIP Liens and Security Interest granted to the Lender herein and under the Financing Orders or any such equal or prior claim, Lien, or security interest shall be established in any manner, except, in any case, as expressly permitted herein and under the Financing Orders;
(g) the Bankruptcy Court shall not have entered the Interim Borrowing Order or the Bidding Procedures Order by March 28, 2018, or any Financing Order or the Bidding Procedures Order shall cease to be in full force and effect from and after the date of entry thereof by the Bankruptcy Court;
(h) the auction as contemplated by the Bidding Procedures Order, if necessary, is not held by April 17, 2018;
(i) in the event the Borrower selects a party other than the Purchaser to be the Successful Bidder (as defined in the Bidding Procedures) with respect to the Purchased Assets after the end of the auction (if necessary) contemplated by the Bidding Procedures for the Purchased Assets, the failure of the Borrower to pay in full the then-outstanding Obligations upon the consummation of the sale transaction with such Successful Bidder
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(or a Backup Bidder (as defined in the Bidding Procedures) that replaces such Successful Bidder);
(j) the Final Borrowing Order (a) shall not have been entered by the Bankruptcy Court by April 11, 2018, (b) shall have been entered in a form not acceptable to Lender, or (c) shall have been stayed, vacated, modified, or supplemented without the Lender’s prior written consent;
(k) the appointment in the Chapter 11 Case of a trustee, or any other fiduciary for the Borrower or any property of the Borrower’s Estate;
(l) the entry of an order dismissing the Chapter 11 Case or converting the Chapter 11 Case to a case under Chapter 7 of the Bankruptcy Code;
(m) the entry of an order appointing an examiner with enlarged or expanded powers related to the operation of the Business beyond those set forth in sections 1106(a)(3) or (4) of the Bankruptcy Code or under section 1106(b) of the Bankruptcy Code;
(n) the entry of an order which provides relief from the automatic stay otherwise imposed pursuant to Section 362 of the Bankruptcy Code, which order permits any creditor, other than the Lender, to realize upon, or to exercise any right or remedy with respect to, any DIP Collateral;
(o) if any creditor of the Borrower, to the extent not disclosed herein or in the Financing Orders, receives any adequate protection payment in respect of proceeds of Advances hereunder or that is senior or equal in priority to the Liens granted to the Lender hereunder on the DIP Collateral which is not acceptable to the Lender in its reasonable discretion, or any Lien is granted senior to the DIP Liens, other than as set forth (i) herein, (ii) in the Interim Borrowing Order, or (iii) in the Final Borrowing Order;
(p) the Borrower or any committee appointed in the Bankruptcy Case shall file a pleading in the Bankruptcy Court or any court of competent jurisdiction (i) challenging the validity, perfection or priority of any DIP Liens of the Lender, (ii) challenging the validity or enforceability of the Lender’s Loan Documents, or (iii) asserting any claims against the Lender; or
(q) in connection with the applicable weekly test contemplated pursuant to Section 6.1, the Borrower’s aggregate disbursements during the applicable testing period exceed 110% of the amount of aggregate disbursements set forth in the Budget for the applicable testing period.
Section 7.2 Rights and Remedies. During any Default Period, after giving the requisite notice required by, and in all cases otherwise subject to the terms and requirements of, the Financing Orders, notwithstanding the automatic stay under Section 362 of the Bankruptcy Code, the Lender may exercise any or all of the following rights and remedies:
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(a) the Lender may, by notice to the Borrower, declare the Commitment to be terminated, whereupon the same shall forthwith terminate;
(b) the Lender may, by notice to the Borrower, declare the Obligations to be forthwith due and payable, whereupon all Obligations shall become and be forthwith due and payable, without presentment, notice of dishonor, protest or further notice of any kind, all of which the Borrower hereby expressly waives;
(c) the Lender may, without notice to the Borrower and without further action, apply any and all money owing by the Lender to the Borrower to the payment of the Obligations;
(d) the Lender may exercise and enforce any and all rights and remedies available upon default to a secured party under the UCC, including the right to take possession of the DIP Collateral, or any evidence thereof, proceeding without judicial process or by judicial process (without a prior hearing or notice thereof, which the Borrower hereby expressly waives) and the right to sell, lease or otherwise dispose of any or all of the DIP Collateral (with or without giving any warranties as to the DIP Collateral, title to the DIP Collateral or similar warranties), and, in connection therewith, the Borrower will on demand assemble the DIP Collateral and make it available to the Lender at a place to be designated by the Lender which is reasonably convenient to both parties;
(e) the Lender may exercise and enforce its rights and remedies under the Security Documents and the other Loan Documents;
(f) the Lender may apply any DIP Collateral to the Obligations;
(g) the Lender may without regard to any waste, adequacy of the security or solvency of the Borrower, apply for the appointment of a receiver of the DIP Collateral, to which appointment the Borrower hereby consents, whether or not foreclosure proceedings have been commenced under the Security Documents and whether or not a foreclosure sale has occurred;
(h) the Lender shall be entitled to seek the appointment of a Chapter 11 trustee;
(i) the Lender may exercise any other rights and remedies available to it by law or agreement; and/or
(j) if the Borrower at any time fails to perform or observe any of the covenants contained herein, and if such failure shall constitute a Default or Event of Default, the Lender may, but need not, perform or observe such covenant on behalf and in the name, place and stead of the Borrower (or, at the Lender’s option, in the Lender’s name) and may, but need not, take any and all other actions which the Lender may reasonably deem necessary to cure or correct such failure (including the payment of taxes, the satisfaction of Liens, the performance of obligations owed to account debtors or other obligors, the procurement and maintenance of insurance, the execution of
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assignments, security agreements and financing statements, and the endorsement of instruments); and the Borrower shall thereupon pay to the Lender on demand the amount of all monies expended and all costs and expenses (including reasonable attorneys’ fees and legal expenses) incurred by the Lender in connection with or as a result of the performance or observance of such agreements or the taking of such action by the Lender. To facilitate the Lender’s performance or observance of such covenants of the Borrower, the Borrower hereby irrevocably appoints the Lender, or the Lender’s delegate, acting alone, as the Borrower’ attorney in fact (which appointment is coupled with an interest) with the right (but not the duty) from time to time to create, prepare, complete, execute, deliver, endorse or file in the name and on behalf of the Borrower any and all instruments, documents, assignments, security agreements, financing statements, applications for insurance and other agreements and writings required to be obtained, executed, delivered or endorsed by the Borrower hereunder.
Section 7.3 Certain Notices. If notice to the Borrower of any intended disposition of the DIP Collateral or any other intended action is required by law in a particular instance, such notice shall be deemed commercially reasonable if given in the manner specified in Section 8.3 at least five (5) calendar days before the date of intended disposition or other action.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 No Waiver; Cumulative Remedies; Compliance with Laws. No failure or delay by the Lender in exercising any right, power or remedy under the Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy under the Loan Documents. The remedies provided in the Loan Documents are cumulative and not exclusive of any remedies provided by law. The Lender may comply with any applicable state or federal law requirements in connection with a disposition of the DIP Collateral and such compliance will not be considered adversely to affect the commercial reasonableness of any sale of the DIP Collateral.
Section 8.2 Amendments, Etc. No amendment, modification, termination or waiver of any provision of any Loan Document or consent to any departure by the Borrower therefrom or any release of the Lender’s DIP Liens or Security Interest shall be effective unless the same shall be in writing and signed by the parties hereto, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.
Section 8.3 Notices; Communication of Confidential Information; Requests for Accounting. Except as otherwise expressly provided herein, all notices, requests, demands and other communications provided for under the Loan Documents shall be in writing and shall be sent by (a) hand delivery or overnight mail and (b) electronic mail, in each case delivered or sent to the party to whom notice is being given to the business address and e-mail address set forth below (or as may be hereafter designated in writing to the other party). All such notices,
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requests, demands and other communications shall be deemed to be an authenticated record communicated or given on (w) the date received if personally delivered, (x) the date delivered by the courier or messenger if delivered by overnight courier or messenger, or (z) the date of transmission if sent by email, except that notices or requests delivered to the Lender pursuant to any of the provisions of Article II shall not be effective until received by the Lender. All notices, financial information, or other business records sent by either party to this Agreement may be transmitted, sent, or otherwise communicated via such medium as the sending party may deem appropriate and commercially reasonable. The Borrower hereby requests that the Lender respond to all such requests which on their face appear to come from an authorized individual and releases the Lender from any liability for so responding. Unless and until any party hereto notifies the other party as provided above, notices shall be sent in accordance with the following information:
If to the Borrower: Candi Controls, Inc. 428 13th Street, 3rd Floor Oakland, CA 94612 Attention: Steve Raschke Email: [email protected]
With a copy to: Perkins Coie LLP 2901 North Central Avenue Suite 2000 Phoenix, AZ 85012 Attention: Jordan Kroop, Esq. Email: [email protected]
If to the Lender: Altair Engineering, Inc. 1820 E. Big Beaver Road Troy, MI 48083 Attention: Steven M. Rivkin Email: [email protected]
With a copy to: Lowenstein Sandler LLP One Lowenstein Drive Roseland, NJ 07068 Attention: Bruce Buechler, Esq. and Peter H. Ehrenberg, Esq. Email: [email protected]; [email protected]
For the avoidance of doubt, the Borrower shall promptly deliver to Altair or its agent a copy of any notice, certificate or report (including any update to the Budget) provided to the Lender under this Agreement.
Section 8.4 Further Documents. The Borrower will from time to time execute, deliver, endorse and authorize the filing of any and all instruments, documents, conveyances, assignments, security agreements, financing statements, control agreements and other agreements and writings that the Lender may reasonably request from time to time (but any failure to request or assure that the Borrower executes, delivers, endorses or authorizes the filing
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of any such item shall not affect or impair the validity, sufficiency or enforceability of the Loan Documents and the Security Interest, regardless of whether any such item was or was not executed, delivered or endorsed in a similar context or on a prior occasion).
Section 8.5 Costs and Expenses. Subject to the conditions set forth in this Agreement, Lender shall be entitled to all reasonable costs and expenses, including attorneys’ fees and other professional fees, incurred in connection with the collection and enforcement of the Obligations in connection with and following the occurrence of an Event of Default and the foreclosure or enforcement of the Security Interest.
Section 8.6 Execution in Counterparts; Electronic Execution. This Agreement and other Loan Documents may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument. Delivery of an executed counterpart of this Agreement by electronic transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by electronic means also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.
Section 8.7 Binding Effect; Assignment; Complete Agreement; Sharing Information. The Loan Documents shall be binding upon and inure to the benefit of the Borrower and the Lender and their respective successors and assigns (including any trustee or examiner of the Borrower or the Estate). This Agreement, together with the Loan Documents, constitutes the complete and integrated agreement of the parties on the subject matter hereof and supersedes all prior agreements, written or oral, on the subject matter hereof. To the extent that any provision of this Agreement contradicts other provisions of the Loan Documents, this Agreement shall control.
Section 8.8 Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.
Section 8.9 Headings. Article, Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.
Section 8.10 Governing Law: Jurisdiction, Venue; Waiver of Jury Trial. The Loan Documents shall be governed by and construed in accordance with the substantive laws (other than conflict laws) of the State of Delaware. The parties hereto hereby (i) consent to the personal jurisdiction of the Bankruptcy Court in connection with any controversy related to or dispute arising out of this Agreement; (ii) waive any argument that venue in any such forum is not convenient; (iii) agree that any litigation initiated by the Lender or the Borrower in connection with this Agreement or the other Loan Documents shall be venued exclusively in the Bankruptcy Court; and (iv) agree that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law; provided, however, that in the event the Bankruptcy Court declines to
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exercise jurisdiction over any such dispute as set forth in this Section 8.10, the parties agree to venue and personal and subject matter jurisdiction of the state court or federal district court sitting in either Troy or Detroit, Michigan. THE BORROWER AND THE LENDER WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION AT LAW OR IN EQUITY OR IN ANY OTHER PROCEEDING BASED ON OR PERTAINING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
Section 8.11 Lender as Party-in-Interest. The Borrower hereby stipulates and agrees that the Lender is and shall remain a party in interest in the Chapter 11 Case and shall have the right to participate, object and be heard in any motion or proceeding in connection therewith. Nothing in this Agreement or any other Loan Document shall be deemed to be a waiver of any of the Lender’s rights or remedies under applicable law or documentation. Without limitation of the foregoing, the Lender shall have the right to make any motion or raise any objection it deems to be in its interest, provided that the Lender will not exercise such right if the action or inaction by the Borrower which is the subject of such motion or objection is expressly permitted by any covenant or provision of this Agreement.
Section 8.12 Waiver of Right to Obtain Alternative Financing. In consideration of the Advances to be made to the Borrower by the Lender, the Borrower hereby further waives any rights it may have to obtain an order by the Bankruptcy Court authorizing the Borrower to obtain additional financing pursuant to Section 364 of the Bankruptcy Code from any Person other than the Lender, unless such financing (i) would result in the indefeasible full payment of all of the Obligations owed to the Lender, or (ii) is consented to by Lender.
Section 8.13 Right to Credit Bid. Except as otherwise set forth herein, the Lender (or following assignment by the Lender to another party its rights hereunder to credit bid the outstanding Obligations owed hereunder) shall have the right to credit bid the Lender's outstanding claims and Obligations under this Agreement and the Financing Orders and such right to credit bid shall not be subject to any challenge or objection; provided that, such right of the Lender or its assignee to credit bid shall be limited to an amount of claims and the outstanding Obligations under this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Debtor-in-Possession Credit and Security Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.
Lender
ALTAIR ENGINEERING, INC.
By: ______
Name: ______
Title: ______
Borrower
CANDI CONTROLS, INC.
By: ______
Name: ______
Title: ______
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SCHEDULE 6.2
1. The Bridge Period Funding extended by the Bridge Loan Lender.
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EXHIBIT B
BUDGET
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Week Ended 03/31/18 04/07/18 04/14/18 04/21/18 04/28/18 TOTAL
People Expenditures: Payroll 90,000 30,000 30,000 30,000 180,000 Employer Payroll Taxes 7,500 2,500 2,500 2,500 15,000 Health Insurance Premiums 2,000 5,000 7,000 401k Plan Termination Expenes 2,000 2,000 2,000 2,000 8,000 Other Employee Expenses - Subtotal: Employee Expenses 99,500 36,500 39,500 34,500 - 210,000
Contractors: Fairfax Consultancy 7,000 7,000 7,000 21,000 Lauren Cox-Pursley 500 500 500 1,500 Douglas Klein 6,600 1,800 1,800 6,600 6,600 23,400 Subtotal: Contractors 13,600 2,300 8,800 7,100 14,100 45,900
Total People Expenditures 113,100 38,800 48,300 41,600 14,100 255,900
Office Expenditures: Rent - 428 13th St, 3rd Fl 10,100 10,100 Utilities, Janitorial 3,000 3,000 Telephone and Internet 2,000 2,000 Web Services 6,000 6,000 12,000 Engineering, Office, and Kitchen Supplies 500 400 500 400 200 2,000 Postage, Courier Services, Misc Office Exp 500 500 1,000
Total Office Expenditures 22,100 400 1,000 6,400 200 30,100
Professional and Financial Services:
Legal: Delaware counsel - Corporate counsel - Expenses (travel, filing fees) 2,500 1,500 500 1,500 1,500 7,500 Subtotal: Legal Expenditures 2,500 1,500 500 1,500 1,500 7,500
Total Professional and Financial Svcs 2,500 1,500 500 1,500 1,500 7,500
Total Other Expenditures ------
Total Expenditures$ 137,700 $ 40,700 $ 49,800 $ 49,500 $ 15,800 $ 293,500 Case 18-10679-CSS Doc 18-3 Filed 03/28/18 Page 1 of 20
EXHIBIT C
PROPOSED INTERIM ORDER
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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
In re: Chapter 11
CANDI CONTROLS, INC.,1 Case No.: 18-10679 (CSS)
Debtor.
Related Docket No. __
INTERIM ORDER (I) AUTHORIZING DEBTOR CANDI CONTROLS, INC. TO INCUR POSTPETITION SECURED SUPERPRIORITY INDEBTEDNESS PURSUANT TO SECTIONS 105(a), 362, 364(c)(1), 364(c)(2), 364(c)(3), AND 364(d); (II) MODIFYING THE AUTOMATIC STAY; (III) SCHEDULING A FINAL HEARING PURSUANT TO BANKRUPTCY RULES 4001(b) AND 4001(c); AND (IV) GRANTING RELATED RELIEF THIS MATTER having come before this Court on the motion (the “Motion”)2 of the above-referenced Debtor, Candi Controls, Inc. (the “Debtor” or “Borrower”), seeking, among other things, entry of an interim order (the “Interim Order”) and a Final Order (as defined below): (i) authorizing the Debtor, pursuant to sections 105, 361, 362, 363, and 364 of title 11 of the United States Code (the “Bankruptcy Code”), Rule 4001 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and Rule 4001-2 of the Local Rules of this
Court (the “Local Rules”), from the date of entry of the Interim Order through and including the date of the Final Hearing (as defined below) to obtain post-petition loans and advances from Altair Engineering, Inc. (the “Lender”), consisting of a debtor-in-possession facility (the “DIP
Facility”) on an interim basis in an aggregate principal amount not to exceed $150,000 at any time outstanding pursuant to the terms and conditions contained in the DIP Credit Agreement
1 The last four digits of the Debtor’s federal tax identification number are 4409. The Debtor’s principal place of business is 428 13th Street, Third Floor, Oakland, CA 94612. 2 Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Motion or the DIP Credit Agreement (as defined herein).
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(defined below) and set forth herein (and after the entry of a Final Order, an aggregate principal amount not to exceed $375,000, subject to a Carve-Out of $75,000 plus certain statutory fees due to the U.S. Trustee as specified herein); (ii) authorizing the Borrower to enter into that certain Debtor-in-Possession Credit and Security Agreement, by and between the Debtor and the Lender in the form annexed as Exhibit 1 hereto and all other related agreements, documents, Notes, certificates, and instruments executed and/or delivered in connection therewith or related thereto (collectively, as may be amended, modified or supplemented in accordance with the terms of this Interim Order and in effect from time to time, the “DIP Credit Agreement”); and incur the “Obligations” under and as defined in the DIP Credit Agreement (collectively, the “DIP Obligations”); (iii) authorizing the Borrower to perform such acts as may be reasonably necessary or desirable in order to give effect to the provisions of the DIP Credit Agreement on an interim basis; (iv) authorizing the use of the proceeds of the DIP Facility on an interim basis in a manner consistent with the terms and conditions of the DIP Credit Agreement, including for the Lender to fund to Borrower Advances, provided that Borrower shall use the proceeds of the Advances only for the purpose of funding Borrower’s post-petition operations and other items, all strictly in accordance with the allowed disbursements line item(s) set forth in the Budget, a copy of which is annexed hereto as Exhibit 2;
(v) providing, pursuant to sections 364(c)(1) and 507(b) of the Bankruptcy Code, that all DIP Obligations owing to the Lender under the DIP Credit Agreement shall be accorded administrative expense status having priority over any and all administrative expenses of, and unsecured claims, against the Borrower now existing or hereafter arising, of any kind or nature whatsoever, including, without limitation, all administrative expenses of the kind specified in, or arising or ordered under, Sections 105, 326, 328, 503(b), 506(c), 507(a), 507(b), 546(c), 726 and 1114 of the Bankruptcy Code, except as otherwise provided herein or in the DIP Loan Agreement and subject to the Carve-Out as specified herein;
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(vi) granting to the Lender, pursuant to sections 364(c)(2) and 364(d)(1) of the Bankruptcy Code, a first priority perfected security interest in and liens on (collectively, the “DIP Liens”) all of Borrower’s property that comprises (i) the Purchased Assets, (ii) all other assets of the Debtor including but not limited to cash, accounts, deposit accounts, investment property, goods, general intangibles, tort claims, intellectual property, patents, trademarks, copyrights, licenses, inventory, furniture, fixtures, equipment, documents, chattel paper, and any other property rights, and (iii) upon entry of the Final Order, proceeds of claims and causes of action brought pursuant to sections 502(d), 544, 545, 547, 548, 549, 550, and 553 of the
Bankruptcy Code (the “Avoidance Action Proceeds”)(collectively, (i), (ii) and (iii), the “DIP Collateral”), subject to any validly perfected and otherwise unavoidable liens (but expressly excluding the liens and security interests of the Bridge Loan Lender which are being primed); (vii) authorizing and directing the Borrower to pay, without further order of this Court, the principal, interest and other DIP Obligations payable to the Lender under the DIP Credit Agreement as they become due, all as and to the extent provided in the DIP Credit Agreement, on an interim basis;
(viii) vacating and modifying the automatic stay imposed by section 362 of the Bankruptcy Code to the extent necessary to implement and effectuate the terms and provisions of the DIP Credit Agreement and this Interim Order; (ix) authorizing the Borrower to grant adequate protection as provided below in connection with the granting of the DIP Liens; (x) scheduling a final hearing (the “Final Hearing”) to consider entry of an order (the “Final Order”) granting the relief requested in the Motion on a final basis and approving the form of notice with respect to the Final Hearing; and (xi) waiving any applicable stay (including under Bankruptcy Rule 6004) and providing for immediate effectiveness of this Interim Order, on the terms set forth in this Interim Order, all as described more fully in the Motion; and the Court having considered the Motion and the Declaration of Douglas Klein in Support of the First-Day Motions (the "DIP
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Declaration"); and the Court having jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C. §§ 157 and 1334; and consideration of the Motion and the relief requested therein on an interim basis being a core proceeding pursuant to 28 U.S.C. § 157(b); and venue being proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409; and the interim relief sought in the Motion being necessary and in the best interests of the Debtor, its estate, creditors and all parties in interest; and the Court having reviewed the Motion and having heard the statements in support of the interim relief requested therein at a hearing before the Court (the “Interim Hearing”); and the Court having determined that the legal and factual bases set forth in the Motion and at the Interim Hearing establish just cause for the interim relief granted herein; and it appearing that approval of the interim relief requested in the Motion is necessary to avoid immediate and irreparable harm to the Debtor pending the Final Hearing and otherwise is fair and reasonable and in the best interest of Debtor, its creditors, and its estate and is essential for the continued operation of the Borrower’s business; and it further appearing that the Debtor is unable to secure unsecured credit on similar or more favorable terms; and upon all the proceedings had before the Court and after due deliberation and sufficient cause appearing therefor:
BASED UPON THE RECORD ESTABLISHED AT THE INTERIM HEARING, THIS COURT HEREBY MAKES THE FOLLOWING FINDINGS OF FACT AND CONCLUSIONS OF LAW:
(A) Petition Date. On March 23, 2018 (the “Petition Date”), an involuntary petition was commenced against the Debtor in this Court. Thereafter, the Debtor consented to the entry of an order for relief under chapter 11 of the Bankruptcy Code in this Court. The Court entered an order for relief under Chapter 11 of the Bankruptcy Code on March 27, 2018. The Debtor continues to manage and operate its businesses and property as a debtor-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed in the Chapter 11 Case.
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(B) Jurisdiction and Venue. This Court has jurisdiction over this proceeding, and over the property affected hereby, pursuant to 28 U.S.C. §§ 157(b) and 1334. Consideration of the Motion constitutes a core proceeding as defined in and pursuant to 28 U.S.C. § 157(b)(2). Venue for this case and for the proceedings on the Motion is proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409. (C) Notice. The Interim Hearing was held pursuant to the authorization of Bankruptcy Rule 4001. Notice of the Interim Hearing and the emergency relief requested in the Motion been provided by Borrower to the United States Trustee for the District of Delaware (the
“United States Trustee”), the Bridge Loan Lender (as defined in the DIP Credit Agreement), the Debtor’s 20 largest unsecured creditors, and all parties requesting notice pursuant to Fed. R. Bankr. P. 2002 in the Chapter 11 Case. Pursuant to Bankruptcy Rule 4001(c), the Borrower submits that under the circumstances such notice of the Interim Hearing and the interim relief requested in the Motion is due and sufficient notice and complies with sections 102(1) and 364(c) and (d) of the Bankruptcy Code, Bankruptcy Rules 2002, 4001(c), 4001(d) and the Local Rules of the Court.
(D) Need for Postpetition Financing. The Debtor has demonstrated its immediate need to obtain postpetition financing pursuant to section 364 of the Bankruptcy Code. In the absence of the financing provided by the DIP Credit Agreement, the Debtor will be unable to continue operating in chapter 11 to its detriment and the detriment of its creditors and other parties in interest. An immediate need exists for the Debtor to obtain funds from the DIP Facility in order to continue its operations and to engage in a process for the sale of its assets (the “Sale Process”) to preserve and maximize the value of its estate and to achieve a sale transaction.
Borrower does not have sufficient working capital or other financing available to operate its business, maintain the estate’s property, and administer this case in the absence of the proposed post-petition financing from the Lender. (E) Immediate Irreparable Damage or Loss Will Result if Immediate Financing Is Not Obtained. There will be immediate and irreparable loss or damage to the estate
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if immediate financing is not obtained. Without the requested financing, Borrower will be unable, among other things, to fund ongoing and essential working capital needs and obligations through a sale of the Purchased Assets. The Borrower must obtain the proposed DIP Facility to meet its obligations through a sale of the Purchased Assets, to effectuate an orderly continuation of its operations in chapter 11 and to engage in the Sale Process. It is in the best interests of the Debtor’s estate for the Borrower to be allowed to enter into the DIP Facility contemplated by the DIP Credit Agreement on an immediate interim basis. (F) No Credit Available on More Favorable Terms. Given, among other things, the Debtor’s current financial condition and available assets, the Debtor is unable to obtain adequate, unsecured financing from any lender on substantially similar terms or terms more favorable than those provided by the Lender in the DIP Credit Agreement and within the time required to avoid immediate and irreparable harm to the Debtor. The Debtor has been unable to obtain (a) unsecured credit allowable solely as an administrative expense pursuant to sections 364(b) and 503(b) of the Bankruptcy Code; (b) credit solely having priority over all other administrative expenses specified in sections 503(b) and 507(a) and (b) of the Bankruptcy
Code; and (c) credit secured by a lien junior to the liens being primed by the DIP Liens. (G) Prior Liens. The Borrower stipulates and acknowledges that the only existing or prior liens and security interests on certain of the DIP Collateral are the security interests that were granted to the Bridge Loan Lender for the Bridge Period Funding, which security interest is being consensually primed pursuant to §364(d) of the Bankruptcy Code (H) Adequate Protection for Bridge Loan Lender. Pursuant to sections 361 and 364(d)(1)(B) of the Bankruptcy Code, the Bridge Loan Lender possesses an equity cushion in the DIP Collateral and is, by virtue of that equity cushion, adequately protected from, among other things, (i) the incurrence of the priming of the DIP Facility, (iii) the granting of the DIP Liens and DIP Administrative Claim, and (iii) the imposition of the automatic stay pursuant to section 362 of the Bankruptcy Code.
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(I) Section 506(c) Waiver. As a further condition of the DIP Credit Agreement and any obligation of the Lender to make credit extensions pursuant to the DIP Credit Agreement, upon entry of a final Order, the Borrower and its estate shall be deemed to have waived any claim to surcharge the DIP Collateral under section 506(c) of the Bankruptcy Code. (J) Use of Proceeds of the DIP Facility. Proceeds of the DIP Facility on an interim basis shall be used strictly in accordance with the allowed disbursements line item(s) set forth in the Budget and subject to the limitations set forth in section 2.6 of the DIP Credit
Agreement. (K) Extension of Financing. The Lender has indicated a willingness to provide financing to Borrower in accordance with the DIP Credit Agreement and subject to (i) the entry of this Interim Order and the Final Order; and (ii) findings by this Court that such financing is essential to preserving the value of the Borrower’s estate, that the Lender is a good faith lender, and that the Lender’s claims, superpriority claims, security interests, and liens and other protections granted pursuant to this Interim Order (and the Final Order) and the DIP
Facility will not be affected by any subsequent reversal, modification, vacatur or amendment of this Interim Order or the Final Order or any other order, as provided in section 364(e) of the Bankruptcy Code. (L) Business Judgment; Good Faith of the Lender. The terms and conditions of the DIP Facility and the DIP Credit Agreement, and the fees paid and to be paid thereunder are fair, reasonable, and the best available under the circumstances, reflect the Borrower’s exercise of prudent business judgment consistent with its fiduciary duties, and are supported by reasonably equivalent value and consideration. The Borrower chose the Lender as a postpetition lender in good faith, without collusion, and after obtaining the advice of experienced counsel and other professionals. The Borrower and the Lender proposed and negotiated the terms of the DIP Credit Agreement in good faith, at arm’s length and without collusion. The Lender is a “good faith” lender within the meaning of section 364(e) of the Bankruptcy Code, and the Lender’s
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claims, superpriority status, first priority security interests and liens and other protections arising from or granted pursuant to this Interim Order and the DIP Credit Agreement will not be affected by any subsequent reversal, modification, vacatur or amendment of this Interim Order or any other order, as provided in section 364(e) of the Bankruptcy Code. (M) Entry of Interim Order. For the reasons stated above, the Borrower has requested immediate entry of this Interim Order pursuant to Bankruptcy Rule 4001(c)(2).
BASED UPON THE FOREGOING FINDINGS AND CONCLUSIONS, AND UPON THE MOTION AND THE RECORD MADE BEFORE THIS COURT AT THE INTERIM HEARING, AND WITH THE CONSENT OF THE BORROWER AND THE LENDER TO THE FORM AND ENTRY OF THIS INTERIM ORDER, AND GOOD AND SUFFICIENT CAUSE APPEARING THEREFOR, IT IS HEREBY FOUND, ORDERED, ADJUDGED AND DECREED THAT: 1. Motion Granted. The Motion is hereby granted on an interim basis, solely to the extent set forth herein. 2. Objections Overruled. All objections to the entry of this Interim Order to the extent not withdrawn or resolved, are hereby overruled.
3. DIP Credit Agreement. The Borrower is hereby expressly and immediately authorized and directed to execute and deliver the DIP Credit Agreement and to perform the DIP Obligations in accordance with, and subject to, the terms of this Interim Order and the DIP Credit Agreement, and to execute and deliver all instruments, certificates, Notes, agreements and Loan Documents which may be required or necessary for the performance by the Borrower under the DIP Facility and the creation and perfection of the DIP Liens described in and provided for by this Interim Order and the DIP Credit Agreement; in connection therewith, the
Borrower is expressly and immediately authorized and empowered to incur any such DIP Obligations in accordance with, and subject to, the terms of this Interim Order and the DIP Credit Agreement. The Borrower is hereby authorized and directed to do and perform all acts, pay the principal, interest and other DIP Obligations required by the DIP Credit Agreement and
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all other documents comprising the DIP Facility as such become due under the terms of such Loan Documents, including, without limitation, other fees and charges as provided for in the DIP Credit Agreement. Upon execution and delivery, the DIP Credit Agreement shall represent valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with its terms. 4. Authorization to Borrow on an Interim Basis. In order to enable the Borrower to continue to operate in chapter 11 through the closing of a sale on the Purchased Assets, during the period from the date of this Interim Order through the date of entry of a Final Order (the
“Interim Period”) and subject to the terms and conditions of this Interim Order, the DIP Credit Agreement, documents comprising the DIP Facility, and the Budget, the Borrower is hereby authorized under the DIP Facility to borrow up to a total amount of $150,000 on an interim basis. Upon any draw under the DIP Facility, the Borrower shall deposit the proceeds of the DIP Facility into a segregated deposit account furnished by a depositary bank acceptable to the Lender (such account, the “DIP Account”). 5. Application of the DIP Proceeds. The Borrower shall (a) use the proceeds of
Advances only for the purpose of funding Borrower’s post-petition operations, and other items all strictly in accordance with the allowed disbursements line item(s) set forth in the Budget and (b) not use any proceeds of Advances for (i) any purpose adverse to or otherwise against the rights, remedies or interests of the Lender: (ii) any investigation or prosecution of any claim or challenge against the Lender; (iii) to pay professional fees and/or expenses to any professionals retained by the Borrower or any committee of unsecured creditors appointed in the Borrower’s Chapter 11 Case, except in the event the Carve-Out is required to be drawn on; and (iv) to pay any severance payments or retention bonuses to employees or contractors of the Borrower. 6. Conditions Precedent. The Lender shall have no obligation to make any loan or Advance under the DIP Credit Agreement during the Interim Period unless each of the conditions precedent set forth in Article IV to the DIP Credit Agreement have been satisfied in full or waived in accordance with the DIP Credit Agreement.
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7. Post-Petition DIP Liens. Effective immediately upon the entry of this Interim Order, the Lender is hereby granted the DIP Liens in and upon the DIP Collateral pursuant to sections 362, 364(c)(2), and 364(d) of the Bankruptcy Code. The DIP Liens constitute valid and perfected first priority Liens on and security interests in the DIP Collateral, and shall be prior and senior to all other Liens and security interests, now existing or hereafter arising, in favor of any other creditor or any other Person whatsoever, including but not limited to the Bridge Loan Lender and any Prior Liens. For the avoidance of doubt, upon entry of the Final Order, the DIP Collateral shall include the Avoidance Action Proceeds.
8. Survival of Liens. The DIP Liens, lien priority, administrative priorities and other rights and remedies granted to the Lender pursuant to the DIP Credit Agreement, this Interim Order and the other Loan Documents shall not be modified, altered or impaired in any manner by any other financing or extension of credit or incurrence of indebtedness by the Debtor (pursuant to Section 364 of the Bankruptcy Code or otherwise), or by any dismissal or conversion of the Chapter 11 Case, or by any other act or omission whatsoever. Without limitation, notwithstanding any such order, financing, extension, incurrence, dismissal, conversion, act or omission: (a) no costs or expenses of administration which have been or may be incurred in the Chapter 11 Case or any conversion of the same or in any other proceedings related thereto, and no priority claims, are or will be prior to or on a parity with any claim of the Lender against Borrower in respect of any DIP Obligation, except as set forth in the DIP Credit Agreement and/or this Order;
(b) the DIP Liens in favor of the Lender set forth herein and in the other Loan Documents shall continue to be valid and perfected first priority liens and security interests in the DIP Collateral without the necessity that the Lender file or record financing statements, mortgages or otherwise perfect its DIP Liens on the DIP Collateral under applicable non- bankruptcy law.
9. Superiority Administrative Claim Status. The DIP Obligations shall constitute, and the Lender shall have, in accordance with Section 364(c)(1) of the Bankruptcy Code, an administrative expense claim (the “DIP Administrative Claim”) that is senior to any and all administrative expenses and unsecured claims against Borrower now existing or hereafter
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arising, of any kind or nature whatsoever, including, without limitation, all administrative expenses of the kind specified in, or arising or ordered under, sections 105, 326, 328, 503(b), 507(a), 507(b), 546(c), 726 and 1114 of the Bankruptcy Code, subject to the Carve-Out. The DIP Administrative Claim shall be secured by liens on the DIP Collateral pursuant to section 364 of the Bankruptcy Code as provided herein. 10. Adequate Protection for Bridge Loan Lender. Pursuant to sections 361 and 364(d)(1)(B) of the Bankruptcy Code, the Bridge Loan Lender is entitled to and is hereby granted adequate protection in the form of a lien and administrative claim on the DIP Collateral solely to the extent of any diminution in the value of its interest in all or a portion of the DIP Collateral securing the Bridge Period Funding as of the Petition Date resulting from, among other things, (a) the incurrence of the priming DIP Facility; (b) the granting of the DIP Liens and the DIP Administrative Claim; and (c) the imposition of the automatic stay pursuant to section 362 of the Bankruptcy Code, which adequate protection lien and administrative claim of the Bridge Loan Lender shall be junior to and subordinate to the DIP Liens and DIP Administrative Claim granted to Lender pursuant to this Order and the DIP Credit Agreement.
11. Post-Petition Lien Perfection. This Interim Order shall be sufficient and conclusive evidence of the validity, perfection and priorities of the DIP Liens upon the DIP Collateral, without the necessity of filing or recording any financing statement, assignment, mortgage, deed of trust, trademark security agreement, copyright security agreement, patent security agreement or other instrument or document which may otherwise be required under the law of any jurisdiction or the taking of any other action to validate or perfect the DIP Liens or to entitle the Lender to the priorities granted herein and in the DIP Credit Agreement; provided, however, that the Borrower shall, upon the request of the Lender, execute such instruments, assignments, mortgages, deeds of trust, trademark security agreements, copyright security agreements, patent security agreements or other documents as the Lender reasonably requests and shall take such other action as may be required to perfect or to continue the perfection of the Lender’s DIP Liens upon the DIP Collateral pursuant to the terms of the DIP Credit Agreement
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12. Carve-Out. Notwithstanding anything to the contrary herein, in the DIP Credit Agreement or any other order of this Court to the contrary, the rights and claims of the Lender, including the DIP Liens (and all liens junior to the DIP Liens including liens of the Bridge Loan Lender), shall be subject and subordinate in all respects to the payment of the Carve-Out (as defined below). Following the occurrence of an Event of Default or default under this Interim Order and/or the DIP Credit Agreement (each, a “Carve-Out Trigger Event”), and delivery of notice thereof (the “Carve-Out Trigger Notice”) (which may be by email) to the Borrower, Debtor’s counsel, and any official committee of unsecured creditors appointed and the US
Trustee (the date of a delivery of such notice, the “Carve-Out Trigger Date”), the Borrower shall be entitled to be paid under the DIP Facility (but, for the avoidance of doubt, capped under all circumstances at $75,000.00) for the following purposes only and without duplication (i) the amount of accrued and unpaid professional fees of any professionals retained by Order of the Bankruptcy Court by the Debtor and any official committee of unsecured creditors appointed from the Petition Date through the Carve-Out Trigger Date, but only to the extent such services and/or expenses are allowed by Bankruptcy Court order, are in accordance with the Budget and subject to any limitations set forth in this Order (the “Professional Compensation”) in an amount not to exceed $75,000 in total; and (ii) any amounts due for statutory fees required to be paid by Borrower to the U.S. Trustee pursuant to 28 U.S.C. §1930(a) through the Carve-Out Trigger Date (the “Carve-Out”). Upon the occurrence of the Carve-Out Trigger Date and the allowance by order of the Bankruptcy Court of the fees and costs of Professional Compensation, the Lender shall be authorized to transfer cash to the Debtor under the DIP Facility in an amount not to exceed $75,000.00, and each party’s claim for all approved fees and/or costs for Professional
Compensation may be satisfied from the Carve-Out pari passu with one another, and if all such fees and/or costs exceed $75,000, pro rata. 13. Reservation of Rights and Bar of Challenges and Claims. The Debtor’s acknowledgements and stipulations with respect to the DIP Facility, DIP Liens, DIP Collateral
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and DIP Credit Agreement as set forth herein shall be and hereby are binding upon the Debtor in all circumstances upon entry of this Interim Order. 14. Rights and Remedies Upon Event of Default. Any automatic stay otherwise applicable to the Lender is hereby modified so that after the occurrence of any Event of Default (as defined in the DIP Credit Agreement) and at any time thereafter, upon four (4) Business Days prior written notice given by email or facsimile of such occurrence, in each case given to counsel for the Borrower, the Official Committee of Unsecured Creditors if any is appointed, and the United States Trustee (collectively, the “Notice Parties”), the Lender shall be entitled to exercise all rights and remedies in accordance with the DIP Credit Agreement and this Interim Order, as applicable. Following the giving of written notice by the Lender of the occurrence of an Event of Default, one or more of the Notice Parties shall be entitled to request an emergency hearing before this Court. If the right of the Lender to exercise its remedies is not contested or otherwise stayed or enjoined by this Court, after notice and hearing, if requested or held, the automatic stay as to the Lender shall automatically terminate at the end of such notice period. Subject to the provisions of this paragraph, upon the occurrence of an Event of Default, the Lender is authorized to exercise its remedies and proceed under or pursuant to the DIP Credit Agreement and this Interim Order. Nothing included herein shall prejudice, impair, or otherwise affect the Lender’s rights to seek any other or supplemental relief in respect of the Borrower nor the Lender’s rights, as provided in the DIP Credit Agreement, to suspend or terminate the making of any further Advances under the DIP Credit Agreement. 15. Costs and Expenses. The Lender shall be entitled to all reasonable costs and expenses, including reasonable attorneys’ fees and other professional fees, incurred in connection with the collection and enforcement of the DIP Obligations in connection with and following the occurrence of an Event of Default and the foreclosure or enforcement of the DIP Liens or the Lenders’ security interests, provided that counsel of record for the Borrower, counsel of record for the Official Committee of Unsecured Creditors if any is appointed, and the U.S. Trustee shall have the ability to challenge the reasonableness of any portion of invoiced
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costs and expenses, including reasonable attorneys’ fees or other professional fees (the "Costs and Expenses" and any such challenged amounts the "Disputed Costs and Expense") for a period of ten (10) calendar days (the "Review Period") after receipt of invoices therefor (which invoices may be redacted or summarized for protection of an applicable privilege or the work product doctrine) by, prior to the end of such Review Period, notifying the Lender of the objection in writing (to be followed by the filing with the Court of a motion or other pleading requesting a determination of allowance or disallowance of the Disputed Costs and Expenses) setting forth the specific basis for each objection to the Disputed Costs and Expenses. The Borrower’s obligations under the DIP Credit Agreement shall survive the termination of the DIP Credit Agreement and this Interim Order and the discharge of the Borrower’s other obligations thereunder. The Bankruptcy Court shall adjudicate any Disputed Costs and Expenses if the parties cannot consensually resolve any such dispute. 16. Termination Date. Immediately upon an Event of Default, a Sale Termination Date or a Specified Sale Transaction Termination Date (as defined in the DIP Credit Agreement), (i) all DIP Obligations shall be immediately due and (ii) the Lender’s obligations under the DIP Credit Agreement to fund additional Advances shall cease. 17. Modifying the Automatic Stay. The automatic stay imposed by section 362(a) of the Bankruptcy Code is hereby modified to permit (a) the Borrower to grant the DIP Liens and the DIP Administrative Claim, and to perform such acts as the Lender may reasonably request to assure the perfection and priority of the DIP Liens; and (b) the implementation of the terms of this Interim Order and the DIP Credit Agreement. 18. Government Acceptance. Upon approval of this Interim Order by the Court, the
Borrower or Lender may make filings with and give notices to all federal, state and local governmental agencies, authorities and instrumentalities in connection with the execution, delivery, validity and enforceability of the DIP Credit Agreement. All federal, state and local
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governmental agencies, authorities and instrumentalities may accept this Interim Order as evidence of the transactions consummated hereby.3 19. Right to Credit Bid. Pursuant to section 363(k) of the Bankruptcy Code, the Lender or Purchaser shall have the right to credit bid the Lender’s outstanding claims and the DIP Obligations under the DIP Credit Agreement and this Interim Order and such right to credit bid shall not be subject to any challenge or objection; provided that, such right of the Lender or Purchaser to credit bid shall be limited to the amount of the DIP Obligations under the DIP Credit Agreement.
20. Protections of 364(e). If any provision of this Interim Order is hereafter modified, vacated, or stayed by subsequent order of this Court or any other court for any reason, the Lender is entitled to the protections provided in section 364(e) of the Bankruptcy Code. 21. Binding Effect. Except as otherwise provided in this Interim Order, the terms and provisions of this Interim Order shall, immediately upon entry of this Interim Order by this Court, become valid and binding upon the Debtor, the Lender, all creditors of the Debtor, the Official Committee of Unsecured Creditors if one is appointed, and all other parties in interest and their respective successors and assigns, including any trustee or other fiduciary hereafter appointed as a legal representative of the Debtor’s estate in the Chapter 11 Case or in any subsequent chapter 7 case. 22. No Waiver. The failure of the Lender to seek relief or otherwise exercise its rights and remedies under the DIP Credit Agreement, the DIP Facility or this Interim Order, as applicable, shall not constitute a waiver of any of the Lender’s rights hereunder, thereunder, or otherwise. Notwithstanding anything herein, the entry of this Interim Order is without prejudice to, and does not constitute a waiver of, expressly or implicitly, or otherwise impair the Lender under the Bankruptcy Code or under non-bankruptcy law, including without limitation, the rights of the Lender to: (i) request conversion of the Chapter 11 Case to a case under chapter 7,
3 Section 1146(a) of the Bankruptcy Code does not apply to paragraph 18.
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dismissal of the Chapter 11 Case, or the appointment of a trustee in the Chapter 11 Case; or (ii) propose, subject to the provisions of Section 1121 of the Bankruptcy Code, a plan; or (iii) exercise any of the rights, claims or privileges (whether legal, equitable or otherwise) of the Lender. 23. No Third Party Rights. Except as specifically provided for herein, this Interim Order does not create any rights for the benefit of any third party, creditor, equity security holders, or any direct, indirect, or incidental beneficiary. 24. Section 506(c) Waiver. The Borrower and its estate shall be deemed to have waived any claim to surcharge the DIP Collateral under section 506(c) of the Bankruptcy Code upon the entry of a final DIP financing order. 25. Waiver of Marshaling. Recourse to the DIP Collateral or other security for the DIP Obligations will not at any time be required, and the Borrower hereby waives any right of marshaling the Borrower may have. 26. Survival of Interim Order. The terms of this Interim Order and any actions taken pursuant hereto, shall survive the entry of any order which may be entered: (a) confirming any plan in the Chapter 11 Case; (b) dismissing the Chapter 11 Case; (c) converting the Chapter 11 Case to any other chapter under the Bankruptcy Code; (d) withdrawing of the references of the Chapter 11 Case from the Bankruptcy Court; and (e) providing for abstention from handling or retaining of jurisdiction of the Chapter 11 Case in the Bankruptcy Court. The terms and provisions of this Interim Order as well as the protections granted pursuant to this Interim Order and the DIP Credit Agreement, shall continue in full force and effect notwithstanding the entry of such order, and such protections shall maintain their priority as provided by this Interim Order until all the obligations of the Borrower to the Lender pursuant to the DIP Credit Agreement are indefeasibly paid in full and discharged. The DIP Obligations shall not be discharged by the entry of any order confirming a chapter 11 plan, the Debtor having waived such discharge pursuant to section 1141(d)(4) of the Bankruptcy Code. The Debtor shall not propose or support
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any plan that is not conditioned upon the payment in full in cash of all of the DIP Obligations on or prior to the effective date of such plan. 27. DIP Credit Agreement Provisions; Inconsistency. The failure specifically to include any particular provision(s) of the DIP Credit Agreement in this Interim Order shall not diminish or impair the effectiveness of such provision, it being the intent of the Court, the Borrower, and the Lender that the DIP Credit Agreement and all Loan Documents are hereby authorized and approved in their entirety on an interim basis with such amendments thereto as may be made by the parties in accordance with this Interim Order and the DIP Credit Agreement; provided, however, that to the extent any provisions of the DIP Credit Agreement are in conflict with the terms and conditions of this Interim Order, the terms and conditions of this Interim Order shall control. 28. Amendment. The Borrower and the Lender may amend, modify, supplement, or waive any provision of the DIP Facility, subject to the following conditions: (i) the amendment, modification, or waiver must not constitute a material change to the terms of the DIP Credit Agreement; and (ii) copies of the amendment, modification, or waiver must be served upon counsel for the Official Committee of Unsecured Creditors if any is appointed, and the U.S. Trustee four (4) Business Days prior to its effectiveness and; (iii) if objected to prior to its effectiveness, must be approved by the Bankruptcy Court. Any amendment, modification, or waiver that constitutes a material change, to be effective, must be approved by the Bankruptcy
Court. For purposes hereof, a "material change" shall mean a change to the DIP Credit Agreement that operates to shorten the term of the DIP Facility or the maturity of the DIP Obligations, to increase the aggregate amount of the commitments of the Lender under the DIP
Facility, to increase the rate of interest other than as currently provided in or contemplated by the DIP Credit Agreement, or to add specific Events of Default, to enlarge the nature and extent of remedies available to the Lender following the occurrence of an Event of Default. Without limiting the generality of the foregoing, no amendment of the DIP Credit Agreement that postpones or extends any date or deadline therein or herein (including, without limitation, the
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expiration of the term of the DIP Facility), nor any waiver of an Event of Default, shall constitute a "material change" and any such amendment may be effectuated by the Borrower and the Lender without the need for further approval of the Bankruptcy Court. Except as otherwise provided herein, no waiver, modification, or amendment of any of the provisions hereof shall be effective unless set forth in writing, signed by the Borrower and the Lender and approved by the Bankruptcy Court. 29. Enforceability. This Interim Order shall constitute findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052, made applicable by Rule 9014, and shall take effect and be fully enforceable immediately upon execution hereof. 30. Waiver of Right to Modify. This Interim Order shall not be modified, amended or extended without the prior written consent of the Lender, and no such consent shall be implied by any action, inaction or acquiescence of the Lender. 31. No Unauthorized Disposition of DIP Collateral. The Borrower shall not sell, use or dispose of the DIP Collateral except as (a) approved by the Lender in accordance with the Budget and the DIP Credit Agreement or (b) as permitted under the Bidding Procedures Order.
32. Waiver of Stay; Effectiveness. Any applicable stay (including, without limitation, under Bankruptcy Rule 6004(h)) is hereby waived and shall not apply to this Interim Order, and the terms of this Interim Order shall be fully effective immediately upon entry. 33. Exclusive Jurisdiction. This Court shall retain exclusive jurisdiction to interpret and enforce the provisions of the DIP Credit Agreement and this Interim Order in all respects; provided, however, that in the event this Court abstains from exercising or declines to exercise jurisdiction with respect to any matter provided for in this paragraph or is without jurisdiction, such abstention, refusal, or lack of jurisdiction shall have no effect upon and shall not control, prohibit or limit the exercise of jurisdiction of any other court having competent jurisdiction with respect to any such matter. 34. Final Hearing. The Borrower shall, on or before April ____, 2018, serve by overnight express delivery service a copy of this Interim Order and the proposed Final Order to
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counsel for the United States Trustee, counsel for the Official Committee of Unsecured Creditors if any is appointed, and if no committee is appointed then the Debtor’s 20 largest unsecured creditors, and all parties requesting notice pursuant to Fed. R. Bankr. P. 2002 in the Chapter 11 Case. 35. Any party wishing to object to the entry of the proposed Final Order and approval of the DIP Facility on a final basis shall file a written objection with the United States Bankruptcy Court Clerk for the District of Delaware, 824 Market Street, Wilmington, Delaware 19801, by no later than April ___ 2018, at 4:00 p.m. prevailing Eastern time, and a copy of any such objection must be served on counsel for Borrower and the Lender so that the objection is actually received by no later than this date and time. 36. The Final Hearing to consider the Motion and entry of the Final Order shall be held on April ____, 2018 at ______a.m./p.m. prevailing Eastern time, before the Honorable Christopher S. Sontchi, United States Bankruptcy Judge, at the United States Bankruptcy Court for the District of Delaware, 824 Market Street, 5th Floor, Wilmington, Delaware 19801. If no objections to the relief sought at the Final Hearing are timely filed and served in accordance with this Interim Order, the Final Hearing may be cancelled, and a Final Order may be presented by the Borrower and entered by this Court.
Dated: April _____, 2018 Wilmington, Delaware ______Honorable Christopher S. Sontchi United States Bankruptcy Judge
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