EXHIBIT 2
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
IN RE:
FWT, INC. CASE NO. 99-42066-MT-11
DEBTOR
ORDER APPROVING AGREEMENT REGARDING CASH COLLATERAL, OTHER COLLATERAL,
ADEQUATE PROTECTION, AND LIMITED RELIEF FROM AUTOMATIC STAY
CAME ON FOR CONSIDERATION the Motion for Authority to Use Cash Collateral
(the "Motion") filed by FWT, Inc. (the "Debtor"). It appears to this Court that
adequate notice of the Motion and the hearing thereon has been given pursuant to
the Federal Rules of Bankruptcy Procedure, and that BT Commercial Corporation.
Individually and as agent for itself and other lenders (the "Lenders"), and the
Debtor have agreed to the terms of this Order (the "Agreed Order") to be entered
upon the Motion. This Court accordingly finds, concludes, and orders:
OPPORTUNITY TO OBJECT
1. PURSUANT TO BANKRUPTCY RULE 4001(D)(2), ANY OBJECTION TO THIS AGREED
ORDER REGARDING CASH COLLATERAL, OTHER COLLATERAL, ADEQUATE PROTECTION, AND
LIMITED RELIEF FROM THE AUTOMATIC STAY MUST BE FILED WITH THE COURT WITHIN
FIFTEEN (15) DAYS OF THE DATE OF MAILING HEREOF TO THOSE PARTIES REQUIRED UNDER
BANKRUPTCY RULE 4001(D)(1). IF NO OBJECTION TO THIS AGREED ORDER IS MADE WITHIN
SUCH TIME PERIOD, THIS
ORDER APPROVING AGREEMENT REGARDING CASH COLLATERAL, OTHER COLLATERAL, ADEQUATE
PROTECTION, AND.LMITED RELIEF FROM AUTOMATIC STAY - Page I
AGREED ORDER SHALL BE SUBJECT TO NO FURTHER OBJECTION AND SHALL BE FINAL. THE
MAILING OF A COPY OF THIS AGREED ORDER BY FIRST CLASS MAIL, POSTAGE PREPAID, ON
THOSE ENTITIES REQUIRED UNDER BANKRUPTCY RULE 4001 (D)(1) SHALL BE DEEMED TO
CONSTITUTE COMPLIANCE WITH THE APPLICABLE NOTICE PROVISIONS OF BANKRUPTCY RULE
4001.
STATEMENT OF JURISDICTION
2. This Court has jurisdiction over this matter pursuant to 28 U.S.C.
ss.ss. 1334 and 157 This matter concerns the administration of this bankruptcy
estate, an order modifying the automatic stay and an order approving the use of
cash collateral and, thus, this matter is a core proceeding pursuant to 28
U.S.C. ss. 157(b)(2)(A), (G) and (M).
VALIDITY OF LOAN DOCUMENTS AND. SECURITY INTERESTS
3. At 4:07 p.m. on April 16, 1999 (the "Petition Date"), the Debtor flied
its voluntary petition for relief under Chapter 11 of Title 11 of the United
States Code (the "Code")
4. The Debtor has filed the Motion requesting that the Court (a) approve
its use Of Lenders' Collateral, including its sale of the inventory portion of
the Collateral (as defined below); (b) approve the provision of adequate
protection of the Lenders' interest (as defined below), and (c) modify the
automatic stay for the limited purpose of allowing the Lenders to continue to
receive the proceeds of the Debtor's accounts receivable and other Cash
Collateral and apply the same to the retirement of the Lenders' Claim (as
defined below).
ORDER APPROVING AGREEMENT REGARDING CASH COLLATERAL OTHER COLLATERAL, ADEQUATE
PROTECTION, AND LIMITED RELIEF FROM AUTOMATIC, STAY - Page 2
5. Prior to the Petition Date, the Debtor executed and delivered to
Lenders certain instruments and documents including, without limitation, the
following (collectively, the "Indebtedness Documents"):
(a) Credit Agreement dated as of November 12, 1997, among the
Debtor, BT Commercial Corporation, as Agent (in such capacity,
"Agent"), and the Lenders, as amended by that certain First
Amendment to Credit Agreement dated as of February 8, 1 gg8,
and Second Amendment to Credit Agreement dated as of January
20, 1999 (as amended, the "Credit Agreement");
(b) Revolving Note dated as of November 12, 1997, in the maximum
amount of $25,000,000 executed by the Debtor and payable to
the order of the Lenders; and
(c) Any and all other documents executed in connection with or
related To the indebtedness evidenced by the Notes, or which
evidence any other indebtedness or obligations of the Debtor
to Lenders.
True and correct copies of certain of the Indebtedness Documents are retained by
Lenders and the Debtor The terms and provisions of the Indebtedness Documents
are referenced and incorporated herein as if set forth IN HAEC VERBA. The
Lenders assert that the indebtedness evidenced by the Indebtedness Documents is
valid, existing, and legally enforceable.
6. The Lenders assert that the indebtedness evidenced by the Indebtedness
Documents and all other obligations of the Debtor to Lenders are secured by
perfected,
ORDER APPROVING AGREEMENT REGARDING CASH COLLATERAL, OTHER COLLATERAL, ADEQUATE
PROTECTION, AND LIMITED RELIEF FROM AUTOMATIC STAY - Page 3
First-priority security interests and liens in all personal property of the
Debtor including, without limitation, All equipment, inventory, accounts,
contract rights, chattel paper, documents, instruments, general Intangibles,
assigned agreements, deposit accounts, trademarks, tradenames, tradesecrets,
business Names, patents, patent applications, licenses, copyrights,
registrations, franchise rights, investment Property, fixtures, books and
records, and all proceeds, products, rents, and profits of or from all such
Property (collectively, the "Collateral") granted pursuant to certain documents
including, without limitation,
The following (collectively, the "Collateral Documents"):
(a) Company Security Agreement dated as of November 12, 1997, executed
by the Debtor in favor of the Lenders;
(b) Company Pledge Agreement dated as of November 12, 1997, executed by
the Debtor in favor of the Lenders;
(c) Company Trademark Security Agreement dated as of November 12, 1997,
executed by the Debtor in favor of the Lenders;
(d) Company Patent Security Agreement dated as of November 12, 1997,
executed by the Debtor in favor of the Lenders; and
(e) Any and all other documents which grant Lenders security interests
or liens on property of the Debtor.
True and correct copies of certain of the Collateral Documents are retained by
the Lenders and the Debtor. The terms and provisions of the Collateral Documents
are referenced and incorporated herein as if set forth IN HAEC verba.
ORDER APPROVING AGREEMENT REGARDING CASH COLLATERAL, OTHER COLLATERAL, ADEQUATE
PROTECTION AND LIMITED RELIEF FROM AUTOMATIC STAY - Page 4
7. The Indebtedness Documents, Collateral Documents, and Perfection
Documents (as hereinafter Defined) shall be referred to herein collectively as
the "Loan Documents." Unless otherwise Defined herein, all defined terms used
herein shall have the same meaning ascribed to them in the Loan Documents.
8. The Loan Documents are genuine, valid, and existing. The original Loan
Documents, or true and accurate copies of them, are hereby deemed identified,
authentic, and admissible in any proceeding or matter in which they are
applicable.
THE LENDERS' CLAIM
9. Prior to the Petition Date, the Debtor had defaulted pursuant to the
terms and provisions of the Loan Documents.
10. The Lenders hold a claim (as defined in Code ss. 101(5)) against the
Debtor as of the Petition Date, pursuant to the Loan Documents and applicable
law, for unpaid principal, accrued but unpaid interest, plus reasonable costs,
attorneys' fees, and any and all other amounts to the extent permitted by the
Code and applicable law (the "Lenders' Claim"). As of the Petition Date, the
Lenders' Claim includes at least $1,227,582.60 in unpaid principal and
$11,747.27 in accrued but unpaid interest.
THE LENDERS' COLLATERAL
11. The Lenders assert that, pursuant to the Loan Documents, the Lenders
were granted first priority security interests and liens in the Collateral,
which secure the Lenders' Claim. As used herein, the term "Collateral " shall
include pre-petition and/or post-petition property of the Debtor.
ORDER APPROVING AGREEMENT REGARDING CASH COLLATERALI OTHER COLLATERAL, ADEQUATE
PROTECTION, AND LIMITED RELIEF FROM AUTOMATIC STAY. Page 5
12. The Lenders assert that they have properly perfected their first
priority liens and security interests in the Collateral by several means,
including, without limitation, filing UCC-1 Financing Statements with the
Secretary of State of Texas, and other appropriate county filing offices (the
"Perfection Documents") The Lenders assert that the liens and security interests
of the Lenders in the Collateral are first-priority, perfected, valid, existing,
and legally enforceable.
13. As of the Petition Date, the value of the Lenders' interest in the
Collateral, which secures the Lenders' Claim, was greater than the amount of the
Lenders' Claim. The Lenders assert that they have an enforceable,
first-priority, perfected security interest and lien in the Collateral and the
Cash Collateral (as hereinafter defined), plus any other property as provided
under Code ss. 552(b), this Agreed Order and applicable law in the amount of the
Lenders' Claim, without limitation (the "Lenders' Interest").
14. The Lenders assert that this Agreed Order constitutes conclusive
evidence concerning issues of existence, validity, perfection, and priority of
the Lenders' Claim and the Lenders' Interest in property of this bankruptcy
estate, wherever located.
15. This Agreed Order constitutes a binding agreement. The agreements and
arrangements authorized in this Agreed Order have been negotiated at arm's
length, are fair and equitable under the circumstances, and are enforceable
pursuant to their terms. The Lenders and the Debtor have acted in good faith in
the negotiation and preparation of this Agreed Order, have been represented by
counsel, and intend to be bound by its terms.
ORDER APPROVING AGREEMENT REGARDING CASH COLLATERAL, OTHER COLLATERAL, ADEQUATE
PROTECTION, AND LIMITED RELIEF FROM AUTOMATIC STAY - Page 6
SEGREGATION, ACCOUNTING, AND RESTRICTED USE OF CASH COLLATERAL
16. To the extent of Lenders' interest as permitted by this Agreed Order
and 1he Code, all cash Equivalents, whether in the form of cash, negotiable
instruments, documents of title, securities, deposit Accounts, or in any other
form, whenever acquired, which represent income, proceeds, products, rents, or
Profits of the Collateral that is now in the possession, custody or control of
the Debtor (or persons in privity With the Debtor), or in which the Debtor will
obtain an interest during the pendency of this bankruptcy Case, are and shall be
treated as the "cash collateral" of the Lenders as that term is defined in Code
ss.363(a) (collectively, the "Cash Collateral'". The Lenders assert that they
have a first priority perfected Lien and security interest in the Cash
Collateral pursuant to the applicable provisions of the Loan Documents in
accordance with Code ss.ss. 363(a) and 552(b)-
17. The debtor shall segregate and account to the court and to the lenders
for all Cash Collateral, if any, which it now possesses, which it has permitted
to be transferred into the possession of others, which is being held by those
in privity with it, or which they might hereafter obtain The Debtor is
Prohibited from using the Cash Collateral except as provided herein.
THE LENDERS' ACCOUNTS
18. The Debtor shall immediately segregate, remit, and deposit all of the
Cash Collateral in the Debtor's possession, custody, or control and which the
Debtor may receive in the future, with Lenders in the preexisting blocked
accounts at Bank One, Texas, N.A. (Accounts Nos. 1561676150 and 1180161000)
pursuant to terms and provisions of the Lockbox Agreement dated as of November
12, 1997, the Blocked Account Agreement
ORDER APPROVING AGREEMENT REGARDING CASH COLLATERAL, OTHER COLLATERAL,
ADEQUATE PROTECTION, AND LIMITED RELIEF FROM AUTOMATIC STAY - Page 7
(dated as of the same date, and the Letter Agreement dated as of March 31, 1999
(the "Lender Accounts"). The Debtor shall immediately, and on an ongoing basis,
direct all account debtors of the Debtor to make and continue to make all
payments directly into the Lockbox established under the Lockbox Agreement for
deposit into the Lender Accounts. The Debtor shall not withdraw funds from the
Lender Accounts. The Lender Accounts shall be maintained for the purpose of
complying with this Agreed Order until such time as the Lenders' Claim has been
fully and finally paid, and the Lender Accounts shall Be and remain separate
from any other accounts of the Debtor, which have been or will be established as
"debtor-in-possession" accounts.
THE DEBTOR'S USE OF THE COLLATERAL
19. The Debtor may not transfer or use Cash Collateral except for the
payment of the Lenders' Claim in accordance with this Agreed Order.
20. Except for the Cash Collateral, the Debtor is authorized to use the
Collateral and to sell the inventory portion of the Collateral in the ordinary
course of its business, subject to the rights of third parties.
ADEQUATE PROTECTION
21. As adequate protection of the Lenders' Interest in accordance with
Code ss.ss. 361 and 363(e) and applicable law, the Debtor shall provide the
following measures to the Lenders: (a) all Cash Collateral, as received in the
Lockbox or as remitted by the Debtor, shall be immediately applied to the
retirement of the Lenders' Claim; (b) the Lenders shall continue to receive
(from the remittances of Cash Collateral through the Lender Accounts)
postpetition interest on Lenders' Claim; (c) the Debtor hereby grants to
ORDER APPROVING AGREEMENT REGARDING CASH COLLATERAL, OTHER COLLATERAL, ADEQUATE
PROTECTION, AND LIMITED RELIEF FROM AUTOMATIC STAY - Page 8
the Lenders continuing, perfected, first-priority replacement liens and security
interests in the Collateral and the Cash Collateral and in all of the property
of the Debtor acquired after the Petition that constitutes Collateral under the
terms of the Loan Documents; (d) in the event and to the extent such liens and
security interests do not adequately protect the Lenders' interest in the
Property, Collateral and Cash Collateral of the Debtor, the Lenders shall have
an administrative expense priority in an amount equal to the extent of such
failure of adequate protection with priority over any and all administrative
expenses of the kind specified in Code ss.ss. 503 and 507; (e) the Debtor shall
maintain, with financially sound and reputable insurance companies or
associations, casualty insurance covering the Collateral in the amount of at
least the Lenders' Claim (and continuing to name the Lenders as loss payee
thereunder), and, at the Lenders' request, deliver to the Lenders evidence of
the maintenance of such insurance; (f) the Debtor shall maintain the Collateral
in good repair and condition, not permit or commit any waste thereof, make all
necessary replacements thereof, and operate the same properly and efficiently;
and (g) the Debtor shall preserve, maintain, and protect all patents, licenses,
authorities, privileges, franchises, certificates, and the like and shall take
all steps necessary to MAINTAIN the value and usefulness of such intellectual
property.
22. The value of the Collateral securing the Lenders' Claim exceeds the
amount of the Lenders' Claim. For purposes of determining whether the Lenders
have been adequately protected under this Agreed Order, adequate protection, and
any failure of same, shall be measured by the amount of Lenders' Claim minus the
amount the Lenders actually receive for or on account of the Collateral and the
Cash Collateral,
ORDER APPROVING AGREEMENT REGARDING CASH COLLATERAL, OTHER COLLATERAL ADEQUATE
PROTECTION, AND LIMITED RELIEF FROM AUTOMATIC STAY - Page 9
REPORTING REQUIREMENTS
23. The Debtor shall comply with all reporting requirements ret forth
herein and in the Loan Documents.
24. The Debtor shall continue to deliver to the Lenders such financial
reports in such form and detail as required by the Loan Documents which shall be
prepared in Accordance with accounting principles consistently applied with past
accounting practices and reporting of the Debtor to the Lenders end shall be
certified to be true and correct by the Debtor's Chief Executive Officer.
25. The Debtor shell deliver to the Lenders copies of all operating
budgets prior to filing same with the Court and shall deliver to the Lenders
copies of ell reports filed with the office of the United States Trustee
contemporaneously with such filing. The Debtor shall within five (5) days
furnish to the Lenders and the Lenders' counsel, at the Lenders' request, such
additional financial or other Information concerning the acts. Conduct.
Property, assets, liabilities, operations, finand4el condition, transactions of
the Debtor, or any matter which may affect the administration of the estate, as
the Lenders may from time to time request.
26. With respect to the security interest and lien granted In Paragraph 21
hereof. The Lenders shall not be required to, but may, file financing statements
or record any other documents in any jurisdiction or lake any other action in
order to validate and perfect the liens and security interests granted to the
Lenders pursuant to the terms end provision. Of the Loan Documents and this
Agreed Order. The Debtor agrees that the Lenders'
ORDER APPROVING AGREEMENT REGARDING CASH COLLATERAL, OTHER COLLATERAL, ADEQUATE
PROTECTION, AND LIMITED RELIEF FROM AUTOMATIC STAY - Page 10
Interest extends to the Collateral, wherever located, and any moving of the
Collateral or other property of this bankruptcy estate shall have no effect on
the validity or perfection of the Lender's Interest. If the Lenders shall, in
their sole and absolute discretion, choose to file such financing statements or
record such documents that otherwise confirm perfection of such liens and
security interests, the Debtor shall execute all such financing statements,
similar instruments, and other documents as required by the Lenders, and such
instruments and documents shall be deemed to have been filed or RECORDED as OF
THE Petition Date.
27. The terms and provisions of this Agreed Order shall be binding upon
and inure to the benefit of the Lenders and the Debtor for all purposes in this
bankruptcy case, and their respective successors and assigns including, but not
limited to, any Chapter 11 or Chapter 7 Trustee hereinafter appointed for the
bankruptcy estate of the Debtor, or any entity in privity with the Debtor.
28. The Debtor will operate its business pursuant to the provisions of the
Code applicable to debtors-in-possession, including seeking court approval for
transactions outside the ordinary course, and shall comply with all terms of
this Agreed Order.
29. The Lenders and the Agent shall have access upon reasonable notice
during normal business hours to the Debtor's business premises to review,
appraise, and evaluate the Collateral and the Cash Collateral and other
properties of the estate and to inspect the financial records and all other
records of the Debtor concerning the Collateral, the Cash Collateral, other
properties of the estate, and the operation of the Debtor's business, and for
review of the Debtor's overall financial condition, the expenditure of funds
generated
ORDER APPROVING AGREEMENT REGARDING CASH COLLATERAL, OTHER COLLATERAL, ADEQUATE
PROTECTION, AND LIMITED RELIEF FROM AUTOMATIC STAY - Page 11
Therefrom, the accrual of expenses relating thereto and any and all other
records relating to the Debtor. The Debtor shall fully cooperate with the
Lenders regarding such reviews, evaluations, and inspections, and shall make its
employees and professionals available to the Lenders and the Lenders'
professionals to conduct such reviews, evaluations, and inspections.
30. To the extent the Debtor has made or makes any deposits for the
benefit of utility companies, such deposits shall be, and hereby are, subject to
first-priority perfected liens and security interests of the Lenders granted by
the Loan Documents and this Agreed Order, and the Debtor assigns and sets over
all such deposits to the Lenders effective upon the earlier to occur of (a) any
conversion of the Debtor's proceedings to Chapter 7 of the Code or (b) the
foreclosure of the liens and security interests of Lenders, provided that at all
times the utilities with whom such deposits are posted shall have prior and
senior rights to such deposits.
31. Any remittance of Cash Collateral to the Lenders since the Petition
Date is hereby authorized pursuant to the applicable provisions of Code ss.ss.
361 and 363(e).
32. To any extent necessary, the automatic stay of Code ss.362 is hereby
modified to permit the transfers, acts, and actions contemplated herein. All
transfers of Cash Collateral arising in this bankruptcy case shall be applied
against the Lenders' Claim as determined by the Lenders in its sole and absolute
discretion.
33. The Debtor's failure to timely and fully comply with the terms and
provisions of this Agreed Order shall constitute a default under this Agreed
Order.
ORDER APPROVING AGREEMENT REGARDING CASH COLLATERAL, OTHER COLLATERAL, ADEQUATE
PROTECTION, AND LIMITED RELIEF FROM AUTOMATIC STAY. Page 12
34. The Court finds that the terms and provisions of this Agreed Order are
necessary and appropriate to enable the Debtor to continue its business
operations and to retire the Lenders' Claim, which Lenders assert, is fully
secured, in a prompt and reasonable manner. The Court further finds that entry
of this Agreed Order at this time is necessary and concludes that it is
appropriate to avoid immediate and irreparable harm to the Debtor or any estate
of such entity pending passage of the time for objections hereto. The notice
provided to interested parties and the opportunity for objection to this Agreed
Order and a hearing thereon is appropriate under the circumstances.
35. If any or all of the provisions of this Agreed Order are modified,
vacated or stayed by subsequent Order of this or any other Court such stay,
modification or vacation shall not affect the validity and enforceability of any
lien or priority claim authorized by this Agreed Order prior to such stay,
modification or vacation. The reversal or modification on appeal of any or all
of the provisions of this Agreed Order shall not affect the validity or
enforceability of any lien, security interest or priority claim authorized by
this Agreed Order prior to the obtaining of a stay pending appeal of this Agreed
Order. This Agreed Order is immediately valid and fully effective upon its entry
by this Court.
36. The Debtor shall execute and deliver such further instruments as may
be deemed necessary or desirable by Lenders to carry out the provisions and
purposes of this Agreed Order.
37. Nothing contained herein shall waive or modify any rights and remedies
which the Lenders may have at law, in equity, or otherwise or be deemed or
construed to limit the rights of the Lenders to seek additional relief in this
bankruptcy case in accordance
ORDER APPROVING AGREEMENT REGARDING CASH COLLATERAL, OTHER COLLATERAL, ADEQUATE
PROTECTION, AND LIMITED RELIEF FROM AUTOMATIC STAY - Page 13
with this Agreed Order or applicable law. The Lenders shall not be subject to
any Surcharge under Code ss. 506(c).
38. Any notice, report, or other document required to be given hereunder
shall Be deemed given upon its deposit In the United States mail, postage
pre-paid, and Addressed as follows:
(a) If to the Lenders:
BT Commercial Corporation
Attn: Douglas R. Lies, Vice President
300 South Grand Avenue
Los Angeles, California 90071
With a copy to:
Daniel C. Stewart
Josiah M. Daniel, III
Winsteed Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270-2199
(b) If to the Debtor:
FWT, Inc.
Attn: Roy Moore
5750 East Interstate 20
Fort Worth, Texas 76119
With a copy to:
Joseph Colvin
Mark J. Petrocchi
Colvin & Petrocchi
801 Cherry 8treat, Suite 1035
Fort Worth, Texas 76102
39. The findings of fact and conclusions of law of this Court set forth in
this Agreed Order shall be deemed effective upon the entry of this Agreed Order.
To the extent
ORDER APPROVING AGREEMENT REGARDING CASH COLLATERAL, OTHER COLLATERAL, ADEQUATE
PROTECTION. AND UMITED RELIEF FROM AUTOMATIC STAY - Page 14
that such findings may constitute conclusions, and vice versa, they hereby are
deemed as such.
SIGNED this 21st day of April 1999.
/S/ MASSIE TILLMAN
HONORABLE MASSIE TILLMAN
UNITED STATES BANKRUPTCY JUDGE
AGREED TO AND ACCEPTED:
COLYIN & PETROCCHI
801 Cherry Street, Suite 1035 Fort Worth, Texas 76102
Tel: (817) 336-7883
Fax: (817) 338-9209
By: /S/JOSEPH COLVIN
Joseph Colvin
Mark Petrocchi
ATTORNEYS FOR THE DEBTOR
WINSTEAD SECHREST & MINICK P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270-2199
Tel: (214) 745-5400
Fax: (214) 745~5390
By: /S/JOSIAH M. DANIEL, III
Josiah M. Daniel lII SBN 05358500
ATTORNEYS FOR BT COMMERCIAL CORPORATION
ORDER APPROVING AGREEMENT REGARDING CASH COLLATERAL, OTHER COLLATERAL, ADEQUATE
PROTECTION, AND LIMITED RELIEF FROM AUTOMATIC STAY - Page 15