EXHIBIT 10.40
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
IN RE: )
) Jointly Administered
BORDEN CHEMICALS AND PLASTICS OPERATING )
LIMITED PARTNERSHIP, a Delaware limited ) Case. No. 01-1268 (MFW)
partnership, et al. )
-- -- ) Chapter 11
)
Debtors.
AMENDED AGREED INTERIM AND PROPOSED FINAL ORDER AUTHORIZING
DEBTOR: (A) TO USE CASH COLLATERAL; (B) TO INCUR
POSTPETITION DEBT; AND (C) TO GRANT ADEQUATE PROTECTION AND
PROVIDE SECURITY TO FLEET CAPITAL CORPORATION, AS AGENT
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This matter came before this Court on the motion (the "Motion") of
debtor Borden Chemicals and Plastics Operating Limited Partnership (the
"Debtor"), requesting that this Court enter an order: (1) authorizing the
Debtor to use certain cash collateral; (2) authorizing the Debtor to incur
Postpetition Debt (as defined herein); and (3) granting certain liens and other
relief to Fleet Capital Corporation, as agent for the Lenders (defined herein)
(the "Agent"). Unless otherwise indicated, the following terms in this Order
shall have the meanings set forth below. Other capitalized terms used in this
Order have the meanings set forth for such terms in the Loan Agreement (as
defined below).
1. Aggregate Collateral. Collectively, the Prepetition Collateral and the
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Postpetition Collateral.
2. Aggregate Liens. Collectively, the Prepetition Liens, the Replacement
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Liens, and the Postpetition Liens.
3. Allowable 506(b) Amounts. All fees, costs, expenses, interest and other
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charges due or coming due under the Prepetition Documents with respect to the
Prepetition Debt (regardless of whether such fees, costs, interest and other
charges are
included in the Budget) to the extent allowable under Code (S) 506(b),
including, without limitation, all reasonable out-of-pocket filing and recording
fees, attorneys' and paralegals' fees and expenses, external and internal audit
fees and expenses, closing fees, unused facility fees, letter of credit fees,
and all other costs and expenses incurred by Agent and the Lenders under the
Prepetition Documents with respect to the Prepetition Debt, including such fees,
costs and charges incurred in connection with: (a) the negotiation, preparation
and submission of this Order and any other order or document related hereto; and
(b) the representation of the Agent and the Lenders in and in connection with
the Case.
4. Allowed Claim. Any claim, as that term is defined in Code (S) 101, for
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which a proof of claim was timely and properly filed, or which has been or
hereafter is listed by the Debtor on its schedules as liquidated in amount and
not disputed or contingent, provided that: (a) no objection to the allowance of
the claim is timely interposed; or (b) if any objection to the allowance of the
claim is timely interposed, the claim has been allowed.
5. Appraisal. The report of the appraiser retained by the Agent that will
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provide an in place valuation of, and orderly liquidation value for, the
Debtor's facilities in Geismar, Louisiana, Addis, Louisiana and Illiopolis,
Illinois.
6. Budget. The budget attached to this Order as Exhibit A, including and
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allowing for the Permitted Variances.
7. Capex Payments. Payments made by the Debtor or its subsidiaries on
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account of capital expenditures in accordance with generally accepted accounting
principles provided that the cumulative capital expenditures from the Filing
Date to the dates listed below do not exceed the amounts listed below for such
dates:
April 30, 2001 $800,000
May 31, 2001 $1,600,000
June 30, 2001 $2,400,000
July 31, 2001 $3,500,000
August 31, 2001 $4,600,000
September 30, 2001 $5,700,000
October 31, 2001 $6,800,000
November 30, 2001 $7,900,000
December 31, 2001 $9,000,000
8. Carveout. The carveout for professional fees of the estate set forth in
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Paragraph 4(c) of this Order.
9. Case. This chapter 11 case or any superseding chapter 7 case of the
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Debtor.
10. Cash Collateral. All "cash collateral," as that term is defined in Code
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(S) 363(a), in which the Lenders have an interest, all deposits subject to
setoff rights in favor of the Lenders, and all cash arising from the collection
or other conversion to cash of the Aggregate Collateral, including, without
limitation, from the sale of inventory and the collection of accounts
receivable. To the extent any such cash collected or received is not
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clearly identifiable as attributable to Prepetition Collateral or Postpetition
Collateral, such cash shall be deemed to be proceeds of Prepetition Collateral.
11. Committee. Any official creditors' committee appointed to represent
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unsecured creditors in this Case pursuant to Code (S) 1102.
12. Cure Period. (a) With respect to the occurrence of an Event of Default
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(a) through (d), none; and (b) with respect to any other Event of Default, three
business days following the receipt of Agent's written notice to the Debtor, the
United States Trustee, and the Committee, via facsimile or overnight mail, of
the occurrence of such Event of Default.
13. Event of Default. Any one or more of the following: (a) the Debtor
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commits any Event of Default as such term is defined in Section 10 of the Loan
Agreement (as modified by this Order and with the exception of Sections 10.1.2
and 10.1.8); provided that (1) it will not be an Event of Default under this
Order if the Event of Default occurring under the Loan Agreement occurred prior
to the Filing Date or is the result of an event that occurred on or prior to the
Filing Date; and (2) no Event of Default will occur under this Order as a result
of the Debtor's bankruptcy filing or the resulting requirements or provisions of
the Code; (b) any representation or warranty made by the Debtor in any
certificate, report or financial statement delivered to the Agent after the
Filing Date proves to have been false or misleading in any material respect as
of the time when made or given (including by omission of material information
necessary to make such representation, warranty or statement not misleading);
(c) this chapter 11 case is converted to a case under chapter 7 of the Code; (d)
a Trustee is appointed or elected in this Case, or an examiner with the power to
operate the Debtor's business is appointed in this Case, and (e) the Debtor
fails to perform any of its other obligations in accordance with the terms of
this Order or the Budget.
14. Filing Date. April 3, 2001.
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15. Final Hearing. The final hearing on the Motion conducted in accordance
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with Fed. R. Bankr. P. 4001.
16. First Priority Liens. Liens which are first priority, properly
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perfected, valid and enforceable security interests, which are not subject to
any claims, defenses, or setoffs, and which are otherwise unavoidable under any
provisions of the Code.
17. Lenders. The financial institutions party to the Loan Agreement
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(defined therein as "Lenders"), which are extending Postpetition Debt to the
Debtor.
18. Loan Agreement. That certain Loan and Security Agreement, dated as of
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March 31, 2000, by Borden Chemicals and Plastics Operating Limited Partnership,
Agent, and the Lenders, as amended prior to the Filing Date.
19. Net Cash Flow. The difference between (1) Receipts Less Production
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Payments, and (2) SG&A Payments.
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20. Overadvance. The least of: (a) $35,000,000; (b) 35% of the liquidation
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value in place of the Debtor's facilities in Geismar, Louisiana, Addis,
Louisiana and Illiopolis, Illinois, as determined by the Appraisal; and (c) 80%
of the orderly liquidation value as determined by the Appraisal; provided, that
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the percentages contained in clauses (b) and (c) herein shall be reduced by 1%
on the first day of each calendar month, beginning with May 1, 2001; provided
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further, however, until such time as the Appraisal is completed, and a copy of
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the Appraisal is provided to the Agent, the Overadvance shall not exceed
$25,000,000.
21. Permitted Liens. Liens in favor of third parties upon any of the
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Aggregate Collateral with priority over the Lenders' security interests in the
Prepetition Collateral, which third-party liens were (i) non-avoidable, valid,
properly perfected and enforceable as of the Filing Date, or (ii) existed prior
to the Filing Date and become non-avoidable, valid, properly perfected and
enforceable after the Filing Date pursuant to Section 546(b) of the Code.
22. Permitted Variances. The amount by which the actual Receipts Less
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Production Payments, SG&A Payments and Net Cash Flow may differ adversely from
the respective amounts included in the Budget, provided that the calculation of
Permitted Variances is performed on a "trailing" 4 week basis (i.e. the sum of
the cash flows for the 4 prior weeks) and the calculation is performed for the
period from Filing Date to April 28, 2001 and weekly thereafter. The Permitted
Variance shall be calculated as follows: (a) Receipts less Production Payments:
the greater of $500,000 or 20% of the budgeted Receipts less Production
Payments, (b) SG&A Payments: 20% of the budgeted SG&A Payments, (c) Net Cash
Flow: the greater of $500,000 or 10% of Net Cash Flow. There shall be no
Permitted Variances for Capex Payments or Professionals' Fee Payments which,
instead, shall be subject to the Budget and the cumulative limits set forth in
and calculated pursuant to the definitions of Capex Payments and Professionals'
Fee Payments.
23. Positive Borrowing Availability. The amount of positive borrowing
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availability under the collateral advance formulas set forth in Section 1.1.1 of
the Loan Agreement, plus the Overadvance; provided, (a) the portion of clause
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(ii) of the definition of Borrowing Base which adds to the Borrowing Base the
lesser of $17,000,000 and 5% of "Consolidated Net Tangible Assets" (as defined
in the Indenture referred to on Exhibit 8.2.3 of the Loan Agreement) is
eliminated, (b) the $10,000,000 Availability restriction contained in Sections
8.3 and 9.4 of the Loan Agreement is eliminated, and (c) the portion of clause
(ii) of the definition of Borrowing Base which adds to the Borrowing Base 65% of
the net amount of Eligible Inventory exclusive of "caustic," "additive" and
"solvent" inventories and 50% of the net amount of Eligible Inventory consisting
of "caustic," "additive" and "solvent" inventories shall be limited to the
lesser of the amount calculated by such provision and $40,000,000; provided,
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however, that the Postpetition Collateral and the Lender's applications of Cash
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Collateral to the Prepetition Debt and the Postpetition Debt pursuant to
Paragraph 5(d) of this Order shall be included in the calculations of such
positive borrowing availability. Notwithstanding the foregoing, (1) the Lenders
shall have the rights to establish reserves against such availability pursuant
to the terms of the Loan Agreement and a reserve
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for the Carveout and accrued but unpaid professional fees, and (2) the Agent,
with the written consent of the Lenders, shall have the right to increase
Positive Borrowing Availability hereunder from time to time, on such terms as it
deems appropriate, without the need for further Court hearing.
24. Postpetition Charges. All fees, costs, expenses, interest and other
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charges due or coming due in connection with the Postpetition Debt (regardless
of whether such fees, costs, interest and other charges are included in the
Budget), including, without limitation, all reasonable out-of-pocket filing and
recording fees, attorneys' fees and paralegals' fees and expenses, external and
internal audit fees and expenses, closing fees, unused facility fees, letter of
credit fees, and all other costs and expenses incurred by the Agent in
connection with the Postpetition Debt including without limitation the
$1,000,000 facility fee payable to the Agent on behalf of the Lenders upon entry
of this Order, the $333,000 structuring fee payable to the Agent upon entry of
this Order, the $500,000 success fee payable to the Agent on behalf of the
Lenders upon the Termination Date or the date on which all Prepetition and
Postpetition Debt owing to the Agent and the Lenders is indefensibly paid in
full, the $30,000 initial administrative fee payable to the Agent upon entry of
this Order and the $20,000 monthly administrative fee payable to the Agent on
the first business day of each successive calendar month, which amounts shall
compensate the Agent and the Lenders for all financial accommodations made
hereunder. In the event the aggregate amount of Prepetition Debt and
Postpetition Debt available to the Debtor increases above $100,000,000 pursuant
to Paragraph 3(a) of this Order: (a) the $1,000,000 facility fee payable to the
Agent on behalf of the Lenders shall increase by the amount of 1% of the
increase in the maximum loans available to the Debtor above $100,000,000, and
(b) the $333,000 structuring fee payable to the Agent shall increase by the
amount of 0.33% of the increase in the maximum loans available to the Debtor
above $100,000,000; and the balance of such increased facility fee and
structuring fee shall be immediately due and payable.
25. Postpetition Collateral. All of the real and personal property of the
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Debtor of any description whatsoever, wherever located and whenever arising or
acquired, including, without limitation, all cash, accounts, inventory,
equipment, fixtures, chattel paper, and general intangibles (excluding claims
and recoveries under Code (S)(S) 544, 547, 548, 549, 550 and 553), and all
proceeds and products, whether tangible or intangible, of any of the foregoing,
including proceeds of insurance covering any of the foregoing.
26. Postpetition Debt. (a) All indebtedness or obligations of the Debtor to
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the Agent and the Lenders incurred on or after the Filing Date pursuant to this
Order or a final order with respect to the Motion (the "Final Order"), including
any advances made by the Lenders to pay Allowable 506(b) Amounts, plus (b) the
Postpetition Charges.
27. Postpetition Documents. (a) The Loan Agreement, as modified by this
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Order or the Final Order; (b) the Loan Documents (as that term is defined in the
Loan Agreement), as modified by this Order or the Final Order; and (c) this
Order, the Final Order, and any financing orders entered by the Court modifying
or supplementing such orders.
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28. Postpetition Liens. First Priority Liens in the Aggregate Collateral
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granted to the Agent for the benefit of the Lenders pursuant to this Order and
the Final Order, subject only to: (a) Permitted Liens; (b) the Carveout; and (c)
the claim of the United States Trustee for the payment of fees under 28
U.S.C.(S) 1930 and the fees of the Clerk of the Court (the "UST and Clerk
Fees"), which liens are and shall be in addition to the Prepetition Liens, are
and shall be, pursuant to Code(S) 364(d), senior to the Prepetition Liens and
the Replacement Liens without any further action by the Debtor, the Agent or the
Lenders and without the execution, filing or recordation of any financing
statements, security agreements, mortgages or other documents or instruments.
29. Prepetition Collateral. All of the Collateral (as that term is defined
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in the Loan Agreement) existing as of the Filing Date, and all proceeds and
products thereof.
30. Prepetition Debt. (a) All indebtedness or obligations under the
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Prepetition Documents as of the Filing Date, including all fees, interest, and
expenses (including the LC Amount of $2,500,000, which amount was cash
collateralized prior to the Filing Date), plus (b) all Allowable 506(b) Amounts.
31. Prepetition Documents. The Loan Agreement and the Loan Documents (as
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that term is defined in the Loan Agreement).
32. Prepetition Liens. The Agent's asserted security interests in the
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Prepetition Collateral under the Prepetition Documents, subject to: (a) the
Postpetition Liens; (b) Permitted Liens; (c) the Carveout; and (d) the UST and
Clerk Fees.
33. Professionals' Fee Payments. Payments made by the Debtor or its
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subsidiaries to non-ordinary course professionals retained pursuant to Section
327 or 1103 of the Code, subject to approval by the Court, provided cumulative
Professionals' Fee Payments (excluding amounts paid subsequent to and in
connection with a sale of all or substantially of the Debtors' assets) from the
Filing Date to the following dates do not exceed the cumulative amounts listed
for such dates --- (a) to June 30, 2001, $2.5 million; (b) to September 30,
2001, $4.0 million, and (c) to December 31, 2001, $5.0 million. No
Professionals' Fee Payments may be used to prosecute, as opposed to investigate
whether to bring, an Avoidance Action (as defined herein)
34. Replacement Liens. First Priority Liens in the Postpetition Collateral
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granted to the Agent for the benefit of the Lenders pursuant to this Order and
the Final Order, subject only to: (a) the Postpetition Liens; (b) Permitted
Liens; (c) the Carveout; and (d) the UST and Clerk Fees.
35. Receipts Less Production Payments. Cash received by the Debtor or its
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subsidiaries (in the ordinary course of business and excluding any sale of
assets outside the ordinary course of business) less payments made by the Debtor
to suppliers of materials used in its production facilities and payments to
other vendors or employees providing services in connection with such production
including, but not limited to, amounts in relation to the transportation of raw
materials or finished goods.
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36. Requisite Lenders. As of any date, Lenders holding 66.66% or more of
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the aggregate Prepetition Debt and Postpetition Debt.
37. SG&A Payments. Payments made by the Debtor or its subsidiaries on
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account of selling, general and administrative expenses incurred, including for
the purposes of this definition, amounts paid on account of Postpetition
Charges, other interest charges and tax liabilities of the Debtor.
38. Termination Date. The earliest to occur of: (a) the later of (1) the
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date on which the written notice to the Debtor, the United States Trustee, and
the Committee of the occurrence of an Event of Default is received from the
Agent via facsimile or overnight mail, and (2) if any Cure Period is applicable
with respect to such Event of Default, the expiration of such Cure Period
(provided that the Debtor may cure such Event of Default within any such Cure
Period, and the Agent may seek to terminate this Order prior to the expiration
of any such Cure Period); (b) if this Order is modified at the Final Hearing in
a manner unacceptable to the Lenders, the date of the Final Hearing; and (c)
December 28, 2001.
39. Trustee. Any trustee appointed or elected in the Case.
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Having examined the Motion, being fully advised of the relevant facts and
circumstances surrounding the Motion and having completed a preliminary hearing
pursuant to Code (S)(S) 363 and 3641 and Fed. R. Bankr. P. 4001(b) and (c)(2),
BASED UPON THE RECORD AT THE PRELIMINARY HEARING, IT APPEARS TO THE COURT THAT:
A. On the Filing Date, the Debtor filed a voluntary petition for relief
under chapter 11 of the Code. The Debtor has retained possession of its property
and continues to operate its business as a debtor in possession pursuant to Code
(S)(S) 1107 and 1108.
B. The Debtor has stipulated and represented to the Court that: (1) the
Prepetition Debt, the Prepetition Liens and the prepetition financing
relationship between the Debtor, the Agent and the Lenders is evidenced and
governed by the Prepetition Documents; (2) as of the Filing Date, the
Prepetition Debt was, at least $84 million; (3) the payment of all of the
Prepetition Debt is secured by, among other things, the Prepetition Liens; and
(4) the Prepetition Liens are First Priority Liens, subject to Permitted Liens.
C. Upon the entry of this Order, the Lenders' interests in the Prepetition
Collateral will be adequately protected, without prejudice to the Agent's right
to later assert
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1 Unless otherwise indicated, all section references are to the Bankruptcy
Code, 11 U.S.C.(S)(S) 101 et. seq.
-- ---
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that the Lenders' interest in the Aggregate Collateral lacks adequate
protection, and (2) as of the Filing Date, including for purposes of Code (S)
506(b) and (S) 507(b), the liquidation value of the Prepetition Collateral was
not less than $100 million, without prejudice to the parties' rights to later
seek higher or lower valuations at a subsequent date.
D. No Committee has been appointed in this Case.
E. An immediate need exists for the Debtor to use Cash Collateral and to
obtain Postpetition Debt in order to enable the Debtor to minimize disruption to
and to avoid the termination of its business operations. Entry of this Order
will also enhance the possibility of a successful reorganization.
F. Pursuant to Code (S)(S) 364(a) and 364(b), the Debtor has attempted to
obtain, but is unable to obtain, unsecured credit or unsecured credit allowable
under Code (S) 503(b)(1). The terms of the Postpetition Debt have been
negotiated in good faith and at arms' length, and the Postpetition Debt is being
extended in good faith, as that term is used in Code (S) 364(e).
G. In order to prevent immediate and irreparable harm to the estate pending
the Final Hearing, the Debtor requires the use of Cash Collateral and
Postpetition Debt to pay the expenses set forth in the Budget through the
conclusion of such Final Hearing.
H. Under the circumstances of the Case, the terms and conditions of this
Order are a fair and reasonable response to the Debtor's request for the
Lenders' consent to the use of Cash Collateral and for the Debtor's incurrence
of Postpetition Debt, and the entry of this Order is in the best interests of
the Debtor's estate and its creditors.
I. The notice provided by the Debtor of the Motion, the hearing on the
Motion, and the entry of this Order satisfy the requirements of Fed. R. Bankr.
P. 4001 and were otherwise sufficient and appropriate under the circumstances.
WHEREFORE, IT IS HEREBY ORDERED THAT:
1. Authorization to Use Cash Collateral. The Debtor is authorized to use
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Cash Collateral solely in accordance with and pursuant to the terms and
provisions of this Order. Prior to the Termination Date and indefeasible payment
in full of the Postpetition
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Debt, the Debtor may not use or seek to use Cash Collateral other than pursuant
to the terms of this Order.
2. Procedure for Use of Cash Collateral.
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(a) Delivery of Cash Collateral to Agent. The Debtor is authorized and
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directed to deposit all Cash Collateral now or hereafter in its possession or
under its control into the existing lockbox/blocked account established by the
Agent (or to otherwise deliver all such Cash Collateral to the Agent in a manner
satisfactory to the Agent) promptly upon receipt thereof. Such Cash Collateral
shall thereafter be applied by the Agent in accordance to Paragraph 5(d) of this
Order.
(b) Account Debtors. The Debtor may, without further order of court, be
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directed by the Agent to, or the Agent may directly, instruct all account
debtors of existing and future accounts receivable included in the Aggregate
Collateral to make payments directly into any blocked/lockbox account
established by the Agent or such other accounts satisfactory to the Agent, in
which event all such proceeds shall be treated in accordance with the provisions
of this Order.
(c) Cash Collateral in Agent's Possession. The Agent is authorized to
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collect upon, convert to cash and enforce checks, drafts, instruments and other
forms of payment now or hereafter coming into its possession or under its
control which constitute Aggregate Collateral or proceeds of Aggregate
Collateral.
3. Authorization To Incur Postpetition Debt.
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(a) Positive Borrowing Availability/Maximum Loans. If there is Positive
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Borrowing Availability (after giving effect to outstanding Prepetition Debt and
Postpetition Debt), the Debtor is authorized to incur Postpetition Debt, and the
Lenders shall be required to provide the Debtor with Postpetition Debt pursuant
to the terms of the Loan Agreement (as modified by this Order and the Final
Order), to the extent of such remaining Positive Borrowing Availability.
Notwithstanding the amount of Positive Borrowing Availability or anything to the
contrary in this Order, the aggregate of Prepetition Debt and Postpetition Debt
shall not at any time exceed $120,000,000; provided, however, that until such
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time as all Lenders agree in writing or the Agent obtains the agreement of one
or more financial
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institutions (in addition to the Lenders who were parties to the Loan Agreement
prior to Filing Date), to extend additional Postpetition Debt to the Debtor
pursuant to the terms of this Order and the Postpetition Documents, the
aggregate of Prepetition Debt and Postpetition Debt shall not at any time exceed
$100,000,000.
(b) Budget. The Debtor is authorized to incur Postpetition Debt solely in
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accordance with and pursuant to the terms and provisions of this Order and only
to the extent required to pay those expenses listed in the Budget (including
Permitted Variances) as and when such expenses become due and payable (including
expenses of the Debtor's subsidiaries to the extent included in the Budget).
Notwithstanding anything to the contrary in this Paragraph 3, however: (1) the
Debtor is hereby authorized and directed to incur the Postpetition Debt at any
time to pay Allowable 506(b) Amounts, the UST and Clerk Fees, and the
Postpetition Charges, and (2) if the Lenders advance monies to the Debtor and
the Debtor uses such monies other than in accordance with or pursuant to the
terms or provisions of this Order, such advances shall be considered
Postpetition Debt for purposes of this Order.
(c) Superpriority Administrative Expense Status; Postpetition Liens. The
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Postpetition Debt is hereby granted superpriority administrative expense status
under Code(S) 364(c)(1), with priority over all costs and expenses of
administration of the Case that are incurred under any provision of the Code,
but subject to the Carveout and the UST and Clerk Fees. In addition, the Agent
and the Lenders are hereby granted the Postpetition Liens to secure the
Postpetition Debt. The Postpetition Liens: (1) are and shall be in addition to
the Prepetition Liens; (2) are and shall be, pursuant to Code(S) 364(d), senior
to the Prepetition Liens and the Replacement Liens without any further action by
the Debtor, the Agent or the Lenders and without the execution, filing or
recordation of any financing statements, security agreements, mortgages or other
documents or instruments; and (3) shall remain in full force and effect
notwithstanding any subsequent conversion or dismissal of the Case.
Notwithstanding the foregoing, the Debtor is authorized and directed to execute
and deliver to the Agent such financing statements, mortgages, instruments and
other documents as the Agent may deem necessary or reasonably desirable from
time to time.
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(d) Conditions Subsequent. Notwithstanding anything to the contrary
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contained in this Order, the following shall be conditions to Debtor's continued
authorization to incur Postpetition Debt:
(i) On or before July 2, 2001, the Debtor shall have received bona
fide but non-binding offers for the purchase of all or substantially all of
the Debtor's assets;
(ii) On or before July 30, 2001, the Debtor shall have received a bona
fide binding offer to purchase all or substantially all of the Debtor's
assets acceptable to the Agent and the Lenders;
(iii) On or before August 15, 2001, the Debtor shall have filed a
motion pursuant to Section 363 of the Code seeking the approval of a sale
of all or substantially all of the Debtor's assets; and
(iv) On or before September 28, 2001 the Debtor shall have closed a
sale of all or substantially all of the Debtor's assets acceptable to the
Agent and the Lenders, or the Prepetition and Postpetition Debt shall have
been indefeasibly paid in full;
provided, that the dates in this Paragraph 2(d) and clause (c) of the
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definition of Termination Date may be extended with the written consent of the
Requisite Lenders and without further order of court.
(e) Additional Terms of Postpetition Debt.
(i) Letters of Credit. From and after the Filing Date no Letters of
Credit shall be issued and no LC Guaranties shall be made by the Agent or
the Lenders under the Loan Agreement or the Postpetition
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Documents. The Letters of Credit and LC Guaranties outstanding as of the
Filing Date shall remain outstanding until such time as they are drawn upon
or expire in accordance with their respective terms.
(ii) Notwithstanding anything to the contrary in the Loan Agreement,
the Prepetition Documents or the Postpetition Documents, effective from
March 15, 2001, interest on the principal amount of the Prepetition Debt
outstanding at the end of each day (after the application of cash
collateral in accordance with Paragraph 5(d) of this Order), shall accrue
at a fluctuating rate per annum equal to (a) with respect to the Base Rate
Portion of Prepetition Debt, 1.25% plus the Alternate Base Rate, and (b)
with respect to the LIBOR Portion of the Prepetition Debt, 3.00% plus the
LIBOR Rate. The Lenders otherwise waive their right to charge the Default
Rate with respect to the Prepetition Debt. Notwithstanding the foregoing,
and notwithstanding anything to the contrary in the Loan Agreement, the
Prepetition Documents or the Postpetition Documents, the LIBOR Period for
any Postpetition Debt shall not exceed one month, any Prepetition Debt
consisting of LIBOR Portion may only be renewed as Base Rate Portion or as
a LIBOR Portion with a LIBOR Period one month or less, and any Prepetition
Debt consisting of Base Rate Portion may only be converted to a LIBOR
Portion with a LIBOR Period of one month or less. All interest on the
Prepetition Debt and the Postpetition Debt shall be paid by the Debtor
pursuant to the terms of the Loan Agreement prior to an Event of Default.
The Postpetition Debt shall: (1) bear interest at 1.25% plus the Alternate
Base Rate
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for the Base Rate Portion and 3.00% plus the LIBOR Rate for the LIBOR
Portion; provided, that such LIBOR Portion shall have no LIBOR Periods in
excess of one month; and (2) mature and be paid in full on the Termination
Date.
(iii) Sale Process Reporting. On Tuesday of each week, beginning with
April 10, 2001, the Debtor shall provide the Agent with a report describing
the steps the Debtor has taken to comply with Paragraph 3(d) of this Order,
including any information or reports received from The Taylor Group.
(iv) Disposition of Assets. Notwithstanding the terms of Section 8.2.9
of the Loan Agreement or any other provisions contained in the Prepetition
Documents or the Postpetition Documents, or herein, the Debtor shall not
dispose of any portion of its assets out of the ordinary course of
business, whether pursuant to Codess. 363 or otherwise, without the Agent's
written consent; provided that, notwithstanding the foregoing, so long as
the net proceeds of such sale are applied as set forth in paragraph
3(e)(v), the Agent and the Lenders agree that the Debtor shall be permitted
to sell or otherwise dispose of (a) the vacant real estate located adjacent
to the Geismer, Louisiana facility within 90 days of entry of this Order,
(b) the methanol plant that is a part of the Geismer Louisiana facility
within 90 days of entry of this Order (together, the "Permitted Sales"),
and/or (c) any ineligible Accounts due from Armstrong World Industries,
Inc. (or any related entity) or any of the following Canadian entities or
any affiliate thereof --- American Biltrite of
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Canada, Ltd., Best Glove Manufacturing, Ltd., Plastique Reinier, Inc., and
Stedfast, Inc. (the "Ineligible Accounts") sold for at least 85% of the
uncollected amount of such Accounts .
(v) Mandatory Repayment. All net proceeds (after costs, taxes, and
satisfaction of Permitted Liens) received by the Debtor from a sale or
disposition of assets (other than Ineligible Accounts) outside the ordinary
course of business (consented to by the Agent if required by the
immediately foregoing Paragraph 3(e)(iv)), in excess of the amount of
Positive Borrowing Availability supported by Accounts and Inventory
transferred as part of the non-ordinary course sale or disposition (the
"Net Sales Proceeds"), will result in the permanent reduction in the
Overadvance as follows:
(A) if the Net Sales Proceeds exceed by two times the Lendable
Value of the sale or disposition assets other than the
Accounts and Inventory, the Overadvance shall be reduced by
50% of the Net Sales Proceeds;
(B) if the Net Sales Proceeds exceed the Lendable Value of the
sale or disposition assets other than Accounts and
Inventory, but are less than two times the Lendable Value of
the sale or disposition assets (other than the Accounts and
Inventory), the Overadvance shall be reduced by the Lendable
Value plus 50% of the amount in excess of the Lendable
Value; and
-14-
(C) if the Net Sales Proceeds are less than or equal to the
Lendable Value of the sale or disposition assets other than
Accounts and Inventory, the Overadvance shall be reduced by
the full amount of the Net Sales Proceeds;
provided, that the "Lendable Value" for purposes of this Paragraph 3(e)(iv)
shall be the lesser of 35% of the liquidation value in place or 80% of the
orderly liquidation value of the assets being transferred in the sale or
disposition, as determined in the Appraisal, and, provided, further, after
making application of the proceeds and reducing the Overadvance as provided in
this Paragraph 3(e)(v), the Overadvance shall not exceed the least of
$35,000,000, 35% of the liquidation value in place, and 80% of the orderly
liquidation value of the remaining assets, as determining by the Appraisal
(subject to the amortization of such advance percentages in accordance with the
definition of "Overadvance" in this Order). Notwithstanding anything in this
Paragraph 3(e)(v) to the contrary, upon the consummation of the Permitted Sales
and the application of the proceeds thereof, the Overadvance will be permanently
reduced by an amount equal to 50% of the Net Sales Proceeds of the Permitted
Sales.
4. Termination of Right to Use Cash Collateral And To Incur Postpetition
---------------------------------------------------------------------
Debt.
- ----
(a) Termination Date. Unless extended by the Court upon the written
----------------
agreement of the Agent, this Order and the Debtor's authorization to use Cash
Collateral and incur Postpetition Debt pursuant to this Order will immediately
terminate on the Termination Date.
(b) Rights Upon Termination. On the Termination Date, the Agent and the
-----------------------
Debtor shall be entitled to apply to this Court for all appropriate relief, upon
such notice as
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may be appropriate under the circumstances; provided, however, that: (1) the
obligations of the Debtor and the rights of the Agent and the Lenders with
respect to all transactions which have occurred prior to the Termination Date
shall remain unimpaired and unaffected; and (2) the Agent, the Lenders and the
Debtor shall retain all of their respective rights and remedies under the Code,
including, without limitation, the Debtor's right, after paying the Postpetition
Debt, including any Overadvance, in full, to request the continued use of Cash
Collateral, and the Agent's right to oppose the Debtor's further use of Cash
Collateral and to move for relief from the automatic stay.
(c) Carveout. Notwithstanding anything to the contrary in this Order, the
--------
Final Order, or any of the Prepetition Documents or the Postpetition Documents,
or otherwise, should the Lenders' obligations to make loans or other financial
accommodations under this Order or the Final Order terminate as a result of an
Event of Default or the occurrence of the Termination Date, the Lenders agree
that, notwithstanding the termination of such obligations, the Debtor may use
the Agent's and the Lenders' cash collateral to pay, in addition to any accrued
fees and expenses as of such date permitted by the Budget (a) any unpaid UST
Fees and Clerk Fees as such fees are charged to the Debtors; and (b) unpaid fees
and expenses allowed by the Bankruptcy Court of professionals or professional
firms retained pursuant to Section 327 or 1103 of the Code, which professional
fees and expenses do not exceed in the aggregate $1.0 million (the amount of all
such professional fees and expenses being defined herein as the "Carveout"). The
Agent's and the Lenders' liens on the Aggregate Collateral, and any claim or
claims arising under Sections 364(c), 364(d), 506(b), or 507(b) of the Code,
shall be subject and subordinate to the Carveout and the UST and Clerk Fees, and
(B) the terms of this Paragraph 4(c) shall survive and not be affected by the
termination of this Order or the Final Order, any default hereunder, the
conversion or dismissal of this Chapter 11 case, the confirmation of a plan, or
the appointment of any trustee. Notwithstanding the foregoing, no part of the
Carveout may be used to prosecute, as opposed to investigate whether to bring,
an Avoidance Action (as defined herein).
5. Adequate Protection of Interests of the Lenders in the Aggregate
-------------------------------------------------------------------
Collateral and the Aggregate Liens. As adequate protection of the interests of
the Lenders in the Prepetition Collateral and the Prepetition Liens:
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(a) Priority of Prepetition Liens/Allowance of Lender's Claim. Subject to
----------------------------------------------------------
the reservation of rights set forth in Paragraph 7(a) of this Order: (1) the
Prepetition Liens shall constitute First Priority Liens, subject to Permitted
Liens, Postpetition Liens, Replacement Liens, the Carveout, and the UST and
Clerk Fees; and (2) the Lenders' claim with respect to the Prepetition Debt
shall constitute an Allowed Claim in an amount not less than $84 million.
(b) Replacement Liens. The Agent and the Lenders are hereby granted the
-----------------
Replacement Liens to secure Prepetition Debt in an amount equal to the decline
(if any) in the value of the Agent's and the Lenders' interests in the
Prepetition Collateral during the Case. The Replacement Liens: (1) are and shall
be in addition to the Prepetition Liens; (2) are and shall be First Priority
Liens that, subject to Permitted Liens, the Carveout, and the UST and Clerk
Fees, are properly perfected, valid and enforceable without any further action
by the Debtor or the Agent and without the execution, filing or recordation of
any financing statements, security agreements, mortgages or other documents or
instruments; and (3) shall remain in full force and effect notwithstanding any
subsequent conversion or dismissal of the Case. Notwithstanding the foregoing,
the Debtor is authorized and directed to execute and deliver to the Agent such
financing statements, mortgages, instruments and other documents as the Agent
may deem necessary or reasonably desirable from time to time.
(c) Allowed Code(S)507(b) Claim. If and to the extent the adequate
---------------------------
protection of the interests of the Agent and the Lenders in the Prepetition
Collateral granted to the Agent and the Lenders pursuant to this Order proves
insufficient, the Agent and the Lenders shall have an Allowed Claim under
Code(S) 507(b) in the amount of any such insufficiency, with priority over: (1)
all costs and expenses of administration of the Case (other than the Lenders'
claim pursuant to Paragraph 3(c) of this Order) that are incurred under any
provision of the Code, including, without limitation, Code (S)(S) 503(b),
506(c), 507(a), or 552(b); and (2) the claims of any other party in interest
under Code (S) 507(b), but in each case, subject and subordinate to the Carveout
and the UST and Clerk Fees.
(d) Application of Cash Collateral. The Agent is authorized to apply all
------------------------------
Cash Collateral now or hereafter coming into the Agent's possession or control
as follows: (1) first, to payment of Prepetition Debt consisting of Allowable
506(b) Amounts; (2)
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second, to payment of other Prepetition Debt; (3) third, to payment of
Postpetition Charges; and (4) fourth, to payment of other Postpetition Debt. All
such applications to Prepetition Debt shall be final in nature, subject only to
(1) the right of parties in interest to object to applications to Allowable
506(b) Amounts under and in accordance with Paragraph 6(a) of this Order; and
(2) the reservation of rights set forth in Paragraph 7(a) of this Order.
Notwithstanding anything to the contrary in this Order, should the Interim Order
not become the Final Order (including any period of stay or appeal), the Agent
and Lenders shall be required to return to the estate promptly upon request (a)
the facility fee and structuring fee paid upon entry of the Interim Order, minus
(b) 1.33% of the difference between (i) the highest principal amount outstanding
under the Loan Agreement after the Filing Date and prior to termination of the
Interim Order, and (ii) the principal amount outstanding under the Loan
Agreement as of the Filing Date.
(e) Prohibition Against Additional Debt. No order shall be entered in this
------------------------------------
case authorizing the Debtor to incur debt (other than the Carveout or the UST
Fees) secured by a lien which is equal to or superior to the Aggregate Liens, or
which is given superpriority administrative expense status under Code (S)
364(c)(1) equal to or superior to the superpriority administrative expense
status granted to the Postpetition Debt, unless, in addition to the satisfaction
of all requirements of Code(S) 364 for the incurrence of such debt: (a) the
Agent and the Lenders have consented to such order; (b) there is no Postpetition
Debt outstanding at the time of the entry of such an order; or (c) such credit
or debt is used to immediately pay the Postpetition Debt in full.
(f) No Consent to Surcharge. Nothing in this Order shall be deemed to
-----------------------
constitute the Agent's and the Lenders' consent to any claim under Code (S)
506(c) asserted for the benefit of any party, and the Agent and the Lenders
shall retain all rights to contest any such claims.
(g) Waiver of Right to Return/Consent to Setoff. The Debtor hereby waives
-------------------------------------------
its right: (1) to return any Prepetition Collateral or Postpetition Collateral
pursuant to Bankruptcy Code(S) 546(g); or (2) to consent to setoff pursuant to
Bankruptcy Code(S) 553.
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6. Miscellaneous Provisions.
-------------------------
(a) Notice of and Objections to Allowable 506(b) Amounts. The Agent shall
----------------------------------------------------
provide the Debtor's counsel, counsel for any Committee, and the United States
Trustee with copies of all invoices sent by the Agent's counsel to the Agent
(edited to delete any attorney-client or other confidential information) with
respect to the attorneys' fees and related costs and expenses asserted as
Allowable 506(b) Amounts. Any such party may object to the reasonableness of any
such fees, costs and expenses. However, any objection by any such party to any
such fees, costs, or expenses shall be forever waived and barred unless, within
thirty days of receipt of the invoice to which the objection relates: (1) the
objection is filed with the Court and served upon the Agent; and (2) the
objection describes with particularity the items or categories of fees, costs
and expenses that are the subject of the objection and provides the specific
basis of the objection to each such item or category of fees, costs and
expenses. Any hearing on an objection to the fees, costs and expenses of the
Agent set forth on any invoice shall be limited to the reasonableness or
necessity of the particular items or categories of the fees, costs and expenses
that are the subject of such objection.
(b) Force and Effect of Prepetition Documents; Conflicts. Except as
-----------------------------------------------------
modified herein, and subject to the other provisions of this Order and the Code,
the Prepetition Documents, and the terms and provisions thereof, shall remain in
full force and effect with respect to the Prepetition Debt. The Postpetition
Debt shall be governed by the Postpetition Documents except where they conflict
with the provisions of this Order, in which case the provisions of this Order
shall prevail. In addition to the modifications otherwise contained in this
Order, the Loan Agreement is further modified as follows: (1) Sections 2.7, 8.3,
9.2 (with respect to prepetition conduct) and 9.4 of the Loan Agreement are
eliminated; (2) each representation and warranty set forth in Section 7 of the
Loan Agreement is modified to take into account the events and circumstances
that customarily occur as a result of the events leading up to and following the
commencement of a proceeding under chapter 11 of the Code, or events that have
occurred leading up to the commencement of the Case; (3) the reporting
requirements of Sections 8.1.3(i) (with respect to the delivery of an
unqualified annual audit), 8.1.3(iii) and 8.1.7 of the Loan Agreement are
-19-
eliminated; and (4) the conditions precedent set forth Sections 9.5 and 9.6 are
modified to take into account the events and circumstances that customarily
occur as a result of the events leading up to and following the commencement of
a proceeding under chapter 11 of the Code, or events that have occurred leading
up to the commencement of the Case. To the extent that any of the Prepetition
Documents conflict with the provisions of this Order, the provisions of this
Order shall prevail.
(c) Modification of Stay. The automatic stay of Code (S) 362 is hereby
--------------------
modified with respect to the Agent and the Lenders to the extent necessary to
effectuate the provisions of this Order.
(d) Financial Information; Insurance. The Debtor is hereby directed to
--------------------------------
deliver to the Agent such financial and other information concerning the
business and affairs of the Debtor and any of the Aggregate Collateral as may be
required pursuant to the Prepetition Documents and such financial information
and other information as the Agent shall reasonably request from time to time,
including monthly information as to the Debtor's post-petition accrued, unpaid
expenses, a daily borrowing base report in form and substance substantially
identical to that provided immediately prior to the Filing Date, a weekly
inventory estimate, information necessary to confirm that the Debtor is within
the Budget and Permitted Variances, and weekly Budgets for any period subsequent
to June 30, 2001 as soon as practicable but in no event later than 60 days prior
to the commencement of such period. The Debtor is also directed to allow the
Agent (and any consultant retained by the Agent) access to the premises for the
purpose of enabling the Agent (or Agent's consultant) to inspect and audit the
Aggregate Collateral and the Debtor's books and records. Such access for such
purpose shall be permitted during normal business hours and upon forty-eight
hours' notice or such shorter notice as may be provided in the Prepetition
Documents; provided, however, that if the Agent alleges fraud or gross
mismanagement, the Agent (or the Agent's consultant) shall be permitted access
to the premises for such purpose at any time without notice. The Debtor is
further directed to deliver to the Agent evidence, satisfactory to the Agent,
that the Aggregate Collateral is insured for the full replacement value thereof,
that all insurance policies required by the Prepetition Documents or obtained in
connection with the Aggregate Collateral are maintained in full force and
effect, and that the Agent is named as
-20-
loss payee on all such property insurance policies and named as additional
insured on all such liability policies as its interests may appear.
(e) No Waiver. Except to the extent expressly set forth in this Order, this
---------
Order shall not constitute a waiver by the Agent or the Lenders of any of their
rights under the Prepetition Documents, the Code or other applicable law,
including, without limitation: (1) its right to later assert that,
notwithstanding the terms and provisions of this Order, any of their interests
in the Prepetition Collateral lack adequate protection within the meaning of
Code(S)(S) 362(d) or 363(e); or (2) their right to later assert a claim under
Code(S) 507. The Agent's failure, at any time or times hereafter, to require
strict performance by the Debtor (or by any Trustee) of any provision of this
Order shall not waive, affect or diminish any right of the Agent and the Lenders
thereafter to demand strict compliance and performance therewith. No delay on
the part of the Agent in the exercise of any right or remedy under this Order
shall preclude any other or further exercise of any such right or remedy or the
exercise of any other right or remedy. None of the rights or remedies of the
Agent or the Lenders under this Order shall be deemed to have been suspended or
waived by the Agent unless such suspension or waiver is in writing, signed by a
duly authorized officer of the Agent, consented to in writing by the Lenders and
directed to the Debtor specifying such suspension or waiver.
7. Binding Effect.
--------------
(a) Stipulations and Findings; Reservation of Rights. The stipulations and
------------------------------------------------
findings contained in Paragraphs B and C of this Order shall be binding on all
parties in interest in the Case and their respective successors and assigns,
including, without limitation, any Trustee, subject only to the provisions of
this Paragraph 7(a). Any party-in-interest shall have through 75 days from the
entry of this Order, and the Committee shall have through 60 days from its
formation (if later), to file an action in this Court (1) (i) challenging the
validity, enforceability, extent or priority of the Prepetition Debt or the
Lender's liens in the Prepetition Collateral, or (ii) otherwise asserting any
claims or causes of action against the Lender arising out of prepetition
activities, and (2) as a result, to the extent required by such actions,
asserting that the payment of any Prepetition Debt authorized or directed by
this Order should be reversed or reapplied (an "Avoidance Action"). Any
Avoidance Action may
-21-
be filed in the name of the Debtor without further leave of Court. To the extent
that a party-in-interest or the Committee ultimately prevails with respect to an
Avoidance Action (whether initially, on appeal, or otherwise), to the extent
required by such Avoidance Action, the Court shall grant any appropriate relief,
including appropriate relief in respect of the payment of the Prepetition Debt.
(b) Order. Except as provided in Paragraph 7(a) of this Order, this Order
-----
shall be binding on all parties in interest in this Case and their respective
successors and assigns, including, without limitation, any Trustee, except that
any Trustee shall have the right to terminate this Order after notice and a
hearing. If this Order never becomes a final and nonappealable order, if a
Trustee terminates this Order, or if any or all of the provisions of this Order
are hereafter modified, vacated or stayed by subsequent order of this Court or
any other court, such termination or subsequent order shall not affect: (a) the
priority, validity, enforceability or effectiveness of any lien, security
interest, priority, or other benefit authorized hereby with respect to any Cash
Collateral used or Postpetition Debt incurred prior to the effective date of
such subsequent order (and all such liens, security interests, priorities and
other benefits shall be governed in all respects by the original provisions of
this Order); (b) the stipulations and findings contained in Paragraphs B and C
of this Order; or (c) the validity, enforceability or effectiveness of the
provisions of Paragraphs 5(d) or 5(f) of this Order. Except as otherwise
explicitly set forth in this Order, no third parties are intended to be or shall
be deemed to be third party beneficiaries of this Order.
(c) Notice of Final Hearing. The Debtor shall, on or before April 9, 2001,
-----------------------
serve by overnight mail copies of a notice of entry of this Order, together with
a copy of this Order, to the Agent and each of the Lenders, the Agent's counsel
at the address set forth at the end of this Order, counsel to the Committee, if
any, when and if appointed, the twenty (20) largest unsecured creditors of the
Debtor as set forth on schedules filed by the Debtor pursuant to Bankruptcy Rule
1007(d), the United States Trustee, any other persons which the Debtor knows are
entitled to notice under Bankruptcy Rule 4001(b) as of such date, and any other
party-in-interest for which counsel to the Debtor has received a written request
in this case before 2:00 p.m. (EDT) on such date to receive such pleadings. The
notice of entry of this Order shall state that any party-in-interest objecting
to the entry of a final order on the
-22-
Motion shall file a written objection with the United States Bankruptcy Court
Clerk for the District of Delaware no later than 10:00 a.m. (EDT) on April 18,
2001, which objection shall be served so that the same is received on or before
10:00 a.m. (EDT) on such date by the United States Trustee and counsel for the
Debtor and counsel for the Agent set forth at the end of this Order (at each of
the addresses set forth therein). If no written objection and request for final
hearing on the Motion has been timely filed with this Court, and served upon and
timely received by all parties entitled to notice thereof, this Order (together
with any modifications approved by the Court) shall be deemed to be a final
order at 5:00 p.m. (EDT) on such date, shall continue on a final basis and
remain in full force and effect thereafter and shall constitute final authority
for the provisions set forth herein, and any objection by any party-in-interest
to the terms of this Order and the relief requested in the Motion shall be
deemed forever waived. If an objection is timely filed, served and received, a
final hearing shall be held on the Motion and objections thereto before this
Court on April 18, 2001 at 2:00 p.m., by telephone at the Court's convenience,
if necessary.
_____________________________________
UNITED STATES BANKRUPTCY JUDGE
Dated: April ______, 2001
AGREED TO AND ACKNOWLEDGED BY:
BORDEN CHEMICALS AND PLASTICS
OPERATING LIMITED PARTNERSHIP
By: ____________________________________
One of Its Attorneys
JONES, DAY, REAVIS & POGUE
David G. Heiman, Esq. Brad B. Erens, Esq.
North Point 77 W. Wacker Drive
901 Lakeside Avenue Suite 3800
Cleveland, OH 44114-1190 Chicago, IL 60601-1692
-23-
Telephone (216) 586-3939 Telephone (312) 782-3939
Telecopier (216) 579-0212 Telecopier (312) 782-8585
DUANE, MORRIS & HECKSCHER LLP
Michael R. Lastowski, Esq.
Mark J. Packel, Esq.
1100 North Market Street, Suite 1200
Wilmington, Delaware 19801
Telephone: (302) 657-4900
Telecopier: (302) 657-4901
FLEET CAPITAL CORPORATION, FOR ITSELF
AND AS AGENT FOR THE LENDERS
By: ____________________________________
One of Its Attorneys
GOLDBERG, KOHN, BELL, BLACK, ROSENBLOOM
& MORITZ
Alan P. Solow, Esq.
Demetrios G. Karcazes, Esq.
55 E. Monroe St., Suite 3700
Chicago, IL 60603
Telephone: (312) 201-4000
Telecopier: (312) 332-2196
THE BAYARD FIRM
Neil B. Glassman, Esq.
222 Delaware Ave., Suite 900
Wilmington, DE 19899
Telephone: (302) 655-5000
Telecopier: (302) 658-6395
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EXHIBIT A
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BUDGET
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