Exhibit 99.2
ORDERED in the Southern District of Florida on December 2, 2005
[BANKRUPTCY COURT LOGO]
A. JAY CRISTOL
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A. Jay Cristol, Chief Judge Emeritus
UNITED STATES BANKRUPTCY COURT
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
www.flsb.uscourts.gov
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IN RE: Chapter 11
EPIXTAR CORP., et al., Case Nos. 05-42040-BKC-AJC through
05-42049-BKC-AJC
Debtors. (Jointly Administered)
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INTERIM ORDER AUTHORIZING CALL CENTER DEBTORS
TO OBTAIN SECURED DEBTOR-IN-POSSESSION FINANCING
FROM AND USE CASH COLLATERAL OF LAURUS MASTER FUND, LTD.
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A. This matter is before the Court on the emergency motion (the
"Motion") of the above-captioned debtors and debtors-in-possession (the
"Debtors") in the above-captioned Chapter 11 cases (the "Bankruptcy Cases"),
requesting entry of an emergency interim order pursuant to Bankruptcy Code
section 364(c) to obtain secured debtor-in-possession financing from Laurus
Master Fund, Ltd. ("Lender") of up to $2,500,000 of which up to $750,000 will be
advanced on an interim basis (the "Interim Advances"). The Debtors have
represented to the Court that Lender was the Debtors' pre-petition secured
lender and that the Debtors had, prior to the date of commencement of the
Bankruptcy Cases (the "Petition Date"), granted Lender liens, mortgages, pledges
and security interests in substantially all assets of the Debtors (the "Pre-
Petition Collateral"), including without limitation the capital stock of Debtor
Epixtar Corp. ("Epixtar") in its first-tier subsidiaries NOL Group, Inc. ("NOL")
and VOXX Corporation ("VOXX"), and the capital stock of both NOL and VOXX in
their respective first-tier and second-tier subsidiaries.
B. The Debtors and Lender, which was the Debtors' pre-petition senior
secured lender, had previously appeared before the Court on October 12, 2005
(the "Cash Collateral Hearing") at which time the Court heard the Motion of
the Debtors-in-Possession for Authority to Use Cash Collateral and Request for
Expedited Hearing (the "Cash Collateral Motion") at which, among other things,
the Debtors and Lender agreed to the Debtors' conditional and limited use of
Lender's cash collateral based upon an agreed interim budget.
C. The Debtors have represented to the Court that subsequent to the
Cash Collateral Hearing, (a) Lender informed the Debtors that Lender was
unwilling to consent to (i) the use of cash collateral generated by Epixtar,
VOXX and the subsidiaries of Voxx (collectively, the "Call Center Debtors") to
fund the expenses of NOL and the subsidiaries of NOL (collectively, the "ISP
Debtors"), (ii) the use of cash collateral generated by the ISP Debtors to fund
the expenses of the Call Center Debtors, (b) the Debtors informed Lender that
the Call Center Debtors required the use of funds in addition to cash collateral
generated by the Call Center Debtors to fund their necessary expenses essential
to prevent irreparable harm to their estates, and (c) the Debtors informed
Lender that the ISP Debtors were projected to fund their necessary expenses
solely through the use of Lender's cash collateral and did not require financing
therefor.
D. The Debtors have further represented to the Court that after
negotiations between the parties, Lender has agreed, subject to the Court's
approval, to make a debtor-in-possession loan to the Call Center Debtors on the
terms and conditions set forth in (collectively, the "DIP
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Financing Documents") this Interim Order, the proposed agreements and
accompanying documents and instruments to be filed with the Court (collectively,
the "Post-Petition Agreement") and the budget annexed hereto (collectively,
with any Extension Budget, as such term is defined below, the "Budget").
E. The Court, having reviewed the file, having heard arguments of
counsel, having determined that good and sufficient cause exists in support of
the relief requested, having determined that the entry of this Interim Order is
necessary to avoid irreparable harm to the estates, makes the following interim
findings of fact and conclusions of law (to the extent any findings of fact
constitute conclusions of law, they are adopted as such, and vice versa):
(a) Lender is willing to advance monies to the Call Center Debtors
only upon the conditions contained in this Interim Order;
(b) the Call Center Debtors are unable to obtain sufficient levels
of unsecured credit allowable under Bankruptcy Code section 503(b)(1)
as an administrative expense necessary to maintain and conduct its
business;
(c) the Call Center Debtors are unable to obtain secured credit
allowable only under Bankruptcy Code sections 364(c)(1) and (c)(2),
except under the terms and conditions provided in this Interim Order;
(d) it is in the best interest of the Call Center Debtors' estates
that they be allowed to finance their operations under the terms and
conditions set forth herein, as such financing is necessary to prevent
a disruption of their business and to permit the Call Center Debtors to
attempt to achieve a successful reorganization; and
(e) the Call Center Debtors admit and represent, without prejudice
to the rights of the Official Committee of Unsecured Creditors (the
"Committee") and third
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parties to challenge same to the extent set forth below, that as of the
Petition Date, in accordance with the Pre-Petition Agreements, (1) the
Call Center Debtors were indebted to Lender, without defense,
counterclaim, recoupment or offset of any kind, in the aggregate amount
of approximately $15.4 million in respect of loans, advances and other
financial accommodations made by Lender to the Call Center Debtors in
accordance with the Pre-Petition Agreements (the "Pre-Petition
Obligations"), and (2) the Pre-Petition Obligations were secured by
valid, enforceable and properly perfected first priority liens,
mortgages, pledges and security interests in and to the Pre-Petition
Collateral of the Call Center Debtors.
F. The Court, further, makes the following findings of fact and
conclusions of law (to the extent any findings of fact constitute conclusions of
law, they are adopted as such, and vice versa) on a final basis with respect to
the Interim Advances:
(a) the credit and financial accommodations to be extended under the
DIP Financing Documents are being extended:by Lender in good faith and
Lender is entitled to the protection of Bankruptcy Code section 364(e);
(b) notice of relief sought by the Motion and the hearings with
respect thereto, believed by the Call Center Debtors to be the best
available notice under the circumstances, has been given pursuant to
Bankruptcy Rule 4001(c) to the Committee's, Lender's and the U.S.
Trustee's respective counsel and to those parties who have filed
notices of appearance in these Bankruptcy Cases, and no further notice
of, or hearing on, the interim relief sought in the Motion is required;
(c) good and sufficient cause exists for the issuance of this
Interim Order, to prevent immediate and irreparable harm to the Call
Center Debtors' estates; and
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(d) the Court has core jurisdiction over the Call Center Debtors'
bankruptcy case, the Motion, and the parties and property affected by
the Motion pursuant to 28 U.S.C. sections 157(b) and 1334, and venue is
proper before the Court pursuant to 28 U.S.C. sections 1408 and 1409;
NOW, THEREFORE, IT IS ORDERED:
1. Effective, nunc pro tunc to the date of this Interim Order, upon the
entry of a final order with respect to the Motion (a "Final DIP Order")
containing such provision and upon the entry of the "9019 Order" (as such term
is defined below), the Call Center Debtors are authorized and deemed to ratify
and adopt the Pre-Petition Agreements, including the validity and enforceability
of the Pre-Petition Obligations to Lender incurred thereunder and the liens and
security interests granted to Lender thereunder, subject to the rights of the
Committee and third parties to challenge same to the extent set forth below.
2. The Call Center Debtors are authorized (a) to enter into the
Post-Petition Agreement, (b) to borrow funds from and incur debt to Lender
pursuant to the terms and conditions of the DIP Financing Documents in aggregate
principal amount not to exceed $750,000 pending entry of a Final DIP Order, and
use Lenders' cash collateral, as such term is defined in Bankruptcy Code
section 363(a) ("Cash Collateral"), in accordance with the Budget, from and
after the date of this Interim Order, subject to the execution and delivery of
the Post-Petition Agreement, and (c) to grant to Lender the liens and security
interests provided for under the Post-Petition Agreement and this Interim Order.
3. As adequate protection for any post-petition diminution in value of
Lender's interests in the Pre-Petition Collateral of the Call Center Debtors,
including without limitation that caused by the Call Center Debtors' use of the
Pre-Petition Collateral and/or Cash Collateral, including without limitation for
purposes of the "Carve-Out" (as such term is defined below),
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Lender is granted a joint and several post-petition claim (the "Adequate
Protection Claim") against the Call Center Debtors' estates.
4. The Adequate Protection Claim and any and all "Obligations" (as such
term is defined in the Post-Petition Agreement) of the Call Center Debtors to
Lender arising subsequent to the date of entry of this Interim Order (the
"Post-Petition Obligations", and together with the Adequate Protection Claim,
the "Bankruptcy Claim", which shall not include the Pre-Petition Obligations)
shall have priority in payment over the Pre-Petition Obligations of the Call
Center Debtors and over any other obligations now in existence or incurred
hereafter by the Call Center Debtors, and over any and all administrative
expenses or charges against property arising in the Call Center Debtors'
bankruptcy case, including without limitation those specified in Bankruptcy Code
sections 105, 326, 328, 330, 331, 503(b), 507(a), 507(b), 726, 1113 or 1114,
subject only to the Carve-Out; provided, however, that with respect to the
Bankruptcy Claim and solely inter se, the Post-Petition Obligations shall be
senior to the Adequate Protection Claim, and the Adequate Protection Claim shall
be junior and subordinate to Post-Petition Obligations.
5. Pursuant to Bankruptcy Code sections 362, 363(e) and 364(c), as
security for the Bankruptcy Claim, the Call Center Debtors are authorized to and
do grant to Lender a valid, binding, enforceable and automatically perfected
lien, mortgage, pledge and/or security interest (a "Lien"), subject only to
Liens existing as of the Petition Date that are valid, enforceable and not
subject to avoidance by a trustee under the Bankruptcy Code, in all of the Call
Center Debtors' presently owned or hereafter acquired property and assets,
whether such property and assets were acquired by the Call Center Debtors before
or after the Petition Date, of any kind or nature, whether real or personal,
tangible or intangible, wherever located, including without limitation the
capital stock in any Call Center Debtor owned by any other Call Center Debtor,
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and the proceeds and products thereof (collectively, the "Collateral") (to the
extent acquired after the Petition Date, the "Post-Petition Collateral");
provided, however, that (a) Lender's Lien securing the Pre-Petition Obligations
of the Call Center Debtors shall be subject and subordinate to the Lien securing
the Bankruptcy Claim (the "Post-Petition Lien"), and (b) with respect to the
Post-Petition Lien and solely inter se, the Lien securing the Post-Petition
Obligations shall be senior to the Lien securing the Adequate Protection Claim,
and the Lien securing the Adequate Protection Claim shall be subject and
subordinate to the Lien securing the Post-Petition Obligations. Notwithstanding
anything herein to the contrary, (a) the Post-Petition Lien, the Adequate
Protection Claim and the Lien securing the Pre-Petition Obligations shall be
subject to the Carve-Out and to post-petition purchase money security interests
and capital leases of the Call Center Debtors permitted pursuant to the
Pre-Petition Agreements and/or the Post-Petition Agreement, (b) the
Post-Petition Lien shall be senior to the Liens of Sands Brothers Venture
Capital LLC, Sands Brothers Venture Capital II, LLC, Sands Brothers Venture
Capital III, LLC, Sands Brothers Venture Capital IV, LLC and their respective
affiliates (collectively, with Laidlaw & Company (UK) Ltd. and its affiliates,
"Sands"), and (c) the Collateral shall not include causes of action available to
the Call Center Debtors and/or their estates pursuant to Chapter 5 of the
Bankruptcy Code and recoveries upon such causes of action other than RSI Escrow
Actions (as such term is defined below) to the extent that the RSI Escrow
Actions fall within the scope of Chapter 5 of the Bankruptcy Code, but the
Collateral shall include other causes of action of the Debtor that are not
within the scope of said statutory provisions and recoveries upon such other
causes of action. For purposes of this Order, "RSI Escrow Actions" shall mean
Epixtar's claims and causes of action and recoveries thereupon against
Realization Services, Inc. ("RSI") and/or Troutman Sanders LLP as escrow agent
("Troutman") for the
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recovery of (and equal to the value of) funds placed into escrow pursuant to
that certain Escrow Agreement dated as of July 20, 2005 among Epixtar, Lender,
RSI and Troutman. Recoveries upon the RSI Escrow Actions shall be directed to
Lender or turned over to Lender in the form received for application in
reduction of the Post-Petition Obligations.
6. Notwithstanding Lender's Bankruptcy Claim, the Post-Petition Lien
and the Liens securing the Pre-Petition Obligations, the Collateral and Cash
Collateral may be used by the Call Center Debtors, if sufficient unencumbered
funds are not available from the Call Center Debtors' estate, to pay
(collectively, the "Carve-Out"):
(a) the statutory fees of the United States Trustee pursuant to 28
U.S.C. section 1930(a) and any unpaid fees due and owing to the Clerk
of the Court;
(b) the allowed fees and expenses of professionals retained and
approved pursuant to final orders of the Court ("Professionals") by the
Call Center Debtors in aggregate amount not to exceed $200,000,
exclusive of pre-petition retainers;
(c) the allowed fees and expenses of Professionals of the Committee,
and the reasonable expenses of members of the Committee (other than the
fees and expenses of professionals employed by members of the
Committee), in aggregate amount not to exceed $250,000;
(d) the allowed fees and expenses of any Chapter 7 Trustee under
Bankruptcy Code section 726(b), including without limitation the
allowed fees and expenses of the Chapter 7 Trustee's Professionals, in
aggregate amount not to exceed $10,000.
All payments received by Professionals with respect to fees and expenses within
the scope of the Carve-Out (exclusive of pre-petition retainers) shall reduce
the respective Carve-Out on a dollar-for-dollar basis.
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7. The Post-Petition Lien shall not be subject to any Lien or any other
interest which is avoided and which would otherwise be preserved for the benefit
of the Call Center Debtors' estate under Bankruptcy Code section 551, and the
Post-Petition Lien shall encumber and constitute a prior Lien to any Lien which
is avoided and which would otherwise be so preserved for the benefit of the Call
Center Debtors' estate. Lender shall not be subject to the equitable doctrines
of "marshaling" or any similar claim or doctrine with respect to any Collateral
securing any of the Bankruptcy Claim.
8. Effective, nunc pro tunc to the date of this Interim Order, upon the
entry of a Final DIP Order containing such provision, the Call Center Debtors
waive irrevocably all claims and rights, if any, it might otherwise assert
against the Collateral pursuant to Bankruptcy Code sections 506(c) or 552(b).
9. Effective, nunc pro tunc to the date of this Interim Order, upon the
entry of a Final DIP Order containing such provision, except from and pursuant
to the terms of the Carve-Out, no entity in the course of this bankruptcy case
(whether Chapter 11 or subsequent Chapter 7), shall be permitted to recover from
the Collateral (whether directly or through grant of derivative and/or equitable
standing in the name of the Call Center Debtors and/or the Call Center Debtors'
estate) any cost or expense of preservation or disposition of the Collateral,
including, without limitation, expenses and charges as provided in Bankruptcy
Code sections 506(c) or 552(b) without the prior written consent of Lender.
Effective, nunc pro tunc to the date of this Interim Order, upon the entry of a
Final DIP Order containing such provision, no entity (other than Professionals
who are beneficiaries of the Carve-Out to the extent of and subject to the terms
and conditions thereof) shall be permitted to recover from the Collateral, or
assert against Lender, any claim with respect to any unpaid administrative
expense of the Call Center Debtors'
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bankruptcy case, whether or not the Call Center Debtors' payment of such
administrative claim was contemplated by or included in the Budget.
10. The Call Center Debtors shall not use Cash Collateral other than in
accordance with the provisions of paragraph "2" of this Interim Order and/or for
purposes of the Carve-Out. So long as there are any Obligations outstanding to
Lender, unless Lender shall have given its prior written consent, or the Court
enters an order, upon at least three (3) business days prior written notice to
Lender and after a hearing, there shall not at any time be entered in the Call
Center Debtors' Chapter 11 case any further orders which authorize: (a) under
Bankruptcy Code section 363, the use of Cash Collateral in which Lender has an
interest, or the sale, use, or lease, other than in the ordinary course of
business, of property of the Call Center Debtors in which Lender has an
interest; (b) the obtaining of credit or the incurring of indebtedness pursuant
to Bankruptcy Code sections 364(c) or 364(d), or any other grant of rights
against the Call Center Debtors and/or its estate, secured by a lien, mortgage
or security interest in the Collateral held by Lender or entitled to priority
administrative status which is equal or superior to that granted to Lender
herein, other than post-petition purchase money security interests and capital
leases of the Call Center Debtors permitted pursuant to the Pre-Petition
Agreements and/or the Post-Petition Agreement; or (c) the return of goods by the
Call Center Debtors pursuant to Bankruptcy Code section 546(h).
11. The Post-Petition Obligations shall, in addition to the Interim
Advances, include Lender's attorneys' and other professionals' fees and expenses
arising from or related to the Cash Collateral Motion, the Settlement
Stipulation and the DIP Financing Documents, including without limitation the
negotiating, closing, documenting and obtaining of Court approval thereof. The
Post-Petition Obligations shall, subject to the following sentence of this
paragraph, also
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include Lender's reasonable attorneys' and other professionals' fees and
expenses arising from or relating to (a) all proceedings in connection with any
Disposition (as such term is defined below), and (b) all proceedings in
connection with the interpretation, amendment, modification, enforcement,
enforceability, validity or carrying out of the Post-Petition Agreement or this
Interim Order at any time. With respect to the fees and expenses under the
immediately preceding sentence of this paragraph, Lender shall provide at least
five (5) business days prior written notice thereof (the "Fee Notice") to the
Noticed Parties (as such term is defined below). The Fee Notice shall be
accompanied by copies of such professionals' invoices to Lender, subject to
redaction against disclosure of privileged and/or confidential information. Such
invoices shall become Post-Petition Obligations without application to or
further order of the Court unless, prior to the expiration of the five (5)
business day period, appropriate pleadings objecting thereto are filed with the
Court and served upon Lender by any of the Noticed Parties. The foregoing
provisions are without prejudice to Lenders' rights under Bankruptcy Code
section 506(b), the Pre-Petition Agreements and the Post-Petition Agreement with
respect to Lenders' fees, costs and expenses.
12. The Call Center Debtors, at their expense, shall continue to keep
the Collateral fully insured against all loss, peril and hazard and make Lender
loss payee as its interests appear, under such policies. The Call Center Debtors
shall pay any and all undisputed post-petition taxes, assessments and
governmental charges with respect to such collateral all as provided under the
Pre-Petition Agreements and/or the Post-Petition Agreement, except as otherwise
permitted by the Bankruptcy Code. The Call Center Debtors shall provide Lender
with proof of the foregoing within three (3) business days of written demand and
will give Lender access to its records in this regard.
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13. The automatic stay provisions of Bankruptcy Code section 362 are
modified to permit (a) the Call Center Debtors to implement and perform the
terms of the DIP Financing Documents, and (b) the Call Center Debtors to create,
and Lender to perfect, any and all post petition liens, mortgages and security
interests granted hereunder. Lender shall not be required to file UCC financing
statements or other instruments with any other filing authority to perfect any
post-petition lien, mortgage or security interest granted by this Interim Order
or take any other action to perfect such post-petition liens, mortgages and
security interests, which shall be deemed automatically perfected by the docket
entry of this Interim Order by the Clerk of the Court. If, however, Lender
shall, in its sole and absolute discretion, elect for any reason to file, record
or serve any such financing statements or other documents with respect to such
post-petition liens and security interests, the Call Center Debtors shall
execute same upon request and the filing, recording or service thereof (as the
case may be) shall be deemed to have been made at the time and on the date of
entry of this Interim Order.
14. The time of payment of any and all Post-Petition Obligations of the
Call Center Debtors to Lender arising out of or incurred pursuant to the DIP
Financing Documents shall not be altered, extended or impaired by any plan or
plans of reorganization that may hereafter be accepted or confirmed or any
further orders of the Court which may hereafter be entered.
15. Each of the following shall constitute an "Event of Default" for
purposes of this Interim Order:
(a) the Call Center Debtors' Chapter 11 cases are either dismissed
or converted to Chapter 7 cases;
(b) a trustee, or an examiner with expanded powers to operate the
Call Center Debtors' business, is appointed in the Call Center Debtors'
Chapter 11 cases;
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(c) the Call Center Debtors file any plan of reorganization, or any
plan of reorganization with respect to the Call Center Debtors is
confirmed, that does not comply with the treatment of the Pre-Petition
Obligations and/or the Adequate Protection Claim set forth in the
Settlement Stipulation;
(d) the Call Center Debtors fail to file a plan of reorganization
that complies with the treatment of the Pre-Petition Obligations and/or
the Adequate Protection Claim set forth in the Settlement Stipulation
(a "Complying Plan") and an accompanying disclosure statement on or
before January 15, 2006, the Call Center Debtors fail to obtain
confirmation of a Complying Plan on or before ninety (90) days after
the date of filing of the Complying Plan or the first hearing date
thereafter made available by the Court for such purpose if the Court
will not provide a hearing date for such purpose prior to such date,
and/or the "effective date" of the confirmed Complying Plan has not
occurred within thirty (30) days after the date of entry of the
confirmation order;
(e) the Court enters an order authorizing the sale of all or
substantially all assets of the Call Center Debtors that does not
provide for the payment in full of the Obligations in cash upon the
closing of the sale, unless otherwise agreed by Lender in its sole and
absolute discretion;
(f) the Call Center Debtors cease operations of its present business
or take any material action for the purpose of effecting the foregoing
without the prior written consent of Lender, except to the extent
contemplated by the Budget;
(g) this Interim Order is reversed, vacated, stayed, amended,
supplemented or otherwise modified in a manner which shall, in the sole
opinion of Lender, materially and
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adversely affect the rights of Lender hereunder or shall materially and
adversely affect the priority of any or all of Lender's Liens;
(h) the occurrence of an Event of Default under the Post-Petition
Agreement;
(i) the Call Center Debtors expend any funds or monies for any
purpose other than those set forth on the Budget and/or for the
Carve-Out;
(j) Intentionally omitted;
(k) the occurrence of a material adverse change in (1) the condition
(financial or otherwise), operations, assets, business or business
prospects of the Call Center Debtors, (2) the Call Center Debtors'
ability to pay the Post-Petition Obligations in accordance with the
terms of the DIP Financing Documents, or (3) the value of the
Collateral;
(1) non-compliance or default by the Call Center Debtors with any of
the terms and provisions of this Interim Order; provided, however, that
said non-compliance or default shall not be deemed an Event of Default
if curable and cured by the Call Center Debtors within five (5)
business days after notice of such non-compliance or default is given
to the Call Center Debtors' counsel and Committee counsel by Lender.
16. Upon the occurrence of an Event of Default, as such term is defined
in the preceding paragraph of this Interim Order and the giving of written
notice thereof by facsimile or e-mail transmission (the "Default Notice") by
Lender to the Call Center Debtors', the Committee's and the U.S. Trustee's
respective counsel (the "Noticed Parties");
(a) Lender shall have no further obligation to make loans, advances,
and/or other financial accommodations to the Call Center Debtors;
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(b) Lender shall have the right, free of the restrictions of
Bankruptcy Code section 362 or under any other section of the
Bankruptcy Code or applicable law or rule, to take immediate reasonable
action to protect the Collateral from harm, theft and/or dissipation;
(c) with respect to the Events of Default other than those specified
in subparagraphs "(a)" through "(e)" of the preceding paragraph of this
Interim Order, the Noticed Parties shall have five (5) business days
from the receipt of the Default Notice (the "Remedy Notice Period") to
cure the default (if curable) or obtain an order of the Court on notice
to Lender enjoining or restraining Lender from exercising its rights
and remedies based upon the Event of Default specified in the Default
Notice ("Restraint on Remedies"), provided that the sole grounds on
which any of the Noticed Parties may seek a Restraint on Remedies shall
be to allege either non-occurrence, non-continuance (if applicable) or
timely cure of the Event of Default specified in the Default Notice;
(d) the Call Center Debtors shall cease the use of Collateral and/or
Cash Collateral, Lender may impose an "administrative freeze" with
respect to any funds of the Call Center Debtors at or on deposit with
Lender, the Post-Petition Obligations shall be due and payable, and
Lender shall have the right, free of the restrictions of Bankruptcy
Code section 362 or under any other section of the Bankruptcy Code or
applicable law or rule, to exercise its contractual, legal and
equitable rights and remedies as to all or such part of the Collateral
to the extent of the Post-Petition Obligations as Lender, in its sole
and absolute discretion, shall elect: (1) with respect to the Events of
Default specified in subparagraphs "(a)" through "(e)" of the preceding
paragraph of this Interim Order, immediately upon the giving of the
Default Notice; or (2) with respect to Events of Default other than
those specified in subparagraphs "(a)" through "(e)" of the preceding
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paragraph of this Interim Order, five (5) business days after the expiration of
the Remedy Notice Period unless a Restraint on Remedies has timely been obtained
from the Court.
17. In the event that the Court has not "so ordered" or otherwise
approved (the "9019 Order") that certain "Stipulation and Order Settling
Controversy Pursuant to Bankruptcy Rule 9019" dated ______ __, 2005 (docket no.
_____) (the "Settlement Stipulation") on or before the "Interim Expiration Date"
(as such term is defined below) or such later date as is acceptable to Lender in
its sole and absolute discretion, or in the event that a Final DIP Order
acceptable to Lender, accompanied by a Budget acceptable to Lender or otherwise
approved by the Court, and the 9019 Order, have not been entered on or prior to
the Interim Expiration Date:
(a) Lender shall have no further obligation to make loans, advances,
and/or other financial accommodations to the Call Center Debtors, and
the Post-Petition Obligations shall be accelerated by Lender;
(b) the Call Center Debtors' authorization to use Collateral and
Cash Collateral shall cease, provided that the Call Center Debtors may
seek from the Court the continued use of Collateral and Cash Collateral
for a period of not more than thirty (30) days (not subject to
extension unless the Post-Petition Obligations have been paid in full
as set forth below) (the "DIP Payoff Period") subject to Lender's right
to object to such use; and
(c) at the conclusion of the DIP Payoff Period, unless the
Post-Petition Obligations shall have been repaid in full in cash prior
thereto, the Call Center Debtors shall cease the use of Collateral
and/or Cash Collateral, Lender may impose an "administrative freeze"
with respect to any funds of the Call Center Debtors at or on deposit
with Lender, the Post-Petition Obligations shall be due and payable,
and Lender
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shall have the right, free of the restrictions of Bankruptcy Code section 362 or
under any other section of the Bankruptcy Code or applicable law or rule, to
exercise its contractual, legal and equitable rights and remedies as to all or
such part of the Collateral to the extent of the Post-Petition Obligations as
Lender, in its sole and absolute discretion, shall elect.
18. The Call Center Debtors shall provide Lender with such written
reports, certified by an officer of the Call Center Debtors acceptable to Lender
to be accurate to the best of such officer's knowledge, information and belief,
as are required under the Pre-Petition Agreements and the Post-Petition
Agreement, and such additional written reports as Lender, in its reasonable
discretion, shall require.
19. Lender shall have the right, upon one (1) business day telephone or
facsimile transmitted written notice to the Call Center Debtors, at any time
during the Call Center Debtors' normal business hours, to inspect, audit,
examine, check, make copies of or extracts from the books, accounts, checks,
orders, invoices, bills of lading, correspondence and other records of the Call
Center Debtors, and to inspect, audit and monitor all or any part of the
Collateral, and the Call Center Debtors shall make all of same available to
Lender and its respective representatives, for such purposes, provided that such
audit shall not unreasonably disrupt the Call Center Debtors' ordinary course
business operations. Lender's agents, employees, independent contractors,
representatives or retained professionals may make recommendations to Call
Center Debtors regarding cost-cutting measures and the implementation thereof as
contemplated by the Budget and/or any draft or final business plan of the Call
Center Debtors, and to discuss any of the foregoing with Call Center Debtors'
officers, retained professionals or employees, all without Lender being deemed
to be in control of, or a fiduciary for, any of Call
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Center Debtors. The failure of the Call Center Debtors to follow any such
recommendations shall not be an Event of Default under this Order or under the
Post-Petition Agreement.
20. Except as otherwise permitted pursuant to the Settlement
Stipulation and the Budget, until such time as all Obligations of the Call
Center Debtors to Lender have been repaid in full, the pre-petition clearing,
dominion, lockbox and similar accounts maintained by or on behalf of the Call
Center Debtors pursuant to the Pre-Petition Agreements at certain banking
institutions for the collection of the proceeds of Lender's Collateral
(including without limitation receivables and other proceeds arising from the
Call Center Debtors' sales of inventory and/or performance of services) in the
ordinary course of the Call Center Debtors' business ("Collections"), and the
payment procedures under which such accounts are administered (collectively, the
"Collection Accounts and Procedures"), shall continue in full force and effect
unless otherwise directed by Lender. Without limitation of the foregoing, from
and after the date of this Interim Order, the Call Center Debtors shall remit to
Lender such cash, cash equivalents and checks as are Collections to Lender,
and/or shall cause customers and account debtors of the Call Center Debtors to
remit such cash, cash equivalent and checks as are Collections to Lender, in
accordance with the Collection Accounts and Procedures and in accordance with
the terms and conditions of the Pre-Petition Agreements. Lender shall make
Collections and/or Cash Collateral available to the Call Center Debtors in
accordance with the Budget subject to the terms and conditions of this Order.
21. To the extent that as of the date of this Interim Order, the Call
Center Debtors maintains custody and/or control of any cash, cash equivalents or
checks, whether in its possession, in bank accounts, in lockbox accounts or
otherwise, in contravention of the requirements of the Collection Accounts and
Procedures, and such cash, cash equivalents or
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checks are proceeds of Lender's Collateral, upon entry of this Interim Order the
Call Center Debtors shall deliver such cash, cash equivalents or checks, and the
proceeds thereof, to Lender.
22. Except as otherwise permitted pursuant to the Settlement
Stipulation and the Budget and subject to Carve Out, the Call Center Debtors and
any successor to the Call Center Debtors, including without limitation any
successor trustee or trustees, shall (a) assign or direct to Lender any and all
payments, proceeds or other consideration ("Proceeds") realized upon the sale,
liquidation, collection or disposition of the Collateral other than in the
ordinary course of the Call Center Debtors' business (a "Disposition"),
including without limitation the proceeds of sales other than in the ordinary
course of business authorized pursuant to Bankruptcy Code section 363 and/or or
any plan of reorganization, and (b) immediately deliver any and all Proceeds
which come into their possession to Lender in the form received, which Proceeds
shall be applied to reduce the Obligations. In furtherance of the foregoing,
neither the Call Center Debtors nor the Committee shall seek to cause the escrow
of, enjoin Lender's receipt of, or otherwise withhold from Lender any Proceeds
of any Disposition, and any order of the Court authorizing a Disposition shall
provide for Lender's receipt of Proceeds in accordance with the provisions of
this paragraph.
23. Except as otherwise permitted pursuant to the Settlement
Stipulation and the Budget and subject to the Carve-Out, Lender is authorized,
notwithstanding the provisions of Bankruptcy Code section 362, to retain and
apply Collections and Proceeds (whether received in the ordinary course of the
Call Center Debtors' business, or pursuant to a Disposition, or as recoveries of
any claim or cause of action of the Call Center Debtors that is included in the
Collateral, or otherwise) (a) first to the repayment of the Bankruptcy Claim in
accordance with the provisions of the Post-Petition Agreement and of this Order,
and (b) second to the repayment
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of the Pre-Petition Obligations as set forth in the Pre-Petition Agreements in
accordance with the provisions of Bankruptcy Code section 506(b) and of this
Order. Such applications of Collections and Proceeds shall be free and clear of
any claim, charge, assessment or other liability including, without limitation,
any such claim or charge arising out of or based on, directly or indirectly,
Bankruptcy Code sections 506(c) or 552(b).
24. Without prejudice to the rights of the Committee and third parties
to the extent set forth in the following paragraph of this Interim Order, (a)
the validity, extent, priority, perfection, enforceability and non-avoidability
of Lender's and Sands' pre-petition claims against the Debtors and/or of
Lender's and Sands' Liens shall not be subject to challenge by any of the
Debtors (for purposes of this paragraph, the term "Debtors" shall include the
Debtors together with their estates, successors and assigns), (b) the Debtors
shall not seek to avoid or challenge (whether pursuant to Chapter 5 of the
Bankruptcy Code or otherwise) any transfer made by or on behalf of the Debtors
to or for the benefit of Lender or Sands prior to the Petition Date, and (c)
the Debtors release, waive and affirmatively agree not to allege or otherwise
pursue any or all defenses, affirmative defenses, counterclaims, claims, causes
of action, recoupments, setoffs or other rights that it may have to contest or
impose liability or seek equitable relief against Lender and/or Sands arising
from.or relating to (1) any Defaults or Events of Default (as defined in the
Pre-Petition Agreements) which were or could have been declared by Lender or
Sands as of the Petition Date, (2) any provisions of the Pre-Petition
Agreements, (3) the amount of the Debtors' indebtedness to Lender or Sands as of
the Petition Date, (4) the conduct of Lender or Sands in administering the
pre-petition business relationship between the Debtors and Lender and Sands,
including without limitation "lender liability" and/or "deepening insolvency"
claims and causes of action, and/or (5) any and all other pre-petition acts or
omissions. Lender
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shall have no Carve-Out obligations to the Call Center Debtors or to any of the
Call Center Debtors' Professionals with respect to any investigation or
litigation (whether threatened or pending) by the Call Center Debtors with
respect to any matter released, waived or specified as not subject to challenge
by the Call Center Debtors pursuant to this paragraph.
25. Notwithstanding the Debtors' release and waiver set forth in the
preceding paragraph of this Interim Order, the Committee and any third party
shall have through and until January 16, 2006 to commence an adversary
proceeding against Lender and/or Sands for the purpose of (1) challenging the
validity, extent, priority, perfection, enforceability and nonavoidability of
Lender's and Sands' pre-petition claims against the Debtors and/or Liens, (2)
seeking to avoid or challenge (whether pursuant to Chapter 5 of the Bankruptcy
Code or otherwise) any transfer made by or on behalf of the Debtors to or for
the benefit of Lender or Sands prior to the Petition Date, and/or (3) seeking
damages or equitable relief against Lender or Sands with respect to any legal or
equitable claim or cause of action available to the Debtors or the Debtors'
estates, including without limitation with respect to the conduct of Lender or
Sands in administering the pre-petition business relationship between the
Debtors and Lender and Sands, including without limitation "lender liability"
and/or "deepening insolvency" claims and causes of action: If the Committee or
any third party fails to commence such an adversary proceeding or file such a
motion (a "Challenge") within the applicable time period shall be barred forever
from doing so. Notwithstanding the foregoing, the Debtors' release and waiver
set forth in the preceding paragraph of this Interim Order shall be binding upon
the Committee and third parties upon entry of the Final DIP Order and the 9019
Order provided that the Final DIP Order and the 9019 Order shall not be entered
prior to December 21, 2005. The foregoing is without prejudice to any and all of
Lender's and Sands' legal and equitable claims,
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counterclaims, defenses and/or rights of offset and setoff in response to any
such Challenge, all of which are reserved, except that Lender and Sands shall
not object to the Committee's standing (derivative, equitable or otherwise) to
timely commence a Challenge on behalf of the Debtors' estates including under
and pursuant to Bankruptcy Code sections 1103(c)(5) and 1109(b). The foregoing
shall in no event revive, renew or reinstate any applicable statute of
limitations which may have expired prior to the date of initiation of such
Challenge. Nothing contained herein shall limit the Court's ability to fashion
an appropriate remedy should the Court determine, by final order resulting from
an adversary proceeding or motion timely commenced in accordance with the
provisions of this paragraph, such Challenge adverse to Lender or Sands. Lender
shall have no Carve-Out obligations to any person or entity (including without
limitation the Committee) or to any of Professional of any such person or entity
with respect to any Challenge (whether threatened or pending) against Lender or
Sands with respect to any matter set forth in this paragraph, except that the
Carve-Out may be used by the Committee for the investigation of any matter set
forth in this paragraph.
26. Nothing in this Interim Order shall preclude the Court from
entering a Final DIP Order containing provisions inconsistent with or contrary
to the provisions of this Interim Order; provided, however, that Lender shall be
entitled to the benefits and protections of this Interim Order, including the
protections afforded pursuant to Bankruptcy Code section 364(e), with respect to
all loans, advances and/or financial accommodations made by Lender to or for the
benefit of the Call Center Debtors pursuant to this Interim Order. Pursuant to
the provisions of Bankruptcy Code section 364(e), the Post-Petition Lien shall
be binding on the Call Center Debtors or any successor trustee or trustees even
if this Interim Order is reversed or modified on appeal.
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27. The terms and conditions of this Interim Order shall be: (a)
immediately enforceable pursuant to Bankruptcy Rule 8005; and (b) not be stayed
absent (1) an application by a party in interest for such stay in conformance
with such Bankruptcy Rule 8005, and (2) a hearing upon notice to the Call Center
Debtors and Lender.
28. The provisions of this Interim Order and any actions taken pursuant
hereto shall survive entry of any orders which may be entered confirming any
plan of reorganization or which may be entered converting this case from Chapter
11 to Chapter 7 of the Bankruptcy Code. The terms and provisions of this
Interim Order, as well as the claims, liens, mortgages, pledges and security
interests granted by this Interim Order, shall continue in this or any
superseding case under the Bankruptcy Code and shall continue notwithstanding
any dismissal of the Call Center Debtors' bankruptcy case (and any such order of
dismissal shall so provide), and such claims, liens, mortgages and security
interests shall maintain their priority as provided by this Interim Order until
the Call Center Debtors' Obligations to Lender are satisfied in full. No
Proceeds, Cash Collateral or Carve-Out may be used by any party in interest
seeking to modify any of the rights granted to Lenders under this Interim Order
or any other DIP Financing Document without Lender's prior written consent.
29. Lender and the Call Center Debtors may amend, modify, supplement
and/or waive the provisions of the Pre-Petition Agreements and/or Post-Petition
Agreement, without further order of the Court, provided that such amendments,
modifications, supplements and/or waivers that are non-material, technical
and/or ministerial.
30. To the extent that any of the provisions of this Interim Order
shall conflict with any of the provisions of the Pre-Petition Agreements or the
Post-Petition Agreement, this Interim Order is deemed to control and shall
supersede the conflicting provision(s) in said agreement(s).
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To the extent that any of the provisions of this Interim Order shall conflict
with any prior order of the Court authorizing the Call Center Debtors to
continue the use of pre-petition bank accounts, cash management systems and/or
business forms, or any similar orders, then this Interim Order is deemed to
control and supersede the conflicting provision(s) in said orders.
31. The "Interim Expiration Date" shall be the date that the Court
enters an order approving or denying the Settlement Stipulation but in no event
earlier than December 21, 2005 or later than December 31, 2005.
32. Notwithstanding anything to the contrary set forth herein, it shall
be a condition precedent to Lender's having any obligation to lend any funds to
the Call Center Debtors pursuant to this Interim Order that the Debtors shall
have executed and delivered to Lender the Settlement Stipulation and filed the
Settlement Stipulation with the Court seeing entry of the 9019 Order on not less
than twenty (20) days notice to the Committee, creditors and parties in
interest.
33. A final hearing with respect to the Call Center Debtors' Motion and
seeking entry of a Final DIP Order is scheduled for December 21, 2005 at 3:00
p.m., Room 1412,51 S.W. First Avenue, Miami, Florida (the "Final Hearing"). The
Call Center Debtors shall promptly mail copies of this Interim Order (which
shall constitute adequate notice of the Final Hearing) to the parties having
been given notice of the Interim Hearing, and to any other party that has filed
a request for notices with the Court and to any Committee after the same has
been appointed; or Committee counsel, if the same shall have been appointed. Any
party in interest objecting to the relief sought at the Final Hearing shall
serve and file written objections; which objections shall be served upon Michael
Seese, Esq. of Kluger, Peretz, Kaplan & Berlin P.L., 201 S. Biscayne Blvd.,
Miami, FL 33131, attorneys for the Call Center Debtors; (b) Paul Singerman, Esq.
of
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Berger Singerman, 200 S. Biscayne Blvd, Miami Fl 33131 and Jeffrey Schwartz,
Esq. of Hahn & Hessen LLP, 488 Madison Avenue, New York, NY 10022, attorneys for
Lender; (c) the Office of the United States Trustee for the Southern District of
Florida; (d) Paul J. Battista, Esq. of Genovese Joblove & Battista P.A., 100
Southeast Second Street, 44th Floor, Miami, Florida 33131, attorneys for the
Committee; and which objections shall be filed with the Clerk of the Court, in
each case so as to be received no later than three business days before the
hearing date for the Final Hearing.
###
Submitted by:
Michael D. Seese
Florida Bar No. 997323
Kluger, Peretz, Kaplan & Berlin, P.L.
201 So. Biscayne Blvd., 17th Floor
Miami, FL 33131
Telephone: 305-379-9000
Facsimile: 305-351-3801
mseese@kpkb.com
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Copies to:
Michael D. Seese [Seese is directed to serve a copy of this order upon all
interested parties and file a certificate of service].
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