GEORGE C. PAINE, II, Chief United States Bankruptcy Judge
Upon the motion, dated March 27, 1999 (the "Motion"), of Service Merchandise Company, Inc. ("Service Merchandise") and the other above-referenced debtors and debtors in possession, each as debtor and debtor in possession (each individually, a "Debtor" and, collectively, with Service Merchandise, the "Debtors"), (a) for authorization and approval, pursuant to section 364 (c) of title 11 of the United States Code (the "Bankruptcy Code") and Bankruptcy Rule 4001 (b), (c) and (d) to (i) obtain postpetition financing pursuant to the terms and provisions of that certain Postpetition Credit Agreement, dated as of March 27, 1999 (as the same may be amended, supplemented or otherwise modified from time to time, the "Postpetition Credit Agreement"), by and among Service Merchandise, as borrower, CITICORP USA, INC. ("Citicorp"), as collateral agent and administrative agent (in such capacity, the "Administrative Agent"), BANKBOSTON, N.A. ("BankBoston"), as document agent and collateral monitoring agent (in such capacities, the "Collateral Monitoring Agent" and, together with the Administrative Agent, the "Agents") and the Lenders named therein, in substantially the form of Exhibit "A" annexed to the Motion, and the other Loan Documents attached thereto, including the guarantees executed by the various guarantors of the Postpetition Credit Agreement (the "Guarantors") (the Postpetition Credit Agreement and the Loan Documents collectively are referred to herein as the "Postpetition Loan Documents" or "DIP Loan Documents," and all obligations thereunder are collectively referred to as the "Postpetition Obligations"), (ii) grant mortgages, security interests, liens and superpriority claims to the Administrative Agent for the benefit of the Lenders, and (iii) pending a final hearing on the Motion (the "Final Hearing") and pursuant to Bankruptcy Rule 4001 (b)(2), obtain emergency posipetition loans under the Postpetition Credit Agreement to and including the Effective Date (the "Interim Facility") and (b) in accordance with Bankruptcy Rule 4001 (b), (c) and (d), requesting that this Court schedule the Final Hearing and approve notice with respect thereto; and the Court having considered the Motion and the Exhibits attached thereto, including, without limitation, the DIP Loan Documents; and in accordance with Bankruptcy Rule 4001 (b), (c) and (d), due and proper notice of the Motion and of the Final Hearing having been given; and a hearing to consider approval of the Interim Facility having been held on March 27, 1999 (the "Interim Hearing"); and the Clerk of the Court having entered an Order on March 30, 1999 (the "Interim Order"), inter alia, authorizing and approving the Interim Facility; and the Final Hearing having been held and concluded on April 27, 1999; and it appearing that approval of the Motion is in the best interests of the Debtors and their creditors and is essential for the continued operations of the Debtors' businesses; and it further appearing that the Debtors are unable to obtain unsecured credit for money borrowed allowable as an administrative expense under section 503 (b)(1) of the Bankruptcy Code; and all of the objections to the entry of this Order having been resolved or overruled; and upon all of the pleadings filed with the Court and all of the proceedings held before the Court and the evidence adduced in connection therewith; and after due deliberation and consideration and good and sufficient cause appearing therefor,
Unless otherwise defined herein, all capitalized terms used herein shall have the meanings ascribed to such terms in the Postpetition Credit Agreement.
IT IS HEREBY FOUND:
A. On March 27, 1999 (the "Petition Date"), each of the Debtors filed voluntary petitions in this Court for relief under chapter 11 of title 11 of the United States Code, as amended (the "Bankruptcy Code"). The Debtors continue to operate their businesses and manage their properties as debtors and debtors-in-possession pursuant to sections 1107 (a) and 1108 of the Bankruptcy Code. The Debtors have moved in this Court for an order consolidating a prior involuntary chapter 11 petition filed only against Service Merchandise on March 15, 1999, and for joint administration and procedural consolidation of these chapter 11 cases (the "Reorganization Cases").
B. On April 8, 1999, the United States Trustee appointed an eleven (11) member Official Creditors' Committee (the "Committee"). Eight members of the Committee were members of an informal committee (the "Informal Committee") formed by the Debtors' creditors in February 1999 in connection with the Debtors' attempted out-of-court restructuring.
C. Pursuant to an Order of this Court, these voluntary chapter 11 cases have been consolidated for procedural purposes only and are being jointly administered.
D. This Court has jurisdiction over this proceeding and the parties in interest and properties and interests in properties affected hereby under sections 157 (b) and 1334 of title 28 of the United States Code (the "Judiciary Code"). Consideration of the Motion constitutes a core proceeding under section 157 (b)(2) of the Judiciary Code.
E. Prior to the Petition Date, Service Merchandise, the Guarantors, the Agents and the Lenders were parties to that certain Second Amended and Restated Credit Agreement, dated as of January 20, 1999, as amended (the "Prepetition Credit Agreement"). The Prepetition Credit Agreement and all documents, instruments and agreements executed in connection therewith or related thereto are hereinafter referred to as the "Prepetition Loan Documents." The Debtors admit that (i) immediately prior to and as of the Petition Date, the aggregate principal amount of not less than $412 million was outstanding in respect of loans made and letters of credit issued under the Prepetition Credit Agreement, plus interest thereon and fees, expenses and charges incurred in connection therewith as provided in the Prepetition Credit Agreement and all of the Prepetition Loan Documents (the "Prepetition Indebtedness"), and (ii) the Prepetition Indebtedness constitutes a valid and binding obligation of Service Merchandise and the Guarantors enforceable (except solely to the extent enforcement is stayed pursuant to section 362 of the Bankruptcy Code) in accordance with the terms of the Prepetition Credit Agreement and the Prepetition Loan Documents, that no defenses, offsets, right of recoupment, expenses or counterclaims to the Prepetition Indebtedness exist, and that the Prepetition Indebtedness is not subject to avoidance or subordination under the Bankruptcy Code or applicable non-bankruptcy law.
F. In connection with the Prepetition Credit Agreement, each of the Debtors granted to or for the benefit of the Agents and the Lenders various security interests and liens on substantially all, if not all, of their assets and properties including but not limited to Accounts, Chattel Paper, Contracts, Documents, Equipment, Fixtures, General Intangibles, Instruments, Intellectual Property, Inventory, Investment Property, Leases, licenses, receivables, causes of action, Depository Accounts, and Collateral Accounts (as all such terms are defined in the Prepetition Loan Documents) and significant real property interests of the Debtors. All assets and properties of the Debtors as to which liens and security interests were granted under or in connection with the. Prepetition Credit Agreement are hereinafter referred to as the "Prepetition Collateral." The Debtors admit that the Prepetition Indebtedness is fully secured pursuant to the Prepetition Credit Agreement and the Prepetition Loan Documents by first priority liens on and security interests in the Prepetition Collateral and that such liens and security interests are valid, binding, properly perfected, unavoidable and enforceable against the Debtors (except solely to the extent enforcement is stayed pursuant to section 362 of the Bankruptcy Code).
G. The Debtors' businesses require the availability of credit in order to finance the ordinary costs of their operations. Without such credit, the Debtors will not be able to pay their employees and other direct operating expenses or to purchase inventory. Inability to obtain such credit would result in a disruption of the Debtors' businesses and would cause immediate and irreparable harm to the Debtors' estates.
H. Substantially all, if not all, of the Debtors' assets, including all current assets, equipment and stock of subsidiaries, are subject to the liens and security interests of the Agents and the Lenders under the Prepetition Loan Documents. All of the proceeds of the Prepetition Collateral is cash collateral of the Lenders within the meaning of section 363 (a) of the Bankruptcy Code.
I. The Debtors are unable to obtain interim or permanent financing from sources other than the Lenders on terms more favorable than under the DIP Loan Documents. The Debtors have been unable to obtain unsecured credit solely under section 503 (b)(1) of the Bankruptcy Code as an administrative expense. New credit is unavailable to the Debtors without their (a) granting to the Agents and the Lenders claims having superpriority over that of all administrative expenses of the kind specified in sections 503 (b) and 507 (b) of the Bankruptcy Code (other than the administrative expenses in the Permitted Expenses (as hereinafter defined)), (b) securing such loans and other obligations with liens on and security interests in all the prepetition and postpetition assets, properties and interests in property of the Debtors including proceeds thereof (the "Collateral") and replacement liens as provided herein and in the DIP Loan Documents and (c) granting adequate protection pursuant to section 361 of the Bankruptcy Code to the Agents and the Lenders with respect to the Prepetition Indebtedness outstanding pending entry of this Order (the period between entry of the Interim Order and the Effective Date, the "Interim Period").
J. The Lenders have indicated a willingness to consent and agree to provide financing to the Debtors subject to (i) the entry of this Order, (ii) the terms and conditions of the Postpetition Credit Agreement and the other DIP Loan Documents, and (iii) a finding by the Court that such financing is essential to the Debtors' estates, has been negotiated on an arms' length basis and is in good faith, and that, as provided in sections 363 (m) and 364 (e) of the Bankruptcy Code, the Agents' and the Lenders' mortgages, security interests, liens, claims, superpriority claims and other protections granted pursuant to this Order, the Postpetition Credit Agreement and the other DIP Loan Documents will not be affected by any subsequent reversal, modification, vacatur or amendment of this Order or any other order.
K. In accordance with the Interim Order, copies of the Motion and the Interim Order were mailed by expedited courier prior to April 2, 1999 to the Office of the United States Trustee; the attorneys for the Agents and the Lenders; all creditors known to the Debtors who may have liens against the Debtors' assets other than the Consignment Lien Creditors (defined herein); the United States Internal Revenue Service; counsel to the Informal Committee, local counsel to the creditors that filed the involuntary chapter 11 petitioners against Service Merchandise, the 20 largest unsecured creditors of the Debtors to the extent such creditors are not participants in the Informal Committee, and counsel to the indenture trustees for holders of Service Merchandise's (a) 9% Senior Subordinated Debentures due 2004, (b) First Mortgage Notes due 2000 and (c) 8 and 3/8% Senior Debt Securities.
L. The ability of the Debtors to finance their respective operations and the availability to them of sufficient working capital through the incurrence of new indebtedness for borrowed money and other financial accommodations is in the best interests of the Debtors and their respective creditors and estates. The Debtors must continue to finance their operations during the Reorganization Cases. The financing authorized hereunder is vital to the Debtors' estates and to allow the orderly continuation and operation of the Debtors' businesses.
M. Under the Postpetition Credit Agreement, any Prepetition Indebtedness, including letters of credit and the reimbursement obligations attendant thereto, outstanding on the date of entry of this Order will be deemed to be indebtedness under the Postpetition Credit Agreement.
N. The Postpetition Credit Agreement and the other DIP Loan Documents have been negotiated in good faith and at arm's length between the Debtors, the Agents and the Lenders and any credit extended, letters of credit issued and loans made to the Debtors by the Lenders shall be deemed to have been extended, issued or made, as the case may be, in good faith within the meaning of section 364 (e) of the Bankruptcy Code.
O. The Debtors, the Agents and the Lenders have executed and delivered the DIP Loan Documents.
P. The Lenders under the Postpetition Credit Agreement are also lenders under the Prepetition Credit Agreement and therefore share a continuity of interest.
Q. The terms of the DIP Loan Documents are fair and reasonable, reflect the Debtors' exercise of prudent business judgment consistent with their fiduciary duties and are supported by reasonably equivalent value and fair consideration.
IT IS HEREBY ORDERED, ADJUDGED AND DECREED:
1. The Motion is granted.
2. The execution and delivery of the DIP Loan Documents be, and it hereby is, approved and the Debtors, be, and they hereby are, authorized to perform their respective obligations under the DIP Loan Documents in accordance with the terms thereof. On the date of entry of this Order, the Postpetition Credit Agreement and the other DIP Loan Documents be, and they hereby are, approved by this Order and, by this reference, incorporated herein as part of this Order.
3. The Postpetition Credit Agreement and the other Postpetition Loan Documents and the liens and security interests created and granted thereunder and under this Order shall in all events constitute valid, binding obligations of the Debtors, enforceable against each of the Debtors in accordance with their terms.
4. The automatic stay in effect pursuant to section 362 of the Bankruptcy Code be, and it hereby is, vacated and modified so as to permit certain payments and applications with respect to the Prepetition Indebtedness as provided in the DIP Loan Documents. Any Prepetition Indebtedness outstanding on the date of entry of this Order (including any interest, fees and expenses and charges as provided under the Prepetition Credit Agreement accrued after the Petition Date) shall be from and after the date of entry of this Order deemed to be and become for all purposes indebtedness outstanding under the Postpetition Loan Documents and all obligations thereunder or relating thereto shall be and shall be deemed to be Postpetition Obligations.
5. Each of the Debtors is authorized and directed to take and effect all actions, to execute, deliver and implement all agreements, instruments and documents and to pay all present and future fees, costs, expenses and taxes that may be provided for under or required or necessary for its performance under the Postpetition Credit Agreement and the other DIP Loan Documents, including, without limitation, the execution and delivery of the Postpetition Credit Agreement, the Revolving Credit Notes and the Term Notes in substantially the form attached to the Postpetition Credit Agreement, and the performance of all of their obligations thereunder.
6. As security for the payment and performance of the Postpetition Obligations, the Agents and the Lenders shall be, and hereby are, granted, effective immediately and without the necessity of the execution by the Debtors of financing statements, mortgages, security agreements, or otherwise:
a. in accordance with section 364 (c)(2) of the Bankruptcy Code, a first priority perfected security interest in and lien on all of the property and assets of each of the Debtors and their estates of every kind or type whatsoever, tangible, intangible, real, personal and mixed, whether now owned or existing or hereafter acquired or arising and regardless of where located, and including, without limitation, all property of the estates of each of the Debtors within the meaning of section 541 of the Bankruptcy Code, and all proceeds, rents and products of all of the foregoing and all distributions thereon that is unencumbered as of the date hereof, which lien is subject only to the Permitted Expenses (as defined below) and Liens which are permitted under the Postpetition Credit Agreement (including Liens created in favor of any person who delivers goods under a consignment to the Debtors provided that the Debtors treat such goods as "goods on consignment" (the "Consignment Lien Creditors") and Liens of the type set forth in section 8.3 of the Postpetition Credit Agreement in existence as of the Petition Date);
b. a first priority perfected security interest in and lien on all of the Collateral that immediately prior to the Petition Date was subject to (i) a valid and perfected first priority lien securing the Prepetition Indebtedness and (ii) one or more valid and perfected junior liens securing other indebtedness of the Debtors, which lien is subject only to the Permitted Expenses and Liens which are permitted under the Postpetition Credit Agreement (including Liens created in favor of any person who delivers goods under a consignment to the Debtors provided that the Debtors treat such goods as "goods on consignment") and Liens of the type set forth in section 8.3 of the Postpetition Credit Agreement in existence as of the Petition Date); and
c. in accordance with section 364 (c)(3) of the Bankruptcy Code, a second perfected security interest in and lien on all of the Collateral which is subject to the liens permitted under the Postpetition Credit Agreement, which lien is subject only to the Permitted Expenses and Liens which are permitted under the Postpetition Credit Agreement (including Liens created in favor of any person who delivers goods under a consignment to the Debtors provided that the Debtors treat such goods as "goods on consignment") and Liens of the type set forth in section 8.3 of the Postpetition Credit Agreement in existence as of the Petition Date).
The security interests and liens granted to the Agents and the Lenders hereunder shall in all events be valid and enforceable and shall not be subject to any security interest or lien that is avoided and preserved for the benefit of any of the estates of any of the Debtors under section 551 of the Bankruptcy Code. Except as specifically provided herein, the security interests and liens granted to the Agents and the Lenders shall not be made on a parity with, or subordinated to, any other security interest or lien under section 364 (d) of the Bankruptcy Code or otherwise.
7. Under the Interim Order, as adequate protection for the use by the Debtors of any Prepetition Collateral, including the cash collateral to the extent provided in the Interim Order, and for any diminution in the value of the interests of the Agents and the Lenders in the Prepetition Collateral:
a. the Agents and the Lenders under the Prepetition Credit Agreement were granted, pursuant to sections 361 and 364 of the Bankruptcy Code, an allowed claim for the amount of any diminution in the value of their interest in the Prepetition Collateral, having priority over any and all administrative expenses of the kind specified in sections 503 (b) and 507 (b) of the Bankruptcy Code, subject and subordinate only to (a) the superpriority administrative expense claim and collateral priority granted to the Agents and the Lenders to secure payment of the Postpetition Obligations and (b)the Permitted Expenses.
b. The Administrative Agent for the benefit of the Lenders under the Prepetition Credit Agreement was granted, under sections 361 and 364 of the Bankruptcy Code, valid, binding, enforceable and perfected security interests in and liens on the Collateral subject and subordinate only to (i) the security interests and liens granted to the Agents and the Lenders under the Postpetition Loan Documents, (ii) the Permitted Expenses and (iii) the liens permitted under the Postpetition Credit Agreement. The security interests and liens granted under the Interim Order to the Agents for the benefit of the Lenders was not subject and subordinate to any security interest or lien that is avoided and preserved for the benefit of the estates of any of the Debtors under section 551 of the Bankruptcy Code or, except as forth specifically in the Interim Order, to be made on a parity with, or subordinated to, any other security interest or lien under section 364 (d) of the Bankruptcy Code or otherwise.
The adequate protection provisions of the Interim Order shall remain in full force and effect until the Debtors have repaid in full the Prepetition Indebtedness.
8. Except as expressly provided in this Order, no expenses of administration of the Reorganization Cases or any future proceeding or case which may result therefrom, including, without limitation, liquidation in bankruptcy or other proceedings under the Bankruptcy Code, or other administrative claims, including, without limitation, fees and expenses of professionals, shall be charged against the Collateral or the Agents and the Lenders under sections 105, 506 (c) or 552 of the Bankruptcy Code or otherwise.
9. "Permitted Expenses" means a carve-out (the "Carve-Out") from liens and superpriority claims granted to the Administrative Agent and the Lenders pursuant to the Postpetition Credit Agreement, this Order and the Final Order, for expenses arising from claims in the Reorganization Cases of the following parties for the following amounts after the occurrence and during the continuance of an Event of Default: (i)(A) allowed professional fees and disbursements incurred by the professionals (the "Professionals") retained, pursuant to sections 327 (a) or (e) of the Bankruptcy Code under a general retainer (excepting ordinary course professionals) or 1103 (a), by the Debtors and no more than two statutory committees appointed in the Reorganization Cases and (B) the expenses of any member of any such committee allowed under section 503 (b)(3)(F) of the Bankruptcy Code, which collectively may not exceed $3,000,000 in the aggregate, inclusive of any holdbacks required by the Bankruptcy Court for post-default services (plus professional fees and disbursements previously incurred, accrued or invoiced prior to such Event of Default and the triggering of the Carve-Out as provided below, to the extent previously or subsequently allowed) and (ii) quarterly fees required to be paid to the United States Trustee pursuant to 28 U.S.C. § 1930 (a)(6) and any fees payable to the Clerk of the Bankruptcy Court; provided that notwithstanding the occurrence or continuance of an Event of Default, no fees or disbursements incurred, accrued or invoiced during the pendency of an Event of Default shall reduce the gross amount of the Carve-Out prior to the delivery (by hand, facsimile or overnight delivery) to Service Merchandise and counsel to the Committee of a notice by the Administrative Agent of noncompliance with the terms of the Postpetition Credit Agreement and the triggering of the Carve-Out; provided, further that Permitted Expenses shall not include, apply to or be available for any fees or expenses incurred by any person, including the Professionals or the Committee, in (A) objecting to or contesting in any manner, or in raising any defenses to, the validity, extent, perfection, priority or enforceability of Indebtedness arising under the Prepetition Loan Documents or the Postpetition Loan Documents or any liens or security interests with respect thereto or any other rights or interests of the Administrative Agent or the Lenders, or in asserting any claims or causes of action, including, without limitation, any actions under chapter 5 of the Bankruptcy Code, against the Administrative Agent, the Collateral Monitoring Agent or the Lenders, (B) preventing, hindering or delaying the Lenders' or the Administrative Agent's enforcement or realization upon any of the Collateral (during the continuance of an Event of Default), (C) using cash collateral or selling any Collateral except as permitted herein, (D) incurring Indebtedness except as permitted herein or (E) modifying the Lenders' or the Administrative Agent's rights under the Postpetition Loan Documents in a non-consensual manner. All of the dollar amounts contemplated by subparagraphs (i) and (ii) of this paragraph are collectively referred to as the "Permitted Expenses." As long as no Event of Default shall have occurred and be continuing, the Debtors shall pay compensation and reimbursement of expenses as authorized by any applicable order of the Bankruptcy Court, as the same may be payable, and the amount so paid shall not reduce the Carve-Out. The automatic stay shall be deemed lifted with respect to the delivery by the Administrative Agent or the Lenders of the notice notifying Service Merchandise and the Committee of the noncompliance with the terms of the Postpetition Credit Agreement. The foregoing shall not be construed as consent to the allowance of any fees and expenses referred to above and shall not affect the right of the Debtors, the Agents or the Lenders to object to the allowance and payment of such amounts. Nothing herein shall prevent the United States Trustee from requesting that one or more additional statutory committees be appointed and that the Lenders allow the proceeds of the Postpetition Credit Agreements to be used to pay the fees, costs and expenses of such additional committee and the professionals thereof;provided that nothing herein shall be deemed to constitute the consent of the Lenders or the Agents to such use of the proceeds of the Postpetition Credit Agreement.
10. The Postpetition Obligations shall constitute, in accordance with section 364 (c)(1) of the Bankruptcy Code, claims against each of the Debtors in its Reorganization Case which are administrative expense claims having priority over any and all administrative expenses of the kind specified in sections 503 (b) or 507 (b) of the Bankruptcy Code, subject only to the Permitted Expenses and except as set forth in paragraph 25 hereof. Except for the Permitted Expenses, no costs or administrative expenses which have been or may be incurred in the Reorganization Cases, or during the period of time between the filing of the involuntary petition against Service Merchandise and the entry of the order for relief in the chapter 11 case of Service Merchandise, or in subsequent cases under chapter 7 of the Bankruptcy Code as a result of a conversion pursuant to section 1112 of the Bankruptcy Code, and no priority claims, are or will be prior to or on a parity with the claims of the Agents and the Lenders with respect to the Postpetition Obligations or any diminution in the value of the Prepetition Collateral. No other claim having a priority superior to or pari passu with that granted by this Order to the Agents and the Lenders shall be granted while any portion of the Postpetition Obligations or Prepetition Indebtedness remains outstanding.
11. The Debtors may use the proceeds of the loans and advances made pursuant to the Postpetition Credit Agreement only for the purposes specifically set forth in the Postpetition Credit Agreement. Notwithstanding anything herein or in the Postpetition Credit Agreement to the contrary and consistent with paragraph 9 hereof, no such loans or advances or any proceeds of the Collateral may be used by the Debtors or any other person or entity to object to or contest in any manner, or raise any defenses to, the validity, extent, perfection, priority or enforceability of the Prepetition Indebtedness or the Postpetition Obligations or any liens or security interests with respect thereto or any other rights or interests of the Agents or the Lenders, or to assert any claims or causes of action, including, without limitation, any actions under chapter 5 of the Bankruptcy Code, against the Agents or the Lenders
12. The Postpetition Obligations shall be due and payable, without notice or demand, on the Termination Date.
13. The Agents and the Lenders shall not be required to file financing statements, mortgages, notices of lien or similar instruments in any jurisdiction or effect any other action to attach or perfect the security interests and liens granted under this Order, the Postpetition Credit Agreement or any other DIP Loan Documents. Notwithstanding the foregoing, the Agents and the Lenders may, in their sole discretion, file such financing statements, mortgages, notices of lien or similar instruments or otherwise confirm perfection of such liens, security interests and mortgages without seeking modification of the automatic stay under section 362 of the Bankruptcy Code and all such documents shall be deemed to have been filed or recorded at the time and on the date of the Petition Date.
14. Upon the occurrence and during the continuance of any Event of Default, the Postpetition Credit Agreement shall be subject to termination in the sole discretion of the Administrative Agent or the Lenders as provided therein, and upon five business days' prior notice by the Administrative Agent to the Debtors, the Committee and the United States Trustee, the Agents and the Lenders, shall have immediate relief from the automatic stay of section 362 (a) of the Bankruptcy Code, unless otherwise ordered by the Court, to enforce their liens and security interests in any manner provided in the Postpetition Credit Agreement, the other DIP Loan Documents or herein, or otherwise to take any enforcement or remedial action provided by such agreements or applicable law. Notwithstanding the occurrence of an Event of Default or the Termination Date or anything herein, all of the rights, remedies, benefits and protections provided to the Agents and the Lenders under this Order and the DIP Loan Documents shall survive the Termination Date.
15. If it becomes necessary for the Administrative Agent or the Lenders, at any time, to exercise any of their rights and remedies hereunder or under applicable law in order to effect repayment of the Postpetition Obligations or to receive any amounts or remittances due in connection therewith, including, without limitation, foreclosing upon and selling all or a portion of the Collateral, the Administrative Agent and the Lenders may, unless otherwise ordered by this Court, exercise such rights and remedies as to all or such part of the Collateral as the Administrative Agent and the Lenders may elect in their sole discretion, subject to the Administrative Agent having given five business days' notice to the Debtors, the Committee and the United States Trustee (such five business days' notice shall not apply to the exercise of rights and remedies with respect to cash collateral which rights and remedies with respect to cash collateral may be exercised immediately).
16. Nothing contained herein shall limit the rights of the Administrative Agent or the Lenders to (i) seek further relief from the automatic stay of section 362 of the Bankruptcy Code at any future time, (ii) seek additional adequate protection from the Debtors, (iii) request a conversion of any or all of the Debtors' chapter 11 cases to chapter 7 or the appointment of a trustee or an examiner under section 1104 of the Bankruptcy Code or (iv) propose, subject to the provisions of section 1121 of the Bankruptcy Code, a chapter 11 plan or plans in any or all of the Reorganization Cases.
17. The provisions of this Order shall be binding upon and inure to the benefit of the Agents, the Lenders, the Debtors, and their respective successors and assigns. This Order shall bind any trustee or other fiduciary (including, without limitation, any examiner or responsible person) hereafter appointed for the estate of any of the Debtors, whether in the chapter 11 cases or in the event of the conversion of any chapter 11 case to a liquidation under chapter 7 of the Bankruptcy Code. Such binding effect is an integral part of this Order.
18. The Postpetition Obligations will not be discharged by the entry of an order confirming a plan or plans of reorganization in the Reorganization Cases.
19. Except as may be otherwise provided in the DIP Loan Documents and in addition to the Events of Default set forth in the DIP Loan Documents, it shall be an Event of Default if an order is entered by the Bankruptcy Court: (i) dismissing the chapter 11 case of any of the Debtors under 11 U.S.C. § 105 (a), 305 or 1112 or otherwise unless, prior to the entry thereof, all Postpetition Obligations owing to the Agents and the Lenders under the DIP Loan Documents shall have been paid in full in cash in accordance with the provisions of the DIP Loan Documents, and the Lenders' obligation and commitment to make loans under the Postpetition Credit Agreement has been terminated; (ii) converting any of the Debtors' chapter 11 cases under section 1112 of the Bankruptcy Code which Debtor entity or entities individually or together with any entity whose case was previously or simultaneously converted own or possess assets whose value exceeds $2,000,000, which value shall be determined by reference to the Debtor's schedule of assets and liabilities filed with the Bankruptcy Court (unless such conversion occurs prior to the filing of such schedules, in which case the conversion of any of the Debtors' cases shall constitute an Event of Default); (iii) appointing a chapter 11 trustee, examiner with enlarged powers or other responsible person, unless prior to the entry thereof, all Postpetition Obligations owing to the Agents and the Lenders under the DIP Loan Documents shall have been paid in full in cash in accordance with the provisions of the DIP Loan Documents, and the Lenders' obligation and commitment to make loans under the Postpetition Credit Agreement has been terminated; (iv) confirming any plan or plans of reorganization in any of the Debtors' chapter 11 cases unless such order provides for the payment in full in cash of all Postpetition Obligations payable or owing to the Agents and the Lenders under the DIP Loan Documents in accordance with the provisions of the DIP Loan Documents on or before the effective date of, or substantial consummation of, the plan or plans of reorganization that is the subject of such order; or (v) granting relief from the automatic stay to the holder of any security interest in any asset of the Debtors, which relief or order the Agents and the Required Lenders do not expressly consent to, to the extent the granting of such relief violates the terms of, or causes an Event of Default under, the Postpetition Credit Agreement. Section 9 (r)(v) of the Postpetition Credit Agreement shall be amended and replaced in its entirety so that it provides that it is an Event of Default if a motion is filed to recover from any portions of the Collateral any costs or expenses of preserving or disposing of such Collateral under section 506 (c) of the Bankruptcy Code which motion is not dismissed within sixty (60) days of the filing thereof. Upon the occurrence of an Event of Default caused by the appointment of a chapter 11 trustee (and no other Event of Default), the Lenders will in good faith negotiate a stipulation with any such trustee authorizing the use of cash collateral for a period of no less than five business days, provided that the terms and conditions of such stipulation shall reasonably acceptable to the Lenders and Agents.
20. Except as expressly permitted by the Postpetition Credit Agreement, the Debtors will not, at any time during these chapter 11 cases, grant mortgages, security interests or liens in the Collateral or any portion thereof to any other parties pursuant to section 364 (d) of the Bankruptcy Code or otherwise.
21. Without limiting the rights of access and information afforded the Agents and the Lenders under the DIP Loan Documents, each of the Debtors shall permit representatives, agents and/or employees of the Agents and the Lenders to have reasonable access to such entity's premises and its records during normal business hours (without unreasonable interference with the proper operation of the Debtors' businesses) and shall cooperate, consult with, and provide to such persons all such non-privileged information as they may reasonably request.
22. If any or all of the provisions of this Order or the Postpetition Credit Agreement or any other Postpetition Loan Document are hereafter modified, vacated, amended or stayed by subsequent order of this Court or any other Court, such modification, vacatur, amendment or stay shall not affect the validity or enforceability of any obligation to the Agents or the Lenders that is or was incurred prior to the effective date of such modification, vacatur, amendment or stay, or the validity and enforceability of any security interest, lien or priority authorized or created by this Order, the Postpetition Credit Agreement or any other Postpetition Loan Document and, notwithstanding any such modification, vacatur, amendment or stay, any obligations of the Debtors pursuant to this Order or the Postpetition Credit Agreement or any other Postpetition Loan Document arising prior to the effective date of such modification, vacatur, amendment or stay shall be governed in all respects by the original provisions of this Order and the Postpetition Credit Agreement and the other DIP Loan Documents, and the validity or enforceability of any such credit extended or security interest or lien granted pursuant to this Order or the Postpetition Credit Agreement or the other DIP Loan Documents is subject to the protection accorded under section 364 (e) of the Bankruptcy Code.
23. Subject to the provisions of paragraph 24 hereof, the Debtors hereby waive any and all claims or causes of action against the Agents and the Lenders and any of their officers, directors, employees, attorneys, advisors or representatives relating to or arising in connection with the Prepetition Credit Agreement, the Prepetition Loan Documents or the DIP Loan Documents, including but not limited to any defenses or challenges to the validity, extent, perfection, priority or enforceability of any claims or causes of action, including causes of action under chapter 5 of the Bankruptcy Code, against the Agents or the Lenders.
24. This Order is without prejudice to the rights of the Committee to object to or challenge prior to June 8, 1999 (i) the validity, extent or priority of the liens and security interests of the Agent and the Lenders in and to the Prepetition Collateral, (ii) the validity, allowability or status of the Prepetition Indebtedness or (iii) any other matter related to the Prepetition Loan Documents. Unless such an objection or challenge is made prior to June 7, 1999, all such objections and challenges shall be forever waived.
25. Nothing in this Order shall: (i) be deemed to provide the Lenders with a priming lien on the mortgages, deeds of trust and deeds that were pledged by the Debtors to The Bank of New York, as successor indenture trustee ("BNY"), and The Long Term Credit Bank of Japan Limited, New York Branch ("LTCB") pursuant to that certain indenture dated as of June 28, 1990 and those certain twelve supplemental indentures thereto relating to those certain secured mortgage notes (the "Secured Notes"); (ii) prohibit the Debtors from providing the holders of the Secured Notes with adequate protection, including a claim under section 507 (b) of the Bankruptcy Code pari passu with any section 507 (b) claim of the Lenders; (iii) be deemed to provide the Lenders with superior rights in insurance policies relating to the collateral securing the Secured Notes; (iv) be deemed to prevent the holders of the Secured Notes or BNY from exercising their rights or remedies in respect of the collateral securing the Secured Notes or prevent the Debtors from selling such collateral subject to the rights of the holders of the Secured Notes; or (v) be deemed to allow the Lenders to foreclose on the collateral securing the Secured Notes in connection with such Lenders' junior lien on such collateral without giving effect to the lien rights of the holders of the Secured Notes; provided that the foregoing shall not affect or modify the rights of the Agent and the Lenders to assert (x) any right of subrogation to claims or liens of the holders of the Secured Notes, BNY or LTCB or (y) any reimbursement obligation claims against the Debtors and the collateral securing the Secured Notes which subrogation or reimbursement claims arise by virtue of the holders of the holders of the Secured Notes, BNY, or LTCB having drawn upon those certain letters of credit which are or may be posted by the Agent or the Lenders for the benefit of the holders of the Secured Notes, BNY or LTCB. The Debtors and BNY shall cooperate over the next sixty (60) days regarding the terms of appropriate adequate protection, if any. Nothing contained in this paragraph 25 shall be construed to be a waiver or release of the Debtors' rights, remedies or defenses with respect to any act or actions that may be taken by the holders of the Secured Notes, BNY or LTCB in respect of the collateral securing the Secured Notes.
26. The Debtors shall not file or support any motion seeking authority to use cash collateral without the consent of the Agents and the Required Lenders.
27. This Order constitutes findings of fact and conclusions of law and takes effect and becomes enforceable immediately upon execution hereof.
28. To the extent any terms and conditions of the DIP Loan Documents are in conflict with the terms and conditions of this Order, the provisions of this Order shall control. The Clerk of the Court is hereby directed to forthwith enter this Order on the docket of the Court maintained with regard to these cases.