velo interim dip order
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UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK
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In re:
VELO HOLDINGS INC., et al.,
Debtors.
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Chapter 11
Case No. 12-11384 (MG)
(Jointly Administered)
INTERIM ORDER (I) AUTHORIZING DEBTORS (A) TO OBTAIN POST-
PETITION FINANCING PURSUANT TO 11 U.S.C. 105, 361, 362,
364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1) AND 364(e) AND (B) TO UTILIZE
CASH COLLATERAL PURSUANT TO 11 U.S.C. 363, (II) GRANTING
ADEQUATE PROTECTION TO PREPETITION SECURED PARTIES
PURSUANT TO 11 U.S.C. 361, 362, 363 AND 364 , (III) GRANTING LIENS ANDSUPER-PRIORITY CLAIMS PURSUANT TO 11 U.S.C. 364 AND (IV) SCHEDULING
FINAL HEARING PURSUANT TO BANKRUPTCY RULES 4001(b) AND (c)
Upon the motion (the Motion), dated April 2, 2012, of V2V Holdings LLC and Vertrue
LLC (together, the Borrowers) and each of their affiliated debtors, each as debtor and debtor-in
possession (collectively, the Debtors), in the above-captioned cases (the Cases) pursuant to
sections 105, 361, 362, 363(b), 363(c)(2), 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1) and 364(e)
of title 11 of the United States Code, 11 U.S.C. , et seq. (the Bankruptcy Code), Rules 2002,
4001, 6004 and 9014 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules)
and the Local Bankruptcy Rules, seeking, among other things:
(a)authorization for each Borrower to obtain post-petition financing (the Financing)and to guaranty the obligations of each other Borrower in connection with the
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Borrowers in an aggregate principal amount of $40,000,000 (the DIP Facility)
consisting of (i) an amount not to exceed $12,000,000 in the aggregate of multiple
draw new money term loans (the Tranche A-1 Loans); (ii) an amount not to exceed
$8,000,000 in the aggregate of multiple draw new money term loans (the Tranche A-
2 Loans and together with the Tranche A-1 Loans, the New Money DIP Loans);
and (iii) a dollar-for-dollar roll up of $20,000,000 in respect of outstanding First Lien
Prepetition Debt (as defined below) beneficially owned (as contemplated in the DIP
Agreement (as defined below), Beneficially Owned) by the applicable DIP Lenders
at 11:59 p.m. (prevailing Eastern time) on April 2, 2012 (the Roll Up DIP Loans),
all subject to the terms and conditions of the DIP Documents (as defined below), with
Barclays Bank PLC, as administrative agent and collateral agent (in such capacities,
the DIP Agent), for itself and a syndicate of financial institutions (the DIP
Lenders);
(b)authorization for the Debtors to execute and deliver the Debtor-in-Possession CreditAgreement substantially in the form attached as Exhibit A to this Interim Order (the
DIP Agreement and, collectively, with all agreements, documents, instruments
and/or amendments delivered in connection therewith, the DIP Documents), and to
perform such other and further acts as may be required in connection with the DIP
Agreement and the other DIP Documents;
(c) the granting of adequate protection to the Prepetition Secured Parties (as defined
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(i) the First Lien Credit Agreement, dated as of August 16, 2007 (asamended, restated, supplemented or otherwise modified from time to
time, the First Lien Prepetition Credit Agreement), among the
Debtors, the lenders party thereto (collectively, the First Lien
Prepetition Secured Lenders), Barclays Bank PLC, as administrative
agent and collateral agent (in such capacities, the First Lien
Prepetition Agent and together with the First Lien Prepetition
Secured Lenders, and any First Lien Prepetition Secured Lender or its
Affiliate (as defined in the First Lien Prepetition Credit Agreement)
which is owed Obligations (as defined in the First Lien Prepetition
Credit Agreement), the First Lien Prepetition Secured Parties), and
the other parties thereto, and each First Lien Loan Document (as
defined in the First Lien Prepetition Credit Agreement) and each other
document executed in connection with the First Lien Prepetition Credit
Agreement, including, for the avoidance of doubt, any Bank Product
Agreements (as defined in the First Lien Prepetition Credit
Agreement), Letters of Credit (as defined in the First Lien Prepetition
Credit Agreement) and Specified Hedge Agreements (as amended,
restated, supplemented or otherwise modified from time to time,
collectively with the First Lien Prepetition Credit Agreement, the
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time, the Second Lien Prepetition Credit Agreement), among the
Debtors, the lenders party thereto (collectively, the Second Lien
Prepetition Secured Lenders), Wilmington Trust, National
Association, as administrative agent and collateral agent (in such
capacities, the Second Lien Prepetition Agent; together with the
Second Lien Prepetition Lenders, the Second Lien Prepetition
Secured Parties); together with the First Lien Prepetition Agent, the
Prepetition Agents; collectively with the First Lien Prepetition
Secured Parties and the Second Lien Prepetition Secured Lenders, the
Prepetition Secured Parties), and the other parties thereto, and each
Second Lien Loan Document (as defined in the Second Lien
Prepetition Credit Agreement) and each other document executed in
connection with the Second Lien Prepetition Credit Agreement (as
amended, restated, supplemented or otherwise modified from time to
time, collectively with the Second Lien Prepetition Credit Agreement,
the Second Lien Prepetition Loan Documents and, together with the
First Lien Prepetition Loan Documents, the Prepetition Loan
Documents);
(d)authorization for the Debtors to use any Cash Collateral (as defined below) in whichany Prepetition Secured Party may have an interest and the granting of adequate
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(e) the granting of (i) allowed superpriority administrative expense claims with respect tothe DIP Obligations (as defined herein) and (ii) the DIP Liens (as defined herein)
pursuant to sections 364(c)(1) and 364(c)(2) of the Bankruptcy Code;
(f) pursuant to Bankruptcy Rule 4001, that an interim hearing (the Interim Hearing) onthe Motion be held before this Court to consider entry of the proposed interim order
annexed to the Motion (the Interim Order), among other things, (i) authorizing each
Borrower, on an interim basis, to forthwith borrow from the DIP Lenders under the
DIP Documents up to an aggregate principal or face amount not to exceed $5,000,000
in New Money DIP Loans and $5,000,000 in Roll Up DIP Loans (subject to any
limitations of borrowings under the DIP Documents), (ii) authorizing each Borrower
to guaranty the DIP Obligations of each other Borrower and the Guarantors to
guaranty the DIP Obligations of each Borrower, (iii) authorizing the Debtors use of
Cash Collateral, (iv) granting the adequate protection described herein; and (v)
granting the Superpriority Claims and DIP Liens described in the Motion; and
(g)that this Court schedule a final hearing (the Final Hearing) to be held within thirty(30) days of the entry of the Interim Order to consider entry of a final order (the
Final Order) authorizing the balance of the borrowings under the DIP Documents
on a final basis, as set forth in the Motion and the DIP Documents filed with this
Court.
Due and appropriate notice of the Motion, the relief requested therein and the Interim
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the Internal Revenue Service in compliance with Bankruptcy Rule 4001(b) and (c) and the Local
Bankruptcy Rules.
The Interim Hearing having been held by this Court on April 3, 2012.
Upon the record made by the Debtors at the Interim Hearing and after due deliberation
and consideration and sufficient cause appearing therefor;
IT IS FOUND, DETERMINED, ORDERED AND ADJUDGED, that:
1. Disposition. The Motion is granted on an interim basis in accordance with theterms of this Interim Order. Any objections to the Motion with respect to the entry of this
Interim Order that have not been withdrawn, waived or settled, and all reservations of rights
included therein, are hereby denied and overruled.
2. Jurisdiction. This Court has core jurisdiction over the Cases, the Motion and theparties and property affected hereby pursuant to 28 U.S.C. 157(b) and 1334. Venue is proper
before this Court pursuant to 28 U.S.C. 1408 and 1409. The statutory predicates for the relief
sought herein are sections 105, 361, 362, 363 and 364 of the Bankruptcy Code, Bankruptcy
Rules 2002, 4001, 6004 and 9014 and the Local Bankruptcy Rules.
3. Notice. Under the circumstances, the notice given by the Debtors of the Motion,the relief requested therein and the Interim Hearing constitutes appropriate, due and sufficient
notice thereof and complies with Bankruptcy Rule 4001(b) and (c) and the Local Bankruptcy
Rules, and no further notice of the relief sought at the Interim Hearing and the relief granted
herein is necessary or required.
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(a) As of the date of the commencement of the Cases (the Petition Date),the Debtors party to or otherwise obligated under the First Lien Prepetition Loan
Documents, without defense, counterclaim, recoupment or offset of any kind, were
jointly and severally indebted and liable to the First Lien Prepetition Secured Parties in
the aggregate principal amount of approximately $373,350,703 in respect of loans made
and in the aggregate face amount of $100,000 in respect of letters of credit issued by the
First Lien Prepetition Secured Lenders, plus interest thereon and fees, expenses
(including any attorneys, accountants, appraisers and financial advisors fees that are
chargeable or reimbursable under the First Lien Prepetition Loan Documents), charges,
Obligations (as defined in the First Lien Prepetition Credit Agreement) and all other
obligations incurred in connection therewith as provided in the First Lien Prepetition
Loan Documents (collectively, the First Lien Prepetition Debt; together with the
Second Lien Prepetition Debt (as defined below), the Prepetition Debt), which First
Lien Prepetition Debt is secured by first priority security interests in and liens on (the
First Lien Prepetition Security Interests; together with the second priority security
interests and liens granted to the Second Lien Prepetition Secured Parties pursuant to the
Second Lien Prepetition Loan Documents, the Prepetition Security Interests)
substantially all property of the Debtors, including, without limitation, substantially all
cash, securities or other property (and the proceeds, product and offspring therefrom), all
as more fully described in the First Lien Prepetition Loan Documents (collectively, the
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Parties, pursuant to the Second Lien Prepetition Loan Documents, the Prepetition
Collateral).
(b) The First Lien Prepetition Debt constitutes the legal, valid and bindingobligations of the respective Debtors named in the First Lien Prepetition Loan
Documents, enforceable in accordance with their terms (other than in respect of the stay
of enforcement arising from section 362 of the Bankruptcy Code).
(c) No portion of the First Lien Prepetition Debt or any payments made to theFirst Lien Prepetition Agent or the other First Lien Prepetition Secured Parties or applied
to the obligations owing under the First Lien Prepetition Loan Documents prior to the
Petition Date is subject to avoidance, recharacterization, recovery, subordination, attack,
offset, counterclaim, defense or claim (as such term is defined in the Bankruptcy Code)
of any kind pursuant to the Bankruptcy Code or other applicable law.
(d) Each Debtor hereby forever waives and releases any and all claims (assuch term is defined in the Bankruptcy Code), counterclaims, causes of action, defenses
and setoff rights against the First Lien Prepetition Agent and each of the other First Lien
Prepetition Secured Parties, whether arising at law or in equity, including, without
limitation, any recharacterization, subordination, avoidance or other claim arising under
or pursuant to section 105 or chapter 5 of the Bankruptcy Code or under any other similar
provisions of applicable state or federal law;provided, however, that nothing herein or in
any of the DIP Documents shall operate as a release or waiver of any claims or causes of
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(e) The First Lien Prepetition Security Interests granted to the First LienPrepetition Agent on the First Lien Prepetition Collateral pursuant to and in connection
with the First Lien Prepetition Loan Documents, including, without limitation, all
security agreements, pledge agreements and other security documents executed by any of
the Debtors in favor of the First Lien Prepetition Agent, for the benefit of the First Lien
Prepetition Secured Parties, are (i) valid, binding, perfected and enforceable liens and
security interests in the property described in the First Lien Prepetition Loan Documents,
(ii) not, pursuant to the Bankruptcy Code or other applicable law, subject to avoidance,
recharacterization, recovery, subordination, attack, offset, counterclaim, defense or
claim (as such term is defined in the Bankruptcy Code) of any kind, and (iii) subject
and subordinate only to (A) the DIP Liens (as defined below), (B) the Carve-Out (as
defined below) to which the DIP Liens are subject and (C) valid, perfected and
unavoidable liens and security interests permitted under the First Lien Prepetition Loan
Documents, but only to the extent that such liens and security interests are permitted by
the First Lien Prepetition Loan Documents to be senior to or pari passu with the First
Lien Prepetition Security Interests.
(f) Substantially all cash, securities or other property (and the proceedstherefrom) as of the Petition Date, including without limitation, all cash, securities or
other property (and the proceeds, product and offspring therefrom) and other amounts on
deposit or maintained by the Debtors in any accounts or accounts with the First Lien
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applicable law, for the benefit of the First Lien Prepetition Secured Parties. All proceeds
of the First Lien Prepetition Collateral (including cash on deposit with the First Lien
Prepetition Secured Parties as of the Petition Date, cash in blocked accounts pursuant to
the First Lien Prepetition Loan Documents, securities or other property) are Cash
Collateral of the First Lien Prepetition Secured Parties within the meaning of section
363(a) of the Bankruptcy Code (the Cash Collateral).
5. Findings Regarding the Financing.(a) Good cause has been shown for the entry of this Interim Order.(b) The Debtors have an immediate need to obtain the Financing and use Cash
Collateral to permit, among other things, the orderly continuation of the operation of their
businesses, to maintain business relationships with vendors, suppliers and customers, to
make payroll, and to satisfy other working capital and operational needs. The access of
the Debtors to sufficient working capital and liquidity through the use of Cash Collateral,
incurrence of new indebtedness for borrowed money and other financial accommodations
under the Financing is vital to the preservation and maintenance of the going concern
values of the Debtors and to a successful reorganization of the Debtors.
(c) The Debtors are unable to obtain financing on more favorable terms fromsources other than the DIP Lenders under the DIP Documents and are unable to obtain
adequate unsecured credit allowable under section 503(b)(1) of the Bankruptcy Code as
an administrative expense. The Debtors are also unable to obtain secured credit
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Liens and the Superpriority Claims (as defined below) under the terms and conditions set
forth in this Interim Order and in the DIP Documents and (ii) allowing each DIP Lender
to provide Roll Up DIP Loans on a dollar-for-dollar basis with such DIP Lenders
Commitment (as defined in the DIP Agreement) to provide New Money DIP Loans.
(d) The terms of the Financing, including the Roll Up DIP Loans, and the useof Cash Collateral are fair and reasonable, reflect the Debtors exercise of prudent
business judgment consistent with their fiduciary duties and constitute reasonably
equivalent value and fair consideration.
(e) The Financing has been negotiated in good faith and at arms lengthamong the Debtors, the DIP Agent and the DIP Lenders, and all of the Debtors
obligations and indebtedness arising under, in respect of or in connection with the
Financing and the DIP Documents, including without limitation, all loans, including the
Roll Up DIP Loans, made to, and guarantees issued by, the Debtors pursuant to the DIP
Documents, and any other obligations under the DIP Documents (all of the foregoing
collectively, the DIP Obligations), shall be deemed to have been extended by the DIP
Agent and the DIP Lenders and their affiliates in good faith, as that term is used in
section 364(e) of the Bankruptcy Code and in express reliance upon the protections
offered by section 364(e) of the Bankruptcy Code, and the DIP Obligations, the DIP
Liens and the Superpriority Claims shall be entitled to the full protection of section
364(e) of the Bankruptcy Code in the event that this Interim Order or any provision
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compensation or payment that may be received by such DIP Lenders incremental to what
would have been received had such Roll Up DIP Loans continued to be administered
under the First Lien Prepetition Credit Agreement, are hereby authorized as
compensation for, in consideration of, and solely on account of, the agreement of such
DIP Lenders to make the New Money DIP Loans and not as payments under, adequate
protection for, or otherwise on account of, the First Lien Prepetition Debt.
(g) The Debtors have requested entry of this Interim Order pursuant toBankruptcy Rules 4001(b)(2) and 4001(c)(2) and the Local Bankruptcy Rules. Absent
granting the relief sought by this Interim Order, the Debtors estates will be immediately
and irreparably harmed. Consummation of the Financing and authorization of the use of
Cash Collateral in accordance with this Interim Order and the DIP Documents is
therefore in the best interests of the Debtors estates consistent with their fiduciary duties.
6. Authorization of the Financing and the DIP Agreement.(a) The Debtors are hereby authorized to execute and enter into the DIP
Documents, including the DIP Agreement, which are all hereby approved.
(b) The Borrowers are hereby authorized to borrow money pursuant to theFinancing, and the Borrowers and the Guarantors are hereby authorized to guaranty such
borrowings, up to an aggregate principal or face amount of $5,000,000 in New Money
DIP Loans and $5,000,000 in Roll Up DIP Loans (plus interest, fees and other expenses
and amounts provided for in the DIP Agreement), in accordance with the terms of this
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and the Guarantors, and (ii) pay interest, fees and expenses in accordance with this
Interim Order and the DIP Documents.
(c) In furtherance of the foregoing and without further approval of this Court,each Debtor is authorized and directed to perform all acts, to make, execute and deliver
all instruments and documents (including, without limitation, the execution or recordation
of security agreements, mortgages and financing statements), that may be reasonably
required or necessary for the Debtors performance of their obligations under the
Financing, including, without limitation:
(i) the execution, delivery and performance of the DIP Documents,which DIP Documents shall be in form and substance reasonably satisfactory to
the DIP Agent, the Backstop Parties (as defined in the DIP Agreement) and the
Borrowers, including, without limitation, the DIP Agreement, any security and
pledge agreements, any mortgages contemplated thereby and the letter agreements
referred to in clause (iii) below,
(ii) the execution, delivery and performance of one or moreamendments, waivers, consents or other modifications to and under the DIP
Documents in each case in such form as the Debtors, the DIP Agent and the
requisite DIP Lenders may agree, and no further approval of this Court shall be
required for amendments, waivers, consents or other modifications to and under
the DIP Documents (and any fees paid in connection therewith) unless such
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interest payable on the loans, or (c) change any Event of Default (as defined in the
DIP Agreement), add any covenants that would materially impact the Debtors
business or amend the covenants therein in any such case to be materially more
restrictive;provided, further, that notice of any modifications shall be filed with
the Court and served upon counsel to the statutory committee of unsecured
creditors appointed in these Cases (the Creditors Committee) and those persons
who have formally appeared and requested service in the Cases pursuant to
Bankruptcy Rule 2002 and the United States Trustee,
(iii) the non-refundable payment to each of the Backstop Parties, theDIP Agent and the DIP Lenders, as the case may be, of the fees referred to in the
DIP Agreement (and in the separate letter agreements between them in connection
with the Financing, which, for the avoidance of doubt, constitute DIP Documents)
and reasonable costs and expenses as may be due from time to time, including,
without limitation, fees and expenses of professionals as provided for in the DIP
Documents,
(iv) the execution and delivery of such documents and the taking of allacts as shall be necessary or desirable in order to effect the roll-up of a portion of
the First Lien Prepetition Debt Beneficially Owned by the applicable DIP Lenders
at 11:59 p.m. (prevailing Eastern time) on April 2, 2012 to Roll Up DIP Loans in
consideration and on account of the agreement of the applicable DIP Lenders to
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(v) pursuant to section 363(b) of the Bankruptcy Code, implementingand conducting the Harvest Transaction (as defined in the DIP Agreement) under
the direction of a Chief Restructuring Officer reasonably acceptable to the DIP
Agent, the DIP Lenders and the First Lien Prepetition Agent, and
(vi) the performance of all other acts required under or in connectionwith the DIP Documents.
(d) Upon execution and delivery of the DIP Agreement and the other DIPDocuments, such DIP Documents shall constitute valid, binding and non-avoidable
obligations of the Debtors enforceable against each Debtor party thereto in accordance
with their respective terms and the terms of this Interim Order for all purposes during the
Cases, any subsequently converted case of any Debtor under chapter 7 of the Bankruptcy
Code or after the dismissal of any Case. Except as provided in the proviso appearing at
the end of this paragraph 6(d), no obligation, payment, roll up or repayment thereof or
recovery on or in respect thereof, transfer or grant of security under the DIP Agreement,
the other DIP Documents or this Interim Order shall be stayed, restrained, revocable,
voidable, avoidable or recoverable under the Bankruptcy Code or under any applicable
law (including without limitation, under sections 502(d), 548, 549, 550 or 553 of the
Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law), or subject to any
defense, reduction, setoff, recoupment or counterclaim;provided, however, that the Court
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validity, enforceability, extent, perfection or priority of the First Lien Prepetition Debt or
the First Lien Prepetition Security Interests, and only to the extent that, the Court finds
that, in light of such timely successful challenge, the Roll Up DIP Loans unduly
advantaged the Roll Up DIP Lenders (as defined below).
(e) The Debtors and the DIP Agent have agreed upon (i) a form of budget forthe Debtors ACU business (the ACU Budget) and (ii) a form of budget for the
Debtors Coverdell and Neverblue businesses (the CDNB Budget, and together with
the ACU Budget, the Budgets), attached hereto as Exhibit B to the Interim Order, each
projecting cash flow for thirteen (13) weeks (the Budget Period). On a monthly basis,
the Debtors will provide to the DIP Agent updated Budgets for the Budget Period in
substantially the same format as the previous Budgets.
7. Superpriority Claims. Pursuant to section 364(c)(1) of the Bankruptcy Code, allof the DIP Obligations shall constitute allowed superpriority administrative expense claims
against each of the Debtors (the Superpriority Claims) with priority over any and all
administrative expenses in the Cases, in any successor case under chapter 11 of the Bankruptcy
Code and in any case with respect to the Debtors converted to chapter 7 of the Bankruptcy Code,
adequate protection claims, diminution claims (including all Adequate Protection Obligations (as
defined below)) and all other claims against the Debtors, now existing or hereafter arising, of any
kind whatsoever, including, without limitation, all administrative expenses of the kind specified
in sections 503(b) and 507(b) of the Bankruptcy Code, and over any and all administrative
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allowed claims shall for purposes of section 1129(a)(9)(A) of the Bankruptcy Code be
considered administrative expenses allowed under section 503(b) of the Bankruptcy Code, and
which shall be payable from and have recourse to all pre- and post-petition property of the
Debtors and all proceeds thereof, including, without limitation (subject to entry of the Final
Order) all proceeds or property recovered in connection with the pursuit of claims or causes of
action arising under chapter 5 of the Bankruptcy Code (the Avoidance Actions Proceeds), if
any, subject only to (i) the proviso in the last sentence of paragraph 6(d) of this Interim Order
and (ii) the payment of the Carve-Out to the extent specifically provided for herein. The
Superpriority Claims granted hereunder to the holders of the Roll Up DIP Loans (the Roll Up
DIP Lenders) shall be immediately junior in priority and subject to the Superpriority Claims of
the holders of the New Money DIP Loans (the New Money DIP Lenders).
8. Carve-Out. The Carve-Out means (i) all fees required to be paid to the Clerk ofthe Bankruptcy Court and to the United States Trustee pursuant to 28 U.S.C. 1930(a), (ii) fees
and disbursements incurred by a chapter 7 trustee (if any) under section 726(b) of the
Bankruptcy Code in an amount not to exceed $75,000, (iii) accrued but unpaid fees and expenses
of professionals retained by the Debtors or by the Creditors Committee, subject to the
restrictions set forth in paragraph 20 of this Interim Order, incurred prior to an Event of Default
or Cash Collateral Termination Event(as defined below) and allowed by the Bankruptcy Court,
and (iv) after the occurrence and during the continuance of an Event of Default or Cash
Collateral Termination Event, allowed and unpaid professional fees and expenses incurred by (x)
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be continuing, the Carve-Out shall not be reduced by the payment of fees and expenses allowed
by this Court under sections 328, 330 and 331 of the Bankruptcy Code. Nothing in this Interim
Order shall be construed to impair the right of any party to object to the reasonableness of any of
the fees, expenses, reimbursement or compensation described in this paragraph.
9. DIP Liens. As security for the DIP Obligations, effective and perfected upon thedate of this Interim Order and without the necessity of the execution, recordation of filings by the
Debtors of security agreements, control agreements, pledge agreements, mortgages, financing
statements or other similar documents, or the possession or control by the DIP Agent or any DIP
Lender of, or over, any DIP Collateral (as defined below), the following security interests and
liens are hereby granted by the Debtors to the DIP Agent for the benefit of itself and the DIP
Lenders (all property identified in clauses (a), (b) and (c) below being collectively referred to as
the DIP Collateral), subject, only in the event of the occurrence and during the continuance of
an Event of Default, to the payment of the Carve-Out (all such liens and security interests
granted to the DIP Agent, for the benefit of itself and the DIP Lenders, pursuant to this Interim
Order and the DIP Documents, are being collectively referred to as the DIP Liens). The
following DIP Liens shall remain valid and enforceable with the same continuing priority as
described in this Interim Order notwithstanding any payment of all or any portion of the
obligations arising under the Prepetition Loan Documents and shall, and shall be deemed to,
secure the full and timely payment of the DIP Obligations until the payment in full, in cash, of all
of the DIP Obligations and termination of the DIP Lenders commitments under the Financing:
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Debtors, whether existing on the Petition Date or thereafter acquired, that, on or as of the
Petition Date is not subject to valid, perfected and non-avoidable liens (collectively,
Unencumbered Property), including without limitation, all of the outstanding equity
interests of any persons that are or become assets of any Borrower or Guarantor,
unencumbered cash (whether or not contained in a controlled account or a blocked
account), cash equivalents, bank accounts, accounts, trade receivables, other receivables,
contracts, inventory, equipment, intellectual property rights, general intangibles,
investment property, deposit accounts, securities accounts, securities (whether or not
marketable), documents, instruments, contract rights, copyrights, franchise rights,
patents, tradenames, trademarks, supporting obligations, letter of credit rights,
commercial tort claims, causes of action, chattel paper, real property interests and
fixtures, and other current assets and all substitutions and proceeds, products offspring
and profits of the foregoing. Subject only to and effective upon the entry of the Final
Order, Unencumbered Property shall exclude claims or causes of action arising under
chapter 5 of the Bankruptcy Code, but shall include any Avoidance Action Proceeds.
(b) Liens Priming Prepetition Secured Parties Liens. Pursuant to section364(d)(1) of the Bankruptcy Code, a valid, binding, continuing, enforceable, fully-
perfected first-priority senior priming security interest in and lien upon all pre- and post-
petition property of the Debtors, including, without limitation, all of the outstanding
equity interests of any persons that are or become assets of any Borrower or Guarantor,
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property, deposit accounts, securities accounts, securities (whether or not marketable),
documents, instruments, contract rights, copyrights, franchise rights, patents, tradenames,
trademarks, supporting obligations, letter of credit rights, commercial tort claims, causes
of action, chattel paper, real property interests and fixtures, and other current assets and
all substitutions and proceeds, products offspring and profits of the foregoing, whether
now existing or hereafter acquired, that is subject to any existing lien presently securing
the First Lien Prepetition Debt (including in respect of issued but undrawn letters of
credit) and the obligations under the Second Lien Prepetition Loan Documents. Such
security interests and liens shall be senior in all respects to the interests in such property
of the Prepetition Secured Parties arising from current and future liens of the Prepetition
Secured Parties (including, without limitation, the Adequate Protection Liens (as defined
below) granted hereunder to the First Lien Prepetition Secured Parties), but shall be
junior to any valid, perfected, enforceable and unavoidable security interests and liens of
other parties, if any, on such property existing immediately prior to the Petition Date, or
to any valid, perfected and unavoidable interests in such property arising out of liens to
which the liens of the Prepetition Secured Parties may become subject subsequent to the
Petition Date as permitted by section 546(b) of the Bankruptcy Code.
(c) Liens Junior to Certain Other Liens. Pursuant to section 364(c)(3) of theBankruptcy Code, a valid, binding, continuing, enforceable, fully-perfected security
interest in and lien upon all pre- and post-petition property of the Debtors (other than the
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liens in existence immediately prior to the Petition Date or to valid and unavoidable liens
in existence immediately prior to the Petition Date that are perfected subsequent to the
Petition Date as permitted by section 546(b) of the Bankruptcy Code (Permitted Priority
Liens), which security interests and liens in favor of the DIP Agent are junior to such
Permitted Priority Liens.
(d) Liens Senior to Certain Other Liens. The DIP Liens and the AdequateProtection Liens shall not be subject or subordinate to (i) any lien or security interest that
is avoided and preserved for the benefit of the Debtors and their estates under section 551
of the Bankruptcy Code, (ii) any liens arising after the Petition Date including, without
limitation, any liens or security interests granted in favor of any federal, state, municipal
or other governmental unit, commission, board or court for any liability of the Debtors or
(iii) any intercompany or affiliate liens of the Debtors.
10. Equities of the Case Waiver. The Debtors shall not assert any equities of thecase claim under section 552(b) of the Bankruptcy Code against the DIP Agent, the DIP
Lenders, the First Lien Prepetition Agent or the other First Lien Prepetition Secured Parties with
respect to proceeds, product, offspring or profits of any of the DIP Collateral.
11. Protection of DIP Lenders Rights.(a) All DIP Collateral shall be free and clear of all liens, claims and
encumbrances, except for those liens, claims and encumbrances expressly permitted
under the DIP Documents or this Interim Order.
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Roll Up DIP Lenders and the Prepetition Secured Parties shall (i) take no action to
foreclose upon or recover in connection with the liens granted thereto pursuant to the
Prepetition Loan Documents or this Interim Order, or otherwise exercise remedies against
any DIP Collateral, except to the extent authorized by an order of this Court, (ii) be
deemed to have consented to any release of DIP Collateral authorized under the DIP
Documents and (iii) not file any further financing statements, trademark filings, copyright
filings, mortgages, notices of lien or similar instruments, or otherwise take any action to
perfect their security interests in the DIP Collateral unless, solely as to this clause (iii),
the DIP Agent or the DIP Lenders file financing statements or other documents to perfect
the liens granted pursuant to this Interim Order, or as may be required by applicable state
law to continue the perfection of valid and unavoidable liens or security interests as of the
Petition Date.
(c) The automatic stay provisions of section 362 of the Bankruptcy Code arevacated and modified to the extent necessary to permit the DIP Agent and the DIP
Lenders to exercise all rights and remedies under the DIP Documents upon the
occurrence of an Event of Default, providedthat the DIP Agent shall provide (i) five (5)
days notice to the Debtors (with a copy to counsel to the Creditors Committee and to
the United States Trustee) prior to the termination of the Debtors right to use Cash
Collateral, and (ii) seven (7) days notice to the Debtors (with a copy to counsel to the
Creditors Committee and to the United States Trustee) prior to the enforcement of the
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require any advance notice to the Debtors. In any hearing regarding any exercise of
rights or remedies, the only issue that may be raised by any party in opposition thereto
shall be whether, in fact, an Event of Default has occurred and is continuing, and the
Debtors, the Roll Up DIP Lenders and the Prepetition Secured Parties hereby each waive
their right to seek relief, including, without limitation, under section 105 of the
Bankruptcy Code, to the extent such relief would in any way impair or restrict the rights
and remedies of the DIP Agent or the DIP Lenders set forth in this Interim Order or the
DIP Documents. In no event shall the DIP Agent, the DIP Lenders or the Prepetition
Secured Parties be subject to the equitable doctrine of marshaling or any similar
doctrine with respect to the DIP Collateral. The delay or failure to exercise rights and
remedies under the DIP Documents or this Interim Order by the DIP Agent or DIP
Lenders shall not constitute a waiver of the DIP Agents or such DIP Lenders rights
hereunder, thereunder or otherwise, unless any such waiver is pursuant to a written
instrument executed in accordance with the terms of the applicable DIP Documents.
12. Protection of Roll Up DIP Lenders Rights. Any compensation payments orrecoveries received by the DIP Lenders on account or in respect of the Roll Up DIP Loans
incremental to what would have been received had such Roll Up DIP Loans continued to be
administered under the First Lien Prepetition Credit Agreement shall be compensation for, in
consideration for, and solely on account of, the agreement of such DIP Lenders to make the New
Money DIP Loans and not as payments under, adequate protection for, or otherwise on account
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Order. The Tranche B Loans will be administered by the DIP Agent under the DIP Agreement
on the terms set forth therein.
13. Priorities Among DIP Lenders. Notwithstanding anything to the contrary herein,(i) the DIP Liens granted hereunder to the Roll Up DIP Lenders shall be immediately junior in
priority and subject to the DIP Liens granted hereunder to the New Money DIP Lenders in
respect of the DIP Collateral and (ii) any proceeds realized by the DIP Agent from the
liquidation of any DIP Collateral shall be applied to repay outstanding New Money DIP Loans in
full before any amounts are applied to the repayment of the Roll Up DIP Loans.
14. Mandatory Prepayments and Payment of First Lien Prepetition Debt. TheDebtors shall be required to prepay the DIP Loans and the First Lien Prepetition Debt with (i)
100% of the Net Cash Proceeds (as defined in the DIP Agreement) received from the incurrence
of indebtedness by the Debtors (other than indebtedness permitted under the DIP Agreement);
(ii) upon any non-ordinary course sales or other dispositions (including casualty and
condemnation events) of the DIP Collateral by the Debtors, an amount equal to 100% of the Net
Cash Proceeds of such sale or other disposition of the DIP Collateral (which, in the case of DIP
Collateral subject to Permitted Priority Liens may be net of any required repayment of any
indebtedness secured by such Permitted Priority Liens); and (iii) at the end of any fiscal month,
100% of any cash and Cash Equivalents (as defined in the DIP Agreement) in excess of
$8,000,000 or such higher amount as the Required Lenders (as defined in the DIP Agreement)
agree in their sole discretion. Such prepayments shall be appliedfirst to the Tranche A Loans
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outstanding obligations under the First Lien Prepetition Credit Agreement (in the order specified
therein).
15. Limitation on Charging Expenses Against Collateral. Subject to the entry of theFinal Order, except to the extent of the Carve-Out, no costs or expenses of administration of the
Cases or any future proceeding that may result therefrom, including liquidation in bankruptcy or
other proceedings under the Bankruptcy Code, shall be charged against or recovered from the
DIP Collateral, the Prepetition Collateral or the Cash Collateral pursuant to section 506(c) of the
Bankruptcy Code or any similar principle of law without the prior written consent of the DIP
Agent or the First Lien Prepetition Agent and no such consent shall be implied from any other
action, inaction, or acquiescence by the DIP Agent, the DIP Lenders, the Prepetition Agents or
the other Prepetition Secured Parties.
16. Use of Cash Collateral. The Debtors are hereby authorized to use all CashCollateral of the Prepetition Secured Parties, and the Prepetition Secured Parties are directed
promptly to turn over to the Debtors all Cash Collateral received or held by them, providedthat
the Prepetition Secured Parties are granted adequate protection as hereinafter set forth and,
except on the terms and conditions of this Interim Order, the Debtors shall be enjoined and
prohibited from at any time using the Cash Collateral. The Debtors right to use Cash Collateral,
and the First Lien Prepetition Secured Parties consent to use of Cash Collateral, shall terminate
(subject to any applicable notice requirements as set forth below) on the earliest to occur of (each
such occurrence being hereinafter referred to as a Cash Collateral Termination Event): (a) the
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supporting such relief; (d) appointment of a trustee or examiner with expanded powers (or any
Debtor seeking or supporting such appointment); (e) the occurrence of the effective date or
consummation of a plan of reorganization for the Debtors; (f) the failure by the Debtors to make
any payment required pursuant to this Interim Order when due; (g) the failure by the Debtors to
deliver to the First Lien Prepetition Agent any of the documents or other information required to
be delivered pursuant to this Interim Order when due or any such documents or other
information shall contain a material misrepresentation; (h) the failure by the Debtors to observe
or perform any of the material terms or material provisions contained herein; (i) the entry of an
order of this Court reversing, staying, vacating or otherwise modifying in any material respect
the terms of this Interim Order; (j) (x) the termination by any non-Debtor of or (y) the
termination of or the filing of a motion to terminate or reject, in each case by or on behalf of a
Debtor, any material lease, material contract or other material agreement on or after the Petition
Date if, in the case of clause (y) only, the result of such termination or rejection would be
adverse to the First Lien Prepetition Secured Parties in any material respect; (k) failure to employ
a Chief Restructuring Officer in connection with the Harvest Transaction reasonably acceptable
to the First Lien Prepetition Agent or failure to actively and diligently implement the Harvest
Transaction; (l) a payment processing arrangement reasonably satisfactory to the First Lien
Prepetition Agent shall fail to remain in effect or any of the ratios permitted under applicable RIS
programs, whether for chargebacks or fraud claims, or similar risk programs in effect prior to the
Petition Date, shall be reduced or changed in any way which would have a negative impact on
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procedures for such sales; (n) the Debtors failure to file by April 16, 2012 an application with
this Court to employ a Chief Restructuring Officer to supervise and direct the Harvest
Transaction; (o) the Debtors failure to file with this Court by August 20, 2012 a plan of
reorganization in form and substance reasonably satisfactory to the First Lien Prepetition Agent;
(p) if this Court shall not have entered an order approving the disclosure statement respecting the
Debtors plan of reorganization by October 1, 2012; (q) if this Court shall not have entered an
order confirming the Debtors plan of reorganization by November 16, 2012; (r) if the effective
date of the Debtors plan of reorganization shall not have occurred by November 30, 2012; (s)
the failure of the majority of any Applicable Board (as defined below) to consist of Acceptable
Independent Directors (as defined below) at any time following the earlier of (x) the date that is
30 days following entry of this Interim Order and (y) the entry of the Final Order (it being
understood that, if an Acceptable Independent Director resigns, it shall not be a Cash Collateral
Termination Event if a replacement Acceptable Independent Director is appointed within ten
Business Days of such resignation); and (t) the appointment of any person other than an
Acceptable Independent Director to any Applicable Board. On and after the occurrence of (x) a
Cash Collateral Termination Event specified in clause (a), (b), (c), (d), (e), (i), (j), (k), (l), (m),
(n), (o), (p), (q), (r), (s) or (t) above, the Debtors shall immediately cease using Cash Collateral
and (y) any other Termination Event, on the fifth business day after the earlier of the date on
which the Debtors receive written notice from the First Lien Prepetition Agent of such Cash
Collateral Termination Event (if on that date such Termination Event remains uncured) and the
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however, that, following the Cash Collateral Termination Date, the First Lien Prepetition Agent
may, upon five (5) days prior written notice, withdraw or direct the Debtors cash management
banks to withdraw from the Debtors existing accounts, free from any stay imposed or
applicable pursuant to sections 105 or 362 of the Bankruptcy Code, principal, fees and expenses
payable to the First Lien Prepetition Secured Parties pursuant to Paragraphs 4 and 17 of this
Interim Order and apply the same to such obligations, without further order of the Court. All
notices set forth in this paragraph 16 shall be provided to the Debtors, the Creditors Committee
and the United States Trustee. Following the occurrence of the Cash Collateral Termination
Date, the Debtors shall not have the right to use Cash Collateral without the prior written consent
of the First Lien Prepetition Agent;provided, however, that (i) the Debtors shall have the right to
seek authority from this Court to use Cash Collateral thereafter on proper notice to the First Lien
Prepetition Agent on behalf of the First Lien Prepetition Secured Parties, which request such
parties shall have the right to oppose, and (ii) the Debtors may use Cash Collateral to pay the
disbursements set forth in the Budgets that were properly and actually incurred by the Debtors
prior to the Cash Collateral Termination Date.
17. Adequate Protection. The First Lien Prepetition Secured Parties are entitled,pursuant to sections 361, 363(e) and 364(d)(1) of the Bankruptcy Code, to adequate protection of
their interests in the First Lien Prepetition Collateral, including the Cash Collateral, in an amount
equal to the Collateral Diminution, if any (as defined below). As used in this Interim Order,
Collateral Diminution shall mean an amount equal to the diminution of the value of the First
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the priming of the First Lien Prepetition Agents security interests in and liens on the First Lien
Prepetition Collateral by the DIP Liens pursuant to the DIP Documents and this Interim Order,
the depreciation, sale, loss or use of such First Lien Prepetition Collateral, and the imposition of
the automatic stay pursuant to section 362 of the Bankruptcy Code, whether in accordance with
the terms and conditions of this Interim Order, the DIP Agreement or otherwise. As adequate
protection for any Collateral Diminution which is entitled to adequate protection under the
Bankruptcy Code, the Prepetition Agents and the Prepetition Secured Parties are hereby granted
the following (collectively, the Adequate Protection Obligations):
(a) Adequate Protection Liens. The First Lien Prepetition Agent, for thebenefit of the First Lien Prepetition Secured Parties, is hereby granted (effective and
perfected upon the date of this Interim Order and without the necessity of the execution
by the Debtors of security agreements, pledge agreements, mortgages, financing
statements or other agreements) a replacement security interest in and lien upon all the
DIP Collateral, subject and subordinate only to (i) the DIP Liens and any liens on the DIP
Collateral that are senior to, orpari passu with, the DIP Liens and (ii) the Carve-Out (the
Adequate Protection Liens).
(b) Section 507(b) Claims. The First Lien Prepetition Secured Parties arehereby granted, subject to the payment of the Carve-Out, allowed superpriority claims as
provided for in section 507(b) of the Bankruptcy Code, immediately junior to the claims
under section 364(c)(1) of the Bankruptcy Code held by the DIP Agent and the DIP
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Lien Prepetition Loan Documents unless and until the DIP Obligations have indefeasibly
been paid in cash in full or as otherwise agreed by the DIP Lenders or as provided in the
DIP Documents.
(c) Fees and Expenses. The First Lien Prepetition Agent shall receive fromthe Debtors current cash payments of all fees and expenses payable to the First Lien
Prepetition Agent under the First Lien Prepetition Loan Documents, including, without
limitation, the reasonable fees and disbursements of counsel, financial and other
consultants for the First Lien Prepetition Agent (including, without limitation, the
professional fees and expenses of Willkie Farr & Gallagher LLP, FTI Consulting, Inc.
and any other professionals or advisors retained by or on behalf of the First Lien
Prepetition Agent) within twenty (20) days after the receipt by the Debtors, the Creditors
Committee and the United States Trustee (the Review Period) of invoices therefor (the
Invoiced Fees) (subject in all respects to applicable privilege or work product
doctrines) and without the necessity of filing motions or fee applications, including such
amounts arising before and after the Petition Date; provided, however, that the Debtors,
the Creditors Committee and the United States Trustee shall preserve their right to
dispute the payment of any portion of the Invoiced Fees (the Disputed Invoiced Fees)
if, within the Review Period, the (i) Debtors pay in full the Invoiced Fees, including the
Disputed Invoiced Fees; and (ii) the Debtors, the Creditors Committee or the United
States Trustee files with the Court a motion or other pleading, on at least ten (10) days
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(d) Principal Payments. Subject to entry of the Final Order, as additionaladequate protection, the Debtors shall pay indefeasibly in cash to the First Lien
Prepetition Agent, for the benefit of the First Lien Prepetition Secured Parties (in
accordance with the application of payments provisions of the First Lien Prepetition Loan
Documents) in permanent reduction of the outstanding principal balance of the First Lien
Prepetition Debt, Net Cash Proceeds and cash payable to the First Lien Prepetition Agent
pursuant to Paragraph 14 of this Interim Order.
(e) Harvest Transaction; Chief Restructuring Officer. As additional adequateprotection, the Debtors shall implement and conduct the Harvest Transaction (as defined
in the DIP Agreement) under the direction of a Chief Restructuring Officer reasonably
acceptable to the DIP Agent, the DIP Lenders and the First Lien Prepetition Agent.
(f) Independent Directors. As additional adequate protection, on or before theearlier of (x) the date that is thirty (30) days following entry of this Interim Order and (y)
the entry of the Final Order, the Debtors shall have caused the appointment of a sufficient
number of independent directors (or equivalent title in a limited liability company)
acceptable to the DIP Agent, the DIP Lenders and the First Lien Prepetition Agent (each
such director, an Acceptable Independent Director) to serve as and constitute a
majority of members of the boards of directors (or equivalent bodies, if any, in the case of
limited liability companies) of Velo Holdings, Inc., each Borrower and each other first-
tier subsidiary of V2V Holdings LLC (each, an Applicable Board), which Acceptable
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prior to each appointment of an Acceptable Independent Director; and unless otherwise
ordered by this Court, such Applicable Independent Director shall be appointed effective
immediately upon the expiration of such notice period. The Debtors shall not, at any
time, allow the appointment of any person to any Applicable Board other than an
Acceptable Independent Director. The Debtors shall not, at any time following the
earlier of (x) the date that is thirty (30) days following entry of this Interim Order and (y)
the entry of the Final Order, permit the majority of any Applicable Board not to consist of
Acceptable Independent Directors (it being understood that if an Acceptable Independent
Director resigns, a replacement Acceptable Independent Director shall be appointed
within ten (10) business days of such resignation).
(g) Financial Reporting. The Debtors shall provide the First Lien PrepetitionAgent with financial and other reporting as described in the First Lien Prepetition Loan
Documents, the DIP Agreement and the other DIP Documents.
(h) Second Lien Prepetition Secured Parties. To the extent that the First LienPrepetition Secured Parties are granted pursuant to this Interim Order adequate protection
in the form of Adequate Protection Liens on any property of the Debtors not included in
the Prepetition Collateral (the Additional Collateral), the Second Lien Prepetition
Agent, for the benefit of the Second Lien Prepetition Secured Parties, is hereby granted
(effective and perfected upon the date of this Interim Order and without the necessity of
the execution by the Debtors of security agreements, pledge agreements, mortgages,
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and (iii) the Adequate Protection Liens granted to the First Lien Prepetition Secured
Parties. The Adequate Protection Liens granted hereunder on Additional Collateral to the
First Lien Prepetition Secured Parties and the Second Lien Prepetition Secured Parties
shall rank in the same relative priority and right as such parties respective prepetition
liens and security interests do with respect to the such collateral as of the Petition Date
under the Intercreditor Agreement (as defined in the First Lien Prepetition Credit
Agreement).
18. Perfection of DIP Liens and Adequate Protection Liens.(a) Subject to the provisions of paragraph 11(b) of this Interim Order, the
Debtors, the DIP Agent, the Prepetition Agents, the DIP Lenders and the Prepetition
Secured Parties are hereby authorized, but not required, to file or record financing
statements, trademark filings, copyright filings, mortgages, notices of lien or similar
instruments in any jurisdiction, or take possession of or control over, or take any other
action in order to validate and perfect the liens and security interests granted to them
hereunder. Whether or not the DIP Agent on behalf of the DIP Lenders or the First Lien
Prepetition Agent on behalf of the First Lien Prepetition Secured Parties shall, in its sole
discretion, choose to file such financing statements, trademark filings, copyright filings,
mortgages, notices of lien or similar instruments, or take possession of or control over, or
otherwise confirm perfection of the liens and security interests granted to them
hereunder, such liens and security interests shall be deemed valid, perfected, allowed,
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take, execute, deliver and file such instruments (in each case without representation or
warranty of any kind) to enable the DIP Agent to further validate, perfect, preserve and
enforce DIP Liens. The Debtors shall execute and deliver to the DIP Agent and the First
Lien Prepetition Agent all such agreements, financing statements, instruments and other
documents as the DIP Agent, the First Lien Prepetition Agent may reasonably request to
more fully evidence, confirm, validate, perfect, preserve and enforce the DIP Liens and
the Adequate Protection Liens. All such documents will be deemed to have been
recorded and filed as of the Petition Date.
(b) A certified copy of this Interim Order may, in the discretion of the DIPAgent, be filed with or recorded in filing or recording offices in addition to or in lieu of
such financing statements, mortgages, notices of lien or similar instruments, and all filing
offices are hereby authorized to accept such certified copy of this Interim Order for filing
and recording.
(c) Any provision of any lease or other license, contract or other agreementthat requires (i) the consent or approval of one or more landlords or other parties or (ii)
the payment of any fees or obligations to any governmental entity, in order for any
Debtor to pledge, grant, sell, assign or otherwise transfer any such leasehold interest, or
the proceeds thereof, or other post-petition collateral related thereto, is hereby deemed to
be inconsistent with the applicable provisions of the Bankruptcy Code. Any such
provision shall have no force and effect with respect to the transactions granting post-
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19. Preservation of Rights Granted Under the Order.(a) No claim or lien having a priority superior to or pari passu with those
granted by this Interim Order to the DIP Agent, the DIP Lenders or the First Lien
Prepetition Secured Parties shall be granted or allowed while any portion of the
Financing (or any refinancing thereof) or the Commitments thereunder or the DIP
Obligations or the Adequate Protection Obligations remain outstanding, and the DIP
Liens and the Adequate Protection Liens shall not be (i) subject or junior to any lien or
security interest that is avoided and preserved for the benefit of the Debtors estates under
section 551 of the Bankruptcy Code or (ii) subordinated to or made pari passu with any
other lien or security interest, whether under section 364(d) of the Bankruptcy Code or
otherwise.
(b) Unless all DIP Obligations shall have indefeasibly been paid in cash in fulland the Adequate Protection Obligations shall have been indefeasibly paid in cash in full,
the Debtors shall not seek, and it shall constitute an Event of Default and terminate the
right of the Debtors to use Cash Collateral if any of the Debtors seeks, or if there is
entered, (i) any modification or extension of this Interim Order without the prior written
consent of the DIP Agent, the Backstop Parties and the First Lien Prepetition Agent (or,
to the extent the DIP Obligations shall have been indefeasibly paid in cash in full, only
the First Lien Prepetition Agent), and no such consent shall be implied by any other
action, inaction or acquiescence, or (ii) an order converting or dismissing any of the
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accordance with sections 105 and 349 of the Bankruptcy Code) that (i) the Superpriority
Claims, priming liens, security interests and replacement security interests granted to the
DIP Agent and the DIP Lenders and to the First Lien Prepetition Secured Parties pursuant
to this Interim Order shall continue in full force and effect and shall maintain their
priorities as provided in this Interim Order until all DIP Obligations and Adequate
Protection Obligations shall have been indefeasibly paid in cash in full (and that such
Superpriority Claims, priming liens and replacement security interests, shall,
notwithstanding such dismissal, remain binding on all parties in interest) and (ii) this
Court shall retain jurisdiction, notwithstanding such dismissal, for the purposes of
enforcing the claims, liens and security interests referred to in clause (i) above.
(d) If any or all of the provisions of this Interim Order are hereafter reversed,modified, vacated or stayed, such reversal, stay, modification or vacatur shall not affect
(i) the validity, priority or enforceability of any DIP Obligations or Adequate Protection
Obligations incurred prior to the actual receipt of written notice by the DIP Agent or the
First Lien Prepetition Agent, as applicable, of the effective date of such reversal, stay,
modification or vacatur or (ii) the validity or enforceability of any lien or priority
authorized or created hereby or pursuant to the DIP Agreement with respect to any DIP
Obligations or Adequate Protection Obligations. Notwithstanding any such reversal,
stay, modification or vacatur, any use of Cash Collateral, or DIP Obligations or Adequate
Protection Obligations incurred by the Debtors to the DIP Agent, the DIP Lenders
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reversal, stay, modification or vacatur shall be governed in all respects by the original
provisions of this Interim Order, and the DIP Agent, the DIP Lenders, the First Lien
Prepetition Agent and the other First Lien Prepetition Secured Parties shall be entitled to
all the rights, remedies, privileges and benefits granted in section 364(e) (and with
respect to the use of cash collateral, section 363(m)) of the Bankruptcy Code, this Interim
Order and pursuant to the DIP Documents with respect to all uses of Cash Collateral, DIP
Obligations and Adequate Protection Obligations.
(e) Except as expressly provided in this Interim Order or in the DIPDocuments, the DIP Liens, the DIP Obligations, the Superpriority Claims, the Adequate
Protection Obligations, the Adequate Protection Liens and all other rights and remedies
of the DIP Agent, the DIP Lenders, the First Lien Prepetition Agent and the other First
Lien Prepetition Secured Parties granted by the provisions of this Interim Order and the
DIP Documents shall survive, and shall not be modified, impaired or discharged by (i)
the entry of an order converting any of the Cases to a case under chapter 7, dismissing
any of the Cases, terminating the joint administration of these Cases or by any other act
or omission or (ii) the entry of an order confirming a plan of reorganization in any of the
Cases and, pursuant to section 1141(d)(4) of the Bankruptcy Code, the Debtors have
waived any discharge as to any remaining DIP Obligations pursuant to the DIP Loans.
The terms and provisions of this Interim Order and the DIP Documents shall continue in
these Cases, in any successor cases if these Cases cease to be jointly administered, or in
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other First Lien Prepetition Secured Parties granted by the provisions of this Interim
Order and the DIP Documents shall continue in full force and effect until the DIP
Obligations and the Adequate Protection Obligations are indefeasibly paid in cash in full.
20. Limitation on Use of Financing Proceeds and Collateral. Notwithstandinganything herein or in any other order by this Court to the contrary, no borrowings, Cash
Collateral, Prepetition Collateral, DIP Collateral, portion of the proceeds of the Financing or part
of the Carve-Out may be used for any of the following (each, a Lender Claim) without the
prior written consent of each affected party: (a) to object, contest or raise any defense to the
validity, perfection, priority, extent or enforceability of any amount due under any DIP
Document or Prepetition Loan Document, or the liens or claims granted under this Interim Order,
any DIP Document or any Prepetition Loan Document, (b) to assert any claim or cause of action
against the DIP Agent, any DIP Lender or any Prepetition Secured Party or their respective
agents, affiliates, representatives, attorneys or advisors, (c) except to contest the occurrence or
continuation of an Event of Default as forth in paragraph 11(c)(ii) of this Interim Order, to
prevent, hinder or otherwise delay the DIP Agents or the Prepetition Agents assertion,
enforcement or realization on the Cash Collateral or the DIP Collateral in accordance with the
DIP Documents, the Prepetition Loan Documents or this Interim Order, (d) to assert or prosecute
any action for preferences, fraudulent conveyances, equitable subordination, recharacterization
or other avoidance power claims or any other claims, counterclaims or causes of action,
objections, contests or defenses against the Prepetition Agents or other Prepetition Secured Party
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modify any of the rights granted to the DIP Agent, the DIP Lenders, the Prepetition Agents or
the other Prepetition Secured Parties hereunder or under the DIP Documents or the Prepetition
Loan Documents,providedthat the Creditors Committee may spend up to $50,000 for the fees
and expenses incurred in connection with the investigation of, but not litigation, objection or any
challenge to, the Prepetition Security Interests.
21. Effect of Stipulations on Third Parties.(a) Each stipulation, admission and agreement contained in this Interim
Order, including, without limitation, in paragraph 4 of this Interim Order, shall be
binding upon the Debtors and any successor thereto (including, without limitation, any
chapter 7 or chapter 11 trustee appointed or elected for any of the Debtors) under all
circumstances and for all purposes, and the Debtors are deemed to have irrevocably
waived and relinquished all Lender Claims as of the date of entry of this Interim Order.
Each stipulation, admission and agreement contained in this Interim Order, including,
without limitation, in paragraph 4 of this Interim Order, shall also be binding upon all
other parties in interest, including, without limitation, the Creditors Committee, under all
circumstances and for all purposes, except to the extent that (i) a party in interest has,
subject to the limitations contained herein, including, inter alia, in paragraph 20 of this
Interim Order, timely and properly filed an adversary proceeding or contested matter
asserting a Lender Claim with respect to any of the stipulations or admissions set forth in
paragraph 4 of this Interim Order by no later than the date that is sixty (60) days (or such
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(b) The success of any particular Lender Claim shall not alter the bindingeffect on each party in interest of any stipulation or admission not subject to such Lender
Claim. Except to the extent (but only to the extent) a timely and properly filed adversary
proceeding or contested matter asserting a Lender Claim is successful, (i) the First Lien
Prepetition Debt shall constitute allowed claims, not subject to avoidance,
recharacterization, recovery, subordination, attack, offset, counterclaims, defense or
claim (as such term is defined in the Bankruptcy Code) of any kind pursuant to the
Bankruptcy Code or other applicable law, for all purposes in the Cases and any
subsequent chapter 7 cases, (ii) the First Lien Prepetition Security Interests shall be
deemed to have been, as of the Petition Date, legal, valid, binding perfected and
enforceable liens and security interests not subject to avoidance, recharacterization,
recovery, subordination, attack, offset, counterclaims, defense or claim (as such term is
defined in the Bankruptcy Code) of any kind, and (iii) the First Lien Prepetition Debt and
the First Lien Prepetition Security Interests shall not be subject to any other or further
challenge by any party in interest seeking to exercise the rights of the Debtors estates,
including, without limitation, any successor thereto (including, without limitation, any
chapter 7 or chapter 11 trustee appointed or elected for any of the Debtors) shall not be
subject to any other or further challenge by any party in interest seeking to exercise the
rights of the Debtors estates.
(c) Nothing in this Interim Order vests or confers on any person (as defined in
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limitation, Lender Claims with respect to the First Lien Prepetition Loan Documents or
the First Lien Prepetition Debt.
22. Priorities Among the Prepetition Secured Parties. Notwithstanding anything tothe contrary herein or in any other order of this Court, in determining the relative priorities and
rights of the Prepetition Secured Parties (including, without limitation, the relative priorities and
rights of the Prepetition Secured Parties with respect to the adequate protection granted
hereunder), such relative priorities and rights shall continue to be governed by the Prepetition
Loan Documents..
23. Collateral Agent. To the extent that any Prepetition Agent is the secured partyunder any account control agreements, listed as loss payee under the Debtors insurance policies
or is the secured party under any Prepetition Loan Document, the DIP Agent is also deemed to
be the secured party under such account control agreements, loss payee under the Debtors
insurance policies and the secured party under each such Prepetition Loan Document, shall have
all rights and powers attendant to that position (including, without limitation, rights of
enforcement) and shall act in that capacity and distribute any proceeds recovered or received
first, for the benefit of the DIP Lenders in accordance with the DIP Agreement and second,
subsequent to indefeasible payment in full in cash of all DIP Obligations, for the benefit of the
Prepetition Secured Parties. Each Prepetition Agent shall serve as agent for the DIP Agent for
purposes of perfecting their respective security interests and liens on all DIP Collateral that is of
a type such that perfection of a security interest therein may be accomplished only by possession
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24. Order Governs. In the event of any inconsistency between the provisions of (x)this Interim Order and (y) the DIP Documents or the Prepetition Loan Documents, the provisions
of this Interim Order shall govern.
25. Binding Effect; Successors and Assigns. The DIP Documents and the provisionsof this Interim Order, including all findings herein, shall be binding upon all parties in interest in
these Cases, including, without limitation, the DIP Agent, the DIP Lenders, the Prepetition
Agents and the other Prepetition Secured Parties, the Creditors Committee, and the Debtors and
their respective successors and assigns (including any chapter 7 or chapter 11 trustee hereinafter
appointed or elected for the estate of any of the Debtors, an examiner appointed pursuant to
section 1104 of the Bankruptcy Code or any other fiduciary appointed as a legal representative of
any of the Debtors or with respect to the property of the estate of any of the Debtors) and shall
inure to the benefit of the DIP Agent, the DIP Lenders, the First Lien Prepetition Agent and the
other First Lien Prepetition Secured Parties and the Debtors and their respective successors and
assigns, provided, however, that the DIP Agent, the DIP Lenders, the First Lien Prepetition
Agent and the other First Lien Prepetition Secured Parties shall have no obligation to permit the
use of Cash Collateral or to extend any financing to any chapter 7 trustee or similar responsible
person appointed for the estates of the Debtors. In determining to make any loan under the DIP
Agreement, to permit the use of Cash Collateral or in exercising any rights or remedies as and
when permitted pursuant to this Interim Order or the DIP Documents, the DIP Agent, the DIP
Lenders, the First Lien Prepetition Agent and the other First Lien Prepetition Secured Parties
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(a) The First Lien Prepetition Agent, upon the direction of the requisite FirstLien Prepetition Secured Lenders, shall have the unqualified right (but not the obligation)
to credit bid up to the full amount of the First Lien Prepetition Debt in any sale of the
Prepetition Collateral under or pursuant to (i) section 363 of the Bankruptcy Code, (ii) a
plan of reorganization or a plan of liquidation under section 1129 of the Bankruptcy
Code, or (iii) a sale or disposition by a chapter 7 trustee for any Debtor under section 725
of the Bankruptcy Code. The Debtors, on behalf of themselves and their estates, stipulate
and agree that any sale of all or part of the Prepetition Collateral that does not include an
unqualified right to credit bid up to the full amount of the First Lien Prepetition Debt by
the First Lien Prepetition Agent, as provided for in this subparagraph, would not result in
the First Lien Prepetition Agent or the other First Lien Prepetition Secured Parties
receiving the indubitable equivalent of their claims and interests. For the avoidance of
doubt, the Second Lien Prepetition Agent and the Second Lien Prepetition Secured
Lenders shall have no right to credit bid the obligations owed under the Second Lien
Credit Agreement (Second Lien Prepetition Debt) in any sale of the Prepetition
Collateral.
(b) No Person shall have the right or power to credit bid all or part of thePrepetition Debt except as set forth above in this paragraph 26.
27. Master Proof of Claim. In order to facilitate the processing of claims, to ease theburden upon the Court and to reduce an unnecessary expense to the Debtors estates, the First
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arising under the First Lien Prepetition Loan Documents and hereunder (the Master Proof of
Claim) against each of the Debtors. Upon the filing of the Master Proof of Claim against the
Debtors, the First Lien Prepetition Agent and each other First Lien Prepetition Secured Party,
and each of their respective successors and assigns, shall be deemed to have filed a proof of
claim in the amount set forth opposite its name therein in respect of its claims against the
Debtors of any type or nature whatsoever with respect to the First Lien Prepetition Loan
Documents, and the claim of each First Lien Prepetition Secured Party (and each of their
respective successors and assigns), named in the Master Proof of Claim shall be treated as if such
entity had filed a separate proof of claim in each of these Cases. Subject to the Intercreditor
Agreement, the First Lien Prepetition Agent shall have the right (but not the duty) to file a
Master Proof of Claim on behalf of the Second Lien Prepetition Secured Parties on account of
any and all of their respective claims arising under the Second Lien Prepetition Loan Documents
and hereunder. The First Lien Prepetition Agent shall not be required to amend any Master
Proof of Claim to reflect a change in the holders of the claims set forth therein or a reallocation
among such holders of the claims asserted therein resulting from the transfer of all or any portion
of such claims. The provisions of this paragraph 27 and the Master Proof of Claim are intended
solely for the purpose of administrative convenience and shall not affect the right of each
Prepetition Secured Party (or their successors in interest) to vote separately on any plan of
reorganization proposed in these Cases. The First Lien Prepetition Agent shall not be required to
file with the Master Proofs of Claim any instruments, agreements or other documents evidencing
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28. Effectiveness. This Interim Order shall constitute findings of fact and conclusionsof law and shall take effect and be fully enforceable nunc pro tunc to the Petition Date
immediately upon entry hereof. Notwithstanding Bankruptcy Rules 4001(a)(3), 6004(h),
6006(d), 7062 or 9024 or any other Bankruptcy Rule, or Rule 62(a) of the Federal Rules of Civil
Procedure, this Interim Order shall be immediately effective and enforceable upon its entry and
there shall be no stay of execution or effectiveness of this Interim Order.
29. Exculpation. Nothing in this Interim Order, the DIP Documents, or any otherdocuments related to these transactions shall in any way be construed or interpreted to impose or
allow the imposition upon the DIP Agent or any DIP Lender any liability for any claims arising
from the prepetition or postpetition activities of the Debtors in the operation of their business, or
in connection with their restructuring efforts. So long as the DIP Agent and the DIP Lenders
comply with their obligations under the DIP Documents and their obligations, if any, under
applicable law (including the Bankruptcy Code), (a) the DIP Agent and the DIP Lenders shall
not, in any way or manner, be liable or responsible for (i) the safekeeping of the DIP Collateral,
(ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii)
any diminution in the value thereof, or (iv) any act or default of any carried, servicer, bailee,
custodian, forwarding agency or other person, and (b) all risk of loss, damage or destruction of
the DIP Collateral shall be borne by the Debtors.
30. Headings. Section headings used herein are for convenience only and are not toaffect the construction of or to be taken into consideration in interpreting this Interim Order.
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given notice of the Interim Hearing, to any party that has filed a request for notices with this
Court and to the Creditors Committee after the same has been appointed, or the Creditors
Committees counsel, if the same shall have been appointed. Any party in interest objecting to
the relief sought at the Final Hearing shall file a written objection, which shall be served upon (a)
Dechert LLP, 1095 Avenue of the Americas, New York, New York 10036, Attn: Michael J. Sage
and Shmuel Vasser, attorneys for the Debtors; (b) Willkie Farr & Gallagher LLP, 787 Seventh
Avenue, New York, New York 10019, Attn: Margot B. Schonholtz and Ana M. Alfonso,
attorneys for the First Lien Prepetition Agent and the DIP Agent, (c) Sidley Austin LLP, 787
Seventh Avenue, New York, New York 10019, Attn: James P. Seery, Jr. and Lee S. Attansio,
attorneys for the Second Lien Prepetition Agent, and (d) the United States Trustee, and shall be
filed with the Clerk of the United States Bankruptcy Court, Southern District of New York, in
each case to allow actual receipt by the foregoing no later than April 16, 2012 at 5:00 p.m.
(prevailing Eastern time). Written reply papers, if any, in further support of the Motion shall be
filed by April 19, 2012 at 12:00 noon (prevailing Eastern time) and served upon the foregoing
notice parties.
Dated: April 3, 2012New York, New York
_____/s/Martin Glenn_______
MARTIN GLENNUnited States Bankruptcy Judge
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Exhibit A
DIP Agreement
See attached.
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WF&G DRAFT4/2/12
$40,000,000
SUPERPRIORITY, SENIOR SECURED DEBTOR IN POSSESSION CREDIT
AGREEMENT
among
V2V HOLDINGS LLC,as a Borrower,
VERTRUE LLC,as a Borrower,
VELO HOLDINGS INC.,as a Guarantor,
The Several Lenders from Time to Time Parties Hereto,
and
BARCLAYS BANK P