scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 1 of 50

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1 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 1 of 50 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re TOISA LIMITED, et al., Debtors. 1 X X : : : : : : : : Chapter 11 Case No (SCC) Jointly Administered FINAL ORDER, UPON CONSENT OF THE DEBTORS AND THE INFORMAL COMMITTEE OF SECURED LENDERS (I) AUTHORIZING THE DEBTORS LIMITED USE OF CASH COLLATERAL, (II) GRANTING ADEQUATE PROTECTION, (III) MODIFYING THE AUTOMATIC STAY, AND (IV) GRANTING RELATED RELIEF ( Informal Committee Cash Collateral Order ) Upon consideration of the motion (the Motion ) 2 of the abovecaptioned debtors and debtors in possession (the Debtors ) for entry of a final order (this Final Order ): (a) authorizing the Debtors, pursuant to Sections 105(a), 361, 362, 363, 507 and 552 of the Bankruptcy Code, Bankruptcy Rules 2002, 4001(b), 6003, 6004 and 9014 and Rule of the Local Bankruptcy Rules for the Southern District of New York (the Local Rules ), to use Cash Collateral (as defined below), as applicable, in accordance with the terms of this Final Order; (b) providing adequate protection to the Secured Parties (as defined below) with respect to any diminution in the value of their 1 The Debtors are as follows: Trade Prosperity, Inc.; Toisa Limited; United Courage, Inc.; Trade Vision, Inc.; United Journey, Inc.; United Kalavryta, Inc.; Trade Sky, Inc.; Trade Industrial Development Corporation; United Honor, Inc.; Trade Will, Inc.; United Leadership Inc.; United Seas, Inc.; United Dynamic, Inc.; United Emblem, Inc.; United Ideal Inc.; Trade Unity, Inc.; Trade Quest, Inc.; Trade Spirit, Inc.; Trade Resource, Inc.; United Ambassador, Inc.; Edgewater Offshore Shipping, Ltd.; United Banner, Inc.; Toisa Horizon, Inc.; and Trade and Transport Inc. 2 Capitalized terms used but not defined in this Final Order shall have the meaning ascribed to them in the Motion.

2 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 2 of 50 respective interests in the Prepetition Collateral (as defined below) pledged by certain of the Debtors; and (c) modifying the automatic stay imposed by Section 362 of the Bankruptcy Code to the extent necessary to implement and effectuate the terms and provisions of this Final Order; all as more fully set forth in the Motion; and upon consideration of the Motion and First Day Declaration; and the Interim Order Pursuant to Debtors Motion for Entry of Interim and Final Orders, Upon Consent of the Debtors and the Informal Committee of Secured Lenders (I) Authorizing the Debtors Limited Use of Cash Collateral, (II) Granting Adequate Protection, (III) Modifying the Automatic Stay, (IV) Scheduling a Final Hearing and (V) Granting Related Relief [Docket No. 137] having been entered on May 4, 2017 (the First Interim Order ); and the Second Interim Order, Upon Consent of the Debtors and the Informal Committee of Secured Lenders (I) Authorizing the Debtors Limited Use of Cash Collateral, (II) Granting Adequate Protection, (III) Modifying the Automatic Stay, (IV) Scheduling a Final Hearing and (V) Granting Related Relief [Docket No. 173] having been entered on May 22, 2017 (the Second Interim Order ); and due and proper notice of the Motion having been given, as set forth in the Motion; and the Court having reviewed the Motion, the materials submitted in support of the Motion, the arguments of counsel and upon the record, and following completion of the Initial Hearing (as defined below); 2

3 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 3 of 50 THE COURT HEREBY FINDS: 3 A. Petition Date. On January 29, 2017 (the Petition Date ), each of the Debtors filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code ) commencing chapter 11 cases (collectively, the Chapter 11 Cases ) in the United States Bankruptcy Court for the Southern District of New York (this Court ). The Debtors have continued in the management and operation of their businesses and properties as debtors in possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code. On May 18, 2017, an Official Committee of Unsecured Creditors (the Committee ) was appointed by the Office of the United States Trustee (the U.S. Trustee ) in these Chapter 11 Cases [Docket No. 161]. B. Jurisdiction; Core Proceeding. This Court has jurisdiction over this matter and the Motion pursuant to 28 U.S.C. 157(b) and Consideration of the Motion constitutes a core proceeding as defined in 28 U.S.C. 157(b)(2). Venue is proper before this Court pursuant to 28 U.S.C and C. Stipulations of the Debtors. Without prejudice to the rights of the Committee as set forth herein and any other party (but subject to the limitations thereon described in paragraph 10 below), the Debtors acknowledge, admit, stipulate and agree (paragraphs C.I through C.VI collectively, the Stipulations ) that: 3 Findings of fact shall be construed as conclusions of law and conclusions of law shall be construed as findings of fact when appropriate. See Fed. R. Bankr. P

4 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 4 of 50 I. Prepetition Facilities. The Debtors are party to the debt instruments (each, a Prepetition Facility and, collectively, the Prepetition Facilities ) with certain administrative agents (collectively, the Agents ) and lenders identified on Exhibit 1 to this Final Order (collectively, the Lenders and, together with the Agents, the Secured Parties ), and the Debtors obligations under the Prepetition Facilities (the Prepetition Obligations ) are secured by assets (the Prepetition Collateral ) of certain Debtors, as further provided in Exhibit 1. II. Operating Vessels. As set forth on Exhibit 1, vessels that (i) are generating revenue or (ii) serve as collateral on a Prepetition Facility pursuant to which the respective Secured Parties are otherwise oversecured as of the Petition Date are referred to as Operating Vessels, 4 the Debtor counterparty to the applicable Prepetition Facility 5 is referred to as the Operating Vessel Borrower, the Secured Party counterparty to the applicable Prepetition Facility is referred to as the Operating Vessel Secured Party, each Operating Vessel Borrower s obligations under the applicable Prepetition Facility are referred to as Operating Vessel Prepetition Obligations, the collateral securing the Operating Vessel Prepetition Obligations is referred to as Operating Vessel Prepetition Collateral, the liens against the Operating 4 For the avoidance of any doubt, any Vessel that may not be generating revenue at the time of entry of this Final Order but that thereafter begins generating revenue during the pendency of these Chapter 11 Cases shall at such time automatically be deemed an Operating Vessel for all purposes hereunder. The Debtors shall file a modified Exhibit 1 reflecting such change within (5) five Business Days from the date the Vessel begins generating revenue to reflect the transition of any such Vessel from a Non Operating Vessel to an Operating Vessel. 5 The documents that evidence the Operating Vessel Borrowers and Operating Vessel Secured Parties rights and obligations under the application Prepetition Facilities are referred to as Operating Vessel Facility Documents. 4

5 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 5 of 50 Vessel Prepetition Collateral are referred to as the Operating Vessel Prepetition Liens, all earnings of each Operating Vessel Borrower are referred to as Operating Vessel Borrower Earnings and the bank accounts for the Operating Vessel Borrowers are referred to as Operating Vessel Borrower Accounts. III. NonOperating Vessels. As set forth on Exhibit 1, 6 vessels that (i) are not generating revenue and are currently in cold layup and (ii) serve as collateral on a Prepetition Facility pursuant to which the respective Secured Parties are not otherwise oversecured as of the Petition Date are referred to as NonOperating Vessels, 7 the Debtor counterparty to the applicable Prepetition Facility 8 is referred to as the Non Operating Vessel Borrower, 9 the Secured Party counterparty to the applicable Prepetition Facility is referred to as the NonOperating Vessel Secured Party, each 6 For the avoidance of doubt, the characterization of any Vessel as an Operating Vessel or Non Operating Vessel pursuant to this Final Order shall not constitute an admission, statement against interest or representation by any party that such Vessel constitutes an Operating Vessel or Non Operating Vessel, as applicable, for any other purpose, and shall not constitute an admission as to the value of the collateral. 7 The Operating Vessels and NonOperating Vessels shall be collectively referred to as the Vessels. For the avoidance of doubt, the Cexim/Citi Newbuild Tanker Credit Facility shall be treated as a NonOperating Vessel facility for purposes of this Final Order; provided, however, the lenders under the Cexim/Citi Newbuild Tanker Credit Facility and the Debtors, in consultation with the Committee, are in continuing discussions with respect to changing the treatment of such facility so that it is an Operating Vessel facility and the lenders under the Cexim/Citi Newbuild Tanker Credit Facility reserve all of their rights, claims and interests. 8 The documents that evidence the NonOperating Vessel Borrowers and NonOperating Vessel Secured Parties rights and obligations under the applicable Prepetition Facilities are referred to as NonOperating Vessel Facility Documents. The Operating Vessel Facility Documents and the Non Operating Facility Documents shall be collectively referred to as the Prepetition Facility Documents. 9 The Operating Vessel Borrowers and the NonOperating Vessel Borrowers shall be collectively referred to as the Borrowers. For the avoidance of doubt, Trade Industrial Development Corporation is not a Borrower or Guarantor (as defined below) for any purposes under this Final Order. 5

6 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 6 of 50 NonOperating Vessel Borrower s obligations under the applicable Prepetition Facility are referred to as NonOperating Vessel Prepetition Obligations, 10 the collateral securing the NonOperating Vessel Prepetition Obligations is referred to as Non Operating Vessel Prepetition Collateral, 11 the liens against the NonOperating Vessel Prepetition Collateral are referred to as the NonOperating Vessel Prepetition Liens, 12 and the bank accounts for the NonOperating Vessel Borrowers are referred to as Non Operating Vessel Borrower Accounts On notice to the Secured Parties, and the Committee, Exhibit 1 shall be amended from time to time as needed to reflect changes in vessel status that warrant a change in the relevant borrower classification provided that, in the event Exhibit 1 is so amended, the revised Exhibit 1 shall be filed with the Bankruptcy Court within five (5) business days of the change in vessel status requiring such amendment; provided, however, if the Committee or the applicable Secured Party disputes the proposed change in borrower classification, then such change in classification may only be effectuated upon a hearing and further order of the Court. 10 The Operating Vessel Prepetition Obligations and the NonOperating Vessel Prepetition Obligations are collectively referred to herein as Prepetition Obligations. 11 The Operating Vessel Prepetition Collateral and NonOperating Vessel Prepetition Collateral are collectively referred to herein as Prepetition Collateral. 12 The Operating Vessel Prepetition Liens and the NonOperating Vessel Prepetition Liens shall be collectively referred to as the Prepetition Liens. 13 The Operating Vessel Borrower Accounts and the NonOperating Vessel Borrower Accounts shall be collectively referred to as Vessel Borrower Accounts. 14 For the avoidance of any doubt, this Final Order is only with respect to Vessel Borrower Accounts that are either currently in existence or to be opened pursuant hereto. Reserve accounts are not subject to the terms hereof. 6

7 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 7 of 50 IV. Cash Collateral. All proceeds in the Operating Vessel Borrower Accounts, all prepetition Operating Vessel Borrower Earnings and all postpetition Operating Vessel Borrower Earnings (for which the Debtors shall be required to provide an accounting and reconciliation in accordance with paragraph 11 hereof), as well as all insurances and requisition compensation for the Operating Vessels shall constitute cash collateral within the meaning of Section 363(a) of the Bankruptcy Code (the Cash Collateral ); provided, however, that the Operating Vessel Secured Parties, the Committee s and the Debtors rights are reserved as to the characterization of the funds, and any interests therein, held at the Debtors nondebtor affiliate managing agents, Marine Management Bulk Services Inc. ( MMBS ), Marine Management Services M.C. ( MMS ), and Sealion Shipping Limited ( Sealion and, together with MMBS and MMS, the Managing Agents ), as of the Petition Date. All proceeds in the Non Operating Vessel Borrower Accounts, all prepetition earnings from NonOperating Vessels ( the NonOperating Vessel Borrower Earnings and together with the Operating Vessel Borrower Earnings, the Vessel Earnings ) (for which the Debtors shall be required to provide an accounting and reconciliation in accordance with paragraph 11 hereof), and all insurances and requisition compensation for the Non Operating Vessels shall constitute Cash Collateral; provided further, however, the NonOperating Vessel Secured Parties, the Committee s and the Debtors rights are reserved as to the characterization of the funds, and any interests therein, held at the Managing Agents as of the Petition Date; and provided further, however, and subject, for the avoidance of doubt, to the Committee Investigation Period in Paragraph 10, pre 7

8 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 8 of 50 petition Vessel Earnings shall only constitute Cash Collateral to the extent that the Operating Vessel Secured Parties or the NonOperating Vessel Secured Parties, as the case may be, had a valid, perfected and enforceable lien on or security interest in such prepetition Vessel Earnings as of the Petition Date. V. Validity of Prepetition Obligations. The Prepetition Obligations constitute legal, valid, binding, enforceable and nonavoidable obligations of the respective Borrowers under the Prepetition Facility Documents and are hereby deemed to be allowed claims of the respective Secured Parties against the applicable Borrowers and the Debtors estates for all purposes, and no offsets, recoupments, challenges, objections, defenses, claims or counterclaims of any kind or nature to any of the Prepetition Obligations exist, and no portion of the Prepetition Obligations is subject to any challenge or defense of any kind or nature including, without limitation, avoidance, disallowance, disgorgement, recharacterization or subordination (whether equitable or otherwise pursuant to the Bankruptcy Code or applicable nonbankruptcy law). VI. Validity of Prepetition Liens. The Prepetition Liens constitute legal, valid, binding, properly perfected and enforceable first priority liens on and security interests in the Prepetition Collateral (including Cash Collateral) that are not subject to avoidance or subordination pursuant to the Bankruptcy Code or applicable nonbankruptcy law. D. Releases. Without prejudice to the rights of any other party (but subject to the limitations thereon described herein in Paragraph 10), each of the Debtors and the Debtors estates, on its own behalf and on behalf of its past, present and future predecessors, successors, heirs, subsidiaries, and assigns, hereby, to the maximum 8

9 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 9 of 50 extent permitted by applicable law, unconditionally, irrevocably and fully, forever waives and releases the Secured Parties and their respective former, current, or future officers, employees, directors, agents, representatives, owners, members, partners, financial advisors, legal advisors, shareholders, managers, consultants, accountants, attorneys, affiliates, and predecessors in interest of any and all Claims (as defined in section 101(5) of the Bankruptcy Code), counterclaims, causes of action, defenses or setoff rights that exist on the date hereof relating to any Cash Collateral, the Operating Vessel Prepetition Collateral, the NonOperating Prepetition Collateral, the relevant Secured Parties Prepetition Facility Documents or the transactions contemplated under such documents, whether known, unknown, asserted, unasserted, suspected, unsuspected, accrued, unaccrued, fixed, contingent, pending or threatened, arising at law or in equity, including, without limitation, any socalled lender liability, 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, any and all claims and causes of action regarding the validity, priority, perfection or avoidability of a Secured Party s liens or claims and any and all claims and causes of action in connection with prepetition enforcement actions taken by Secured Parties. Subject to paragraph 10 hereof, the Debtors acknowledgements, stipulations, and releases shall be binding on the Debtors and their respective representatives, successors and assigns, and, on each of the Debtors estates, all creditors thereof and each of their respective representatives, successors and assigns, including, without limitation, any trustee or other 9

10 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 10 of 50 representative appointed in these Chapter 11 Cases, whether any such trustee or representative is appointed under chapter 7 or chapter 11 of the Bankruptcy Code. E. Cause Shown. I. Good cause has been shown for the entry of this Final Order. The Operating Vessel Borrowers have a need to use Cash Collateral to pay ongoing operating and maintenance expenses, and to allow the Operating Vessel Borrowers to continue to operate the Operating Vessels and thereby preserve their value for the Debtors. The ongoing costs to maintain and operate the Operating Vessels include, without limitation, voyage and vessel operating expenses such as fuel (bunkers), insurance, port fees, crew and repairs (collectively, the Vessel Operations Expenses ), capital improvements, (the Operating Vessel Capital Expenditures ), drydocking and related repair expenses ( Operating Vessel Drydocking Expenses ), and drydocking reserves (the Operating Vessel Drydocking Reserve Amounts and, together with the Vessel Operations Expenses, the Operating Vessel Capital Expenditures, and the Operating Vessel Drydocking Expenses, the Operating Vessel Expenses ). Without payment of these costs and expenses, the Operating Vessels and, by extension, the Operating Vessel Borrowers and their estates will suffer immediate and irreparable loss of value. II. The NonOperating Vessel Borrowers have a need to use Cash Collateral to continue to pay the costs and expenses of maintaining the NonOperating Vessels in cold layup, for dry docking and special survey expenses, or for the reactivation of NonOperating Vessels following layup (the NonOperating Vessel Expenses and 10

11 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 11 of 50 together with Operating Vessel Expenses, the Vessel Expenses ) to preserve the value of the NonOperating Vessel Borrowers and their estates. III. These expenditures are necessary and appropriate to avoid irreparable harm to the Debtors estates. The expenses incurred in operating the Operating Vessels are paid in the ordinary course of business by a Toisa nondebtor affiliate (MMS, MMBS or Sealion, as applicable) on behalf of the Operating Vessel Borrowers. NonOperating Vessel Expenses are paid in the ordinary course of business by Toisa nondebtor affiliate, Sealion, on behalf of the NonOperating Vessel Borrowers. As vesselowning entities, they rely on the technical and commercial services of the Managing Agents to procure goods and services, crew the vessels, and manage relationships with their customers. IV. For each of the Operating Vessel Borrowers, the only means of revenue generation is through the continued operation of the Operating Vessels, which also will result in the continued generation of new Cash Collateral. Permitting the Operating Vessel Borrowers to pay operating and maintenance expenses will minimize disruption to the Operating Vessel Borrowers businesses and operations, allow the Operating Vessel Borrowers to honor their obligations to vendors, employees and customers, and will preserve the value of the Operating Vessel Prepetition Collateral. The Non Operating Vessels are not currently generating any revenue. However, payment of NonOperating Vessel Expenses will preserve the value of NonOperating Vessel Prepetition Collateral. The use of Cash Collateral will, therefore, help preserve and maintain the going concern value of the Debtors and their respective estates, and will 11

12 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 12 of 50 enhance the prospects for a successful reorganization of the Debtors under chapter 11 of the Bankruptcy Code. F. Adequate Protection. The Secured Parties are entitled, pursuant to Sections 361, 362(d) and 363 of the Bankruptcy Code, to adequate protection for diminution in value of their interests in the respective Prepetition Collateral, as applicable, from and after the Petition Date arising from (i) the use of Cash Collateral, (ii) the imposition of the automatic stay pursuant to Section 362(a) of the Bankruptcy Code (the Automatic Stay ) and (iii) the use, sale or lease of the Prepetition Collateral under Section 363 of the Bankruptcy Code (collectively, the Adequate Protection Obligations ). 15 After good faith, arm slength negotiations, the Secured Parties have consented to the use of their Cash Collateral and Prepetition Collateral during the term of this Final Order solely in accordance with the terms, conditions and limitations set forth in this Final Order, including, without limitation, the adequate protection described herein. G. Good Faith. Pursuant to Bankruptcy Code Sections 105, 361 and 363, the Secured Parties and the Debtors are hereby found to have acted in good faith in connection with the negotiation and entry of this Final Order, and the Secured Parties are entitled to the protection provided under Bankruptcy Code Section 363(m). H. Notice. Notice of the Final Hearing, defined below, and the relief requested in the Motion has been provided by the Debtors to certain parties in interest, 15 The definition of Adequate Protection Obligations shall be subject to, and not exceed that which is protected pursuant to applicable law and the Bankruptcy Code, including but not limited to, section 361 of the Bankruptcy Code. 12

13 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 13 of 50 including: (a) the U.S. Trustee; (b) the Debtors prepetition secured lenders; (c) the Committee; (d) the Internal Revenue Service; (e) the United States Department of Justice; and (f) any such other party entitled to notice pursuant to Local Rule 90131(b). Under the circumstances, such notice of the Motion, the relief requested therein and the hearing on the Motion complies with Bankruptcy Rule 4001(b) and (d) and the Local Rules and constitutes appropriate, due and sufficient notice. No other or further notice of the relief granted herein is necessary or required. I. Fair and Reasonable. Based on the Motion, the materials submitted in support of the Motion, including without limitation the First Day Declaration, and the record presented at the hearing held on May 3, 2017 (the Initial Hearing ) and June 23, 2017 (the Final Hearing ), the terms of the use of Cash Collateral by the Debtors, including the adequate protection granted herein in respect of the Adequate Protection Obligations, are fair and reasonable, and reflect the Debtors prudent exercise of their business judgment consistent with their fiduciary duties. J. Immediate Entry of Final Order. The Debtors have requested immediate entry of this Final Order pursuant to Bankruptcy Rule 4001(b)(2). The Court concludes that entry of this Final Order is in the best interest of the Debtors estates and all creditors and is necessary to avoid immediate and irreparable harm to the Debtors and their estates. Based upon the foregoing findings and conclusions, and upon the record made before this Court at the Initial Hearing and Final Hearing, and good and sufficient cause appearing therefor; 13

14 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 14 of 50 IT IS HEREBY ORDERED that: 1. Disposition. The Motion is granted on a final basis to the extent set forth herein. Any objections to the Motion, to the extent not withdrawn, are hereby denied and overruled. 2. Effect. As of the date of entry of this Final Order by the Court, the Debtors shall have interim authorization to use Cash Collateral and the Prepetition Collateral, and to provide adequate protection to the Secured Parties in respect thereof, solely on the terms and subject to the conditions set forth herein, nunc pro tunc to the Petition Date. 3. Use of Cash Collateral. a. The Debtors shall not use any Secured Party s Cash Collateral except (i) upon the terms and conditions set forth in this Final Order, (ii) upon the applicable Secured Party s prior written consent (which consent may be provided or withheld in each Secured Party s sole discretion) or (iii) as otherwise approved by this Court. b. The Debtors are hereby authorized to use Cash Collateral, subject to the terms and conditions of this Final Order, consistent with and for the purposes set forth in the Budget (as defined below) for each Vessel to fund or be reimbursed for 16 among other items, as applicable, the Operating Vessel Expenses (for each applicable Operating 16 Any funding or reimbursement requests under the applicable Budget may be made by the Managing Agents on behalf of the applicable Borrower to which the Secured Parties will reasonably respond. In the event of any dispute regarding any funding or reimbursement requests under the applicable Budget, the applicable Borrower shall consult in good faith with the applicable Secured Party to resolve such dispute, with notice of such dispute to the Committee; provided that if the applicable Borrower and Secured Party are unable to resolve such dispute, either party may request that the Court resolve such dispute on shortened notice. 14

15 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 15 of 50 Vessel) and NonOperating Vessel Expenses, and to make the Adequate Protection Payments (as defined below) as set forth in the applicable Budget for each Vessel. c. The budgets to be attached as Exhibits to the Final Order 17 shall be on a per Vessel and per Prepetition Facility basis (as such budget may be amended, extended, supplemented, or otherwise modified from time to time by the Debtors, as applicable, in each case on prior notice with a copy of the proposed budget to the Committee and with the prior written consent of the applicable Secured Party (which consent may be provided or withheld in each Secured Party s sole discretion) (each a Budget )). In the event of any dispute regarding the substance of any Budget to be approved by the applicable Secured Party, the applicable Borrower shall consult in good faith with the applicable Secured Party and the Committee to resolve such dispute; provided that if the applicable Borrower and Secured Party are unable to resolve such dispute, a party may request that the Court resolve such dispute on shortened notice; provided, further, that during the pendency of any such dispute, the applicable Borrower shall comply with the applicable Budget then in effect. A Borrower shall not, without the prior written consent of the applicable Secured Party, use Cash Collateral in an amount in excess of the aggregate amount budgeted for Total Disbursements ; 18 provided that the Borrower shall be permitted to expend up to 105% 17 The Budgets to be attached as Exhibits to the Final Order contain a line item for Total Management Fees to be paid to Sealion or MMS, as applicable, which fees shall only be payable in respect of the initial 13week Budget under this Final Order. All parties reserve all rights with respect to the payment of any management fees. 18 For the avoidance of doubt, and notwithstanding Paragraph 8(a)(iii) of this Final Order, the following are not included in Total Disbursements : (i) Informal Committee Expense Reimbursements 15

16 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 16 of 50 of the Total Disbursements set forth in the Budget during any monthly or fourweek period, as the case may be (a Permitted Deviation ). Notwithstanding the foregoing, the Debtors shall not be permitted to use Cash Collateral to pay Total Management Fees in excess of the amount budgeted for Total Management Fees pursuant to the applicable Budget then in effect Reporting. The applicable Borrowers shall deliver to the Committee and the applicable Secured Party, on a per Vessel and per Prepetition Facility basis, on or before the tenth (10 th ) day after the end of each month (unless such day is not a business day, in which case the required delivery date shall be the next succeeding business day), (i) an updated 13week forecast of cash receipts and expenditures in respect of such Borrower s applicable Vessels in form and lineitem detail consistent with prior Budgets (on a per Vessel basis) (each, a Proposed Budget ), which Proposed Budget, upon written approval by the applicable Secured Party, which approval may be provided or withheld in each Secured Party s sole discretion, shall become the Budget effective as of the first day of the following calendar month, (ii) a report detailing Vessel Expenses incurred during the prior month in respect of such Borrower s applicable Vessels, (iii) a report detailing the aggregate total of Vessel Earnings received related to each of the Secured Parties Vessels, as applicable, during such month and on a (as defined below), (ii) Individual Creditor Expense Reimbursements (as defined below), and (iii) the allowed and unpaid postpetition fees and expenses of Committee professionals Sheppard Mullin Richter & Hampton LLP and Klestadt Winters Jureller Southard & Stevens, LLP that are actually incurred and invoiced and payable under sections 330 and 331 of the Bankruptcy Code. 19 For the avoidance of doubt, payment of amounts to affiliates (including management fees) under the Budget does not constitute a waiver of any rights or claims or acknowledgment of any kind in respect of such payments by any party. 16

17 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 17 of 50 cumulative basis (the Proceeds ), (iv) a report reflecting any reserves and any amounts deposited in and utilized from any reserve accounts for any Vessel in layup, dry docking or similar status, (v) a linebyline variance report of the actual Vessel Expenses against the projected Vessel Expenses for such month and of the actual Proceeds against the projected Proceeds for such month, (vi) a report on the status of, and any material developments relating to, any employment relating to the Vessels, and (vii) such other reports and information as the Secured Party or the Committee may reasonably request from the Debtors from time to time, on reasonable notice to the Debtors, the Secured Parties and/or the Committee (as applicable). 5. Access a. The Debtors shall make themselves available in New York, New York, London, England or Athens, Greece during normal business hours and with reasonable advance notice to discuss the details of the reports provided in accordance with paragraph 4 herein with the Committee and any Secured Party that so requests. b. The Debtors shall provide advance notice to the Committee and any applicable Secured Party within a reasonable time prior to the drydocking of any Operating Vessel, the inspection of any Vessel by the relevant classification society, and the placing of any Vessel in hot or coldlayup and shall provide Secured Parties reasonable access to such Vessel during such drydocking at the applicable Secured Party s expense. Nothing in this provision modifies any Secured Party s rights with respect to the Borrowers obligation to pay for these expenses as provided for by the terms and conditions of the applicable Operating Vessel Facility Documents. The 17

18 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 18 of 50 Secured Parties reserve the right to assert a claim or file a motion seeking payment of any such expense incurred by the Secured Party, and the Debtors and/or the Committee reserve the right to object to any such claim or motion. 6. Adequate Protection. As adequate protection for, and to secure payment on account of, the Adequate Protection Obligations, the Secured Parties are hereby granted the following: a. Adequate Protection Liens. Pursuant to Sections 361(2), 363(c)(2) and 363(e) of the Bankruptcy Code, effective as of and continuing from the Petition Date, the Secured Parties shall be granted valid, binding, continuing, enforceable and fully perfected first priority senior priming nonavoidable security interests in, and liens (the Adequate Protection Liens ) (all property described in this paragraph 6(a) being collectively referred to as the Collateral ) on each Secured Party s Prepetition Collateral (including all rents, products, revenues and proceeds thereof) and all other of the applicable Borrower s now owned and hereafter acquired property and assets, real or personal, tangible or intangible, wherever located and by whomever held, including (in each case solely against the applicable Secured Party s Borrower and its Vessel(s)) all postpetition charters, charter revenue and earnings, insurances, requisition compensation, bank accounts and other security, deposit or retention accounts, and all proceeds, products, rents, and revenues of any and all of the foregoing, whether arising from Section 552(b) of the Bankruptcy Code or otherwise, along with any property acquired postpetition that forms part of, or is an appurtenance to, the applicable Vessel(s) for each Secured Party; provided, however, that (a) nothing herein shall be 18

19 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 19 of 50 deemed to create any lien on or otherwise encumber any property of Toisa Limited that does not relate to the specific Vessels subject to the liens of a Secured Party, and (b) the foregoing definition of Adequate Protection Liens in this paragraph 6(a) shall, in each case (i) be subject to the CarveOut (as defined below) and (ii) exclude causes of action (and proceeds thereof) (x) on account of the Debtors prepetition and postpetition commercial tort claims, and (y) arising under Bankruptcy Code Sections 544, 545, 546, 547, 548, 549, 550, and 553 or any similar state or federal law, which shall include recoveries of cash or other property after the date of the entry of the First Interim Order that was or may have been recovered by way of causes of action under such statutes or laws, regardless of whether such cash or other property is or was recovered consensually 20 as part of a payment in satisfaction or settlement of any such claim or cause of action, or by litigation of any such claim or cause of action (collectively, the Avoidance Actions ). 21 Each Adequate Protection Lien in respect of the applicable 20 For the avoidance of doubt, a cash or other contribution from an existing shareholder that constitutes new value in connection with a plan of reorganization in these chapter 11 cases shall not be deemed to have been recovered by way of an Avoidance Action. 21 For the purposes of Paragraphs 6 and 7 herein (and subject to the Committee Investigation Period), the defined term Avoidance Actions shall not include, whether prepetition or postpetition and whether held by the Debtors, any nondebtor affiliates, the Managing Agents, or deposited into the applicable Vessel Borrower Account or otherwise: any transfers of Cash Collateral, Collateral, Prepetition Collateral, or proceeds of any of the foregoing including, but not limited to, the Vessel Earnings; provided, however, that this shall not be deemed to exclude the Debtors transfers made (i) on account of, in connection with, as a result of, or in relation to an equity interest in the Debtors (unless such transfer was made from a Vessel Borrower Account or the funds transferred were otherwise subject to a Secured Party s valid lien at the time of said transfer (subject to the Committee Investigation Period)) that may otherwise be subject to a cause of action arising under Bankruptcy Code Sections 544, 545, 546, 547, 548, 549, 550, and 553 or any similar state or federal law and/or (ii) to unaffiliated vendors or other unaffiliated thirdparties that may otherwise be subject to a cause of action arising under Bankruptcy Code Sections 544, 545, 546, 547, 548, 549, 550, and 553 or any similar state or federal law. For the avoidance of any doubt, no limitations that may exist in clause (i) shall apply to clause (ii), which shall have full force and effect irrespective of clause (i). 19

20 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 20 of 50 Borrower shall be: (i) a fully perfected first priority replacement lien on the applicable Borrower s prepetition and postpetition property relating to applicable Vessel(s) to the same extent, priority and enforceability held by the applicable Secured Party as of the Petition Date, including first priority liens on all proceeds, products, or profits of the applicable Secured Party s Prepetition Collateral; (ii) a fully perfected first priority lien on all of the applicable Borrower s prepetition and postpetition property, whether existing as of the Petition Date or thereafter acquired, relating to the applicable Vessel(s) that is not otherwise encumbered by a validly perfected, enforceable, nonavoidable security interest or lien; and (iii) a fully perfected second priority lien on all of the applicable Borrower s prepetition and postpetition property, whether existing as of the Petition Date or thereafter acquired, relating to the applicable Vessels, which is subject to a validly perfected lien as of the Petition Date, to the Restricted Permitted Liens (as defined below), or to a valid and unavoidable lien in existence immediately prior to the Petition Date that is perfected after the Petition Date as permitted by Bankruptcy Code Section 546(b). The Adequate Protection Liens in respect of the applicable Borrowers shall in all cases be prior and senior to all liens, encumbrances and security interests in and to such Collateral granted by operation of law or consensually by the applicable Borrower after the Petition Date except for liens, encumbrances and security interests that meet each of the following three conditions: (x) the lien, encumbrance or security interest is incidental to the conduct of the business of the applicable Borrower; (y) the lien, encumbrance or security interest arises by operation of any applicable law; and (z) pursuant to such applicable law, the lien, encumbrance or security interest ranks 20

21 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 21 of 50 prior and senior to, or pari passu with, the Adequate Protection Liens (the Restricted Permitted Liens ). The Adequate Protection Liens shall not be (i) subject to any lien that is avoided and preserved for the benefit of the applicable Borrower s estate under Bankruptcy Code Section 551 or (ii) subordinated to any other lien under Bankruptcy Code Sections 363 and 364. b. Adequate Protection Payments. Each Borrower is directed and authorized to (i) pay to the applicable Secured Party, on the last business day of each month, adequate protection payments in an amount equal to all accrued and unpaid postpetition interest, expenses, fees and costs due and payable on the applicable Prepetition Obligations under the applicable Prepetition Facility Documents, calculated based on the nondefault contract rate of interest set forth in the applicable Prepetition Facility Documents (collectively, the Adequate Protection Interest Payments ), it being understood for purposes of this clause that the default rate will accrue to the fullest extent permitted under the Bankruptcy Code, with all rights to object thereto fully preserved; provided, however, that the NonOperating Vessel Secured Parties shall only receive Adequate Protection Interest Payments from the NonOperating Vessel Borrowers for the months of February 2017, March 2017 and April 2017 unless the Non Operating Vessel Borrowers, in prior consultation with the Committee, agree in writing to continue such payments; provided, further, however, that any Adequate Protection Interest Payment received by a NonOperating Vessel Secured Party in excess of any diminution in value to the applicable NonOperating Vessel shall be credited against the secured portion of such NonOperating Vessel Secured Party s claim in the event 21

22 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 22 of 50 that, prior to October 3, 2017, there is (a) insufficient Informal Committee Participation (as defined below), or (b) a liquidation or conversion of the Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code; 22 (ii) pay, from the Debtors assets that are otherwise unencumbered, the reasonable and documented unpaid postpetition fees and expenses of the legal and financial professionals for the Informal Committee of Secured Lenders (the Informal Committee and the Informal Committee Professionals ) 23 in connection with the Debtors Chapter 11 Cases (the Informal Committee Expense Reimbursement, ); 24 provided, however, notwithstanding anything to the contrary herein, any payments to Informal Committee Professionals shall be conditioned on Informal Committee participation by at least 66.6% of the amount of total outstanding prepetition debt of members of the Informal Committee as of the date hereof, 66.6% of the amount of total outstanding Operating Vessel debt of members of the Informal Committee as of the date hereof and 66.6% of the amount of total outstanding NonOperating Vessel debt of members of the Informal Committee as of the date hereof, respectively (satisfaction of such participation thresholds shall be 22 For the avoidance of doubt, the characterization of any Vessel as a NonOperating Vessel pursuant to this Final Order shall not constitute an admission, statement against interest or representation by any party that such Vessel constitutes a NonOperating Vessel, as applicable, for any other purpose, and shall not constitute an admission as to the value of the collateral. 23 The current Informal Committee Professionals are: Cadwalader, Wickersham & Taft LLP, Watson Farley & Williams LLP (collectively, the Informal Committee Counsel ), and AMA Capital Partners LLC ( AMA ). 24 For the avoidance of doubt, the Informal Committee Expense Reimbursement shall include a monthly fee payable to AMA in the amount of $150,

23 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 23 of 50 referred to as Informal Committee Participation ); 25 and (iii) pay the reasonable and documented unpaid postpetition fees and expenses of the Operating Vessel Secured Parties individual professionals for amounts incurred on account of such Operating Vessels (the Individual Creditor Expense Reimbursement 26 and, together with the Adequate Protection Interest Payments and the Informal Committee Expense Reimbursement, the Adequate Protection Payments ). The parties reserve all of their respective rights, claims and defenses with respect to the payment of prepetition fees, costs and expenses in respect of the applicable Prepetition Facility Documents. To the extent that any Borrower has not paid any postpetition amount of interest or expense reimbursement due and owing prior to the entry of this Final Order, such Borrower(s) is authorized to make such payments upon entry of this Final Order and subject to the terms hereof. None of the fees, costs and expenses payable pursuant to this paragraph 6 shall be subject to separate approval by this Court, and no recipient of any such payment shall be required to file or serve upon any party an interim or final fee application with respect thereto. c. Objections to Fees. The U.S. Trustee, the Debtors, and the Committee, shall have seven (7) days from the date of delivery of Individual Creditor Expense 25 For the avoidance of doubt, the analysis regarding whether the 66.6% thresholds have been met shall include the outstanding prepetition debt of all Informal Committee members, whether such members are covered by this Final Order or not. Such percentage thresholds may be modified upon agreement of the Debtors and the Informal Committee. 26 For the payment of Individual Creditor Expense Reimbursements and Adequate Protection Interest Payments, upon receipt and review of the Invoiced Fees as provided hereunder or interest invoices from the Operating Vessel Secured Parties, the Debtors shall provide any necessary authorization to the Operating Vessel Secured Parties to draw funds from their respective Vessel Borrower Accounts to satisfy such amounts. 23

24 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 24 of 50 Reimbursement and Informal Committee Expense Reimbursement invoices to review the amounts invoiced to the Debtors (the Invoiced Fees ) and the Debtors shall have seven (7) days from the date of delivery of such invoices to pay the Invoiced Fees; provided that the Debtors, the Committee or U.S. Trustee may preserve their right to dispute the payment of any portion of the Invoiced Fees (the Disputed Invoiced Fees ) if, within the seven day period, (i) the applicable Borrower pays (a) in full the Invoiced Fees, including the Disputed Invoiced Fees with respect to the Operating Vessel Secured Parties and (b) with respect to the Informal Committee, the Invoiced Fees, less any Disputed Invoiced Fees; and (ii) the applicable Borrower, the Committee or the U.S. Trustee files with the Court and serves upon the applicable Secured Parties and Informal Committee Counsel a motion or other pleading, on at least ten days prior written notice to the applicable Secured Parties or Informal Committee Counsel, of any hearing on such motion or other pleading, setting forth specific objections to the Disputed Invoiced Fees. Each invoice submitted by Informal Committee Counsel and/or counsel to an Operating Vessel Secured Party on account of an Individual Creditor Expense Reimbursement to the Debtors and the Committee shall include, with respect to the period covered by such invoice: (i) a summary of the work performed by the firm s professionals; (ii) the name and hourly rate of each professional that billed time on the matter; (iii) the number of hours spent by each professional; and (iv) the total cost of the work performed by each professional. For the avoidance of doubt, the Informal Committee Professionals and the Operating Vessel Secured Parties individual professionals may (but are not required to) submit invoices on a monthly basis, and the 24

25 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 25 of 50 Debtors shall pay any such invoices within seven (7) days of receipt, subject to this paragraph (b) Claims. As adequate protection for, and to secure payment of an amount equal to, the Adequate Protection Obligations, the Borrowers and guarantors under each Secured Party s respective Prepetition Facility ( Guarantors ) grant an allowed superpriority administrative expense claim to the Secured Parties against the applicable Borrowers and Guarantors with priority over any and all other administrative expense claims against the applicable Borrowers and Guarantors now existing or hereafter arising in the Chapter 11 Cases (collectively, the 507(b) Claims ), subject only to the CarveOut, which 507(b) Claims shall have recourse to and be payable from all prepetition and postpetition property of the respective Borrowers and Guarantors including, without limitation, proceeds and property recovered in respect of Avoidance Actions but only subject to the following conditions and limitations: (i) 507(b) Claims of the Secured Parties accruing from the Petition Date through and including April 27, 2017 shall only be payable from proceeds and property recovered in respect of Avoidance Actions to the extent that all other prepetition and postpetition property of the respective Borrowers and Guarantors to which the 507(b) Claims shall have recourse as provided hereunder is insufficient to satisfy any such 507(b) Claims in the first instance, in which case any proceeds or property recovered in respect of Avoidance Actions shall be applied as necessary to satisfy any 25

26 scc Doc 246 Filed 07/18/17 Entered 07/18/17 16:26:32 Main Document Pg 26 of 50 remaining 507(b) Claims but only on a pari passu basis with general unsecured claims and not on a superpriority basis; (ii) 507(b) Claims of the Secured Parties accruing from April 28, 2017 through and including July 1, 2017 shall only be payable from proceeds and property recovered in respect of Avoidance Actions to the extent that all other prepetition and postpetition property of the respective Borrowers and Guarantors to which the 507(b) Claims shall have recourse as provided hereunder is insufficient to satisfy any such 507(b) Claims in the first instance, in which case any proceeds or property recovered in respect of Avoidance Actions shall be applied as necessary to satisfy any remaining 507(b) Claims on a superpriority basis; (iii) 507(b) Claims of the Secured Parties accruing from July 2, 2017 through and including October 3, 2017 (or the termination of this Order on a Termination Date pursuant to the terms hereof), shall only be payable from proceeds and property recovered in respect of Avoidance Actions to the extent that all other prepetition and postpetition property of the respective Borrowers and Guarantors to which the 507(b) Claims shall have recourse as provided hereunder is insufficient to satisfy any such 507(b) Claims in the first instance, in which case any proceeds or property recovered in respect of Avoidance Actions shall be applied as necessary to 26