American Signature - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• American Signature, Inc., American Signature Home Inc., American Signature USA Inc., ASI Pure Promise Insurance LLC, ASI Elston LLC, ASI - Laporte LLC, ASI Polaris LLC, ASI Thomasville LLC, and American Signature Woodbridge LLC, as Borrowers
• Each subsidiary of the Borrowers, as Guarantors

Agent / Lender(s)

• Second Avenue Capital Partners, LLC, as Administrative Agent
• The lenders party thereto from time to time, as DIP Lenders

DIP Commitments

• $50 million superpriority senior secured asset-based credit facility, which includes a roll-up of prepetition obligations comprised of:
  • Creeping Roll-Up: Upon entry of the interim order, all cash collections and proceeds of DIP collateral were used to reduce prepetition revolving loans on a dollar-for-dollar basis, resulting in a corresponding increase in DIP availability.
  • Full Roll-Up: Upon entry of the final order, all remaining outstanding Prepetition ABL Obligations are deemed exchanged and converted on a cashless basis into DIP Obligations.

Cash Collateral

• The debtors are authorized to use cash collateral in accordance with the approved budget, subject to permitted variances.
• Segregated Cash Collateral: Cash held in segregated accounts may only be used to satisfy Prepetition LOC Obligations and other Prepetition PNC Obligations until paid in full.

Fees

• The debtors are authorized to pay fees as set forth in the DIP loan documents, including unused line fees, closing fees, commitment fees, administrative agency fees, and professional fees.
• Indemnity Accounts: Upon the closing of a sale, the debtors must fund the following non-interest bearing indemnity accounts:
  • $250,000 for the benefit of the Prepetition ABL Agent
  • $250,000 for the benefit of the DIP Agent

Maturity

• The earliest to occur of:
  • The Termination Declaration Date
  • An Event of Default, including failure to comply with required milestones
  • January 8, 2026: Entry of the Final Order authorizing the DIP Facility
  • February 5, 2026: Entry of the Sale Order
  • February 6, 2026: Consummation of the Sale
  • February 6, 2026: Payment in full of all Prepetition ABL Obligations, DIP Obligations, and Prepetition PNC Obligations

Carve Out

• Pre-Trigger Notice: All unpaid professional fees and disbursements incurred by the debtors and the committee in accordance with the approved budget, plus any transaction fee owed to SSG Advisors, LLC.
• Post-Trigger Notice Cap: $500,000 for professional fees incurred after the delivery of a Carve Out Trigger Notice.
• Statutory Fees: Fees pursuant to 28 U.S.C. § 1930(a) and fees owed to the Clerk of the Court.
• Chapter 7 Trustee Fee: $50,000

Use of Proceeds

• Repay and refinance Prepetition ABL Obligations via the DIP Roll-Up Loan
• Fund working capital requirements and general corporate purposes
• Pay costs of administering the Chapter 11 cases, including professional fees and the Carve Out
• Pay court-approved prepetition liabilities
• Sale Closing Deposits: Upon the closing of a sale, the debtors shall deposit:
  • $735,000 (50% of estimated Stub Rent Claims) into a segregated account for holders of Stub Rent Claims
  • $610,000 (50% of estimated 503(b)(9) Claims) into a segregated account for holders of 503(b)(9) Claims

Credit Bid

• Prepetition Agents may credit bid some or all of their claims for their respective collateral.
• Cross-Collateralization Restriction: Absent payment in full of the respective obligations, the Prepetition ABL Secured Parties may not credit bid for Prepetition PNC Collateral, and the PNC Secured Parties may not credit bid for Prepetition ABL Collateral.

Avoidance Actions

• The DIP Agents are granted liens on all claims and causes of action, and proceeds thereof, arising under Chapter 5 and section 724(a) of the Bankruptcy Code.

Challenge Period and Budget

• Challenge Deadline: February 4, 2026, unless extended by written agreement or court order.
• Investigation Budget: The Committee may use up to $150,000 of DIP proceeds to investigate (but not prosecute) claims and liens of the Prepetition Secured Creditors.

Securities and Priorities

• Superpriority Claims: The DIP obligations constitute allowed superpriority administrative expense claims with priority over all other administrative expenses, subject to the Carve Out and Prepetition Permitted Liens.
• DIP Liens: Valid, binding, enforceable, and automatically perfected senior priming liens on all DIP Collateral, including avoidance action proceeds.
  • First and senior priority over all other interests and liens, subject only to Prepetition Permitted Liens and the Carve Out.

Adequate Protection

Prepetition ABL and Term Loan Secured Parties

• Replacement Liens: Valid and perfected replacement liens on the DIP Collateral, subordinate to the DIP Liens and Prepetition Permitted Liens.
• Payments:
  • Cash payment of interest at the Default Rate
  • Payment of reasonable and documented fees and expenses (ABL Fees and Term Fees)
• Superpriority Claims: Allowed administrative claims junior to the DIP superpriority claims and the Carve Out.

Prepetition PNC / Junior Loan Secured Parties

• Payments: Cash payment of interest at the default rate provided in the Prepetition PNC Documents.
• Reporting: Entitlement to receive financial reporting, borrowing base reports, 13-week cash flow forecasts, and periodic conference calls regarding operations and the sale process.

Waivers

• Section 506(c): Waiver of rights to surcharge the DIP or Prepetition Collateral for costs of administration.
• Section 552(b): Waiver of the "equities of the case" exception.
• Marshaling: Waiver of the equitable doctrine of marshaling regarding DIP or Prepetition Collateral.

Permitted Variance

• The debtors must comply with the Approved Budget subject to the Permitted Variances set forth in the DIP Credit Agreement.