BY Hotel SPE-3 LLC, et al. - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• By Hotel SPE-3 LLC; 1101 Wabash Development Mezz, LLC; Wabash 11th Mezz LLC; Pacific Tai Mezz LLC; 1101 Wabash Development SPE LLC; Wabash 11th LLC; 1101 Wabash Development LLC; Pacific Tai, LLC; and SB Yen's Management Group, Inc., as Borrowers

Agent / Lender(s)

• SBY DeKalb Inn, LTD, an Illinois company, and any other lender that may join in the financing, as DIP Lenders

DIP Commitments

• $1 million single-draw, junior secured postpetition term loan facility
  • Available upon entry of the interim order
  • Subject to partial disgorgement based on failure to meet certain milestones

Interest Rate

• 10% per annum, simple fixed interest

Fees

• No prepaid points or prepayment fees
• Customary indemnities and all reasonable, documented out-of-pocket fees and expenses of the DIP Lender as allowed by the Bankruptcy Court

Maturity

• The debtors shall make monthly payments of $50,000 on account of the DIP obligations, with the unpaid balance due on the maturity date
• The earliest to occur of:
  • May 31, 2027
  • The effective date of a confirmed chapter 11 plan for any debtor
  • Consummation of a sale of substantially all assets of any debtor
  • Conversion or dismissal of any chapter 11 case
  • An event of default

Carve Out

• The DIP orders shall not include a carve-out in favor of the DIP Lender

Equity Conversion

• The debtors reserve the right, but not the obligation, to seek to convert any remaining debt under the DIP facility to equity upon the debtors' emergence from chapter 11, subject to Bankruptcy Court approval and the chapter 11 plan process

Use of Proceeds

• Reasonable and necessary operating expenses incurred in the ordinary course of business
• Maintenance and preservation of the hotel properties
• Payroll and related tax obligations
• Property taxes and insurance premiums
• Costs of administration of the chapter 11 cases, including reasonable professional fees and expenses as approved by the Bankruptcy Court

Avoidance Actions

• No lien or security interest is granted on claims and causes of action under sections 544, 545, 547, 548, 549, and 550 of the Bankruptcy Code or the proceeds thereof except as expressly provided in the DIP orders

Milestones and Disgorgement

• The debtors shall achieve the following milestones:
  • Entry of the final DIP order by May 5, 2026
  • Filing of a chapter 11 plan and disclosure statement within 12 months after the petition date
  • Extension of plan exclusivity on or before its expiration
  • Confirmation of a chapter 11 plan within 18 months after the petition date
• If any milestone is not met, the debtors shall disgorge a portion of the DIP facility on a per diem basis equal to $1,828.15 multiplied by the number of days calculated as the difference between (i) the number of days between the date that is 18 months from the petition date and the petition date, and (ii) the number of days elapsed between the petition date and the date that the milestone was missed (and/or rendered impossible)

Securities and Priorities

• The DIP lenders are granted valid, binding, enforceable, and perfected junior liens under section 364(c)(3) of the Bankruptcy Code on the DIP collateral, which liens are expressly subordinate to all valid, perfected, and non-avoidable liens of the senior obligations and any other permitted prior liens
• DIP collateral consists of:
  • The real properties commonly known as 1101 South Wabash Avenue, Chicago, Illinois 60605 (the Hilton Property) and 1100 South Michigan Avenue, Chicago, Illinois 60605 (the Best Western Property), including all proceeds, profits, rents, and products thereof
• The DIP liens shall be deemed automatically valid and perfected with such priority as provided in the interim order, without any further notice or act by any party that may otherwise be required under any other law

Adequate Protection

Prepetition Senior Secured Parties

• As of the petition date, the debtors were liable under the loan documents in an aggregate principal amount of not less than $146,737,500, plus additional potential prepetition interest, fees, expenses, and other amounts arising in respect of such obligations immediately prior to the petition date
• The senior obligations are secured by a mortgage on the hotel properties
• As of the petition date, the debtors were in default of the credit agreement and/or other loan documents

Prepetition Mezzanine Loan Parties

• As of the petition date, the debtors were liable under the mezzanine loan agreement in an aggregate principal amount of not less than $3,762,500, plus additional potential prepetition interest, fees, expenses, and other amounts arising in respect of such obligations immediately prior to the petition date
• The mezzanine loan agreement is not secured by the senior mortgage, and bears an interest rate of 6.375% plus LIBOR
• As of the petition date, the debtors were in default of the mezzanine loan agreement

Waivers

• The DIP orders shall not provide a waiver of section 506(c) of the Bankruptcy Code
• Nothing herein shall be deemed a waiver of section 506(c) of the Bankruptcy Code or the equitable doctrine of marshaling