BFG Supply - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• Bamboo Purchaser, Inc., a Delaware corporation (the “Company”), as Borrower and borrower representative, together with the other U.S. borrowers and Canadian borrowers from time to time party to the DIP credit agreement. De Cloet Greenhouse Mfg. Ltd. executes the DIP credit agreement as a Borrower in its capacity as the Canadian Borrower.
• BFG Purchaser Parent, Inc. (“Holdings”) and each existing and future direct and indirect subsidiary of Holdings (other than any such subsidiary acting as Borrower), as Guarantors, on a joint and several basis (collectively with the Borrower, the “DIP Loan Parties”)
• The interim order does not effect a substantive consolidation of the debtors’ estates, although the debtors are jointly and severally liable for the DIP obligations
• De Cloet Greenhouse Mfg. Ltd. (the “Canadian Borrower”), in its capacity as “foreign representative,” has commenced recognition proceedings before the Ontario Superior Court of Justice (Commercial List) in Toronto under Part IV of the Companies’ Creditors Arrangement Act (Canada), seeking recognition of its chapter 11 case as a “foreign main proceeding”

Agent / Lender(s)

• ACF FinCo I LP, as Administrative Agent, Collateral Agent, Swingline Lender, and Lead Arranger (the “DIP Agent”), which also serves as Administrative Agent, Collateral Agent, and Lead Arranger under the Prepetition ABL Credit Agreement
• Each lender party to the Prepetition ABL Credit Agreement participating in the DIP facility on a pro rata basis in accordance with such lender’s share of the existing revolving credit commitments thereunder as of the petition date, as DIP Lenders. The signature pages to the DIP credit agreement are executed by ACF FinCo I LP and Sumitomo Mitsui Banking Corporation as Lenders.

DIP Commitments

• $55 million superpriority senior secured, asset-based debtor-in-possession revolving credit facility, which shall not exceed $55 million at any one time outstanding and remains subject to availability under the borrowing base:
  • $22 million available to the Borrower on an interim basis
  • Upon entry of the interim order, all cash, collections, and proceeds of DIP collateral (other than Prepetition Term Loan Priority Collateral) are applied on a dollar-for-dollar basis to reduce the Prepetition Revolving Loans, giving rise to a corresponding increase in availability under the DIP facility (the “Creeping Roll-Up”)
  • Upon entry of the final order, all remaining outstanding Prepetition Revolving Loans of the DIP Lenders are deemed exchanged and converted on a cashless basis into DIP obligations (the “Full Roll-Up”), together with cash payment of all accrued and unpaid interest, expenses, fees, and other sums constituting Prepetition ABL obligations through entry of the final order, to the extent not previously paid
  • All Banking Services Obligations and Secured Hedging Obligations under the Prepetition ABL Credit Agreement are deemed DIP obligations upon entry of the interim order
• Amounts borrowed may be repaid and reborrowed during the term of the facility. No revolving loans or other credit extensions denominated in Canadian dollars are available under the DIP credit agreement.
• The debtors state that the DIP lenders made clear in negotiations that inclusion of the DIP Roll-Up Loan was a required component of any DIP facility, and that the roll-up remains subject to challenge until the challenge deadline. The roll-up is authorized as consideration solely on account of the Prepetition ABL Lenders’ agreement to fund the DIP facility, and not as adequate protection for the Prepetition ABL obligations.
• Prepetition capital structure:
  • Prepetition ABL Facility: $43,079,675.97 in outstanding Prepetition Revolving Loans as of the petition date, plus other obligations, under a facility with aggregate revolving commitments of approximately $120 million
  • Prepetition Term Loan Facility (Ares Capital Corporation, as Administrative Agent and Collateral Agent): not less than $299,456,012.99 in aggregate outstanding principal, consisting of not less than $137,608,289.31 of Term Loans A and not less than $161,847,723.68 of Term Loans B
• The “Specified Sales Agreement” is a letter agreement dated July 28, 2026 between a joint venture comprised of SB360 Capital Partners, LLC and Tiger Capital Group, LLC and BFG Supply Co., LLC — the agency arrangement underpinning the inventory monetization workstream. A fully executed copy is a condition precedent to the initial credit extension, its assumption on an interim and then final basis is a sale milestone, and failure to comply with or consummate the Specified Sale Transaction is an event of default.
• Conditions to the initial credit extension include, among others, entry of the interim order and cash management order, delivery of the initial approved budget and a borrowing base certificate, delivery of executed engagement letters for the company advisors on terms acceptable to the DIP Agent, receipt of a fully executed copy of the Specified Sales Agreement, and payment of all fees and expenses due on the closing date

Cash Collateral

• All of the debtors’ cash, including cash in their deposit accounts, wherever located, whether as original collateral or proceeds of other prepetition collateral, constitutes cash collateral of the prepetition secured creditors. All cash on hand as of the petition date is subject to the prepetition secured creditors’ liens.
• The Prepetition ABL Secured Parties have consented to the use of cash collateral and to the subordination of the Prepetition ABL liens to the DIP liens and the carve out
• Use is permitted only in accordance with the approved budget, subject to permitted variances, and conditioned on payment and maintenance of the adequate protection described below
• During the remedies notice period, cash collateral may be used solely to fund the carve out, pay payroll (excluding any severance or bonuses), and pay U.S. Trustee fees, together with other day-to-day operational expenses critical to administration of the estates subject to the DIP Agent’s reasonable consent and, where the payment relates to Prepetition Term Loan Priority Collateral, the written consent of the Prepetition Term Loan Agent

Interest Rate

• Alternate Base Rate + 4.75% for ABR Loans and Canadian Prime Rate + 4.75% for Canadian Prime Rate Loans
  • The applicable rate for SOFR Loans and CORRA Loans is 5.75%, although no SOFR or CORRA loans will be available under the DIP credit agreement
• Default Rate Increase: 2.0%, applicable to all outstanding obligations upon and during the continuance of an event of default, payable on demand
• Accrued interest is payable in arrears on each interest payment date and upon termination of the revolving credit commitments

Fees

• Commitment Fee: 0.75% per annum on the average daily unused portion of each lender’s revolving credit commitment, payable monthly in arrears on the first business day of each month and on the date the commitments terminate; computed on a 360-day year basis
• Such other fees as set forth in the Fee Letters, comprising a Fee Letter and an Agent Fee Letter, each dated as of the closing date, between the Company and the Administrative Agent. Fees paid are not refundable under any circumstances.
• The debtors are authorized to pay principal, interest, fees, expenses, and other amounts under the DIP loan documents as they become due without further court approval, including commitment fees, exit fees, collateral management fees, and the reasonable and documented fees and disbursements of the DIP Credit Parties’ attorneys — Choate, Hall & Stewart LLP and Womble Bond Dickinson (US) LLP — and their advisers, accountants, and other consultants
  • The DIP Agent’s professionals are not required to comply with U.S. Trustee guidelines or to file fee applications with the court, other than with respect to disputed amounts
• The debtors are authorized to pay all reasonable and documented out-of-pocket costs and expenses of the DIP Credit Parties in connection with the DIP facility, including costs and expenses incurred prior to the petition date, and the DIP Agent may make advances or charges against the loan account to pay such amounts
• The DIP credit agreement provides for usual and customary expense and indemnification provisions for debtor-in-possession credit facilities of this size, type, and purpose, including reimbursement of the fees, expenses, and disbursements of Choate, Hall & Stewart LLP as counsel to the DIP Agent and the DIP Lenders, subject to customary carveouts

Maturity

• The earliest to occur of:
  • The stated maturity date of February 14, 2027 (i.e., 180 days after the petition date)
  • 14 days after entry of an order confirming a plan of reorganization for the loan parties
  • The date of consummation of a sale of all or substantially all of the loan parties’ working capital assets under section 363 of the Bankruptcy Code
  • The date the DIP Agent provides written notice of its election to terminate the revolving credit commitments and/or accelerate all secured obligations following the occurrence and during the continuance of an event of default
• The borrowers may prepay any borrowing of revolving loans in whole or in part at any time without premium or penalty, subject to prior notice
• If total revolving credit exposure exceeds the line cap, the borrowers must promptly prepay the excess, applied first to repay and permanently reduce prepetition revolving loans, second to swingline loans and protective advances, and third to the outstanding principal of the revolving loans
• On a termination declaration date, all DIP obligations become immediately due and payable and all commitments to extend credit terminate, subject to funding of the carve out. The automatic stay is modified upon expiration of the five business day period following the termination declaration date (the “Remedies Notice Period”) and funding of the carve out, after which the DIP Agent and the prepetition agents may exercise their rights and remedies. During the Remedies Notice Period the debtors and all other parties in interest may seek an emergency hearing on a remedies determination; if the debtors seek such a hearing but the court schedules it for a later date without the debtors’ request, the period is tolled. All fees and costs incurred by the debtors in connection with any remedies determination are funded solely by the carve out.

Milestones

• DIP Milestones:
  • On the petition date (i.e., August 18, 2026), the debtors shall file the DIP motion
  • On or before August 20, 2026 (i.e., two business days after the petition date), entry of the interim order
  • On or before September 22, 2026 (i.e., 35 days after the petition date), entry of the final order
• Sale Milestones:
  • On the petition date, the debtors shall file a bidding procedures motion governing the sale of all or substantially all of their assets and a motion seeking authorization to assume the Specified Sales Agreement
  • On or before August 20, 2026 (i.e., two business days after the petition date), entry of an order authorizing assumption of the Specified Sales Agreement on an interim basis
  • On or before September 17, 2026 (i.e., 21 business days after the petition date), entry of an order approving the bidding procedures and authorizing assumption of the Specified Sales Agreement on a final basis
  • On or before October 15, 2026 (i.e., 58 days after the petition date), entry of one or more sale orders
  • On or before October 22, 2026 (i.e., 65 days after the petition date), consummation of the sale(s)
• Canadian Recognition Proceedings Milestones: commencement of the Canadian recognition proceedings and entry of the Canadian DIP recognition order, each no later than 10 business days after the petition date, and entry of an amended or restated Canadian DIP recognition order recognizing the final order no later than 10 business days after entry of the final order
• The DIP Agent may extend any chapter 11 case milestone in its sole and absolute discretion for a period of not more than 10 days, or for a longer period with the consent of the required lenders

Carve Out

• Unpaid professional fees and disbursements of case professionals — including Cole Schotz P.C., as restructuring counsel, and Reflect Advisors — incurred prior to delivery of a carve out trigger notice, to the extent allowed by the court and incurred in accordance with the approved budget; plus
• Post Carve Out Trigger Notice Cap: $250,000 for case professionals retained by the debtors and $50,000 for case professionals retained by a committee; plus
• Fees payable under 28 U.S.C. § 1930(a), including U.S. Trustee and Clerk of Court fees, which are not limited to amounts set forth in the approved budget; plus
• Chapter 7 trustee fees and expenses: reasonable fees and expenses up to $50,000 incurred by a chapter 7 trustee under section 726(b) of the Bankruptcy Code
• Within three business days of delivery of a carve out trigger notice, the debtors shall fund the outstanding carve out into the Professional Fee Escrow Account, first from cash on hand and, only to the extent of any shortfall, from proceeds of the DIP facility, which funding may take the form of additional DIP loans
• A carve out trigger notice may be delivered by the DIP Agent only following the occurrence and during the continuation of an event of default
• Prior to an event of default or the termination declaration date, the debtors may borrow weekly under the DIP facility to fund the Professional Fee Escrow Account, which is held in trust solely for the benefit of the case professionals and is not subject to any other creditor’s lien or claim
• Payments of allowed professional fees made prior to the termination declaration date do not reduce the carve out; payments made on or after the termination declaration date permanently reduce the carve out on a dollar-for-dollar basis
• The DIP Agent is entitled at all times to maintain an ABL carve out reserve against the borrowing base in an amount not to exceed the carve out limit
• The DIP Credit Parties and prepetition secured creditors reserve their rights as to the allocation of proceeds used to fund the carve out as among the Prepetition ABL Priority Collateral, the Prepetition Term Loan Priority Collateral, and the DIP collateral

Use of Proceeds

• On the closing date, pay the fees, costs, and expenses incurred in connection with the DIP transactions
• On and after the closing date, in accordance with the approved budget and subject to permitted variances:
  • Repay the Prepetition ABL obligations pursuant to the Creeping Roll-Up and, subject to entry of the final order, the Full Roll-Up
  • Fund working capital requirements and general corporate purposes
  • Fund the costs, fees, and expenses of administering the chapter 11 cases and the Canadian recognition proceedings
  • Pay reasonable and documented out-of-pocket costs, fees, and expenses required by the DIP loan documents
  • Pay court-approved prepetition liabilities of the DIP loan parties
  • Fund the Professional Fee Escrow Account and obligations benefitting from the carve out
  • Fund such other costs and expenses of the debtors and their estates as the DIP Agent may approve in writing in its sole discretion
• The debtors state that access to the DIP facility and cash collateral is required to permit the orderly continuation of their businesses and to pursue three concurrent workstreams: a court-supervised going-concern sale process, an orderly monetization of inventory, receivables, and other assets, and a real estate disposition program. As of the date of the motion, the debtors have approximately $1,956,642 in cash on hand.
• No portion of the carve out, DIP collateral, or prepetition collateral, including cash collateral, may be used to investigate, initiate, or prosecute claims or causes of action against the DIP Agent, the DIP Lenders, or the prepetition secured creditors, to challenge the validity, perfection, priority, or enforceability of the DIP liens or prepetition liens, to modify the rights granted to the DIP Credit Parties or prepetition secured parties, to object to or appeal any order with respect to the DIP facility, or to hinder or delay enforcement against the DIP collateral following an event of default and expiration of any applicable remedies notice period

Credit Bid

• Upon entry of the interim order, and subject to the challenge provisions and the rights of parties in interest under section 363(k) of the Bankruptcy Code, the prepetition agents may seek to credit bid some or all of their claims for their respective priority collateral in connection with any court-authorized sale process
• A credit bid may be applied only to reduce the cash consideration with respect to those assets in which the bidding party holds a senior, perfected security interest
• Unless and until the Prepetition Term Loan obligations are paid in full, the Prepetition ABL Secured Parties may not credit bid for Prepetition Term Loan Priority Collateral; unless and until the Prepetition ABL obligations are paid in full, the Prepetition Term Loan Secured Parties may not credit bid for Prepetition ABL Priority Collateral

Avoidance Actions

• The DIP collateral includes all claims and causes of action, and the proceeds thereof, to avoid a transfer of property pursuant to section 549 of the Bankruptcy Code
• Subject to and effective upon entry of the final order, the DIP collateral also includes all other avoidance actions and any proceeds thereof, including under chapter 5 and section 724(a) of the Bankruptcy Code
• The DIP superpriority claims and the adequate protection superpriority claims are payable from and have recourse to all prepetition and postpetition property of the debtors and all proceeds thereof, including, subject to entry of the final order, avoidance proceeds

Challenge Period and Budget

• Any party in interest, other than the debtors, which have irrevocably waived any challenge, must commence a challenge no later than 75 calendar days after entry of the interim order, as such date may be extended in writing by the applicable prepetition secured creditor in its sole discretion or by the court for good cause shown
• If the cases are converted to chapter 7 or a chapter 7 or chapter 11 trustee is appointed or elected prior to expiration of the challenge deadline, such estate representative or trustee receives the full benefit of the remaining time, which, solely if not yet expired, is extended by 60 days
• The challenge deadline is tolled if a party in interest files a motion seeking standing to bring a challenge attaching one or more draft complaints, until the court decides such motion, and solely with respect to the movant and the contents of the attached complaint
• A committee, if appointed, may use up to an aggregate of $50,000 of DIP loan proceeds and DIP collateral, including cash collateral, to investigate — but not to prosecute — the claims and liens of the prepetition secured creditors and potential claims, counterclaims, causes of action, or defenses against them, prior to the challenge deadline
• Absent a timely and successfully prosecuted challenge, the debtors’ stipulations — including as to the validity, enforceability, priority, and non-avoidability of the prepetition secured obligations and prepetition liens, and the absence of estate claims against the prepetition secured creditors — become binding on all parties in interest upon expiration of the challenge deadline

Securities and Priorities

• The DIP Agent, for the benefit of the DIP Credit Parties, is granted automatically perfected security interests in and liens on all tangible and intangible prepetition and postpetition assets and real property of the DIP loan parties, whether existing on the petition date or thereafter acquired, and the proceeds, products, rents, and profits thereof (the “DIP Collateral”), including accounts, goods, inventory, equipment and fixtures, documents and instruments, letters of credit and letter-of-credit rights, securities and investment property, intellectual property, commercial tort claims, general intangibles, deposit accounts, cash and cash equivalents, real property interests, and the prepetition collateral. Subject to the carve out, the prepetition permitted liens, and the relative priorities set forth on the Lien Priority Annex, the DIP liens have the following priority:
  • First and senior priority with respect to Prepetition ABL Priority Collateral, priming the Prepetition ABL liens
  • Junior and subordinate to the Prepetition Term Loan liens with respect to Prepetition Term Loan Priority Collateral; provided that the Prepetition Term Loan liens are in all cases subject and subordinate to the carve out
  • Senior in priority to all other interests and liens with respect to unencumbered assets
• The DIP obligations are granted allowed superpriority administrative expense claims under section 364(c)(1) of the Bankruptcy Code in each of the chapter 11 cases and any successor cases, with priority over all other administrative expenses, subject only to the carve out and the relative priorities set forth on the Lien Priority Annex
• The DIP collateral excludes (i) leasehold interests in non-residential real property that prohibit or restrict the granting of liens, except as permitted under applicable non-bankruptcy law, although the proceeds of any sale or disposition of such leases are included, and (ii) security deposits held by a landlord and the debtors’ interests in prepaid rent, unless liens thereon are expressly permitted under the applicable lease, although the DIP liens extend to such amounts upon reversion to the debtors
• The interim order is sufficient and conclusive evidence of the priority, perfection, and validity of the DIP liens and adequate protection liens, effective as of the petition date, without the need for any further perfection act
• The prepetition secured parties have consented to the priming of their prepetition liens, and, pursuant to Section 5.2(a) of the intercreditor agreement, the Prepetition Term Loan Secured Parties are deemed to have consented to the DIP facility

Adequate Protection

• Adequate protection is granted to the prepetition secured creditors solely to the extent of any Diminution in Value of the prepetition collateral — defined to include diminution on account of the granting of the DIP liens, the incurrence of the DIP obligations, the subordination of the prepetition liens to the carve out, the debtors’ use of cash collateral, and any diminution arising from the imposition of the automatic stay or the debtors’ use, sale, lease, depreciation, or disposition of the prepetition collateral during the cases

Prepetition ABL Secured Parties

• Adequate protection liens on all DIP collateral securing the Prepetition ABL obligations, deemed valid, binding, non-avoidable, enforceable, and fully perfected as of the petition date, subject to the carve out, the Lien Priority Annex, and the prepetition permitted liens
• Adequate protection superpriority claims under section 507(b) of the Bankruptcy Code, with priority over all administrative expense and unsecured claims, payable from and with recourse to all prepetition and postpetition property of the debtors, including, subject to entry of the final order, avoidance proceeds
• Adequate protection payments consisting of cash payment of interest on the Prepetition ABL obligations at the default rate specified in Section 2.12(c) of the Prepetition ABL Credit Agreement, payable monthly in arrears on the first business day of each calendar month commencing with the first such date after entry of the interim order
• Payment of all reasonable and documented fees, costs, expenses, and charges of the Prepetition ABL Agent to the extent payable under the Prepetition ABL Credit Agreement. Out-of-pocket expenses incurred prior to and unpaid as of the closing date are payable on the closing date without the need to deliver a summary invoice.

Prepetition Term Loan Secured Parties

• Adequate protection liens on all DIP collateral securing the Prepetition Term Loan obligations, deemed valid, binding, non-avoidable, enforceable, and fully perfected as of the petition date, subject to the carve out, the Lien Priority Annex, and the prepetition permitted liens
• Adequate protection superpriority claims under section 507(b) of the Bankruptcy Code, with priority over all administrative expense and unsecured claims, payable from and with recourse to all prepetition and postpetition property of the debtors, including, subject to entry of the final order, avoidance proceeds
• Payment of all reasonable and documented fees, costs, expenses, and charges of the Prepetition Term Loan Agent to the extent payable under the Prepetition Term Loan Credit Agreement, payable solely from and to the extent of funds in the Term Loan Reserve until payment in full of the DIP obligations and the Prepetition ABL obligations, and thereafter without limitation
• Interest on the Prepetition Term Loan obligations continues to accrue at the applicable rate provided for in the Prepetition Term Loan documents through the chapter 11 cases
• All proceeds of Prepetition Term Loan Priority Collateral are deposited into a segregated account maintained by the debtors (the “Term Loan Reserve”), to which the prepetition liens attach with the same extent and priority as they attached to such collateral. The debtors may not use such cash collateral or make distributions from the Term Loan Reserve absent further order of the court or the prior written consent of both the Prepetition Term Loan Agent and the Prepetition ABL Agent.
• All estate-retained case professionals shall use reasonable efforts to indicate in their fee applications whether and to what extent fees or expenses were incurred in connection with preserving or disposing of Prepetition Term Loan Priority Collateral, and all parties’ rights as to the allocation of such costs are reserved
• Pamplona Equity Partners, L.P., the debtors’ principal equity investor, holds a minority position under the Prepetition Term Loan Facility

Additional Protections

• Adequate protection payments are not subject to further approval by the court or U.S. Trustee guidelines, and the prepetition agents’ professionals need not file fee applications other than with respect to disputed amounts. Invoices delivered after the closing date are subject to a 10-day objection period, following which the debtors shall promptly pay such fees and expenses in full.
• Maintenance of collateral, including payment of past due and postpetition tax obligations and assessments in accordance with the approved budget and maintenance of insurance consistent with prepetition practices
• The prepetition secured creditors’ rights under section 507(b) of the Bankruptcy Code are preserved in the event the adequate protection provided proves insufficient to compensate for any diminution in value

Waivers

• Subject to and effective upon entry of the final order:
  • Section 506(c): The debtors waive the right to surcharge the DIP Credit Parties or the DIP collateral — other than the Prepetition Term Loan Priority Collateral, which remains subject to subsequent order of the court — or the Prepetition ABL Secured Parties or the Prepetition ABL Priority Collateral
  • Section 552(b): The “equities of the case” exception shall not apply to the DIP Credit Parties or the prepetition secured creditors with respect to the proceeds, products, offspring, or profits of any prepetition collateral or DIP collateral
  • None of the DIP Credit Parties or the prepetition secured creditors shall be subject to the equitable doctrine of “marshaling” or any similar doctrine with respect to the DIP collateral or the prepetition collateral
• Effective upon entry of the interim order, and subject to the challenge rights of parties in interest, the debtors release the DIP Agent, the DIP Credit Parties, the Prepetition ABL Agent, the Prepetition Term Loan Agent, the other prepetition secured parties, and their related persons from all claims and causes of action relating to the DIP obligations, the DIP loan documents, the prepetition secured obligations, and the prepetition credit documents, including lender liability and equitable subordination claims and claims arising under chapter 5 of the Bankruptcy Code
• Other than as expressly provided in the interim order or the DIP loan documents, or with the written consent of the DIP Agent or applicable prepetition agent, it constitutes an event of default for the debtors to seek authority to, among other things, use cash collateral, obtain additional financing under sections 364(c) or 364(d), challenge the application of payments under section 506(b) or assert that the value of either prepetition priority collateral pool is less than the obligations secured thereby, propose or support a plan that does not provide for payment in full of the DIP obligations and prepetition secured obligations on the effective date, seek relief impairing the DIP Credit Parties’ rights and remedies, or challenge the validity, extent, enforceability, or priority of the DIP Agent’s postpetition liens and claims
• Until the DIP obligations are paid in full and all commitments terminated, it is an event of default for the debtors to seek or consent to any modification, stay, vacatur, or amendment of the interim order without the DIP Agent’s consent, any administrative or unsecured claim equal or superior to the DIP superpriority claims or adequate protection superpriority claims other than the carve out, any order other than the DIP orders permitting use of cash collateral, or any lien on the DIP collateral or prepetition collateral with priority equal or superior to the DIP liens, adequate protection liens, or prepetition liens

Permitted Variance

• The initial approved budget is a four-week weekly cash flow forecast, a summary copy of which is attached as Exhibit 3 to the interim order, covering the weeks ending Friday, August 21, August 28, September 4, and September 11, 2026. It projects total receipts of approximately $7.99 million over the four weeks and a total ending revolver and DIP balance rising from approximately $45.7 million to approximately $51.1 million, against beginning cash of approximately $1.96 million. (The DIP credit agreement’s definition of “Approved Budget” states that the initial approved budget “shall commence as of the week of August 30, 2026,” which does not correspond to the periods covered by the budget attached as Exhibit 3.)
• Updated budgets covering the next successive 13-week period must be delivered every two weeks, commencing with the week of August 30, 2026, on or before the fourth business day of the first week of each successive two-week period and in any event no later than Friday of such week. Each updated budget must be in form and substance satisfactory to the DIP Agent in its sole discretion; failure of the DIP Agent and the debtors to agree on a new approved budget gives rise to an event of default once the period covered by the most recent approved budget has terminated.
• Compliance is tested weekly upon delivery of a compliance certificate, due by 5:00 p.m. on Wednesday of each week, commencing with the first full calendar week following the petition date (i.e., the week ending August 22, 2026), with variance reporting on the Wednesday following the last Saturday of each completed week:
  • Receipt Variance: actual cash receipts for any line item, for each cumulative period and any cumulative four-week period, shall not be less than 85.0% of budgeted cash receipts for the first two cumulative four-week periods following the petition date, 87.5% for the third such period, and 90.0% for each such period thereafter
  • Expense Variance: actual disbursements for any line item, excluding fees, expenses, and disbursements payable to the Administrative Agent and the lenders and their respective counsel and advisors, for each cumulative period and any cumulative four-week period, shall not exceed 115.0% of budgeted disbursements for the first two cumulative four-week periods following the petition date, 112.5% for the third such period, and 110.0% for each such period thereafter
  • Borrowing Variance: total revolving credit exposure on any business day, tested at all times, shall not exceed 115.0% of the budgeted total revolving credit exposure set forth in the most recent approved budget for the week including such business day
• These covenants may be waived or modified at the borrower representative’s request solely with the prior written consent of the Administrative Agent
• In the event of a material change in the sale strategy being pursued in the chapter 11 cases, including any shift from a going-concern sale to a liquidation or vice versa, the Administrative Agent shall engage in good faith consultation with the company advisors, including Reflect Advisors, before requiring any corresponding update to the approved budget