CashCall - Chapter 11 DIP Terms

DIP Terms

Borrower / Guarantor(s)

• CashCall, Inc., as Debtor and debtor-in-possession, as Borrower
• None, as Guarantors

Lender

• Absolutely Zero Corporation, as Lender
  • The Lender is owned by J. Paul Reddam, the sole shareholder of the Debtor
  • The Debtor is not currently indebted to the Lender

DIP Commitments

• Up to $3,995,000 secured, superpriority, debtor-in-possession credit facility, consisting of a $3,995,000 revolving line of credit provided by the Lender to the Debtor:
  • $1,300,000 available upon entry of the Interim DIP Order
  • The balance available upon entry of the Final DIP Order
  • In each case consistent with the Debtor's 13-week cash flow forecast (the "Budget")
• Amounts repaid under the DIP Facility are permitted to be reborrowed

Cash Collateral

• The Debtor does not believe that any person or entity has a valid lien or security interest against the Collateral, and there are no known entities with an interest in cash collateral
• To the extent any person or entity (a "Pre-Petition Lender") holds a senior lien or security interest that is perfected as of the Petition Date, the Debtor seeks authorization to use such Pre-Petition Lender's cash collateral throughout the pendency of the case, in exchange for replacement liens senior to those of the Lender, solely to the extent of any diminution in the value of the Prepetition Collateral occurring from and after the Petition Date (the "Diminution"), which may arise from:
  • The incurrence and payment of the DIP Obligations
  • The use of Pre-Petition Collateral (including cash collateral)
  • The granting of the DIP Liens
  • The subordination of the Pre-Petition Obligations to the Carve-Out
  • Imposition of the automatic stay pursuant to section 362 of the Bankruptcy Code
• The Debtor requires the use of Cash Collateral to, among other things, maintain its ongoing business operations and pay the costs and expenses associated with the administration of the chapter 11 case

Interest Rate

• Interest will accrue and be added to the loan principal, with no interest payment obligations until maturity or termination of the DIP Facility
• All accrued sums will be payable upon the maturity or termination of the DIP Facility
• The Lender is charging an interest rate that is well below market for similar loans

Fees

• There are no origination, prepayment or other fees to be paid to the Lender
• There are no financial covenants other than compliance with the Budget

Maturity

• Maturity Date: December 31, 2026
• All unpaid principal, interest, fees, costs and expenses on the DIP Facility shall be immediately due and payable in full by the Debtor on the Termination Date, whether at maturity, upon acceleration or otherwise

Milestones

• None, other than the deadlines for entry of the Interim Order and Final Order approving the DIP Facility

Events of Default

• Entry of an Interim or Final Order in form and substance not acceptable to the Lender in its reasonable discretion
• The Chapter 11 Case is converted to a case under Chapter 7 or dismissed, or a motion requesting such relief is filed by any party
• Filing or support of a proposed plan of reorganization by the Debtor that does not provide for the indefeasible payment in full of the DIP Obligations, unless otherwise agreed in writing by the Lender in its sole discretion
• Entry of an order confirming (or the filing of any motion or pleading requesting confirmation of) a plan of reorganization that does not require the indefeasible repayment in full of the DIP Obligations as of the effective date of the plan, unless otherwise agreed in writing by the Lender in its sole discretion
• Appointment of a trustee under Section 1104 without the express written consent of the Lender, or the filing of any motion or other pleading requesting such relief which the Debtor fails to timely oppose
• Entry of an order staying or vacating the DIP Facility, the Interim Order or Final Order, without the prior written consent of the Lender, or the filing of a motion or other pleading requesting such relief which the Debtor fails to timely oppose
• Any attempt by the Debtor to obtain, or if any other party in interest obtains, an order or judgment that invalidates, reduces or otherwise impairs the Lender's claims, or subjects any of the Lender's collateral to a surcharge pursuant to Section 506(c)
• Entry of a final order granting any creditor with a claim in excess of $1,000,000 relief from the automatic stay or the right to retain or withhold from payment to the Debtor any asset or collection of assets having a value in excess of $1,000,000
• Failure to make all payments under the DIP Facility when due
• Any breach in any material respect of any covenant or obligation set forth in the DIP Facility or any Interim Order or Final Order
• The Debtor takes (or supports any other Person in taking) any action to restrict or prohibit the Lender from submitting a "credit bid" for any assets of the Debtor
• The Debtor fails to disburse any sale proceeds to the Lender, in accordance with the priority of proceeds, contemporaneously with the closing of a sale of substantially all of their assets, subject to payment of the Carve Out
• The commencement of any suit by any Person not subject to the automatic stay against the Lender that would, or seeks to, reduce, set off, or subordinate the Obligations or DIP Liens
• The Debtor is denied, or otherwise does not obtain or loses authorization to, use cash collateral as that term is used in section 363 of the Bankruptcy Code
• Any payment of, or application by the Debtor for authority to pay, any prepetition claim or other amount without the prior written consent of the Lender, other than as set forth in the Budget or as otherwise permitted under the DIP Loan Documentation [verify exact language]
• The Debtor seeks to grant, or grants, a security interest in or lien on any property of the estate (or any of the Lender's collateral) senior to or pari passu with the DIP Liens without the Lender's prior written consent [verify exact language]
• Failure by the Debtor to comply with the Budget, subject to any permitted variance [verify exact language]

Carve-Out

• Unpaid postpetition fees and expenses of the Clerk of the Court and the U.S. Trustee pursuant to 28 U.S.C. § 1930(a)
• Unpaid postpetition fees and expenses of the Clerk of the Court and the U.S. Trustee pursuant to 28 U.S.C. § 1930(a), in such amount as, with respect to the U.S. Trustee, is agreed to by the U.S. Trustee or determined by the Court
• Unpaid postpetition fees and expenses of the professionals and/or officers retained by the Debtor and by any Committee (up to a maximum of $25,000 in the case of any professionals retained by the Committee), whose retentions are approved by final orders under sections 327, 328, 363 or 1103(a), but only to the extent such fees and expenses are:
  • Incurred prior to the giving of a notice of the occurrence of the Termination Date by the DIP Lender to the Debtor and any Committee
  • Subsequently allowed by the Bankruptcy Court under sections 330, 331, or 363
  • Not otherwise paid from retainers
• Fees of the Independent Director
• Fees of the Chief Restructuring Officer
• All other administrative expenses incurred by the Debtor prior to the Termination Date
• All reasonable fees and expenses incurred by a trustee under Section 726(b) in an aggregate amount not exceeding $50,000

Use of Proceeds

• Proceeds of the DIP Facility shall be used solely for the following purposes, in each case consistent with the Budget:
  • To fund, after application of all other available cash, post-petition operating expenses and working capital needs of the Debtor, including activities required to remain in, or return to, compliance with laws in accordance with 28 U.S.C. § 1930
  • To pay fees and expenses to the DIP Lender in accordance with the term sheet
  • To fund the Carve Out Account
  • To pay Professional Fees of professionals engaged by or for the benefit of the Debtor or the DIP Lender (acknowledged to be paid from the DIP Lender's collateral, and made notwithstanding the conversion or dismissal of the bankruptcy case)
  • To pay certain other costs and expenses of administration of the Chapter 11 Case in the ordinary course of business (or outside the ordinary course, provided the DIP Lender consents in writing, with such consent not to be unreasonably withheld or delayed)

Avoidance Actions

• The DIP Lender's super-priority claim shall be payable from all claims or causes of action arising under chapter 5 of the Bankruptcy Code or any applicable state fraudulent transfer statutes (together, "Avoidance Actions") and the proceeds thereof, to the extent of any principal balance owed
• Subject to entry of a Final Order, the DIP Collateral includes all avoidance actions brought pursuant to Chapter 5 or applicable state law equivalents, together with any proceeds thereof

Other Provisions / Waivers

• Releases: No release is being granted in connection with this DIP financing
• Indemnification: None
• Cross-collateralization: None
• Provisions deeming prepetition debt to be postpetition debt (roll-up): None
• Section 506(c), 552(b) 'equities of the case,' and marshalling waivers: None (per the material-terms chart)

Challenge Period

• N/A

Securities and Priorities

• The DIP Facility will be secured by valid, enforceable and fully-perfected security interests and liens (the "DIP Liens") on the DIP Collateral, and will be entitled to a Super Priority Administrative Expense Claim
• The DIP Facility will be senior in all respects to the claims of any other person or entity, except pre-petition liens perfected as of the Petition Date, subject to the Debtor's right to subsequently challenge or avoid any such liens during the Chapter 11 Case, and subject to the carve-out
• "DIP Collateral" means all property of the estate under section 541, including all real and personal property, whether now existing or hereafter arising and wherever located, tangible and intangible, including:
  • All cash, cash equivalents, deposit and securities accounts, accounts and other receivables (including credit card receivables), chattel paper, contract rights, inventory, outstanding capital stock of any subsidiaries, hedge agreements, real estate, furniture, fixtures, equipment, goods, franchise rights, trade names, trademarks, servicemarks, copyrights, patents, license rights, intellectual property, general intangibles, rights to the payment of money (including tax refunds), supporting obligations, guarantees, letter of credit rights, commercial tort claims, causes of action, all present and future intercompany debt, and all substitutions, accessions and proceeds of the foregoing (including insurance or other proceeds)
  • Subject to entry of a Final Order, all avoidance actions under Chapter 5 (or applicable state law equivalents), together with any proceeds thereof
  • Proceeds from the Debtor's exercise of rights under sections 506(c) and 550
  • All property of the Debtor not otherwise subject to valid, perfected, enforceable and unavoidable liens on the Petition Date
  • All proceeds from the sale, assignment, or other disposition of any leased real property and the Debtor's right to select, identify, and designate which commercial leases may be assumed and assigned under section 365
• The DIP Liens shall be subject only to validly perfected, enforceable and non-avoidable liens existing as of the Petition Date (the "Prepetition Permitted Liens")
• Amounts owed to the DIP Lender (including all accrued interest, fees, costs and expenses) shall constitute, in accordance with Section 364(c)(1), DIP Superpriority Claims having priority over any and all administrative expenses of the kind specified in, among other sections, Sections 105, 326, 330, 331, 503(b), 506(c), 507(a), 507(b) and 726, other than the Prepetition Permitted Liens and Superpriority Claim Pre-Petition Lender Adequate Protection Claims, which shall be senior in priority to the DIP Superpriority Claim, and in all cases subject and subordinate to payment of the Carve Out

Adequate Protection

Prepetition Secured Parties (to the extent any exist)

• As adequate protection for the use of its cash collateral and in consideration for being primed in part by the DIP Lender's claims and liens, any Pre-Petition Lender shall receive:
  • A claim having priority over any and all expenses of the kind specified in, among other sections, Sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 726 and 1114, subject to payment of the Carve Out and subject to the super-priority administrative claims of the DIP Lender and the existing Adequate Protection claims of the Pre-Petition Lender on its pre-petition collateral
  • Replacement liens, junior and subordinate only to the Carve-Out, equal to the aggregate diminution, if any, in the value of its Pre-Petition Collateral subsequent to the Petition Date resulting from the sale, use, lease or disposition of such pre-petition collateral during the Chapter 11 Case