Charter School Capital - DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• Charter School Capital, Inc., as Borrower

Agent / Lender(s)

• East West Bank, N.A., as DIP Lender

DIP Commitments

• $5 million senior secured superpriority new money term loan facility comprised of:
  • Up to $2.5 million available on an interim basis
  • The remaining balance, for an aggregate of up to $5 million, available upon entry of the final order

Cash Collateral

• The debtor seeks authority to use cash collateral.

Interest Rate

• 12% per annum, payable in kind
• Default Rate Increase: 2.0%

Fees

• Upfront Fee: 2.5% of the total DIP commitment, payable from the proceeds of the interim draw.
• Exit Fee: 5% of the total DIP commitment, payable upon repayment of the DIP loans, termination of the commitment, or acceleration.
• Extension Fee: 2% of the total DIP commitment, payable to extend the initial maturity date.

Maturity

• The earliest to occur of:
  • Aug. 6, 2025, which may be extended by 30 days upon payment of the extension fee
  • 28 days after entry of the interim order, if the final order has not been entered
  • Consummation of a sale of all or substantially all of the debtor’s assets
  • Substantial consummation of a confirmed chapter 11 plan
  • Entry of an order converting or dismissing the case, or appointing a trustee
  • Acceleration of the DIP loans following an event of default
• The debtor may prepay the DIP loans in whole or in part at any time, subject to payment of the exit fee.
• Mandatory prepayment is required from 100% of the net cash proceeds from certain asset sales or the incurrence of unpermitted indebtedness.

Carve Out

• Post-Carve Out Trigger Notice Cap: $300,000 for allowed professional fees of the debtor.
• Chapter 7 Trustee Fee: $25,000

Use of Proceeds

• Fund working capital and general corporate purposes
• Pay bankruptcy-related costs and expenses in accordance with the approved budget

Credit Bid

• The DIP lender has the right to credit bid all or any portion of its claims in connection with any sale of the debtor’s assets.

Avoidance Actions

• Upon entry of the final order, the DIP collateral will include the proceeds of any avoidance actions.

Budget / Permitted Variance

• The debtor is required to operate in accordance with an approved budget.
• Aggregate operating disbursements, excluding professional fees and restructuring charges, may not exceed 120% of the budgeted amount for the applicable testing period.
• Testing occurs on a rolling four-week basis.
• Unused disbursements from one testing period may be rolled into the budget for the following period.

Securities and Priorities

• The DIP obligations are granted superpriority administrative expense claims against the debtor, subject only to the carve-out.
• The DIP lender is granted perfected liens on all of the debtor’s prepetition and postpetition assets (the "DIP Collateral"), subject to the carve-out, with the following priorities:
  • Senior priming liens on all prepetition collateral
  • First-priority liens on all unencumbered assets
  • Junior liens on assets subject to existing prepetition liens

Waivers

• Subject to entry of the final order:
  • Section 506(c): The debtor waives its right to surcharge the DIP collateral.
  • The equitable doctrine of “marshaling” shall not apply with respect to the DIP collateral.