FitLab - Chapter 11 DIP Terms

DIP Terms

DIP Commitments

• $5.64 million new-money, senior secured, superpriority priming delayed-draw term loan facility, made up of two facilities that are committed and secured separately:
  • FitLab facility: up to $5.15 million from Grizzly Investment Group, LLC, including a $2.15 million interim draw
  • Ragnar facility: up to $489,250 from Golazo NV and SBAR Endurance, Inc., of which up to $350,000 is available on an interim basis, solely to fund the Ragnar debtors' operations under the budget's "Ragnar Funding" line
• The court entered the interim order on Nov. 6, 2026. It authorizes only the interim draws. The remaining commitments become available only after the final order is entered and the funding conditions are met or waived in writing.
• The two facilities are ring-fenced from each other. The lenders' obligations are several, not joint. Each borrower group is jointly and severally liable only for its own facility, and neither group's collateral secures the other's loans. A default, funding failure, termination or acceleration in one facility does not by itself affect the other.
• Each lender must fund a properly submitted draw request within two business days. Each post-interim draw is limited to the amount requested and reasonably required under the budget. Unused budgeted amounts carry forward through maturity, and repaid amounts may not be reborrowed.

Interest Rate

• 12% per annum simple interest on principal actually advanced, payable in cash at maturity, with no capitalization and no interest on interest
• Default Rate Increase: 3% per annum on the affected loans only, payable in cash monthly in arrears. The interim order applies it while an event of default continues; the term sheet has it accrue only from written notice of a continuing event of default after cure periods expire, stop on cure or waiver, and never apply retroactively.

Fees

• The interim order does not approve the commitment or exit fee; both depend on entry of the final order:
  • Commitment Fee: 3% of each lender's binding commitment. It is earned only as the commitment becomes legally available and the lender funds, and is paid from that lender's first advance after availability. No fee is earned on amounts never authorized or on commitments withheld or terminated because of the lender's breach, and any fee already paid on such amounts is refunded or credited.
  • Exit Fee: 1% of principal actually advanced, earned as principal is advanced and payable proportionately as it is repaid, with the earned balance due on final repayment or valid acceleration. No exit fee applies to undrawn commitments or merely because availability terminates.
• The budget nonetheless books a $150,000 FitLab commitment fee and a $14,250 Ragnar commitment fee in week 2, alongside the interim draws, while the interim order defers approval of both commitment fees to the final order.
• Each lender recovers reasonable, documented, nonduplicative fees of counsel and one financial advisor: Golden Goodrich LLP and Ice Miller LLP for the FitLab lender, and King & Spalding LLP and Ice Miller LLP for the Ragnar lender. Each lender's fees are payable only by its own borrower group, after invoices are reviewed by the debtors, the U.S. Trustee and any committee.
• Disputed invoices are withheld pending resolution and do not trigger a default or funding stop. Fees incurred as a bidder or purchaser, inter-lender disputes and duplicative services are not reimbursable.
• The interim order gives reviewing parties 10 business days to object to lender invoices but provides for payment absent an objection within 10 calendar days; the term sheet states 10 days.

Maturity

• Under the interim order, the earliest of:
  • Jan. 24, 2027, 90 days after the petition date
  • Closing of a sale of all or substantially all assets or business of the applicable debtors
  • The effective date of a Chapter 11 plan
• The term sheet instead sets maturity at day 90 alone and provides that a sale of any debtor's assets, selection of another bidder, failure to sign a stalking horse agreement with a DIP lender, or the filing of a sale motion or plan does not by itself accelerate maturity; sale proceeds are applied as mandatory prepayments.
• After any other event of default, the applicable lender may accelerate its own facility and terminate its undrawn availability by delivering a termination notice. Maturity or termination of one facility does not accelerate the other.
• The interim order sets the DIP termination date at the earlier of maturity and delivery of a termination notice. The term sheet sets it at the earlier of maturity and the effective date of an acceleration after the five-business-day notice period.
• The term sheet treats day 90 as fixed: court-scheduling extensions of milestones do not move it. However, if the borrowers and the applicable lender agree in writing to extend the sale-closing milestone, maturity tolls until the sale closes.
• Most significantly for the Ragnar facility: if the Ragnar DIP lender or its designee is not selected and approved as stalking horse for the Ragnar debtors' assets, the Ragnar lender has no further funding obligation. The selected stalking horse must, as a condition of its selection, refinance and repay the Ragnar DIP obligations in full in cash no later than entry of the order approving its selection.

Milestones and Key Dates

• Final hearing: Dec. 14, 2026 at 1 p.m. (prevailing Eastern Time); objections due Nov. 24, 2026 at 4 p.m. (prevailing Eastern Time)
• The term sheet milestones are listed below. The interim order makes missing one an event of default for the affected facility only, but states that it does not approve the milestones:
  • Nov. 11, 2026: file a motion to sell all or substantially all assets, after reasonable consultation with the applicable DIP lenders
  • 40 days after the petition date: entry of the final order
  • Dec. 9, 2026: stalking horse agreement between the Ragnar debtors and the Ragnar DIP lender
  • Bidding procedures order setting the bid deadline at Dec. 29, 2026, 64 days after the petition date. No earlier deadline is allowed without the written agreement of the debtors and the applicable lender and court approval.
  • 75 days after the petition date: entry of a sale order
  • 90 days after the petition date: sale closing, extendable by written agreement of the borrowers and the applicable lender (email suffices)
  • Jan. 24, 2027: repayment of the DIP obligations at maturity
• Earlier milestones required execution of the term sheet and definitive documents, and filing of the DIP motion, by Nov. 5, 2026, and entry of the interim order within three days of the hearing on the motion.
• Milestones that require court action extend by up to five business days if the delay results solely from court scheduling, but never past maturity. Failing to select a DIP lender as stalking horse or purchaser is not a milestone breach and does not release that lender's commitment, apart from the Ragnar refinancing trigger.
• The bidding procedures order must provide for a competitive process. The Ragnar debtors may select a stalking horse, if any, in their reasonable business judgment, and the Ragnar DIP lender may compete on the same court-approved terms.

Borrowers / Lenders

• Borrowers: FitLab, Inc. and its debtor affiliates, which filed Chapter 11 in Delaware on Oct. 26, 2026 (Ragnar RTB, LLC followed on Nov. 2). They are split into the Ragnar debtors (Ragnar Holdings LLC, Ragnar Events LLC and Ragnar RTB, LLC) and the FitLab debtors (all other debtors). No nondebtor is a borrower or guarantor, and CRO Nicholas Rubin acts as borrower representative.
• FitLab DIP lender: Grizzly Investment Group, LLC
• Ragnar DIP lender: Golazo NV, a Belgian naamloze vennootschap, and SBAR Endurance, Inc., a Delaware corporation, or affiliates they designate. Golazo may assign its rights and obligations to an affiliate on notice.

Approved Budget

• The 13-week budget attached to the interim order projects $3.04 million of receipts, $2.99 million of them on the "Assault" line, against $1.31 million of purchase-order disbursements and $4.35 million of operating disbursements, with operating cash flow of negative $2.61 million before $1.19 million of professional and restructuring fees.
• $1.14 million of the professional and restructuring fees is budgeted in week 10. The budget includes:
  • $400,000 for the debtors' proposed counsel, Raines Feldman Littrell LLP
  • $350,000 for Force Ten Partners LLC
  • $75,000 for Stretto, Inc. and $25,000 for an independent director
  • $50,000 for their proposed investment banker, Hilco Corporate Finance, LLC
  • $80,000 for committee counsel and $54,000 for a committee financial advisor
  • $5,000 a week of protective payments
• Opening cash is $46,345. The budget draws the FitLab facility at $2.15 million in week 2, $1.15 million in week 10 and $250,000 in week 11, $3.55 million in total, leaving $1.6 million of the FitLab commitment undrawn.
• The full Ragnar commitment is drawn as $181,250 in week 2 and $77,000 in each of weeks 4, 6, 8 and 10, against $475,000 of budgeted Ragnar operating disbursements.
• Ending cash is projected at $100,000 in week 10, the level of the minimum-cash covenant, and at roughly $120,000 at the end of week 13.
• The debtors may propose updates at any time and must do so at least every four weeks. Each lender approves only its own portion: the Ragnar lender covers the Ragnar debtors and the "Ragnar Funding" line, and the FitLab lender covers the rest.
  • Approval may not be unreasonably withheld, and a portion is deemed approved unless its lender objects in writing, with reasons, within three business days.
  • Neither lender has a veto over the other group's budget or funding.
  • Under the interim order, updates are made in consultation with the prepetition secured parties.

Permitted Variance

• Tested weekly and separately for each borrower group on a rolling four-week cumulative basis:
  • Actual total operating disbursements may not exceed 125% of budget. Restructuring items, DIP interest and fees, sale-process costs and court-authorized unbudgeted payments are excluded and reported separately. The same 125% tolerance applies to "Ragnar Funding" operating expenditures, with no separate line-item cap.
  • Actual total receipts may not fall below 75% of budget
• Professional Fee Tolerance: professional fees paid since the petition date may not exceed 115% of the cumulative budget, and unused budgeted amounts carry forward
• The interim order's definition of permitted variance carries the disbursement test and the professional-fee tolerance but no receipts test; the term sheet adds the 75% receipts floor and starts testing with the fourth full week after the petition date.
• A variance breach becomes an event of default only if it is not cured within three business days after written notice from the affected lender. Until then it neither restricts advances nor triggers default interest.
• A breach is cured in any of these ways:
  • Meeting the receipts test, the disbursement test (through actual spending reductions, not deferrals) or the professional-fee test
  • Approval of an updated budget against which the breach is cured
  • Written waiver by the affected lender; the unaffected lender's consent is not needed
• Meeting these tolerances counts as budget compliance, and no single reporting-line variance is a default by itself. Narrative explanations are required for any line variance above the greater of 15% and $25,000 on a rolling four-week basis.

Carve Out

• Post Carve-Out Trigger Cap: $100,000 in the aggregate for all estate professionals under the interim order; the term sheet states $150,000
• Chapter 7 Trustee Fee: $25,000
• The carve-out also covers statutory U.S. Trustee and clerk fees with interest. It covers allowed estate professional fees incurred through the first business day after a trigger notice, but only up to each professional's budgeted amounts for the period. One professional's budget is not available to another, and fees for a restricted use are excluded.
• A trigger notice may be delivered only after a continuing event of default under that lender's facility and a valid acceleration following the default notice period. It affects only professional fees allocated to that lender's borrower group. The post-trigger cap is allocated between the groups in the budget, not multiplied, and shared fees are allocated by benefit.
• The Ragnar DIP liens and collateral bear the carve-out only up to the amounts the budget allocates to the Ragnar debtors, and the FitLab facility bears the rest. Ragnar collateral and loan proceeds may never fund the FitLab debtors' share.
• Under the term sheet, the debtors may fund a carve-out account outside lender control each week with the next week's estimated professional fees. When a trigger notice is delivered, they must fund it up to the full professional fee cap before paying any DIP obligations. The applicable lender keeps a reversionary interest in any balance left over.
• The carve-out survives maturity, acceleration, enforcement, conversion and dismissal. The lenders do not guarantee it and do not have to lend beyond their commitments to fund it.

Securities and Priorities

• Each lender's liens attach only to its own borrower group's assets. They take effect and are automatically perfected on entry of the interim order, subject to the carve-out, with the following priorities:
  • Section 364(c)(2): first-priority liens on unencumbered collateral
  • Section 364(d)(1): first-priority priming liens on the applicable collateral
  • Section 364(c)(3): junior liens on collateral subject to valid, perfected and unavoidable petition-date liens that are expressly identified
• The DIP liens prime all other liens and claims, including adequate protection and judgment liens. The exceptions are eShipping's preserved liens, the carve-out and the excluded collateral.
• Collateral covers all pre- and postpetition property of the applicable debtors, including cash, deposit accounts, receivables, inventory, equipment, intellectual property, equity interests, insurance proceeds and commercial tort claims. The following excluded collateral is carved out:
  • Estate claims against insiders and insiders' affiliates
  • Avoidance actions to recover transfers to or for the benefit of insiders or their affiliates
  • Claims against a DIP lender or its affiliates for breach of the DIP documents, fraud, gross negligence, bad faith or willful misconduct
  • Proceeds and recoveries of all of the above
  • Cash in a specified Citizens account
• The final order may not expand the collateral to reach the excluded collateral.
• DIP obligations are allowed superpriority administrative claims under section 364(c)(1), with recourse only to the estates of the applicable borrower group. There is no cross-group guarantee or superpriority claim.
• eShipping Distribution Services, LLC and eShipping, LLC keep their valid possessory or statutory liens unprimed. Those liens rank ahead of the adequate protection liens and claims and the carve-out as to goods in eShipping's possession and their proceeds, and the DIP lenders reserve their rights on those liens until the final order.
  • Neither the FitLab lender nor the prepetition lenders may foreclose on those goods without paying the liens or obtaining a court order.
  • Proceeds of those goods pay eShipping's undisputed claim first, and any disputed portion is escrowed subject to its lien.

Avoidance Actions

• Chapter 5 avoidance actions and other litigation claims, and their proceeds, become DIP collateral on entry of the final order.
• Avoidance actions against insiders and their affiliates are excluded collateral and never secure the DIP. The prepetition lenders' replacement liens and section 507(b) claims, however, do reach them.
• Paragraph 9 of the interim order lists avoidance-action proceeds among the property encumbered on entry, while the order's recital of the relief sought and the term sheet make liens on Chapter 5 claims and their proceeds subject to the final order.

Cash Collateral

• The debtors may use cash collateral (estate cash and proceeds subject to the DIP liens) and DIP proceeds only under the budget. Using cash collateral of a nonconsenting interest holder requires that holder's consent or a section 363 order, and the debtors must segregate and account for cash collateral.
• The interim order provides that cash collateral use ceases automatically on the DIP termination date, which includes delivery of a termination notice, while separately barring termination of cash collateral use until five business days after that notice.
• Cash in the specified Citizens account must stay there. The debtors may not use, move, sweep or encumber it without the prepetition agent's written consent.
• DIP proceeds go into segregated accounts for each lender, which the interim order perfects by control without control agreements. The debtors must keep their existing cash management system and may not open accounts outside the DIP liens, other than the carve-out account.

Use of Proceeds

• Working capital and ordinary-course employee, vendor, technology, marketing and other operating expenses
• DIP transaction expenses
• Allowed and budgeted estate professional fees, subject to the carve-out
• Adequate protection payments approved in writing by the DIP lenders and included in the budget
• Ragnar loans fund only the Ragnar debtors' operations, plus their allocated share of estate administrative expenses and the carve-out under the "Ragnar Funding" line. Neither facility may pay the other lender's fees.
• No DIP proceeds, cash collateral or carve-out may fund distributions to equity, unauthorized prepetition payments, or litigation challenging the new-money DIP liens or obligations. The following remain permitted: investigating prepetition claims within a court-approved budget, objecting to fees or asserted defaults, seeking emergency relief during the remedies notice period, and pursuing lender-misconduct claims.

Adequate Protection

Prepetition Secured Parties

• For any postpetition diminution in value, including from the priming of their liens, and subject to eShipping's preserved liens:
  • Replacement liens on the excluded collateral, senior to all other liens and claims and not subject to the DIP liens or claims
  • Replacement liens on the DIP collateral, junior only to the DIP liens and the carve-out
  • Section 507(b) superpriority claims, junior only to the carve-out and the DIP claims, with recourse to all estate property, including the excluded collateral
  • All budget, variance and weekly reporting at the same time as the DIP lenders, plus continued access to sale information
  • Reasonable costs of defending a timely challenge, unless the challenge invalidates any part of their liens or claims
• The prepetition lenders hold a senior secured term loan dated Feb. 7, 2024, with FitLab Inc. as borrower and ACP Post Oak Credit II LLC as agent. They were owed principal of not less than $70.45 million at filing. The Small Business Administration, Mike DeMichele and Farhad Nanji also asserted prepetition security interests.
• The prepetition secured parties keep their rights to:
  • Object to cash collateral use and the DIP at the final hearing
  • Seek additional adequate protection, stay relief, conversion, dismissal, or a trustee or examiner
  • Object to any sale or plan
  • Credit bid
• No interim finding binds them except those in their favor. They also hold a consent right over amendments to the DIP documents.
• The prepetition secured parties need not file proofs of claim, and the prepetition obligations are deemed allowed under section 502(a).
• The term sheet contemplated narrower protection: limited to diminution in value determined by the court, capped at amounts in the budget, and junior to the DIP liens and the carve-out.

Challenge Period and Stipulations

• Challenge deadline: 75 days after entry of the interim order, for any party in interest with requisite standing; the debtors' own challenges are waived
• The deadline can be extended in three ways:
  • In writing by the prepetition secured parties in their sole discretion, or by the court for good cause on an application filed before it expires
  • A standing motion filed before the deadline, with the proposed complaint attached, extends it for that movant until two business days after standing is granted
  • A Chapter 11 or Chapter 7 trustee appointed before the deadline has until the later of the deadline and 30 days after appointment or conversion
• The debtors stipulate that:
  • The prepetition liens are valid, perfected and senior, except for eShipping's preserved liens
  • The prepetition obligations are allowed secured claims free of defenses
  • The estates hold no claims against the prepetition secured parties
  • None of the prepetition secured parties controls the debtors
• The stipulations bind the debtors immediately. Subject to entry of the final order, they bind all other parties unless a timely challenge succeeds by final judgment.
• The interim order's stipulations also acknowledge that no claims exist against the DIP lender. The term sheet, however, provides that no blanket admission that claims against a DIP lender do not exist will be required.
• The DIP lenders will not argue that fiduciary-duty waivers in the LLC debtors' operating agreements under section 18-1101 of the Delaware Limited Liability Company Act bar derivative challenges, and those agreements are amended as needed to allow such challenges. Challengers must still obtain standing before the deadline.

Waivers

• Subject to entry of the final order, in favor of the DIP lenders as to their collateral:
  • Section 506(c): no surcharge of DIP collateral without the applicable lender's prior written consent. Consent to the carve-out or budget does not imply that consent.
  • Section 552(b): the equities-of-the-case exception does not apply
  • The marshaling doctrine does not apply to the DIP collateral or DIP obligations

Credit Bid

• Each DIP lender may credit bid all or part of its DIP obligations, but only against its own facility's collateral, including in a plan or a successor Chapter 7 case. The right is subject to section 363(k), the court's authority to limit credit bidding for cause, and court-approved bidding procedures.
• The interim order also conditions the right on entry of the final order and expiration of the challenge deadline. The term sheet allows it on entry of the final order or earlier express court authorization.
• Each DIP lender is deemed a qualified bidder, and its credit bid a qualified bid, with no deposit required.
• Credit-bid rights may be assigned to an affiliate, designee or acquisition vehicle on prior written notice, as long as the assignment does not enlarge the debt or collateral rights or release any funding obligation.
• A prepetition secured party may credit bid its allowed secured claim under section 363(k) only if the transaction pays the applicable DIP obligations and DIP lender professional fees in full in cash at closing.
• Neither lender is guaranteed selection as stalking horse or successful bidder, subject to the Ragnar refinancing trigger.

Sale Proceeds and Prepayments

• Subject only to the carve-out, the first dollars of sale proceeds go directly from the purchaser or closing agent to the applicable lender at closing until its obligations are paid in full in cash. Sale proceeds include deposits belonging to the estates, escrow releases, break-up fees and other consideration. They are applied to lender professional fees first, then fees, interest, principal and other obligations.
• Proceeds attributable to the Ragnar debtors pay only the Ragnar obligations. FitLab proceeds may not reduce the Ragnar obligations without the Ragnar lender's consent.
• On any sale of Ragnar assets to anyone other than the Ragnar lender or its designee, the Ragnar DIP is paid in full in cash at closing, without escrow and before any other distribution, and the sale order must say so.
• No reserve, escrow, netting, purchase-price allocation or distribution to another creditor may delay or reduce a payoff without the lender's written consent and court approval. Noncash consideration does not discharge cash obligations.
• Mandatory Prepayments: unless waived, 100% of the following:
  • Net cash proceeds of asset dispositions outside the ordinary course
  • Insurance, condemnation, litigation, tax-refund and other extraordinary receipts not budgeted for reinvestment or operations
  • Financing, refinancing, recapitalization or equity proceeds
  "Net" does not allow transaction costs to be deducted ahead of the DIP lenders.
• Voluntary Prepayments: permitted on three business days' notice in minimum principal amounts of $50,000 (or the remaining balance), with accrued interest, the proportionate exit fee and other undisputed amounts, without premium or penalty

Events of Default and Remedies

• Events of default apply facility by facility, and an act affecting only one borrower group is not a default for the other. Across the interim order and the term sheet, they include:
  • Failure to meet an applicable milestone, including obtaining a DIP order, subject to the court-scheduling extension
  • Dismissal or conversion of the affected cases
  • A plan that fails to pay the affected DIP obligations as the term sheet requires or the lender agrees
  • Appointment of a Chapter 11 trustee for the affected borrowers
  • Liens granted senior to the affected DIP liens, other than the carve-out and permitted priorities
  • Reversal, vacatur, stay or material modification of a DIP order that materially impairs the affected lender's lien, priority or payment rights
  • An unauthorized disposition that materially impairs the affected lender's collateral or repayment rights
  • An uninsured, unstayed judgment or settlement requiring an unbudgeted cash payment above $150,000 without the lender's consent, which may not be unreasonably withheld
  • An unauthorized material prepetition payment
  • A representation that is materially incorrect when made, subject to good-faith reporting protections
  • Failure to pay an undisputed DIP obligation when due
  • A material covenant breach
  • For the Ragnar facility only, cancellation of a planned race or event
• In the interim order, the plan, trustee, senior-lien and DIP-order-modification triggers fire when a debtor seeks the relief. In the term sheet, they fire on confirmation, appointment or entry.
• The judgment, prepetition-payment, representation, payment and covenant defaults arise only if uncured five business days after written notice. Principal due at maturity has no cure period. Reporting failures carry a five-business-day cure and variance breaches a three-business-day cure. Missing monthly reporting is not a default.
• On a continuing event of default, the applicable lender may deliver a termination notice, which under the interim order terminates its undrawn commitment and makes its obligations due on delivery; the term sheet defers acceleration and commitment termination, like the other remedies, until five business days after delivery. The notice is emailed to the debtors, the U.S. Trustee and committee counsel and filed on the docket. After acceleration following the notice period, the lender may deliver a carve-out trigger notice.
• Termination of cash collateral use, sweeps, foreclosure and other enforcement must wait five business days after delivery.
  • During that period the debtors, the U.S. Trustee and the committee may seek an emergency hearing, and the period tolls until the court can hear the matter.
  • Meanwhile, the debtors may use cash collateral only for necessary spending to prevent immediate and irreparable harm, payroll and the carve-out. They may not seek nonconsensual cash collateral use or priming or pari passu financing.
• When the period expires, unless the court orders otherwise, the automatic stay lifts without further order. The lender may then terminate cash use and enforce its liens, including by foreclosure, against its own facility's collateral only. Enforcement remains subject to the carve-out, lien priorities and any required sale approval.

Covenants and Reporting

• Minimum Liquidity: $100,000 of aggregate unrestricted cash across the debtors at all times after the FitLab interim advance is funded, and also as a funding condition immediately after each advance. The amount is not duplicated per borrower group. The budget allocates responsibility for it, and a breach or waiver affects only the responsible group.
• The debtors may not incur additional debt or liens or make material prepetition payments except as the DIP documents permit, the budget includes and the court authorizes, and no such transaction may impair the DIP priorities or repayment rights without the applicable lender's consent or a court order. Without the applicable lender's consent (not to be unreasonably withheld) or a court order after notice, the debtors also may not:
  • Dispose of material assets outside the ordinary course, except through the court-approved sale process
  • Enter into or materially amend a sale, financing, settlement or restructuring transaction that materially impairs a lender's lien, priority or repayment rights
  Selecting another bidder or pursuing a higher or better offer does not require lender consent.
• The debtors must preserve collateral; maintain insurance, permits, licenses, and merchant-processing, technology, landlord and service-provider relationships; and pay postpetition taxes.
• The debtors must share drafts of material sale and restructuring pleadings with counsel to the DIP lenders and the prepetition secured parties. Once a DIP lender bids, court-approved sale procedures govern its access to competitively sensitive bidder information.
• Reporting to both the DIP lenders and the prepetition secured parties includes:
  • A CRO-certified weekly report each Wednesday covering variance by reporting line, liquidity and unrestricted cash, revenue and merchant-processor receipts, receivable and payable agings, DIP loans funded, and an anonymized sale-process update
  • Biweekly payroll headcount
  • Monthly bookings, shipments, backlog, pipeline and purchase-order data, on a commercially reasonable efforts basis
• Within three business days after the CRO learns of it, the debtors must give notice of any event of default, litigation seeking more than $150,000, termination of a material contract, or a disruption expected to materially interrupt operations.

Conditions Precedent

• Each advance requires that:
  • The applicable DIP order is in effect: the interim order for interim draws, the final order for later advances
  • The DIP liens and claims are perfected with the required priority
  • An approved budget is in place
  • The debtors are in material compliance with the DIP documents, the budget, the permitted variances and the milestones
  • Representations are materially accurate
  • No event of default is continuing after cure periods, and no material adverse effect has occurred
  • No trustee or examiner with expanded powers has been appointed, and maturity has not occurred
  • The advance stays within authorized amounts, and undisputed lender fees are paid or provided for
  • At least $100,000 of unrestricted cash remains after funding
• The material adverse effect definition excludes the Chapter 11 filings and their reasonably foreseeable consequences, circumstances disclosed in writing before execution, performance consistent with the budget, the agreed sale process (including selecting an alternative bidder), and conditions affecting the other borrower group. A matter still within an unexpired cure period does not block funding.

Other Provisions

• The term sheet and the interim order are the operative financing documents. No separate credit agreement is required, but the lenders may require one, to be filed before the final hearing.
• Each lender and its own borrower group may agree to nonmaterial amendments, budget updates, extensions and waivers with the prepetition agent's prior written consent. Court approval on notice is required for any of the following: higher commitments, interest or fees; earlier maturity; expanded collateral or releases; tighter covenants or defaults; or a smaller carve-out.
• The debtors indemnify their respective lenders, except for gross negligence, fraud or willful misconduct as finally determined. At payoff, a lender may require a reasonable reserve for indemnity claims asserted by then.