FlexShopper - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• FlexShopper, Inc. (Parent) and FlexShopper, LLC (OpCo), as Borrowers
• FlexLending, LLC, FlexRevolution, LLC, FlexRetail, LLC, Flex TX, LLC, Flex TX Funding, LLC, and Flex TX CAB, LLC, as Guarantors

Agent / Lender(s)

• ReadySett LLC, as DIP Lender

DIP Commitments

• $8 million new money delayed-draw term loan facility comprised of:
  • $2 million initial DIP loan available immediately upon entry of the interim order
  • $6 million subsequent DIP loan available upon entry of the final order

Cash Collateral

• The debtors are authorized to use cash collateral, including cash and cash equivalents, solely in accordance with the approved budget.
• Funds transferred to the Professional Fees Escrow Account do not constitute DIP collateral or cash collateral.

Interest Rate

• 15.0% per annum
• Default Rate Increase: 4.0%

Fees

• Initial Commitment Fee: 1.5% of the maximum aggregate DIP commitment, deemed fully earned upon entry of the interim order and payable on the termination date.
• Final Commitment Fee: 1.5% of the maximum aggregate DIP commitment, deemed fully earned upon entry of the final order and payable on the termination date.
• Facility Extension Fee: 1.5% of the maximum aggregate DIP commitment, deemed fully earned upon entry of the final order and payable on demand if DIP obligations are not repaid by the termination date.

Maturity

• The earliest to occur of:
  • 80 days following the petition date
  • The occurrence of an event of default
  • The consummation of the transactions contemplated by the Stalking Horse Purchase Agreement
  • The closing of a sale of substantially all of the debtors' assets to a purchaser other than the Stalking Horse Purchaser

Carve Out

• Post-Carve Out Trigger Notice Cap: $200,000
• Chapter 7 Trustee Fee: $25,000
• Statutory fees payable to the Clerk of the Court and the U.S. Trustee

Use of Proceeds

• Fund postpetition operating expenses and working capital needs in accordance with the budget
• Pay interest, fees, and expenses to the DIP Lender
• Fund fees and expenses incurred in connection with the sale process
• Reimburse the Administrative Agent for Warehouse Interim Advances
• Pay professional fees and expenses and certain other case administration costs
• Pay permitted prepetition claim payments, if approved

Credit Bid

• Subject to entry of the final order, the DIP Lender has the unqualified right to credit bid up to the full amount of the DIP obligations in any sale of the debtors' assets.

Avoidance Actions

• Upon entry of the final order, the DIP liens extend to the proceeds of actions arising under Chapter 5 of the Bankruptcy Code.

Challenge Period and Budget

• Challenge rights are preserved as granted pursuant to the Interim Securitization Order.

Securities and Priorities

• The DIP obligations constitute allowed superpriority administrative expense claims with priority over all other administrative expenses.
• The DIP Lender is granted the following liens, subject to the carve-out:
  • First-priority liens on all unencumbered property, including (upon entry of the final order) avoidance action proceeds
  • Junior liens on all DIP collateral subject to valid, perfected, and non-avoidable liens in existence as of the petition date

Waivers

• Subject to entry of the final order:
  • Section 506(c): The debtors waive the right to surcharge DIP collateral for costs or expenses.
  • Section 552(b): The "equities of the case" exception shall not apply to the DIP Lender.
  • The equitable doctrine of "marshaling" shall not apply to the DIP collateral.

Permitted Variance

• Tested on a trailing two-week basis:
  • Actual total cash receipts shall not be less than 90% of the budgeted amount.
  • Actual total cash disbursements (excluding professional fees) shall not exceed 110% of the budgeted amount.