House Canary New Jersey - Chapter 11 DIP Terms

DIP Terms

DIP Commitments

• $15 million multi-draw, senior secured, superpriority term loan facility from Condor FundingCo 26, LLC, approved on a final basis by order entered Oct. 21, 2026, comprised of:
  • $3 million in new money made available under the interim order, consisting of:
    • A $1 million initial draw funded following entry of the interim order
    • A $2 million additional draw conditioned on the credit agreement's funding conditions and on the DIP lender's receipt of a plan term sheet, setting out the material terms of a plan, acceptable to it in its sole discretion
  • $12 million available upon entry of the final order, subject to the conditions in the credit agreement
• The credit agreement records that the lender funded the $1 million tranche on Sept. 29, 2026, a date the agreement shows in brackets. It funded the $2 million tranche on a second interim funding date in October 2026, and the agreement leaves the day blank.
• The facility carries no roll-up of prepetition debt. Amounts repaid or prepaid may not be reborrowed, and the interim and final loans form a single class with the same maturity, interest rate and exit premium.
• Under the credit agreement, the $12 million final tranche may be drawn as follows: on no more than five funding dates during the availability period; in draws of at least $1 million and in $250,000 increments, or the remaining commitment if less (both figures are bracketed in the agreement); no more than once per calendar week unless the lender agrees; and only in the amount needed to fund approved-budget disbursements through the next scheduled funding date. Each draw requires an irrevocable notice by 3:00 p.m. Eastern Time two business days ahead and permanently reduces the commitment.
• On the effective date of an acceptable plan, meaning a plan satisfactory to the DIP lender in its sole discretion, the borrowers may draw, and the lender must fund, the entire undrawn final commitment immediately before it terminates. That draw is free of the availability period, the per-draw limits and the budget-sizing condition, but remains subject to the other subsequent-draw conditions.

Case Context and Key Dates

• HouseCanary New Jersey, Inc., HouseCanary, Inc., HouseCanary (CT), Inc., ComeHome, Inc., HC Certified Analytics, Inc. and HouseCanary R&D, LLC filed Chapter 11 on Sept. 22, 2026 in the U.S. Bankruptcy Court for the District of New Jersey.
• The court held the interim hearing on Sept. 24, 2026 and entered the interim order on Sept. 25, 2026 [Docket No. 34]. It held the final hearing on Oct. 20, 2026 and entered the final order on Oct. 21, 2026 [Docket No. 155].
• The debtors' litigation against Amrock Inc. (f/k/a Title Source, Inc.), Quicken Loans Inc. and their affiliates features in both the prepetition and DIP collateral packages. The credit agreement's collateral expressly includes the debtors' commercial tort claims in two cases:
  • Title Source, Inc. v. HouseCanary, Inc., in the 73rd Judicial District Court of Bexar County, Texas, including any retrial, appeal or remand
  • HouseCanary, Inc. v. Quicken Loans Inc., in the U.S. District Court for the Western District of Texas
• The credit agreement refers to a verdict awarded to HouseCanary in the Texas case and to an expected retrial.
• The prepetition stack consists of two litigation funding arrangements, secured by first-priority liens the debtors stipulate to, and a 2021 secured loan from Structural. The final order records Structural's claim and first-priority lien only as Structural's assertions.
• As of the final order, the U.S. Trustee had not appointed an official committee of unsecured creditors.
• The final order approves the credit agreement substantially in the form attached to it and directs that the final version be filed on the docket upon finalization. The attached agreement is dated as of an October 2026 date left blank, its signature blocks are unsigned, and its guarantor signature block and disclosure schedules are blank. The agreement lets the lender correct patent errors and fill in blanks on written notice, with a 10-day window for the borrowers to object.
• The final order governs any conflict with the credit agreement and controls over the interim order and the separate cash collateral order. The credit agreement in turn controls over the DIP term sheet filed Sept. 23, 2026, which it incorporates by reference.
• Non-material amendments to the DIP documents need no further court approval. That does not extend to amendments that shorten maturity, increase the loans, raise the interest rate or fees, or release DIP liens.

Parties

• HouseCanary, Inc., a Delaware corporation, and HouseCanary New Jersey, Inc., a New Jersey corporation, are joint and several borrowers, and each also guarantees the other's obligations.
• The final order makes all other debtors guarantors. The credit agreement defines guarantors as the debtors listed on its signature pages, and its guarantor signature block is blank.
• Condor FundingCo 26, LLC is the sole DIP lender, represented by Ropes & Gray LLP. The final order's adequate protection package separately covers fees the litigation funders incur, including those of Ropes & Gray.

Interest Rate

• 10.0% per annum, paid in kind and added to principal on the first business day of each month, computed on a 360-day year for actual days elapsed
• Default rate: 12.0% per annum while an event of default continues, payable in cash on demand at the lender's election under the credit agreement. The final order lists invoking the default rate among the remedies the DIP lender may exercise after a termination notice given on at least five business days' notice.

Fees

• Upfront fee: 2.0% of the total facility under the final order, which the credit agreement records as a $300,000 cash premium paid on the first interim funding date. The fee became fully earned, nonrefundable and not subject to reduction, setoff or recoupment on entry of the interim order, payable from the interim proceeds or cash on hand within two business days after that entry.
• Exit fee: The final order fixes the exit fee at 5.0% of the total facility, fully earned and nonrefundable on entry of the interim order. It is payable in cash at the earliest of maturity, payment in full or, pro rata, any mandatory or voluntary prepayment, subject to section 2.6(c) of the credit agreement, which treats the premium as earned only when it falls due rather than on entry of the interim order. Section 2.6(c) works as follows:
  • The premium equals 5.00% of all funded principal plus any final commitment still unfunded at maturity
  • It is payable in cash at the earliest of maturity, acceleration or any prepayment or repayment; a partial prepayment triggers 5.00% of the principal repaid, and the balance stays payable
  • It is nonrefundable once paid and cannot be charged more than once on the same principal
• Lender expenses: The credit agreement covers reasonable and documented costs, including in-house or outside counsel fees, collateral audit fees and enforcement costs. These are payable on each funding date and the lender may deduct them from the final loans drawn that day; after that they are paid under the DIP orders.
• Under the final order, all DIP fees and expenses, whether arising before or after the petition date, are payable without retention motions, fee applications or detailed time records, with lender professional fees running through the review procedures described below. Once paid, fee payments are irrevocable and cannot be challenged.
• Unless the lender decides otherwise, payments apply first to fees and lender expenses, then to interest, then to principal (credit agreement).

Maturity

• The earliest of:
  • Dec. 1, 2026, which the DIP lender may extend in its sole discretion
  • Conversion of any case to Chapter 7
  • Dismissal of any case
  • Consummation of a sale of all or a material portion of the collateral, under section 363 or otherwise
  • Acceleration
  • The first business day on which the interim order has expired, unless the final order has been entered by then
  • The effective date of a confirmed plan
• If maturity falls on the effective date of an acceptable plan, the obligations are satisfied as that plan provides. Otherwise all principal, accrued interest and the exit premium are due at maturity (credit agreement).
• The final commitment terminates at the earliest of maturity, the commitment's reduction to zero, or its termination by the lender after an event of default.

Milestones

• A plan acceptable to the DIP lender must be confirmed and go effective within 70 days of the Sept. 22, 2026 petition date, and the final order, in a form acceptable to the DIP lender, had to be entered within 30 calendar days of the petition date. Schedule 1 to the final order and Schedule 6.20 to the credit agreement set these same deadlines, and each can be extended with the DIP lender's consent.
• The court entered the final order on Oct. 21, 2026.
• Missing a milestone is an event of default unless the lender waives or extends it in writing; an email from counsel is enough.

Plan Path and Lender Controls

• Lender approval of the plan gates each stage of funding:
  • The $2 million interim draw was conditioned, under the final order, on a plan term sheet acceptable to the DIP lender
  • Under the credit agreement, the closing date for the first final draw requires that the debtors have filed an acceptable plan and that the court have set a confirmation hearing
  • Any draw within 15 business days of the earlier of the scheduled confirmation hearing and maturity requires an updated budget, reasonably acceptable to the lender, covering the 13 weeks after the plan's effective date
  • On the effective date of an acceptable plan, the borrowers may draw, and the lender must fund, the entire remaining commitment
• Under the final order, it is an event of default if the debtors propose or support, or the court enters an order approving, a plan or a sale of all or substantially all assets that is not conditioned on payment in full in cash (including by credit bid) of three sets of claims: the DIP obligations, the litigation funders' prepetition obligations and the adequate protection obligations. Payment must be indefeasible and come by DIP maturity, and in no event later than the plan effective date or sale closing. The default applies unless both the DIP lender and the litigation funders give prior written consent.
• The credit agreement separately makes it an event of default if any plan is confirmed, or a loan party or one of its subsidiaries or affiliates proposes or supports a plan, that is for all or substantially all of the loan parties' assets, is not an acceptable plan, or does not repay the DIP loans and the litigation funders' obligations in full in cash on its effective date. Any attempt to sell substantially all assets through a plan or a section 363 sale without lender consent is also a default.
• Termination of plan exclusivity without lender consent is an event of default, including where a loan party requests or supports it or fails to object on time. So is any change of control other than under an acceptable plan. Change of control means the holders as of the petition date ceasing to own more than 50% of either borrower's voting power, or either borrower ceasing to own all of its subsidiaries.

Conditions to Funding

• The final order makes every DIP loan subject to the conditions in the loan documents being satisfied or waived. The credit agreement records that the interim conditions were satisfied or waived.
• The closing date for the first final draw requires documentary deliveries (executed loan documents, officer certificates, the initial approved budget, KYC materials, current financial statements and evidence of insurance) and the following:
  • Filing of an acceptable plan and the court's setting of a confirmation hearing date
  • Entry of each DIP order consistent with the DIP term sheet, in full force and not reversed, modified, stayed, vacated, appealed or subject to a stay pending appeal, with the loan parties in material compliance
  • First-day orders, and the relief sought in second-day pleadings, reasonably acceptable to the lender
  • No appointment of a trustee or an examiner with expanded powers, and no conversion or dismissal
  • Satisfaction or waiver of each milestone due by the closing date
  • Representations accurate in all material respects and no default
  • No material impairment, in the lender's reasonable discretion, of the collateral or of the borrowers' affairs, management, results, financial condition or repayment prospects
  • Payment of lender expenses then due
• Each later draw repeats the trustee, representation, DIP-order, milestone, material-impairment and expense conditions. It also requires timely delivery of an approved budget and variance report, and a draw amount within both the remaining commitment and the approved budget.
• Each notice of borrowing certifies that no injunction against the financing is pending or noticed, and that no event reasonably expected to have a material adverse effect has occurred since the latest financial statements.

Prepayments

• Mandatory: 100% of net cash proceeds from three sources must repay the DIP loans, together with accrued interest and the exit premium on the amount prepaid (credit agreement):
  • Collateral transfers, other than ordinary-course inventory sales, permitted licenses, surplus or obsolete equipment and permitted uses of cash
  • Debt not permitted under the agreement
  • Equity the borrowers issue for cash
• On acceleration, all principal, accrued interest, the exit premium and other obligations become immediately due.
• Voluntary: permitted at any time on two days' notice, with accrued interest and the exit premium on the portion prepaid.
• Under the final order, cash proceeds of any section 364(b), (c) or (d) financing obtained in violation of the DIP documents before payment in full go to the DIP lender after the Carve Out is satisfied, unless the lender agrees otherwise.

Prepetition Capital Structure

• Litigation funding: Subject to the challenge provisions, the debtors stipulate that they owe the litigation funders, without defense or offset, at least the "Investment Return" defined in each funding agreement, plus interest, fees, premiums, expenses and other obligations. The debt is secured by first-priority liens on the "Claims," "Litigation Proceeds," "Litigation IP," "Crane 2 Proceeds Account" and other collateral as defined in the funding agreements. The final order identifies the two agreements as:
  • An amended and restated litigation funding agreement dated Jan. 8, 2026 between HouseCanary, Inc. and Crane 2 FundingCo 23, LLC
  • A litigation funding agreement dated June 6, 2018 among HouseCanary, Inc., HC 1 LLC and Security Finance 1 LLC
• The credit agreement describes these instruments differently. It identifies the Crane 2 agreement as a litigation funding agreement dated March 29, 2023 and amended Jan. 6, 2025. It treats Crane 2 and HC 1 as the only funders, and records that Security Finance 1 LLC assigned all of its rights and obligations under the 2018 agreement to HC 1, with that agreement amended March 29, 2023.
• For any settlement of the litigation, the credit agreement sets a target return for each funder equal to the Investment Return under its funding agreement plus, for HC 1, a Transaction Fee, calculated as if paid in full on the settlement date. It uses that target to define DIP collateral: any shortfall between the target and the cash litigation proceeds paid to the funders counts as litigation proceeds.
• Structural: Structural Capital Investments III, LP; Series Structural DCO II series of Structural Capital DCO, LLC; and CEOF Holdings LP are parties, with HouseCanary, Inc. as borrower, to a March 25, 2021 loan and security agreement. The final order records only that Structural asserts a petition-date claim, plus interest, fees and other amounts, whose principal figure the order leaves blank, and that Structural purports to hold a first-priority lien on the collateral defined in its loan agreement. Structural's claim and lien are not among the debtors' stipulations.
• The funders' and Structural's relative rights in their respective collateral remain governed by their own agreements and applicable law. The final order does not change those priorities except where it says so expressly.
• The credit agreement's permitted-debt and permitted-lien baskets name the two litigation funding agreements and any existing debt or liens listed on the disclosure schedules, which are blank. Neither basket names the Structural loan.

Securities and Priorities

• The DIP obligations are allowed superpriority administrative expense claims under section 364(c)(1) against each loan party. They rank ahead of all other administrative claims, including those under sections 503(b), 506(c) and 507(b), subject only to the Carve Out. They have recourse to all prepetition and postpetition property except the avoidance actions themselves, but do reach avoidance proceeds.
• The final order grants DIP liens, automatically perfected as of entry of the interim order and subject to the Carve Out, with the following priorities:
  • A first-priority lien under section 364(c)(2) on all unencumbered property, including cash, intellectual property, tort claims, causes of action, intercompany claims, insurance proceeds, all equity of non-debtor subsidiaries and avoidance proceeds, but not avoidance actions
  • A lien under section 364(c)(3) junior to the litigation funders' liens on their collateral, and junior to Structural's liens on Structural's collateral only to the extent the court determines Structural's claims are valid, secured and perfected
• The DIP liens may not be subordinated to, or made pari passu with, liens avoided and preserved under section 551, postpetition liens (unless the DIP documents or the final order provide otherwise), intercompany liens, or any other lien under section 363 or 364.
• The order's recital of the relief sought cites section 364(d), and the credit agreement is styled a priming facility. The lien grant in the final order itself consists of the section 364(c)(2) and 364(c)(3) liens described above.
• The credit agreement's collateral description expressly includes the debtors' commercial tort claims, including the Amrock and Quicken litigation, and all litigation proceeds. The agreement defines litigation proceeds to cover:
  • Any consideration from the defendants by judgment, settlement, licensing or otherwise
  • Receipts, net of costs, under any services or license agreement entered into with the defendants in a settlement
  • Any shortfall between the funders' targeted settlement return and the cash proceeds paid to them
• Litigation proceeds are measured without deduction for contingency fees or setoffs. They exclude injunctive relief and, except as the funding agreements provide, delivery of appraisal data. Trust accounts for payroll, taxes, escrow and fiduciary funds fall outside the collateral.
• While DIP obligations remain outstanding, the litigation funders may not foreclose on or enforce against DIP collateral. They are deemed to consent to any disposition or lien release the DIP documents authorize.
• If the funders or Structural receive proceeds of unencumbered collateral, including by setoff, they hold them in trust and turn them over to the DIP lender. This does not prime or impair any setoff rights Structural may have. Anyone else who receives unencumbered collateral proceeds before the DIP is paid in full must also turn them over.
• Neither the turnover provisions nor the payment-finality provision decides whether any receipt is Structural's cash collateral; all parties' rights on that question are reserved.

Carve Out

• Post-trigger cap: $175,000 in aggregate for allowed fees of debtor and committee professionals incurred on or after the first business day after a trigger notice is delivered
• Chapter 7 trustee fees: up to $25,000 under section 726(b)
• U.S. Trustee fees
• Pre-trigger fees: all allowed but unpaid fees and expenses of debtor and committee professionals incurred before a trigger notice is delivered, whether or not provided for in any approved budget and even if invoiced after the trigger
• The Carve Out ranks ahead of the DIP obligations, liens and superpriority claims. It also ranks ahead of the litigation funders' obligations, liens and claims, including those under their prepetition funding agreements. The provision does not mention Structural's liens.
• The DIP lender may deliver a trigger notice while an event of default continues. On delivery:
  • The notice is a demand that the debtors use all cash on hand to fund segregated trust reserves, first for unpaid pre-trigger fees and then for an amount equal to the $175,000 cap
  • The notice is also a deemed request for DIP loans equal to the post-trigger cap, which the DIP lender must fund on the first business day after the trigger even if an event of default exists, a condition is unmet, the commitment has terminated or the facility has matured
• Amounts funded for the Carve Out become DIP obligations secured by the DIP collateral. Professional fees paid after the trigger reduce the Carve Out dollar for dollar. A trigger notice is not by itself a termination notice and does not start the remedies notice period.
• The DIP lender and the funders reserve the right to object to any professional fees, whether or not budgeted. Beyond allowing the Carve Out to be funded, they have no obligation to pay estate professionals directly.

Use of Proceeds

• Under the final order, DIP proceeds may be used solely in accordance with the approved budget, subject to permitted variances, the DIP orders and the DIP documents.
• The credit agreement lists the following budgeted uses:
  • Amounts due under certain leases, and certain employee-related, maintenance and other expenses
  • Restructuring costs and the debtors' professional fees, including U.S. Trustee fees
  • Amounts owed to the lender, including its professional fees, the upfront premium and the exit premium; interest is paid in kind
  • Adequate protection payments
  • Other items, all strictly within the approved budget
• No DIP proceeds, collateral or Carve Out funds may be used for the following purposes, under both the final order and the credit agreement (the credit agreement's version exempts defending such litigation):
  • Investigating or prosecuting claims against the DIP lender or the litigation funders, or challenging their claims or liens on lender-liability, avoidance or other grounds; any committee may, however, use up to $25,000 to investigate, but not prosecute, the funders' claims and liens
  • Hindering the DIP lender's or the funders' enforcement
  • Seeking to modify their rights
  • Seeking liens or claims senior to, or on parity with, the DIP and adequate protection liens and claims
  • Paying prepetition claims, unless the payment is court-approved, agreed by the lender, or permitted under the final order or the approved budget
• The credit agreement also bars using proceeds to pay fees, interest or principal under the Structural loan agreement, unless a court order permits or requires it. It bars any motion, consent or payment above $10,000 in aggregate to settle any claim without lender consent.

Budget, Permitted Variance and Reporting

• For each testing period, overall disbursements (excluding the DIP lender's fees and expenses) may not exceed budget by more than 10%. No individual line-item disbursement may exceed budget by more than 5%. The final order and the credit agreement set the same test, which covers disbursements only.
• The first testing period ran from the petition date through Oct. 9, 2026. After that, each test covers a rolling four-week period ending on the Friday before the variance report is due.
• The debtors may reserve budgeted professional fees weekly and reconcile them to actuals upon billing, court approval and payment. A favorable line-item variance carries forward one testing period, but only to offset an unfavorable variance in the same line; it cannot increase a favorable variance.
• Under the final order, any variance beyond the permitted variances is an event of default. The credit agreement separately defaults on spending proceeds other than under the approved budget, subject to permitted variances.
• The debtors delivered an initial budget to the DIP lender. Updated 13-week cash flow forecasts, broken out weekly with anticipated uses of DIP proceeds, are due by 5:00 p.m. ET on the third business day of the fourth week of each month.
  • Under the credit agreement, the first forecast was due by 5:00 p.m. ET on the seventh day after entry of the interim order, and the monthly cycle starts Oct. 28, 2026
  • Each forecast takes effect when the lender approves it, in its sole discretion but not unreasonably withheld; if the lender does not approve, the prior budget stays in place
  • Budget updates need no court approval
  • Each forecast must come with a report of accrued fees of the debtors' legal and financial advisors for the prior four weeks
• Variance reports are due weekly by 5:00 p.m. ET on the third business day of each week, starting Oct. 14, 2026 under the credit agreement. They go to the DIP lender, the litigation funders and any committee, and compare actual receipts and disbursements to budget line by line and cumulatively.
• The credit agreement also requires:
  • Monthly consolidated financial statements within 30 days
  • Audited annual statements within 120 days of fiscal year-end
  • Board materials, excluding privileged, conflicted or trade-secret content
  • Notice of legal actions threatening damages above $50,000
  • Notice of any default within two business days
  • Access to management on strategic planning, liquidity and restructuring
• The final order adds asset inspection rights and regularly scheduled meetings with senior management.

Cash Collateral

• Cash collateral means all of the debtors' cash that is cash collateral of the litigation funders or the DIP lender.
• The litigation funders have consented, or are deemed to have consented, to use of their non-cash collateral and to the order's lien priorities. The final order states that nothing in it is to be read as their consent to use of cash collateral, and they keep the right to seek further adequate protection.
• Use of Structural's collateral and its proceeds, and Structural's adequate protection, are governed by a separate cash collateral order entered on the debtors' cash collateral motion filed at Docket No. 67. Where that order and the final order conflict on the rights, claims, liens and priorities of the DIP lender, the funders and Structural, the final order controls.
• Any withdrawal or termination of cash collateral authority, or any other cash collateral order, does not affect the DIP lender's or the funders' rights under the final order.
• It is an event of default if an order denies or terminates the loan parties' use of cash collateral, or adds conditions to it, without lender consent and stays unstayed for more than three business days (credit agreement).

Adequate Protection

Prepetition Litigation Funders

• Replacement liens on the litigation funders' prepetition collateral, effective as of entry of the interim order. They rank below the DIP liens, the funders' prepetition liens and the Carve Out.
• A section 507(b) superpriority claim to the extent the replacement liens prove insufficient, with recourse to unencumbered collateral. It ranks behind only the Carve Out and the DIP superpriority claims.
• Cash payment of reasonable, documented fees and expenses, including professional fees such as those of Ropes & Gray LLP, subject to the review procedures below
• Maintenance of insurance on the DIP and litigation collateral
• All reporting delivered to the DIP lender, continuing after the DIP is repaid
• The court found the adequate protection reasonable and sufficient. The funders may request more and other parties may contest any request.
• When a confirmed plan that pays the DIP obligations indefeasibly in full in cash goes effective, the adequate protection liens and claims are satisfied and released as that plan provides.

Structural

• Structural's adequate protection is governed by the separate cash collateral order. Under the final order, the debtors must report weekly the amount and location of any cash or proceeds Structural asserts is its cash collateral.

Credit Bid

• The DIP lender may credit bid up to the full DIP obligations in any sale of DIP collateral.
• Subject to the challenge provisions, the litigation funders may credit bid up to their full prepetition obligations plus adequate protection claims in any sale of their collateral.
• Both rights apply under section 363(k) without further court order, whether the sale proceeds under section 363(k), 1123 or 1129(b), through a Chapter 7 trustee under section 725, or otherwise, unless the court for cause orders otherwise. The credit agreement also allows the lender to credit bid at any public sale.

Avoidance Actions

• The final order keeps the avoidance actions themselves (including claims under sections 502(d), 544, 545, 547, 548 and 550) outside both the DIP liens and the superpriority claims' recourse, but includes their proceeds. The credit agreement's collateral description includes avoidance proceeds, subject to entry of the final order.

Challenge Period

• The debtors' stipulations bind the debtors immediately; they irrevocably waived any challenge. For other parties, the deadline depends on the constituency, with day counts measured from entry of the interim order on Sept. 25, 2026:
  • Any statutory committee: 45 calendar days after its appointment or, if longer, 60 days after entry of the interim order
  • A Chapter 7 or Chapter 11 trustee appointed or elected on conversion before the period ends: the later of 60 calendar days after entry of the interim order or 30 calendar days after its appointment
  • All other parties in interest: the earlier of 60 calendar days after entry of the interim order or the court-set deadline for objecting to plan confirmation
  • In each case, any later date the DIP lender or the litigation funders agree to
• A challenge may contest the amount, validity, perfection, enforceability, priority or extent of the litigation funding documents and liens, and may assert avoidance or other claims against the funders and their representatives.
• Pleadings must state their basis with specificity, and any claim not specified before the deadline is barred. Even when a challenge is timely, the stipulations remain binding on everyone else except to the extent a final, non-appealable order sustains the challenge. Parties may move to extend the period on notice.
• A trustee is not bound by the stipulations while the period runs or while a timely challenge is pending.
• The final order does not give any committee standing. An appeal of a standing ruling does not stay the cases or plan confirmation, although parties may seek a stay pending appeal.
• Any committee may use up to $25,000 of DIP proceeds or collateral to investigate, but not prosecute, the funders' claims and liens. The debtors also indemnify the litigation funders with respect to any challenge, to the extent their funding agreements provide.

Debtors' Stipulations and Releases

• Subject to the challenge provisions, the debtors stipulate that:
  • The funders' liens are not subject to avoidance, recharacterization, subordination or any other challenge
  • The estates have no claims against the funders or the DIP lender
  • The funders do not control, and have never controlled, the debtors, and are not control persons or insiders because of the funding documents
• The debtors, and subject to the challenge provisions their estates, release the following parties for acts on or before the final order date relating to the litigation funding documents, the DIP facility and its negotiation:
  • Crane 2 FundingCo 23, LLC, HC 1 LLC and Security Finance 1 LLC, the funders as the final order defines them
  • Condor FundingCo 26, LLC
  • Each of their subsidiaries, affiliates, officers, directors, managers, principals, employees, agents, financial advisors, attorneys, accountants, investment bankers, consultants and other professionals
• The release does not cover claims that a court finds resulted from bad faith, fraud, gross negligence or willful misconduct.
• In the credit agreement, the loan parties also waive any claims against the lender for breach of agency or fiduciary duty.
• The final order has the debtors indemnify the DIP lender generally, and the litigation funders solely with respect to any challenge, to the extent the credit agreement or the funding agreements provide. The indemnified parties have no liability to the debtors or their shareholders or creditors except where a final non-appealable judgment finds it resulted solely from their gross negligence or willful misconduct, and no party is liable for special, indirect, consequential or punitive damages.
• Under the final order, neither the DIP lender nor the funders is deemed to control the debtors or owes a fiduciary duty to the debtors or their creditors, and neither is responsible for safekeeping of or loss to the collateral; that risk stays with the debtors.

Waivers

• Section 506(c): No administrative costs may be charged against the DIP collateral (including cash collateral) or the litigation funders' collateral without the DIP lender's or the funders' written consent, and consent cannot be implied.
• Section 552(b): The funders receive the benefits of section 552(b), and the equities-of-the-case exception does not apply to them for proceeds of the DIP collateral, including their own collateral.
• Marshaling: Neither the DIP lender nor the funders are subject to marshaling.
• Payments to the DIP lender or the funders are irrevocable and free of section 506(c) or 552(b) claims.
• Once the remedies notice period expires, the debtors waive the right to seek section 105 or other relief that would impair the DIP lender's or the funders' remedies.

Events of Default

• Besides the plan, sale, exclusivity, change-of-control, milestone, budget and cash collateral triggers described above, the credit agreement's case-specific events of default include:
  • Nonpayment
  • Breach, with no cure period, of the reporting, default-notice or negative covenants, or of the good-standing covenant by the borrowers
  • Any other covenant or representation breach not cured within five days after notice or after a responsible officer becomes aware of it
  • Violation of either DIP order, unless the violation is immaterial and cured within three days after written notice
  • Entry of an order, or an application by a loan party, subsidiary or affiliate, to convert a case, dismiss a case without payment in full, or appoint a trustee or an examiner with expanded powers
  • Entry of an order, or such an application, that modifies the DIP orders inconsistently with the agreement or grants claims equal or senior to the DIP superpriority claims (other than the Carve Out and the funders' adequate protection) without lender consent
  • A loan party motion to pay prepetition claims outside the first- and second-day orders, the approved budget or lender consent; to lift the stay for foreclosure on assets with book value above $10,000 in aggregate (a threshold the agreement brackets); or to approve an adequate protection settlement with a secured creditor that the lender has not approved and the budget does not include, other than for the funders
  • An order, without lender consent, authorizing other section 364 financing that does not repay the DIP in full in cash, or authorizing use of cash proceeds of collateral
  • A loan party challenge to the validity, perfection or priority of the DIP lender's or the litigation funders' liens, or any effort to disallow either's claims
  • Any loan document or funding agreement ceasing to be enforceable, or being asserted to be unenforceable
  • A final non-appealable order entered without lender consent that surcharges collateral under section 506(c), requires disgorgement, marshals collateral, modifies the DIP orders or grants senior liens or claims
  • A third party obtaining a section 506(c) order or another materially adverse final order on an application the loan parties did not contest in good faith
  • A loan party suing the lender over the DIP (other than to enforce the loan documents), or joining a pleading whose relief would cause an event of default
  • Attachment of material collateral not released within 10 days, or a governmental lien not paid within five days after notice, unless stayed, bonded or insured
  • Cross-default on debt above $500,000, and judgments of at least $500,000 other than bankruptcy court orders fixing claims; the agreement brackets both thresholds
• Standard defaults for misrepresentation, invalidity of the liens or guarantees, and ERISA events also apply.

Remedies

• After an event of default, the DIP lender may deliver a termination notice, by email if it chooses, on at least five business days' notice (the remedies notice period). The notice goes to the debtors' counsel, the funders' counsel, any committee and the U.S. Trustee.
• Without further court order, the DIP lender may then terminate the facility as to future funding, accelerate the DIP obligations and charge default interest. The debtors' ability to incur more DIP obligations ends once the notice is delivered, subject to expiration of the remedies notice period and unless the court orders otherwise. The debtors must file the notice on the docket.
• During the remedies notice period, the debtors, any committee and other parties in interest may seek an emergency hearing, to which the DIP lender consents, solely to contest whether an event of default has occurred. The court's power to grant other relief is not limited.
• Unless the court orders otherwise, the automatic stay lifts at the end of the period. The DIP lender may then exercise its remedies, subject to the Carve Out, and the funders may exercise theirs, subject to the DIP lender's.
• The credit agreement subjects all remedies to the DIP orders. It deems a foreclosure sale's timing reasonable if the lender gives at least 10 days' notice of the first sale date, and makes the borrowers liable for any deficiency.

Covenants

• The credit agreement's operating covenants include:
  • No agreement or related series of agreements reasonably expected to require payment of more than $5,000 to any person
  • No asset transfers other than ordinary-course inventory, non-exclusive licenses carrying payment obligations of no more than $500,000 per fiscal year, surplus or obsolete equipment, permitted uses of cash, and other assets of up to $50,000 per fiscal year
  • No debt or liens outside the permitted baskets, and no investments outside permitted categories, which include capital asset purchases of up to $50,000
  • No dividends or distributions, other than by subsidiaries to a borrower or a guarantor subsidiary
  • No new subsidiaries; no suspension of business or entry into new lines of business; no subsidiary liquidations other than of non-loan parties or into loan parties; no fiscal-year change without consent
  • No transaction transferring more than 50% of a loan party's voting equity to new holders, other than under an acceptable plan
  • Affiliate transactions limited to ordinary-course compensation arrangements consistent with past practice, transactions among loan parties and guarantor subsidiaries, and transactions the lender approves
  • Receivables may be compromised in good faith and in the ordinary course if no default exists and the amount forgiven does not exceed $500,000; returns, recoveries, disputes and claims above $25,000 must be reported
  • Notice to the lender within 10 days after a responsible officer departs, and 20 days' advance notice of any name, jurisdiction or collateral-location change
  • Copies of material pleadings to the lender at least three calendar days before filing
• The credit agreement requires the lender to be named loss payee and additional insured on the debtors' insurance. The final order deems the DIP lender a loss payee and additional insured wherever the funders are listed, with the same relative priority the order sets for liens and claims. It also requires two business days' notice to the DIP lender of any cancellation, non-renewal or material change to a policy.

Lender Professional Fees

• Professionals for the DIP lender and the litigation funders are to be paid no later than 10 business days after the debtors' counsel, any committee or the U.S. Trustee receives their invoices, a window the final order also uses as the review period, though the same paragraph separately allows undisputed amounts to be paid within five business days after that review period ends. No fee applications or compliance with U.S. Trustee guidelines is required, and the payments include prepetition amounts.
• Invoices may be summaries listing the professionals, their hourly rates and class years, and a brief description of the work. Time entries are not required, and privileged material may be redacted.
• The debtors escrow the full invoiced amount during the review period. Objections are due by 12:00 p.m. ET on the last day of the review period. Undisputed amounts are paid within five business days after the review period, and disputed amounts stay in escrow until resolved. Any hearing is limited to reasonableness.
• Fees incurred through the date the facility was first drawn (the final order's closing date, as distinct from the credit agreement's closing date for the first final draw), through the funding of the additional draw and through the funding of the final amount are payable on those dates without going through the review procedures.