Quality Fresca I - Chapter 11 DIP Terms

DIP Terms

Borrower / Debtor

• Quality Fresca I, LLC, a Delaware limited liability company, borrows alone; the DIP loan carries no guarantors.

Lender

• GR Loanco 1 LLC, as DIP lender, which is also the prepetition lender and an affiliate of Genrock Investment Fund I, LP, the debtor's ultimate parent.
• The prepetition position is acquired, not originated: PNC Bank, N.A., successor to BBVA USA, sold and assigned the initial loan documents to GR Loanco 1 LLC on or about May 5, 2026, roughly three months before the Aug. 4, 2026 petition date.

DIP Commitments

• $1.6 million delayed multi-draw term loan facility, all new money, with no roll-up of the prepetition debt.
• Draw structure:
  • Interim advance of $250,000 upon entry of the interim order, which the DIP lender could consent to increase to $500,000.
  • Subsequent advances upon entry of the final order, up to the amount approved by the final order less the interim advance, with the interim and subsequent advances together capped at $1.6 million.
• The final order, entered Sept. 4, 2026 following the Sept. 2, 2026 final hearing, authorizes borrowing of the full $1.6 million on a final basis effective as of the petition date.
• Funding is capped by the approved budget: the DIP lender has no obligation to fund in excess of the amounts and times the budget and term sheet set, and each draw request must come from the debtor's chief restructuring officer certifying that the advance is needed to fund that week's budgeted expenses with no event of default continuing.
• Funding is capped by the approved budget: the DIP lender has no obligation to fund in excess of the amounts and times the budget and term sheet set, and each draw request must come from the debtor's chief restructuring officer and state that the advance is required to fund that week's budgeted expenses in accordance with the budget.
• Every advance is further conditioned on no event of default having occurred and continuing and on the applicable DIP order not having been appealed, modified, stayed, vacated or reversed, with satisfaction of the conditions resting in the DIP lender's sole and absolute discretion.

Prepetition Capital Structure

• Three secured loans from the same lender, all secured by liens on substantially all of the debtor's assets in descending priority:
  • Initial loans under the March 9, 2020 credit agreement, first priority, with an outstanding principal balance of $15.2 million as of the petition date; the facility originally comprised a $32.5 million term loan, a $4 million development line of credit and a $500,000 revolving line, and was amended eleven times, most recently by the March 26, 2026 eleventh amendment, which extended final maturity to April 30, 2026.
  • $700,000 promissory note dated July 23, 2026, second priority.
  • $100,000 promissory note dated July 31, 2026, third priority.
• The debtor stipulates to aggregate prepetition principal of $16 million, exclusive of interest, fees and other charges, and that no other perfected liens encumbered the prepetition collateral.

Cash Collateral

• The debtor is authorized to use cash collateral from the petition date through any termination event, in accordance with the approved budget, for working capital, general corporate purposes and the costs of administering the case, including payments benefiting from the Carve-Out.
• Cash collateral captures all of the debtor's cash, cash equivalents, negotiable instruments, investment property and securities, plus amounts generated from the use, sale, lease or other disposition of the prepetition collateral, wherever located.
• The debtor must maintain its existing prepetition cash management system, with material changes subject to the DIP lender's sole discretion, and the DIP lien attaches to cash held in the debtor's bank accounts.

Interest Rate

• 12.00% per annum on each advance from funding until repayment, payable monthly in arrears in cash pursuant to the budget, computed on a 360-day year over actual days elapsed.
• Default Rate Increase: 5.00%, accruing monthly on the same dates as regular interest and payable in full at maturity.
• Postpetition interest on the prepetition secured obligations accrues, to the extent allowed, at the rate in the prepetition loan documents and is payable alongside DIP interest as set out in the approved budget.

Fees

• Loan Fee: 1.5% of the DIP loan, payable upon entry of the interim order.
• Lender Expenses: all reasonable fees, costs, disbursements and expenses of the DIP lender, including those of its counsel, Venable LLP, incurred after the petition date, payable without further motion, fee application or court order.
• Indemnification: the debtor indemnifies the DIP lender and its affiliates, officers, directors, employees, advisors and agents against losses arising from the financing or the use of proceeds, except losses a presiding court finds arose from gross negligence or willful misconduct.

Maturity

• The earliest to occur of:
  • Feb. 26, 2027
  • The effective date of a confirmed Chapter 11 plan
  • The occurrence and continuation of an event of default
• Principal does not amortize and is due in full in cash at maturity; the debtor may prepay in whole or in part at any time without penalty or premium.

Carve Out

• The DIP liens, DIP superpriority claim, adequate protection liens and prepetition lender superpriority claims are subject to payment of the sum of:
  • Clerk of court and U.S. Trustee fees
  • Up to $25,000 in Chapter 7 trustee fees and expenses under section 726(b)
  • Allowed professional fees of debtor and committee professionals incurred through the first business day after delivery of a carve-out trigger notice, limited to the line-item amounts in the approved budget for each professional and reduced dollar-for-dollar by retainer applications
  • Post-Carve Out Trigger Notice Cap: $50,000 of debtor professionals' allowed fees incurred after that date, allocated $12,500 to the chief restructuring officer and $37,500 to debtor's counsel
• A carve-out trigger notice is the DIP lender's written declaration that an event of default has occurred.
• Professional fee reserve: the debtor funds weekly into an account maintained by Berger Singerman LLP an amount equal to the budgeted weekly fees of each professional, allocated per professional and used solely to pay fees as allowed; no amounts are funded for committee professionals unless a committee is appointed, and any residue is paid to the DIP lender and applied to the DIP loan, or to the prepetition obligations once the DIP loan is repaid.
• The DIP lender has no obligation to fund fees exceeding the budget line items or the amount of the DIP loan.
• The debtor is to seek approval of compensation procedures permitting monthly payment of 80% of fees and 100% of costs, capped at each professional's monthly budget line item; fees of the chief restructuring officer are paid monthly under the GulfAtlantic Capital Corporation engagement letter, subject to a 25% cumulative variance.

Use of Proceeds

• Maintain customer, vendor and supplier relationships and permit the orderly continuation of operations, including payroll
• Pay fees, costs and expenses of the Chapter 11 case and fund the Carve-Out
• Satisfy other working capital and operational needs, in each case in accordance with the approved budget
• Proceeds and cash collateral may not be used to challenge the validity, perfection or priority of the DIP or prepetition liens, to prosecute or defend claims against either lender, to contest the debtor's obligations under the prepetition loan documents or term sheet, or to fund acquisitions or capital expenditures outside the budget, subject to a $15,000 aggregate basket for committee professionals to investigate, but not prosecute, avoidance actions and other claims on account of the prepetition loan documents during the review period.
• While DIP obligations remain outstanding and absent the DIP lender's written consent, the debtor may not seek orders authorizing section 364(c) or 364(d) financing, or any other lien or superpriority grant, that does not indefeasibly repay the DIP loan in full in cash, and may not seek orders authorizing section 546(h) goods returns or related setoffs at all.

Credit Bid

• The DIP lender and the prepetition lender, the same entity in both capacities, are authorized to credit bid all or any portion of the DIP loan obligations or the prepetition secured obligations at any sale or disposition of collateral, including a sale under section 363.

Avoidance Actions

• The final order includes avoidance actions under sections 502(d), 541, 544, 545, 547, 548 through 551 and 553(b) and their proceeds in the DIP collateral; the term sheet made that grant contingent on entry of the final order.
• The prepetition lender's adequate protection replacement liens under the term sheet exclude avoidance actions and their proceeds.
• The debtor stipulates that as of the petition date it had brought and was aware of no chapter 5 or other claims against the prepetition lender.

Challenge Period and Budget

• Challenge deadline: Oct. 13, 2026, 60 days after entry of the interim order, for the committee or any other party in interest with standing to file an adversary proceeding attacking the prepetition secured obligations, liens or collateral, or asserting avoidance, recharacterization, subordination or lender liability claims.
• Absent a timely challenge, the prepetition secured obligations become allowed claims not subject to any counterclaim, setoff, subordination or other challenge, and all parties are barred from pursuing estate claims against the prepetition lender; a timely challenge leaves the stipulations binding except as to findings expressly and successfully challenged.
• No official committee had been appointed as of entry of the final order, and no committee-professional amounts are funded to the reserve until one is.
• The budget attached as Exhibit 1 to the term sheet runs weekly from the petition date through and including Nov. 2, 2026, setting anticipated receipts and disbursements, available cash, cash flow, trade payables and ordinary course expenses, total expenses and incremental capital expenditures, case fees including professional fees, and other general corporate needs. The budget exhibit itself was not transcribed from the filing.
• The debtor may submit an updated budget on any weekly reporting date; approval sits in the DIP lender's sole discretion, and the then-current budget continues to govern if approval is withheld.

Securities and Priorities

• Under sections 363, 364(c) and 364(d), and subject only to the Carve-Out, the DIP obligations are secured by a first-priority senior priming lien on substantially all of the debtor's assets, whether now owned or later acquired, including cash, accounts, inventory, goods, machinery and equipment, capital stock in subsidiaries, investment property, instruments, chattel paper, real estate, leasehold interests, contracts, documents, intellectual property and other general intangibles, tax and other refunds, insurance proceeds, letters of credit, commercial tort claims, avoidance actions, and all products and proceeds, including proceeds of any sale or disposition of collateral.
• The priming liens are senior to all other prepetition and postpetition liens and interests, including judgment liens, mechanics' liens, liens imposed by covenants, declarations and restrictions, mortgages and other security interests, under sections 364(d) and 364(c)(2); the prepetition lender, which holds the primed liens in its other capacity, consents to the priming and to entry of the final order.
• The DIP obligations also constitute a superpriority administrative expense claim under sections 364(c)(1), 503(b) and 507(b), senior to all other administrative expenses, including those under sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 726, 1113 and 1114, and junior only to the Carve-Out; the timing of payment of advances may not be altered, extended or impaired by any plan or later order without the DIP lender's consent.
• The DIP liens are not subject to sections 510, 549 or 550, are not subordinate to any lien avoided and preserved under section 551 or to any lien arising after the petition date including the adequate protection liens, and no party paying the DIP or prepetition obligations is subrogated to the DIP lender's rights until the DIP obligations are paid in full in cash.
• Collateral carve-out: the liens do not encumber leasehold interests in non-residential real property whose leases prohibit or restrict such liens, though proceeds of the sale or disposition of those leases are collateral. The DIP lender's rights to use or occupy leased premises are limited to those valid under non-bankruptcy law, agreed in writing by the landlord, or granted by further court order.
• All liens are deemed perfected on entry without further action; the lenders may nonetheless make UCC, intellectual property, mortgage and similar filings, or record the final order itself, and the DIP lender is automatically deemed the secured party, loss payee, mortgagee or additional insured under existing prepetition collateral documents and insurance policies.

Adequate Protection

Prepetition Lender

• Protection runs only to the extent of postpetition diminution in the value of the prepetition lender's interest in the prepetition collateral, including diminution from the use, sale or lease of collateral, the subordination of the prepetition liens to the Carve-Out, and the imposition of the automatic stay.
• Allowed superpriority claims under section 507(b), senior to all other administrative expenses but subordinate to the DIP superpriority claim and the Carve-Out.
• Adequate protection liens on all collateral, perfected without further action: a first-priority additional and replacement lien senior to all liens other than the DIP liens, and a junior replacement lien subject to the DIP liens. The term sheet framed the replacement liens as excluding avoidance actions and their proceeds; the final order grants replacement liens on all collateral, which it defines to include avoidance actions.
• The adequate protection liens are not subject to sections 510, 549 or 550, and may not be primed, subordinated or made pari passu with any other lien under sections 363 or 364, or with any lien avoided and preserved under section 551.
• No bar date order applies to the prepetition lender, whose obligations, liens and protections under the final order are deemed a timely filed proof of claim.
• The prepetition lender reserves the right to seek further adequate protection, stay relief, appointment of a trustee or examiner, or dismissal of the case.

Waivers and Releases

• Section 506(c): effective as of the petition date, the debtor and its successors, including any trustee in this case or a superseding Chapter 7 case, waive all surcharge claims against the DIP collateral, prepetition collateral and both lenders, and no party may recover preservation or disposition costs, or assert unpaid administrative expenses, against the collateral or either lender except through the Carve-Out or the term sheet, whether or not the expense was in the approved budget.
• Section 552(b): the "equities of the case" exception does not apply to the prepetition lender or the DIP lender with respect to any collateral, in consideration for the prepetition lender's subordination of its liens to the Carve-Out and its consent to the use of cash collateral.
• Marshaling: neither lender is subject to the equitable doctrine of marshaling or any similar doctrine, and proceeds of the prepetition collateral are applied under the prepetition loan documents.
• Estate releases: subject to the challenge rights described above, the debtor and its estate release the prepetition lender and its affiliates, officers, directors, employees, attorneys, participants and other representatives from all claims, including lender liability claims, arising before entry of the final order, while the term sheet frames the same release as reaching only claims held as of the petition date. The DIP lender is released from obligations relating to the term sheet only upon indefeasible payment in full in cash of the DIP obligations.
• Neither lender is deemed a control person, responsible person, owner or operator of the debtor by reason of extending credit or exercising budget approval rights, and the lending relationship does not create a joint venture or partnership.
• Governing law: Florida, for the term sheet.

Permitted Variance and Reporting

• The debtor may exceed any approved budget line item by 10%, or exceed a line item by more than 10% so long as aggregate overages across all line items stay within 10% of the total approved budget.
• Compensation payable to the chief restructuring officer is subject to a separate 25% cumulative variance over the period covered by the approved budget.
• Weekly, beginning the Thursday of the week following entry of the interim order, the debtor must deliver a detailed line-by-line actual-to-budget variance computation, with brief commentary on each material line-item deviation, favorable or unfavorable, exceeding 10% on a cumulative basis or such higher percentage as the DIP lender approves.

Events of Default and Remedies

• Events of default under the term sheet:
  • Failure to obtain approval of the final order on or before Sept. 11, 2026, a milestone the Sept. 4, 2026 entry satisfied
  • Any filing by the debtor seeking to vacate or modify the entered DIP orders over the DIP lender's objection
  • Failure to make required payments or comply with any deadline in the term sheet
  • Filing or supporting any pleading seeking a superpriority claim or lien senior to or pari passu with the DIP lender's, or the granting of any such claim or lien
  • Use of DIP proceeds in a manner not provided for in the budget
  • Entry of an order appointing a Chapter 11 trustee or an examiner with expanded powers
  • Filing of a Chapter 11 plan not consented to by the DIP lender
  • Entry of an order dismissing the case or converting it to Chapter 7
  • Any sale of collateral without court approval, or that does not indefeasibly satisfy the DIP obligations in full in cash, absent the DIP lender's consent in its sole discretion
• The right to use cash collateral terminates automatically on the sooner of an event of default or the debtor's breach of any covenant in the final order or term sheet.
• On a termination event, and without further notice or court order, the automatic stay is vacated to the extent necessary for the DIP lender, in its sole discretion and on written notice, to suspend or terminate funding, accelerate the DIP obligations, and exercise all rights and remedies under the DIP orders or applicable law; the debtor waives any right to seek relief restricting those remedies but may contest whether a termination event has occurred, with both parties consenting to an expedited hearing.
• The adequate protection obligations, superpriority claims, liens and remedies survive conversion, dismissal or plan confirmation.

Key Dates

• March 9, 2020: original credit agreement with BBVA USA, later PNC
• March 26, 2026: eleventh amendment extends final maturity to April 30, 2026
• May 5, 2026: PNC assigns the initial loan documents to GR Loanco 1 LLC
• April 30, 2026: extended final maturity of the prepetition credit agreement
• July 23 and July 31, 2026: $700,000 and $100,000 promissory notes to the prepetition lender
• Aug. 3, 2026: DIP term sheet executed
• Aug. 4, 2026: petition date
• Aug. 6, 2026: interim hearing; interim order entered Aug. 11, 2026
• Sept. 2, 2026: final hearing; final order entered Sept. 4, 2026
• Sept. 11, 2026: term sheet deadline for final order approval
• Oct. 13, 2026: challenge deadline
• Nov. 2, 2026: end of the initial budget period
• Feb. 26, 2027: outside maturity date

Document Hierarchy

• The two operative documents allocate control in opposite directions: the term sheet provides that the DIP orders control over the term sheet, while the final order provides that the term sheet governs over the final order except as to the debtor's prepetition stipulations, which the final order controls. The allocation is live: the documents differ on whether the adequate protection replacement liens reach avoidance actions, on how far back the estate release runs, and on the period the budget must cover.