Republic National Distributing Company - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• Republic National Distributing Company, LLC ("RNDC"), as Parent Borrower, Company and Borrower Representative
• Certain subsidiaries of RNDC identified on the signature pages to the DIP Credit Agreement, together with entities that become parties by joinder, as Borrowers
• Each of the debtors, in their capacities as guarantors, as DIP Guarantors; the interim order describes each of the debtors as both a DIP Borrower and a DIP Guarantor, while the DIP Credit Agreement identifies RNDC and certain of its subsidiaries as Borrowers with the remaining loan parties as Guarantors
• Each Borrower and Guarantor is a debtor and debtor-in-possession in the chapter 11 cases; RNDC acts as Borrower Representative and borrowing agent and attorney-in-fact for all Borrowers, and the Borrowers are jointly and severally liable for all obligations

Agent / Lender(s)

• Wells Fargo Bank, National Association, as DIP Administrative Agent, Lead Arranger and sole Book Runner (also Prepetition Agent and collateral agent under the Prepetition Credit Agreement)
• The lenders party to the DIP Credit Agreement, as DIP Lenders, comprising DIP Revolving Lenders and DIP Term Loan Lenders
• Required Lenders (referred to in the interim order as the Required DIP Lenders): DIP Revolving Lenders holding at least 66.67% of the aggregate DIP Revolving Exposure and unfunded DIP Revolving Commitments of all DIP Revolving Lenders, disregarding the exposure and unfunded commitments of any Defaulting Lender, and which must at all times include Wells Fargo Bank, National Association so long as it is a Lender

DIP Commitments

• $250 million senior secured super-priority priming debtor-in-possession facility comprised of:
  • $75 million new money revolving credit facility
    • Up to $50 million available upon entry of the interim order (the "Interim Draw")
    • Borrowings may be made no more frequently than once per calendar week (or twice, with the agent's prior written consent), in minimum amounts of $1 million or increments thereof
    • Aggregate borrowings in any calendar week may not exceed 110% of the Budgeted Two-Week Amount
    • Amounts repaid may be reborrowed prior to the Commitment Termination Date
    • Protective Advances outstanding at any one time may not exceed $7.5 million
  • $175 million roll-up of prepetition obligations into DIP term loans, comprised of:
    • $66,313,172.05 of Fourteenth Amendment Priority Delayed Draw Term Loans, deemed exchanged and converted upon entry of the interim order (the "DDTL Roll-Up")
    • $108,686,827.95 of prepetition Revolving Loans, converted on a pro rata basis upon entry of the final order (the "ABL Roll-Up"); the portion not rolled up includes 100% of the FILO Revolving Loans
• The DIP term loans are deemed made on the closing date and will not result in the funding of new cash proceeds to the borrowers; amounts repaid or prepaid may not be reborrowed
• The Roll-Up DIP Loans will be repaid following repayment of the DIP new money loans, consistent with the repayment priority set forth in the Prepetition Credit Agreement, and are final and irrevocable as to the debtors, subject to the challenge provisions of the interim order
• No new letters of credit may be issued under the DIP facility; DIP revolving loans may be used to cash collateralize Existing Letters of Credit, with proceeds deposited into the Existing LC Cash Collateral Account
• Subject to the challenge provisions of the interim order, the debtors stipulate that as of the petition date they were indebted under the Prepetition Credit Facility in the aggregate principal amount of $224,947,167.12 in respect of loans and payment-in-kind interest, plus accrued and unpaid interest at the default rate and other fees, indemnification and reimbursement obligations, charges, premiums, costs and expenses, in addition to issued letters of credit totaling $1,010,719.00

Cash Collateral

• All of the debtors' cash, including cash in all deposit accounts and collection accounts, wherever located, comprising proceeds of or otherwise arising from or relating to the prepetition collateral, but excluding any cash collateral subject to Permitted Prior Senior Liens
• The debtors are authorized to use cash collateral solely in accordance with the DIP loan documents and the DIP budget (subject to permitted variance), limited to (a) adequate protection payments to the Prepetition Facility Secured Parties, (b) payment of DIP facility obligations, (c) payments under the first day orders, and (d) uses consistent with the approved budget and the DIP orders
• The Prepetition Agent has been directed by the requisite Prepetition Secured Parties not to object to the terms of the interim order, and the Prepetition Secured Parties have consented, are deemed to have consented, or have not objected to the use of cash collateral and the debtors' entry into the DIP loan documents; each individual Prepetition Lender has waived any rights to object in its individual capacity
• Cash sweep: prior to termination of the DIP revolving commitments and payment in full in cash of the DIP revolving obligations, the loan parties must deliver, immediately upon receipt, 100% of all cash (or Net Cash Proceeds, where applicable) received or receivable during the pendency of the cases — whether from accounts, sale of inventory, sale of joint venture interests, sale of other assets, settlements, insurance, condemnation or casualty proceeds — to the agent for application to outstanding DIP revolving loans; such loans may be reborrowed
• If no DIP revolving loans are outstanding, such cash is to be deposited into an account maintained with the agent subject to its sole dominion and control, constituting collateral to be applied to future DIP revolving loans, fees and expenses, and Bank Product Obligations
• Following payoff of the DIP revolving facility, the agent may retain such funds as it determines necessary as collateral for future fees, expenses and other obligations related to the cases, with the remainder applied to the DIP term loans in accordance with the post-Application Event waterfall under the Prepetition Credit Agreement
• The DIP Agent shall enjoy the benefit of all deposit account control agreements, and may not exercise rights or remedies thereunder inconsistent with the interim order or the DIP loan documents, including the debtors' ability to retain and use funds during any notice period and to fund the carve out

Interest Rate

• Adjusted Daily Simple SOFR + 8.50%, where Adjusted Daily Simple SOFR is the greater of (i) SOFR plus the Simple SOFR Adjustment of 0.10% and (ii) a 1.00% floor (all-in floor of 9.50%), or
• Base Rate + 7.50% (2.00% Base Rate floor)
• Borrowers may only request Daily Simple SOFR Loans and may not request that any loan bear interest by reference to a term SOFR rate or the Base Rate; Base Rate pricing applies only by operation of the agreement, including to Protective Advances, upon a benchmark unavailability period or illegality, and to non-loan obligations at the default rate
• Default Rate Increase: automatically upon the occurrence and during the continuation of an event of default, all loans bear interest at 2.0% above the rate otherwise applicable, and all other obligations (including overdue interest, fees, costs and expenses) bear interest at the Base Rate plus the applicable margin plus 2.0%
• Interest is payable in arrears on the first day of each month and on the maturity date
• Interest and fees are calculated on the basis of a 360-day year and actual days elapsed, other than for Base Rate Loans, which are calculated on the basis of a 365- or 366-day year

Fees

• Fees applicable to the DIP revolving commitments:
  • Closing Fee: 3.00% of the DIP Revolving Committed Amount as in effect on the closing date, fully earned, due and payable in cash on the closing date
  • Exit Fee: 2.00% of the DIP Revolving Committed Amount as in effect on the closing date, fully earned on the closing date and payable in cash on the earliest of (i) the maturity date, (ii) acceleration of the obligations, (iii) the effective date of any plan, and (iv) repayment in full of the obligations following termination of the commitments; payable in full in cash prior to any cash payments in respect of the DIP term loans
  • Unused Line Fee: 0.50% per annum on the amount by which each lender's DIP revolving commitment exceeds the average daily outstanding amount of its DIP revolving exposure, payable quarterly in arrears and on the maturity date (monthly during the continuance of an event of default)
• Arranger Fee and agency fees: as set forth in the Fee Letter
• Field examination, appraisal and valuation fees and charges, as and when incurred or chargeable, together with audit fees, administrative and collateral agents' fees; absent a continuing event of default, no more than one field examination and one inventory appraisal may be conducted at the loan parties' expense during the chapter 11 cases
• Reasonable and documented out-of-pocket fees, costs and expenses of the DIP Agent and DIP Lenders, including legal counsel (Paul Hastings LLP) and financial advisor (Carl Marks Advisors), subject to the review procedures set forth in the interim order and not subject to court approval or U.S. Trustee fee guidelines
  • Review Parties (the debtors, the U.S. Trustee, the DIP Agent, the Prepetition Agent and committee counsel) have a ten business day review period to object to the reasonableness of such fees
• All such unpaid fees, costs, expenses and indemnities constitute DIP obligations, are secured by the DIP collateral, and are afforded all priorities and protections afforded to DIP obligations

Maturity

• DIP revolving commitments terminate on the earliest to occur of:
  • The maturity date (90 days after the closing date, subject to extension with the written consent of the Required Lenders to no later than 150 days after the closing date)
  • Termination of the DIP revolving commitments during the continuance of an event of default, subject to applicable cure and notice periods
  • The effective date of the plan
  • Conversion of any of the chapter 11 cases to a case under chapter 7
  • Appointment of any trustee, or an examiner with expanded powers, with respect to any debtor
  • Payment in full in cash of all DIP revolving loans and related obligations and termination of the DIP revolving commitments
• Unless waived or extended in writing by the DIP Agent (at the direction of the Required DIP Lenders, which may be by email from counsel), the DIP obligations accelerate and become immediately due and payable, and the revolving DIP commitments terminate, without further notice or action by the court upon the earliest to occur of (a) the occurrence and continuation of an event of default, subject to cure or grace periods and the notice period and procedures set forth in the interim order, or (b) the occurrence of the maturity date
• Borrowers may terminate the DIP revolving commitments and repay the DIP revolving loans in full in cash upon at least one business day's prior written notice; the DIP term loans may not be voluntarily prepaid until the DIP revolving commitments have been terminated, all DIP revolving obligations paid in full in cash, and any agent reserve established

Milestones

• The loan parties must achieve the following milestones, each of which may be extended by up to five business days by the agent in its discretion:
  • Petition date or the immediately succeeding business day: file the DIP motion and forms of other first day orders mutually acceptable to the Required DIP Lenders and the debtors, including on account of a proposed settlement with Reyes
  • Three business days after the petition date: entry of the interim order
  • Five business days after the petition date: file a plan and disclosure statement, each in form and substance reasonably satisfactory to the agent and Required Lenders, providing for repayment in full in cash of the DIP facility on the effective date (unless otherwise consented to by the agent and all DIP Revolving Lenders)
  • 30 days after the petition date: deliver fully executed binding purchase agreements, in form and substance satisfactory to the agent and Required Lenders (including as to purchase price), for section 363 sales of all or substantially all (or such lesser amount as may be acceptable to the agent and Required Lenders) of the loan parties' assets, including the equity interests or substantially all of the assets of all of the joint ventures owned by the loan parties as of the petition date, contemplated to be sold as a going concern (or with respect to a specified region)
  • 35 days after the petition date: entry of the final order; note that the DIP Credit Agreement separately conditions any DIP revolving loan made from and after the date that is 30 days after the petition date on entry of the final order, and the final hearing is scheduled for August 24, 2026 at 1:00 p.m. (prevailing Central Time), with objections due August 17, 2026 at 5:00 p.m. (prevailing Central Time)
  • 70 days after the petition date: entry of an order confirming the plan or approving the sales
  • 75 days after the petition date: the plan becomes effective, or the sales close and the net proceeds are applied

Carve Out

• A Carve Out Trigger Notice may be delivered by email by the DIP Agent, acting at the direction of the DIP Lenders, to the debtors, their lead restructuring counsel, the U.S. Trustee and committee counsel, only following the occurrence and during the continuation of an event of default and acceleration of the DIP obligations; the date of delivery is the Termination Declaration Date
• The carve out is the sum of: statutory fees payable to the Clerk of the Court and the U.S. Trustee plus interest at the statutory rate; allowed professional fees (including any restructuring, sale, financing or other success fee not yet due at the time of delivery of a Carve Out Trigger Notice) incurred at any time before or on the first business day following delivery of a Carve Out Trigger Notice; and the following:
  • Post-Carve Out Trigger Notice Cap: $2.5 million, to be funded into the Funded Reserve Account from proceeds of the Interim Draw
  • Chapter 7 Trustee Fee: $75,000
• Commencing with the week ended August 1, 2026, and on or before Thursday of each week thereafter, the debtors must fund a reserve equal to the greater of estimated or budgeted weekly professional fees, plus the Post-Carve Out Trigger Notice Cap, plus allowed professional fees budgeted for the following two weeks, held in a segregated Funded Reserve Account in trust
• Each professional person must deliver weekly fee estimates to the debtors by 7:00 p.m. (New York time) on the third business day of each week, commencing with the first full calendar week following the petition date, and must deliver one additional Final Statement within one business day of the Termination Declaration Date; failure to deliver a Weekly Statement or Final Statement within three calendar days of its due date limits that professional's entitlement to the Pre-Carve Out Trigger Notice Reserve to amounts included in the DIP budget for the applicable period
• Following delivery of a Carve Out Trigger Notice, the DIP Agent and Prepetition Secured Parties may not sweep or foreclose on cash until the carve out reserves have been fully funded, but hold a first-lien, automatically perfected security interest in any residual interest therein
• The carve out is senior to all liens and claims securing the DIP obligations, the adequate protection liens and superpriority claims, the prepetition secured obligations, and the DIP superpriority claims
• Payments in respect of allowed professional fees made prior to the Termination Declaration Date do not reduce the carve out; payments made on or after such date permanently reduce the carve out on a dollar-for-dollar basis

Use of Proceeds

• Fund the carve out and pay any obligations arising from or related thereto
• Pay transaction and postpetition administrative costs, fees and expenses incurred in connection with the chapter 11 cases
• Pay interest, charges, fees and reasonable and documented out-of-pocket expenses incurred in connection with the DIP loan documents
• Provide working capital and fund general corporate purposes of the debtors
• Pay approved fees and expenses of professionals retained in the chapter 11 cases
• Repay and refinance the Fourteenth Amendment Priority Delayed Draw Term Loans and Revolving Loans in accordance with the Roll-Up
• Such other purposes subject to the reasonable consent of the DIP Agent, acting at the direction of the Required DIP Lenders, in each case subject to the DIP budget (as adjusted by permitted variance), the DIP loan documents and the interim order
• No proceeds of the DIP term loans will be advanced to or made available for use by any loan party
• Limitation on use: absent the DIP Agent's written consent, no proceeds of the DIP facility, collateral, cash collateral, carve out or budgeted disbursement may be used to incur indebtedness other than as permitted, to prevent, hinder or delay enforcement or realization on the collateral following an event of default and the notice period, to object to or contest the validity, extent, amount, perfection, priority or enforceability of the DIP obligations, DIP liens, prepetition liens or prepetition collateral, to assert or prosecute claims or causes of action (including chapter 5 actions) against the DIP Agent, DIP Lenders, Prepetition Agent or Prepetition Lenders, or to pursue lender liability or similar claims or to appeal or challenge the interim order, the final order or the DIP loan documents
  • Exception: the committee's right to be compensated for any objection to the final order is preserved, and allowed fees and expenses of committee professionals with respect thereto may be paid from proceeds of the DIP facility, the DIP collateral, cash collateral or the carve out
  • Exception: the Investigation Fund of up to $50,000 described below
  • Nothing prevents the debtors or debtor professionals, or any other party in interest, from being heard on whether an event of default has occurred and is continuing

Credit Bid

• Subject to any bidding or auction procedures subsequently approved by the court:
  • The DIP Agent, at the direction of the Required DIP Lenders and subject to the Permitted Prior Senior Liens, may credit bid up to the full amount of the outstanding DIP facility loans (including any Roll-Up DIP Loans) in any sale of the DIP collateral under section 363, a plan of reorganization or liquidation under section 1129, or a disposition by a chapter 7 trustee under section 725; such credit bid is binding on all DIP Lenders
  • The Prepetition Agent, at the direction of the Required Prepetition Lenders, may credit bid up to the full amount of the Prepetition Loans in any sale of the prepetition collateral under the same provisions, subject to satisfaction of all DIP obligations and all obligations secured by the Permitted Prior Senior Liens; such credit bid is binding on all Prepetition Lenders
• The DIP Secured Parties and the Prepetition Secured Parties each have the absolute right to assign, sell or otherwise dispose of their credit bid rights to any acquisition entity or joint venture formed in connection with such bid, subject to reasonable advance notice to the debtors of the proposed transfer

Avoidance Actions

• Subject to and effective upon entry of the final order, the DIP collateral and the unencumbered property securing the DIP obligations will include proceeds of estate causes of action under chapter 5 of the Bankruptcy Code and any other avoidance actions, whether recovered by judgment, settlement or otherwise, but not the avoidance actions themselves
• Subject to and upon entry of the final order, both the DIP superpriority claims and the adequate protection superpriority claims will have recourse to such avoidance proceeds
• The DIP Secured Parties and the Prepetition Secured Parties must use commercially reasonable efforts to first obtain recoveries from DIP collateral other than avoidance proceeds

Challenge Period and Budget

• Investigation Termination Date: 60 calendar days from the date of a committee's appointment, if any, and 60 calendar days following entry of the interim order for all other non-debtor parties in interest, including a trustee appointed or elected prior to such date
  • If the cases are converted to chapter 7, or a chapter 11 trustee is appointed or elected prior to expiration of the Investigation Termination Date, such date is extended to the date that is 60 calendar days from the date of such appointment or election, solely with respect to such trustee
  • A challenge must be filed by the applicable Investigation Termination Date, upon five days' written notice to the debtors and the Prepetition Secured Parties; nothing confers standing, which must be separately obtained
  • If no challenge is timely filed, then without further action or order: the debtors' stipulations in paragraph F become immediately and irrevocably binding on the debtors, their estates, any committee and all parties in interest; the prepetition liens are deemed valid, binding, enforceable and perfected and not subject to avoidance or disallowance; and the prepetition secured obligations are deemed finally allowed in the stipulated amounts. If a challenge is timely commenced, the stipulations remain binding and preclusive as to all other parties
• Investigation Fund: up to $50,000 of collateral proceeds and DIP loans may be used by a committee, if any, solely to investigate — but not to prepare, initiate, litigate, prosecute, object to or otherwise challenge — claims against the Prepetition Secured Parties
• Upon a successful challenge, the court may fashion an appropriate remedy, including unwinding or disallowing all or a portion of the Roll-Up DIP Loans
• DIP budget: an initial 13-week budget and cash flow forecast is attached to the interim order as Exhibit 2; the borrowers must deliver an updated 13-week budget and cash flow forecast by 5:00 p.m. on the Friday of each week commencing with the first full calendar week after the week in which the closing date occurs, and the budget delivered on every fourth calendar week (commencing the fourth full calendar week after the week in which the closing date occurs) constitutes the Proposed Budget, subject to the approval of the DIP Agent and Required DIP Lenders, not to be unreasonably withheld, conditioned or delayed; supplemental Proposed Budgets may be submitted from time to time on the same approval basis
  • A proposed budget is deemed approved if no written objection is received within four business days of delivery; absent approval, the then-existing DIP budget remains in effect
  • The debtors must deliver a weekly variance report on a line-item and cumulative basis by 5:00 p.m. (New York time) on Friday of each week, commencing with the second week following the week in which the petition date occurs
  • In no event does the DIP budget operate as a cap on professional fees and expenses

Security and Priorities

• The DIP obligations constitute superpriority administrative expense claims under section 364(c)(1) against each of the debtors on a joint and several basis, without the need to file any proof of claim, with priority over all administrative expenses, adequate protection claims and diminution claims, subject only to the carve out and any Permitted Prior Senior Liens
• The DIP Agent, for the benefit of the DIP Secured Parties, is granted valid, binding, enforceable, non-avoidable and automatically perfected liens on all present and after-acquired property of the debtors of any nature whatsoever, including licenses issued by any federal or state regulatory authority, leasehold and other real property interests, commercial tort claims, all cash and cash equivalents in any account, and, subject to entry of the final order, all avoidance proceeds, subject only to the carve out and Permitted Prior Senior Liens, consisting of:
  • First priority priming liens under section 364(d)(1) on all encumbered property, senior to any existing liens or claims and subordinate only to valid, perfected and non-avoidable Permitted Prior Senior Liens
  • First priority liens under section 364(c)(2) on all unencumbered property, including, upon entry of the final order, avoidance proceeds
  • Junior perfected liens under section 364(c)(3) on property subject to unavoidable Permitted Prior Senior Liens and not subject to section 552(a)
• The DIP liens are not subject or subordinate to (i) subject to entry of the final order, any lien avoided and preserved under section 551, or (ii) any intercompany or affiliate liens among the debtors
• The DIP liens and adequate protection liens are deemed valid, perfected, enforceable, non-avoidable and effective by operation of law automatically upon entry of the interim order, without the need for control agreements, filings, recordings, possession or further action of any kind
• Except as expressly permitted by the interim order or the DIP loan documents, the debtors may not grant liens in the DIP collateral senior to the DIP liens and adequate protection liens, and no other superpriority claims may be granted without the consent of the DIP Agent, acting at the direction of the Required DIP Lenders
• The DIP Agent and the DIP Secured Parties are deemed named as additional insureds and loss payees, as applicable, on each insurance policy relating to the DIP collateral, with insurance proceeds distributed subject to the carve out and in accordance with the DIP loan documents and the interim order
• Permitted Prior Senior Liens means valid, perfected and non-avoidable Prior Permitted Liens (that is, Permitted Liens as defined in the Prepetition Credit Agreement) that are senior to the prepetition liens, together with liens validly perfected after the petition date to the extent permitted by section 546(b); the debtors do not stipulate that Permitted Prior Senior Liens are perfected as against assets that do not constitute prepetition collateral, and all parties reserve the right to challenge their validity, enforceability, perfection, extent or priority
• The DIP obligations, DIP liens and DIP superpriority claims are entitled to the full protection of section 364(e) in the event the interim order is vacated, reversed or modified on appeal, and any liens or claims granted, or payments made, prior to the effective date of such vacatur, reversal or modification remain governed by the original provisions of the interim order
• The DIP liens, DIP superpriority claims and (upon conversion or dismissal) the adequate protection liens and superpriority claims survive confirmation of any plan, conversion to chapter 7 and dismissal, and continue in full force and effect until the DIP obligations and adequate protection superpriority claims are indefeasibly paid in full; none of the DIP Agent, the DIP Secured Parties or the Prepetition Secured Parties is required to file a proof of claim, though each may file a master proof of claim in RNDC's case on behalf of all debtors

Adequate Protection

Prepetition Secured Parties

• Adequate protection is provided until indefeasible repayment in full in cash of the prepetition secured obligations, solely to the extent of, and in an aggregate amount equal to, any Diminution in Prepetition Collateral Value resulting from the priming liens granted to the DIP Agent, the use of cash collateral and other prepetition collateral, the imposition of the automatic stay, or otherwise. No current cash payment of principal or interest is provided; adequate protection consists of:
  • Valid, enforceable, unavoidable and fully perfected replacement liens on the DIP collateral, junior only to the DIP liens and Permitted Prior Senior Liens and subject to the carve out, ranking in the same relative priority as the liens under the Prepetition Credit Agreement as of the petition date
  • Superpriority administrative expense claims under section 507(b) against the debtors' estates, including, subject to and effective upon entry of the final order, avoidance proceeds, junior in all respects to the carve out and the DIP superpriority claims
  • Payment of all reasonable and documented out-of-pocket and invoiced fees, costs and expenses of the Prepetition Agent, including one firm of legal professionals per jurisdiction, incurred in connection with the negotiation, administration and monitoring of the Prepetition Credit Agreement and prepetition collateral and in connection with the chapter 11 cases, whether arising prior to, on or after the petition date, subject to the review procedures set forth in the interim order
  • The benefit of all deposit account control agreements and escrow agreements to which any debtor is a party, subject and subordinate to the rights of the DIP Secured Parties and holders of Permitted Prior Senior Liens
• Nothing in the interim order impairs or modifies the application of section 507(b) in the event the adequate protection provided proves insufficient; any additional section 507(b) claims are subject to the same relative priority as the adequate protection obligations
• So long as any DIP facility loans or DIP obligations are outstanding or commitments remain in place, the Prepetition Secured Parties may not foreclose upon or otherwise exercise remedies against the DIP collateral, may not file further perfection instruments, are deemed to have consented to any release of DIP collateral authorized under the DIP loan documents, and may not seek to terminate or modify the use of cash collateral
• In the event the court determines the Prepetition Secured Parties did not maintain valid, perfected and enforceable liens on the prepetition collateral, the court reserves the right to reallocate any payments made to them and to modify any liens and claims granted under the interim order

Waivers

• Subject to and effective upon entry of the final order, and subject only to a challenge:
  • Section 506(c): except to the extent of the carve out, no costs or expenses of preservation, protection, enhancement or realization of the DIP collateral or prepetition collateral may be charged against or recovered from such collateral without the prior written consent of the DIP Agent or the Prepetition Agent, as applicable
  • Section 552(b): the "equities of the case" exception will not apply to any of the DIP Secured Parties or Prepetition Secured Parties with respect to the proceeds, products, rents, issues or profits of the DIP collateral or prepetition collateral
  • Marshaling: neither the DIP Secured Parties nor the Prepetition Secured Parties will be subject to the equitable doctrine of "marshaling" or any similar doctrine, provided that all liens securing the DIP obligations and prepetition secured obligations remain subject and subordinate in all respects to the carve out
  • Section 552: the debtors and their estates are deemed to have irrevocably waived, and agreed not to assert, any claim or right seeking to avoid the imposition of the DIP liens, prepetition liens or adequate protection liens on property acquired by the debtors or their estates
  • Releases: each debtor releases and discharges the DIP Secured Parties and their respective affiliates, agents, attorneys, officers, directors and employees from all claims and causes of action arising prior to the petition date relating to the DIP loan documents, any loans under the DIP facility, or their prepetition relationship with such debtor, including any claims or defenses under chapter 5, excluding any claims or liabilities determined by a court of competent jurisdiction to result from bad faith, fraud, gross negligence or willful misconduct; nothing in the release relieves the DIP Secured Parties of their commitments or obligations under the DIP facility arising after the closing date
• The DIP obligations and the Prepetition Agent Fees and Expenses will not be discharged by entry of an order confirming any plan, notwithstanding section 1141(d), unless indefeasibly paid in full in cash (other than contingent indemnification obligations for which no claim has been asserted and cash-collateralized letters of credit) on or before the effective date of such plan, or unless the applicable secured parties have otherwise agreed in writing, with the debtors having waived such discharge pursuant to section 1141(d)(4)

Permitted Variance

• The unfavorable variance of cumulative operating disbursements, as compared to the DIP budget, may not exceed 20% for any one-week test period commencing with the second full calendar week after the closing date; the weekly variance report is delivered on a line-item and cumulative basis, while the covenant itself is tested on an aggregate basis with respect to cumulative operating disbursements
  • Any favorable variance achieved during any test period is carried forward and applied to offset unfavorable variances in subsequent test periods
  • The variance covenant applies only to "operating disbursements" as set forth in the DIP budget and does not include professional fees or expenses
• Liquidity covenant: as of 5:00 p.m. (New York time) on Friday of each week, commencing with the second full calendar week after the petition date, the loan parties must maintain liquidity of not less than 85% of the forecasted weekly liquidity set forth in the then-current approved budget for the week then ended, with liquidity measured as the aggregate unrestricted cash and cash equivalents of the loan parties (disregarding, for this purpose, liens in favor of the Prepetition Facility Secured Parties)

Remedies and Notice Period

• The DIP Agent must promptly notify counsel to the DIP Lenders, committee counsel and the debtors' counsel of the occurrence of any DIP termination event
• Upon a DIP termination event arising from an event of default, the DIP Agent's counsel must give not less than five business days' advance written notice (the "Enforcement Notice"; such period, the "Notice Period") to the debtors' counsel, the U.S. Trustee, counsel to the DIP Lenders and committee counsel before the DIP Secured Parties may exercise rights and remedies against the DIP collateral, the Prepetition Secured Parties may exercise remedies, or the DIP commitments may be terminated
• Before exercising any such right, the Required DIP Lenders and the DIP Secured Parties must file a motion for emergency relief from the automatic stay (the "Stay Relief Motion") on not less than five business days' notice to the debtors, the U.S. Trustee and any committee (which may run concurrently with the Notice Period); the court will schedule an emergency hearing at its earliest opportunity without the necessity of a motion to shorten, and the automatic stay remains in effect until the court rules
• At the hearing, the court may determine whether an event of default has occurred and is continuing, whether the debtors may use cash collateral on a non-consensual basis, and may fashion an appropriate remedy; if a hearing is requested before the end of the Notice Period, the Notice Period is continued until the court hears and rules
• During the Notice Period: (a) the DIP Secured Parties may not exercise default rights or remedies against the DIP collateral; (b) the Prepetition Secured Parties may not exercise default rights or remedies against the prepetition collateral; (c) the debtors may continue to use DIP proceeds and cash collateral solely to fund payroll, taxes, statutory obligations and other operating expenses critically necessary to keep the businesses operating (or consented to by the Required DIP Lenders, such consent not to be unreasonably withheld or delayed) and to fund the carve out; and (d) the DIP Lenders are not obligated to make any new money DIP loans
• At the end of the Notice Period, unless the court has entered a contrary order or fashioned another remedy, the debtors' right to use DIP proceeds and cash collateral immediately ceases and the DIP Secured Parties and Prepetition Secured Parties may exercise remedies without further relief from the automatic stay
• The automatic stay is modified to the extent necessary to permit the debtors, the DIP Agent and DIP Lenders, and the Prepetition Secured Parties to implement and effectuate the terms of the interim order and the DIP loan documents