RiverStreet Communications of Virginia - Chapter 11 DIP Terms

DIP Terms

DIP Commitments

• Size: up to $80 million senior secured superpriority credit facility, made up of:
  • $20 million new-money delayed-draw term loan: $10 million is available when the interim order is entered, and the commitment rises automatically by $10 million when the final order is entered. The DIP credit agreement sets the post-final-order commitment at the unused portion of the initial $10 million plus $10 million.
  • Up to $60 million cashless roll-up of prepetition Term A-1 loan principal at $3 of prepetition debt for each $1 of delayed-draw commitment made available: $30 million on entry of the interim order, and up to $60 million in total, including the interim tranche, on entry of the final order
  • Other obligations incurred under the DIP credit agreement
• Source: the facility comes from the debtors' existing lenders. The DIP credit agreement recites that the DIP lenders, along with other lenders and participants, provided the prepetition financing. The roll-up lenders are the DIP lenders that held Term A-1 loans immediately before the roll-up, and CoBank, ACB is agent on both the prepetition and DIP facilities.
• Roll-up timing: each roll-up tranche is sized off delayed-draw commitments made available and takes effect when the applicable order is entered. The proposed interim order treats $30 million of prepetition obligations as refinanced and irrevocably repaid immediately on its entry, as a condition to the lenders providing liquidity. The credit agreement rolls the final tranche automatically on entry of the final order and the commitment increase. In each case the prepetition principal is treated as repaid and, at the same moment, as funded as DIP term loans, pro rata among the roll-up lenders, with no exchange of funds.
• Roll-up terms: the proposed interim order makes the roll-up subject to the challenge rights in its paragraph 42. Once rolled, the roll-up loans carry the same superpriority claims and DIP liens as the new money, and bear interest, are repaid and share in prepayments and proceeds on the same terms. They cannot be reborrowed, and no commitment, origination or unused fee accrues on them. The motion states that the interim order provides for no cross-collateralization other than the roll-up and the adequate protection liens.
• Interim availability: the proposed interim order authorizes borrowings of up to $10 million outstanding from its entry until the earlier of (1) entry of the final order and (2) the Effective Termination Date, defined as the earlier of the maturity date and delivery of a termination declaration after an event of default. Under the credit agreement, any draw above the initial $10 million commitment requires entry of a final order acceptable to the DIP agent and the Required Lenders, meaning DIP lenders holding more than 50% of total credit exposure.
• Draw mechanics: the delayed-draw commitments do not revolve and cannot be reborrowed. Draws must be at least $100,000 and in $100,000 multiples (or the remaining commitment balance, if smaller), each draw request must comply with the approved budget, and any unused commitment terminates permanently on the Effective Termination Date.

Interest Rate

• Rate: Weekly One-Month SOFR Index + 6.50% per annum. The index is 0.10% plus one-month term SOFR, reset weekly on the first business day of each week, with the term SOFR component floored at 0%.
• Default Rate Increase: 2.00% per annum over the interest rate. During any default or event of default, all obligations bear interest at the default rate, and the unused commitment fee accrues at a rate equal to the default rate.
• Payment: monthly in arrears on the 20th day of each month after closing and on the Effective Termination Date, calculated on a 360-day year for actual days elapsed. The roll-up loans bear interest on the same terms as the new money.

Fees

• Fees under section 2.5 of the credit agreement apply to the new-money delayed-draw facility only:
  • Origination Fee: 1.5% of the delayed-draw facility (up to $10 million after entry of the interim order and up to $20 million after entry of the final order). It is fully earned and nonrefundable on entry of the interim order and payable at closing.
  • Exit Fee: 1.5% of the delayed-draw facility up to $20 million after entry of the final order. It is fully earned and nonrefundable on entry of the interim order whether or not the commitments are drawn, and is payable on the earlier of the Effective Termination Date and repayment of the loans in full. It also comes due in cash on acceleration for any reason, including in connection with a credit bid; on satisfaction or release of the secured obligations by foreclosure or deed in lieu; and on any satisfaction, restructuring, reorganization or compromise of the secured obligations, or any distribution to the lenders, in an insolvency proceeding. Any prepayment in full must include the fee, and the borrowers agree that it is reasonable liquidated damages and are barred from arguing otherwise.
  • Unused Commitment Fee: 1.00% per annum on the average daily unfunded delayed-draw commitments, payable monthly in arrears. Defaulting lenders earn none.
  • Administration Fee: $50,000 to the DIP agent, fully earned on entry of the interim order and payable at closing
• Lender professionals: the proposed interim order authorizes payment of the prepetition and postpetition fees of Eversheds Sutherland (US) LLP, Williams Mullen P.C. and Wilkinson Barker Knauer LLP as counsel to the DIP agent, and of the other DIP agent advisors. The credit agreement identifies those advisors as including Oliver Wyman (financial advisor) and Pete Holland (industry advisor).
  • These fees are not subject to court allowance, the U.S. Trustee fee guidelines or fee applications. Professionals deliver summary invoices without time entries to the U.S. Trustee and any committee. The debtors, the U.S. Trustee and any committee have 14 days to object; objections not resolved within five business days go to the court, and undisputed amounts are paid promptly.
  • All fees incurred by the DIP and prepetition secured parties through closing are paid at closing without invoices. All fees the debtors paid those parties before the petition date are approved in full.

Maturity

• The earliest to occur of:
  • Six months after the petition date
  • The effective date of a Chapter 11 plan
  • Consummation of a sale of all or substantially all of the loan parties' assets, whether under section 363, a plan or otherwise
  • Dismissal of any case, conversion to Chapter 7, or appointment of a trustee or an examiner with expanded powers
• If maturity falls on a day that is not a business day, it moves to the preceding business day.
• All DIP obligations, including the roll-up loans, are due on the Effective Termination Date. On that date the proposed interim order terminates the commitments (except as needed to fund the Carve Out) and the debtors' authority to use cash collateral, subject to the Remedies Notice Period: the five business days after the Effective Termination Date.

Milestones and Key Dates

• Key dates: the debtors filed Chapter 11 on Oct. 21, 2026 in the Eastern District of Virginia, and the DIP credit agreement is dated as of Oct. 20, 2026. The proposed interim order leaves the interim hearing date, the final hearing date and the final-order objection deadline blank. The final order is to be submitted later, in a form acceptable to the DIP agent and the prepetition agent.
• Case milestones (Exhibit 3 to the proposed interim order; Exhibit F to the credit agreement), each measured from the petition date:
  • One business day: file the DIP motion
  • Four business days: obtain entry of the interim order and satisfy all conditions in the DIP documents; file a motion to approve bidding and auction procedures for a sale of substantially all assets
  • 35 days: entry of the bidding procedures order and the final DIP order
  • 55 days: bid deadline
  • 60 days: auction if more than one qualified bid is received, or declaration of the successful bid if only one is submitted
  • 65 days: entry of one or more orders approving the sale of all or substantially all assets, acceptable to the DIP agent in its sole discretion
  • 90 days: file a Chapter 11 plan acceptable to the DIP agent in its sole discretion
  • 150 days: entry of a confirmation order acceptable to the DIP agent in its sole discretion
• Milestone conditions: the DIP agent may extend any milestone in writing in its sole discretion. Under the proposed interim order, a missed milestone (subject to any grace period in the DIP documents):
  • is an event of default under both the order and the credit agreement;
  • automatically ends cash collateral use once the Remedies Notice Period expires; and
  • lets the DIP agent exercise remedies, subject to the order's remedies provisions.
  Separately, the credit agreement bars payments or actions that are inconsistent with the budget or the milestones.
• Sale-process consents: the milestones require a sale procedures motion within four business days. However, the credit agreement makes it an event of default for any loan party to file bidding or sale procedures for a section 363 sale of substantially all assets, or to seek or support an order approving such a sale, without the Required Lenders' prior written consent. The proposed interim order bars dispositions of DIP collateral without DIP agent consent, but lets the debtors pursue court-approved bidding procedures that the DIP agent and the prepetition agent consent to in their sole discretion.
• Plan and sale outcome: most significantly, the proposed interim order bars the debtors from proposing or supporting any plan, or any sale of all or substantially all assets, that does not do both of the following, unless each DIP secured party and the prepetition agent consent in writing:
  • pay the DIP obligations and the prepetition obligations in full; and
  • pay the adequate protection obligations in full in cash no later than the plan or sale effective date.
  Proposing or supporting such a Prohibited Plan or Sale, or entry of an order approving one, is an event of default. Payment in full under the order includes cash collateralization, replacement or backing of letters of credit. Confirmation does not discharge the DIP or adequate protection obligations unless they are paid in full by the plan effective date or the lenders agree otherwise.

Background and Financing Process

• Business: since 1951 the debtors have built communications infrastructure for rural communities. Under the RiverStreet brand they provide fiber broadband, voice, wireless and security services to approximately 31,600 subscribers across mostly rural Virginia and North Carolina. Subscribers include households, farms, small businesses, schools, and public-safety and healthcare users for whom the debtors' network is the only available connection.
• Path to default: Guggenheim Securities, LLC, the debtors' investment banker, launched a junior capital raise on July 23, 2025. The raise was meant to fund capital expenditure obligations tied mainly to the expansion build-out in the RiverStreet Virginia territory. The debtors missed an interest payment in August 2025, and the junior process was terminated after about three months of outreach for lack of investor interest.
• Forbearance: after the missed payment, the loan parties and CoBank entered into a forbearance and conditional limited waiver on Sept. 19, 2025. It was amended and restated on Dec. 31, 2025, amended on March 6, 2026, and amended and restated again on May 20, 2026, effective April 30, 2026, with a June 30, 2026 termination date. CoBank then extended forbearance three times:
  • by letter dated June 30, 2026, through July 31, 2026, together with the deadlines for certain milestones, the fiscal 2025 audited financial statements and compliance certificate, and certain real estate deliverables;
  • through Sept. 15, 2026, under a Third Amended and Restated Forbearance Agreement entered into on July 31, 2026, subject to milestones and conditions; and
  • by letter dated Sept. 9, 2026, through Oct. 30, 2026, together with the audited financial statement and compliance certificate deadlines.
• Marketing: on May 22, 2026, Guggenheim launched a senior secured financing process on a best-available-terms basis, seeking funding for either of two plans. The Harvest Plan also invited DIP proposals.
  • Growth Plan: complete the build-out and refinance the existing lenders at or below par
  • Harvest Plan: refinance the existing lenders at or below par with no material new money, on the basis that the debtors would walk away from a significant portion of their grant obligations and the related capital expenditure requirements
  That process produced one highly preliminary indicative DIP proposal, which was found not actionable, and it was suspended after about seven weeks. The debtors then developed a Modified Build Plan: walk away from a material portion of the grants while pursuing either a standalone reorganization or a sale through bankruptcy. On July 10, 2026, Guggenheim relaunched outreach to 79 counterparties about exit financing for the go-forward business, 44 of them new to the process, again inviting DIP proposals.
• Outcome: the existing lenders would not consent to third-party DIP financing on a priming basis, and no institution was willing to provide DIP financing on a standalone basis. Accordingly, the debtors negotiated the facility with the existing lenders. The motion states that no unsecured offers were submitted and no other viable secured offers are available, and that the financing will fund the cases while the debtors pursue a value-maximizing sale.
• Governance: Stuart Kaufman of Areté Partners, LLC is chief restructuring officer and signed the DIP credit agreement for the loan parties. James Decker is independent director. Failing to retain either of them, or a replacement acceptable to the DIP agent, is an event of default.

Prepetition Capital Structure

• Funded debt: approximately $188 million of total funded obligations, including accrued and unpaid interest and fees, under the Oct. 31, 2023 prepetition credit agreement, with CoBank as administrative agent and issuing lender. The debt consists of:
  • Revolving credit facility: approximately $3 million
  • Term Loan A-1: approximately $91 million, the debt being rolled up
  • Delayed-draw term loans: approximately $93 million outstanding
• The funded obligations include about $18 million of accrued and unpaid interest and fees in total. The debtors are also liable for about $32 million of reimbursement obligations on undrawn letters of credit issued under the prepetition credit agreement.
• Security and maturity: the debt is secured by liens on the debtors' assets under an Oct. 31, 2023 pledge and security agreement and matures Oct. 31, 2028.
• Default interest: since the August 2025 payment default, the prepetition obligations have accrued interest at the default rate, an extra 200 basis points; a portion was paid in kind on Dec. 31, 2025. The debtors stipulate that they are in default and that interest is accruing at the default rate.
• Virginia guaranty caps: the prepetition guaranties given by the debtors' Virginia incumbent telephone subsidiaries are subject to recourse caps approved by the Virginia State Corporation Commission of approximately $23 million (Peoples Mutual), $10.7 million (Amelia) and $3.8 million (New Castle).

Borrower(s) / Guarantor(s) / Agent / Lender(s)

• Borrowers: Wilkes Telephone Membership Corporation, a North Carolina cooperative corporation that acts as borrower representative, and RiverStreet Management Services, LLC, each jointly and severally liable
• Guarantors: each direct and indirect subsidiary of the borrowers, on a joint and several guaranty of payment. Each guarantor's liability is capped at the maximum amount that is not avoidable under fraudulent-transfer law. The guarantors signing are RiverStreet Communications of Virginia, Inc., Wilkes Communications, Inc., Barnardsville Telephone Company, Saluda Mountain Telephone Company, Service Telephone Company, RiverStreet Communications of North Carolina, Inc., Ellerbe Telephone Company, RiverStreet Networks, Inc., RiverStreet Wireless of North Carolina, Inc., RiverStreet Wireless of Virginia, Inc., Tri-County Communications, Inc., Peoples Mutual Telephone Company, Amelia Telephone Corporation, New Castle Telephone Company, RiverStreet Connections, LLC, Electronics Service Co. of Hamlet, LLC, RiverStreet Wireless Assets, LLC, RiverStreet Intermediate Holdings, LLC and RiverStreet Parent Holdings, LLC.
• DIP agent: CoBank, ACB, a federally chartered instrumentality of the United States, as administrative and collateral agent. CoBank is also prepetition administrative agent and issuing lender. The loans are extended on a non-patronage basis, and no loan party has rights in CoBank equity or patronage distributions.
• DIP lenders: the financial institutions that are party to the DIP credit agreement, which recites that they provided the prepetition financing alongside other lenders and participants. Farm Credit voting participants count toward the Required Lenders.
• Lender advisors: Eversheds Sutherland (general counsel), Williams Mullen (Virginia counsel), Wilkinson Barker Knauer (regulatory counsel), Oliver Wyman (financial advisor) and Pete Holland (industry advisor)
• Debtor advisors: Guggenheim Securities (investment banker), Areté Partners (CRO Stuart Kaufman), and Pachulski Stang Ziehl & Jones and Tavenner & Beran (proposed counsel)

Approved Budget

• Period: 13 weeks, from the Oct. 21, 2026 filing through week 13 (Jan. 15, 2027). The budget is Exhibit 2 to the proposed interim order and has been approved by the DIP agent.
• Receipts: $12.3 million, including:
  • customer collections of $8.6 million;
  • grant receipts of $3.1 million, arriving in $1.0 million installments in weeks 3, 7 and 11; and
  • other receipts of $605,000.
• Operating disbursements: $12.5 million, with line items for payroll and benefits ($5.3 million), trade payables covering capex and opex ($6.7 million) and taxes and regulatory payments ($564,000). Non-operating bank interest and fees add $260,000. Cash flow before restructuring costs is negative $471,000.
• Restructuring costs: $10.1 million, including professional fees of $9.5 million, DIP interest and fees of $618,000 and other restructuring costs of $35,000
• Net cash flow: negative $10.6 million over the period, and negative in every week
• Liquidity: the budget starts with $40.2 million of book cash and deducts $36.8 million of restricted cash, so the restricted portion accounts for most of the book balance. That leaves $3.4 million of available cash at filing. The lowest weekly ending balance is $3.6 million, in week 12 (Jan. 8, 2027), and the period closes at $7.5 million.
• Draws: $4.7 million in week 1 (Oct. 23, 2026), $5 million in week 5 (Nov. 20, 2026) and $5 million in week 13, for $14.7 million over the period, less than the $20 million commitment
• DIP balance: the budget records the first $30 million roll-up tranche and a $300,000 origination fee in week 1, and the second $30 million roll-up tranche in week 5. The DIP balance reaches $35 million after week 1, $70 million after week 5 and $75 million at week 13.
• Updates: under the proposed interim order, the debtors must update the budget four full weeks after the petition date and four full weeks after each prior budget was delivered. No update takes effect until the DIP agent approves it in writing (email counts); until then, the prior budget stays in force. Material modifications must be filed with the court, and budgets go to any committee and the U.S. Trustee. Under the credit agreement, failing to agree on a new budget becomes an event of default once the prior budget's period ends.

Permitted Variance and Reporting

• Variance test: negative variance from the budget of no more than 10%, on both an aggregate and a line-item basis, for (i) the loan parties' cash disbursements and (ii) disbursements for professional fees of debtor and committee professionals. The test runs cumulatively through the first full week, the first two full weeks and the first three full weeks after the petition date, then on a rolling four-week basis. Other variances need the DIP agent's written consent in its sole discretion. The permitted variance does not increase the budget's totals.
• Compliance starts with the first full calendar week after the petition date. Under the proposed interim order, failing to comply with the budget (including the permitted variance) or to deliver weekly budget reports is an event of default.
• Weekly budget report: starting the second full calendar week after the petition date, due by 3:00 p.m. (prevailing Eastern Time) each Thursday. It shows actuals and line-item variances for the week ending the previous Friday and on a rolling four-week basis.
• Other reporting under the credit agreement:
  • prompt notice of defaults;
  • copies of court filings and reports to the U.S. Trustee;
  • communications from the FCC, any PUC or other government bodies about noncompliance that could reasonably be expected to cause a material adverse change;
  • written threats of audits or investigations into the debtors' use of, or entitlement to, funding-program money; and
  • notice of litigation or funding-program actions that could cause a material adverse change.
• Access under the proposed interim order: the lenders get access to books and records, inspections, audits, collateral examinations and appraisals at the debtors' cost; consultation with management with the consent of debtors' counsel; and information from Areté Partners and Guggenheim Securities, which the debtors authorize to share with the DIP agent, its advisors and the prepetition agent.

Carve Out

• The proposed interim order (paragraph 39) defines the Carve Out as:
  • Statutory fees: fees owed to the clerk and the U.S. Trustee under 28 U.S.C. § 1930(a)
  • Chapter 7 trustee fees: reasonable fees and expenses of a trustee under section 726(b), up to $50,000
  • Pre-trigger professional fees: to the extent allowed and subject to the approved budget, unpaid fees and expenses of debtor and committee professionals incurred through the first business day after the Effective Termination Date. This includes any success or transaction fee allowed to Guggenheim Securities that accrued by that date, whenever allowed.
  • Post-Carve Out Cap: $250,000 for allowed professional fees incurred after the first business day following the Effective Termination Date, less prepetition retainers not yet returned or applied
• Trigger: the DIP agent's termination declaration itself triggers the Carve Out. It goes to debtors' counsel, any committee counsel, the prepetition agent and the U.S. Trustee.
• Funding:
  • Before the Effective Termination Date, the debtors fund the trust account of their restructuring counsel each week with that week's budgeted professional fees.
  • After it, they promptly fund the $250,000 cap into the same account. These amounts are held to pay allowed professional fees ahead of all other claims.
  • After the third business day following the Effective Termination Date, the DIP agent may not sweep or foreclose on the debtors' cash until the Carve Out is fully funded. The prepetition agent may not do so until the part of the Carve Out to be funded from prepetition collateral is fully funded. Each keeps a security interest in any residual.
• Application: payments made before the Effective Termination Date do not reduce the Carve Out, and payments made afterward reduce it dollar for dollar. Any Carve Out funding becomes a DIP obligation. The lenders have no direct obligation to pay professionals and keep their right to object to fee allowance. The debtors may pay allowed fees reflected in the most recent budget only while no unwaived event of default exists.

Use of Proceeds

• Under both the proposed interim order and the credit agreement, proceeds may be used only as provided in the approved budget, for:
  • Working capital and general corporate purposes
  • Costs of administering the cases, including U.S. Trustee fees and allowed professional fees
  • Prepetition obligations that the DIP documents permit, the DIP agent consents to in its sole discretion and the court approves
  • Interest, fees and expenses under the DIP documents, including the origination, administration, unused commitment and exit fees and the DIP agent advisors' fees
  • Carve Out obligations
  • Other uses consistent with the approved budget
• The roll-up is applied without any cash disbursement.
• Restrictions: DIP proceeds, collateral, cash collateral and the Carve Out may not be used to:
  • hinder the lenders' enforcement, except to contest whether an event of default occurred;
  • challenge the DIP or prepetition liens and claims, or pursue claims against the lenders, including Chapter 5 actions;
  • seek subordination, recharacterization, disallowance or avoidance of the DIP or prepetition obligations;
  • incur debt or sell collateral without consent, or seek to use cash collateral over the lenders' objection; or
  • pay prepetition claims, unless the DIP agent agrees, the DIP documents or budget permit it, or all DIP and prepetition obligations are paid in full.
  The committee investigation budget is the one exception.

Cash Collateral

• Definition: under the proposed interim order, all of the debtors' cash, wherever held, is cash collateral of the prepetition secured parties. The exceptions are cash subject to a perfected security interest of a non-debtor at filing, and cash that a final, nonappealable order finds is held in trust for a non-debtor.
• Use: in exchange for the adequate protection below, the prepetition secured parties consent to the debtors using cash collateral under the approved budget and permitted variance until the Effective Termination Date. Proceeds of DIP collateral may be used on the same terms.
• Remedies Notice Period: during this period cash collateral may be used only for payroll and taxes then owed, Carve Out funding and a limited set of other expenses, which the documents describe differently:
  • Paragraph 11 of the proposed interim order allows expenses needed to avoid immediate and irreparable harm to the estates, under the budget or as the DIP agent agrees in its sole discretion.
  • Paragraph 30 allows other expenses the DIP agent approves as critical to administering the estates under the budget.
  • The motion's summary describes the category as expenses necessary or reasonably advisable to avoid immediate and irreparable harm. The motion provides that the interim order controls.
• Cash controls:
  • All cash receipts and proceeds of DIP collateral are subject to the DIP liens and the adequate protection liens. They are either remitted to the DIP agent under the DIP documents or used for budgeted expenses.
  • Starting from the interim hearing date, net cash proceeds of DIP collateral, including from ordinary-course sales, are applied as the credit agreement provides.
  • Banks must turn over cash collateral when the DIP agent requests, subject to the Carve Out.
  • The debtors must keep their existing cash management system; changes need DIP agent consent (not to be unreasonably withheld) or a court order.

Securities and Priorities

• DIP liens: the proposed interim order grants automatically perfected liens under sections 364(c)(2), 364(c)(3) and 364(d), effective on entry, on all of the debtors' assets. The collateral includes:
  • cash, grants and grant proceeds, and subsidiary equity;
  • licenses and license rights, to the fullest extent permitted by law, and the proceeds of any license disposition;
  • real property and the proceeds of leased real property;
  • section 549 recoveries of postpetition transfers of DIP collateral; and
  • subject to the final order, claims under sections 506(c) and 550 and their proceeds.
• Priority: senior to all other liens and claims on the DIP collateral, subject only to the Carve Out, and junior only to Prepetition Permitted Prior Senior Liens. Those are liens permitted under the prepetition documents that, at filing, were valid, perfected, unavoidable and senior to the prepetition liens. The order makes no finding that any such lien is valid or senior and preserves every party's right to challenge them.
• Priming: the DIP liens prime the prepetition liens under section 364(d), with the prepetition secured parties' consent.
• The motion's section 364(c) argument describes the DIP liens as subject and subordinate to the prepetition liens, the Carve Out and other prior perfected liens, while the proposed interim order primes the prepetition liens and makes the DIP liens junior only to Prepetition Permitted Prior Senior Liens; the motion provides that the interim order controls.
• Exclusions: notwithstanding the grant, the DIP collateral excludes:
  • real property leases for which the lenders do not obtain landlord consents (the lease proceeds are still included);
  • Chapter 5 avoidance claims and their proceeds, other than section 549 recoveries; and
  • the credit agreement's excluded collateral: intent-to-use trademark applications, property that may not legally be pledged, and leaseholds that need a third-party consent not yet obtained (each only while the restriction is effective), plus cash subject to a perfected non-debtor lien or trust.
• Superpriority claims: an allowed section 364(c)(1) superpriority claim for all DIP obligations, including the roll-up, senior to all administrative and unsecured claims and subject only to the Carve Out. Subject to the final order, the claim cannot be paid from Chapter 5 avoidance proceeds other than section 549 recoveries.

Avoidance Actions

• The proposed interim order excludes Chapter 5 avoidance claims and their proceeds from the DIP collateral, with no final-order condition on the exclusion, and captures only section 549 recoveries of postpetition transfers of DIP collateral. The grant separately lists section 506(c) and 550 claims and their proceeds, subject to the final order, while the Chapter 5 exclusion is stated to apply notwithstanding the grant.
• Subject to entry of the final order, neither the DIP superpriority claims nor the adequate protection superpriority claims can be paid from avoidance proceeds other than those section 549 recoveries.

Adequate Protection

Prepetition Secured Parties

• Adequate protection is granted to CoBank as prepetition agent for the prepetition secured parties, only to the extent their interest in the collateral loses value between the petition date and plan confirmation. Covered causes include the automatic stay, use of the collateral, and priming by the DIP liens and the Carve Out.
• Replacement liens on all DIP collateral, subject to the Carve Out, junior only to the DIP liens and Prepetition Permitted Prior Senior Liens, and senior to all other liens
• Section 507(b) superpriority claims, subject only to the Carve Out and the DIP superpriority claims. Subject to the final order, they cannot be paid from Chapter 5 avoidance proceeds other than section 549 recoveries.
• Costs, including reasonable attorneys' fees, of defending any timely challenge
• The credit agreement separately requires the borrowers to pay the prepetition agent's out-of-pocket expenses, including counsel fees, related to the DIP documents and, as the DIP orders provide, to enforcing the prepetition documents.
• In the post-default waterfall, the prepetition obligations are paid immediately after the DIP obligations.
• The prepetition secured parties may seek more adequate protection, and section 507(b) remains available if the protection proves insufficient.

Debtors' Stipulations and Challenge Period

• Stipulations: in the proposed interim order the debtors stipulate that:
  • the prepetition liens are valid, perfected and senior, subject only to Prepetition Permitted Prior Senior Liens;
  • the prepetition obligations are valid and unavoidable, and are allowed secured claims to the extent of the collateral's value under sections 502 and 506;
  • the debtors have no defenses or claims against the prepetition secured parties; and
  • the debtors are in default, with interest accruing at the default rate.
• Binding effect: the stipulations bind the debtors immediately, and the debtors irrevocably waive their own right to challenge. They bind every other party, including any committee or trustee, unless a party with court-granted standing files a timely challenge and wins a final, nonappealable judgment. Even then, the stipulations fall away only for the matters successfully challenged and only for the parties that brought the challenge. The debtors' stipulations about the DIP facility, DIP obligations and DIP liens bind them in all circumstances, and no challenge may affect them.
• Deadline: the earlier of:
  • the later of 60 days after a committee is formed; 75 days after entry of the interim order, if no committee is appointed; or, if a Chapter 7 trustee is appointed or elected before the period runs out, 60 days after that appointment; and
  • entry of an order approving a plan or a sale of all or substantially all assets. The milestones require a sale order within 65 days of the petition date.
• Extensions: the prepetition agent may extend the deadline in writing in its sole discretion, or the court may extend it for good cause on an application filed before the deadline passes.
• Committee Investigation Budget: $50,000 in total, subject to the final order, payable from the Carve Out, collateral proceeds and DIP loans. It may be used only for a committee's investigation of the prepetition liens and claims.
• Roll-up exposure: the proposed interim order makes the roll-up subject to the challenge rights in paragraph 42 and carves it out of the order's general protection of DIP obligations against avoidance, recharacterization and subordination. Paragraph 42 itself, however, provides that no challenge may affect the DIP obligations or DIP liens, and it does not separately address the roll-up. If a challenge succeeds, the court may fashion any appropriate remedy.
• Related terms: the debtors do not indemnify the lenders for losses from a successful challenge. Under the order, no facility counts as paid in full until the challenge deadline passes with no challenge filed, or any timely challenge is finally resolved.

Releases

• Subject to challenge rights, the debtors release the following parties under the proposed interim order: CoBank as DIP agent and as prepetition agent; the DIP lenders and other DIP secured parties; the prepetition lenders and other prepetition secured parties; and their affiliates and related parties. The release covers all claims relating to the DIP facility, the prepetition loans and letters of credit, and related transactions. It includes lender liability, equitable subordination and recharacterization claims, claims under the Bankruptcy Code, and challenges to the validity, priority, perfection or avoidability of the lenders' liens and claims.
• The debtors also waive any defense, counterclaim or setoff against payment of the prepetition or DIP obligations based on acts before entry of the interim order. Under the credit agreement, they also release any claims against the DIP agent and lenders for breach of agency or fiduciary duty.

Credit Bid

• Under the proposed interim order, the DIP agent and the prepetition agent, or their designees (which may be the same), may credit bid up to the full DIP obligations and the full prepetition obligations, respectively, including accrued interest, fees and costs. The right applies in any section 363 sale, any plan under section 1129(b)(2)(A)(ii) and any Chapter 7 trustee sale under section 725. The lenders count as qualified bidders, the debtors may not object, and the credit agreement's credit-bid provisions are incorporated and approved. These rights are subject to the paragraph 42 challenge rights and to the stalking horse exception below.
• Credit agreement terms:
  • The DIP agent may bid all secured obligations, expressly including the roll-up loans, directly or through acquisition vehicles. With the prepetition agent's consent, and subject to a committee's investigation rights, it may also bid the prepetition obligations. The right applies in any 363 sale, plan, foreclosure or other disposition, whether or not an event of default exists.
  • The loan parties waive any objection that the claims being bid are subject to defense, setoff or disallowance, or that the bid should be limited under section 363(k).
  • The loan parties must use commercially reasonable efforts to preserve the right in every bidding procedures order, sale order and plan.
  • The exit fee is owed in cash on any credit-bid acceleration.
• Stalking horse exception: if the court approves a stalking horse bid that the DIP agent has approved in writing in its sole discretion, the DIP secured parties give up credit bidding only on the collateral that bid covers, and only while it remains a viable, pending offer.
• An order precluding the DIP agent or prepetition agent from credit bidding, or a debtor motion seeking one, is an event of default.

Regulatory Licenses and Grant Programs

• Regulatory approval condition: under the credit agreement, no remedy may result in any of the following without first obtaining any FCC, PUC or other government approval the law requires:
  • assignment or transfer of a license;
  • a change of control of a license holder; or
  • a foreclosure on the equity of a loan party that holds a license.
  The DIP orders govern if they conflict with these provisions.
• Receiver or trustee: the DIP agent may ask the court to appoint a receiver or trustee to seek regulators' consent to a transfer of control or assignment of licenses to a bona fide purchaser, and to any interim operating authority needed in the meantime. The loan parties consent and agree not to oppose.
• Cooperation trigger: the loan parties' cooperation duties kick in on any of:
  • an event of default;
  • an order authorizing a credit bid;
  • confirmation of a plan that contemplates transferring a license or related equity to the DIP agent, a lender or a designee, including an acquisition vehicle; or
  • any order allowing remedies against license collateral.
  The loan parties must then file the required regulatory applications; consent, subject to regulatory approval, to transferring licenses and related equity to any purchaser through a sale, foreclosure or credit bid; and avoid actions that would impair the licenses. These obligations are specifically enforceable.
• Grant-program covenants: the loan parties must maintain all licenses and franchises whose loss could cause a material adverse change. They may not apply for or enter into new funding programs without DIP agent consent. They also may not surrender, return, forfeit or assign any funding-program award funds or eligible support locations without the DIP agent's prior written consent in its sole discretion, unless the step is consistent with the budget. Funding agencies include the Universal Service Administrative Company, the National Telecommunications and Information Administration, the Rural Utilities Service and comparable state and municipal agencies.
• Material adverse change: any funding-agency recoupment, setoff or withholding of amounts owed under a funding program that impairs budgeted revenue counts as a material adverse change. A material adverse change becomes an event of default if not cured within two business days.

Events of Default

• Under the proposed interim order, events of default are (1) any failure to perform the order's terms in any material respect and (2) any event of default under the credit agreement. The order also separately makes budget noncompliance, failure to deliver weekly reports and a Prohibited Plan or Sale events of default. The motion's summary describes the first trigger as a material failure to perform material terms; the motion provides that the order controls.
• Case-specific events of default under the credit agreement include:
  • Payment: failure to pay principal or interest when due, or any other amount within three days
  • Covenants: default under the reporting, existence and licenses, insurance, inspection, further assurances, CoBank eligibility or use-of-proceeds covenants, or any negative covenant. Other covenant breaches become defaults after five days if no other cure period is specified.
  • Material adverse change not cured within two business days
  • Budget: failure to comply with the approved budget, subject to the permitted variance, or failure to agree on a new budget by the time the prior budget's period ends
  • Milestones: missing any milestone, as extended by the DIP agent
  • Management: failure to retain Stuart Kaufman as CRO on substantially the terms of the scope of work attached to the July 31, 2026 forbearance agreement (or terms otherwise satisfactory to the DIP agent), or James Decker as independent director, or a replacement acceptable to the DIP agent
  • Plan and exclusivity, absent consent of the DIP agent and the Required Lenders: confirmation of a plan not acceptable to the Required Lenders in their sole discretion, unless it pays the obligations in full by its effective date; filing, supporting or failing to contest a plan or disclosure statement that does not pay in full; or termination or expiration of exclusivity
  • Financing and case control, absent consent of the DIP agent and the Required Lenders:
    • motions for additional 364(c) or 364(d) financing, liens that are not permitted, nonconsensual use of cash collateral or other actions adverse to the lenders;
    • orders modifying the DIP orders, the cash management order or the milestones, or a motion to reconsider the DIP orders;
    • orders requiring disgorgement of payments on the DIP obligations;
    • the DIP orders ceasing to be effective, or an order denying or ending cash collateral use; and
    • an unconsented sale procedures motion or support for a 363 sale.
  • Case events, absent DIP agent consent:
    • appointment of a trustee or an examiner with expanded powers;
    • dismissal or conversion of a case, or a debtor motion to dismiss;
    • stay relief letting another creditor enforce a lien on collateral;
    • superpriority claims or liens that are senior to or pari passu with the lenders';
    • an order imposing a section 506(c) surcharge or limiting section 552(b);
    • a final DIP order without a 506(c) waiver and 552(b) protection satisfactory to the Required Lenders;
    • a venue change not reversed within 10 days;
    • orders or motions adversely affecting or modifying the lenders' rights; and
    • orders or motions that would preclude credit bidding.
  • Lender challenges:
    • any loan party challenge to the prepetition documents, liens or payments, or a motion granting another creditor adequate protection inconsistent with the DIP orders;
    • suits against the DIP or prepetition lenders brought by or with the consent of a debtor, or by an estate representative with standing;
    • such suits brought by a party without standing that are not dismissed within 30 days; and
    • any written denial of liability, or a damages suit against the lenders.
• Standard defaults include misrepresentations; judgments over $50,000 not discharged or stayed within 30 days; invalidity of, or a written challenge to, the DIP or prepetition loan documents or liens; and changes in ownership or corporate structure through equity issuances or dispositions of subsidiary equity. The ownership trigger excludes changes the DIP agent consents to and ordinary-course issuances of equity by Wilkes Telephone Membership Corporation to its qualifying customers. The court's grant of relief on any loan-party motion that results in an event of default is itself an event of default, and the debtors consent to an expedited hearing on any such motion at the DIP agent's request.

Remedies

• Termination declaration: under the proposed interim order, as soon as an event of default occurs, the DIP agent may, without applying to the court, send a termination declaration by email to debtors' counsel, any committee counsel, the prepetition agent and the U.S. Trustee. The declaration may:
  • accelerate the DIP obligations, terminate or restrict the commitments and terminate the facility as to future obligations, without affecting the DIP liens or claims;
  • trigger the Carve Out;
  • terminate or restrict cash collateral use; and
  • impose default interest.
• Remedies Notice Period: the automatic stay is modified so that, five business days after the Effective Termination Date:
  • the DIP agent may exercise remedies, subject to the Carve Out and Prepetition Permitted Prior Senior Liens; and
  • the prepetition agent may exercise its remedies, subject also to the DIP liens and DIP superpriority claims.
  During the period, the debtors or a committee may seek an emergency hearing. The debtors may contest only whether an event of default has occurred and is continuing, and they waive any section 105 relief that would restrict the lenders. Unless the court orders otherwise, the stay ends automatically when the period ends.
• Collateral access: after the period, the lenders may recover collateral and enter leased premises, but only under a landlord agreement, existing rights, landlord consent or a court order. They owe only per diem rent that first accrues after the Effective Termination Date, for the time they occupy the premises.
• Under the credit agreement, the DIP agent may exercise remedies, and must do so if the Required Lenders request, subject to the DIP orders and the regulatory approval condition. Each lender may also set off deposits it holds.

Covenants

• Budget: no payments, obligations or actions inconsistent with the budget (subject to the permitted variance) or the milestones, and management fees only as budgeted
• Debt and liens: debt is limited to the DIP and prepetition facilities, scheduled existing debt, up to $100,000 of purchase-money and capital lease debt consistent with the budget, and budgeted unsecured intercompany debt. Only permitted liens are allowed.
• Investments: limited to scheduled existing investments, cash equivalents, budgeted intercompany investments, CoBank equities and other investments of up to $50,000 in total that are consistent with the budget
• Dispositions: limited to ordinary-course inventory sales, immaterial obsolete assets, budgeted dispositions, and dispositions approved by the DIP agent or by the court on at least 14 days' notice. No merger, liquidation or acquisition is allowed without the DIP agent's prior written consent in its sole discretion, other than through a sale process or plan approved by both the DIP agent, in its sole discretion, and the court, and no such transaction may create a new subsidiary.
• Structure: no restricted payments. No new subsidiaries, and no joint ventures without DIP agent consent. No change in line of business or fiscal year, and no amendment of organizational documents without DIP agent consent. Material agreements may be amended only if the change is not adverse to the lenders and on five business days' notice.
• Affiliates: transactions with affiliates are limited to budgeted intercompany dealings, ordinary-course compensation, scheduled transactions or those disclosed in first-day pleadings, and arm's-length ordinary-course dealings. For this purpose, any equity holder of RiverStreet Parent Holdings, LLC counts as an affiliate, as does Eric S. Cramer for so long as Cramer directly or indirectly owns equity in that entity.
• Affirmative covenants: maintain existence, licenses and franchises; carry insurance naming the DIP agent as additional insured and loss payee; pay postpetition taxes as budgeted; keep eligibility to borrow from CoBank while CoBank is a lender; and allow inspections and collateral reviews at the borrowers' expense.

Prepayments and Application of Proceeds

• Voluntary: permitted in whole or in part on three U.S. Government Securities Business Days' notice. The minimum is the lesser of the outstanding loan and $100,000, in $100,000 multiples, with accrued interest and fees. Any prepayment in full must include the exit fee.
• Mandatory: 100% of net cash proceeds of:
  • Asset dispositions, unless the DIP agent agrees otherwise, excluding up to $100,000 of ordinary-course sales of excess inventory
  • Casualty events
  • Equity issuances
  • Permitted debt incurrence
• Mandatory prepayments are applied pro rata across the loans, must include the exit fee if they repay the loans in full, and do not cure any default the triggering event caused. Under the proposed interim order, if any later financing secured by DIP collateral is obtained before the DIP and prepetition obligations are paid in full, its proceeds must be turned over to the DIP agent.
• Waterfall: after remedies are exercised, proceeds go first to the DIP agent's fees and expenses (including its advisors); then to lender expenses and indemnities; then interest and fees; then principal; then other DIP obligations; then to the prepetition agent for the prepetition obligations; and any balance to the loan parties.

Conditions Precedent

• Closing:
  • entry of the interim order, with the budget, in the form attached to the credit agreement or otherwise acceptable to the DIP agent and each DIP lender in their sole discretion, in full effect and not stayed or adversely modified without consent;
  • signed loan documents;
  • know-your-customer and beneficial ownership deliveries; and
  • payment of fees due at closing.
• Each draw:
  • a loan request at least one business day in advance;
  • for any draw above the initial $10 million commitment, entry of a final order acceptable to the DIP agent and the Required Lenders;
  • accurate representations;
  • no default or event of default since the petition date, and the maturity date not yet reached;
  • the DIP orders in full effect;
  • budget compliance; and
  • payment of fees then due.

Waivers

• Subject to entry of the final order, paragraphs 44 through 46 of the proposed interim order provide:
  • Section 506(c): no administrative costs may be charged against the DIP or prepetition secured parties, their claims or their collateral without their written consent
  • Section 552(b): the equities-of-the-case exception will not apply to the prepetition secured parties
  • No marshaling as to either the DIP or the prepetition secured parties
• The order is not consistent on timing for the DIP lenders:
  • Finding L of the proposed interim order extends the section 506(c) and 552(b) waivers to the DIP secured parties without a final-order condition.
  • Paragraph 44 makes the 506(c) waiver subject to entry of the final order for both lender groups.
  • Paragraph 46 addresses the 552(b) waiver only for the prepetition secured parties, subject to the final order.
• Under the credit agreement, a final order without a 506(c) waiver and 552(b) protection reasonably satisfactory to the Required Lenders is an event of default.

Amendments and Lender Protections

• Controlling document: the proposed interim order governs over the DIP documents. The motion provides that the credit agreement controls over the motion, and the interim order controls over both.
• Amendments: the DIP documents may be amended without a court order if the change is not materially adverse to the estates, with notice to any committee, the prepetition agent and the U.S. Trustee. Materially adverse amendments need notice and court approval, which may be expedited. They include any amendment that would:
  • increase the commitment or shorten the maturity;
  • raise the interest rate or fees, other than imposing a previously agreed default rate;
  • change the collateral or lien priority, or modify the Carve Out;
  • add or modify events of default in a way materially adverse to the debtors, the committee or other parties; or
  • materially modify or eliminate the debtors' budget obligations or covenants.
• Restrictions on the debtors: under paragraph 55 of the proposed interim order, until the DIP and prepetition obligations are paid in full, the debtors irrevocably waive the right to seek, without the agents' consent:
  • any modification of the order;
  • any claim equal or senior to the superpriority claims;
  • any further cash collateral order, outside the Remedies Notice Period; or
  • any lien equal or senior to the DIP or prepetition liens.
  By contrast, the motion's summary states that the order does not waive the debtors' authority to request cash collateral use or credit, subject to limitations in the credit agreement.
• Unless both agents consent or the obligations are paid in full, no order other than the DIP orders may authorize financing that primes or ranks equally with the lenders, other uses of cash collateral, returns of goods under section 546(h), or changes to the lenders' rights.
• Indemnity and liability: under the proposed interim order the debtors indemnify the DIP secured parties under the credit agreement, except for losses a final order finds arose from actual fraud, gross negligence or willful misconduct, losses from the indemnitee's material breach of the credit agreement, claims between indemnitees that do not involve a debtor act or omission, and costs of a successful challenge. The order also provides that neither lender group is deemed to control the debtors or owes them a fiduciary duty, that the lenders bear no liability for the debtors' operations or for loss of or damage to collateral, and that the lenders need not file proofs of claim.