Simply Interior Homes - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• Simply Interior Homes AcquisitionCo, LLC (f/k/a Soft Goods, LLC) ("SIH Acquisition") and Simply Interior Homes, LLC (f/k/a Soft Goods Operating, LLC) ("SIH OpCo"), together with SIH Beckham Buyer LLC, SIH-BB Holdings LLC, SIH-DMD Holdings, LLC, SIH-HSD Holdings, LLC, and SIH-SR Holdings, LLC, collectively as DIP Borrowers

Agent / Lender(s)

• Great Rock Capital Partners Management, LLC, as sole and exclusive Administrative Agent, and as Collateral Agent (the "DIP Agent"), performing the duties customarily associated with such role and consistent with the Prepetition Credit Agreement (also the Prepetition Agent)
• GRC SPV Investments, LLC and Wingspire Capital, LLC, as DIP Lenders (also the Prepetition Lenders)

DIP Commitments

• $15 million senior secured superpriority debtor-in-possession financing, comprised of:
  • $5 million revolving new money credit facility (the "New Money DIP Commitments," and the loans made thereunder, the "New Money DIP Loans"), available to draw upon entry of the Interim DIP Order in accordance with the Approved DIP Budget, Interim DIP Order, and DIP Loan Documents
  • Second-out roll-up tranche of Prepetition Secured Obligations, at a ratio of $3.00 of Prepetition Secured Obligations for every $1.00 of New Money DIP Loans funded, not to exceed $10 million in the aggregate (the "Roll-Up Loans")
    • The Roll-Up Loans are automatically deemed funded, exchanged, and converted on a cashless basis into DIP Obligations upon each funding of New Money DIP Loans, with a corresponding dollar-for-dollar reduction in the remaining Prepetition Secured Obligations (without prepayment premium)
    • Prepetition Secured Obligations are converted into Roll-Up Loans only for the first $3,333,333 of New Money DIP Loans funded; any further reborrowing of New Money DIP Loans does not result in the roll-up of any additional Prepetition Secured Obligations
• Any New Money DIP Loans repaid or prepaid may be reborrowed, subject to the terms and conditions of the DIP Loan Documents
• As of the Petition Date, each Prepetition Loan Party was indebted to the Prepetition Secured Parties in an aggregate principal amount of not less than $17,916,002.34 (plus accrued but unpaid interest, unused line fees, commitment termination fees, and other fees), constituting the Prepetition Secured Obligations
• Subject to any successful Challenge, the Roll-Up is authorized as compensation for, in consideration for, and solely on account of, the agreement of the Prepetition Secured Parties (each of whom is a DIP Lender) to fund and provide consideration under the DIP Facility, and is intended to enable each Debtor to obtain financing to administer the Case, fund its operations, pursue the orderly liquidation of certain assets, and maximize value for all parties in interest
• Any Prepetition Collateral subject to a successful Challenge shall not be available to satisfy any DIP Obligations on account of the Roll-Up

Cash Collateral

• All cash of the Debtors and cash proceeds of the Prepetition Collateral, including such cash and cash proceeds held from time to time in the Debtors' securities accounts and banking, checking, or other deposit accounts (other than trust, payroll, and custodial funds held as of the Petition Date in properly established trust, payroll, and custodial accounts)
• The Prepetition Agent, at the direction of the Prepetition Secured Parties, consents to the Debtors' use of Cash Collateral solely in accordance with the Approved DIP Budget and the terms of the Final Order

Interest Rate

• Adjusted Term SOFR Rate (as defined in the Prepetition Credit Agreement) plus 7.50%, paid in cash on the last business day of each month
• Default Rate: 3.00% per annum over the otherwise applicable rate, accruing at any time an Event of Default has occurred and is continuing

Fees

• Unused Line Fee: 0.75% on New Money DIP Commitments up to the amount permitted to be drawn under the Initial DIP Budget, paid in cash on the last business day of each month; if the DIP Lenders fund New Money DIP Loans in excess of the amount permitted under the Initial DIP Budget, the unused line fee is retroactively earned and assessed on such excess amount
• Collateral Monitoring Fee: $5,000 per month, paid in cash on the last business day of each month
• Closing Fee: $100,000, earned and payable in full in-kind on the Closing Date

Maturity

• The Scheduled Maturity Date is September 30, 2026
• The DIP Facility (and the New Money DIP Commitments) terminate upon the earliest to occur of:
  • The Scheduled Maturity Date
  • The date of acceleration or termination of the DIP Facility in accordance with the DIP Terms and DIP Orders
  • The effective date of any Plan
  • The entry of an order converting the Debtors' cases to Chapter 7
  • The entry of an order dismissing the Debtors' cases
  • At the election of the DIP Lenders, the date on which any Event of Default is continuing

Milestones

• The DIP Facility contemplates a dual-track liquidation and going-concern sale process, with the following milestones (each extendable with the prior written consent of the DIP Lenders):
  • Entry of the Interim DIP Order no later than June 10, 2026
  • Within one day of the Petition Date, the filing of a motion seeking, on an interim basis, authority to continue liquidation sales pursuant to the Consulting and Marketing Services Agreement, dated June 7, 2026, with SB360 Capital Partners, LLC, and, on a final basis, approval of assumption of that agreement
  • Entry of the Final DIP Order no later than July 6, 2026
  • Filing of a chapter 11 plan and disclosure statement no later than July 22, 2026, providing for the establishment of a Liquidating Trust and a Litigation Trust
  • Entry of an order approving the Solicitation Motion and scheduling the combined hearing no later than August 12, 2026
  • No later than September 18, 2026 (or such later date as the Bankruptcy Court may schedule), a combined hearing to approve the adequacy of the Disclosure Statement and confirm the Plan, and entry of an order confirming the Plan and approving the adequacy of the Disclosure Statement (the "Confirmation Order")
  • Satisfaction of the conditions precedent to the effectiveness of the Plan no later than September 21, 2026

Carve Out

• An amount equal to the sum of:
  • All fees required to be paid to the Clerk of the Court and the U.S. Trustee under 28 U.S.C. § 1930(a), plus statutory interest
  • Up to $25,000 in fees and expenses incurred by a trustee under section 726(b) of the Bankruptcy Code
  • Allowed Professional Fees of the Debtor Professionals and Committee Professionals incurred on or before the first business day following delivery of a Carve Out Trigger Notice, to the extent allowed and not exceeding the amounts set forth in the Approved DIP Budget
  • Post-Carve Out Trigger Notice Cap: Allowed Professional Fees of the Professional Persons in an aggregate amount not to exceed $200,000 incurred after the first business day following delivery of a Carve Out Trigger Notice, excluding any Success Fee (which is to be escrowed from applicable sale proceeds)
• The Carve Out is senior to all liens and claims securing the DIP Obligations, the Adequate Protection Obligations, the Prepetition Secured Obligations, the DIP Superpriority Claims, and all other forms of adequate protection, liens, or claims securing the DIP Obligations and the Prepetition Secured Obligations
• None of the DIP Secured Parties or the Prepetition Secured Parties is responsible for the payment or reimbursement of any Professional Person's fees or disbursements incurred in connection with the Chapter 11 or any Successor Case

Use of Proceeds

• Provide ongoing operations and working capital and pay budgeted expenses of each Debtor in accordance with the Approved DIP Budget
• Provide for other general corporate purposes, including payment of the Debtors' professional fees
• Pay transaction fees and expenses
• Pay the costs of administration of the Cases, including funding the Carve-Out
• As otherwise contemplated in the Approved DIP Budget or permitted by the DIP Lenders

Credit Bid

• Subject to the Challenge provisions, the Prepetition Lenders are entitled to credit bid the Prepetition Secured Obligations pursuant to section 363(k) of the Bankruptcy Code and applicable state or foreign law, implemented in their absolute discretion

Avoidance Actions

• Upon entry of the Final DIP Order, the DIP Collateral includes the proceeds of Claims and Causes of Action under chapter 5 of the Bankruptcy Code and avoidance actions proceeds (the "Avoidance Actions Proceeds"), and the DIP Agent is granted a perfected first-priority priming lien on and security interest in such avoidance actions and their proceeds
• The Secured Parties shall look to the proceeds of non-insider Avoidance Actions last in order to satisfy any outstanding DIP Obligations, Adequate Protection Claims, Adequate Protection Liens, and Adequate Protection Payments

Challenge Period and Budget

• The Challenge Deadline is no later than 75 calendar days from the date the Interim Order was entered, by which a party with requisite standing may assert a Challenge to the amount, validity, perfection, enforceability, priority, or extent of the Prepetition Secured Obligations and Prepetition Liens, or otherwise pursue claims against the Prepetition Secured Parties
• The Challenge Deadline may be extended by the written consent of the Prepetition Secured Parties or by an order of the Court entered prior to the expiration of the Challenge Period
• If a chapter 7 or chapter 11 trustee is appointed or elected during the Challenge Period, the Challenge Period Termination Date as to such trustee is the later of the last day of the Challenge Period and 20 calendar days after the trustee's appointment or election
• No more than $50,000 in the aggregate of the proceeds of the Collateral, Prepetition Collateral, and the Carve-Out (credited against the amount allocated to Committee professionals under the Approved DIP Budget) may be used by the Committee or any chapter 7 or chapter 11 trustee solely to investigate (but not prosecute or Challenge) the Debtors' admissions and releases
• The Initial DIP Budget is the 13-week budget attached as Exhibit 1 to the Interim Order; the Approved DIP Budget is the 13-week cash flow budget then in effect, in form and substance satisfactory to the DIP Lenders in their sole discretion
• By 5:00 p.m. prevailing Eastern Time on June 18, 2026, and each one-week anniversary thereafter, the DIP Loan Parties will provide a rolling 13-week cash flow forecast, certified by Adam Zalev as the chief restructuring officer, detailing on a line-item basis operating cash receipts, operating cash disbursements (excluding professional fees), inventory levels, accounts receivable, and forecasted professional fees

Securities and Priorities

• The DIP Agent, for the benefit of the DIP Secured Parties, is granted automatically perfected DIP Liens in all DIP Collateral, subject to the Carve-Out, with the following priorities:
  • Liens on Unencumbered Property: pursuant to section 364(c)(2), a first-priority security interest in all tangible and intangible pre- and postpetition property not subject to valid, perfected, and non-avoidable liens as of the Petition Date and, upon entry of the Final Order, the Avoidance Actions Proceeds
  • Priming DIP Liens: pursuant to section 364(d)(1), a first-priority senior priming lien on all other prepetition and postpetition property, subject and subordinate only to the Permitted Prior Liens and the Carve-Out
  • Junior DIP Liens: pursuant to section 364(c)(3), a junior security interest in all property subject to Permitted Prior Liens, subject only to the Carve-Out
• The DIP Liens shall prime and be senior to the Prepetition Liens pursuant to section 364(d)(1) of the Bankruptcy Code
• DIP Superpriority Claims: pursuant to sections 364(c)(1) and 364(c), an allowed superpriority administrative expense claim on account of the DIP Obligations, with priority (except for the Carve-Out) over the Adequate Protection Claims and all other administrative expenses, and considered administrative expenses allowed under section 503(b) for purposes of section 1129(a)(9)(A), with recourse against the DIP Loan Parties

Adequate Protection

Prepetition Secured Parties

• Adequate Protection Liens: pursuant to sections 361(2) and 363(c)(2), a first-priority senior security interest in and lien on the DIP Collateral, including all Unencumbered Property and, upon entry of the Final Order, the Avoidance Actions Proceeds, securing an amount equal to the Collateral Diminution, subject and subordinate only to the DIP Liens (and any liens to which the DIP Liens are junior, including Permitted Prior Liens) and the Carve-Out
• Adequate Protection Claims: an allowed superpriority administrative expense claim under section 507(b), subject to the DIP Superpriority Claims and the Carve-Out, payable from all of the DIP Collateral (including Unencumbered Property and the Avoidance Actions Proceeds)
  • Adequate Protection Payments on account of Adequate Protection Claims (but not on account of DIP Superpriority Claims) are subject to automatic recharacterization as principal if the Prepetition Secured Parties are determined to be undersecured
• Adequate Protection Payments: payment of all reasonable and documented out-of-pocket fees and expenses of the Prepetition Secured Parties (including counsel and other professionals), whether incurred before or after the Petition Date
• Collateral Diminution: an amount equal to the diminution in value, from and after the Petition Date, of the Prepetition Secured Parties' interests in the Prepetition Collateral, including from the use, sale, or lease of the Prepetition Collateral (including Cash Collateral) or the imposition of the automatic stay
• Other covenants, including maintenance of cash management arrangements consistent with the Court's cash management order and the provision of reasonable access to the Prepetition Loan Parties' offices, properties, records, and personnel
• Any Prepetition Collateral subject to a successful Challenge shall not be available to satisfy any Adequate Protection Liens or Adequate Protection Claims to the extent of such successful Challenge

Remedies / DIP Termination Events

• The occurrence and continuance of any Event of Default (as defined in the DIP Term Sheet) constitutes a DIP Termination Event; on the DIP Termination Date the maturity of the DIP Facility is accelerated and, subject to the Carve-Out, the Prepetition Secured Parties' consent to use of Cash Collateral automatically terminates
• The DIP Agent (at the direction of the DIP Lenders) delivers notice of a DIP Termination Event to counsel for the Debtors, the Prepetition Agent, the U.S. Trustee, and any Committee; any party in interest may request an Emergency Default Hearing
• Subject to the Carve-Out, after a five (5) calendar-day Remedies Notice Period (or such later time as the Court may order), the automatic stay is deemed lifted as to the Prepetition Collateral, Cash Collateral, and DIP Collateral, and the Secured Parties may exercise remedies (including set-off and foreclosure); the Debtors may cure a curable Event of Default during the Remedies Notice Period
• During the Remedies Notice Period (prior to the Emergency Default Hearing), the Debtors may use Cash Collateral only for expenses (a) necessary to pay accrued and unpaid wages through the notice date, (b) necessary to preserve going-concern value (not to exceed the Approved DIP Budget absent consent), or (c) necessary to contest in good faith whether a DIP Termination Event occurred

Waivers

• Subject to entry of the Final Order:
  • Section 506(c): all rights to surcharge the interests of the Prepetition Secured Parties in any Prepetition Collateral or Collateral are finally and irrevocably waived
  • Section 552(b): the "equities of the case" exception shall not apply with respect to the proceeds, products, offspring, or profits of any Prepetition Collateral or DIP Collateral
  • Marshalling: neither the Prepetition Secured Parties nor the DIP Secured Parties shall be subject to the equitable doctrine of "marshaling," provided that, before seeking satisfaction from Last-Out Collateral, they shall first look to all other DIP Collateral and Prepetition Collateral

Permitted Variance

• The DIP Borrowers must adhere to the then-applicable Approved DIP Budget, tested every Thursday (commencing June 18, 2026), subject to the following Variance Limits measured as of each Variance Testing Date for the applicable Testing Period:
  • Cash Operating Receipts (the "Total Receipts" line item) shall not decrease by more than 15% in the first Testing Period (looking back one week), 15% in the second Testing Period (looking back two weeks), 12.5% in the third Testing Period (looking back three weeks), and 10% in the fourth Testing Period and each Testing Period thereafter (looking back four weeks)
  • Cash Operating Disbursements (the "Total Disbursements" line item) shall not exceed the amount forecasted in the Approved DIP Budget by more than 10%
• For purposes of calculating variances, "Total Disbursements" excludes disbursements made in payment of the Debtors' or DIP Lenders' professional fees
• Failure to comply with the Budget Covenant constitutes a Budget Covenant Default and an event of default under the DIP Loan Documents