S.M.F. Group - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• The Fireman Group Cafe Concepts, Inc. and its 21 affiliated restaurant debtors, including S.M.F. Group Inc., Brooklyn Diner USA, Inc., Red Eye Grill, L.P., Brasserie 57 LLC, and Fiorello's Roman Cafe, Inc., borrow jointly and severally; every debtor is a borrower, so there are no separate guarantors.

Agent / Lender(s)

• FHGRF LLC, a Delaware limited liability company, as sole DIP lender and, in its separate capacity as holder of the prepetition note, the prepetition secured party.

DIP Commitments

• Senior secured superpriority financing consisting of two new-money facilities plus a roll-up that accrues as new money is drawn:
  • New money term facility of up to $2.3 million in aggregate principal advances, inclusive of the $1.205 million funded under the interim order, drawn in amounts consistent with the budget's projected cash shortfalls and funded irrespective of holdback receipts; borrowing requests are due by noon one business day before the draw. The commitment expires on the earliest of full funding, Oct. 31, 2026, the maturity date, or termination of the commitments following an event of default.
  • Additional new money revolving facility, available on a revolving basis in an amount equal at any time to the lesser of $4.2 million and the aggregate holdback amounts remitted to the lender. The revolver may be borrowed, repaid, and reborrowed; new money term loans may not be reborrowed once repaid.
  • Roll-up of prepetition secured obligations at a 2:1 ratio: each dollar drawn under either new money facility after the restatement effective date is matched by a deemed term loan equal to twice that principal amount, which converts an equivalent amount of prepetition debt into DIP obligations without any cash changing hands. Under the interim order, $2.41 million of prepetition obligations had already been rolled up against the $1.205 million interim advance.
• The lender is owed at least $6,235,147.78 in principal under the July 31, 2026 second amended and restated secured demand promissory note, inclusive of $2,378,334.60 of prepetition emergency funding extended in contemplation of the filing.
• Holdback amounts, meaning funds owed to the debtors and held by third-party payment processors including American Express, Toast, Stripe, and The Hilton Club, must be remitted to the lender within one business day of receipt and are applied first to fees and expenses, second to the roll-up loans, third to the new money loans, with any excess returned to the debtors only if no default is continuing. Remitted holdbacks replenish the revolving commitment.
• The amended and restated credit agreement dated Sept. 24, 2026 replaces the initial credit agreement in its entirety without novation; the interim advances, the interim roll-up, and all accrued PIK interest carry over as DIP obligations, and the liens, superpriority claims, and adequate protection granted under the interim order continue uninterrupted. The lender waived the existing defaults under the initial credit agreement, along with all default-rate interest and any fee or charge arising solely from those defaults accrued before the restatement effective date; contract-rate interest was not waived.
• The restatement followed the debtors' default under the initial credit agreement, which had left the lender with no further funding obligations under it.

Cash Collateral

• The debtors are authorized to use cash collateral, defined as all of their cash wherever located and held, including cash in deposit accounts, constituting cash collateral of the prepetition secured party or the DIP lender, solely for purposes permitted by the approved DIP budget and subject to permitted variances.

Conditions to Funding

• The restated agreement took effect on entry of a final order satisfactory to the lender, unstayed and unmodified without its consent, with the budget approved in that order.
• Each draw under either new money facility requires that representations remain true in all material respects; no default exists or would result; no material adverse effect has occurred since the petition date in the lender's reasonable discretion; every milestone due by the borrowing date has been met; the debtors are in compliance with the budget covenant; the final order remains in effect, unstayed, and unmodified without the lender's consent; lender fees and expenses then due have been paid; the lender has its required bank-account and platform access; and no trustee or examiner with expanded powers has been appointed and no case has been dismissed or converted.

Interest Rate

• Rate: 12% per annum, simple, paid in kind by increasing the principal amount of the loans; interest is due on the maturity date.
• Default Rate: the interest rate plus 4%, payable on demand following an event of default.
• Interest is computed on a 360-day year and actual days elapsed. PIK interest added to principal is disregarded in measuring availability under the commitments.

Fees

• Exit Fee: 1.0% of the aggregate principal of all loans advanced, deemed advanced, capitalized, or otherwise added to the DIP obligations, roll-up loans included, reduced by the final order from the 2.0% in the credit agreement; fully earned on entry of the interim order, payable at the earlier of maturity or full repayment, including on acceleration, and non-refundable.
• Lender expenses: the debtors pay all of the lender's reasonable and documented out-of-pocket costs and expenses, including the fees of Pullman & Comley, LLC as lender's counsel, without fee applications or further court order; the credit agreement calls for payment within five business days of a payment request, but the final order subjects those expenses to the seven-day invoice review procedure below. Unpaid lender expenses are deemed requested as an advance under the loans and become DIP obligations, and the debtors also indemnify the lender and its affiliates, officers, directors, attorneys, agents, and employees.

Maturity

• The earliest to occur of:
  • Dec. 31, 2026
  • Conversion of any of the Chapter 11 cases to Chapter 7
  • The effective date of a confirmed Chapter 11 plan
  • Acceleration of the DIP obligations
• Voluntary prepayment is permitted at any time without premium or penalty, other than the exit fee and accrued interest, fees, and expenses then due; prepayment does not reduce the commitments absent the lender's written agreement.
• Mandatory prepayment of 100% of net cash proceeds is required within three business days of receipt of proceeds from any disposition or involuntary disposition, any non-permitted debt issuance or equity issuance, and any settlement, judgment, or award on a commercial tort claim or other litigation claim constituting DIP collateral, in each case applied to fees and expenses, then accrued interest, then principal, subject to the estates' share of litigation recoveries under the final order's allocation described below.

Case Milestones

• Entry of the final order approving the DIP facilities, acceptable to the lender in its sole discretion, by Sept. 18, 2026. The debtors filed Chapter 11 on Aug. 9, 2026, and the court entered the interim order on Aug. 12; it entered the final order on Sept. 24, 2026, following a final hearing adjourned from Sept. 3, after all objections, including the U.S. Trustee's, were withdrawn, resolved, or overruled.
• Collection and remittance to the lender of not less than $4.2 million of holdback amounts by Nov. 18, 2026, and of all remaining holdback amounts by Dec. 15, 2026.
• Bankruptcy court approval of solicitation for the Chapter 11 plan by Nov. 30, 2026.
• Occurrence of the plan effective date by Dec. 31, 2026.
• Milestones missed solely because of the court's availability are automatically extended, with corresponding extensions of subsequent milestones, by no more than three business days; any other extension requires the lender's written agreement and applies only to the milestone identified.

Carve Out

• The carve out consists of the sum of:
  • Unpaid statutory fees owed to the clerk of the court and the U.S. Trustee, plus statutory interest
  • Up to $25,000 of unpaid fees and expenses of a Chapter 7 trustee under section 726(b)
  • Allowed professional fees of debtor and committee professionals accrued through the first business day following delivery of a carve out trigger notice, to the extent consistent with the approved DIP budget
  • Up to $250,000 of allowed professional fees incurred after that first business day
  • $150,000 reserved solely for distributions on general unsecured claims, first under any confirmed Chapter 11 plan and then, to the extent unused once each case has been dismissed, converted, or had a plan confirmed, in any Chapter 7 successor case
• The trigger notice may be delivered following a DIP termination event and may be included in a remedies notice. On delivery, the debtors must fund a pre-trigger reserve equal to unpaid estimated allowed professional fees incurred through the trigger date, capped at budgeted amounts, and a post-trigger reserve equal to the $250,000 notice amount; the lender may not sweep or foreclose on the debtors' cash until the reserves are fully funded, and the reserves are not subject to the DIP liens or adequate protection liens.
• The credit agreement's parallel carve-out definition bars the committee and its professionals from carve-out coverage for any action to avoid, challenge, object to, recharacterize, or subordinate the prepetition secured obligations, the DIP loans, or the DIP collateral.
• After an event of default, the debtors may use DIP proceeds or cash collateral to fund the carve out and the reserves, subject to the budget, though the credit agreement allows no additional borrowing for that purpose unless the DIP order requires it or the lender approves in writing. Neither the DIP lender nor the prepetition secured party is directly obligated to pay any professional's fees.

Use of Proceeds

• Provide working capital and fund general corporate purposes, in each case only in accordance with the approved DIP budget and the DIP order
• Permit the orderly continuation of the business and maintain vendor, supplier, and customer relationships
• Pay the costs of administering the estates, fund the carve out, and pay adequate protection obligations

Securities and Priorities

• The DIP obligations constitute allowed superpriority administrative expense claims against each debtor on a joint and several basis under section 364(c)(1), senior to all other administrative, priority, and unsecured claims and payable from all prepetition and postpetition property, subject only to the carve out.
• The DIP liens, DIP superpriority claims, and adequate protection liens and claims survive with their priority any conversion or dismissal of the cases, any section 363(b) sale order except as the loan documents permit, and plan confirmation; on dismissal they continue until the DIP and adequate protection obligations are paid in full, with the court retaining jurisdiction to enforce them.
• The DIP lender holds automatically perfected liens on all DIP collateral, effective as of entry of the interim order, subject and subordinate to the carve out and the permitted prior senior liens, with the following priorities:
  • First-priority senior liens under section 364(c)(2) on all DIP collateral not subject to valid, perfected, non-avoidable prepetition liens
  • Junior liens under section 364(c)(3) on DIP collateral subject to permitted prior senior liens
  • Otherwise, under the section 364(c) and 364(d) grant, liens senior to all other security interests in and claims against the DIP collateral, priming the prepetition secured party's own liens and any lien avoided and preserved under section 551; the DIP liens may not be made pari passu with any later-granted lien and are not subject to sections 510, 549, or 550
• The DIP collateral is defined broadly across all asset classes, including real property and prepetition tax refunds and credits such as any employee retention tax credits, and expressly captures the debtors' commercial tort claims against merchant cash advance lenders, future receivables and revenue-based financing funders and their affiliates, and claims against Hilton Grand Vacations Management, LLC and related Hilton Club entities, together with all proceeds and recoveries, as well as turnover claims under section 542 against payment processors, merchant acquirers, and reserve account holders.
• Permitted prior senior liens consist of purchase money security interests and property subject to true equipment leases; liens of BankUnited, N.A.; liens of the Small Business Administration; and liens of Inkind Card and Rewards Network securing certain contractual obligations, in each case only to the extent senior to the lender prepetition and duly perfected, valid, enforceable, and non-avoidable as of the petition date. Also included are petition-date liens later perfected under section 546(b), to the extent valid, perfected, enforceable, unavoidable, and expressly identified in the credit agreement or otherwise permitted by the order, along with ordinary depository setoff rights, minor real-property encumbrances, certain tax liens, and statutory and common law liens of landlords, carriers, warehousemen, mechanics, suppliers, materialmen, and repairmen. The order expressly declines to find any alleged permitted prior senior lien valid, senior, or perfected, and preserves every party's right to challenge them. A seller's reclamation right under section 546(c) is not a permitted prior senior lien and is expressly subject to the DIP liens.

Avoidance Actions

• Liens on avoidance action proceeds attach upon entry of the final order and, so attached, avoidance action proceeds form part of the DIP collateral.
• Avoidance recoveries fall within the final order's other recoveries, 30% of which, net of litigation costs, the estates may retain for eligible administrative claims under the allocation described below.

Credit Bid

• The DIP lender and the prepetition secured party, or any assignee or designee, may credit bid any or all of the obligations outstanding under the DIP facility and the prepetition loan documents in connection with any disposition of estate property under section 363(k), and the debtors have agreed not to oppose that right.

Estate Stipulations and Challenge Period

• The official committee, appointed Aug. 27, 2026, completed its investigation of the prepetition note, the prepetition liens, and related claims, including recharacterization, subordination, Chapter 5 avoidance, disallowance, and perfection theories, and advised the court at the final hearing that it does not intend to assert and consents to the waiver of any challenge to those claims or to the DIP claims, and that it supports the DIP facility.
• Accordingly, upon entry of the final order and without any further action or the running of any challenge deadline, the debtors' stipulations and the credit agreement releases are binding as to the prepetition note claims and the DIP claims on the debtors, their estates, the committee, any successor entity, and all parties in interest; the prepetition secured obligations are allowed as secured claims in the amount of not less than $6,235,147.78; the prepetition liens are valid, perfected, and non-avoidable with the stipulated priority; the interim roll-up and the credit agreement are approved on a final basis as DIP obligations immune from challenge, avoidance, recharacterization, subordination, disallowance, reduction, or unwinding; and all challenges to the prepetition note claims and DIP claims are forever waived, released, and barred.
• Challenge Deadline: Oct. 26, 2026, applicable only to "Other Prepetition Claims," meaning any stipulation, waiver, or release reaching a claim that is neither a prepetition note claim nor a DIP claim. Those stipulations bind the debtors and their successors immediately on entry but bind the committee, any other committee, and any successor entity, including a trustee or examiner, only if no party timely files a standing motion describing the specific nature and basis of the challenge, commences a challenge proceeding by the deadline, and obtains a final non-appealable order sustaining it. The deadline may be extended by written agreement of the debtors and the DIP lender or by court order for cause on a motion filed before it expires.
• Challenge Budget: $50,000, available to the committee solely to investigate, and not to prosecute, the other prepetition claims before the challenge deadline. With the committee's prepetition note investigation concluded, no part of that budget may be used on the prepetition note claims or the DIP claims.
• No DIP proceeds, DIP collateral, cash collateral, or carve out may be used to investigate, initiate, prosecute, join, or finance any claim against the DIP lender or the prepetition secured party, to challenge their claims, liens, or interests, or to assert avoidance actions relating to the DIP or prepetition liens and obligations, subject to the challenge budget carve-out above.
• The court expressly reserved the right, after notice and a hearing, to unwind or partially unwind the adequate protection provided to any permitted prior senior lien holder whose liens are determined invalid, unperfected, or unenforceable; no such unwinding is available as to the prepetition note claims or the DIP claims.

Adequate Protection

Prepetition Secured Party

• Superpriority administrative expense claims under section 507(b) in the amount of any diminution in value of the prepetition liens, subordinate only to the carve out and the DIP superpriority claims and senior to all other claims against the estates.
• Automatically perfected replacement liens on the DIP collateral, effective as of entry of the interim order, senior to all other liens but subordinate to the carve out and the DIP liens; in no circumstance may the adequate protection liens be senior to or pari passu with the DIP liens, regardless of when they attach.
• Payment of reasonable and documented out-of-pocket fees, costs, and expenses, including the fees of Pullman & Comley, LLC as counsel to the prepetition secured party, incurred since the petition date, subject to the invoice review procedure below.
• Nothing in the order impairs the application of section 507(b) if the protection provided proves insufficient to compensate for diminution in value.
• In the credit agreement, the borrowers represent that using cash collateral to fund the budgeted fees and costs of retained professionals constitutes a diminution of the lender's collateral that warrants adequate protection.

Permitted Prior Senior Lien Holders

• Replacement liens under sections 361 and 363 on all postpetition property to the same extent, validity, and priority as their prepetition liens held as of the petition date, solely to the extent of diminution in value from the debtors' use of their collateral, subject to the DIP liens and the carve out and to a determination of the validity, priority, and extent of the underlying liens.
• A superpriority administrative expense claim under section 507(b), subordinate to the DIP obligations and the carve out, available only where the holder is determined to hold valid, perfected, enforceable prepetition liens, the use of cash collateral diminishes the value of its interest, and the other forms of protection prove insufficient.

Professional Fee Review

• DIP professional fees and adequate protection professional fees are paid without fee applications, without compliance with U.S. Trustee guidelines, and without further court approval, provided that each professional delivers summary invoices, redactable for privilege, to counsel to the debtors, the U.S. Trustee, counsel to the committee, and counsel for the DIP lender; objections must be submitted in writing within seven calendar days, after which unobjected invoices are promptly paid and any disputed portion is held back pending agreement or court order.

Waivers

• Section 506(c): except to the extent of the carve out, no costs or expenses of administering the Chapter 11 cases or any successor case may be charged against or recovered from the DIP collateral, the prepetition collateral, the DIP lender, or the prepetition secured party without prior written consent, which cannot be implied from any action, inaction, or acquiescence.
• Section 552(b): the "equities of the case" exception does not apply to the DIP lender or the prepetition secured party with respect to proceeds, products, offspring, or profits of the DIP collateral or prepetition collateral.
• Marshaling: under the credit agreement, neither the DIP collateral nor the application of its proceeds is subject to the equitable doctrine of marshaling or any similar doctrine.
• Section 364(e) and 363(m) protections apply to the DIP obligations, liens, and superpriority claims if the final order is later vacated, reversed, or modified.

Permitted Variance

• The court approved the initial DIP budget attached to the final order as the operative budget under the credit agreement. Compliance is tested on a weekly rolling basis against four covenants, deviation within which constitutes the permitted variances:
  • Weekly disbursements may not exceed 110% of aggregate budgeted disbursements
  • Operating receipts for any four-week period may not fall below 90% of budgeted operating receipts for that period
  • No line-item disbursement category may exceed 110% of its budgeted amount for a single week unless offset by prior underspend in that category
  • Borrowings under the new money facility or the additional new money revolving facility, together with all prior borrowings net of repayments, may not exceed 110% of the aggregate amount of those facilities projected to be outstanding under the then-current budget, measured cumulatively from the petition date, and in no event may exceed the applicable funding commitment
• The final order applies its tests subject to any contrary or clarifying provision in the credit agreement, whose own budget covenant, tested weekly beginning the first Friday after entry of the interim order, measures the disbursement and receipts tests cumulatively from entry of the interim order rather than by single week and four-week period, and caps each line item at 115% of its budgeted amount on the same cumulative basis rather than 110% for a single week; its draw test, like the final order's, is measured cumulatively from the petition date. The credit agreement separately bars any expenditure above 110% of planned expenditures for the week following submission of a forecast, on a non-cumulative line-item basis, without the lender's written approval.
• Budget refresh and reporting: by 5 p.m. each Wednesday, the debtors must deliver an updated cash flow forecast, including a salary run by employee with a compensation line item and restaurant-level detail, in form satisfactory to the lender in its sole discretion, together with supporting documentation within three business days of request; each forecast must set out all variances between the then-current budget and actual income and expenditures on a line-item basis. An updated budget replaces the then-current budget only upon the lender's written approval.
• Starting the first Wednesday after entry of the final order and weekly thereafter, the debtors must deliver to the lender by 5 p.m. (ET) reporting of actual results for the prior week against the approved DIP budget, an updated forecast, and any supporting documentation the lender requests. The credit agreement separately requires a variance report by noon on the first Wednesday following entry of the interim order and by noon on the fifth business day after each week thereafter, showing dollar and percentage variance of actual disbursements against budget on a line-item basis with an explanation of any material variance. All written reports delivered to the DIP lender must also go to counsel for the committee.
• Capital expenditures must conform to the budget and the DIP order, and no compensation may be paid to any affiliate without the lender's consent or to any officer, director, or employee other than as provided in the budget.
• The budget is expressly not an amendment to any DIP loan document or to the borrowing limits it sets; budget line items for interest, expenses, and other amounts owed to the lender are estimates only and do not cap the debtors' obligation to pay the DIP obligations in full. The lender may assume compliance, has no duty to monitor it, and is not obligated to pay, directly or from the DIP collateral, any unpaid expense, whether incurred under the budget or omitted from it.

Budget Economics

• The six-week forecast running from the week beginning Sept. 21, 2026 through the week ending Nov. 1, 2026 projects total cash receipts of approximately $9.5 million, all from operations with no holdback collections projected, against total disbursements of approximately $11.0 million, for negative net cash flow of approximately $1.5 million over the period.
• Beyond food and beverage costs of approximately $2.0 million, operating disbursements of approximately $7.0 million are led by labor at approximately $4.4 million, sales tax at approximately $892,000, and a single rent payment of approximately $651,000 in week two, leaving positive operating cash flow of approximately $448,000 for the period. Non-operating disbursements of approximately $2.0 million include restructuring professional fees of approximately $1.1 million and debt interest and principal payments of approximately $281,000.
• The forecast opens with a bank balance of approximately $670,000 and runs negative from week two onward, troughing at a projected balance of approximately negative $1.0 million in the week ending Oct. 4, 2026 after accounting for a $125,000 restricted utility deposit, and closing the period at approximately negative $962,000 on the same adjusted basis. Weekly funding need is shown as $30,000 in week one and $1 million in week two, totaling $1.03 million, with no further draws projected across the remaining four weeks.

Events of Default and Remedies

• Events of default under the credit agreement include, among others:
  • Failure to pay principal, interest, premium, fees, or any other amount when due
  • Breach of any affirmative or negative covenant, the holdback remittance provision, the prepayment provisions, or the fee and expense provisions, with no notice or cure period; other covenant breaches carry a five-business-day cure after written notice
  • Any representation or warranty incorrect or misleading in any material respect when made
  • Cross-default on other indebtedness or guarantees exceeding $50,000, subject to stay and good faith dispute carve-outs
  • Entry of money judgments exceeding $50,000 in the aggregate not covered by insurance, or non-monetary judgments with a material adverse effect, that go unstayed or undismissed for 30 consecutive days
  • Entry of a final judgment or order determining that any of the merchant cash advance contracts at issue in the debtors' pending adversary proceeding, Adv. Proc. No. 26-01087 (SAB), constitutes a sale of a debtor's revenues, receivables, or other payment rights
  • Failure to meet any milestone when required
  • Invalidity of any DIP loan document, or failure of the DIP order to create a valid perfected lien with the required priority
  • Commencement of a challenge proceeding asserting other prepetition claims that is not withdrawn or dismissed with prejudice within seven calendar days of filing
  • Any event or circumstance that, in the lender's reasonable discretion, has or will have a material adverse effect, a term defined to include loss or threatened loss of a liquor license, food-service permit, health department approval, or payment processor, reservation-platform, or delivery-platform relationship, and closure, material reduction in operating hours, loss of access to premises or utilities, casualty, eviction, strike, lockout, or public health order affecting any material restaurant location, except as expressly contemplated by the budget or approved by the lender in writing
  • Entry of orders converting a case to Chapter 7; confirming a plan that does not provide for termination of the commitments and payment in full in cash of the DIP obligations and prepetition secured obligations by the effective date and for continuation of the lender's liens until that date; dismissing a case without provision for payment in full; without the lender's consent, modifying the DIP orders, granting administrative priority equal or senior to the lender, or granting any lien on DIP collateral other than a permitted lien; or granting stay relief, not stayed pending appeal, to any creditor on a claim of $100,000 or more; or an application for an order impairing the DIP collateral or for a trustee, conversion, or dismissal made by the debtors, or by another party and not contested by the debtors in good faith, or for non-consensual use of cash collateral or DIP collateral, including financing secured by liens of any rank on the DIP collateral
• An event of default under the credit agreement constitutes a DIP termination event unless waived in writing by the lender, which may be evidenced by email from lender's counsel to debtors' counsel. On a termination event, the automatic stay is deemed vacated to the extent necessary for the lender to deliver a remedies notice to counsel for the debtors, the U.S. Trustee, and counsel for the committee, declaring the termination declaration date; effective no sooner than seven calendar days after that date, the lender may terminate, reduce, or restrict the commitments; accelerate the DIP obligations; terminate the facility and loan documents; revoke the right to use cash collateral; charge default-rate interest; and enforce against the DIP collateral or prepetition collateral.
• During the seven-day remedies notice period, the debtors and the committee may seek emergency relief before the court, which automatically extends the notice period until the motion is adjudicated; the debtors may use cash collateral during the period solely to fund payroll and critical expenses necessary to keep the business operating or consented to by the lender, to fund the carve out, and to file the emergency motion. Unless the court orders otherwise, the stay terminates automatically at the end of the period. On a hearing to prevent the lender from exercising remedies, the credit agreement provides that the sole issue before the court is whether an event of default has occurred and remains uncured.
• The DIP obligations become due and payable without notice or demand on the termination declaration date, subject to the remedies-notice procedure; under the credit agreement, the debtors may attempt to cure during the notice period but may not request or receive further borrowings or make payments outside the budget and the DIP order without the lender's consent.

Allocation for Unsecured Creditors and Plan Backstop

• The debtors or their estates may retain 20% of each dollar of holdback recoveries and 30% of each dollar of other recoveries, in each case net of litigation costs, for distribution to holders of eligible claims; amounts received by the DIP lender are paid over to the estates for that purpose. Holdback recoveries include all proceeds of the debtors' claims against payment processors, including the pending adversary proceeding Brasserie 57 LLC, et al. v. American Express Travel Related Services Company, Inc., et al., Adv. Proc. No. 26-01077.
• The allocation is capped at $3.5 million in the aggregate and is available only for administrative expense claims identified on the wind-down costs exhibit to the credit agreement that are not assumed by a buyer in the sale process, and only to the extent necessary and actually incurred to confirm a plan. Cash on hand and other available assets must be applied to eligible claims first. No further allocation is payable for claims off the wind-down costs exhibit, or after the earlier of the date the $3.5 million cap is reached, the date eligible claims are satisfied, or dismissal or conversion of any case.
• Plan backstop: if the DIP lender or its designee is the successful bidder for substantially all of the debtors' assets in the sale process approved at ECF No. 104, and subject to delivery by Oct. 21, 2026 of a post-sale-through-confirmation budget reasonably acceptable to the lender, with disputes resolved by the court, the lender will permit the use of cash collateral or advance additional new money loans on the same terms as other new money loans to fund eligible claims to the extent required to confirm a plan; those advances are DIP obligations. The lender is not required to fund on or after Dec. 31, 2026, and must be reimbursed or recaptured out of the allocation before the allocation may be used to pay eligible claims.

Other Covenants and Provisions

• The debtors may not close any restaurant location, cease operations at a location, or give public or employee notice of a closure without the lender's prior written consent.
• The debtors must diligently prosecute all scheduled commercial tort claims and other material litigation claims constituting DIP collateral consistent with the budget, and may not settle or release any such claim without the lender's consent where the resolution exceeds $25,000 individually or $75,000 in the aggregate, carries non-monetary terms, or releases any funder. Litigation counsel for a material commercial tort claim may not be retained, replaced, or terminated without the lender's consent, not to be unreasonably withheld, and the lender receives quarterly status reporting on all such claims.
• The debtors may not make critical vendor or other prepetition unsecured claim payments, section 503(b)(9) payments, or management incentive or section 503(c) payments except as approved by the court after notice and hearing and, where funded from borrowings, approved by the lender and within the limits of the budget.
• The debtors may not incur debt ranking pari passu with or senior to the DIP obligations, and ordinary-course unsecured debt beyond budgeted payroll, trade, and operating expenses is capped at $25,000 without the lender's consent; they may not commence any action against the lender relating to the prepetition loan documents or amend the DIP order without the lender's consent.
• The debtors must give the lender continuous, real-time, read-only access to their deposit accounts and cash and bank account information, and seven business days' notice before altering their accounting, cash management, or data platforms. Jordan Meyers, the chief restructuring officer, and Benjamin Grossman, the sole manager, are designated responsible officers and may not be replaced or removed without the lender's prior written consent.
• Amendments to the DIP loan documents must be provided to the U.S. Trustee and committee counsel at least two business days before effectiveness; any amendment shortening the maturity or increasing the aggregate commitments or the interest rate is a material DIP amendment that must be filed with the court and is deemed approved if no objection is filed within two business days, failing which it proceeds to hearing.
• Nothing in the final order or the loan documents prevents the debtors or their officers from negotiating or documenting alternate financing, including any refinancing or exit facility, that they believe in good faith offers reasonably more favorable terms.
• The DIP lender is deemed named as additional insured and lender's loss payee on each insurance policy relating to the DIP collateral upon entry of the final order.
• Releases: the borrowers release the DIP lender together with its successors, assigns, officers, directors, employees, representatives, trustees, attorneys, agents, and affiliates from all claims arising out of the credit agreement, the DIP loan documents, the prepetition note and prepetition secured obligations, the Chapter 11 cases, and the DIP orders. Those releases are effective on entry of the final order as to prepetition note claims and DIP claims, and, as to other prepetition claims, bind third parties only subject to the challenge deadline described above.