TM36 - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• TM36, LLC, StopLoss Specialists, LLC, StopLoss, LLC, StopLoss Response Services, LLC, and StopLoss Logistics, LLC, as Borrowers

Agent / Lender(s)

• Twelve Bridge Capital, LLC (the "12BC DIP Lender") and 431 KW, LLC (the "431KW DIP Lender"), as DIP Lenders

DIP Commitments

• $5.75 million senior secured multi-draw term loan facility pursuant to the DIP Term Sheet, of which:
  • $2 million was made available as the Initial Draw upon entry of the Interim Order
  • The full $5.75 million aggregate principal amount becomes available upon entry of the Final Order, subject to the Approved Budget
• The DIP Lenders shall have no obligation to make any loan unless all conditions precedent under the DIP Term Sheet and Final Order have been satisfied in full or waived by the DIP Lenders in their sole discretion

Cash Collateral

• The Debtors are authorized to use cash collateral in accordance with the Final Order and the Approved Budget
• Following an Event of Default, the DIP Lenders may issue a Termination Notice and, after a five (5) business day Remedies Notice Period, exercise remedies subject to filing a Stay Relief Motion. Until the Stay Relief Motion has been adjudicated by the Court, the Debtors shall continue to have the right to use cash collateral solely to pay necessary expenses to avoid irreparable harm to the estates and to fund the Carve Out in accordance with the Final Order and the Approved Budget during the Remedies Notice Period

Interest Rate

• At the rates set forth in the DIP Term Sheet
• Default Rate: The DIP Lenders may invoke the right to charge interest at the default rate under the DIP Loan Documents upon an Event of Default

Fees

• Commitment Fee: 5.0%, fully earned, non-refundable, and paid upon entry of the Interim Order
• Funding Fee: 3.0%, fully earned, non-refundable, and payable as draws are made (including the Interim Draw) in accordance with the DIP Term Sheet and Approved Budget
• Exit Fee: 2.0%, payable on the amount of the DIP Commitment at the closing of a sale, refinancing, voluntary or mandatory prepayments, or pursuant to a plan, if any
• In the event of a refinancing, the DIP Lenders shall be paid all reasonable and documented out-of-pocket costs and expenses, including legal fees, financial advisor fees, and other similar fees, costs, and expenses incurred in connection with the DIP Facility and the Chapter 11 Cases
• The DIP Fees shall be part of the DIP Obligations

Maturity

• On the applicable Maturity Date or Termination Event set forth in the DIP Term Sheet, all DIP Obligations shall be immediately due and payable, and all commitments to extend credit under the DIP Facility will terminate
• The Debtors shall comply with the Milestones set forth in the DIP Term Sheet, each of which may be extended or waived without further order of the Court upon the prior written consent of the DIP Lenders (which may be by email)

Carve Out

• The Carve Out is the sum of:
  • All fees required to be paid to the Clerk of the Court and the U.S. Trustee under section 1930(a) of title 28 of the United States Code, plus statutory interest
  • All reasonable fees and expenses up to $50,000 incurred by a chapter 7 trustee under section 726(b) of the Bankruptcy Code
  • Allowed and unpaid Professional Fees of Professionals retained by the Debtors or the Committee, subject to the Approved Budget and any compensation orders entered by the Court, incurred:
    • Prior to delivery of a Carve Out Trigger Notice, subject to the limits of the Approved Budget, Interim Order, or Final Order
    • Following an Event of Default and delivery of a Carve Out Trigger Notice, in an aggregate amount not to exceed $250,000 for the Debtors' Professionals and $75,000 for the Committee Professionals
• The Carve Out may be funded to an administrative reserve or escrow account (the "Professional Fee Reserve"), into which the Debtors shall pay budgeted Professional Fee amounts on a weekly basis as cash flow permits, assuming no Carve Out Trigger Notice has been issued

Use of Proceeds

• Working capital and general corporate purposes of the Debtors
• Fund costs and expenses related to the Chapter 11 Cases, including the sale of substantially all of the assets of the Debtors
• Fund the payment of interest, fees, costs, and expenses related to the DIP Term Loans, including the reasonable and documented fees and expenses of the DIP Lenders' professionals
• Any other purposes specifically set forth in the Approved Budget

Credit Bid

• The DIP Lenders shall have the right to credit bid their proportional share of the DIP Commitment on a dollar-for-dollar basis up to the full amount of the respective outstanding DIP Obligations, pursuant to section 363(k) of the Bankruptcy Code, in connection with any sale under section 363, any plan of reorganization or liquidation under section 1129, or a sale or disposition by a chapter 7 trustee, and shall not be prohibited from making such credit bid "for cause" under section 363(k)
• The DIP Lenders may assign all or any portion of the DIP Obligations to an acquisition vehicle, affiliate, or any other Person (the "Agent Assignee"), which shall have the right to credit bid any prepetition or post-petition secured obligations so assigned to it or to any of its affiliated entities in any sale of the Debtors' assets

Avoidance Actions

• The DIP Collateral shall not include any avoidance actions brought pursuant to chapter 5 or section 724(a) of the Bankruptcy Code, or any other avoidance actions under the Bankruptcy Code or applicable state or foreign law (collectively, the "Avoidance Actions"); however, the proceeds of such Avoidance Actions shall be included in the DIP Collateral
• The DIP Lenders shall use commercially reasonable efforts to first obtain recoveries from DIP Collateral other than Avoidance Proceeds, and shall not apply the Avoidance Proceeds until a final, non-appealable dispositive order is entered in any adversary proceeding initiated by the Debtors against Insured Advocacy Group, LLC and Insured Advocacy Group II, LLC (collectively, "IAG") or Recovery Logistics Finance, LLC ("RLF")
• All parties' rights are reserved regarding the sale of the Debtors' invoices to IAG. Any invoices the Court determines were purchased by IAG are not DIP Collateral; any invoices the Court determines were not purchased by IAG are property of the estate not encumbered by IAG

Challenge Period and Budget

• The Debtors' Stipulations regarding 431KW's prepetition Convertible Loan Documents (Secured Convertible Note in an amount up to $6,500,000, with $1,586,222.26 in principal outstanding as of the Petition Date) and the RLF Loan are binding on the Debtors and any successor (including a chapter 7 or chapter 11 trustee) unless timely challenged. The Challenge Deadline applicable to the Committee, after obtaining the requisite standing if necessary, is the earlier of:
  • 75 calendar days after entry of the Final Order
  • Such later date as may be agreed in writing by the Debtors and the DIP Lenders
• If the Chapter 11 Cases are converted to chapter 7 prior to the Challenge Deadline, the deadline shall be extended solely for the chapter 7 trustee to the later of (i) the Challenge Deadline or (ii) 60 days after the appointment of the chapter 7 trustee
• Any motion seeking standing shall attach a draft complaint or other pleading setting forth such Challenge, and any Challenge not included therein shall be deemed forever waived, released, and barred
• The challenge provisions shall not apply to the DIP Lenders in their capacity as such, and in no event shall the DIP Facility, DIP Obligations, or DIP Liens be subject to challenge, avoidance, or any other grounds by any party
• Approved Budget:
  • The Approved Budget attached as Exhibit 1 to the Final Order constitutes the "Initial Budget"
  • Commencing May 22, 2026, on the Friday of every other week (or more frequently by mutual agreement to accommodate changes in business operating activity), the Debtors shall deliver to the DIP Lenders and the Committee an updated 13-week forecast (each, a "Proposed Budget") broken down by week and including the anticipated uses of the DIP Term Loans
  • A Proposed Budget shall be deemed approved three Business Days following delivery to the DIP Lenders unless the DIP Lenders object in writing on or before such date; if the DIP Lenders object, the parties will work in good faith to reconcile the Proposed Budget, and the prior Approved Budget shall remain in full force and effect until the conditions for the most recently delivered Proposed Budget are met

Securities and Priorities

• The DIP Lenders are granted valid, binding, continuing, enforceable, non-avoidable, and automatically and properly perfected security interests and liens (the "DIP Liens") on all of the Debtors' assets, whether now existing or hereafter arising and wherever located, tangible or intangible (the "DIP Collateral"), including, without limitation, all buildings, inventory, accounts receivable, real and personal property, plants, equipment, rights under leases and other contracts, patents, copyrights, licenses, trademarks, trade names and other intellectual property, capital stock of the Debtors, and the proceeds thereof (including proceeds of contract and tort claims and causes of action), as identified in Schedule 1 to the DIP Term Sheet, with the following priorities, subject to the Carve Out:
  • An allowed claim with priority over any and all administrative expenses and all other claims against the Debtors, pursuant to Bankruptcy Code sections 507(b) and 364(c)(1), including all administrative expenses of the kind specified in sections 503(b) or 507(b)
  • Valid, enforceable, fully perfected security interests in and first priority priming liens upon the DIP Collateral pursuant to section 364(d)(1) of the Bankruptcy Code, including all of the Debtors' rights in property of the estates as of the Petition Date and all rights in property acquired post-petition (and proceeds thereof)
  • The DIP Liens shall be subordinate to the liens of RLF with respect to the equipment listed on Schedule 2 to the DIP Term Sheet (the "RLF Collateral"); RLF shall have a superpriority administrative expense, subordinate only to the DIP Lenders' superpriority administrative expense, for any RLF equipment the Debtors affirm is in their possession post-petition (by filing a statement with the Court upon completion of the collection process) that is subsequently lost or destroyed after being collected by the Debtors
• The DIP Obligations shall, pursuant to section 364(c)(1) of the Bankruptcy Code, constitute allowed super-priority administrative expense claims (the "DIP Super-Priority Claims") against the Debtors, payable from and with recourse to all assets and property of the Debtors, with priority over any and all other administrative expenses, adequate protection claims, diminution in value claims, and all other claims, subject only to the Carve Out and RLF's senior interest in the RLF Collateral
• The DIP Liens automatically attached to the DIP Collateral and became valid and perfected immediately upon entry of the Interim Order without the requirement of any further action by the DIP Lenders
• Upon entry of the Final Order, the DIP Liens shall not be subject to the "equities of the case" exception of section 552, section 506(c), or section 551 of the Bankruptcy Code
• Permitted Senior Liens:
  • PNC Bank, National Association's perfected security interest in the 2024 Wabash Duraplate Trailer (VIN: 1JJV532DXRL44862) (the "PNC Equipment") shall remain in full force and effect and constitute a prepetition permitted senior lien; the DIP Liens shall not prime or otherwise affect such interest
  • Wells Fargo Vendor Financial Services, LLC's perfected security interests in the listed Wells Fargo Equipment (comprising various 2024 Bobcat TL923, 60in, UV34XL Diesel, and TL619 units) shall remain in full force and effect and constitute prepetition permitted senior liens; the DIP Liens shall not prime or otherwise affect such interests

Adequate Protection

Prepetition Secured Creditors

• Consistent with section 364(d) of the Bankruptcy Code, and pursuant to sections 361, 363, and 364, the Prepetition Secured Creditors (431KW under the Convertible Loan Documents and RLF under the RLF Loan) are protected against any post-petition diminution in value of their respective liens and interests in the Prepetition Collateral resulting from, among other things:
  • The use, sale, or lease by the Debtors of such collateral
  • The market value decline of such collateral
  • The imposition of the automatic stay
  • The subordination of the Prepetition Liens and Prepetition Secured Debt to the Carve Out, the DIP Liens, and the DIP Obligations
  • Any other act or omission which causes diminution in the value of their respective liens or interests in the Prepetition Collateral

Waivers

• Section 506(c): Except to the extent of the Carve Out, no expenses of administration of the Chapter 11 Cases or any future proceeding shall be charged against or recovered from any DIP Collateral pursuant to section 506(c) or any similar principle of law, without the prior written consent of the DIP Lenders; the Debtors irrevocably waive any such claim
• Section 552(b): The DIP Lenders shall be entitled to all rights and benefits of section 552(b); the "equities of the case" exception shall not apply with respect to the proceeds, products, rents, issues, or profits of any DIP Collateral or Prepetition Collateral
• No Marshaling: The DIP Lenders shall not be subject to the equitable doctrine of "marshaling" or any other similar doctrine with respect to any of the DIP Collateral
• Release of the DIP Lenders: The Debtors, on their own behalf and on behalf of the Estate, forever and irrevocably release, discharge, and acquit the DIP Lenders and their respective representatives from any and all claims, including any "lender liability" or equitable subordination claims or defenses, solely with respect to the negotiation and entry into any DIP Documents; the Debtors also waive any and all defenses (including offsets and counterclaims) solely with respect to the validity, perfection, priority, enforceability, and avoidability of the DIP Liens and DIP Obligations
• Indemnification: The Debtors will indemnify and hold harmless the DIP Lenders and their respective affiliates, officers, directors, employees, agents, advisors, attorneys, financial advisors, and representatives from and against all losses, liabilities (including environmental liabilities), claims, damages, or other expenses arising out of or relating to the DIP Loan Documents and the Debtors' use of the financing
• Waiver of Stay: Notwithstanding Bankruptcy Rules 4001(a)(3), 6004(h), 7062, 9024, or Rule 62(a) of the Federal Rules of Civil Procedure, the Final Order shall be immediately effective and enforceable upon entry, with no stay of execution or effectiveness

Permitted Variance

• The Debtors shall not conduct their business in a manner that causes cash disbursements for Operating Expenses in the Approved Budget to materially deviate upward (cumulative of all Operating Expense line items) by greater than 15% from the applicable Approved Budget
• In the event of a dispute between the Debtors and the DIP Lenders regarding Permitted Variances, the Court may, after notice and an expedited hearing, determine whether such variance constitutes an Event of Default
• Reporting: The Debtors shall provide the DIP Lenders and the Committee with bi-weekly submissions of customary financial reporting (including bank account cash balances, receipts, and disbursements) and a bi-weekly accounts receivable collection process update, and shall make the Debtors' professionals reasonably available for telephonic or virtual meetings on all matters affecting the Debtors and the Chapter 11 Cases, including the marketing and sale of the DIP Collateral