Tonopah Solar Energy - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• Tonopah Solar Energy, LLC, a Delaware limited liability company, as Borrower

Agent / Lender(s)

• Crescent Dunes Finance, Inc., a Delaware corporation, as DIP Lender (also Prepetition Lender)

DIP Commitments

• $10 million senior secured superpriority delayed draw term loan facility comprised of:
  • $5 million available on an interim basis upon entry of the interim order
  • An additional $5 million available on a final basis upon entry of the final order
• The DIP Facility does not contemplate a roll-up of prepetition obligations.
• Amounts repaid or prepaid under the facility may not be reborrowed.

Cash Collateral

• All of the debtor's cash and cash equivalents, including cash on deposit in any account as of the petition date, securities or other property, wherever located, whether as original collateral or proceeds of other prepetition collateral, constitute cash collateral of the prepetition lender.
• The debtor is authorized to use cash collateral, limited to postpetition receipts of prepetition collateral or DIP collateral, in accordance with the approved budget (subject to permitted variances).

Interest Rate

• 4.5% per annum, payable monthly in arrears in kind (by adding the amount of such outstanding interest to the aggregate principal amount of the DIP loans), with all accrued and unpaid interest due and payable in cash upon the termination date
• Default Rate Increase: 2.0%

Maturity

• The earliest to occur of:
  • Six months from the petition date (as such date may be extended with the prior written consent of the DIP lender)
  • Upon the occurrence and during the continuance of an event of default
  • The date of consummation of a sale of all or substantially all of the debtor's assets
  • The effective date of a chapter 11 plan of the debtor
  • The date the DIP obligations become due and payable in full, whether by acceleration or otherwise
• The debtor may prepay the DIP loans in whole or in part at any time without premium or penalty.

Carve Out

• Post Carve-Out Trigger Notice Cap: $250,000 in the aggregate
• Chapter 7 Trustee Fee: $50,000
• On a monthly basis, budgeted fees, costs and expenses of retained professionals will be funded into a segregated escrow account in an amount as set forth in the approved budget (the "Professional Fee Reserve").
• Amounts funded into the Professional Fee Reserve will be considered borrowed by the debtor at such time as they are deposited into the Professional Fee Reserve for distribution to professionals in accordance with orders of the bankruptcy court.

Use of Proceeds

• Fund general corporate needs, including working capital and other general corporate purposes
• Pay costs, premiums, fees, and expenses incurred to administer or related to the chapter 11 cases, including fees and expenses of professionals (including professional fees and expenses of the debtor, the DIP lender, any official committee that may be appointed or any other party that are reimbursable by the debtor, and including funding of the carve-out in accordance with the financing orders) and adequate protection payments, if any, under the financing orders

Credit Bid

• Subject to section 363(k) of the Bankruptcy Code and the DIP loan documents, the DIP lender may credit bid all or any portion of its claims, including the DIP obligations, in connection with any proposed sale of any, all, or substantially all of the debtor's assets, including any sale occurring under section 363 of the Bankruptcy Code or included as part of a reorganization plan under section 1123 of the Bankruptcy Code, including a plan subject to confirmation under section 1129(b)(2)(A)(ii), or a sale or disposition by a chapter 7 trustee under section 725 of the Bankruptcy Code.
• Subject to a challenge and to section 363(k) of the Bankruptcy Code, the prepetition lender has the right to credit bid any or all of the obligations under the prepetition loan agreement in connection with any disposition of prepetition collateral.
• Notwithstanding the foregoing, each of the DIP lender and prepetition lender agrees that it will not credit bid an initial overbid to any approved stalking horse transaction.

Avoidance Actions

• Upon entry of the final order, the DIP collateral will include proceeds or property recovered, unencumbered or otherwise from the debtor's claims and causes of action under chapter 5 of the Bankruptcy Code and under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act, and similar statutes or common law.

Challenge Period and Budget

• The deadline to bring a challenge is the earlier of:
  • April 8, 2026, which is 75 days following the date of entry of the interim order
  • Any later date agreed to in writing by the prepetition lender
• No more than $25,000 of the proceeds of the DIP facility, the DIP collateral, or the prepetition collateral, including the cash collateral, in the aggregate, may be used by the committee, if appointed, solely to investigate matters with respect to the prepetition liens or the prepetition obligations within the challenge period.

Securities and Priorities

• The DIP obligations are granted superpriority administrative expense claims against the debtor in the chapter 11 case and any successor case, with priority over any and all administrative expense claims and unsecured claims against the debtor or its estate, subject only to the carve-out and permitted liens.
• The DIP lender is granted perfected liens on and security interests in all of the debtor's prepetition and postpetition assets and properties (the "DIP Collateral"), subject to the carve-out, with the following priorities:
  • Valid, automatically perfected, non-avoidable, senior in priority, and superior to any security, mortgage, collateral interest, lien, other encumbrances on, or claim to any of the DIP collateral
  • Senior priming liens on all prepetition collateral, subject only to permitted liens and the carve-out
  • First-priority liens on all unencumbered assets, including, upon entry of the final order, avoidance action proceeds
• The equity interests in the debtor shall be pledged by Crescent Dunes Investment, LLC to the DIP lender in consideration for the DIP loans.

Adequate Protection

Prepetition Lender

• Allowed superpriority administrative expense claims in the chapter 11 case (the "Adequate Protection Superpriority Claims"), junior and subordinate only to the carve-out, the permitted liens and the DIP obligations, under section 507(b) of the Bankruptcy Code, with priority over any and all other administrative expenses and unsecured claims against the debtor and its estate.
• Validly perfected replacement liens under sections 361, 363(e), and 364(d)(1) of the Bankruptcy Code on all DIP collateral (the "Adequate Protection Liens"), which will be subject and subordinated only to the carve-out, the DIP liens, and permitted liens, and which will otherwise be senior to all other security interests in, liens on, or claims against the DIP collateral.
• Payment of reasonable and documented fees and out-of-pocket expenses, including professional fees.
• Financial reporting as may reasonably be required in the final order and the DIP term sheet.

Waivers

• Subject to entry of the final order:
  • Section 506(c): No costs or expenses of administration of the chapter 11 case or any successor case will be charged against or recovered from the DIP lender or the prepetition lender with respect to the DIP collateral or the prepetition collateral without the prior written consent of the DIP lender or the prepetition lender, as applicable.
  • Section 552(b): The "equities of the case" exception will not apply to the prepetition lender or prepetition collateral.
  • The equitable doctrine of "marshaling" or any similar doctrine will not apply with respect to the DIP collateral, the DIP obligations, or the prepetition collateral, and all proceeds will be received and applied in accordance with the final order, the DIP loan documents, and the prepetition loan documents.

Permitted Variance

• Commencing the second full week following the petition date, tested on a rolling two-week basis for each variance testing period thereafter:
  • The variance from the then-current approved budget shall not exceed 15% above the total aggregate amount of actual operating disbursements (excluding debtor professional fees) during any variance testing period against the projected operating disbursements in the approved budget for such variance testing period.
• For the avoidance of doubt, documented fees and out-of-pocket expenses paid to the debtor or its professionals will not be included in the variance testing.

Prepetition Obligations

• As of the petition date, the debtor is justly and lawfully indebted and liable to the prepetition lender, without defense, counterclaim or offset of any kind, in an amount not less than $173 million in principal amount of loans and commitments outstanding, plus accrued and unpaid interest and fees, expenses, charges, indemnities, and all other obligations incurred or accrued in connection with the same (whether arising before, on, or after the petition date) as provided in the prepetition loan documents.
• The prepetition obligations owing to the prepetition lender constitute legal, valid, and binding obligations of the debtor, enforceable against it in accordance with their terms (other than in respect of the stay of enforcement arising from section 362 of the Bankruptcy Code), and no portion of the prepetition obligations owing to, or any transfers made to the prepetition lender on account of the prepetition obligations, is subject to avoidance, recharacterization, reduction, set-off, offset, counterclaim, cross-claim, recoupment, defenses, disallowance, impairment, recovery, subordination, or any other legal or equitable challenges under the Bankruptcy Code or applicable non-bankruptcy law or regulation by any person or entity.
• The prepetition liens granted to the prepetition lender constitute legal, valid, binding, enforceable (other than in respect of the stay of enforcement arising from section 362 of the Bankruptcy Code), and perfected security interests in and liens on the prepetition collateral (including the proceeds thereof), were granted to, or for the benefit of, the prepetition lender for fair consideration and reasonably equivalent value, and are not subject to defense, counterclaim, recharacterization, subordination, avoidance, or recovery under the Bankruptcy Code or applicable non-bankruptcy law or equity or regulation by any person or entity.

Events of Default

• Events of default include, among others:
  • Failure to pay any principal or interest of any DIP loan when due (whether at stated maturity, by acceleration, voluntary prepayment, mandatory prepayment or otherwise)
  • Failure to pay any other amount payable under the DIP loan documents within five business days after such amount becomes due
  • Any representation or warranty made or deemed made by the debtor in the DIP loan documents proves to have been inaccurate in any material respect
  • Default in the observance or performance of any material agreement contained in the DIP loan documents, which default, if capable of being cured, remains uncured for five business days after notice or actual knowledge
  • One or more judgments arising following the petition date for the payment of money in an aggregate amount of $500,000 or more (other than judgments covered by insurance), which remain undischarged for 60 consecutive days during which execution is not effectively stayed
  • Any material provision of the DIP loan documents ceases to be valid or binding on the debtor, or the debtor so asserts in any pleading
  • Any action of the debtor to challenge the prepetition liens or the DIP liens
  • Use of proceeds of any sale for any purpose other than repayment of the DIP obligations, the prepetition obligations, other customary closing costs and any transaction fees payable to SSG Advisors, LLC, and other amounts as agreed by the DIP lender and the debtor
  • Entry of an order directing the appointment of an examiner with expanded powers or a chapter 11 trustee without the prior written consent of the DIP lender, converting the chapter 11 case to chapter 7, dismissing the chapter 11 case, or terminating or reducing the debtor's exclusive right to file a plan
  • Any variance from the approved budget above a permitted variance
  • Any material breach by the debtor of any obligation under any DIP order
  • Failure to meet any of the DIP milestones and such failure continues for five business days without the prior written consent of the DIP lender
  • The debtor files a pleading seeking to vacate or modify any DIP order without the prior written consent of the DIP lender, the entry of an order without the prior written consent of the DIP lender amending, supplementing or otherwise modifying any DIP order, or the reversal, vacation or stay of the effectiveness of any DIP order without the prior written consent of the DIP lender
  • The granting of relief from the automatic stay to permit foreclosure or enforcement on assets of the debtor in excess of $250,000
  • The debtor's filing of (or supporting another party in the filing of) a motion seeking entry of, or the entry of an order granting, any superpriority claim or lien (except as contemplated in the DIP orders) which is senior to or pari passu with the DIP lender's claims under the DIP facility
  • Cessation of the DIP liens or the superpriority DIP claims to be valid, perfected and enforceable in all respects
  • Subject to the carve-out, the debtor's use of cash collateral or DIP loans for any item other than those set forth in the approved budget
  • Any uninsured judgments are entered with respect to any postpetition liabilities against the debtor or its properties in an aggregate amount in excess of $250,000
  • The occurrence of any event, development, or circumstance that results in, or could reasonably be expected to result in, a material adverse effect

Remedies

• Following five business days' advance notice to the debtor, the U.S. Trustee and the committee (if one is appointed) (a "Termination Declaration"), during which the debtor and any other party in interest may seek an emergency hearing from the bankruptcy court, the DIP lender may, upon the expiration of the five business-day notice period, take all or any of the following actions without further order of or application to the bankruptcy court, and notwithstanding the automatic stay:
  • Immediately terminate the debtor's use of any cash collateral
  • Cease making any DIP loans under the DIP facility to the debtor and terminate the DIP commitment
  • Declare all DIP obligations to be immediately due and payable
  • Freeze monies or balances in the debtor's accounts (and, with respect to the DIP loan documents and the DIP facility, sweep all funds contained in any account subject to a control agreement)
  • Immediately set-off any and all amounts in accounts maintained by the debtor with the DIP lender against the DIP obligations, or otherwise enforce any and all rights against the DIP collateral in the possession of the DIP lender, including disposition of the DIP collateral solely for application towards the DIP obligations
  • Take any other actions or exercise any other rights or remedies permitted under the DIP orders, the DIP term sheet, or applicable law to effect the repayment of the DIP obligations
• During the remedies notice period or, if an emergency hearing is sought, until the court enters an order following that emergency hearing, the debtor will continue to have the right to use cash collateral in accordance with the terms of the final order, solely to satisfy obligations that are necessary to avoid immediate and irreparable harm to the debtor and its estate.

Milestones

• The debtor shall comply with the following milestones (the "DIP Milestones"), each of which may be waived only upon the consent of the DIP lender:
  • Within 24 hours of the petition date, or as soon as reasonably practicable thereafter, the debtor shall file the first day pleadings, the DIP financing motion, the plan, and the bidding procedures motion
  • No later than 50 days after the petition date, the bid deadline in the bidding procedures order shall have occurred
  • No later than 55 days after the petition date, the bankruptcy court shall have entered the DIP financing order (subject to the bankruptcy court's availability) on a final basis
  • No later than 80 days after the petition date, the bankruptcy court shall have entered the sale order (subject to the bankruptcy court's availability), if applicable
  • No later than 125 days after the petition date, the bankruptcy court shall have entered an order confirming the plan
  • No later than 225 days after the petition date, a transaction shall have been consummated, if applicable
  • No later than 240 days after the petition date, the effective date under the plan shall have occurred
• Unless waived by the DIP lender and the prepetition lender, each in its sole discretion, the failure of the debtor to meet the DIP milestones by the applicable specified deadlines will constitute an event of default under the DIP loan documents and the DIP orders.

Indemnification

• The debtor will indemnify and hold harmless the DIP lender and each of its affiliates and its and their respective directors, officers, employees, agents, attorneys, accountants, advisors, controlling persons, equity holders, partners, members, and other representatives and each of their respective successors and permitted assigns (each, an "Indemnified Party") against, and hold each indemnified party harmless from, any and all losses, claims, damages, liabilities, and reasonable, documented and invoiced out-of-pocket fees and expenses (including fees and disbursements of counsel but limited, in the case of counsel, to the extent set forth in the DIP loan documents) that may be incurred by or asserted or awarded against any indemnified party, in each case, arising out of, or in any way in connection with, or as a result of:
  • The execution or delivery of any of the DIP loan documents, the performance by the parties thereto of their respective obligations thereunder and the other transactions contemplated thereby
  • The use of the proceeds of the DIP facility
  • The enforcement or protection of their rights in connection with any of the DIP loan documents
  • The negotiation of and consent to the final order
  • Any claim, litigation, investigation, or proceeding relating to any of the foregoing, whether or not any indemnified party is a party thereto and regardless of whether such matter is initiated by a third party or the debtor or any of its affiliates or creditors
• The foregoing indemnity will not apply to any claims arising prior to the petition date or out of, or in any way in connection with, or as a result of provisions of the prepetition loan documents.
• No indemnified party will be indemnified for any loss, claim, damage, liability, cost, or other expense to the extent such loss, claim, damage, liability, cost, or expense is determined by a final, non-appealable judgment of a court of competent jurisdiction to have resulted from the gross negligence, fraud, or willful misconduct of such indemnified party or a material breach of the obligations of such indemnified party under the DIP loan documents, or relates to any proceeding between or among indemnified parties other than claims arising out of any act or omission on the part of the debtor.

Releases

• The debtor, on behalf of itself and its estate (including any successor trustee or other estate representative in the chapter 11 case and any successor case), stipulates and agrees that it absolutely and unconditionally releases and forever and irrevocably discharges and acquits the prepetition lender, the DIP lender, and their respective affiliates and each of its and their respective former or current officers, partners, directors, managers, owners, members, principals, employees, agents, related funds, investors, financing sources, financial advisors, attorneys, accountants, investment bankers, consultants, representatives and other professionals and the respective successors and assigns thereof, in each case solely in their capacity as such (collectively, the "Released Parties"), of and from any and all claims, demands, liabilities, responsibilities, disputes, remedies, causes of action, indebtedness and obligations, rights, assertions, allegations, actions, suits, controversies, proceedings, losses, damages, injuries, attorneys' fees, costs, expenses, or judgments of every type, whether known, unknown, asserted, unasserted, suspected, unsuspected, accrued, unaccrued, fixed, contingent, pending or threatened, arising out of, in connection with, or relating to the DIP facility, the DIP loan documents, the prepetition loan documents and/or the transactions contemplated thereunder, including any so-called "lender liability" or equitable subordination claims or defenses, any and all claims and causes of action arising under the Bankruptcy Code, and any and all claims and causes of action with respect to the validity, priority, perfection or avoidability of the liens or claims of the prepetition lender and/or the DIP lender (collectively, the "Released Claims") that exist or may exist prior to the entry of the final order.
• The debtor further waives and releases any defense, right of counterclaim, right of setoff or deduction to the payment of the prepetition obligations and the DIP obligations which the debtor now has or may claim to have against the released parties arising out of, connected with, or relating to any and all acts, omissions or events occurring prior to the entry of the final order.
• The debtor's stipulations and releases are binding upon the debtor's estate and each other party in interest, including any statutory committee appointed in the chapter 11 case (and including any chapter 11 trustee or chapter 7 trustee), except to the extent such party in interest first obtains standing no later than the challenge period termination date and second, obtains a final, non-appealable order in favor of such party in interest sustaining any such challenge in any such timely-filed contested matter, adversary proceeding, or other action (any such challenge timely brought for which such a final and non-appealable order is so obtained, a "Successful Challenge").
• For the avoidance of doubt, nothing in the release will relieve the debtor of the secured obligations under the prepetition loan agreement or its obligations under the DIP loan documents.

Mandatory Prepayments

• The following amounts shall be indefeasibly paid in cash in satisfaction of the DIP obligations within two business days of receipt, except as such amounts are set forth in the approved budget and are necessary to satisfy the expenditures set forth in the approved budget:
  • 100% of the net proceeds of the disposition of the DIP collateral, including asset sales
  • 100% of the net proceeds of insurance and condemnation awards
  • 100% of the net proceeds of any debt issuance or equity issuance
  • 100% of proceeds of claims and causes of action

Proofs of Claim

• Neither the DIP lender nor the prepetition lender will be required to file a proof of claim in the chapter 11 case or any successor case, and the debtor's stipulations in the final order will be deemed to constitute a timely filed proof of claim.
• Any order entered by the court in relation to the establishment of a bar date for any claim (including administrative claims) in the chapter 11 case or any successor case will not apply to the DIP lender.
• Notwithstanding the foregoing, each of the DIP lender and the prepetition lender is authorized and entitled, in its sole discretion, but not required, to file (and amend and/or supplement, as it sees fit) a proof of claim and/or aggregate proofs of claim in the chapter 11 case.

Survival

• The provisions of the final order and any actions taken pursuant thereto will survive entry of any order which may be entered confirming a plan of reorganization in the chapter 11 case, converting the chapter 11 case to a case under chapter 7 of the Bankruptcy Code, dismissing the chapter 11 case or any successor case, or by which the court abstains from hearing the chapter 11 case or any successor case.
• The terms and provisions of the final order, including the claims, liens, security interests, and other protections granted to the DIP lender and the prepetition lender under the final order and the DIP loan documents, will continue in the chapter 11 case, in any successor case, or following dismissal of the chapter 11 case or any successor case, and will maintain their priority as provided by the final order until all the DIP obligations and the prepetition obligations under the respective loan documents and the final order have been paid in full or otherwise satisfied with the consent of the DIP lender and the prepetition lender.
• The terms and provisions concerning the indemnification of the DIP lender will continue in the chapter 11 case, in any successor case, following dismissal of the chapter 11 case or any successor case, following termination of the DIP facility and/or the indefeasible repayment of the DIP obligations.

Good Faith

• The DIP lender has committed to provide financing to the debtor subject to entry of the DIP orders, approval of the terms and conditions of the DIP facility and those set forth in the DIP loan documents, satisfaction of the closing conditions set forth in the DIP loan documents, and findings by the court that the DIP facility is essential to the debtor's estate, that the DIP lender is extending credit to the debtor under the DIP loan documents in good faith, and that the DIP lender's claims, superpriority claims, security interests and liens, and other protections granted under the final order and the DIP loan documents will have the protections provided by section 364(e) of the Bankruptcy Code.
• The terms of the financing embodied in the DIP loan documents, including the fees, expenses, and other charges paid and to be paid thereunder or in connection therewith, the adequate protection authorized by the final order and DIP loan documents, and the terms on which the debtor may continue to use the prepetition collateral (including cash collateral), in each case under the final order and the DIP loan documents, are fair and reasonable, reflect the debtor's exercise of prudent business judgment consistent with its fiduciary duties, constitute reasonably equivalent value and fair consideration, and represent the best financing and terms available under the circumstances.
• The terms and conditions of the DIP facility and the use of cash collateral were negotiated in good faith and at arm's-length among the debtor, the DIP lender, and the prepetition lender with the assistance and counsel of their respective advisors.
• Use of cash collateral and credit to be extended under the DIP facility will be deemed to have been allowed, advanced, made, or extended in good faith by the DIP lender and the prepetition lender within the meaning of section 364(e) of the Bankruptcy Code.
• The DIP lender and the prepetition lender have acted in good faith in connection with the DIP facility, the DIP loan documents, and the final order and are entitled to rely upon the protections granted in the final order and by section 364(e) of the Bankruptcy Code.