TRM NRE Holding LLC - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• TRM NRE Holding LLC and TRM NRE Acquisition LLC, as Debtors, with headquarters located at 908 Shawnee Street, Mount Vernon, IL 62864
• Under the Prepetition Loan Agreement, TRM NRE Acquisition LLC served as borrower and TRM NRE Holding LLC as guarantor

Agent / Lender(s)

• Great Rock Capital Partners Management, LLC, as administrative agent under the Prepetition Loan Agreement (the "Prepetition Agent"), together with the lenders party thereto from time to time (the "Prepetition Lenders" and, together with the Prepetition Agent, the "Prepetition Secured Parties")
• The DIP Lender, as lender under the Junior DIP Facility, which is also the maker's counterparty under the Sponsor Subordinated Note (in such capacity, the "Second Lien Lender")

DIP Commitments

• Junior DIP Facility in a committed aggregate principal amount of up to $3,000,000 (the "DIP Loan Commitments"), which the Debtors are authorized to incur on a final basis pursuant to sections 364(c)(1), 364(c)(2), 364(c)(3), and 364(d) of the Bankruptcy Code
• The Debtors are permitted to reborrow any amounts repaid during the Chapter 11 Cases
• After considering all alternatives, the Debtors concluded, in the exercise of their sound business judgment, that the Junior DIP Facility represents the best financing available to them at this time
• The Junior DIP Facility is junior to the Debtors' existing prepetition capital structure, which as of the Petition Date comprised:
  • Prepetition Secured Obligations of not less than $20,279,751.04 on account of the Prepetition Loans, consisting of:
    • Prepetition Term Loans in the aggregate principal amount of $8,749,324.71
    • Revolving Loans in the aggregate principal amount of $11,530,426.33
  • Second Lien Secured Obligations of not less than $13,118,000 under the Sponsor Subordinated Note (original aggregate principal amount of $13,118,000), owed by TRM NRE Acquisition LLC to the Second Lien Lender

Cash Collateral

• The Debtors are authorized to use the Cash Collateral of the Prepetition Secured Parties on a consensual and final basis, subject to the Final Order, the Approved Budget (and permitted variances as set forth in the Term Sheet), and the DIP Loan Documents
• "Cash Collateral" means all cash collateral, as defined in section 363 of the Bankruptcy Code, in or on which the Second Lien Lender, the Prepetition Secured Parties, or the DIP Lender hold a lien, security interest, or other interest (including any adequate protection liens or security interests), whether existing on the Petition Date or arising thereafter

Interest Rate

• Upon the occurrence of an Event of Default, the DIP Lender may charge interest at the default rate set forth in the DIP Loan Documents without being subject to the Remedies Notice Period
• Prior to the Prepetition Credit Facility Payoff Date, such default interest is payable solely in kind as set forth in the DIP Loan Documents

Fees

• All fees paid and payable, and all costs and expenses reimbursed or reimbursable to the DIP Lender (including all fees, costs, and expenses referred to in the DIP Loan Documents) are approved, and the Debtors are authorized and directed to pay them in accordance with the DIP Loan Documents without any further application or pleading
• The fees, costs, and expenses of the DIP Lender, whether incurred before or after the Petition Date, are deemed fully earned and non-refundable as of the date of the Final Order, except for reimbursement of professional fees and expenses, which remain subject to the fee review procedures set forth in the Final Order

Maturity

• The DIP Loan Commitments terminate, and the DIP Loans and other DIP Obligations mature and become due and payable, on the earliest to occur of:
  • October 25, 2026
  • The effective date of any confirmed plan of reorganization in the Chapter 11 Cases
  • Termination of the Junior DIP Facility by the DIP Lender following the occurrence of an Event of Default
• Except as otherwise consented to in writing by the Prepetition Secured Parties, nothing in the Final Order authorizes the repayment of any DIP Obligations prior to the Prepetition Credit Facility Payoff Date, and no payments by the Debtors or proceeds of DIP Collateral shall be applied to repay or prepay the DIP Obligations before that date
• From and after the Prepetition Credit Facility Payoff Date, or with the Prepetition Agent's prior written consent, the Junior DIP Facility shall be repaid during the Chapter 11 Cases through:
  • Weekly cash sweeps of all cash on hand in excess of $1.00 million
  • The proceeds of non-core asset sales, including the marine business, inventory and machinery and equipment, and other assets located at the Paducah, Kentucky facility

Cash Collateral Termination Events

• A "Cash Collateral Termination Event" means the occurrence of any of the following that, to the extent capable of being remedied, are not remedied in accordance with the Final Order:
  • A breach of the variance covenant for any testing period with respect to an Approved Budget
  • The Debtors' filing of any pleading seeking to amend, modify, reverse, revoke, stay, rescind, vacate, supplement, or extend the Final Order without the prior written consent of the Prepetition Secured Parties
  • The Final Order ceasing, for any reason, to be in full force and effect
  • The Debtors' filing of any pleading seeking approval of debtor-in-possession financing without the consent of the Prepetition Secured Parties, or entry of an order approving such financing that primes the Adequate Protection Liens or Prepetition Liens without consent, unless the Prepetition Secured Obligations are repaid in cash in full
  • The filing by the Debtors of any pleading seeking approval of any superpriority claim or any lien pari passu with or senior to the Adequate Protection Claims, Adequate Protection Liens, Prepetition Liens, or Prepetition Secured Obligations without the prior written consent of the Prepetition Secured Parties
  • Entry of any order dismissing the cases, converting them to a Successor Case, appointing a chapter 11 trustee or an examiner with expanded powers, or terminating the Debtors' exclusive periods under section 1121, absent written consent of the Prepetition Secured Parties
  • Entry of an order granting relief from the automatic stay to permit any party to proceed against Prepetition Collateral or Adequate Protection Collateral with a fair market value in excess of $750,000
  • A material Event of Default under the DIP Loan Documents that substantively and adversely affects the Prepetition Secured Parties' rights relative to their position immediately prior to funding of the Junior DIP Facility, or a failure of the DIP Lender to fund DIP Loans as required or to consent to release of proceeds from the Controlled Account
  • A breach by the Debtors or the DIP Lender of any material term of the Final Order as it relates to the Prepetition Secured Parties' rights and interests, including the exercise of any remedy by the DIP Lender in breach of the Final Order
  • The Debtors' failure to timely meet or satisfy any Case Milestone, subject to any agreed extensions

Carve Out

• The "Carve-Out" means the sum of:
  • All fees required to be paid to the Clerk of the Court and to the Office of the United States Trustee under section 1930(a) of title 28 and section 3717 of title 31 of the United States Code
  • Allowed Professional Fees of the Debtor Professionals and the Committee Professionals incurred prior to the occurrence of an Event of Default and notice thereof, but only to the extent of amounts included in the Approved Budget
  • After the occurrence of an Event of Default and notice thereof delivered to the Borrowers, Allowed Professional Fees not in excess of $250,000 (the "Carve-Out Cap")
• On a weekly basis, the fees and expenses of the Debtors' and Creditors' Committee's professionals provided in the Approved Budget shall be funded into an escrow account (the "Professional Fee Reserve"); payment of Allowed Professional Fees under the Carve-Out is not limited to funds held in the Professional Fee Reserve, and any residual amounts remaining after satisfaction in full of all Carve-Out obligations are subject to the Adequate Protection Liens

Use of Proceeds

• Permit the continuation of the Debtors' businesses and preserve their going concern value
• Satisfy payroll obligations and other working capital and general corporate purposes consistent with the DIP Loan Documents
• Pay fees and expenses related to the DIP Loan Documents and the Chapter 11 Cases, including interest, fees, and expenses, and any other amounts required or allowed to be paid under the Final Order
• All such uses are strictly in accordance with the Approved Budget (and permitted variances as set forth in the Term Sheet) and the DIP Loan Documents
• The Approved Budget sets forth projected cash receipts and cash disbursements, by line item, on a weekly basis for the period from the Petition Date through July 31, 2026

Credit Bid

• Subject to section 363(k) of the Bankruptcy Code and any Challenge, the Prepetition Agent or its designee (which may be an acquisition vehicle) has the right to credit bid up to the full amount of the Prepetition Secured Obligations in any sale of all or any portion of the Prepetition Collateral, whether in a sale under section 363, a chapter 11 plan subject to confirmation under section 1129(b)(2)(A), a sale or disposition by a chapter 7 trustee under section 725, or otherwise
• The Prepetition Agent has the absolute right to assign, transfer, sell, or otherwise dispose of its credit bid rights to any acquisition vehicle formed in connection with such bid or other designee

Avoidance Actions

• The DIP Collateral includes all proceeds of claims and causes of action of the Debtors under sections 502(d), 544, 545, 547, 548, 549, and 550 of the Bankruptcy Code (the "Avoidance Actions Proceeds")

Challenge Period and Budget

• The Debtors' Stipulations, admissions, waivers, and releases are binding on all parties in interest, including any Creditors' Committee or chapter 7 or chapter 11 trustee, unless a Challenge is duly filed within the applicable Challenge Period:
  • Seventy-five (75) calendar days from entry of the Interim Order for any Challenge against the Prepetition Secured Parties relating to the Prepetition Loan Documents, the Prepetition Collateral, the Prepetition Liens, or the Prepetition Secured Obligations
  • Ninety (90) calendar days from entry of the Interim Order for any Challenge against the Second Lien Lender relating to the Sponsor Subordinated Note, the Second Liens, the Second Lien Secured Obligations, or the Second Lien Collateral
  • If, prior to expiration, any case is converted to a Successor Case or a chapter 11 trustee is appointed, the Challenge Period is extended thirty (30) days solely with respect to any Trustee
• Any Creditors' Committee may seek standing to file and prosecute a Challenge, and the filing of a standing motion prior to the expiration of the Challenge Period satisfies the deadline with respect to the Challenges identified therein, subject to the Court's subsequent grant of standing
• Up to $12,500 in the aggregate of the Junior DIP Facility and $12,500 of the Prepetition Secured Parties' Cash Collateral, DIP Collateral, Prepetition Collateral, and Carve-Out may be used by a Creditors' Committee to investigate the Prepetition Secured Obligations, the Sponsor Subordinated Note, or the Prepetition Liens and/or claims prior to expiration of the Challenge Period

Securities and Priorities

• The DIP Collateral comprises substantially all assets and properties of each of the Debtors and their estates, whether tangible or intangible, real, personal, or mixed, now owned or hereafter acquired, including all "Collateral" under the Prepetition Loan Agreement, cash and accounts, receivables, contract rights, inventory, equipment, real property interests, intellectual property, general intangibles, equity interests, commercial tort claims, and the Avoidance Actions Proceeds
• To secure the DIP Obligations, the DIP Lender is granted, subject to the Carve-Out at all times, valid, enforceable, and fully perfected DIP Liens, consisting of:
  • 1.5 priority liens on all DIP Collateral, which, until the Prepetition Credit Facility Payoff Date, are junior and subordinate to the Adequate Protection Liens and the Prepetition Liens
  • Junior liens on all DIP Collateral subject to valid, perfected, and non-avoidable liens in existence as of the Petition Date (or perfected thereafter as permitted by section 546(b)), other than DIP Collateral subject to the Second Liens
  • 1.5 priority priming liens on all DIP Collateral subject to the Second Liens, priming and subordinating the Second Liens to the DIP Lender's senior liens
• The liens and claims granted under the Final Order rank in the following order of priority with respect to the DIP Collateral:
  • Carve-Out
  • Permitted Prior Liens
  • Prepetition Liens
  • Adequate Protection Liens
  • DIP Liens
  • Second Liens
• The DIP Liens were effective immediately upon entry of the Interim Order and shall not be made subject or subordinated to, or pari passu with, any other lien, security interest, or claim, other than the Permitted Prior Liens, Prepetition Liens, Adequate Protection Liens, and Adequate Protection Claims (in each case prior to the Prepetition Credit Facility Payoff Date) and prior payment of the Carve-Out
• No liens, claims, interests, or priority status, other than the Carve-Out, superior to or pari passu with the DIP Liens or Adequate Protection Liens shall be granted while any portion of the DIP Obligations, Prepetition Secured Obligations, or Second Lien Secured Obligations remains outstanding, absent the prior written consent of the DIP Lender and the Prepetition Secured Parties

Adequate Protection

Prepetition Secured Parties

• The Prepetition Secured Parties are entitled to adequate protection of their liens and interests in the Prepetition Collateral (including Cash Collateral) for any Diminution in Value from and after the Petition Date, including from the use, sale, or lease of collateral, the use of Cash Collateral, the imposition of the automatic stay, and the subordination of the Prepetition Liens and Prepetition Secured Obligations to the Carve-Out
• Adequate Protection Liens: continuing, valid, binding, enforceable, non-avoidable, and automatically perfected security interests in and liens on the DIP Collateral, granted until the Prepetition Credit Facility Payoff Date and junior only to the Permitted Prior Liens, the Prepetition Liens, and the Carve-Out
• Adequate Protection Claims: an allowed superpriority administrative expense claim under section 507(b) in each of the Chapter 11 Cases and any Successor Cases, with priority over all other administrative and unsecured claims, other than the Carve-Out
• Adequate Protection Payments: payment, until the Prepetition Credit Facility Payoff Date and without formal fee applications, of the reasonable and documented fees, costs, and expenses of the Prepetition Agent Advisors — Paul Hastings LLP, as counsel, Blank Rome LLP, as Delaware counsel, and Huron Consulting Group LLC, as financial advisor — payable in cash up to the amounts set forth in the Approved Budget, with any such amounts not included in the Approved Budget treated as Prepetition Secured Obligations
• Nothing in the Final Order impairs the application of section 507(b) should the adequate protection provided prove insufficient to compensate for any Diminution in Value of the Prepetition Secured Parties' interests in the Prepetition Collateral

Waivers

• In exchange for, and as a material inducement to, the DIP Lender's agreement to provide the Junior DIP Facility and the Prepetition Secured Parties' agreement to the use of their Cash Collateral, the Debtors waive, for the benefit of the DIP Lender and the Prepetition Secured Parties:
  • Section 552(b): any "equities of the case" claims under section 552(b) of the Bankruptcy Code
  • Section 506(c): the provisions of section 506(c) of the Bankruptcy Code; no costs or expenses of administration may be surcharged against the DIP Lender, the Prepetition Secured Parties, their respective claims, the Carve-Out, the DIP Collateral, or the Prepetition Collateral without their prior written consent
• Neither the DIP Lender nor the Prepetition Secured Parties shall be subject to the equitable doctrine of "marshaling" or any similar doctrine with respect to any of the DIP Collateral or Prepetition Collateral