UPG Enterprises - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• UPG Enterprises LLC and the other debtor borrowers party to the DIP loan agreement, on a joint and several basis
• No subsidiary guarantors exist as of the effective date
• The Elk Grove entities (Mapes & Sprowl Steel LLC, Cortran LLC and Mapes Holdings LLC) and the Monroe entities (UPG Electrical LLC, Carter Motor Company, LLC and UPG Electrical Holdings LLC) are obligors under the prepetition bridge note but are neither debtors nor DIP borrowers and are not subject to the interim order; the Elk Grove entities intend to pursue Article 9 sales of their assets

Agent / Lender(s)

• Firehorse Capital LLC, as sole DIP lender and administrative agent, and also the prepetition bridge loan lender whose note converts into the roll-up tranche

DIP Commitments

• $6.083 million of new money term loan commitments under a junior secured superpriority facility, plus a roll-up on entry of the final order; the interim order caps the facility's aggregate principal at $6.083 million even though it lists both the new money commitments of that full amount and the roll-up as its components. The facility consists of:
  • New money: $2 million available on entry of the interim order, and the balance only after entry of the final order at least two business days before the draw and against a revised approved budget acceptable to Firehorse
  • Roll-up: on the final order date, the Fourth Amended and Restated Promissory Note dated Sept. 17, 2026 (original principal $4.98 million) is automatically exchanged and converted into a term loan equal to the bridge loans' outstanding principal plus accrued and unpaid interest at that date; the interim order authorizes none of this relief
• Additional availability after the final order is $4.083 million under the interim order, which controls over the DIP documents in any inconsistency; the DIP loan agreement states $4.2 million, which together with the $2 million interim tranche would exceed the $6.083 million total commitment both documents carry.
• The roll-up does not enhance the priority of the bridge obligations relative to the prepetition secured obligations and liens, and the roll-up loan is junior and subordinate to them in all respects; amounts repaid under the roll-up may not be reborrowed, and new money amounts repaid may not be reborrowed. The exchange is not a novation, and the promissory note remains in full force as to the Monroe and Elk Grove entities.
• Proceeds net of amounts payable to other parties under the draw conditions are deposited in a segregated DIP loan account and may not be commingled with other debtor cash; borrowing requests are limited to once per calendar week absent agent consent, on three business days' notice, and may not exceed 100% of the projected DIP budget for the initial draw period or, thereafter, the week following the draw week, subject to permitted variances.

Cash Collateral

• The debtors may use cash collateral, meaning all debtor cash wherever held, including cash in deposit accounts, that is cash collateral of the bridge lender, the DIP lender or the prepetition secured lenders, in accordance with the approved budget.
• No DIP proceeds or cash collateral may be used to pay Section 503(b)(9) administrative claims.
• Use of cash collateral is conditioned on separate borrowing-base and liquidity covenants for each prepetition facility:
  • Under the White Oak facility, weekly Monday delivery of a US borrowing base report and a certified variance report, and maintenance at all times of US revolver availability of not less than 85% of the availability line item in the Flat Roll Group forecast; the US specified overadvance may not exceed $4 million, and availability is increased by White Oak cash collateral in the blocked account or main operating account above $250,000.
  • Under the Wintrust facility, weekly Monday delivery of a borrowing base certificate and certified variance report, and maintenance of excess availability of not less than 85% of the availability line item in the Fabrication Group forecast, with excess availability increased by Wintrust cash collateral held in the Wintrust blocked account or the Wintrust debtors' main operating account.
  • A shortfall below either 85% threshold terminates the debtors' authority to use, and the applicable agent's consent to the use of, cash collateral until cured by cash payment within two business days after delivery of the relevant variance report; the prepetition secured lenders may waive termination in writing.
• Cash collateral is swept to blocked accounts and remitted back daily only to the extent remittance would not drive availability below the applicable minimum threshold; amounts retained are not applied to the prepetition obligations until the earlier of the termination date or the sale of substantially all assets of the applicable debtor group.
• Two specified White Oak collateral items must be remitted promptly to the White Oak agent and applied against the White Oak obligations without being credited toward the availability line item: proceeds of the $2 million seller promissory note dated Sept. 26, 2024 executed by Grand Steel Products, Inc. in favor of Maksteel-Chattanooga, LLC, and the $500,000 payment, subject to reductions, under the Aug. 21, 2026 settlement and termination agreement between Nucor Warehouse Systems, Inc. and MAK Steel USA LLC.
• The debtors' consensual use of cash collateral terminates on the earlier of the maturity date, termination of the DIP facility, or as otherwise set forth in the interim order.

Interest Rate

• 10% per annum, computed on a 360-day year, with accrued interest added monthly to outstanding principal; on an event of default, interest is payable on demand in cash
• Default Rate Increase: 2.0%
• The debtors must first make all payments due to the prepetition secured parties, including interest, before paying any interest under the DIP loan agreement.

Fees

• Exit Fee: 4.0% of the initial aggregate principal amount of new money commitments, fully earned on the effective date and payable at maturity, added to the outstanding principal balance. Approval is subject to entry of the final order, and under the interim order the fee is calculated on actual postpetition borrowings rather than on the full new money commitment.
• Lender legal fees: all fees and expenses of DLA Piper LLP (US), as counsel to Firehorse, payable within 15 days of invoice, with any invoice delivered on or before the effective date fully earned and payable then and fundable from new money proceeds; the debtors are not authorized to pay DIP lender counsel fees until entry of the final order.
• All fees are non-refundable, are paid in kind and added to outstanding principal, and constitute obligations under the loan documents.
• The budget separately reflects a 1.5% unused line fee alongside the 10% interest line.
• The debtors must pay all outstanding adequate protection fees and expenses before paying any DIP fees and expenses.

Maturity

• The earliest to occur of:
  • Dec. 18, 2026, the scheduled maturity date
  • Consummation of a sale of all or substantially all of the borrowers' assets or equity, or, where assets are sold in a series of transactions, consummation of the final sale in the series
  • Acceleration of the obligations or termination of the new money commitments by the agent or lenders
  • The effective date of a confirmed plan of reorganization or liquidation
  • 14 days after the petition date if the final order has not been entered, unless extended with Firehorse's written consent, not to be unreasonably withheld
  • The date the interim or final order ceases to be in full force and effect after entry
  • Conversion or dismissal of any of the cases
  • Incurrence of any other Section 364 financing that does not provide for immediate payment in full in cash of the prepetition senior secured obligations and all DIP obligations
• Firehorse may agree to extend maturity for any reason, including to allow the debtors to pursue confirmation of a plan acceptable to it.
• The borrowers may not prepay without Firehorse's consent and subject to the intercreditor agreements, except that they may prepay in full without premium or penalty in connection with a refinancing. Mandatory prepayment of 100% of net cash proceeds is required within two business days of receipt of proceeds from any non-ordinary-course disposition or any event of loss, and from any non-permitted indebtedness incurrence.

Case Milestones

• By Sept. 24, 2026: entry of the interim order and filing of a motion, in form and substance satisfactory to Firehorse, seeking approval of bid procedures for a Section 363 sale and of the sale itself
• By Oct. 21, 2026: entry of the final order and of a bid procedures order satisfactory to Firehorse
• By Oct. 21, 2026: $1 million in net cash proceeds deposited into the DIP account, plus either an additional $1 million so deposited or execution of one or more fully committed, contingency-free asset purchase agreements with qualified and financially capable buyers that in Firehorse's sole discretion will yield additional net cash proceeds in excess of $1 million
• By Oct. 30, 2026: execution of one or more fully committed, contingency-free asset purchase agreements that in Firehorse's sole discretion will yield net cash proceeds in excess of $2 million
• By Nov. 30, 2026: an additional $2 million in net cash proceeds deposited into the DIP account
• Failure to meet any milestone, as extended with Firehorse's consent, is an event of default.

Key Dates

• Petition date: Sept. 22 and 23, 2026, as applicable to each debtor; joint administration ordered Sept. 23, 2026
• John Sordillo serves as chief restructuring officer and SC&H Capital and Angle Advisors as the debtors' investment bankers; the DIP funds a Section 363 sale process, with operations budgeted in a Flat Roll Group, whose forecast sets the White Oak availability test, and a Fabrication Group, whose forecast sets the Wintrust availability test.
• Interim hearing held Sept. 24, 2026; the interim order was entered Sept. 28, 2026
• Objection deadline: Oct. 13, 2026 at 4:00 p.m. (prevailing Central Time)
• Final hearing: Oct. 20, 2026 at 2:00 p.m. (prevailing Central Time)
• The U.S. Trustee had not appointed a creditors' committee as of entry of the interim order.

Carve Out

• The carve-out consists of the sum of:
  • Statutory clerk and U.S. Trustee fees plus statutory interest, unlimited by any budget
  • Chapter 7 Trustee Fee: $50,000
  • Allowed professional fees of estate professionals accrued through the first business day after delivery of a carve-out trigger notice, capped at each professional's allocation in the approved budget
  • Post-Carve-Out Trigger Notice Cap: $100,000 for debtor professionals and $50,000 for committee professionals
• The debtors fund the pre-trigger amount weekly into a non-interest-bearing professional fee account each Wednesday for the following week's budgeted fees, and may borrow weekly under the DIP facility to do so until an event of default or the termination date; funded amounts remain payable to professionals regardless of a subsequent default, and any residual after final fee applications is returned to the DIP lender.
• Fees incurred by a professional in excess of its budget allocation are not payable from the carve-out, and the carve-out is reduced dollar-for-dollar by payments made to that professional; payments made after the trigger date on account of post-trigger fees permanently reduce the post-trigger cap.
• The carve-out is funded solely from DIP proceeds and not from prepetition secured collateral, including cash collateral, absent the applicable prepetition secured agent's written consent or payment in full in cash of its obligations.
• Success and transaction fees earned by SC&H Capital and Angle Advisors, the debtors' investment bankers, constitute allowed professional fees for carve-out purposes regardless of whether they appear in the approved budget, and are funded into the professional fee account at closing of the applicable transaction unless court-approved and paid at closing.
• The carve-out trigger notice may be delivered only during the continuance of an event of default, and the DIP liens, prepetition secured liens, bridge loan liens, adequate protection liens and claims, and DIP superpriority claims are all subordinate to it; after the weekly funding, the DIP lender's and prepetition secured lenders' subordination in respect of budgeted professional fees is limited to the amounts on deposit in the professional fee account.
• On delivery of a trigger notice, the debtors must fund a carve-out reserve equal to the carve-out, solely from available cash in the DIP loan account unless the applicable prepetition secured agents agree otherwise, applied first to the statutory fees, the Chapter 7 trustee amount and pre-trigger professional fees until paid in full; a shortfall in the reserve does not affect the carve-out's priority, and neither the DIP lender nor the prepetition secured lenders is obligated to pay estate professionals or to advance funds after a trigger notice.

Use of Proceeds

• Pay fees, interest and expenses under the loan documents
• Fund the cost of administering the cases, including professional fees and expenses
• Finance other prepetition and pre-filing expenses approved by the court
• Fund working capital and general corporate purposes
• Make adequate protection payments and fund the carve-out
• Roll-up proceeds are deemed used to refinance the bridge loans dollar-for-dollar.

Credit Bid

• The DIP agent, at the DIP lender's direction and directly or through acquisition vehicles, may credit bid up to the full amount of the bridge loan obligations and the DIP obligations incurred under the interim order, and, on entry of the final order, the full amount of the DIP obligations, in any sale of DIP collateral or applicable prepetition secured collateral, whether under Section 363, Sections 1123 or 1129(b), or by a Chapter 7 trustee under Section 725, without further court order.
• Each prepetition secured agent may credit bid up to the full amount of its prepetition secured loans, including adequate protection obligations, and both the DIP lender and each prepetition secured agent are automatically deemed qualified bidders in any such disposition.
• Any credit bid by the DIP lender or DIP agent for prepetition secured collateral must provide for indefeasible payment in full in cash of all prepetition secured obligations at closing, unless the applicable prepetition secured agent agrees otherwise in advance in writing.
• If avoidance actions or other estate claims are sold or otherwise disposed of, whether by the debtors or a trustee, the DIP agent may credit bid up to the full amount of the DIP obligations in connection with that disposition.
• No debtor may object to either credit bid right.

Avoidance Actions

• Until entry of a final order granting such relief, the DIP liens do not extend to, and DIP collateral does not include, avoidance actions, other estate actions or the proceeds of either, which together make up the excluded interim collateral; on entry of the final order, DIP collateral includes them.
• Other estate actions are defined to capture non-avoidance claims arising from a debtor's or estate's predicate liability, including breach of fiduciary duty, alter ego and veil-piercing (including single-enterprise theories), and successor liability claims (including product-line, continuity-of-enterprise and de facto merger claims).
• The prepetition secured adequate protection liens likewise do not reach avoidance actions or their proceeds until entry of the final order.

Challenge Period and Budget

• Challenges must be filed within 75 calendar days after entry of the interim order by a party in interest with standing, or within 60 days after formation by a creditors' committee, extendable by written agreement of the applicable prepetition secured parties; absent a timely, successful challenge, the debtors' stipulations and releases bind the estates and all parties in interest upon entry of the final order.
• A Chapter 7 or Chapter 11 trustee appointed before the period expires receives the longer of the remaining period or 14 calendar days after appointment, and is not bound by the debtors' stipulations for purposes of any challenge proceeding.
• A timely standing motion attaching a proposed challenge extends the period for that party alone, and only as to the identified claims, until two business days after the court approves standing; the period expires immediately if standing is denied.
• DIP proceeds and DIP collateral that is not prepetition secured collateral may fund investigation, but not prosecution or the preparation of any complaint or motion, of the bridge lender's claims and liens and of potential claims against it, by the debtors until entry of the final order and by a creditors' committee, whose investigation spending after entry of the final order is capped at $25,000; no investigation funds may be used against the DIP obligations, DIP liens or DIP superpriority claims. The DIP loan agreement instead directs its $25,000 committee investigation allowance at the White Oak and Wintrust lenders' claims and liens, and the interim order controls over the DIP documents.
• If the debtors settle the stipulated claims before entry of the final order, the settlement binds the estates and all parties in interest, and no committee or other party may thereafter pursue a challenge to the settled matters.

Securities and Priorities

• The DIP obligations constitute allowed superpriority administrative expense claims against the debtors on a joint and several basis under Section 364(c)(1), payable from all pre- and postpetition assets and proceeds other than the excluded interim collateral until entry of a final order. Those claims are junior and subordinate to, and subject to prior payment in full in cash of, the prepetition secured obligations, the prepetition liens, the prepetition secured adequate protection liens, the prepetition secured 507(b) and other adequate protection claims, and the carve-out.
• The DIP agent, for the benefit of the DIP lender, receives automatically perfected postpetition liens under Sections 364(c)(2) and 364(c)(3) on all collateral, with the following priorities:
  • First-priority senior liens on all DIP loan proceeds and the accounts holding them, subject only to the carve-out and the adequate protection liens
  • First-priority senior liens on unencumbered property, including the excluded interim collateral upon entry of a final order, junior to the adequate protection liens granted with respect to the assets of the respective prepetition secured obligors
  • Liens on all other collateral, senior to other liens but junior to valid, perfected, unavoidable third-party liens existing immediately before the petition date, including the prepetition secured liens, or perfected thereafter under Section 546(b), and subject to the carve-out and the adequate protection liens
• The DIP facility and DIP liens are junior and subordinate to the liens and replacement liens under the prepetition secured loan documents; under Article VII of the DIP loan agreement, the obligations and all liens securing them are expressly subordinated in right of payment and collateral allocation to prior payment in full of the prepetition senior secured obligations.
• The DIP liens may not be subordinated to or made pari passu with liens avoided and preserved under Section 551, postpetition liens (including governmental liens), intercompany or affiliate liens, or any lien granted under Section 363 or 364 after entry.
• Under the loan agreement's security grant, the administrative agent takes a security interest in all assets of the loan parties, including accounts, chattel paper, deposit accounts, documents, general intangibles, goods and inventory, instruments, intellectual property, investment property, letter-of-credit rights, money, promissory notes, software and proceeds of the foregoing, including proceeds of directors and officers insurance, and may file all-assets UCC financing statements; a debtor acquiring a new commercial tort claim must give notice and grant a security agreement within 10 days.
• Notwithstanding any intercreditor agreement, payments and proceeds of collateral subject to the prepetition secured liens are applied first to the prepetition secured obligations, second to the carve-out, third to amounts due on the new money loans, fourth to the roll-up loan (if permitted by the final order) or the promissory note, and last to the debtors, subject to other stakeholders' rights.
• The loan agreement applies remedy and sale proceeds, subject to the DIP order and the intercreditor agreements, in the following order: agent fees, indemnities and expenses; new money fees, indemnities and other non-principal, non-interest amounts, pro rata; new money interest; new money principal; other new money obligations; then the same four-step sequence for the roll-up loan; and finally to the estates or as the court directs.
• Where the bridge loan secured parties are listed as loss payee under the debtors' insurance policies, the DIP agent is deemed loss payee as well, and distributes recoveries first to payment in full of the prepetition secured obligations, second to payment in full of the DIP obligations and termination of the commitments, and third to the bridge loans and bridge loan obligations.
• Any party receiving DIP collateral, proceeds of DIP collateral or a payment on account of a security interest in DIP collateral before indefeasible payment in full of the DIP obligations holds it in trust for the DIP lender and prepetition secured lenders and must immediately turn it over to the applicable agent. Payments to the DIP agent are irrevocable and received free and clear of any claim, charge or assessment asserted by or on behalf of the debtors, subject to the prepetition secured lenders' liens and replacement liens, the adequate protection liens and the carve-out; payments to the prepetition secured agents are likewise irrevocable and free and clear, without that qualification.
• The DIP liens, DIP superpriority claims, adequate protection liens and obligations, 507(b) claims and the carve-out survive conversion to Chapter 7, dismissal, termination of joint administration, entry of a Section 363 sale order or confirmation of a plan; on dismissal under Section 1112, they continue in full force with their priorities intact until payment in full and remain binding on all parties in interest, with the court retaining jurisdiction to enforce them.
• The prepetition liens and DIP liens are continuing liens that encumber the DIP collateral until indefeasible payment in full of the prepetition obligations and DIP obligations, respectively. The court made no finding that any alleged prepetition permitted prior lien is valid, senior, enforceable, perfected or non-avoidable, and preserved all parties' rights to challenge such liens; a seller's Section 546(c) reclamation right is expressly subject to the DIP liens and prepetition liens.

Prepetition Capital Structure

• White Oak facility: a $90 million revolver commitment under the Dec. 31, 2024 loan and security agreement among Maksteel USA LLC, Chicago Steel Holdings LLC and Lexington Steel LLC as US borrowers, Maksteel Holdings ULC as Canadian borrower, Maksteel Holding Corp. and UPG Flat Roll Group LLC as guarantors, and White Oak Commercial Finance, LLC as agent. Outstanding principal and interest as of the petition date is not less than $50,424,614.73, plus prepayment premium, make-whole amount, fees, expenses and Section 506(b) amounts.
• Wintrust facility: the Aug. 22, 2022 loan and security agreement, as amended by a Jan. 30, 2026 forbearance agreement and fourth amendment, among Metalex LLC, National Metalwares L.P., UPG Fabrication LLC, National Metalwares Holdings LLC and Sidecar NM LLC as borrowers, with Schaumburg Bank & Trust Company, N.A., a Wintrust Financial Corporation subsidiary, as agent. Outstanding principal and interest as of the petition date is not less than $7,520,357.86, plus other obligations.
• Bridge loans: the Fourth Amended and Restated Promissory Note dated Sept. 17, 2026, original principal $4.98 million plus accrued interest and other amounts, issued by the debtors, the Monroe entities and the Elk Grove entities in favor of Firehorse Capital LLC and secured by liens junior to the prepetition secured liens but senior to all other liens on the bridge loan collateral.
• The debtors stipulate that they are and have been in default under the prepetition loan documents, and waive and release any right to challenge the bridge loans, the prepetition secured loans, the related obligations, or the validity, extent and priority of the liens securing them, subject to the challenge provisions.
• Firehorse's DIP loans are subordinated to the White Oak debt under a subordination and intercreditor agreement dated Sept. 22, 2026 among the White Oak agent, Firehorse and the White Oak obligors, and the prepetition secured liens rank ahead of the bridge loan liens under that and the other intercreditor agreements.

Adequate Protection

Prepetition Secured Lenders

• Replacement and additional postpetition liens on all prepetition secured collateral and all collateral constituting assets of the prepetition secured obligors, in the amount of any diminution in value, senior to all other liens and, until the prepetition secured obligations are paid in full, not subject to or pari passu with any lien granted in these or any successor cases; these liens reach avoidance actions and avoidance action proceeds only upon entry of the final order.
• Allowed superpriority administrative expense claims under Section 507(b) against the applicable borrower and obligor debtors, payable from all pre- and postpetition property subject to their liens and, upon entry of the final order, avoidance action proceeds. Those claims are subordinate only to the carve-out and rank ahead of the DIP superpriority claims in payment.
• Continued accrual of interest on the White Oak loans and the Wintrust loans at the applicable default rate under each facility, paid in cash when due in accordance with the loan documents and the approved budget.
• Cash payment of all reasonable and documented prepetition and postpetition fees and expenses, including remedies-related fees of primary, special and local counsel and financial advisors, subject to the invoice review procedures and, before closing of a sale of substantially all assets of the respective debtors, capped at the budgeted amounts for each party; the debtors may fund these payments from DIP proceeds on entry of the interim order.
• Information rights: all reporting the debtors owed prepetition, copies of all financial reporting provided to the DIP agent including borrowing base reports, monthly financial statements, a rolling 13-week cash flow forecast with weekly budget-to-actual variance reports, and periodic conferences with management on operations, collateral and the sale process.
• Maintenance and insurance of the prepetition secured collateral to the extent required under the prepetition secured loan documents.
• The court found this package reasonable and sufficient to protect the prepetition secured lenders' interests, while reserving all of their rights, including to seek new, different or additional adequate protection.

Bridge Loan Secured Parties

• No separate adequate protection is granted, because Firehorse Capital LLC is itself the DIP lender and DIP agent; the bridge loan secured parties retain their rights under the bridge loan documents as to the bridge obligations, liens and collateral, including the automatic exchange of the promissory note into the roll-up loan upon entry of a final order granting that relief.
• Nothing in the interim order primes the bridge loan liens or impairs Firehorse's rights as bridge lender except as expressly provided by the roll-up, or affects the bridge parties' rights as to the non-debtor Elk Grove entities.
• Information rights: all reporting the debtors were obligated to provide under the bridge loan documents immediately before the petition date.

Events of Default and Remedies

• Events of default include failure to pay principal when due; failure to pay interest, fees or other amounts within three business days; materially incorrect certifications, representations or budget variance reports; covenant breaches with cure periods of five business days for reporting, 10 business days for certain covenants, 30 days generally, and none for the negative covenants; cross-default on material indebtedness above $50,000 (excluding defaults arising from the filing itself); judgments above $250,000 or material non-monetary judgments remaining undischarged for 30 days; ERISA events; a change in control; failure of the DIP order or security documents to create valid perfected liens; dissolution or liquidation; entry of a Section 363 sale order without Firehorse's consent; any Material Adverse Effect or any riot, act of war or terrorism, epidemic or pandemic, insurrection, revolution, nuclear or natural disaster materially affecting the loan parties; indictment or specified criminal or regulatory proceedings against a loan party or its directors or officers; and failure to meet any milestone.
• Bankruptcy-specific defaults include appointment of a Chapter 7 or Chapter 11 trustee or an examiner or receiver with expanded powers; dismissal or conversion; disposition of material assets outside the permitted paths; non-compliance with the DIP order; termination or reduction of exclusivity without Firehorse's consent; entry of, or debtor support for, orders modifying the cash management or DIP orders, granting equal or senior administrative priority, granting liens on the collateral, permitting Section 506(c) charges, or authorizing other cash collateral use or Section 364 financing; confirmation of a plan other than one acceptable to Firehorse or one paying the obligations and prepetition senior secured obligations in full in cash; stay relief permitting foreclosure on collateral; termination of cash collateral use; any challenge to the enforceability of the DIP order or the validity of the liens; and prepetition-claim payments outside the budget or authorized orders.
• It is also an event of default if any order is entered authorizing priming or pari passu liens or administrative priority, non-permitted cash collateral use, returns of goods or setoffs under Sections 546(h) or 553, or any modification of the DIP or bridge parties' rights; and if the debtors seek confirmation of a plan that does not provide for indefeasible payment in full in cash of the prepetition secured obligations and adequate protection obligations on or before the plan effective date, absent the applicable agent's advance written consent.
• On the termination date, all DIP obligations become immediately due, the commitments terminate, and the DIP agent and prepetition secured lenders may restrict the debtors' use of their respective cash collateral; during the remedies notice period the debtors may use cash collateral solely to fund the carve-out and to pay payroll and other expenses critical to administration, strictly in accordance with the approved budget.
• The automatic stay is modified so that remedies become exercisable five business days after the termination date, in a sequenced order: first the prepetition secured lenders (who may not, without the DIP lender's written consent, freeze, sweep or restrict funds in the DIP loan account); then, subject to the intercreditor agreements, the DIP agent, including sweeping the DIP loan account, setoff, foreclosure on DIP collateral other than prepetition secured collateral, and credit bidding, in each case subject to funding the carve-out reserve and payment of accrued wages and benefits; and then the bridge loan secured parties.
• During the remedies notice period any party in interest may seek an emergency hearing on whether an event of default has occurred; if the court schedules the hearing after the period ends, the period is automatically extended until the court rules.

Waivers

• Subject to entry of the final order granting such relief:
  • Section 506(c): no administration costs or expenses of these or any successor cases may be charged against or recovered from the DIP collateral, prepetition secured collateral or bridge loan collateral without the applicable secured party's prior written consent, and no consent may be implied from action, inaction or acquiescence.
  • Section 552(b): the "equities of the case" exception does not apply to the bridge loan secured parties or the prepetition secured lenders as to proceeds, products, offspring or profits of their collateral; the prepetition secured parties are otherwise entitled to all benefits of Section 552(b).
  • Marshaling: the equitable doctrine of marshaling and similar doctrines do not apply to the DIP lender or the prepetition secured parties with respect to the DIP, prepetition secured or bridge loan collateral or obligations.
• Release: subject to and effective only upon entry of the final order and to the challenge provisions, the debtors and their estates release the prepetition secured parties, the DIP agent, the DIP lender and their respective representatives from all claims and from all derivative and estate claims, including avoidance actions, preference claims and fraudulent transfer claims, arising out of the promissory note, the bridge loans, the prepetition loan documents, the DIP loan agreement and the related negotiations and transactions. Representatives include each entity's subsidiaries, affiliates, officers, directors, managers, principals, employees, agents, financial advisors, attorneys, accountants, investment bankers, consultants and professionals, and their successors and assigns. The release does not relieve the DIP lender or the debtors of their DIP obligations arising from and after the date of the interim order, and is mirrored in Section 10.21 of the DIP loan agreement.
• An acceptable plan under the DIP loan agreement must be satisfactory to Firehorse in its sole discretion and include exculpations, indemnities and releases for the agent, the lenders, the White Oak and Wintrust lenders and their related parties, which for Firehorse include Chris Hutter and Paul Douglass; confirmation of any other plan that does not pay the DIP obligations and the prepetition senior secured obligations in full in cash is an event of default.
• The debtors waive any defense to the indemnity obligations owed to the DIP lender and prepetition secured parties, though the debtors do not indemnify the prepetition secured parties for costs or fees directly related to an unsuccessful defense against a portion of an ultimately successful challenge.
• The automatic stay is modified to permit implementation of the interim order, the DIP documents and, upon entry, the final order, including delivery of termination notices, and to permit non-debtor affiliates to take implementing actions.

Permitted Variance

• Beginning with the period from the effective date through the first Friday thereafter and each weekly period ending on a Friday thereafter, neither cash receipts nor aggregate cash disbursements, excluding lender fees, may vary by more than 10% from the approved budget for the applicable period; the compliance certificate tests the same covenant excluding debtor and lender professional fees.
• Variances are tested cumulatively within each four-week budget period — week 1 alone, then weeks 1 through 2, weeks 1 through 3, and weeks 1 through 4 — with the first budget period running the four weeks beginning Sept. 19, 2026 and ending Oct. 17, 2026, and the second running weeks 5 through 8 ending Nov. 14, 2026.
• The approved budget variance report, certified by a responsible officer and in form and substance satisfactory to Firehorse, is due by 5:00 p.m. (New York City time) each Thursday and must set out actual operating receipts, operating disbursements and non-operating disbursements on both a line-item and aggregate basis, indicate whether each variance is temporary or permanent, explain any material variance, and demonstrate compliance with the budget covenants.
• Nothing in the approved budget limits allowance of professional fees, and allowance of fees above budget does not increase the lender's funding obligations, which remain limited to the approved budget. The agent and lenders may assume compliance, have no duty to monitor it, and are not obligated to pay any expense incurred under a budget; budget line items for interest, expenses and other amounts payable to the agent and lenders are estimates only, and the borrowers remain liable for all obligations regardless of those estimates. No approved budget constitutes an amendment to any loan document or to the borrowing limits it sets.
• The borrowers must deliver an updated 13-week budget every fourth Thursday, subject to Firehorse's prior written approval; if the parties cannot agree, the prior approved budget continues in effect, though an unapproved forecast does not satisfy the condition to drawing the additional availability. Any amendment to the approved budget requires the prepetition secured agents' prior written consent, and notice of any material amendment to the budget or DIP documents must be docketed and served, with three business days to object; budget updates and supplements required under the DIP documents are not treated as amendments requiring further court approval.

Budget Economics

• The initial DIP budget opens with a $250,000 cash balance and projects cumulative negative cash flow of approximately $6.333 million over the 13 weeks ending Dec. 18, 2026, taking the cumulative DIP funding need to $6.083 million by the final week, which the budget covers with the $2 million Firehorse draw and projected transaction recoveries rather than further Firehorse funding.
• Projected disbursements over the period comprise approximately $4.354 million of professional fees, $754,000 of corporate expenses, $625,000 of adequate protection payments and $600,000 of critical vendor payments, with the largest weekly outflow of roughly $1.105 million in the week ending Oct. 2, 2026.
• Adequate protection payments run at $25,000 per week for Flat Roll Group lender professionals and $30,000 per week for Fabrication Group lender professionals through the week ending Nov. 20, 2026, with none budgeted thereafter, plus $65,000 Wintrust interest payments in the weeks ending Oct. 2 and Nov. 6, 2026.
• DIP sources are the $2 million Firehorse funding plus $6.892 million of projected transaction recoveries, for total sources of $8.892 million. The budget accrues $126,000 of DIP interest and unused line fee across the period and a $253,000 exit fee in the final week, taking Firehorse's total loan, made up of $4.984 million of initial payments, the $2 million DIP draw and $379,000 of unused line and exit fees, to $7.363 million.
• The Flat Roll Group cash collateral forecast, which sets the White Oak availability test, holds an $8.771 million balance outstanding in every week shown, while a separate Flat Roll Group recovery schedule on the DIP budget pays that $8.771 million down to zero through pay-downs of $450,000, $2.2 million, $185,000 and $5.936 million; the Fabrication Group forecast, which sets the Wintrust availability test, holds a $6.736 million balance with availability turning negative in the weeks ending Nov. 13 and Nov. 20, 2026.
• The Flat Roll Group forecast carries $8.771 million outstanding against the at least $50.4 million of White Oak principal and interest the interim order stipulates as of the petition date. The Fabrication Group forecast likewise carries $6.736 million against the at least $7.52 million stipulated for Wintrust.