BioXcel Therapeutics - Chapter 11 DIP Terms

DIP Terms

Borrower / Guarantors

• BioXcel Therapeutics, Inc., as borrower
• OnkosXcel Therapeutics, LLC and OnkosXcel Employee Holdings, LLC, as guarantors on a joint and several basis

Agent / Lenders

• The administrative agent under the DIP credit agreement, as DIP agent; the lenders party thereto, as DIP lenders
• Oaktree Fund Administration, LLC serves as administrative agent under the prepetition April 19, 2022 credit agreement; the DIP lenders hold 100% of the outstanding prepetition secured obligations, and every prepetition lender consented to the DIP facility and cash collateral use conditioned on entry of the final order

DIP Commitments

• $77.25 million multi-draw senior secured superpriority priming term loan facility consists of:
  • $19 million of new money term loans
    • $9.5 million initial draw, fully funded at closing of the facility following entry of the interim order
    • A single additional draw of up to $9.5 million, available upon entry of the final order and satisfaction of the remaining conditions in the DIP credit agreement
  • Up to $58.25 million roll-up of prepetition secured obligations on a cashless, dollar-for-dollar basis, in two steps:
    • Interim roll-up at closing of $1.25 million of prepetition bridge financing obligations plus $28.5 million of additional prepetition secured obligations, pro rata in proportion to the initial draw
    • Final roll-up of a further $28.5 million upon funding of the additional draw, pro rata in proportion to that draw
• Prepetition secured obligations stood at not less than $111,755,133.46 in principal as of the Aug. 27, 2026 petition date, inclusive of PIK interest capitalized before filing; amounts not rolled up remain outstanding as remaining prepetition secured obligations, secured by the continuing prepetition liens.
• Each roll-up is deemed funded without novation and discharges an equal amount of prepetition secured obligations as if paid under the prepetition loan documents. The court found the debtors could not obtain financing on more favorable terms, and that the roll-up is an integral part of the facility without which the DIP lenders would not extend the new money.
• The roll-up loans remain subject to the challenge rights reserved to parties in interest.

Interest Rate

• The final order does not set the rate, which is carried in the DIP credit agreement; upon an event of default and delivery of a carve-out trigger notice, the DIP agent may declare that interest accrues at the default rate provided in the DIP loan documents.

Fees

• Fees are those set forth in the DIP credit agreement and the agency fee letter, payable non-refundably without further court approval and without fee applications, together with all reasonable and documented costs and expenses; the debtors are jointly and severally liable for them, and amounts owed to the DIP secured parties constitute DIP obligations.
• Lender professional fees are payable within a 10-business-day review period after invoice summaries are delivered, without time entries or timekeeper summaries; the debtors, any committee, or the U.S. Trustee may object within that window, and any hearing is limited to reasonableness of the disputed amounts, with undisputed fees paid promptly.
• Closing-date fees and expenses of counsel to the DIP lenders, DIP agent, prepetition agent, and prepetition lenders were payable outside those procedures, as are fees incurred through the additional-draw funding date, provided invoices are delivered to debtors' counsel at least two business days before that funding.
• Lender counsel identified as payable: Sullivan & Cromwell (DIP agent, certain DIP lenders, prepetition agent and certain prepetition lenders), Richards, Layton & Finger (Delaware counsel to the same), and DLA Piper (certain DIP and prepetition lenders); except in a conflict, the DIP and prepetition secured parties must share professionals other than DLA Piper and Sullivan & Cromwell.
• The debtors indemnify the DIP lenders and agent, and the prepetition lenders and agent solely as to a challenge, along with their related persons, as and to the extent provided in the DIP and prepetition credit agreements; indemnified persons have no liability to the debtors or their shareholders or creditors except where a final non-appealable judgment finds it resulted solely from their gross negligence or willful misconduct, and neither indemnified persons nor the debtors are liable for special, indirect, consequential, or punitive damages, without affecting the debtors' indemnity.

Maturity / Termination

• The facility matures on termination in accordance with the DIP credit agreement, at which point all DIP obligations become immediately due and payable, the new money loans terminate, authority to use cash collateral ceases, and the DIP secured parties may exercise remedies under the order.
• During the remedies notice period the debtors may continue to use cash collateral solely to fund the carve-out and to pay payroll and critical expenses necessary to preserve the prepetition collateral, strictly in line with the approved budget and permitted variance.
• Proceeds of any asset sales must repay DIP obligations per Section 3.02 of the DIP credit agreement, subject to proceeds retained by the debtors under a wind-down budget to be agreed in good faith with the required DIP secured parties.
• Subject to the roll-up priority waiver in an administrative shortfall, holders of DIP superpriority claims must be paid in cash in full on a plan effective date unless a holder consents to different treatment; that requirement cannot be amended without the prior written consent of each adversely affected holder.

Events of Default and Remedies

• An event of default arises on:
  • The debtors' failure to perform any material term, provision, condition, covenant, or obligation under the final order
  • Failure to comply with the case milestones set out in the DIP credit agreement
  • An event of default under the DIP credit agreement
• Until the DIP obligations, prepetition secured obligations, and adequate protection obligations are paid in full in cash and the new money commitments terminated, it is also an event of default for the debtors to seek or consent to any of the following:
  • Modification, stay, vacatur, or amendment of the order, unless permitted by the DIP loan documents or consented to by the DIP agent, the required DIP lenders, and the prepetition agent
  • Any administrative or unsecured claim pari passu with or senior to the DIP superpriority claims, the prepetition adequate protection superpriority claims, or the prepetition secured obligations, subject to the same exception
  • Any other order allowing use of DIP or prepetition collateral, subject to the same exception
  • Any lien on that collateral equal or superior to the DIP, adequate protection, or prepetition liens
  • Use of cash collateral for unpermitted purposes
  • The return of goods under section 546(h) or otherwise on account of prepetition debt
  • Conversion or dismissal
  • Appointment of a Chapter 11 trustee
  • Appointment of an examiner with enlarged powers
• On default, the DIP agent at the direction of the required DIP lenders may deliver a carve-out trigger notice declaring the DIP obligations accelerated; terminating, reducing, or restricting any remaining commitment; terminating the facility as to future liability without affecting the DIP liens, superpriority claims, or obligations; and causing interest to accrue at the default rate. The prepetition agent, at the direction of the majority prepetition lenders, may separately terminate, reduce, or restrict cash collateral use.
• The automatic stay is modified so that, after a five-business-day remedies notice period following delivery of a carve-out trigger notice, the DIP agent may exercise remedies to satisfy the DIP obligations, subject to the carve-out, and, behind it, the prepetition secured parties may exercise their remedies as to cash collateral use. The debtors and any committee may seek an emergency hearing within that period solely to contest whether a default occurred, though the court's ability to grant any relief it determines appropriate is preserved; absent a contrary order, the stay terminates at the end of the period without further notice, after which the debtors waive any right to seek relief, including under section 105, that would impair the secured parties' remedies.

Carve Out

• Post-Carve Out Trigger Notice Cap: $725,000 for allowed professional fees incurred after delivery of the trigger notice, net of unapplied prepetition retainers
• Chapter 7 Trustee Fee: $25,000 under section 726(b)
• The carve-out also covers statutory fees payable to the clerk and the U.S. Trustee plus statutory interest, and all unpaid allowed fees and expenses of debtor and committee professionals incurred before delivery of the trigger notice, including monthly, restructuring, or sale fees earned before then, whenever allowed.
• The carve-out is senior to all liens and claims securing the DIP facility, the prepetition adequate protection liens and claims, and any other adequate protection; payments before the trigger notice date do not reduce it, and payments after that date reduce it dollar for dollar. Any funding of the carve-out is added to the DIP obligations and secured by the DIP collateral.
• The debtors must fund a segregated professional fees account weekly, outside the control of the DIP and prepetition secured parties, in the amounts budgeted for each professional; upon the trigger notice date, all available cash on hand goes into that account until it equals allowed professional fees plus the post-trigger cap, with the balance of the carve-out separately reserved. The DIP agent and lenders may not sweep or foreclose on available cash until the account is fully funded and hold a security interest only in any residual. Account disbursements are neither loans nor reductions of the DIP obligations, and neither the account nor the carve-out caps the professional fees the debtors owe.
• Neither the DIP agent, the DIP lenders, nor the prepetition secured parties are responsible for paying professional fees or for ensuring the debtors have funds to do so, and each reserves the right to object to any professional's fee request.

Use of Proceeds

• General corporate and working capital purposes
• Costs and expenses of the Chapter 11 cases
• Interest, fees, costs, and expenses of the DIP facility under the DIP loan documents
• Other fees and expenses set forth in the approved budget
• Neither DIP proceeds, DIP or prepetition collateral, cash collateral, nor the carve-out may fund any investigation, challenge, or litigation against the DIP or prepetition secured parties, including lender-liability claims, attacks on the DIP or prepetition liens and obligations, or avoidance actions related to them; a committee, if appointed, may use up to $25,000 during the challenge period solely to investigate potential challenges to the prepetition liens, not to prosecute them. The debtors may still respond to committee discovery, pay related professional fees, and contest whether a default or termination date has occurred.
• Neither the DIP agent nor the DIP lenders bear any obligation to monitor the debtors' use of the facility.
• If the debtors or any trustee, examiner, or responsible officer obtains credit under sections 364(b), (c), or (d) in violation of the DIP loan documents before the DIP obligations are repaid, all cash proceeds go to the DIP secured parties after satisfaction of the carve-out. Any party receiving DIP collateral or its proceeds before payment in full holds them in trust and must turn them over.

Cash Collateral

• All of the debtors' cash, subject to exceptions in the prepetition loan documents, including amounts in any deposit account wherever located and collections on accounts receivable or other dispositions of prepetition collateral as of or after the petition date, constitutes the prepetition secured parties' cash collateral.
• The debtors may use it from the date of the interim order through the termination date for the purposes set out in the final order and in accordance with the approved budget subject to permitted variance, including to make adequate protection payments.
• The court found the debtors lack sufficient working capital to preserve the value of their businesses without the facility and cash collateral, that keeping vendor, supplier, and customer relationships requires that liquidity, and that its absence would immediately and irreparably harm the debtors, their estates, and parties in interest.

Securities and Priorities

• The DIP obligations carry allowed superpriority administrative expense claims against each estate under section 364(c)(1), senior to all other administrative expenses including those under sections 503(b) and 507(b), payable from and with recourse to all prepetition and postpetition property including avoidance action proceeds, and subject and subordinate only to the carve-out and permitted prior liens. No other superpriority claims may be granted in the cases except as the order provides, on consent of the required DIP lenders, or for the bid protections sought in the debtors' pending sale motion (Docket No. 13), which asks the court to approve bidding procedures and entry into a stalking horse APA with bid protections and to schedule an auction and sale hearing.
• Most significantly, if distributable value under a plan acceptable to the debtors and the required DIP lenders cannot cover the DIP superpriority claims and other required administrative and priority claims on the effective date, the DIP secured parties waive the administrative priority of the superpriority claims allocable to the roll-up loans, up to the amount of that shortfall and capped at the outstanding principal of the roll-up loans; the secured claim status of the roll-up loans and the liens securing them are unaffected.
• The DIP agent holds the following liens on all of the debtors' prepetition and postpetition property, subject and subordinate only to the carve-out and permitted prior liens, meaning valid, perfected, unavoidable liens senior to the prepetition liens at the petition date by law or under the prepetition credit agreement, liens on assets that were not prepetition collateral, and liens perfected postpetition as section 546(b) permits:
  • First-priority liens under section 364(c)(2) on all property not subject to prepetition or permitted prior liens (previously unencumbered property), including unencumbered cash, receivables, intellectual property, commercial tort claims, section 549 claims, and all proceeds and property recovered in respect of avoidance actions
  • Priming first-priority liens under section 364(d)(1) on all property of the debtors
  • Junior liens under section 364(c)(3) on all other prepetition and postpetition property
• Where applicable law bars attachment, the liens attach solely to the debtors' economic rights and proceeds. Liens granted under the interim order were perfected on its entry and are ratified; new or expanded liens, including those on avoidance action proceeds, perfect automatically on entry of the final order without any filing, and lease or license provisions requiring landlord consent or payments to a governmental entity as a condition to transfer are unenforceable against the lien grants.
• The DIP obligations are repaid first from the previously unencumbered property and second from all other DIP collateral, at the option of the required DIP lenders.
• The DIP and adequate protection liens and claims survive conversion, dismissal, a section 363(b) sale, or plan confirmation, and cannot be made pari passu with or junior to any later-granted lien or to any lien preserved for the estates under section 551. The debtors waived any discharge under section 1141(d)(4) as to remaining DIP obligations or adequate protection obligations. Until the DIP obligations are paid in full, the prepetition secured parties may not foreclose on the DIP collateral or take further perfection steps.
• Section 510(a) intercreditor and subordination terms, including the April 19, 2022 intercompany subordination agreement to which the prepetition agent is beneficiary, remain in full force and are not modified by the order.

Adequate Protection

Prepetition Secured Parties

• Adequate protection runs solely to the extent of diminution in value of the prepetition collateral, including cash collateral, from the priming DIP liens, the carve-out, the debtors' use of the collateral, and the automatic stay.
• Additional and replacement liens, automatically perfected, subordinate to the carve-out and the DIP liens and, as to prepetition collateral and assets subject to permitted prior liens, to those permitted prior liens; otherwise senior to all other liens and claims against the DIP collateral, including any lien preserved under section 551. Liens on avoidance action proceeds became effective on entry of the final order. Following the deemed funding of the roll-up loans, these liens continue to secure the remaining prepetition secured obligations.
• Allowed superpriority administrative expense claims under sections 503(b), 507(a), and 507(b), senior to all other administrative claims to the extent of diminution in value, but subordinate to the carve-out and the DIP superpriority claims.
• Payment of all reasonable and documented fees and expenses of the prepetition secured parties, incurred before or after the petition date and to the extent not duplicative of DIP lender professional payments, including fees of Sullivan & Cromwell, Richards, Layton & Finger, and DLA Piper, without separate court approval or fee applications.
• Maintenance of cash management arrangements consistent with the cash management order; compliance with the DIP credit agreement's conduct-of-business covenants, including preservation of licenses, permits, governmental authorizations, and intellectual property rights material to the business, and maintenance of properties and insurance; and compliance with all reporting requirements under the DIP credit agreement, with reports delivered to the prepetition agent.
• The debtors must maintain casualty and loss insurance on the prepetition and DIP collateral on substantially the same basis as before the petition date, naming the DIP agent as loss payee or additional insured, until the DIP obligations are paid in full.
• Section 507(b) rights are preserved if the protection proves insufficient, and the order carries no finding that the protection granted is in fact adequate.

Waivers

• Section 506(c): no administration expenses of the cases or any successor proceeding may be charged against or recovered from the DIP collateral or the prepetition collateral, other than through the carve-out, or from the DIP agent, DIP lenders, or prepetition secured parties, absent their prior written consent.
• Section 552(b): the prepetition secured parties retain the full benefit of section 552(b), and the "equities of the case" exception does not apply to proceeds, products, offspring, or profits of the DIP or prepetition collateral.
• Marshaling: neither the DIP agent, the DIP lenders, nor the prepetition secured parties are subject to the equitable doctrine of marshaling or any similar doctrine.
• Payments received by the DIP secured parties, and, subject to the challenge rights, by the prepetition secured parties, are taken free and clear of any offset, recoupment, subordination, recharacterization, disgorgement, or avoidance, including any claim arising under section 506(c) or the section 552(b) equities exception.

Release

• The debtors, their estates, predecessors, successors, assigns, and anyone claiming through them release the DIP secured parties, effective on entry of the interim order, and the prepetition secured parties, effective on entry of the final order and subject to the challenge rights, together with each group's affiliates, current, former, and future officers, employees, directors, agents, representatives, owners, members, partners, financial and legal advisors, shareholders, managers, consultants, accountants, attorneys, funds, managed accounts, assigns, and predecessors in interest.
• The release covers all claims existing as of entry, including those arising from the DIP facility and prepetition credit documents, lender-liability and equitable subordination theories, claims under sections 542, 544, 545, 547, 548, 549, 550, 551, 552, and 553, challenges to the validity, priority, or avoidability of the released parties' liens and claims, and claims arising from the negotiation or entry of either DIP order; it does not release any DIP secured party's own obligations under the DIP loan documents or the orders.
• The debtors covenant not to commence or support any released claim and to use reasonable best efforts to oppose any action or challenge by another party that would violate the release.

Credit Bid

• The DIP agent, at the direction of the required DIP lenders, may credit bid in any sale of the DIP collateral up to the full amount of the DIP obligations, expressly including the roll-up loans.
• The prepetition agent, at the direction of the majority prepetition lenders and subject to the challenge rights, may credit bid in any sale of the prepetition collateral up to the full amount of the prepetition secured obligations and any adequate protection claims.
• Both rights arise under section 363(k) without further court order, whether the sale runs through sections 363(k), 1123, or 1129(b), or through a Chapter 7 trustee under section 725, unless the court orders otherwise for cause.

Avoidance Actions

• DIP collateral includes all proceeds and property recovered in respect of avoidance actions, and the DIP superpriority claims have recourse to those proceeds; liens on avoidance action proceeds, including the corresponding adequate protection liens, perfected on entry of the final order.

Debtors' Stipulations

• The debtors stipulate that, as of the petition date, they owed the prepetition lenders not less than $111,755,133.46 in principal plus unpaid interest (including default interest), fees, expenses, and other amounts under the prepetition credit agreement, without defense, counterclaim, or offset, and that no portion is subject to avoidance, recharacterization, subordination, or other challenge.
• The prepetition liens are stipulated to be valid, properly recorded, perfected first-priority liens on all prepetition collateral, senior to all other liens other than permitted priority liens under the prepetition credit agreement.
• The debtors further stipulate that the estates hold no claims against the prepetition secured parties, including under sections 105, 502, 510, 541, 542 through 553, and 558; that the prepetition secured parties do not control the debtors; that the debtors are in default under the prepetition credit agreement; and that the prepetition secured parties acted in good faith in negotiating the facility.
• The stipulations bind the debtors immediately, and the debtors are deemed to have waived all challenges as of the petition date; they bind all other parties in interest unless a party with court-granted standing brings a timely, successful challenge.

Challenge Period and Budget

• Challenge deadline: Nov. 14, 2026. A Chapter 11 or Chapter 7 trustee appointed or elected before that date has until the later of the deadline or the tenth day after appointment or conversion to commence, join, or take over a challenge, and is not bound by the debtors' stipulations as to the specific challenges it asserts.
• Standing is not conferred by the order: a committee or other party in interest must obtain a separate standing order to prosecute a challenge, and the prepetition secured parties may still contest standing on other grounds.
• If the deadline passes without a timely challenge, or a challenge is withdrawn or overruled, the prepetition secured obligations become allowed claims not subject to counterclaim, setoff, subordination, recharacterization, or avoidance; the prepetition liens are deemed valid, binding, and perfected as of the petition date; and the debtors' stipulations bind all parties in interest in these cases and any successor cases.
• No official committee had been appointed as of entry of the final order.
• The initial budget attached to the interim order, approved by the required DIP lenders, governs as the approved budget. Budget supplements and variance reports must be delivered to the DIP agent, DIP lenders, prepetition lenders, and their advisors in form, scope, and detail satisfactory to the required DIP lenders and the debtors; if the debtors and the required DIP lenders cannot agree on a supplement, the most recent approved budget remains in effect.
• The debtors must give the DIP lender advisors and the prepetition agent all reporting delivered to the DIP agent, and permit the DIP secured parties, on reasonable notice, to inspect assets and attend regularly scheduled meetings with senior management, excluding privileged or third-party confidential information.

Permitted Variance

• Weekly variance testing on a rolling four-week basis of disbursements and non-operating cash flows, including professional fees, at a 15% threshold.
• Actual disbursements and reserves for professional fees and expenses of the DIP and prepetition secured parties are excluded from both budgeted and actual disbursements for compliance purposes.
• Unused budgeted amounts for any professional fee line item may be carried forward and used in a subsequent week.

Key Dates

• Petition date: Aug. 27, 2026
• Interim hearing: Aug. 31, 2026; interim order entered at Docket No. 64
• Final order entered Sept. 23, 2026 at Docket No. 149; the order recites a final hearing held Sept. 28, 2026, a date after entry.
• Challenge period termination date: Nov. 14, 2026