Braskem Idesa, S.a.p.i. - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• Braskem Idesa, S.A.P.I., a sociedad anónima promotora de inversión, as DIP Borrower
• Braskem Idesa Servicios, S.A. de C.V. and Braskem Idesa Ethane LLC, as DIP Guarantors
  • The DIP Credit Parties are jointly and severally liable for the DIP obligations, with each guarantor guaranteeing payment as a primary obligor and not merely as a surety
  • Braskem Idesa's non-debtor joint venture, Terminal Química Puerto México S.A.P.I. ("TQPM"), is not a guarantor under the DIP facility

Agent / Lender(s)

• TMF Mexico Business Process, S. de R.L. de C.V., as DIP Collateral Agent
• Braskem Netherlands B.V. and Braskem America, Inc. (or their affiliate designees), as Initial DIP Lenders, with Braskem Netherlands B.V. serving as Designated DIP Lender
  • Schedule I to the DIP facility agreement reflects interim DIP loan commitments of $230,000,000 and final DIP loan commitments of $49,000,000 for each Initial DIP Lender, with the aggregate principal amount of interim and final loans capped at the Interim DIP Amount and Final DIP Amount, respectively, and with the DIP lenders determining among themselves the amount advanced by each; each lender's commitment is automatically and permanently reduced dollar-for-dollar upon funding
• Braskem Netherlands B.V. holds the $129,893,181 of Eligible Prepetition Claims subject to the roll-up, and is also the lender under both Emergency Braskem Bridge Facilities being rolled up
• The DIP lenders are non-debtor affiliates of the borrower's controlling shareholder — Braskem holds, through the Mexican Security Trust, 75% of the equity interests in Braskem Idesa, with Etileno XXI holding the remaining 25% — and the debtors accordingly argue in the alternative that the facility satisfies the entire fairness standard, pointing to arm's-length negotiations involving the third-party Ad Hoc Group and Inbursa, a unanimous shareholder resolution approving the DIP (including support from Etileno XXI, which is not participating and whose affiliates are being primed), and the Independent Director's certification and approval; the proposed interim order includes findings that the DIP financing, the roll-up and the adequate protection package satisfy the entire fairness standard to the extent applicable

DIP Commitments

• Approximately $408.89 million superpriority, senior secured and priming, delayed-draw debtor-in-possession term loan facility, plus applicable fees and premiums, comprised of:
  • $279 million of new money term loans
    • Up to $230 million borrowable in a single drawing on the effective date (or one business day thereafter) following entry of the interim order
    • Up to $49 million borrowable in a single drawing following entry of the final order
  • Approximately $129.89 million roll-up of Emergency Braskem Bridge Facilities Obligations, converted on a cashless, dollar-for-dollar basis
    • Approximately $103.91 million ($103,914,544.80) deemed made immediately upon funding in full of the interim new money loans
    • Approximately $25.98 million ($25,978,636.20) deemed made immediately upon funding in full of the final new money loans, subject to entry of the final order
• The roll-up represents a ratio of roughly 0.47:1, or $0.47 of rolled-up Emergency Braskem Bridge Facilities Obligations for every dollar of new money loans extended by Braskem
• The rolled-up loans are in addition to, and do not reduce or count against, the DIP commitments or the new money loans, and no cash proceeds will be advanced to or received by the debtors in respect of the rolled-up loans
• Only Eligible Prepetition Secured Claims held by a DIP lender, directly or indirectly, or by any affiliate, designee or beneficial holder thereof, may be exchanged for rolled-up loans; upon conversion, such claims are deemed irrevocably cancelled, extinguished and waived under the Prepetition Secured PE Agreement and the Prepetition WC Credit Agreement and thereafter constitute DIP obligations
• The new money loans and the rolled-up loans are secured by the DIP collateral on a pari passu basis
• No more than two borrowings of new money loans are permitted, and amounts repaid or prepaid may not be reborrowed
• As of the petition date, the debtors have approximately $2.4 billion in principal amount of funded indebtedness, including approximately $129 million of prepetition term loan obligations, approximately $900 million of 2029 notes obligations, approximately $1.2 billion of 2032 notes obligations, approximately $101 million of prepetition WC facility obligations and approximately $67 million of prepetition secured PE obligations; the debtors also have approximately $30.7 million of letter of credit obligations and approximately $1.2 billion owed to the Subordinated Shareholder Lenders
• Of the prepetition secured PE obligations, only the $25 million of emergency funding advanced under the Prepetition Secured PE Agreement Fifth Amendment is contemplated to be rolled up; other claims under that facility are to receive treatment under the proposed plan, and the interim order's stipulations construe the Prepetition Secured PE Obligations, the Prepetition Secured PE Liens and the Prepetition Secured PE Agreement as applying solely to that $25 million of prepayment obligations plus accrued and unpaid interest. Together with the approximately $101 million of prepetition WC facility loans plus accrued interest, these comprise the approximately $129.89 million of Emergency Braskem Bridge Facilities Obligations subject to the roll-up

Cash Collateral

• All of the debtors' cash, wherever located and held, including cash in deposit accounts, that constitutes cash collateral of any of the prepetition secured parties and DIP secured parties within the meaning of section 363(a) of the Bankruptcy Code
• The debtors are authorized to use all cash collateral in accordance with the DIP documents and the approved budget, subject to permitted variances, including for payment of the adequate protection fees and expenses; absent the terms of the interim order, the debtors are enjoined from using cash collateral without further court order
• The prepetition secured parties are the only parties with an interest in the cash collateral and have consented to its use on the terms of the interim order
• Post-Termination Cash Collateral Usage: during the standstill period, and thereafter until the stay relief motion is adjudicated, the debtors may use cash collateral solely to pay necessary expenses and fund working capital needs and expenditures set forth in the then-current approved budget, to fund the carve-out, and as otherwise set forth in any future approved budget reasonably consented to by the DIP lenders and the Requisite Prepetition Secured Creditors

Interest Rate

• 10% per annum on both the new money loans and the rolled-up loans, payable in kind in lieu of cash, with accrued interest automatically capitalized and added to the then-outstanding principal amount on each interest payment date
• Interest payment dates are the scheduled maturity date, including any acceleration thereof, and any earlier date on which any or all of the obligations are required to be repaid or prepaid; there are no periodic interest payment dates, so interest capitalizes at maturity or upon repayment or prepayment
• Interest accrues on the rolled-up loans, although no commitment fee or other fee is payable in respect of them
• The facility carries no default interest rate

Fees

• Commitment Fee, payable to the Designated DIP Lender and paid in kind in lieu of cash:
  • 0.50% of $230 million upon funding of the interim DIP loans
  • 0.50% of $49 million on the final disbursement date
• No commitment fee or other fee under section 4.3 of the DIP facility agreement accrues or is payable in respect of the roll-up loans
• DIP Fees and Expenses: reasonable and documented fees and expenses of counsel and advisors to the DIP secured parties, including Jones Day and Sinchro Partners Assessoria Empresarial Ltda, payable without the need to file retention motions or fee applications and not subject to allowance or review by the court
  • Invoices are subject to a 10-calendar-day review period by the debtors, the Inbursa Advisors, the Ad Hoc Group Advisors, the DIP Lender Advisors, counsel to any statutory committee and the U.S. Trustee; absent a timely written objection, invoices are paid within five business days, and any undisputed portion of a disputed invoice is paid within the same period
  • The DIP Lender Advisors, Inbursa Advisors, Ad Hoc Group Advisors and professionals for the prepetition agents and trustees are not required to comply with the U.S. Trustee fee guidelines
• Any fees, costs and expenses paid by any of the debtors prior to the petition date to or for the benefit of the DIP secured parties, the prepetition agents and trustees or the other prepetition secured parties, in connection with or with respect to the DIP facility, the debtors or the chapter 11 cases, are approved in full and not subject to recharacterization, avoidance, subordination or disgorgement
• DIP fees and expenses and adequate protection fees and expenses incurred on or prior to the effective date are payable on the effective date without the need for prior delivery of invoices to the review parties other than the debtors, provided the professional delivers an invoice to the debtors — which may include estimates — no later than two business days before the effective date; no attorney or advisor to any DIP secured party or prepetition secured party is required to file a fee application with the court
• Payment of fees, premiums and rights received as consideration under the DIP facility, including the commitment fee under section 4.3, is irrevocable and deemed approved upon entry of the interim order, whether the fee arose before, on or after the petition date and whether or not the transactions are consummated, and is not subject to contest, recoupment, subordination, recharacterization, avoidance or disallowance

Maturity

• The earliest to occur of:
  • Six months after the effective date, subject to the borrower's discretionary election to extend for one additional month upon satisfaction of the Maturity Date Extension Conditions, consisting of delivery of a written extension request and no default or event of default having occurred and continuing
  • Dismissal of any of the chapter 11 cases or conversion of any of the cases to chapter 7
  • Substantial consummation of a chapter 11 plan of the borrower, which shall be no later than the effective date of a plan confirmed by the court
  • Subject to the standstill period, acceleration of the obligations and termination of all commitments upon an event of default
  • Consummation of a sale of all or substantially all of the borrower's assets pursuant to section 363 of the Bankruptcy Code or otherwise
• Voluntary Prepayments: permitted in whole or in part in a minimum amount of $1 million or larger multiples of $250,000 in excess thereof, subject to customary notice periods and payment of any applicable fees and breakage costs
• Mandatory Prepayments: 100% of net cash proceeds from asset sales or other dispositions, once accumulated proceeds equal or exceed $1 million, and 100% of the proceeds of any issuance or incurrence of indebtedness other than permitted indebtedness, in each case applied pro rata to the loans plus accrued and unpaid interest
• Exit Consideration: upon the effectiveness of an Acceptable Reorganization Plan, in lieu of cash repayment, each DIP lender will instead receive the consideration set forth in such plan in exchange for the obligations, the loans and all accrued interest and fees will be satisfied in full through payment of such consideration, and the DIP facility agreement and the obligations thereunder will terminate and be superseded and replaced in accordance with the plan, other than obligations that survive by their terms and subject to payment in full in cash of the fees and expenses of the collateral agent and the DIP lenders
  • Under the RSA and the proposed plan, the entirety of the DIP facility — including both the new money loans and the rolled-up loans — is to be satisfied on the plan effective date through the issuance of new equity by the reorganized debtors, such that the facility does not increase the debtors' post-emergence leverage and, assuming consummation, the debtors would emerge without ever having made a cash payment to service the DIP
  • Braskem is separately to extend a further $71 million of equity funding to the debtors on the plan effective date, which the debtors describe as an integrated part of the same restructuring proposal
  • If the plan is not confirmed or fails to become effective, the debtors retain the option of satisfying the DIP facility in cash
  • If the Restructuring Support Agreement is no longer in effect, an Acceptable Reorganization Plan must provide for indefeasible repayment in full in cash of the obligations upon or prior to consummation, or such other terms as are acceptable to the Required DIP Lenders

Milestones

• For so long as the Restructuring Support Agreement remains in effect, the borrower must comply with the following milestones:
  • No later than Aug. 17, 2026, commence solicitation of the plan
  • No later than Aug. 17, 2026, file voluntary chapter 11 petitions and, within 24 hours thereafter, file the first day pleadings, including the DIP motion, the plan and the disclosure statement
  • No later than two business days after the petition date, entry of the interim DIP order and execution of the Mexican Security Trust Agreement Amendment, Mexican Share Pledge Amendment and Mexican Non-Possessory Pledge Amendment, with perfection steps, including notarization and registration under applicable Mexican law, completed within the timeframes set forth in such agreements
  • No later than 40 calendar days after the petition date, entry of the final DIP order, approval of the disclosure statement and entry of the confirmation order
  • No later than 55 calendar days after the petition date, occurrence of the plan effective date, automatically extendable to the outside date if all conditions precedent have been satisfied other than required regulatory approvals and the company and consenting shareholders are working in good faith to obtain them
  • Any milestone may be extended or waived in writing, including by email, with the consent of the company, Braskem and the Required Consenting Creditors; extension of the Outside Date requires the consent of the company, the Consenting Shareholders, Inbursa and the Required AHG Consenting Creditors

Events of Default and Remedies

• Usual and customary for DIP facilities of this type, including non-payment of principal, interest or other amounts (with a five business day grace period for technical or administrative failures as to interest and other amounts); materially false or misleading representations and warranties, subject to cure; covenant defaults, with a five business day cure for sections 9.6(b) and 10.4 and a 30-day cure (extendable to 60 days for defaults not reasonably curable in 30 days) for other covenants; cross-default arising from a payment default on, or acceleration of, other debt totaling $10 million or more; unstayed or undischarged money judgments in excess of $20 million; insolvency proceedings other than the chapter 11 cases; change of control; invalidity or unenforceability of any loan document or material provision thereof; the interim or final DIP order ceasing to grant a first-priority perfected security interest in the collateral; Mexican exchange controls, expropriation or loss of required government approvals; filing of a motion for replacement financing from a party other than the DIP lenders or for non-consensual use of cash collateral; filing of a motion to pay prepetition claims outside the effective budget or seeking stay relief permitting foreclosure on assets over $5 million; dismissal of any case or conversion to chapter 7; entry of orders modifying the DIP orders inconsistently with the agreement or granting equal or senior superpriority adequate protection; violation by the borrower of any term of the interim or final DIP order; termination or shortening of the borrower's exclusive right to file a plan; attempts to invalidate or impair the DIP liens or to subject collateral to assessment under section 506(c); attempts to disallow or contest the secured parties' claims; an attempted sale of substantially all assets without the Required DIP Lenders' consent; confirmation of a plan that is not an Acceptable Reorganization Plan; entry of an order granting stay relief permitting foreclosure on assets over $7.5 million; entry of an order denying or materially conditioning the use of cash collateral; commencement of or participation in litigation against a secured party; payment of prepetition indebtedness outside the effective budget; termination of the Restructuring Support Agreement; and enforcement action by holders of subordinated indebtedness other than Braskem S.A.
• Compliance with the milestones is an affirmative covenant under section 9.15 of the DIP facility agreement rather than a separately enumerated event of default, so a missed milestone matures into an event of default through the general covenant-default provision and its cure period
• Upon an event of default that has not been waived by the Required DIP Lenders, the Required DIP Lenders may deliver a termination notice on not less than five business days' notice — the remedies notice period — to lead restructuring counsel to each of the debtors, Inbursa, Braskem, the Ad Hoc Group, any statutory committee and the U.S. Trustee, and may terminate or revoke the debtors' right to use cash collateral other than Post-Termination Cash Collateral Usage, terminate the facility as to any future commitment or performance obligation of the DIP lenders without affecting the DIP obligations or the liens securing them, and declare all DIP obligations immediately due and payable; the automatic stay is modified for that purpose without further notice, hearing or court order
• During the remedies notice period, the debtors, any statutory committee and any party in interest may seek an emergency hearing to contest whether an event of default has in fact occurred and is continuing or to obtain non-consensual use of cash collateral; if such a request is made before the period ends, the remedies notice period is continued until the court hears and rules, and if a motion for non-consensual use of cash collateral is filed the debtors may continue using cash collateral within the Post-Termination Cash Collateral Usage limits until the motion is adjudicated
• Standstill Period: for a period not to exceed 15 months following delivery of a termination notice, during which the DIP lenders, prepetition secured parties and DIP borrower are to negotiate in good faith to pursue an alternative restructuring transaction and the exercise of specified remedies is prohibited
• Following expiration of the standstill period, the Controlling Secured Parties must file a stay relief motion on not less than five business days' notice to the remedies notice parties, which may run concurrently with the remedies notice period, before exercising further remedies, with the debtors' rights to contest such relief fully reserved

Carve Out

• All fees required to be paid to the Clerk of the Court and to the U.S. Trustee under 28 U.S.C. § 1930(a), plus statutory interest, if any
• Chapter 7 Trustee Fee: up to $100,000 of reasonable and documented fees and expenses incurred by a trustee under section 726(b) of the Bankruptcy Code
• Allowed professional fees of the estate professionals incurred at any time before or on the first business day following delivery of a carve-out trigger notice, subject to the approved budget
• Post-Carve-Out Trigger Notice Cap: $8 million of allowed professional fees incurred after the first business day following delivery of a carve-out trigger notice
• The prepetition liens, DIP liens, DIP superpriority claims, adequate protection claims and adequate protection liens are subject and subordinate to the carve-out
• Funding mechanics:
  • Each estate professional must deliver a weekly statement of estimated unpaid fees and expenses by 7:00 p.m. prevailing New York time on the third business day of each week, and a final statement within one business day of delivery of a carve-out trigger notice; failure to deliver a weekly statement within three calendar days of its due date limits that professional's entitlement to funds in the carve-out account to the amounts included in the approved budget for the applicable period
  • Weekly statements are due beginning with the first full calendar week following the petition date, and the debtors must deliver each weekly statement and final statement to the DIP collateral agent on the day received
  • The debtors must transfer cash proceeds of the DIP facility or cash collateral weekly into a segregated carve-out account not subject to the control of the DIP secured parties or the prepetition agents and trustees, held in trust and used solely to satisfy allowed professional fees
  • Upon delivery of a carve-out trigger notice, and prior to payment of any DIP obligations, the debtors must fund the carve-out account up to the Total Carve-Out Cap, and the DIP secured parties may not sweep or foreclose on cash or cash collateral until the account is fully funded
  • Amounts in the carve-out account are reduced dollar-for-dollar as carve-out amounts are paid and are not replenished; any remaining funds after payment in full are distributed to the DIP collateral agent for the benefit of the DIP lenders, or, following payment in full of the DIP obligations and termination of the DIP commitments, to the Intercreditor Administrative Agent for the benefit of the prepetition secured parties
  • To the extent the carve-out is funded by a draw on the DIP facility, the borrowed amounts constitute DIP obligations; the incurrence or payment of any carve-out amount is not restricted by the approved budget; and neither the carve-out, the carve-out account nor any approved budget operates as a cap or limitation on the amount of allowed professional fees the debtors owe or the court may allow
• A carve-out trigger notice may be delivered only following the occurrence and during the continuation of an event of default, by the Required DIP Lenders or, after the Discharge of DIP Obligations, the Intercreditor Administrative Agent acting at the direction of the Required Voting Parties, and must be delivered by email to the debtors, their lead restructuring counsel, the U.S. Trustee and lead counsel to any statutory committee, stating that the Post-Carve-Out Trigger Notice Cap has been invoked

Use of Proceeds

• Provide working capital and fund other general corporate purposes of the borrower, including operating costs and capital expenditures during the chapter 11 cases and the expenses necessary to bring the operations of the Complex closer to optimal levels
• Pay administration costs of the chapter 11 cases, including professional fees and other restructuring charges, statutory fees of the U.S. Trustee and allowed professional fees and expenses of any unsecured creditors' committee
• Pay amounts owing to the DIP lenders and professional fees and expenses, including legal, financial advisor, appraisal and valuation-related fees and expenses, incurred by the DIP lenders and the obligors
• All uses are subject to the DIP orders, the loan documents and the effective budget, subject to permitted variances; no proceeds of any roll-up loans will be advanced in cash, such loans being deemed made on a cashless basis solely in exchange for Eligible Prepetition Claims
• No proceeds of the DIP loans, DIP collateral, prepetition collateral or the carve-out may be used, directly or indirectly, including through reimbursement of the professional fees of any non-debtor party, to investigate, threaten initiation of or prosecute claims against the DIP secured parties, the prepetition secured parties or Inbursa, or their predecessors-in-interest or representatives, to challenge the amount, validity, perfection, priority or enforceability of the DIP or prepetition obligations or liens, to interfere with their enforcement or realization rights, to seek to modify their rights and remedies, to seek liens or superpriority claims senior to or pari passu with the DIP liens and DIP superpriority claims, or to pay prepetition claims other than as approved by the court, agreed by the Required DIP Lenders or expressly permitted under the interim order or the other DIP documents — in each case subject to the $50,000 investigation budget in favor of any statutory committee described below, and without limiting the debtors' right to use DIP collateral to contest whether an event of default has occurred

Credit Bid

• The DIP secured parties do not have the right to credit bid all or any portion of the DIP obligations, DIP loans or DIP superpriority claims in any sale, transfer or other disposition of the DIP collateral, so long as, in the event any other prepetition secured party credit bids, such party complies with the applicable provisions of the interim order and a Discharge of DIP Obligations occurs prior to or concurrently with, and as a condition to, consummation of such sale; this does not limit any other right or remedy of the DIP secured parties, including the right to receive payment in full in cash of the DIP obligations from sale proceeds
• The Required Voting Parties are authorized to direct the Collateral Agent, on behalf of itself and the other prepetition secured parties, to credit bid up to the full amount of the applicable prepetition secured obligations, including any adequate protection obligations, in a sale of the prepetition collateral, without further court order and whether effectuated under section 363(k), 1123 or 1129(b) of the Bankruptcy Code, by a chapter 7 trustee under section 725 or otherwise, in each case consistent with the intercreditor agreement and providing for the Discharge of DIP Obligations and termination of the DIP commitments
• The prepetition secured parties may not undertake any foreclosure, credit bid, refinancing of DIP obligations, recapitalization of the debtors or other disposition of collateral while the DIP obligations are outstanding and the RSA is in effect, unless the RSA is terminated in accordance with its terms and the DIP obligations are repaid indefeasibly in full in cash, or the Required DIP Lenders otherwise consent
• From the date six months following delivery of a termination notice, the 2029 notes secured parties, 2032 notes secured parties and prepetition term loan secured parties may prosecute a credit bid for any or all of their collateral, so long as such credit bid is consented to by the Requisite Prepetition Secured Creditors and provides for the Discharge of DIP Obligations upon consummation

Avoidance Actions

• Subject to and effective upon entry of the final order, the DIP collateral will include avoidance proceeds and the DIP collateral agent, for the benefit of the DIP lenders, will be granted liens on the proceeds of avoidance actions
• The DIP superpriority claims have recourse to all prepetition and postpetition property of the DIP credit parties, the trust collateral and all proceeds thereof, excluding avoidance actions but including avoidance proceeds
• Each DIP secured party is to use commercially reasonable efforts to first obtain recoveries from DIP collateral other than avoidance proceeds

Challenge Period and Budget

• The deadline to bring a challenge is the earlier of:
  • The date of confirmation of the debtors' chapter 11 plan of reorganization
  • 60 calendar days after the appointment of a statutory committee, as to such committee
  • 30 calendar days after entry of the interim order, as to all other parties in interest
• If, prior to expiration of the challenge period, the cases convert to chapter 7 or a chapter 11 trustee is appointed, the challenge period is extended, solely with respect to such trustee, by the later of the time remaining plus 30 days and such other time as ordered by the court
• Any statutory committee may use proceeds of the DIP loans or DIP collateral, including cash collateral, to investigate, but not to prosecute or initiate the prosecution of, potential challenges to the claims and liens of the prepetition secured parties and potential claims against the prepetition secured parties, Inbursa or their affiliates, up to an aggregate cap of $50,000
• Upon entry of the interim order, the DIP credit parties stipulate to the extent, validity, security, enforceability, priority and perfection of the prepetition liens, subject to the challenge period
• The stipulations bind the debtors and any successor, including any chapter 7 or chapter 11 trustee or examiner, in all circumstances and for all purposes, and bind all other parties in interest unless a party with requisite standing obtained by court order before the challenge period expires timely files a challenge and obtains a final non-appealable order sustaining it; challenges not pleaded with specificity before expiration are forever waived; and nothing in the interim order confers standing or authority on any committee or other entity to pursue estate claims
• As a condition to effectiveness of the DIP facility agreement and funding of the new money loans, the debtors prepared and delivered an Initial DIP Budget, attached to the interim order as Schedule 1, to the advisors to the DIP lenders, the Inbursa Advisors and the Ad Hoc Group Advisors, reflecting projected operating receipts, operating disbursements, non-operating disbursements and bankruptcy expenses, net operating cash flow and liquidity for each calendar week covered thereby, including the anticipated uses of the new money loans, in form and substance acceptable to the Required DIP Lenders and the Requisite Prepetition Secured Creditors; the budget may be modified, amended, extended and updated from time to time, and each such budget, once approved by the Required DIP Lenders and reasonably consented to by the Requisite Prepetition Secured Creditors, becomes the approved budget for the periods covered

Securities and Priorities

• Pursuant to section 364(c)(1) of the Bankruptcy Code, the DIP obligations constitute allowed superpriority administrative expense claims against the DIP credit parties on a joint and several basis, without the need to file any proof of claim, with priority over all other claims other than the carve-out and any permitted pari passu debt
• As security for the DIP obligations, subject and subordinate to the carve-out and any liens senior by operation of law, the DIP collateral agent, for the benefit of the DIP lenders, is granted automatically perfected liens on the DIP collateral, effective upon entry of the interim order and without the need for any further filing or action, with the following priorities:
  • Section 364(c)(2) first-priority senior liens on all unencumbered property of the DIP credit parties, whether existing on the petition date or thereafter acquired
  • Section 364(d)(1) first-priority senior priming liens on all prepetition collateral, including cash collateral, trust collateral, non-possessory pledge collateral and all residual interests of the DIP borrower in TQPM so long as no third-party consent is required, together with all shares of the DIP credit parties; such liens are senior in all respects to the prepetition liens and the adequate protection liens, subordinate to the carve-out and any liens senior by operation of law, and not subordinate to any lien avoided and preserved under section 551
  • Section 364(c)(3) liens on all tangible and intangible prepetition and postpetition property of the DIP credit parties or their estates, junior and subordinate to the carve-out, immediately junior and subordinate to any liens senior by operation of law, and senior in all respects to the adequate protection liens
• The prepetition liens are primed by and made subject and subordinate to the DIP priming liens, and the intercreditor agreement is deemed amended to provide for the priority of the DIP priming liens and for the application of proceeds of prepetition collateral and DIP collateral as set forth in the interim order and the DIP documents
• The DIP liens are not subject or subordinate to, or pari passu with, any lien avoided and preserved under section 551, any postpetition liens including those granted in favor of any governmental unit, any liens in favor of the DIP credit parties or their shareholders and affiliates, or any other lien under section 361, 363 or 364 of the Bankruptcy Code
• Pari Passu Debt: following an RSA Termination Event, and only upon court approval after notice and a hearing, the DIP borrower may incur additional indebtedness of up to $150 million outstanding at any time with the prior written consent of the Requisite Prepetition Secured Creditors and, during the first six months of the standstill period, the Required DIP Lenders; such debt may be secured by liens ranking pari passu with, but not senior to, the DIP liens, subject to an intercreditor agreement reasonably satisfactory to the Required DIP Lenders and the Requisite Prepetition Secured Creditors providing for ratable sharing of collateral, and the proceeds must be applied in accordance with the approved budget
• Other than the carve-out and permitted pari passu debt, no claim or lien senior to or pari passu with the DIP superpriority claims or the DIP liens is permitted while any DIP obligations remain outstanding, and the DIP superpriority claims are entitled to the full protection of section 364(e)
• The interim order and DIP facility agreement do not provide for cross-collateralization, and the interim order contains no provisions authorizing the non-consensual priming of prepetition liens; the requisite prepetition secured parties have consented, or are deemed to have consented, to the priming

Adequate Protection

Prepetition Agents and Trustees, for the benefit of the Prepetition Secured Parties, and the Prepetition Secured PE Payor and Prepetition WC Facility Lender

• Adequate Protection Liens: each of the prepetition agents and trustees, for itself and for the benefit of the applicable prepetition secured parties, and the Prepetition Secured PE Payor and the Prepetition WC Facility Lender, are granted valid, perfected replacement security interests in and liens upon all of the DIP collateral, effective and perfected upon the date of the interim order and without the need to execute any mortgages, security agreements, pledge agreements or financing statements, senior to all other liens but subject and subordinate only to permitted prepetition liens, the DIP liens and the carve-out
• 507(b) Claims: allowed superpriority administrative expense claims against each debtor on a joint and several basis, without the need to file any proof of claim, payable from and with recourse to all DIP collateral and proceeds thereof, subject and subordinate to the DIP superpriority claims and the carve-out
• The adequate protection liens and 507(b) claims are granted consistent with, and apply in accordance with, the relative prepetition lien priorities set forth in the prepetition credit documents, including the intercreditor agreement
• Adequate Protection Fees and Expenses: current cash payment of all reasonable and documented prepetition and postpetition fees and out-of-pocket expenses of the prepetition term loan secured parties, including the Inbursa Advisors; the Ad Hoc Group, including the Ad Hoc Group Advisors; the Prepetition Secured PE Payor and the Prepetition WC Facility Lender; and each of the other prepetition agents and trustees, including the 2029 notes trustee and its counsel, Moses & Singer LLP, the 2032 notes trustee and its counsel, Pryor Cashman LLP, and Deutsche Bank Trust Company Americas in its various agency capacities and its counsel, DLA Piper LLP (US), together with special and local counsel in each applicable jurisdiction
• Financial reporting: all reporting required to be provided to the DIP secured parties under the DIP documents, delivered at the same time and only to the extent so provided
• Continuation of covenants: from entry of the interim order and following the Discharge of DIP Obligations, the prepetition secured parties remain entitled to the benefit of the reporting, budget compliance and other financial covenants set forth in the DIP facility agreement and the interim order for so long as any prepetition secured obligations remain outstanding
• Maintenance of collateral: the DIP credit parties must continue to maintain and insure the prepetition collateral and DIP collateral in the amounts, for the risks and by the entities required under the prepetition credit documents and the DIP documents
• Upon the Discharge of DIP Obligations, and subject to the roll-up, adequate protection and indemnification for the benefit of the Prepetition Secured PE Payor and the Prepetition WC Facility Lender cease, although such parties preserve their rights under sections 363 and 364 to seek stay relief or additional adequate protection with respect to collateral securing their respective obligations
• The prepetition secured parties have consented to the priming of their prepetition liens and, through their entry into the RSA, have affirmatively consented to the DIP facility and the adequate protection package; any prepetition secured party may request further or different adequate protection, subject to applicable contractual limitations, and the DIP credit parties and other parties in interest may contest any such request

Indemnification

• The interim order and DIP facility agreement provide for customary indemnification by each of the DIP credit parties, on a joint and several basis, of each of the prepetition secured parties, the DIP lenders and the DIP collateral agent, together with their related parties and representatives
• The prepetition secured parties and DIP secured parties are indemnified and held harmless from all costs, expenses (including reasonable and documented legal fees) and liabilities arising out of or relating to the transactions contemplated by the interim order and any actual or proposed use of DIP loan proceeds, and the indemnity has equal priority and lien status to the DIP superpriority claims
• No indemnified party has liability to the debtors or their shareholders or creditors in connection with the transactions, except to the extent liability is found by final non-appealable judgment to have resulted solely from that party's gross negligence, willful misconduct or fraud; the debtors agree that no exception or defense to the indemnity exists and waive any such defenses

Modification of the Automatic Stay

• The automatic stay is vacated and modified to the extent necessary to permit the debtors and their affiliates, the DIP secured parties and the prepetition secured parties to implement and effectuate the terms of the interim order and the other DIP documents, to deliver termination and other notices, to take perfection actions and record or file the order and related documents, and to permit the debtors to pay the DIP fees and expenses and adequate protection fees and expenses
• The stay is further modified to permit the Required DIP Lenders to exercise the post-default remedies described above without further notice to, hearing of or order from the court, subject to the remedies notice period, the standstill period, the stay relief motion requirement and the carve-out
• Non-debtor affiliates of the debtors are permitted to take all actions necessary or appropriate to implement the terms of the interim order
• The interim order does not waive or modify the debtors' right to file a plan

Waivers

• Upon entry of the interim order, and in each case without prejudice to the provisions of the final order:
  • Section 506(c): waiver of all rights to surcharge the prepetition collateral and the DIP collateral; except to the extent of the carve-out, no costs or expenses of administration of the cases or any successor cases may be charged against or recovered from the DIP collateral, including cash collateral, or the prepetition collateral without the prior written consent of the Required DIP Lenders
  • Section 552(b): the "equities of the case" exception does not apply to the prepetition secured parties with respect to proceeds, products, offspring or profits of any prepetition collateral
  • Marshaling: the equitable doctrine of "marshaling" and other similar doctrines are waived with respect to the DIP collateral for the benefit of any party other than the DIP secured parties, and with respect to the prepetition collateral, including cash collateral, for the benefit of any party other than the prepetition secured parties
• Limited Marshaling: solely to the extent asserted by the prepetition agents and trustees on behalf of the prepetition secured parties against the DIP lenders with respect to any roll-up, or adequate protection in respect of eligible prepetition secured claims that are not rolled up, following expiration of the standstill period, the DIP lenders will be subject to marshaling with respect to the DIP collateral and DIP obligations to the extent prepetition secured PE collateral or prepetition WC facility collateral otherwise remains available to satisfy such DIP obligations
• Releases: effective upon entry of the interim order and subject to the challenge period, the debtors and their estates release the prepetition secured parties, each DIP lender, Inbursa and their respective affiliates and representatives from all claims and causes of action arising on or prior to the petition date relating to the prepetition credit documents and the DIP documents; the debtors also waive, discharge and release any right to challenge the prepetition secured obligations and the validity, extent and priority of the prepetition liens
• No claims or causes of action: the debtors stipulate that no claims or causes of action held by the debtors or their estates exist against Inbursa, the prepetition notes secured parties, their affiliates or representatives in their capacities as creditors under any prepetition credit document as of the petition date, or against Braskem or its affiliates and representatives relating to Braskem's capacity as a creditor under any prepetition credit document as of the petition date; the release does not extend to Braskem in any capacity other than as a DIP lender and a prepetition secured party under the Prepetition Secured PE Agreement and the Prepetition WC Facility Documents, and nothing in the release relieves any party of its obligations under the RSA or the definitive documents
• Payments free and clear: all payments or proceeds remitted to the DIP secured parties or the prepetition secured parties are irrevocable and received free and clear of any claim, charge, assessment or other liability, including any arising under section 506(c) or 552(b)
• The adequate protection liens are not subject to sections 506(c), 510, 549 or 550 of the Bankruptcy Code

Permitted Variance

• Aggregate operating disbursements during any testing period may not exceed the then-effective budget by more than 15%
• Testing periods are the one-week, two-week and three-week periods ended the Friday prior to each of the first, second and third weekly reporting dates following the effective date, and the four-week period ended on the Friday prior to each weekly reporting date thereafter; for each monthly reporting date, the testing period is the cumulative calendar-day period beginning on the petition date and ending on such monthly reporting date
• On each reporting date, the borrower must deliver a budget variance report comparing cumulative actual receipts and operating disbursements, excluding professional fees, against the effective budget, certified by an authorized officer and including a reasonably detailed explanation of any variance exceeding the permitted variance
• Positive variances in any testing period may be carried forward to offset subsequent negative variances, in an amount not to exceed such positive variance
• Within three business days of a reasonable written request of the Required DIP Lenders or the Requisite Prepetition Secured Creditors, the borrower must convene a conference call with senior management or its financial advisor to discuss any updated effective budget and budget variance report, though no more frequently than every two calendar weeks