Karyopharm Therapeutics - Chapter 11 DIP Terms

DIP Terms

DIP Facility

• Size: Up to $110 million superpriority senior secured priming term loan facility. Participating prepetition first lien lenders provide it, and it consists of:
  • $55 million of first-out new money term loans
    • $25 million available in a single initial draw on the closing date, upon entry of the interim order
    • The remaining $30 million available in a single delayed draw upon entry of the final order
  • Up to $55 million of second-out roll-up loans, converting prepetition first lien term loans held by funding lenders on a cashless, dollar-for-dollar basis
    • $25 million rolled up upon entry of the interim order, at the same time as the initial draw
    • An additional $30 million rolled up upon entry of the final order, at the same time as the delayed draw
• The roll-up loans are added on top of each draw and do not count against it. The loans do not amortize. A financial institution may front a lender's new money loans on terms acceptable to the debtors and that lender.
• Voting control rests with the new money. The "Required DIP Lenders" are lenders holding a majority of outstanding new money loans and unfunded new money commitments.
• The motion says the debtors expect to need about $25 million during the interim period and about $30 million over the course of the cases.

Roll-Up and Payment Waterfall

• The roll-up converts up to $55 million of prepetition first lien term loans, $1 of prepetition loans for each $1 of new money a lender funds. The 2028 notes, the 2029 notes and the royalty obligations are excluded entirely.
• Under the proposed interim order:
  • Converted first lien obligations become second-out DIP obligations as if funded on the closing date.
  • Each lender's prepetition claim is reduced by the amount it rolls up.
  • The converted obligations can be attacked only through the challenge process described below.
• The proposed interim order also contains findings that the interim roll-up is integral to the facility. Without it, the first lien lenders would not have consented to cash collateral use or to the priming of their liens. The roll-up is authorized as consideration for funding new money and consenting to cash collateral use, not as payment on, or adequate protection for, prepetition claims. The motion adds that the debtors could not obtain actionable financing from any other source.
• After the Carve-Out, all DIP collateral and proceeds go first to the first-out new money obligations until they are paid in full in cash (subject to the RSA), and then to the second-out roll-up obligations. Until the first-out tranche is repaid, the roll-up tranche may receive nothing but PIK interest.

Interest Rate

• New Money Loans: SOFR + 900 bps per annum, PIK, quarterly
• Roll-Up Loans: SOFR + 1,225 bps per annum, PIK, quarterly
• SOFR Floor: 3.00% (one-month term SOFR)
• Default Rate Increase: 2.00% on outstanding new money loans and overdue amounts
• PIK interest is paid on the last day of each March, June, September and December and is calculated on a 360-day year. Accrued interest is paid in cash when the related principal is repaid.

Fees and Expenses

• Exit Fee (new money): 4.00% of the new money loans, including capitalized PIK interest, or of the commitments. It is payable on any repayment, prepayment, acceleration or other satisfaction of the loans, and on any termination or reduction of commitments other than through funding.
• Exit Fee (roll-up): 8.00% of the roll-up loans, including capitalized PIK interest, payable on any repayment, prepayment, acceleration or other satisfaction. No fee is owed if the roll-up loans are deemed reconverted into allowed prepetition first lien obligations.
• Agent Fee: Set by a fee letter dated Oct. 30, 2026 between the borrower and the DIP agent, and exempt from the fee-review procedures.
• The proposed interim order deems all fees, including exit fees, fully earned and non-refundable on the closing date.
• The borrower pays one primary and one Texas local counsel for the DIP agent, the ad hoc group's advisors and the royalty secured parties' professionals. No fee applications are required, but the debtors, any committee and the U.S. trustee have 10 days to dispute an invoice. Royalty professional fees are limited to:
  • Counsel fees, open to objection only above $600,000
  • Financial advisor monthly fees of $150,000, accruing from the petition date until the closing of the Ayrmid transaction or of an "Acceptable Alternative Transaction," as the RSA defines it
  • A deferred financial advisor fee, paid solely from the proceeds of an Acceptable Alternative Transaction: $1 million if the proceeds pay all funded debt in full in cash, or $500,000 if they do not
• The motion's adequate protection summary describes the royalty advisor's deferred fee as a flat $1 million on an Acceptable Alternative Transaction, while the motion's fee summary, the proposed interim order and the term sheet carry the $1 million/$500,000 split.

Maturity

• The earliest to occur of:
  • May 1, 2027, which the filing describes as six months after the petition date
  • The effective date of the prepackaged plan
  • Closing of a sale of all or substantially all assets under section 363, section 1129 or otherwise
  • Acceleration of the DIP loans
  • Dismissal of any case or conversion to Chapter 7
• All DIP obligations, including accrued interest and exit fees, are payable in full in cash at maturity unless the Required DIP Lenders agree otherwise.

Prepayments

• The borrower may prepay at any time at par plus accrued interest, without premium or penalty, but subject to the exit fee.
• Mandatory prepayments equal 100% of net cash proceeds from the sources below. They are applied first to the first-out obligations, including their exit fee, until paid in full, and then to the second-out obligations, including their exit fee:
  • Sales of DIP collateral, other than ordinary course sales (including inventory), de minimis sales and exceptions to be agreed
  • Insurance on losses of DIP collateral, subject to a 180-day reinvestment right and exceptions to be agreed
  • Debt incurred after the closing date that the DIP documents do not permit, payable on receipt

Key Dates and Milestones

• The debtors filed the petitions and the motion on Nov. 2, 2026. An emergency hearing on interim relief is scheduled for Nov. 3, 2026, at 11:00 a.m. (prevailing Central Time).
• The initial draw requires entry of the interim order within three calendar days of the petition date.
• The final order must be entered within 35 calendar days of the petition date. Missing that deadline is an event of default.
• The first budget test falls on Nov. 18, 2026 and covers the petition date through Nov. 15, 2026.
• Updated budgets are due by 11:59 p.m. (Central Time) on the first Wednesday that is four full calendar weeks after the petition date, and on every fourth Wednesday after that.
• The RSA's milestones are written into the term sheet and may be modified, extended or waived under the RSA. Missing any milestone is an event of default. Extending one is not a material amendment and does not need court approval.

Parties

• Borrower: Karyopharm Therapeutics Inc. KPT Texas LLC and any other debtor subsidiary guarantee the DIP obligations jointly and severally.
• Agent: Wilmington Savings Fund Society, FSB (WSFS), as administrative and collateral agent. WSFS is also the prepetition first lien agent, trustee for the 2028 and 2029 notes and notes collateral trustee. Nixon Peabody LLP is its counsel.
• Lenders: Prepetition first lien lenders, and their affiliates and managed funds, that elect to participate, in amounts listed on a schedule on file with the debtors.
• Ad hoc group: Certain first lien lenders, 2028 and 2029 noteholders and DIP lenders, advised by Latham & Watkins LLP, Haynes and Boone, LLP and Houlihan Lokey Capital, Inc.
• Royalty secured parties: The royalty investors, whose interests were assigned to a KKR affiliate, with HealthCare Royalty Management, LLC as investor representative and HCR Karyopharm SPV, LLC as collateral agent, represented by Hogan Lovells Cadwalader US LLP.
• Debtors' advisors: Sidley Austin LLP as proposed counsel, with Centerview assisting on the financing search.

Case Background and Financing Process

• Karyopharm is a commercial-stage pharmaceutical company developing first-in-class cancer therapeutics, including treatments for certain blood cancers. Its lead asset received initial FDA approval in July 2019 and is marketed in the U.S. under certain indications, and certain of its treatments hold regulatory approvals in more than 50 territories and countries outside the U.S.
• The company filed Chapter 11 on Nov. 2, 2026 in the Southern District of Texas with a restructuring support agreement. Holders of 100% of the first lien term loans, 100% of the 2028 notes, 100% of the 2029 notes and 100% of the convertible preferred stock support it, as do the royalty investors. Ayrmid, the proposed stalking horse bidder, is also a party.
• Before the filing, the ad hoc group and the royalty investors extended the company's runway through payment deferrals, forbearances (including a Sept. 10, 2026 forbearance agreement) and out-of-court transactions that provided new capital.
• Beginning in July 2025, the debtors and Centerview explored financing with existing lenders, noteholders and third parties.
  • HealthCare Royalty Partners, the existing second-lien royalty provider, declined to provide DIP financing ranking senior to its own lien but junior to the first lien loans.
  • No party proposed actionable junior or unsecured financing, or offered to fight a priming contest.
  • A majority of the term lenders indicated they would not consent to being primed by, or sharing lien priority with, third-party financing.
• Accordingly, the debtors negotiated the facility with the first lien lenders, and the other prepetition secured parties consented to the priming.
• KKR acquired a majority interest in HealthCare Royalty Management, LLC (HCRx) in July 2025. In connection with that deal, the royalty investors' interests, and the term loans of HCRx-managed entities among the original first lien lenders, were each assigned to an affiliate of KKR.

Prepetition Capital Structure and Stipulations

• Funded debt totals approximately $390 million as of the petition date, consisting of:
  • $146 million under the first lien term loan facility (maturing May 2028), including accrued interest, fees and premiums, secured by first-priority liens on substantially all assets; the facility began as an initial $100 million term loan, and the lenders funded an additional $12.5 million in October 2025
  • $16 million of 9.00% convertible senior notes due 2028 (maturing October 2028)
  • $114 million of 9.00% convertible senior notes due 2029 (maturing May 2029)
  • $114 million under the royalty agreement (maturing September 2035)
• The 2028 and 2029 notes share second-priority liens on the first lien collateral, held by WSFS as collateral trustee. Collateral proceeds go first to the 2028 notes until they are paid in full.
• The notes were issued in original principal amounts of $15 million (2028 notes) and $103.5 million (2029 notes). They bear 9% interest, paid in kind through March 31, 2026 and in cash quarterly after that, and convert into common stock at initial prices of $6.64 per share (2028 notes) and $22.50 per share (2029 notes).
• The royalty investors hold second-priority liens only on royalty collateral, ranking equally with the notes on that collateral. The motion describes the royalty liens as reaching substantially all of the company's assets, while the proposed interim order's stipulations limit them to collateral as the royalty agreement defines it and expressly exclude non-royalty collateral.
• Under the royalty agreement, the company received a total of $135 million in exchange for quarterly payments equal to a percentage, currently 8%, of the net revenues of XPOVIO and its other products. Total payments are capped at $263.3 million, and the company had paid $147.1 million as of June 30, 2026. The agreement terminates on the earlier of reaching the cap or Sept. 26, 2035, when any shortfall below a specified minimum return becomes payable; upon a change of control or an event of default, including insolvency or a payment default or acceleration on other debt, the company owes the cap less payments already made.
• In the proposed interim order, the debtors stipulate to the validity, perfection and priority of the prepetition liens, and to the absence of any defenses or claims against the prepetition lenders. They also stipulate to minimum claim amounts as of the petition date:
  • First lien principal of not less than $128,981,939, plus interest at the default rate under the Sept. 10, 2026 forbearance agreement, premiums and fees
  • 2028 notes principal of not less than $15,648,085, including capitalized interest
  • 2029 notes principal of not less than $107,974,339, including capitalized PIK interest
  • Royalty obligations of not less than $113,536,880, including the final payment amount under the royalty agreement
• The royalty investors assert that approximately $114 million, the remaining amount payable up to the royalty agreement's payment cap, is currently due in full following events of default. The motion reserves the debtors' rights on the allowed amount of that claim, while the proposed interim order's stipulations put royalty obligations at not less than $113,536,880 without defense or offset.

Budget

• The initial 13-week budget runs from the week of Nov. 2 through the week ending Jan. 31 and projects:
  • Opening cash of $7.8 million, excluding $315,000 of restricted cash
  • Receipts of $32.3 million, all from collections
  • Operating disbursements of $66.6 million, including $18.1 million of compensation and benefits and $48.5 million of accounts payable
  • Professional fees of $28.4 million, including $11 million of advisor fees in week 13
  • Total disbursements of $95 million
  • A net cash outflow of $62.8 million
  • DIP draws of $25 million in week 1 and $30 million in week 5 (week of Nov. 30)
• Ending cash falls to $10.3 million in week 4, rises to $40.4 million after the week-5 delayed draw, and is projected at zero at the end of week 13.
• An updated rolling 13-week budget takes effect only with Required DIP Lender consent. Consent is deemed given if they do not object in writing within five business days, and the existing budget stays in force until then.

Covenants and Permitted Variance

• Permitted Variance: Cumulative receipts must be at least 80% of budget, and cumulative disbursements no more than 120%. Compliance is tested every second Wednesday for the period from the start of the current budget through the preceding Sunday. Allowed professional fees are excluded, and failing to deliver a variance report counts as a failed test.
• Minimum Liquidity: $10 million of unrestricted cash and cash equivalents on a consolidated basis at all times, excluding the plan effective date.
• Capital expenditures are limited to budgeted amounts.
• Reporting obligations include:
  • Weekly line-by-line variance reports, starting the second Wednesday after the petition date
  • Monthly and quarterly unaudited financials within 30 and 45 days
  • Audited annual financials within 90 days
  • Rolling 13-week forecasts every four weeks
  Sale-process materials are withheld from any DIP lender acting in a bidder capacity.
• The affirmative covenants require the debtors to:
  • Comply with the RSA and its milestones
  • Deliver drafts of the first-day pleadings, bidding procedures, sale order, plan, disclosure statement and other material filings at least three calendar days before filing
  • Object to any motion seeking a trustee or expanded-powers examiner, conversion, dismissal, or modification or termination of exclusivity
  • Preserve their intellectual property and material regulatory approvals
• Unless the Required DIP Lenders consent or the budget provides otherwise, the negative covenants bar:
  • Debt beyond the DIP and prepetition secured obligations
  • Non-permitted liens
  • Asset sales outside the ordinary course without a court order acceptable to the Required DIP Lenders
  • Payments on prepetition debt other than adequate protection interest or court-approved, lender-consented payments
  • Restricted payments and new subsidiaries
  • Changes to material agreements

Cash Collateral

• The debtors may use cash collateral on a consensual basis, in line with the budget, until the DIP termination date.
• Under the proposed interim order, all of the debtors' cash is cash collateral of the first lien lenders and the noteholders. To the extent it is proceeds of royalty collateral, it is also cash collateral of the royalty secured parties. Upon entry of the order, it also becomes cash collateral of the DIP lenders.

Carve-Out

• Post-Carve-Out Trigger Notice Cap: $2.75 million for debtor professionals, plus any earned and payable restructuring, sale, success or other transaction fee (including deferred fees) of the debtors' investment banker or financial advisor as approved in its retention order. Committee professionals are capped at $50,000.
• Chapter 7 Trustee Fee: $100,000
• The Carve-Out also covers clerk and U.S. trustee fees, and all allowed professional fees incurred through the first business day after a trigger notice, whether or not budgeted. It remains in place for the prepetition and adequate protection obligations after the DIP is repaid.
• The debtors prefund separate debtor and committee carve-out accounts outside lender control.
  • Within five business days, they deposit two weeks of budgeted fees.
  • After that, they deposit weekly the greater of each professional's estimate or its budget line.
  • On a trigger notice, they must top the accounts up to the cap before paying any DIP obligations, and lenders may not sweep cash until the accounts are funded.
• A trigger notice may be delivered only during a continuing event of default, and it has no effect if the court finds that no default occurred. Any surplus in the accounts goes to the DIP agent, then to the first lien agent, then under the intercreditor agreements, and finally to the debtors.

Use of Proceeds

• New money proceeds fund, subject to the budget:
  • Fees, interest and expenses of the facility
  • Working capital, capital expenditures and general corporate needs
  • The Carve-Out
  • Adequate protection payments
  • Case administration, the sale process and completion of the restructuring transactions
• DIP proceeds, collateral, cash collateral and Carve-Out funds may not be used to:
  • Challenge, or sue over, the DIP or prepetition secured parties' claims and liens, beyond the committee investigation budget
  • Hinder enforcement after a default
  • Use cash collateral or dispose of DIP collateral other than as the order provides
  • Use insurance proceeds on DIP collateral without DIP agent or first lien agent consent
  • Incur debt outside the budget or the DIP documents
  • Pay prepetition claims except as the budget provides
  • Seek financing that does not comply with the DIP documents
  • Pursue a section 506(c) surcharge, the section 552(b) equities exception or marshaling
  • Contest credit bidding
  The debtors may still be heard on whether an event of default has occurred.

Securities and Priorities

• Under the proposed interim order, the DIP obligations are secured by automatically perfected liens on all real and personal property of the debtors. That includes regulatory approvals and applications (new drug applications, supplemental new drug applications and marketing authorizations), intellectual property, royalty and revenue interests, subsidiary equity (including unencumbered equity in non-U.S. subsidiaries), commercial tort claims and section 549 recoveries. The liens rank as follows:
  • First-priority priming liens under section 364(d)(1) on prepetition collateral, including cash collateral, senior to the first lien, second lien notes and second lien royalty liens and to any adequate protection liens
  • First-priority liens under section 364(c)(2) on unencumbered property
  • Junior liens under section 364(c)(3) on property subject to permitted prior liens
• Each DIP lien is subject only to the Carve-Out and permitted prior liens.
• The DIP obligations also carry section 364(c)(1) superpriority claims, subject only to the Carve-Out, with recourse to all DIP collateral.
• Exhibit B to the proposed interim order ranks liens and claims, senior to junior, as follows:
  • Non-royalty prepetition collateral, including cash: Carve-Out and permitted prior liens; DIP liens; first lien adequate protection liens; prepetition first lien liens; notes adequate protection liens; prepetition second lien notes liens; royalty adequate protection liens
  • Royalty collateral: Carve-Out and permitted prior liens; DIP liens; first lien adequate protection liens; prepetition first lien liens; notes and royalty adequate protection liens, pari passu; prepetition second lien notes and royalty liens, pari passu
  • Unencumbered collateral: Carve-Out; DIP liens; first lien adequate protection liens; notes and royalty adequate protection liens, pari passu
  • Claims against all assets: Carve-Out; DIP superpriority claims; first lien 507(b) claims; notes and royalty 507(b) claims, pari passu; all other administrative claims

Avoidance Actions

• Upon entry of the final order, the DIP liens, the DIP superpriority claims and each adequate protection lien reach avoidance action proceeds and the proceeds of the debtors' section 506(c) and 550 rights. No lien attaches to the avoidance actions themselves.

Adequate Protection

• Each prepetition secured group is protected only against diminution in the value of its collateral. The priming is consensual, given in exchange for the package below.
• No prepetition secured party may receive anything on its 507(b) claims until the DIP obligations are paid in full in cash.
• If a timely challenge fails, the prepetition secured parties recover their defense costs, including attorneys' fees, as adequate protection, subject to the RSA and any limits on those costs.
• If a challenge shows a party was undersecured and not entitled to adequate protection fee payments, those payments may be applied to its principal. No disgorgement is required, and agent and trustee fees are exempt.

Prepetition First Lien Secured Parties

• Replacement liens on all DIP collateral, junior only to the Carve-Out, the DIP liens and permitted prior liens
• Section 507(b) claims, junior only to the Carve-Out and the DIP superpriority claims
• Monthly cash payment of fees and expenses, including the secured parties' advisors and the first lien agent's fees, expenses and indemnities
• PIK interest on the prepetition first lien obligations: before the petition date, at the term loan default rate under the Sept. 10, 2026 forbearance agreement; from the petition date on, at the credit agreement's default rate
• Information rights matching those of the DIP lenders, with sale-process materials withheld from parties acting in a bidder capacity

Prepetition Notes Secured Parties

• Replacement liens on all DIP collateral, junior to the Carve-Out, the DIP liens, permitted prior liens, the prepetition first lien liens and the first lien adequate protection liens
• Section 507(b) claims, junior to the Carve-Out, the DIP superpriority claims and the first lien 507(b) claims. Holders are deemed to agree under section 1129(a)(9) that these claims may be satisfied under a plan in any combination of cash, debt, equity or other property, except the trustees' own fees, expenses and indemnities, which must be paid in full in cash.
• Monthly cash payment of fees and expenses, including those of the trustees and collateral trustee
• PIK interest on the 2028 notes obligations, with no corresponding provision for the 2029 notes

Prepetition Royalty Secured Parties

• Replacement liens on all DIP collateral, junior to the Carve-Out, the DIP liens, permitted prior liens, the prepetition first lien liens and the first lien adequate protection liens. On non-royalty collateral, they are also junior to the notes adequate protection liens and the second lien notes liens.
• Section 507(b) claims, junior to the Carve-Out, the DIP superpriority claims and the first lien 507(b) claims, under the same section 1129(a)(9) deemed agreement that applies to the noteholders
• Monthly cash payment of professional fees, subject to the counsel and financial advisor limits described under Fees and Expenses
• The royalty secured parties' right to assert postpetition interest under section 506(b), and every other party's right to contest it, are reserved

Challenge Period and Investigation Budget

• The challenge deadline is the earliest of:
  • Confirmation of a plan
  • The court-set deadline to object to a sale of all or substantially all assets
  • For a committee, 60 days after its formation; for any other party in interest, 75 days after entry of the interim order
• The deadline can be extended in two ways:
  • In writing, by the prepetition agent or trustee whose debt is affected
  • By court order for cause, limited to the party that applied and the specific challenge
  Absent consent of the affected secured parties, no extension may run past the first day of a hearing on a sale of all or substantially all assets, and no challenge hearing may take place after that date.
• A committee motion for standing that attaches a proposed complaint extends the deadline, for that committee and those claims, until two business days after the court rules. If the cases convert or a Chapter 11 trustee is appointed, the trustee's deadline becomes the later of the challenge deadline or 10 calendar days after appointment.
• Investigation Budget: $50,000 for a committee to investigate, but not litigate, the stipulations and potential challenges.
• The stipulations bind the debtors immediately upon entry of the interim order. No statutory committee had been appointed when the motion was filed, and the proposed order gives no party standing.

Waivers

• Subject to entry of the final order:
  • Section 506(c): No surcharge of the DIP or prepetition collateral, except to the extent of the Carve-Out.
  • Section 552(b): The "equities of the case" exception does not apply to the prepetition secured parties. Under the term sheet, the DIP lenders are covered as well.
  • Marshaling: Waived as to the DIP and prepetition collateral. The waiver does not apply against the royalty secured parties as to royalty collateral. Under the term sheet, it applies to prepetition collateral only until the first lien obligations are discharged.
  • DIP repayment: At the Required DIP Lenders' option, the DIP obligations are repaid first from unencumbered collateral and then from other DIP collateral.

Credit Bid

• Acting at the Required DIP Lenders' direction, the DIP agent has an unqualified right to credit bid any or all DIP obligations, including superpriority claims, under section 363(k), in any section 1129 plan or under section 725. The first lien agent has the same right for the first lien obligations, including the first lien 507(b) claims.
• The notes collateral trustee and the royalty secured parties may credit bid their obligations, subject to the intercreditor agreements.
• Any credit bidder is automatically treated as a qualified bidder with a qualified bid, whether or not it meets the bidding requirements.

Plan and Sale Protections

• If the Ayrmid transaction under the RSA closes, each holder of a DIP claim consents to the treatment set out in the Ayrmid transaction term sheet. In any other transaction, no DIP claim holder gives up payment in full in cash without Required DIP Lender consent.
• The debtors may not propose or consummate a plan, or a sale of all or substantially all assets, unless it is conditioned on payment in full in cash of the DIP obligations, the DIP superpriority claims, the first lien adequate protection obligations and the first lien 507(b) claims. The exceptions are DIP agent and first lien agent consent, satisfaction through a credit bid, or agreement under the RSA.
• Notwithstanding section 1141(d), and subject to the RSA, confirmation does not discharge the DIP and adequate protection obligations unless they are paid in full in cash. Notes and royalty 507(b) claims may be satisfied under their section 1129(a)(9) agreements.

Events of Default

• The term sheet limits events of default to an enumerated list that includes:
  • Nonpayment, cross-default on postpetition material indebtedness, material misrepresentation, and covenant breaches (with a five-business-day cure for curable affirmative covenants)
  • Judgments above $2.5 million individually or $5 million in the aggregate left undischarged or unstayed for 60 days, and ERISA liability above $2.5 million
  • An unstayed dissolution decree outstanding for more than 30 days; any DIP document ceasing to be effective, or a debtor repudiating it or contesting it or the DIP liens in writing; or allowance of a section 506(c) claim against DIP collateral other than the Carve-Out
  • Withdrawal, by the FDA or any debtor, of approval for selinexor in its current indication for use with bortezomib and dexamethasone
  • Budget noncompliance beyond the permitted variances, and failure to meet any milestone, including entry of the final order within 35 calendar days of the petition date
  • Any breach of the RSA by the debtors (subject to cure), or termination of the RSA
  • A change of control, other than through the Ayrmid transaction or an Acceptable Alternative Transaction
  • Dismissal, conversion, or appointment of a trustee or expanded-powers examiner, or a debtor motion seeking any of them; or termination of plan exclusivity
  • A sale motion or plan that does not pay the DIP loans in full in cash (subject to the RSA), or an unauthorized section 363 sale of material DIP collateral
  • Liens or superpriority claims senior to or pari passu with the DIP's; loss of DIP lien perfection or priority; or a request for financing other than from the DIP lenders or a full takeout of the DIP, first lien and (after the final order) notes obligations
  • Debtor challenges to, or litigation against, the DIP or prepetition secured parties
  • Stay relief granted to any other creditor as to DIP collateral
  • Rejecting, assuming, amending or terminating any material agreement or royalty document without Required DIP Lender consent, except as the RSA contemplates
  • DIP orders the Required DIP Lenders find unacceptable, or modification of the DIP orders without their consent
  • Cessation of all or substantially all operations
  • Payments on prepetition debt other than accrued payroll and certain creditor payments authorized by acceptable first-day orders and consistent with the budget
• The proposed interim order separately makes material noncompliance with the order itself an event of default, as the term sheet also does. Absent consent of the DIP agent and first lien agent, it also makes the entry of any order an event of default if it authorizes financing senior to or pari passu with the DIP or first lien position, cash collateral use outside the budget, or changes to the DIP or first lien parties' rights, unless the order pays those obligations in full. The final order is to extend the financing trigger to the noteholders, absent notes collateral trustee consent or payment of the notes in full.

Remedies

• Upon an event of default, the DIP agent, acting at the Required DIP Lenders' direction, may deliver a DIP termination declaration without further court order. The declaration may:
  • Accelerate the DIP obligations
  • Terminate, reduce or restrict remaining commitments, and terminate the facility
  • Trigger the Carve-Out
  • Terminate, reduce or restrict cash collateral use
• The automatic stay terminates five business days after the declaration unless the court finds that no event of default occurred. That period extends automatically so the court can rule at an expedited stay relief hearing, held on at least three business days' notice and limited to whether a default occurred.
• The debtors waive any section 105 relief that would impair the lenders' remedies.
• During the remedies notice period, the debtors may use cash collateral only for payroll and for expenses needed to avoid immediate and irreparable harm, which the term sheet says include critical patient supply and product distribution costs and the Carve-Out. Those uses must follow the budget or be approved by the DIP agent.
• After the notice period, the lenders may:
  • Freeze and sweep deposit accounts
  • Exercise setoff and collect receivables
  • Sell DIP collateral under sections 363 and 365, including directing assumption and assignment of contracts to the lenders' designees
  • Credit bid
  • Enter the debtors' premises
  The debtors must cooperate.
• Once the DIP is repaid, cash collateral and Carve-Out trigger rights pass to the first lien agent, and once the first lien debt is repaid, to the notes collateral trustee.

Conditions Precedent

• The initial draw requires:
  • Entry, within three calendar days of the petition date, of an interim order acceptable to the Required DIP Lenders in their sole discretion that authorizes the interim roll-up
  • First-day orders, including cash management, that the Required DIP Lenders find satisfactory
  • An acceptable initial budget
  • Payment of lender fees invoiced at least 24 hours in advance
  • No default, no trustee or expanded-powers examiner, no material adverse effect since the RSA effective date, and adequate insurance
• The delayed draw requires a final order in full force that approves the DIP credit agreement and the final roll-up, an executed DIP credit agreement, compliance with the milestones, and no default or material adverse effect.
• The definition of material adverse effect excludes the Chapter 11 cases and the circumstances leading to them.

Releases, Indemnification and Lender Liability

• Subject to the challenge process, the debtors release the following parties, together with their affiliates, officers, directors, shareholders, employees, attorneys and agents:
  • The DIP agent and the DIP lenders
  • The first lien lenders, and WSFS as first lien agent
  • The 2028 and 2029 noteholders, and WSFS as trustee and collateral trustee
  • The royalty investors, HealthCare Royalty Management, LLC as investor representative, and HCR Karyopharm SPV, LLC as collateral agent
  The release covers all claims relating to the DIP facility and the prepetition debt, including lender liability, equitable subordination, recharacterization and lien-validity claims.
• A separate release, effective upon entry, covers the DIP agent and DIP lenders for claims tied to the new money loans. For WSFS as DIP agent, it reaches the entire facility and is not subject to the challenge process.
• The borrower indemnifies the DIP secured parties for costs arising from the transactions and the use of proceeds, excluding disputes solely among lenders other than claims against the agent. The term sheet also excludes losses from gross negligence or willful misconduct and claims on which a debtor wins a final judgment against a lender for material breach; the motion's summary instead lists fraud, gross negligence, bad faith or willful misconduct.
• Upon entry of the final order, the proposed interim order shields the DIP and prepetition secured parties from liability for the debtors' operations. It also provides that lending does not make them a responsible person under CERCLA, or a manufacturer, distributor, marketing authorization holder, sponsor or seller of the debtors' products under the Federal Food, Drug, and Cosmetic Act.

Amendments and Documentation

• Non-material amendments need no court approval. Material amendments require notice, and court approval only if someone objects within three business days.
• Each directly and adversely affected lender must consent to changes that would:
  • Extend the maturity
  • Waive, reduce or postpone scheduled repayments
  • Cut interest or principal, or increase a lender's new money commitment
  • Change the conditions to funding
  • Subordinate the DIP liens
  • Change the definition of Required DIP Lenders
  • Alter the ratable treatment of the DIP obligations
  Changes that adversely affect the DIP agent also require its consent.
• The term sheet and the interim order govern until a DIP credit agreement is executed and attached to the final order. The interim order controls over any inconsistent DIP document.