Miyoshi America - Chapter 11 DIP Terms

DIP Terms

Borrower / Guarantor

• Miyoshi America, Inc., as Debtor and Borrower

Agent / Lender

• Miyoshi Kasei, Inc. ("MKI"), as DIP Lender (also the Prepetition Secured Party)

DIP Commitments

• $20 million senior secured superpriority debtor-in-possession term loan facility comprised of:
  • $5 million in aggregate principal amount of new money term loans (the "New Money DIP Loans")
    • Up to $2 million available immediately upon entry of the interim order
    • An additional up to $3 million available upon entry of the final order
  • $15 million roll-up of prepetition principal obligations under the Prepetition Loan Agreement on a cashless, dollar-for-dollar basis (the "DIP Rolled-Up Loans")
    • $5 million deemed substituted and exchanged upon entry of the interim order
    • An additional $10 million deemed substituted and exchanged upon entry of the final order
• The DIP Facility was the result of arm's-length negotiations between the Debtor and the DIP Lender and represents a prudent exercise of the Debtor's business judgment.
• The Roll-Up is authorized as compensation for, in consideration for, as a necessary inducement for, and on account of the DIP Lender's agreement to fund the New Money DIP Loans, and not as adequate protection for, or otherwise on account of, the Prepetition Secured Debt. The Prepetition Secured Party would not otherwise consent to the use of its Cash Collateral or the subordination of its liens to the DIP Liens, and the DIP Lender would not be willing to provide the DIP Facility or extend credit to the Debtor thereunder without the Roll-Up.
• Section 7(x)(c) of the DIP Financing Credit Agreement is deemed amended to replace the date May 31, 2026 with June 15, 2026.

Prepetition Loan Background

• On June 10, 2025, the Debtor and MKI entered into an Intercompany Loan Agreement, pursuant to which MKI advanced a loan to the Debtor in an original principal amount of $3 million (the "Initial Prepetition Loan").
• On August 1, 2025, the Debtor and MKI entered into an Intercompany Loan and Security Agreement (the "Prepetition Loan Agreement"), pursuant to which MKI agreed to refinance the Initial Prepetition Loan and fund up to $7 million of additional new money, for a total facility of $10 million.
• On January 27, 2026, the Debtor and MKI entered into an amendment to the Prepetition Loan Agreement to further increase the size of the facility to $15 million.
• The Debtor is indebted to the Prepetition Secured Party in the aggregate principal amount of approximately $15 million of outstanding loans under the Prepetition Loan Documents, plus accrued and unpaid interest thereon and any other obligations incurred in connection therewith (whether arising before or after the Petition Date) (the "Prepetition Secured Debt").
• The Prepetition Loan is secured by perfected, first-priority liens on substantially all assets of the Debtor, including pursuant to applicable UCC financing statements, a recorded real estate mortgage, and filings with the U.S. Patent and Trademark Office.

Cash Collateral

• All of the Debtor's cash, whether existing as of the Petition Date or thereafter, wherever located (including all cash on deposit or maintained by the Debtor in any account), whether as original collateral or proceeds of other Prepetition Collateral, constitutes Cash Collateral of the Prepetition Secured Party within the meaning of section 363(a) of the Bankruptcy Code.
• Certain prepetition rents, income, offspring, products, proceeds, and profits, in existence as of the Petition Date or thereafter created or arising, including balances of funds in the Debtor's prepetition and postpetition operating bank accounts, also constitute Cash Collateral.
• The Debtor is authorized to use Prepetition Collateral (including Cash Collateral) in accordance with the DIP Documents and the Approved Budget (subject to Permitted Variances).

Interest Rate

• Interest payable in accordance with the DIP Financing Credit Agreement
• Upon the occurrence and during the continuation of an Event of Default, the DIP Lender may invoke the right to charge interest at the default rate under the DIP Documents

Maturity

• On the Maturity Date, the Debtor shall pay the then unpaid and outstanding amount of the DIP Obligations pursuant to the provisions of the DIP Documents.
• Upon the occurrence and during the continuation of an Event of Default that has not been waived, and following delivery of a Termination Notice with not less than five business days' notice to the Remedies Notice Parties, the DIP Lender may:
  • Immediately terminate and/or revoke the Debtor's right to use Cash Collateral (subject to the Carve-Out)
  • Terminate the DIP Facility and any DIP Document as to any future liability or obligation of the DIP Lender, without affecting any DIP Obligations or the DIP Liens securing such DIP Obligations
  • Declare all DIP Obligations to be immediately due and payable
  • Invoke the right to charge interest at the default rate
• Prior to exercising any additional remedies, the DIP Lender must file a Stay Relief Motion with the Court on not less than five business days' notice to the Remedies Notice Parties.

Carve-Out

• The Carve-Out consists of:
  • 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, and all fees and expenses for services provided under section 156(c) of title 28
  • Reasonable and documented fees and expenses up to $100,000 incurred by a trustee under section 726(b) of the Bankruptcy Code
  • Pre-Carve-Out Trigger Notice Cap: all unpaid Allowed Professional Fees of Estate Professionals incurred at any time before or on the first business day following delivery of a Carve-Out Trigger Notice (excluding any restructuring, sale, success or other transaction fee of any investment bankers or financial advisors)
  • Post-Carve-Out Trigger Notice Cap: $1,000,000 of Allowed Professional Fees of Estate Professionals incurred after the first business day following delivery of a Carve-Out Trigger Notice
• Upon delivery of a Carve-Out Trigger Notice, the Debtor shall deposit into a separate Carve-Out Account (not subject to the control of the DIP Lender) cash equal to the difference between the Carve-Out Cap and the balance held in the Carve-Out Account.
• The Debtor may, but shall not be obligated to, transfer cash into the Carve-Out Account on a weekly basis to fund estimated Estate Professional fees as set forth in the Approved Budget.

Use of Proceeds

• Continue the Debtor's business and fund operational needs and expenses during the Chapter 11 Case
• Preserve and maintain the going concern value of the Debtor
• Fund the administration of the Chapter 11 Case in accordance with the Approved Budget (subject to Permitted Variances)
• Pay principal, interest, indemnification obligations, and enforcement-related costs and expenses payable under the DIP Documents
• Provide adequate protection payments and fund the Carve-Out

Avoidance Actions

• The DIP Superpriority Claims shall not have recourse to, and the DIP Collateral excludes, (i) claims and causes of action under sections 502(d), 544, 545, 547, 548, and 550 of the Bankruptcy Code, or any other avoidance actions under the Bankruptcy Code, and (ii) any proceeds or property recovered, unencumbered or otherwise, from Avoidance Actions.

Challenge Period and Budget

• The Challenge Period shall expire on the earlier of three business days prior to the commencement of the hearing to confirm a chapter 11 plan and:
  • For the Creditors' Committee (if any), 60 calendar days after its appointment
  • For any chapter 7 trustee or chapter 11 trustee appointed prior to the end of the Challenge Period, the later of (1) 75 calendar days after entry of the interim order or (2) 30 calendar days after such trustee's appointment
  • For all other parties in interest, 75 calendar days after entry of the interim order
• A later date may apply if agreed to in writing by the Prepetition Secured Party or ordered by the Court for cause
• The Challenge Period shall terminate upon confirmation of the Plan, subject to the subsequent effectiveness of the Plan
• Upon conversion of the Chapter 11 Case to chapter 7 or appointment of a chapter 11 trustee, the proceeds of the DIP Loans and/or DIP Collateral (including Cash Collateral) may be used by the Creditors' Committee or Talc Claimants' Committee, if any, to investigate (but not to prosecute) (A) the claims and liens of the Prepetition Secured Party and (B) potential claims, counterclaims, causes of action or defenses against the Prepetition Secured Party, up to an aggregate cap of no more than $50,000
• The Debtor has prepared and delivered an Initial DIP Budget reflecting anticipated operating receipts, anticipated operating disbursements, anticipated non-operating disbursements, net operating cash flow and liquidity for each calendar week. The Initial DIP Budget may be modified, amended, extended, and updated solely in accordance with the DIP Financing Credit Agreement.

Securities and Priorities

• The DIP Obligations constitute allowed superpriority administrative expense claims against the Debtor pursuant to section 364(c)(1) of the Bankruptcy Code, with priority over any and all claims against the Debtor, subject only to the Carve-Out. The DIP Superpriority Claims are payable from and have recourse to all prepetition and postpetition property of the Debtor and all proceeds thereof, excluding (x) the Carve-Out Account and amounts held therein (other than the Debtor's reversionary interest therein), (y) Avoidance Actions, and (z) Avoidance Proceeds.
• The DIP Lender is granted valid, binding, continuing, enforceable, non-avoidable and automatically perfected liens on all DIP Collateral, subject only to the Carve-Out and Permitted Liens, with the following priorities:
  • Pursuant to section 364(c)(2), first-priority senior liens on all Unencumbered Property (excluding Avoidance Actions, Avoidance Proceeds, and the Carve-Out Account)
  • Pursuant to section 364(d)(1), first-priority senior priming liens on all Prepetition Collateral, senior in all respects to the Prepetition Liens and senior to any Adequate Protection Liens on DIP Collateral
    • The DIP Priming Liens shall not take priority over the Unreleased Legacy Mortgage to the extent it remains valid and enforceable under applicable nonbankruptcy law
  • Pursuant to section 364(c)(3), junior liens on all DIP Collateral subject to a Permitted Lien (including the Unreleased Legacy Mortgage, to the extent valid and enforceable)
• The DIP Liens shall not be subject or subordinate to, or pari passu with, any lien or security interest avoided and preserved under section 551 of the Bankruptcy Code, any postpetition liens (except as provided in the DIP Documents or Orders), or any intercompany or affiliate liens of the Debtor.

Adequate Protection

Prepetition Secured Party

• Adequate Protection Liens: a valid, perfected replacement security interest in and lien upon all of the DIP Collateral, subordinate to (i) the Carve-Out, (ii) the DIP Liens, and (iii) the Permitted Liens
• Adequate Protection 507(b) Claims: an allowed superpriority administrative expense claim pursuant to section 507(b) of the Bankruptcy Code, payable from and with recourse to all DIP Collateral and proceeds thereof (excluding Avoidance Actions and Avoidance Proceeds), subject and subordinate only to (i) the Carve-Out and (ii) the DIP Superpriority Claims
• Information Rights: the Debtor shall provide to the Prepetition Secured Party all reporting required to be provided to the DIP Lender under the DIP Documents at the same time, and shall also provide copies to the Talc Claimants' Committee (if appointed) and the proposed Future Claimants' Representative
• Compliance with the financial and other covenants set forth in section 7 of the DIP Financing Credit Agreement and maintenance and updating of the Approved Budget
• Continued maintenance and insurance of the Prepetition Collateral and DIP Collateral as required under the Prepetition Loan Agreement and the DIP Documents
• Reservation of the Prepetition Secured Party's right to request further or different adequate protection

Waivers

• Section 506(c): The Debtor waives its right 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 Chapter 11 Case or any Successor Case shall be charged against or recovered from the DIP Collateral (including Cash Collateral) or Prepetition Collateral.
• Section 552(b): The "equities of the case" exception under section 552(b) of the Bankruptcy Code shall not apply to the Prepetition Secured Party with respect to proceeds, products, offspring, or profits of any Prepetition Collateral.
• Marshaling: The equitable doctrine of marshaling and other similar doctrines shall not apply to the DIP Lender or the Prepetition Secured Party with respect to the DIP Collateral, the DIP Obligations, the Prepetition Secured Debt, or the Prepetition Collateral.
• Payments Free and Clear: All payments or proceeds remitted to the DIP Lender pursuant to the Orders, the DIP Documents, or any subsequent order of the Court shall be irrevocable and received free and clear of any claim, charge, assessment, or other liability, including any such claim arising under sections 506(c) or 552(b) of the Bankruptcy Code.

Permitted Variance

• Permitted Variances shall be reported beginning on May 15, 2026 and every other Friday thereafter (each, a "Testing Date").
• "Permitted Variance" means the actual disbursements and actual operating cash receipts (in each case, excluding asset sales proceeds) tested against the Initial DIP Budget (or any subsequently Approved DIP Budget).
• The Debtor shall prepare and deliver to the DIP Lender and Prepetition Secured Party a Variance Report setting forth, for (i) the two weeks ending on the Testing Date and (ii) the Cumulative Period ending on the Testing Date: (a) a comparison of actual operating cash receipts (excluding asset sales proceeds) and actual disbursements to the projected amounts under the then-approved DIP Budget; and (b) an indication as to whether each variance is temporary or permanent, with an explanation in reasonable detail.

Automatic Stay

• The automatic stay is vacated and modified to the extent necessary to permit the Debtor, its affiliates, the DIP Lender, and the Prepetition Secured Party to implement and effectuate the Orders and the DIP Documents, to deliver Termination/remedies notices, and to perfect the DIP Liens and Adequate Protection Liens.

Indemnification

• The Debtor shall indemnify the DIP Lender and the Prepetition Secured Party as provided in the Prepetition Loan Agreement and the DIP Documents, including section 12 of the DIP Financing Credit Agreement, and waives any contract, law, or equity defense to such indemnification obligations as of the date of the Final Order.