Synthego Corporation - DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• Synthego Corporation, as Borrower

Agent / Lender(s)

• Perceptive Credit Holdings III, LP, as Administrative Agent and a DIP Lender
• Certain lenders party to the agreement from time to time, as DIP Lenders

DIP Commitments

• $25 million senior secured, superpriority term loan facility comprised of:
  • $15 million in new money term loans:
    • Up to $5 million available on an interim basis
    • The remaining balance available upon entry of the final order
  • $10 million roll-up of outstanding prepetition obligations, available on an interim basis
• The roll-up is provided as consideration for the DIP Lenders' agreement to fund the new money facility.

Cash Collateral

• The debtor is authorized to use cash collateral, defined as all of the debtor’s cash, including amounts generated from accounts receivable and other dispositions of prepetition collateral.
• Use of cash collateral must be in accordance with the approved budget, subject to permitted variances.

Fees

• Closing Fee and Exit Fee, as defined in the DIP credit agreement
• Payment of reasonable and documented fees, expenses, and indemnities as they become due under the DIP credit agreement, including professional fees of the DIP secured parties.

Maturity

• The DIP obligations accelerate and the debtor's right to use cash collateral ceases upon the earliest to occur of:
  • The Maturity Date, as defined in the DIP credit agreement
  • The occurrence of an event of default
  • The debtor’s failure to comply with the final order, including the budget and milestones
  • Dismissal of the chapter 11 case or conversion to chapter 7
  • The filing of a plan or disclosure statement not approved by the DIP agent or prepetition agent
  • The entry of an order authorizing other financing under section 364 without the consent of the DIP agent or prepetition agent

Carve Out

• The DIP and prepetition liens and claims are subject and subordinate to a carve-out, which includes:
  • Statutory fees payable to the Clerk of the Court and the U.S. Trustee
  • Up to $25,000 for fees and expenses incurred by a chapter 7 trustee
  • Allowed and unpaid fees and expenses of the debtor's professionals incurred prior to the delivery of a Carve Out Trigger Notice
  • A post-trigger notice cap of $300,000 for allowed fees and expenses of the debtor's professionals
• A Carve Out Trigger Notice may be delivered by the DIP agent following an event of default and acceleration of the DIP obligations.

Use of Proceeds

• To be used for purposes set forth in the DIP credit agreement and in compliance with the approved budget.
• Proceeds may not be used to challenge the validity, perfection, or priority of the DIP or prepetition obligations, liens, or claims, or to prosecute any claims or causes of action against the DIP or prepetition secured parties.

Credit Bid

• The DIP secured parties and the prepetition secured parties have the right to credit bid up to the full amount of their respective obligations in connection with any sale of their collateral.

Avoidance Actions

• The DIP collateral includes the debtor's rights and any proceeds from avoidance actions arising under chapter 5 of the Bankruptcy Code.

Challenge Period

• The deadline for a party in interest to challenge the prepetition liens or claims is 75 days from the entry of the interim order.
• If a chapter 11 or chapter 7 trustee is appointed before the deadline expires, the trustee will have until the later of the original deadline or 30 days after their appointment to commence a challenge.

Securities and Priorities

• The DIP obligations are granted allowed superpriority administrative expense claims, subject only to the carve-out.
• The DIP lenders are granted automatically perfected, non-avoidable, post-petition liens on all pre- and post-petition property of the debtor’s estate (the "DIP Collateral"), including cash collateral and avoidance action proceeds, subject to the carve-out, with the following priorities:
  • First-priority priming liens on all prepetition collateral
  • First-priority liens on all unencumbered assets
  • Junior liens on assets subject to valid permitted liens

Adequate Protection

Prepetition Secured Parties

• Allowed superpriority administrative expense claims under section 507(b), junior to the DIP superpriority claims and the carve-out.
• Replacement liens on all DIP collateral, junior to the DIP liens and the carve-out.
• Payment of reasonable and documented professional fees and out-of-pocket expenses.
• Payment of post-petition interest in kind at the default rate as provided under the prepetition credit documents.

Waivers

• The debtor waives its ability to:
  • Surcharge the DIP or prepetition collateral under section 506(c) of the Bankruptcy Code.
  • Invoke the “equities of the case” exception under section 552(b).
  • Apply the equitable doctrine of “marshaling” with respect to the DIP or prepetition collateral.

Permitted Variance

• Tested on a four-week rolling basis, cumulative actual expenses may not exceed 115% of cumulative budgeted expenses.
• The variance test is deemed met if the cumulative actual net cash flow for the period is equal to or greater than the cumulative expected net cash flow, regardless of the expense variance.
• Professional fees for the DIP secured parties are excluded from the variance test, while fees for the debtor's and any committee's professionals are included.