UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 20, 2017
Walter Investment Management Corp.
(Exact Name of Registrant as Specified in its Charter)
Maryland | 001-13417 | 13-3950486 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
1100 Virginia Drive, Suite 100
Fort Washington, PA 19034
(Address of principal executive offices, including zip code)
(844) 714-8603
(Registrants telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01 | Entry into a Material Definitive Agreement. |
Restructuring Support Agreements
On October 20, 2017, Walter Investment Management Corp. (the Company) entered into (i) an Amended and Restated Restructuring Support Agreement (as amended, the Term Loan RSA) with lenders (collectively, the Consenting Term Lenders) holding, as of October 20, 2017, more than 48% of the loans and commitments outstanding (the Term Loans) under that certain Amended and Restated Credit Agreement, dated as of December 19, 2013, by and among the Company, as the borrower, Credit Suisse AG, as administrative agent, and the lenders party thereto (the Credit Agreement), that are subject to the existing Restructuring Support Agreement, dated as of July 31, 2017 (as amended), and (ii) a Restructuring Support Agreement (the Senior Noteholder RSA, and together with the Term Loan RSA, the RSAs) with senior unsecured noteholders (the Consenting Senior Noteholders, and together with the Consenting Term Lenders, the Consenting Creditors) holding, as of October 20, 2017, more than 50% of the 7.875% senior unsecured notes (the Senior Notes) outstanding due 2021 under that certain Indenture, dated as of December 17, 2013 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the Indenture), by and among the Company, the guarantors party thereto, and Wilmington Savings Fund Society, FSB, a national banking association as successor trustee. The RSAs will become effective once holders of more than 66 2/3 % in the aggregate of Senior Notes and Terms Loans become party to the applicable RSA (the Support Effective Date). The parties may terminate the RSAs if the Support Effective Date does not occur on or before October 25, 2017. Capitalized terms used herein but not defined shall have the meaning set forth in the RSAs or the Term Sheet (defined below), as applicable.
As set forth in each RSA (including in the Prepackaged Plan Restructuring Term Sheet attached to each RSA (the Term Sheet)), the Consenting Creditors and the Company have agreed to the principal terms of a financial restructuring (the Restructuring) of the Company, which will be implemented through a prepackaged plan of reorganization (the Prepackaged Plan) under chapter 11 of Title 11 of the United States Code (the Bankruptcy Code) and will restructure the indebtedness comprising the Companys Term Loan Claims, Senior Notes Claims and Convertible Notes Claims, as well as the Companys Existing Equity Interests. Pursuant to the Prepackaged Plan, it is intended that only the Company will file for reorganization under the Bankruptcy Code. The Companys operating entities, including Ditech Financial LLC and Reverse Mortgage Solutions, Inc., are expected to remain out of chapter 11 and continue their operations in the ordinary course through the consummation of the Restructuring, which is expected to occur not later than January 31, 2017.
The RSAs obligate the Company and the Consenting Creditors to, among other things, use commercially reasonable efforts to support and not interfere with consummation of the Restructuring, and as to the Consenting Creditors, vote to accept the Prepackaged Plan subject to the receipt of solicitation materials in accordance with section 1125(g) and 1126 of the Bankruptcy Code. The RSAs may be terminated upon the occurrence of certain events, including, among other requirements, the failure to meet specified milestones relating to the filing, confirmation and consummation of the Prepackaged Plan, the occurrence of a Material Adverse Effect and in the event of certain breaches by the parties under the RSAs. Pursuant to the RSAs, the Company is required to commence solicitation on the Prepackaged Plan by November 6, 2017 and commence the Chapter 11 Case on or before November 30, 2017. Although the Company intends to pursue the Restructuring in accordance with the terms set forth in the RSAs and the Term Sheet, there can be no assurance that the Company will be successful in completing a restructuring or any other similar transaction on the terms set forth in the RSAs and the Term Sheet, on different terms, or at all.
Proposed Prepackaged Chapter 11 Plan of Reorganization
As described in the RSAs and in the Term Sheet, under the contemplated Prepackaged Plan, which will be subject to approval of the Bankruptcy Court, it is anticipated that, among other things, on the effective date of the Prepackaged Plan (the Effective Date):
| The Company will be a guarantor of certain new warehouse refinancing agreements to be entered into by Ditech Financial LLC and Reverse Mortgage Solutions Inc., as borrowers, to provide for the refinancing of existing warehouse lines of Ditech Financial LLC and Reverse Mortgage Solutions Inc., on material terms and conditions acceptable to the Requisite Creditors. |
| Holders of Term Loan Claims will become bound by the Amended and Restated Credit Facility Agreement and receive, in full and final satisfaction of their Allowed Term Loan Claims on the Effective Date, their pro rata share of (i) term loans under the Amended and Restated Credit Facility Agreement (such term loans to be in an aggregate principal amount equal to the term loans then outstanding under the Credit Agreement as of the Effective Date), and (ii) any accrued and unpaid interest under the Credit Agreement as of the Effective Date. |
| Each holder of a Revolving Loan Claim will receive (i) payment in full of its Claim and termination of all letters of credit issued under the Revolving Loan Facility (which will be refinanced), (ii) its pro rata share of an amended and restated revolving loan facility (if each Revolving Lender consents to enter into such facility), or (iii) other consideration satisfactory to such holder. |
| Each holder of a Senior Notes Claim will receive its pro rata share of (a) New Second Lien Notes (described below), (b) Mandatorily Convertible Preferred Stock (described below), and (c) if the Class of Convertible Notes Claims does not vote to accept the Prepacked Plan, 100% of the New Common Stock issued, subject to dilution by shares of New Common Stock issuable on conversion of the Mandatorily Convertible Preferred Stock and shares of New Common Stock issued or issuable pursuant to the Management Incentive Plan and shares of New Common Stock issued after the Effective Date. The Senior Notes will be cancelled without further action by or order of the Bankruptcy Court. |
| The Company will issue to holders of Senior Notes Claims: |
| $250 million aggregate principal amount of secured second lien notes having the terms described on Exhibit 2 to the Term Sheet; and |
| $100 million face amount of Mandatorily Convertible Preferred Stock having the terms described on Exhibit 3 to the Term Sheet, convertible into 73% of the total number of issued and outstanding shares of New Common Stock as of the Effective Date subject to dilution by shares of New Common Stock issued or issuable pursuant to the Management Incentive Plan and by shares of New Common Stock issued after the Effective Date, including shares of New Common Stock issuable pursuant to the Warrants (if issued). |
| Solely to the extent that the Class of Convertible Notes Claims votes to accept the Prepackaged Plan: |
| Each holder of a Convertible Notes Claim will receive its pro rata share of (i) New Common Stock representing, in the aggregate, 50% of the New Common Stock issued, subject to dilution by shares of New Common Stock issuable upon conversion of the Mandatorily Convertible Preferred Stock, shares of New Common Stock issued or issuable pursuant to the Management Incentive Plan and shares of New Common Stock issued after the Effective Date, including pursuant to the Warrants, and (ii) 50% of the Warrants. The Convertible Notes will be cancelled without further action by or order of the Bankruptcy Court; |
| Each holder of an Existing Equity Interest will receive its pro rata share of (i) New Common Stock representing, in the aggregate, 50% of the New Common Stock issued, subject to dilution by shares of New Common Stock issuable upon conversion of the Mandatorily Convertible Preferred Stock, shares of New Common Stock issued or issuable pursuant to the Management Incentive Plan and shares of New Common Stock issued after the Effective Date, including pursuant to the Warrants, and (ii) 50% of the Warrants. All Interests will be cancelled without further action by or order of the Bankruptcy Court; and |
| The Company will issue to the holders of Convertible Notes Claims and Existing Equity Interests, 10 year warrants in two (2) separate tranches, on the terms described on Exhibit 4 to the Term Sheet. |
| If the Class of Convertible Notes Claims does not vote to accept the Prepackaged Plan, then holders of Convertible Notes Claims and holders of Existing Equity Interests will not receive or retain any property under the Prepackaged Plan on account of such Claims or Interests. |
| Unless a holder of a General Unsecured Claim agrees to different treatment, (i) the Company or Reorganized Company, as applicable, will continue to pay or treat such General Unsecured Claim in the ordinary course of business or (ii) such holder will receive such other treatment so as to render such General Unsecured Claim Unimpaired, in each case subject to all defenses or disputes the Company may assert as to the validity or amount of such Claims. |
| All priority tax claims, other priority claims, and other secured claims, other than those claims otherwise referenced herein, will be unimpaired under the Prepackaged Plan and/or paid in full in the ordinary course of business. |
| The board of directors of the Reorganized Company will consist of nine (9) members, with six (6) directors nominated by holders of the Mandatorily Convertible Preferred Stock, and three (3) directors nominated by the Company (on behalf of the holders of New Common Stock). |
| The Reorganized Company will enter into a post-Restructuring Management Incentive Plan, under which 10% of the New Common Stock (after taking into account the shares to be issued under the Management Incentive Plan) will be reserved for issuance as awards under the Management Incentive Plan. |
| The Prepackaged Plan will include releases for the Company and the Consenting Creditors. In addition, the Prepackaged Plan will provide for releases of the Companys subsidiaries with respect to their guarantees under the Credit Agreement and the Indenture, without the need for the Companys subsidiary guarantors to file for chapter 11. |
The foregoing description of the Term Loan RSA, Senior Notes RSA and the Term Sheet does not purport to be complete and is qualified in its entirety by reference to the full text of each RSAs, a copy of which are filed as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference.
Any new securities to be issued pursuant to the Restructuring have not been registered under the Securities Act of 1933, as amended (the Securities Act), or any state securities laws. Therefore, the new securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and any applicable state securities laws. This Current Report on Form 8-K does not constitute an offer to sell or buy, nor the solicitation of an offer to sell or buy, any securities referred to herein, nor is this Current Report on Form 8-K a solicitation of consents to or votes to accept any chapter 11 plan. Any solicitation or offer will only be made pursuant to a disclosure statement and only to such persons and in such jurisdictions as is permitted under applicable law.
Item 7.01 | Regulation FD Disclosure. |
On October 20, 2017, the Company issued a press release announcing the signing of the RSAs. A copy of the press release is being furnished as Exhibit 99.1 and is incorporated into this Item 7.01 by reference.
The information furnished pursuant to Item 7.01, including Exhibit 99.1, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing of Basics under the Securities Act of 1933, as amended (the Securities Act), unless specifically identified therein as being incorporated therein by reference.
Certain statements in this Form 8-K constitute forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements that are not historical fact are forward-looking statements. Certain of these forward-looking statements can be identified by the use of words such as believes, anticipates, expects, intends, plans, projects, estimates, assumes, may, should, could, shall, will, seeks, targets, future, or other similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors, and our actual results, performance or achievements could differ materially from future results, performance or achievements expressed in these forward-looking statements. Such statements include, but are not limited to, statements relating to the potential transactions contemplated by the RSAs, descriptions of managements strategy, plans, objectives, expectations, or intentions and descriptions of assumptions underlying any of the above matters and other statements that are not historical fact.
These forward-looking statements are based on the Companys current beliefs, intentions and expectations and are not guarantees or indicative of future performance, nor should any conclusions be drawn or assumptions be made as to any potential outcome of any proposed transactions the Company considers. Risks and uncertainties relating to the proposed Restructuring include: the ability of the Company to comply with the terms of the RSAs, including completing various stages of the
Restructuring within the dates specified by the RSAs; the ability of the Company to obtain requisite support for the Restructuring from various stakeholders; the ability of the Company to maintain the listing of its common stock on the New York Stock Exchange; the ability of the Company to successfully execute the transactions contemplated by the RSAs without substantial disruption to the business of, or a Chapter 11 bankruptcy filing by, one or more of its primary operating or other subsidiaries; and the effects of disruption from the proposed Restructuring making it more difficult to maintain business, financing and operational relationships, to retain key executives and to maintain various licenses and approvals necessary for the Company to conduct its business. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements include, but are not limited to, those factors, risks and uncertainties described in more detail under the heading Risk Factors and elsewhere in the Companys annual and quarterly reports, including amendments thereto, and other filings with the Securities and Exchange Commission.
The above factors, risks and uncertainties are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond the Companys control. New factors, risks and uncertainties emerge from time to time, and it is not possible for management to predict all such factors, risks and uncertainties. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore any of these statements may prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the results or conditions described in such statements or the Companys objectives and plans will be achieved. These forward-looking statements speak only as of the date such statements were made or any earlier date indicated, and the Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, changes in underlying assumptions or otherwise. If the Company were in any particular instance to update or correct a forward-looking statement, investors and others should not conclude that the Company would make additional updates or corrections thereafter.
Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits .
EXHIBIT INDEX
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
WALTER INVESTMENT MANAGEMENT CORP. | ||||||
Date: October 20, 2017 |
By: |
/s/ John J. Haas |
||||
Name: | John J. Haas | |||||
Title: | General Counsel, Chief Legal Officer and Secretary |
Exhibit 10.1
Execution Version
AMENDED AND RESTATED
RESTRUCTURING SUPPORT AGREEMENT
This RESTRUCTURING SUPPORT AGREEMENT (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, and including any exhibits or schedules hereto, this Agreement ), dated as of October 20, 2017, is entered into by and between:
(i) Walter Investment Management Corp. (the Company ); and
(ii) each undersigned entity, in each such entitys respective capacity as lender under, or as nominee, investment adviser, sub-adviser, or investment manager, as applicable, to certain funds, accounts, and other entities (including subsidiaries and affiliates of such funds, accounts, and entities) that is a lender (in its respective capacity as such, each, a Term Lender , and, collectively, the Term Lenders and, together with their respective successors and permitted assigns and any subsequent Term Lender that becomes party hereto in accordance with the terms hereof, each, a Consenting Term Lender , and, collectively, the Consenting Term Lenders ) party to that certain Amended and Restated Credit Agreement, dated as of December 19, 2013 (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time in accordance with the terms thereof, the Credit Agreement , and the term loan facility thereunder, the Term Loan Facility ), by and among the Company, as the borrower, Credit Suisse AG, as administrative agent (together with any successor administrative agent, in each case, in such capacity, the Administrative Agent ), the other term lenders party thereto and the other lenders party thereto.
The Company, each Consenting Term Lender, and any subsequent Person that becomes a party hereto in accordance with the terms hereof are referred to herein as the Parties and individually as a Party .
Capitalized terms used but not defined herein shall have the meanings ascribed to them, as applicable, in the restructuring term sheet attached hereto as Exhibit A (together with all exhibits and annexes attached thereto, the Term Sheet ), including any schedules, annexes and exhibits attached thereto, and as may be modified in accordance with Section 9 hereof, or the Credit Agreement.
WHEREAS, the Parties entered into a Restructuring Support Agreement, dated as of July 31, 2017, as amended effective as of August 3, 2017, and further amended as of August 21, 2017, and August 31, 2017 (the Original RSA );
WHEREAS , the Parties desire to amend and restate the Original RSA in its entirety as set forth herein;
WHEREAS , the Parties have agreed to a restructuring of the Company and/or its capital structure (the Restructuring ) that will be implemented through a chapter 11 proceeding consistent with the terms and subject to the conditions set forth herein, including in the Term Sheet, which are the product of arms-length, good faith discussions between the Parties and their respective professionals;
WHEREAS , as of the date hereof, the Consenting Term Lenders in the aggregate hold, or act as the nominee, investment adviser, sub-adviser, or investment manager to entities that hold, as of the date hereof, more than 48% of the aggregate outstanding principal amount of the Loans and Commitments (each as defined in the Credit Agreement);
WHEREAS, concurrently with the execution of this Agreement, the Company is entering into the Senior Notes RSA; and
WHEREAS , the Parties desire to express to each other their mutual support and commitment in respect of the matters discussed in the Term Sheet and hereunder.
NOW, THEREFORE , in consideration of the premises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:
The Original RSA is hereby amended and restated in its entirety, effective as of the Support Effective Date (as defined below), to read as set forth below:
1. | Certain Definitions. |
As used in this Agreement, the following terms have the following meanings:
(a) Alternative Transaction means any plan, dissolution, winding up, liquidation, sale or disposition, reorganization, merger or restructuring of the Company or its assets other than the Restructuring, as set forth herein, including the Term Sheet;
(b) Amended and Restated Credit Facility means that certain credit facility with terms consistent with the terms set forth on Exhibit 1 to the Term Sheet.
(c) Bankruptcy Code means title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. , as amended from time to time.
(d) Bankruptcy Court means the United States Bankruptcy Court for the Southern District of New York having jurisdiction over the Chapter 11 Case, and, to the extent of the withdrawal of any reference under 28 U.S.C. § 157, pursuant to 28 U.S.C. § 151, the United States District Court for the Southern District of New York.
(e) Claims means claim as defined in section 101(5) of the Bankruptcy Code, including, without limitation, any claim arising under the Credit Agreement or related to the Term Loan Facility.
2
(f) Consenting Senior Noteholders means the Senior Noteholders that execute the Senior Notes RSA, together with their respective successors and permitted assigns that become party thereto.
(g) Convertible Noteholders means the holders of Convertible Notes, in their respective capacities as such.
(h) Convertible Notes means the 4.50% convertible senior subordinated notes due 2019 issued pursuant to the Convertible Notes Indenture.
(i) Convertible Notes Indenture means that certain Subordinated Indenture dated as of January 13, 2012 by and between the Company and Wells Fargo Bank, National Association as Trustee, and a Supplemental Indenture thereto, dated as of January 13, 2012.
(j) Convertible Notes RSA means any restructuring support agreement that may be entered into by the Company and any holders of the Convertible Notes.
(k) Definitive Documents means the documents (including any related orders, agreements, instruments, schedules or exhibits) that are contemplated by the Term Sheet and that are otherwise necessary or desirable to implement, or otherwise relate to the Restructuring, the Prepackaged Plan and the Term Sheet, including: (i) the Prepackaged Plan; (ii) the documents to be filed in the supplement to the Prepackaged Plan (collectively, the Plan Supplement ); (iii) the definitive documentation with respect to the Amended and Restated Credit Facility (collectively, the Amended and Restated Credit Facility Documents ); (iv) the Direction; (v) the Disclosure Statement; (vi) any motion seeking the approval of the adequacy of the Disclosure Statement and solicitation of the Prepackaged Plan; (vii) the Confirmation Order; (viii) the motion for use of cash collateral and to incur postpetition financing and any credit agreement with respect thereto (the Financing Motion ); (ix) any Financing Orders; (x) the post-Effective Date organizational documents for the Company, shareholder-related agreements, or other related documents (including the mandatorily convertible preferred stock described on Exhibit 3 to the Term Sheet and the warrants described on Exhibit 4 to the Term Sheet); and (xi) the definitive documentation with respect to the Management Incentive Plan. Without prejudice to the rights of any Consenting Term Lender with respect to any action that any Consenting Term Lender may take with respect to any action or failure to act of either the Company or any Consenting Noteholder with respect the Senior Notes RSA, the Senior Notes RSA shall not constitute a Definitive Document for purposes of this Agreement. Each of the Definitive Documents shall contain terms and conditions consistent in all material respects with this Agreement and the Term Sheet, and shall otherwise be reasonably acceptable in all material respects to the Required Parties, including with respect to any modifications, amendments, or supplements to such Definitive Documents at any time during the Support Period; provided , that the terms of the Prepackaged Plan with respect to the treatment of the Term Loans and the treatment of any matters with respect to the Credit Agreement will be acceptable in all material respects to the Requisite Term Lenders, and Amended and Restated Credit Facility Documents, the Financing Motion, and the Financing Orders shall be acceptable in all respects to the Requisite Term Lenders.
3
(l) Deposit Account means any deposit accounts, securities accounts, operating accounts, commodities accounts, or other accounts of any kind or nature (other than (x) Excluded Accounts (as defined in the Security Agreement) and (y) accounts that the Requisite Term Lenders otherwise agree shall not be subject to Section 4(d)(iii) hereof) held by a Credit Party (as defined in the Credit Agreement) into which funds of any Credit Party (as defined in the Credit Agreement) are deposited from time to time.
(m) Direction means the Consent of Noteholders to Direction to Trustee attached as Exhibit B to the Senior Notes RSA, including all attachments, annexes and exhibits thereto.
(n) Disclosure Statement means the Disclosure Statement relating to the Prepackaged Plan.
(o) Effective Date means the date on which the Restructuring is consummated.
(p) Filing Conditions means the Company having received votes to accept the Prepackaged Plan by (i) holders of Term Loans satisfying the Requisite Term Lenders Threshold and (ii) holders of Senior Notes satisfying the Requisite Senior Notes Threshold.
(q) Financing Orders means any orders authorizing the Company to continue to access cash collateral and incur any postpetition financing on an interim basis or final basis consistent with the Term Sheet.
(r) Management Incentive Plan means a post-Effective Date management incentive plan for certain members of the Companys management to be adopted by the board of directors of the reorganized Company post-Effective Date in accordance with the Term Sheet.
(s) Person means any person as defined in section 101(41) of the Bankruptcy Code, including, without limitation, any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof or other entity.
(t) Prepackaged Plan means the prepackaged chapter 11 plan of reorganization of the Company (including any annexes, supplements, exhibits, term sheets, or other attachments attached thereto, which will be consistent in all respects with the Term Sheet and this Agreement and otherwise reasonably acceptable to the Company and Requisite Term Lenders), to be implemented in the Restructuring in accordance with and subject to the terms and conditions of this Agreement, including the Term Sheet.
4
(u) Required Lenders means the Required Lenders as defined in the Credit Agreement.
(v) Required Parties means each of (i) the Company and (ii) the Requisite Term Lenders.
(w) Requisite Senior Notes Threshold means 66 2/3 % of the aggregate outstanding principal amount of the Senior Notes.
(x) Requisite Term Lenders means, as of the date of determination, Consenting Term Lenders holding at least a majority in aggregate principal amount outstanding of the Term Loans held by the Consenting Term Lenders as of such date.
(y) Requisite Term Lenders Threshold means 66 2/3 % of the aggregate outstanding principal amount of the Term Loan Facility.
(z) SEC means the Securities & Exchange Commission.
(aa) Second Lien Notes means the Series A Notes and Series B Notes described in the Term Sheet.
(bb) Senior Notes means the 7.875% senior notes due 2021 issued pursuant to the Senior Notes Indenture.
(cc) Senior Notes Indenture means the Indenture for the 7.875% Senior Notes due 2021 dated December 17, 2013 among the Company, the guarantors and Wilmington Savings Fund Society, FSB, a national banking association, as successor trustee.
(dd) Senior Notes RSA means the restructuring support agreement, dated as of October 20, 2017, to support the Restructuring with terms consistent with this Agreement and the Term Sheet executed by the Company and the Consenting Senior Noteholders satisfying the Requisite Senior Notes Threshold. The Term Sheet will be attached as Exhibit A to the Senior Notes RSA; provided that the Consenting Term Lenders shall not deemed to be parties to, or third party beneficiaries under, the Senior Notes RSA for any purpose whatsoever.
(ee) Senior Noteholders means the holders of Senior Notes, in their respective capacities as such.
(ff) Securities Act means the Securities Act of 1933, as amended.
(gg) Support Effective Date means the date on which the counterpart signature pages to (i) this Agreement shall have been executed and delivered by the Company and Consenting Term Lenders (a) holding at least 66 2/3 % in aggregate principal amount outstanding of the Term Loans and (b) representing the Required Lenders; and (ii) the Senior Notes RSA shall have been executed and delivered by the Company and the Consenting Senior Noteholders holding at least the Requisite Senior Notes Threshold.
5
(hh) Support Period means the period commencing on the Support Effective Date and ending on the earlier of the (i) date on which this Agreement is terminated in accordance with Section 5 hereof and (ii) the Effective Date.
2. | Term Sheet. |
The Term Sheet is expressly incorporated herein by reference and made part of this Agreement as if fully set forth herein. The Term Sheet, including the exhibits and annexes and exhibits thereto, sets forth the material terms and conditions of the transactions contemplated by the Restructuring (collectively, the Restructuring Transactions ); provided , however , the Term Sheet is supplemented by the terms and conditions of this Agreement. In the event of any inconsistency between the Term Sheet and this Agreement, the Term Sheet shall control.
3. | Agreements of the Consenting Term Lenders. |
(a) Agreement to Support . During the Support Period, subject to the terms and conditions hereof, each of the Consenting Term Lenders agrees, severally and not jointly, that it shall:
(i) use its commercially reasonable efforts to support the Restructuring and the transactions contemplated by the Term Sheet and the Prepackaged Plan, and to act in good faith and take any and all reasonable actions necessary to consummate the Restructuring and the transactions contemplated by the Term Sheet and the Prepackaged Plan (including the negotiation of the Amended and Restated Credit Facility Documents), in a manner consistent with this Agreement;
(ii) refrain from initiating (or directing or encouraging the Administrative Agent or any other party to initiate) any actions, including legal proceedings, that are inconsistent with, or that would delay, prevent, frustrate or impede the approval, confirmation or consummation, as applicable, of the Restructuring;
(iii) timely vote (pursuant to the Prepackaged Plan) or cause to be voted all of its Claims (including on account of the Senior Notes Indenture or the Convertible Notes Indenture owned or controlled by such Consenting Term Lender) to accept the Prepackaged Plan by delivering its duly executed and completed ballot or ballots, as applicable, accepting the Prepackaged Plan on a timely basis following commencement of the solicitation of acceptances of the Prepackaged Plan in accordance with sections 1125(g) and 1126 of the Bankruptcy Code;
(iv) negotiate in good faith with the Company the forms of the Definitive Documents (to the extent such Consenting Term Lender is a party thereto) and execute the Definitive Documents;
6
(v) not change or withdraw its votes to accept the Prepackaged Plan (or cause or direct such vote to be changed or withdrawn); provided , however , that such vote shall, without any further action by the applicable Consenting Term Lender, be deemed automatically revoked (and, upon such revocation, deemed void ab initio ) by the applicable Consenting Term Lender at any time following the expiration of the Support Period with respect to such Consenting Term Lender;
(vi) not directly or indirectly, through any Person, seek, solicit, propose, support, assist, engage in negotiations in connection with or participate in the formulation, preparation, filing or prosecution of, any plan, plan proposal, restructuring proposal, offer of dissolution, winding up, liquidation, sale or disposition, reorganization, merger or restructuring of the Company under any bankruptcy, insolvency or similar laws other than the Restructuring, or take any other action that is inconsistent with or that would reasonably be expected to prevent, interfere with, delay or impede the solicitation of votes on the Restructuring, Prepackaged Plan and Disclosure Statement, and the confirmation and consummation of the Prepackaged Plan and the Restructuring;
(vii) use its commercially reasonable efforts to support and take all actions as are reasonably necessary and appropriate to obtain any and all required regulatory and/or third-party approvals to consummate the Transactions; and
(viii) support and take all reasonable actions necessary or reasonably requested by the Company to facilitate the solicitation of votes on the Prepackaged Plan by the Company, approval of the Prepackaged Plan and Disclosure Statement, and confirmation and consummation of the Prepackaged Plan and the Restructuring.
(b) Transfers .
(i) Each Consenting Term Lender agrees that, for the duration of the Support Period, such Consenting Term Lender shall not sell, transfer, loan, issue, participate, pledge, hypothecate, assign or otherwise dispose of (other than ordinary course pledges and/or swaps) (each, a Transfer ), directly or indirectly, in whole or in part, any of its Claims, including any beneficial ownership in any such Claims, 1 or any option thereon or any right or interest therein, unless the transferee thereof either (A) is a Consenting Term Lender (with respect to a transfer by a Consenting Term Lender) or (B) prior to such Transfer, agrees in writing for the benefit of the Parties to become a Consenting Term Lender and to be bound by all of the terms of this Agreement applicable to Consenting Term Lenders (including with respect to any and all Claims it already may hold against or in the Company prior to such Transfer) by executing a joinder agreement, a form of which is attached hereto as Exhibit B (a Joinder Agreement ), and delivering an executed copy thereof within two (2) business days of
1 |
As used herein, the term beneficial ownership means the direct or indirect economic ownership of, and/or the power, whether by contract or otherwise, to direct the exercise of the voting rights and the disposition of, any Claims subject to this Agreement or the right to acquire such Claims. |
7
such execution, to (i) Weil, Gotshal and Manges LLP ( Weil ), as counsel to the Company, (ii) Kirkland & Ellis LLP, as counsel to an ad hoc group of Consenting Term Lenders ( Kirkland ) and (iii) Davis Polk & Wardwell LLP (Davis Polk), as counsel to the Administrative Agent,, in which event (x) the transferee shall be deemed to be a Consenting Term Lender hereunder to the extent of such transferred Claims and (y) the transferor shall be deemed to relinquish its rights (and be released from its obligations) under this Agreement to the extent of such transferred Claims (such transfer, a Permitted Transfer and such party to such Permitted Transfer, a Permitted Transferee ). Each Consenting Term Lender agrees that any Transfer of any Claim that does not comply with the terms and procedures set forth herein shall be deemed void ab initio, and the Company and each other Consenting Term Lender shall have the right to enforce the voiding of such Transfer.
(ii) Notwithstanding anything to the contrary herein, (A) a Qualified Marketmaker 2 that acquires any Claims subject to this Agreement held by a Consenting Term Lender with the purpose and intent of acting as a Qualified Marketmaker for such Claims, shall not be required to become a party to this Agreement as a Consenting Term Lender, if (x) such Qualified Marketmaker transfers such Claims (by purchase, sale, assignment, or other similar means) within the earlier of ten (10) business days of its acquisition and the plan voting deadline to a Permitted Transferee and the transfer otherwise is a Permitted Transfer, and (y) such Consenting Term Lender shall be solely responsible for the Qualified Marketmakers failure to comply with this Section 3(b), and (B) to the extent any Party is acting solely in its capacity as a Qualified Marketmaker, it may Transfer any ownership interests in the Claims that it acquires from a holder of Claims that is not a Consenting Term Lender to a transferee that is not a Consenting Term Lender at the time of such Transfer without the requirement that the transferee be or become a signatory to this Agreement or execute a Transfer Agreement.
(iii) This Agreement shall in no way be construed to preclude the Consenting Term Lenders from acquiring additional Claims; provided that (A) any Consenting Term Lender that acquires additional Claims during the Support Period shall promptly notify Weil, Kirkland and Davis Polk of such acquisition, including the amount of such acquisition, and (B) such acquired Claims shall automatically and immediately upon acquisition by a Consenting Term Lender be deemed subject to the terms of this Agreement (regardless of when or whether notice of such acquisition is given to the Company).
2 | As used herein, the term Qualified Marketmaker means an entity that (a) holds itself out to the public, the syndicated loan market, and/or the applicable private markets as standing ready in the ordinary course of business to purchase from customers and sell to customers claims against, and equity interests in, the Company, including Term Loans, or enter with customers into long and short positions in claims against the Company), in its capacity as a dealer or market maker in such claims and (b) is, in fact, regularly in the business of making a market in claims against issuers or borrowers (including term, loans, and/or debt or equity securities). |
8
(iv) This Section 3(b) shall not impose any obligation on the Company to issue any cleansing letter or otherwise publicly disclose information for the purpose of enabling a Consenting Term Lender to Transfer any Claims. Notwithstanding anything to the contrary herein, to the extent the Company and another Party have entered into a separate agreement with respect to the issuance of a cleansing letter or other public disclosure of information, the terms of such confidentiality agreement shall continue to apply and remain in full force and effect according to its terms.
(c) Additional Claims . To the extent any Consenting Term Lender (i) acquires additional Claims, (ii) holds or acquires any other claims against the Company entitled to vote on the Prepackaged Plan, or (iii) holds or acquires any equity interests in the Company entitled to vote on the Prepackaged Plan, then, in each case, each such Consenting Term Lender shall promptly notify Weil, Kirkland and Davis Polk, and each such Consenting Term Lender agrees that all such Claims shall be subject to this Agreement, and agrees that, for the duration of the Support Period and subject to the terms of this Agreement, it shall vote in favor of the Prepackaged Plan (or cause to be voted) any such additional Claims entitled to vote on the Prepackaged Plan (to the extent still held by it on or on its behalf at the time of such vote), in a manner consistent with Section 3(a) hereof. For the avoidance of any doubt, any obligation to vote for the Prepackaged Plan or any other plan of reorganization shall be subject to sections 1125(g) and 1126 of the Bankruptcy Code.
(d) Preservation of Rights . Notwithstanding the foregoing, nothing in this Agreement (including any Consenting Term Lenders entry into this Agreement in connection with, or following, the Companys entry into Senior Notes RSA) or the Term Sheet, and neither a vote to accept the Prepackaged Plan by any Consenting Term Lender, nor the acceptance of the Prepackaged Plan by any Consenting Term Lender, shall: (A) be construed to limit consent and approval rights provided in this Agreement and the Definitive Documentation; (B) be construed to prohibit any Consenting Term Lender from contesting whether any matter, fact, or thing is a breach of, or is inconsistent with, this Agreement, or exercising rights or remedies specifically reserved herein; (C) be construed to prohibit any Consenting Term Lender from appearing as a party-in-interest in any matter to be adjudicated in the Chapter 11 Case, so long as such appearance and the positions advocated in connection therewith are not inconsistent with this Agreement and are not for the purpose of (or could not reasonably be expected to) hindering, delaying, or preventing the consummation of the transactions contemplated in, subject to the terms and conditions of, consummation of the Restructuring; (D) impair or waive the rights of any Consenting Term Lender to assert or raise any objection expressly permitted under this Agreement in connection with any hearing in the Bankruptcy Court, including, without limitation, any hearing on confirmation of the Prepackaged Plan; or (E) subject to Section 3(f), limit the ability of any Consenting Term Lender to assert any rights, claims, and/or defenses under the Credit Agreement, the Security Agreement (as defined in the Credit Agreement), and any related documents or agreements (including, without limitation, the right of any Consenting Term Lender to assert that any potential action of the Company or any Credit Party that is inconsistent with, or any potential omission of the Company or any Credit Party to take any action required, by the Credit Agreement and/or that a potential Default or Event of Default has occurred under the Credit Agreement).
9
(e) Negative Covenants . The Consenting Term Lenders agree that, for the duration of the Support Period, each Consenting Term Lender shall not take any action inconsistent with, or omit to take any action required by the Credit Agreement, except to the extent that any such action or inaction is expressly contemplated or permitted by this Agreement, the Prepackaged Plan, or any of the other Definitive Documents.
(f) Forbearance . Each Consenting Term Lender (collectively representing the Required Lenders) agrees that, for the duration of the Support Period, in connection with any default or event of default arising under the Credit Agreement in connection with the Restructuring (including pursuant to Section 7.01(e) of the Credit Agreement), (i) each Consenting Term Lender shall forbear from (A) commencing any judicial enforcement proceedings against the Company or any of its subsidiaries, (B) exercising (or directing any Person to exercise) any remedy available to the Consenting Term Lenders and the Administrative Agent under the Credit Agreement, including without limitation pursuant to Article 7 thereof, any Credit Document (as defined in the Credit Agreement) or otherwise by contract, in law or in equity, (C) requesting that the Administrative Agent not convert Loans (as defined in the Credit Agreement) into, or continue Loans as, Eurodollar Loans (as defined in the Credit Agreement) and/or (D) voting in favor of, or otherwise taking any action to direct, instruct or authorize any Person to undertake any of the actions in foregoing clauses (A) through (C) and (ii) no additional interest shall accrue pursuant to Section 2.07 of the Credit Agreement; provided that if this Agreement is terminated during the Support Period other than pursuant to Section 5(e) or Section 5(c)( i ) hereof, any interest that would have otherwise accrued pursuant to Section 2.07 of the Credit Agreement during the Support Period absent the forbearance set forth in this Section 3(f) shall be deemed to have accrued as of the date of termination of this Agreement, without any further action by any Term Lender or the Administrative Agent, to the extent provided under the Credit Agreement. For the avoidance of doubt, the forbearance set forth in this Section 3(f) shall not itself constitute a waiver with respect to any defaults or events of default under the Credit Agreement, and shall not bar the Administrative Agent or any Consenting Term Lender from filing a proof of claim, taking action to establish the amount of any Claim, or exercising any rights under this Agreement, including terminating this Agreement pursuant to Section 5(b) hereof.
4. | Agreements of the Company. |
(a) Covenants . The Company agrees that, for the duration of the Support Period, the Company shall, and shall cause each of its subsidiaries included in the definition of Company, to:
(i) (A) support and use commercially reasonable efforts to consummate and complete the Restructuring and all transactions contemplated under this Agreement (including, without limitation, those described in the Term Sheet and once filed, the Prepackaged Plan) including, without limitation, (1) take any and all reasonably
10
necessary actions in furtherance of the Restructuring and the transactions contemplated under this Agreement, including, without limitation, as set forth in the Term Sheet and, once filed, the Prepackaged Plan, (2) subject to the satisfaction of the Filing Conditions (unless waived by the Company), commence the Chapter 11 Case on or before November 30, 2017 (the Outside Petition Date , and the actual commencement date, the Petition Date ) and complete and file, within the timeframes contemplated herein, the Prepackaged Plan, the Disclosure Statement, and the other Definitive Documents, and (3) use commercially reasonable efforts to obtain orders of the Bankruptcy Court approving the Disclosure Statement and confirming the Prepackaged Plan within the timeframes contemplated by this Agreement; (B) use commercially reasonable efforts to obtain any and all required regulatory approvals for the Restructuring embodied in the Definitive Documents, including the Prepackaged Plan; (C) not take any action that is inconsistent with, or to alter, delay, impede, or interfere with, approval of the Disclosure Statement, confirmation of the Prepackaged Plan, or consummation of the Prepackaged Plan and the Restructuring, in the case of each of clauses (A) through (C) to the extent consistent with, upon the advice of counsel, the fiduciary duties of the board of director of the Company;
(ii) not commence an avoidance action or other legal proceeding that challenges the validity, enforceability, or priority of the Term Loans or obligations under the Credit Agreement;
(iii) if the Company receives an unsolicited bona fide unsolicited proposal or expression of interest in undertaking an Alternative Transaction that the board of directors of the Company, determines in its good-faith judgment provides a higher or better economic recovery to the Companys stakeholders than that set forth in this Agreement and such Alternative Transaction is from a proponent that the board of directors of the Company has reasonably determined is capable of timely consummating such Alternative Transaction, the Company will within 48 hours of the receipt of such proposal or expression of interest, notify counsel to the Requisite Term Lenders and counsel to the Administrative Agent of the receipt thereof, with such notice to include the material terms thereof, including the identity of the Person or group of Persons involved;
(iv) provide draft copies of all material motions or applications and other documents (including all first day and second day motions and orders, the Prepackaged Plan, the Disclosure Statement, ballots and other solicitation materials in respect of the Prepackaged Plan and any proposed amended version of the Prepackaged Plan or the Disclosure Statement, and a proposed confirmation order) the Company intends to file with the Bankruptcy Court to Kirkland and to Davis Polk, if reasonably practical, at least five (5) business days prior to the date when the Company intends to file any such pleading or other document (provided that if delivery of such motions, orders or materials (other than the Prepackaged Plan, the Disclosure Statement, a confirmation order or adequate protection order) at least five (5) business days in advance is not reasonably practicable, such motion, order or material shall be delivered as soon as reasonably practicable prior to filing) and shall consult in good faith with such counsel regarding the form and substance of any such proposed filing with the Bankruptcy Court;
11
(v) file such first day motions and pleadings reasonably determined by the Company, in form and substance reasonably acceptable to the Requisite Term Lenders, to be necessary, and to seek interim and final (to the extent necessary) orders, in form and substance reasonably acceptable to the Company and the Requisite Term Lenders, from the Bankruptcy Court approving the relief requested in such first day motions;
(vi) subject to appropriate confidentiality arrangements, provide to the Consenting Term Lenders professionals, upon reasonable advance notice to the Company; (A) reasonable access (without any material disruption to the conduct of the Companys business) during normal business hours to the Companys books, records, and facilities; (B) reasonable access to the respective management and advisors of the Company for the purposes of evaluating the Companys finances and operations and participating in the planning process with respect to the Restructuring; (C) prompt access to any information provided to any existing or prospective financing sources (including lenders under any debtor-in-possession and/or exit financing); and (D) prompt and reasonable responses to all reasonable diligence requests;
(vii) use its commercially reasonable efforts to support and take all actions as are reasonably necessary and appropriate to obtain any and all required regulatory and/or third-party approvals to consummate the Transactions;
(viii) promptly pay all prepetition and postpetition reasonable and documented fees and expenses of (x) Kirkland, FTI Consulting Inc. ( FTI ), and one firm acting as local counsel for Kirkland, if any, in each case in accordance with the terms of their respective engagement letters with the Company, and (y) the Administrative Agent, Davis Polk, and one firm acting as local counsel for Davis Polk, if any, in each case, in accordance with the Credit Agreement;
(ix) not, nor encourage any other person or entity to, take any action which would, or would reasonably be expected to, breach or be inconsistent with this Agreement or delay, impede, appeal, or take any other negative action, directly or indirectly, to interfere with the acceptance, confirmation, or consummation of the Plan or implementation of the Restructuring;
(x) subject to applicable laws, use commercially reasonable efforts to, consistent with the pursuit and consummation of the Restructuring and the transactions contemplated thereby, preserve intact in all material respects the current business operations of the Company and its subsidiaries;
(xi) subject to applicable laws, use commercially reasonable efforts to, consistent with the pursuit and consummation of the Restructuring and the transactions contemplated thereby, preserve intact in all material respects the current business operations of the Company and its subsidiaries (other than as consistent with applicable fiduciary duties), keep available the services of its current officers and material employees (in each case, other than voluntary resignations, terminations for cause, or
12
terminations consistent with applicable fiduciary duties) and preserve in all material respects its relationships with customers, sales representatives, suppliers, distributors, and others, including the warehouse lenders, in each case, having material business dealings with the Company (other than terminations for cause or consistent with applicable fiduciary duties)
(xii) provide prompt written notice to the Requisite Term Lenders between the date hereof and the Effective Date of (A) receipt of any written notice from any third party alleging that the consent of such party is or may be required in connection with the transactions contemplated by the Restructuring, (B) receipt of any written notice from any governmental body in connection with this Agreement or the transactions contemplated by the Restructuring, (C) receipt of any written notice of any proceeding commenced, or, to the actual knowledge of the Company, threatened against the Company, relating to or involving or otherwise affecting in any material respect the transactions contemplated by the Restructuring and (D) receipt of any notice of termination of the Senior Notes RSA;
(xiii) unless otherwise agreed by the Company and the applicable firm, on the date that is at least one (1) calendar day prior to the Petition Date, pay to (A) Kirkland, (B) one firm acting as local counsel for Kirkland, if any, (C) FTI, (D) the Administrative Agent, (E) Davis Polk, and (F) one firm acting as local counsel for Davis Polk, if any in each case, (x) all reasonable and documented fees and expenses accrued but unpaid as of such date, whether or not such fees and expenses are then due, outstanding, or otherwise payable in connection with this matter and (y) fund or replenish, as the case may be, any retainers reasonably requested by Kirkland or FTI, in each case in accordance with the terms of their respective engagement letters with the Company; and
(xiv) on the Support Effective Date, the Company shall transfer $37,500,000 in cash (the Effective Date Prepayment ) to the Administrative Agent for application of such cash as a voluntary prepayment of the Term Loans pursuant to Section 2.12(a) to the Credit Agreement, with such prepayment to be applied to the Term Loans in direct order of maturity. The Consenting Term Lenders constituting the Required Lenders waive (i) the prior notice requirement with respect to the Effective Date Prepayment required pursuant to Section 2.12(a) and (c) of the Credit Agreement and (ii) the requirement in Section 2.12(a) of the Credit Agreement that voluntary prepayments of term loans be in an amount that is an integral multiple of $1,000,000 with respect to the Effective Date Prepayment.
(b) Automatic Stay . The Company acknowledges and agrees and shall not dispute that after the commencement of the Chapter 11 Case, the giving of notice of termination by any Party pursuant to this Agreement shall not be a violation of the automatic stay of section 362 of the Bankruptcy Code (and the Company hereby waives, to the greatest extent possible, the applicability of the automatic stay to the giving of such notice); provided that nothing herein shall prejudice any Partys rights to argue that the giving of notice of default or termination was not proper under the terms of this Agreement.
13
(c) Negative Covenants . The Company agrees that, for the duration of the Support Period, the Company shall not take any action inconsistent with, or omit to take any action required by the Credit Agreement, except to the extent that any such action or inaction is expressly contemplated or permitted by this Agreement, the Prepackaged Plan or any of the other Definitive Documents.
(d) Deposit Control Agreement Matters . The Company, on behalf of itself and its subsidiaries, agrees that:
(i) within three (3) business days of the date upon which the Company provides a draft account control agreement (with springing control) for any Deposit Account to Kirkland and FTI, or receives a revised draft of any such account control agreement for any Deposit Account from a depositary financial institution, the Company shall provide comments (if any) to such draft account control agreement, to Kirkland and FTI on a professionals eyes only basis pursuant to their respective confidentiality agreements;
(ii) within three (3) business days of the date upon which the Company receives any comments to any draft account control agreement from Kirkland or FTI that are reasonably acceptable to the Company, the Company shall circulate such comments (including any comments from the Company) to the relevant financial institution; and
(iii) the Company shall, and shall cause each other relevant Credit Party (as defined in the Credit Agreement) to, use best efforts to enter into account control agreements (with springing control) that are customary for transactions of this type and as otherwise reasonably acceptable to the Requisite Term Lenders and the Company with respect to each of the Deposit Accounts of such Credit Parties by November 6, 2017 (or such later date as the Requisite Term Lenders may agree). For the avoidance of doubt, the terms of this Section 4(e) shall not require the Company or any subsidiary to move any of its Deposit Accounts from the depositary financial institutions at which such Deposit Accounts are currently held, except as otherwise provided in the Credit Agreement.
5. | Termination of Agreement. |
(a) This Agreement shall terminate upon the receipt of written notice to the other Parties, delivered in accordance with Section 19 hereof, from the Requisite Term Lenders at any time after and during the continuance of any Lender Termination Event.
14
(b) A Lender Termination Event shall mean any of the following:
(i) the breach by the Company of (a) any covenant contained in this Agreement (including the failure to comply with the covenant contained in Section 4(e) ) or (b) any other obligations of the Company set forth in this Agreement, in each case, in any material respect and, in either respect, such breach remains uncured for a period of five (5) business days following the Companys receipt of written notice pursuant to Sections 5(a) and 19 hereto (as applicable);
(ii) any representation or warranty in this Agreement made by the Company shall have been untrue in any material respect when made or shall have become untrue in any material respect, and such breach remains uncured for a period of five (5) business days following the Companys receipt of notice pursuant to Sections 5(a) and 19 hereto (as applicable);
(iii) the Definitive Documents and any amendments, modifications, or supplements thereto filed by the Company include terms that are materially inconsistent with the Term Sheet and are not otherwise acceptable to the Consenting Term Lenders in all respects, and such event remains unremedied for a period of three (3) business days following the Companys receipt of notice pursuant to Sections 5(a) and 19 hereto (as applicable);
(iv) a Definitive Document alters the treatment of the Term Lenders specified in the Restructuring Term Sheet and the Requisite Term Lenders have not consented to such Definitive Document;
(v) the issuance by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any ruling, judgment or order enjoining the consummation of or rendering illegal the Prepackaged Plan or the Restructuring, and either (A) such ruling, judgment or order has been issued at the request of or with the acquiescence of the Company, or (B) in all other circumstances, such ruling, judgment or order has not been not stayed, reversed or vacated within fifteen (15) calendar days after such issuance;
(vi) the Support Effective Date shall not have occurred on or before October 25, 2017;
(vii) the Petition Date shall not have occurred on or before the Outside Petition Date;
(viii) the Company shall not have filed the Prepackaged Plan, the Disclosure Statement, and motions seeking approval of the Disclosure Statement and the solicitation procedures and setting a confirmation hearing for the Prepackaged Plan, within one (1) business day after the Petition Date;
(ix) the hearings to consider approval of the Disclosure Statement and confirmation of the Prepackaged Plan shall not have commenced on or before the forty-fifth (45th) day after the Petition Date;
15
(x) two business days after the voting deadline for the Prepackaged Plan, if Senior Noteholders holding at least the Requisite Senior Notes Threshold shall not have voted in favor of the Prepackaged Plan;
(xi) the Company shall not have commenced solicitation of the Prepackaged Plan (together with the substantially final form of the Amended and Restated Credit Facility Agreement, which shall be included in the solicitation materials) on or before November 6, 2017;
(xii) the Effective Date shall not have occurred on or before the earlier of (A) seventy-five (75) days after the Petition Date and (B) January 31, 2018;
(xiii) the Bankruptcy Court enters an order that is not stayed (A) directing the appointment of an examiner with expanded powers or a trustee in the Chapter 11 Case, (B) converting the Chapter 11 Case to a case under chapter 7 of the Bankruptcy Code, (C) dismissing the Chapter 11 Case, (D) denying confirmation of the Prepackaged Plan, the effect of which would render the Prepackaged Plan incapable of consummation on the terms set forth herein, or (E) granting relief that is inconsistent with this Agreement or the Prepackaged Plan in any materially adverse respect to the supporting Lenders, in each case;
(xiv) the Confirmation Order is reversed or vacated by a Final Order;
(xv) any court of competent jurisdiction has entered a final, non-appealable judgment or order declaring this Agreement to be unenforceable;
(xvi) if either (i) the Company (or any person or entity on behalf of the Company or its bankruptcy estate with proper standing) files a motion, application or adversary proceeding (or supports or fails to timely object to such a filing) (1) challenging the validity, enforceability, perfection or priority of, or seeking invalidation, avoidance, disallowance, recharacterization or subordination of, the obligations or Claims under the Credit Agreement, or (2) challenging the seniority of the obligations or Claims under the Credit Agreement over any obligations or Claims under the Senior Notes Indenture or the Convertible Notes Indenture, or (ii) the Bankruptcy Court (or any court with jurisdiction over the Chapter 11 Cases) enters an order providing relief against the interests of the Term Lenders with respect to any of the foregoing causes of action or proceedings, including, but not limited to, invalidating, avoiding, disallowing, recharacterizing, subordinating, or limiting the enforceability of any of the obligations or Claims arising under or related to the Credit Agreement;
(xvii) if any official committee of creditors or equity holders appointed in the Chapter 11 Cases (a Committee) or any other person or entity is granted standing to commence any of the litigation or causes of action referenced in the immediately preceding clause (xvi);
16
(xviii) the terms and conditions of the debtor-in-possession financing and exit facilities (including, but not limited to, any Definitive Documents memorializing such facilities) are not reasonably acceptable to the Requisite Term Lenders;
(xix) the debtor-in-possession financing contemplated by the Term Sheet is terminated;
(xx) the Company (unless the Company is acting at the direction or instruction of the Requisite Term Lenders any of their respective employees, agents, or representatives) files or seeks approval of, or supports (or fails to timely object to) another party in filing or seeking approval of an Alternative Transaction;
(xxi) the commencement of an involuntary bankruptcy case against the Company under the Bankruptcy Code, if such involuntary case is not dismissed within sixty (60) calendar days after the filing thereof, or if a court order grants the relief sought in such involuntary case;
(xxii) if the Company (A) withdraws the Prepackaged Plan, (B) publicly announces its intention not to support the Restructuring or the Prepackaged Plan, (C) files a motion with the Bankruptcy Court seeking the approval of an Alternative Transaction, or (D) agrees to pursue (including, for the avoidance of doubt, as may be evidenced by a term sheet, letter of intent, or similar document) or publicly announces its intent to pursue an Alternative Transaction;
(xxiii) if, at any time, (x) the Company terminates or Consenting Senior Noteholders holding more than the Requisite Senior Noteholder Threshold terminates the Senior Notes RSA or (y) the aggregate Senior Note Claims held by the Consenting Senior Noteholders that are bound by the Senior Notes RSA are less than the Requisite Senior Noteholders Threshold (each of clauses (x) and (y), a Senior Notes RSA Termination ); provided, further, that the Company shall promptly notify Kirkland of the occurrence of any Senior Notes RSA Termination (and in any event shall notify Kirkland no later than one (1) Business Day after such occurrence);
(xxiv) the term sheet attached as Exhibit A to the Senior Notes RSA is modified without the consent of the Requisite Term Lenders;
(xxv) the Bankruptcy Court enters an order modifying or terminating the Companys exclusive right to file and/or solicit acceptances of a plan of reorganization (including the Prepackaged Plan);
(xxvi) prior to the Petition Date if the Company effects (or enters into any agreement to effect) any of the following transactions to the extent a payment, a transfer, or an assignment of an asset is required to be made by the Company as a part of such transaction: (A) the voluntary sale, transfer, or assignment of any loan, mortgage servicing right, or any other asset or liability that requires an individual payment of greater than $5,000,000, or a series of payments in excess of $10,000,000 in the
17
aggregate, with respect to any specific asset or liability on the part of the Company to induce the counterparty to complete the transaction, including sales, transfers, or assignments related to certain mortgage servicing rights associated with agency nonperforming loans; or (B) the sale of all or part of Walter Reverse Acquisition, LLC, Reverse Mortgage Servicing, or any subsidiaries, beneficial interests, equity interests, or related assets of the foregoing entities, to the extent that the transaction requires the Company to make a payment or transfer or assign an asset for the counterparty to complete the transaction; provided , however , that if the Company effects (or enters into any agreement to effect) a transaction disclosed to the Consenting Term Lenders advisors in an e-mail dated as of the date hereof, and that meets the definition of a transaction described in the sub-item (A) or (B) of this sub-section 5(b)(xiii), then such a transaction (or an agreement to effect such a transaction) shall not constitute a Lender Termination Event;
(xxvii) if, prior to the Petition Date, the Company effects (or enters into any agreement to effect) any settlement of a pending or future dispute or litigation that requires the payment by the Company prior to the Petition Date of an amount in excess of $5,500,000 on an individual basis unless such settlement or potential settlement disclosed to Kirkland or FTI in an e-mail dated as of the date hereof;
(xxviii) the occurrence of a Material Adverse Effect; 3
3 | Material Adverse Effect means any uncured event, change, occurrence, development, circumstance or change of fact occurring after the date hereof that has had a material adverse effect on the business, results of operations or financial condition of the Company and all of its affiliates, taken as a whole; provided, however, that none of the following, either alone or in combination, will constitute, or be considered in determining whether there has been, a Material Adverse Effect: (i) event, change, occurrence, development, circumstance or change of fact resulting from or related to any event, change, effect, occurrence, development, circumstance or change of fact arising out of, resulting from or relating to the commencement or existence of the Chapter 11 Cases, the announcement of this Agreement, the Senior Notes RSA, the Prepackaged Plan and the Restructuring, the pendency of the Restructuring, compliance by any Party with the covenants and agreements contained herein, or in the Senior Notes RSA, the Prepackaged Plan or the Term Sheet, including any objections by the Bankruptcy Court to this Agreement or any of the transactions contemplated herein, (ii) any outbreak or escalation of war or hostilities or any act of terrorism, (iii) changes in laws, generally accepted accounting principles or enforcement or interpretation thereof, including effects in, arising from, or relating to changes in the foregoing, (iv) changes that generally affect the industries and markets in which the Company or any of its subsidiaries operates, (v) changes in financial markets, general economic conditions (including prevailing interest rates, exchange rates, commodity prices and fuel costs) or political conditions, (vi) in and of itself or as a consequence thereof, any change in the Companys stock price or trading volume or listing on the New York Stock Exchange (including, for the avoidance of doubt, any consequential effects of a delisting, as it relates to the Convertible Notes, any decrease in the ratings or ratings outlook for the Company, or any failure by the Company to meet (or the publication of any report regarding) any projections, forecasts, budgets, estimates or outlook of or relating to the Company, including with respect to revenues or earnings or other internal or external financial or operating projections, (vii) any actions, effects or changes arising from or related to any actions taken by or failed to be taken pursuant to or in accordance with this Agreement or at the request of, or consented to by, the Consenting Term Lenders, (viii) the execution or delivery of this Agreement, the consummation of the transactions contemplated by this Agreement or the public announcement or other publicity with respect to any of the foregoing, (ix) any event, condition or circumstance that is disclosed in any securities filing of the Company, (x) any effect arising from the filing of the Chapter 11 Case, (xi) any failure, in and of itself, by the Company to achieve any budgets, projections, forecasts, estimates, plans, predictions, performance metrics, or operating statistics (whether or not shared with the Consenting Senior Noteholders, the Consenting Term Lenders, or the foregoing parties affiliates or advisors), or (xii) the occurrence of any act of God or other calamity or force majeure event (whether or not declared as such), including any strike, labor dispute, civil disturbance, embargo, natural disaster, fire, flood, hurricane tornado or other weather event. |
18
(xxix) the Company amends, modifies, restates, or supplements the Senior Notes RSA in a manner that is materially adverse and not acceptable to the Consenting Term Lenders holding more than the Requisite Term Lenders Threshold or the term sheet attached as Exhibit A to the Senior Notes RSA is modified without the consent of the Requisite Term Lenders; or
(xxx) if the Company or any other Credit Party (as defined in the Credit Agreement) makes, or causes to be made, any payment of principal or interest on any indebtedness constituting Senior Notes or Convertible Notes.
(c) A Company Termination Event shall mean any of the following:
(i) the breach in any material respect by one or more of the Consenting Term Lenders, of any of the undertakings, representations, warranties, or covenants of the Consenting Term Lenders set forth herein in any material respect which remains uncured for a period of five (5) business days after the receipt of written notice of such breach pursuant to Section 5(a) and 19 hereof (as applicable), but only if the non-breaching Consenting Term Lenders own less than 66 2/3 % of the Claims;
(ii) the board of directors of the Company or its subsidiaries reasonably determines in good faith based upon the advice of outside counsel that continued performance under this Agreement would be inconsistent with the exercise of its fiduciary duties under applicable law; provided , that the Company shall provide notice of such determination to Kirkland and Davis Polk via email within one (1) business day after the date thereof;
(iii) the Company shall not have obtained votes accepting the Prepackaged Plan from holders of the (x) Term Loans and (y) Senior Notes, in each case, sufficient to satisfy the conditions for acceptance set forth in section 1126(c) of the Bankruptcy Code on or before the voting deadline set forth in the solicitation materials distributed in connection with the Prepackaged Plan;
(iv) the Support Effective Date shall not have occurred on or before October 25, 2017;
19
(v) if the Effective Date shall not have occurred on or before January 31, 2018;
(vi) if, at any time, a Senior Notes RSA Termination occurs; provided, further, that the Company shall promptly notify Kirkland and Davis Polk of the occurrence of any Senior Notes RSA Termination (and in any event shall notify Kirkland and Davis Polk no later than one (1) Business Day after such occurrence);
(vii) the term sheet attached as Exhibit A to the Senior Notes RSA is modified without the consent of the Requisite Term Lenders; or
(viii) the issuance by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any ruling, judgment or order enjoining the consummation of or rendering illegal the Prepackaged Plan or the Restructuring, and such ruling, judgment or order has not been not stayed, reversed or vacated within fifteen (15) calendar days after such issuance.
(d) Mutual Termination . This Agreement may be terminated by mutual agreement of the Company and the Requisite Term Lenders upon the receipt of written notice delivered in accordance with Section 19 hereof.
(e) Automatic Termination . This Agreement shall terminate automatically, without any further action required by any Party, upon the occurrence of the Effective Date.
(f) Effect of Termination . Upon the termination of this Agreement in accordance with this Section 5 (other than pursuant to Section 5(e) ) if the Restructuring has not been consummated, and except as provided in Section 13 hereof, this Agreement shall forthwith become void and of no further force or effect and each Party shall, except as provided otherwise in this Agreement, be immediately released from its liabilities, obligations, commitments, undertakings and agreements under or related to this Agreement and shall have all the rights and remedies that it would have had and shall be entitled to take all actions, whether with respect to the Restructuring or otherwise, that it would have been entitled to take had it not entered into this Agreement, including all rights and remedies available to it under applicable law, the Credit Agreement and any ancillary documents or agreements thereto; provided , however , that in no event shall any such termination relieve a Party from liability for its breach or non-performance of its obligations hereunder prior to the date of such termination. Upon any such termination of this Agreement, each vote or any consents given by any Consenting Term Lender prior to such termination shall be deemed, for all purposes, to be null and void ab initio and shall not be considered or otherwise used in any manner by the Parties in connection with the Restructuring and this Agreement, in each case, without further confirmation or other action by such Consenting Term Lender. If this Agreement has been terminated as to any Consenting Term Lender in accordance with Section 5 (other than pursuant to Section 5(e) ) at a time when permission of the Bankruptcy Court shall be required for a Consenting Term Lender to change or withdraw (or cause to change or withdraw) its vote
20
to accept the Prepackaged Plan, the Company shall support and not oppose any attempt by such Consenting Term Lender to change or withdraw (or cause to change or withdraw) such vote at such time, subject to all remedies available to the Company at law, equity, or otherwise, including those remedies set forth in Section 12 hereof. The Consenting Term Lender shall have no liability to the Company or to each other in respect of any termination of this Agreement in accordance with the terms of this Section 5 and Section 19 hereof.
(g) If the Restructuring has not been consummated prior to the date of termination of this Agreement, nothing herein shall be construed as a waiver by any Party of any or all of such Partys rights and the Parties expressly reserve any and all of their respective rights. Pursuant to Federal Rule of Evidence 408 and any other applicable rules of evidence, this Agreement and all negotiations relating hereto shall not be admissible into evidence in any proceeding other than a proceeding to enforce its terms.
6. | Definitive Documents; Good Faith Cooperation; Further Assurances. |
Subject to the terms and conditions described herein, during the Support Period, each Party, severally and not jointly, hereby covenants and agrees to reasonably cooperate with each other in good faith in connection with, and shall exercise commercially reasonable efforts with respect to the pursuit, approval, implementation, and consummation of the Prepackaged Plan and the Restructuring, as well as the negotiation, drafting, execution (to the extent such Party is a party thereto), and delivery of the Definitive Documents. Furthermore, subject to the terms and conditions hereof, each of the Parties shall take such action as may be reasonably necessary or reasonably requested by the other Parties to carry out the purposes and intent of this Agreement, including making and filing any required regulatory filings and voting any claims against or securities of the Company in favor of the Restructuring, and shall refrain from taking any action that would frustrate the purposes and intent of this Agreement; provided that no Consenting Term Lender shall be required to incur any material cost, expense, or liability in connection therewith.
7. | Representations and Warranties. |
(a) Each Party, severally and not jointly, represents and warrants to the other Parties that the following statements are true, correct and complete as of the date hereof (or as of the date a Consenting Term Lender becomes a party hereto):
(i) such Party is validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, and has all requisite corporate, partnership, limited liability company or similar authority to enter into this Agreement and carry out the transactions contemplated hereby and perform its obligations contemplated hereunder; and the execution and delivery of this Agreement and the performance of such Partys obligations hereunder have been duly authorized by all necessary corporate, limited liability company, partnership or other similar action on its part;
21
(ii) the execution, delivery and performance by such Party of this Agreement does not and will not (A) violate any material provision of law, rule or regulation applicable to it or any of its subsidiaries or its charter or bylaws (or other similar governing documents) or those of any of its subsidiaries, or (B) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation to which it or any of its subsidiaries is a party;
(iii) the execution, delivery and performance by such Party of this Agreement does not and will not require any material registration or filing with, consent or approval of, or notice to, or other action, with or by, any federal, state or governmental authority or regulatory body, except such filings as may be necessary and/or required by the SEC; and
(iv) this Agreement is the legally valid and binding obligation of such Party, enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or limiting creditors rights generally or by equitable principles relating to enforceability or a ruling of the Bankruptcy Court.
(b) Each Consenting Term Lender severally (and not jointly), represents and warrants to the Company that, as of the date hereof (or as of the date such Consenting Term Lender becomes a party hereto), such Consenting Term Lender (i) is the beneficial owner of the aggregate principal amount of Term Loans set forth below its name on the signature page hereof (or below its name on the signature page of a Joinder Agreement for any Consenting Term Lender that becomes a party hereto after the date hereof) and does not beneficially own any other Term Loans, and/or (ii) has, with respect to the beneficial owners of such Term Loans, (A) sole investment or voting discretion with respect to such Term Loans, (B) full power and authority to vote on and consent to matters concerning such Term Loans or to exchange, assign and transfer such Term Loans, and (C) full power and authority to bind or act on the behalf of, such beneficial owners.
(c) Each Consenting Term Lender severally (and not jointly) makes the representations and warranties set forth in Section 21(c) hereof, in each case, to the other Parties.
8. | Disclosure; Publicity. |
(a) Subject to the provisions set forth in Section 8(b) hereof, the Company shall disseminate a Current Report on Form 8-K or a press release disclosing the existence of this Agreement and the terms hereof and of the Term Sheet (including any schedules and exhibits thereto that are filed with the Bankruptcy Court on the Petition Date) with such redactions as may be reasonably requested by Kirkland to maintain the confidentiality of the items identified in Section 8(b) hereof, except as otherwise required by law. In the event that the Company fails to make the foregoing disclosures in compliance with the terms specified herein, any such Consenting Term Lender may
22
publicly disclose the foregoing, including, without limitation, this Agreement and all of its exhibits and schedules (subject to the redactions called for by Section 8 hereof), and the Company hereby waives any claims against the Consenting Term Lenders arising as a result of such disclosure by a Consenting Term Lender in compliance with this Agreement.
(b) The Company shall submit drafts to Kirkland of any press releases, public documents and any and all filings with the SEC that constitute disclosure of the existence or terms of this Agreement or any amendment to the terms of this Agreement, or any other matter relating to the Term Loans, at least one (1) business day prior to making any such disclosure, and any such press releases, public documents, and other SEC filings shall be reasonably acceptable in all material respects to the Requisite Term Lenders. Except as required by applicable law or otherwise permitted under the terms of any other agreement between the Company and any Consenting Term Lender, no Party or its advisors shall disclose to any person (including, for the avoidance of doubt, any other Consenting Term Lender), other than advisors to the Company, the principal amount of the Term Loans held by the Consenting Term Lender, without such Consenting Term Lenders prior written consent; provided , however , that (i) if such disclosure is required by law, subpoena, or other legal process or regulation, the disclosing Party shall afford the relevant Consenting Term Lender a reasonable opportunity to review and comment in advance of such disclosure and shall take all reasonable measures to limit such disclosure (the expense of which, if any, shall be borne by the relevant Consenting Term Lender) and (ii) the foregoing shall not prohibit the disclosure of the aggregate percentage or aggregate outstanding principal amount of the Term Loans held by all the Consenting Term Lenders collectively. Notwithstanding the provisions in this Section 8 , any Party may disclose, to the extent consented to in writing by a Consenting Term Lender, such Consenting Term Lenders individual holdings).
9. | Amendments and Waivers. |
This Agreement, including any exhibits or schedules hereto, may not be waived, modified, amended or supplemented except with the written consent of the Company and the Requisite Term Lenders; provided , however , that any waiver, modification, amendment or supplement to this Section 9 shall require the written consent of all of the Parties; provided , further , that any modification, amendment or change to the definition of Requisite Term Lenders shall require the written consent of each Consenting Term Lender; provided , further , that any change, modification or amendment to this Agreement, the Term Sheet or the Prepackaged Plan that treats or affects any Consenting Term Lender in a manner that is disproportionately adverse, on an economic or non-economic basis, to the manner in which any of the other Consenting Term Lenders are treated (after taking into account each of the Consenting Term Lenders respective holdings and interests in the Company and the recoveries contemplated by the Term Sheet (as in effect on the date hereof)) shall require the written consent of such Consenting Term Lender; provided , further , that if any change, modification or amendment to this Agreement, the Term Sheet or the Prepackaged Plan does not materially, adversely affect the rights of a Consenting Term Lender, the consent of such Consenting Term Lender shall not be required. In
23
the event that an adversely affected Consenting Term Lender ( Non-Consenting Term Lender ) does not consent to a waiver, change, modification or amendment to this Agreement requiring the consent of each Consenting Term Lender, but such waiver, change, modification or amendment receives the consent of Consenting Term Lenders owning at least 66 2/3 % of the aggregate outstanding principal amount of the Term Loans, this Agreement shall be deemed to have been terminated only as to such Non-Consenting Term Lender, but this Agreement shall continue in full force and effect in respect to all other Consenting Term Lenders who have so consented, in a way consistent with (or otherwise reasonably acceptable to the Requisite Term Lenders) this Agreement and the Term Sheet as waived, changed, modified, or amended, as applicable.
10. | Effectiveness. |
This Agreement shall become effective and binding on the Parties on the Support Effective Date, and not before such date; provided that signature pages executed by Consenting Term Lenders shall be delivered to (a) the other Consenting Term Lenders in a redacted form that removes such Consenting Term Lenders holdings of the Term Loans or any other Claims against or interests in the Company and any schedules to such Consenting Term Lenders holdings (if applicable) and (b) the Company, Weil, and Kirkland in an unredacted form (and to be kept confidential by the Company, Weil and Kirkland).
11. | Governing Law; Jurisdiction; Waiver of Jury Trial. |
(a) This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York, without giving effect to the conflict of laws principles thereof.
(b) Each of the Parties irrevocably agrees that any legal action, suit or proceeding arising out of or relating to this Agreement brought by any party or its successors or assigns shall be brought and determined in any federal or state court in the State of New York, and each of the Parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such proceeding arising out of or relating to this Agreement or the Restructuring Transactions. Each of the Parties agrees not to commence any proceeding relating hereto or thereto except in the courts described above in New York, other than proceedings in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in New York as described herein. Each of the Parties further agrees that notice as provided herein shall constitute sufficient service of process and the Parties further waive any argument that such service is insufficient. Each of the Parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any proceeding arising out of or relating to this Agreement or the Restructuring Transactions, (i) any claim that it is not personally subject to the jurisdiction of the courts in New York as described herein for any reason, (ii) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of
24
execution of judgment, execution of judgment or otherwise) and (iii) that (A) the proceeding in any such court is brought in an inconvenient forum, (B) the venue of such proceeding is improper or (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. Notwithstanding the foregoing, during the pendency of the Chapter 11 Case, all proceedings contemplated by this Section 11(b) shall be brought in the Bankruptcy Court.
(c) EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
12. | Specific Performance/Remedies. |
It is understood and agreed by the Parties that money damages would not be a sufficient remedy for any breach of this Agreement by any Party and each non-breaching Party shall be entitled to specific performance and injunctive or other equitable relief (including attorneys fees and costs) as a remedy of any such breach, without the necessity of proving the inadequacy of money damages as a remedy, including an order of the Bankruptcy Court requiring any Party to comply promptly with any of its obligations hereunder.
13. | Survival. |
Notwithstanding the termination of this Agreement pursuant to Section 5 hereof, the agreements and obligations of the Parties in this Section 13 , and Sections 4(b) , 5(d) , 8 , 10 , 11 , 12 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , and 21 hereof (and any defined terms used in any such Sections) shall survive such termination and shall continue in full force and effect in accordance with the terms hereof; provided , however , that any liability of a Party for failure to comply with the terms of this Agreement shall survive such termination.
14. | Headings. |
The headings of the sections, paragraphs and subsections of this Agreement are inserted for convenience only and shall not affect the interpretation hereof or, for any purpose, be deemed a part of this Agreement.
25
15. | Successors and Assigns; Severability; Several Obligations. |
This Agreement is intended to bind and inure to the benefit of the Parties and their respective successors, permitted assigns, heirs, executors, administrators and representatives; provided , however , that nothing contained in this Section 15 shall be deemed to permit Transfers of the Term Loans or claims arising under the Term Loans other than in accordance with the express terms of this Agreement. If any provision of this Agreement, or the application of any such provision to any Person or circumstance, shall be held invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provision or part thereof and the remaining part of such provision hereof and this Agreement shall continue in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon any such determination of invalidity, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a reasonably acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible. The agreements, representations and obligations of the Parties are, in all respects, ratable and several and neither joint nor joint and several.
16. | No Third-Party Beneficiaries. |
Unless expressly stated herein, this Agreement shall be solely for the benefit of the Parties (and their respective successors, permitted assigns, heirs, executors, administrators and representatives) and no other Person shall be a third-party beneficiary hereof.
17. | Prior Negotiations; Entire Agreement. |
This Agreement, including the exhibits and schedules hereto (including the Term Sheet) constitutes the entire agreement of the Parties, and supersedes all other prior negotiations, with respect to the subject matter hereof and thereof, except that the Parties acknowledge that any confidentiality agreements (if any) heretofore executed between the Company and each Consenting Term Lender shall continue in full force and effect.
18. | Counterparts. |
This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same agreement. Execution copies of this Agreement may be delivered by facsimile or by electronic mail in portable document format (pdf), which shall be deemed to be an original for the purposes of this paragraph.
26
19. | Notices. |
All notices hereunder shall be deemed given if in writing and delivered, if contemporaneously sent by electronic mail, facsimile, courier or by registered or certified mail (return receipt requested) to the following addresses and facsimile numbers:
(1) If to the Company, to:
Walter Investment Management Corp.
3000 Bayport Drive, Suite 1100
Tampa, FL 33607
Attn: John Haas, General Counsel, Chief Legal Counsel and Secretary
Email: JHaas@walterinvestment.com
With a copy to (which shall not constitute notice):
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attn: Ray C. Schrock, P.C.
Email: Ray.Schrock@weil.com
Attn: Joseph H. Smolinsky, Esq.
Email: Joseph.Smolinsky@weil.com
Attn: Sunny Singh, Esq.
Email: Sunny.Singh@weil.com
27
(2) If to a Consenting Term Lender, or a transferee thereof, to the addresses or facsimile numbers set forth below following the Consenting Term Lenders signature (or as directed by any transferee thereof), as the case may be, with copies to:
Kirkland & Ellis LLP
300 North LaSalle
Chicago, Il 606545
Attn: Patrick J Nash Jr., P.C.
Email: patrick.nash@kirkland.com
Attn: Gregory Pesce
Email: gregory.pesce@kirkland.com
(3) If to the Administrative Agent:
Credit Suisse AG
11 Madison Avenue,
New York, NY 10010
Attn: Megan Kane
Email: megan.kane@credit-suisse.com
Attn: Peter Winstanley
Email: peter.winstanley@credit-suisse.com
With a copy to (which shall not constitute notice):
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
Attn: Brian M. Resnick
Email: brian.resnick@davispolk.com
Attn: Michelle McGreal
Email: michelle.mcgreal@davispolk.com
Any notice given by delivery, mail or courier shall be effective when received. Any notice given by facsimile or electronic mail shall be effective upon oral, machine or electronic mail (as applicable) confirmation of transmission.
20. | Creditors Committee. |
Notwithstanding anything herein to the contrary, if any Consenting Term Lender is appointed to and serves on an official committee of unsecured creditors in the Chapter 11 Case, the terms of this Agreement shall not be construed so as to limit such Consenting Term Lenders exercise of its fiduciary duties to any person arising from its service on such committee, and any such exercise of such fiduciary duties shall not be deemed to constitute a breach of the terms of this Agreement. All Parties agree they shall not oppose the participation of any of the Consenting Term Lenders on any official committee of unsecured creditors formed in the Chapter 11 Case
28
21. | Reservation of Rights; No Admission. |
(a) Nothing contained herein shall (i) limit (A) the ability of any Party to consult with other Parties, or (B) the rights of any Party under any applicable bankruptcy, insolvency, foreclosure, or similar proceeding, including the right to appear as a party in interest in any matter to be adjudicated in order to be heard concerning any matter arising in the Chapter 11 Case, in each case, so long as such consultation or appearance is consistent with such Partys obligations hereunder, or under the terms of the Prepackaged Plan; (ii) limit the ability of any Consenting Term Lender to sell or enter into any transactions in connection with the Noteholder Claims, or any other claims against or interests in the Company, subject to the terms of Section 3(b) hereof; (iii) limit the rights of any Consenting Term Lender under the Credit Agreement or any agreements executed in connection with the Credit Agreement; or (iv) constitute a waiver or amendment of any provision of the Credit Agreement or any agreements executed in connection with the Credit Agreement.
(b) Except as expressly provided in this Agreement, nothing herein is intended to, or does, in any manner waive, limit, impair, or restrict the ability of each of the Parties to protect and preserve its rights, remedies, and interests, including its claims against any of the other Parties (or their respective affiliates or subsidiaries) or its full participation in any bankruptcy case filed by the Company or any of its affiliates and subsidiaries. This Agreement, the Term Sheet, and the Prepackaged Plan are part of a proposed settlement of matters that could otherwise be the subject of litigation among the Parties. Pursuant to Rule 408 of the Federal Rule of Evidence, any applicable state rules of evidence, and any other applicable law, foreign or domestic, this Agreement and all negotiations relating thereto shall not be admissible into evidence in any proceeding other than a proceeding to enforce its terms. This Agreement shall in no event be construed as or be deemed to be evidence of an admission or concession on the part of any Party of any claim or fault or liability or damages whatsoever. Each of the Parties denies any and all wrongdoing or liability of any kind and does not concede any infirmity in the claims or defenses which it has asserted or could assert.
22. | Relationship Among Consenting Term Lenders. |
(a) It is understood and agreed that no Consenting Term Lender has any duty of trust or confidence in any kind or form with any other Consenting Term Lender, and, except as expressly provided in this Agreement, there are no commitments among or between them. In this regard, it is understood and agreed that any Consenting Term Lender may trade in the Noteholder Claims or other debt of the Company without the consent of the Company or any other Consenting Term Lender, subject to applicable securities laws, the terms of this Agreement, and any confidentiality agreement entered into with the Company; provided that no Consenting Term Lender shall have any responsibility for any such trading to any other person or entity by virtue of this Agreement. No prior history, pattern, or practice of sharing confidences among or between the Consenting Term Lender shall in any way affect or negate this understanding and agreement.
(b) Notwithstanding anything to the contrary herein, nothing in this Agreement shall require any Consenting Term Lender or representative of a Consenting Term
29
Lender that becomes a member of a statutory committee that may be established in the Chapter 11 Case to take any action, or to refrain from taking any action, in such persons capacity as a statutory committee member; provided that nothing in this Agreement shall be construed as requiring any Consenting Term Lender to serve on any statutory committee in the Chapter 11 Case.
23. | No Solicitation; Representation by Counsel; Adequate Information. |
(a) This Agreement is not and shall not be deemed to be a solicitation for votes in favor of the Prepackaged Plan in the Chapter 11 Case by the Term Lenders or a solicitation to tender or exchange any of the Term Loans. The acceptances of the Consenting Term Lenders with respect to the Prepackaged Plan will not be solicited until such Consenting Term Lender has received the Disclosure Statement and related ballots and solicitation materials, each as approved or ratified by the Bankruptcy Court.
(b) Each Party acknowledges that it has had an opportunity to receive information from the Company and that it has been represented by counsel in connection with this Agreement and the transactions contemplated hereby. Accordingly, any rule of law or any legal decision that would provide any Party with a defense to the enforcement of the terms of this Agreement against such Party based upon lack of legal counsel shall have no application and is expressly waived.
(c) Although none of the Parties intends that this Agreement should constitute, and they each believe it does not constitute, a solicitation or acceptance of a chapter 11 plan of reorganization or an offering of securities, each Consenting Term Lender acknowledges, agrees and represents to the other Parties that it (i) is a qualified institutional buyer as such term is defined in Rule 144A of the Securities Act or a non-US person participating in the offering outside the United States in reliance on Regulation S under the Securities Act, (ii) is an accredited investor (as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act), (iii) understands that the securities to be acquired by it (if any) pursuant to the Restructuring Transactions have not been registered under the Securities Act and that such securities are, to the extent not acquired pursuant to section 1145 of the Bankruptcy Code, being offered and sold pursuant to an exemption from registration contained in the Securities Act, based in part upon such Consenting Term Lenders representations contained in this Agreement and cannot be sold unless subsequently registered under the Securities Act or an exemption from registration is available and (iv) has such knowledge and experience in financial and business matters that such Consenting Term Lender is capable of evaluating the merits and risks of the securities to be acquired by it (if any) pursuant to the Restructuring Transactions and understands and is able to bear any economic risks with such investment.
[R EMAINDER OF P AGE I NTENTIONALLY L EFT B LANK ]
30
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their respective duly authorized officers, solely in their respective capacity as officers of the undersigned and not in any other capacity, as of the date first set forth above.
WALTER INVESTMENT MANAGEMENT CORP. | ||
By: |
/s/ Anthony N. Renzi |
|
Name: Anthony N. Renzi | ||
Title: Chief Executive Officer |
CONSENTING TERM LENDERS
DOUBLE BLACK DIAMOND OFFSHORE LTD. | ||
By: | Carlson Capital, L.P., its investment advisor | |
By: |
/S/ Lynne B. Alpar |
|
Name: | Lynne B. Alpar | |
Title: | Chief Financial Officer of Carlson Capital, L.P | |
CATHEDRAL LAKE II, LTD. | ||
By: |
/S/ Lynne B. Alpar |
|
Name: | Lynne B. Alpar | |
Title: | Chief Financial Officer of Carlson Capital, L.P. | |
CATHEDRAL LAKE III, LTD. | ||
By: |
/S/ Lynne B. Alpar |
|
Name: | Lynne B. Alpar | |
Title: | Chief Financial Officer of Carlson Capital, L.P. | |
CATHEDRAL LAKE IV, LTD. | ||
By: |
/S/ Lynne B. Alpar |
|
Name: | Lynne B. Alpar | |
Title: | Chief Financial Officer of Carlson Capital, L.P. |
[Signature Page to Restructuring Support Agreement]
TAO Fund, LLC
By: |
/S/ Joshua Peck |
|
Name: | Joshua Peck | |
Title: | Vice President |
CREDIT SUISSE ASSET MANAGEMENT, LLC | ||
In its capacity as investment manager, sub-adviser or similar capacity on behalf of holders of the Term Loan B of Walter Investment Management Corp | ||
By |
/S/ Louis Farano |
|
Name: | Louis Farano | |
Title: | Authorized Signatory | |
MARATHON ASSET MANAGEMENT, LP | ||
By: |
/S/ Randy Raisman |
|
Name: | Randy Raisman | |
Title: | Authorized Signatory |
[Signature Page to Restructuring Support Agreement]
Nuveen Diversified Dividend and Income Fund
Nuveen Floating Rate Income Fund
Nuveen Credit Strategies Income Fund
Nuveen Symphony Floating Rate Income Fund
Nuveen Credit Opportunities 2022 Target Term Fund
Nuveen Short Duration Credit Opportunities Fund
Nuveen Floating Rate Income Opportunity Fund
Nuveen Senior Income Fund
Symphony Asset Management LLC, | ||
As Sub-Advisor | ||
By: |
/S/ Gunther Stein |
|
Name: | Gunther Stein | |
Title: | Authorized Signatory |
[Signature Page to Restructuring Support Agreement]
SCOF-2, LTD
California Street CLO IX Limited Partnership
Symphony CLO VIII. Limited Partnership
California Street CLO XII, Ltd.
Symphony CLO XIV, Ltd.
Symphony CLO XV, Ltd.
Symphony CLO XVI, LTD.
Symphony CLO XVII, LTD.
Symphony CLO XVIII, LTD.
Symphony Asset Management LLC, | ||
As Collateral Manager | ||
By: |
/S/ Gunther Stein |
|
Name: | Gunther Stein | |
Title: | Chief Investment Officer and Chief Executive Officer |
BayCity Corporate Arbitrage and Relative Value Fund, L.P. | ||
Symphony Asset Management LLC, | ||
As General Partner | ||
By: |
/S/ Gunther Stein |
|
Name: | Gunther Stein | |
Title: | Chief Investment Officer and Chief Executive Officer |
[Signature Page to Restructuring Support Agreement]
BayCity Alternative Investment Funds SICAV-SIF-BayCity US Senior Loan Fund
Goldman Sachs Multi-Manager Non-Core Fixed Income Fund
Menard, Inc.
Municipal Employees Annuity & Benefit Fund of Chicago
PENSIONDANMARK PENSIONSFORSIKRINGSAKTIESELSKAB
Principal Funds, Inc. Diversified Real Asset Fund
Diversified Real Asset CIT
Symphony Floating Rate Senior Loan Fund
BayCity Long-Short Credit Master Fund, LTD.
BAYCITY SENIOR LOAN MASTER FUND LIMITED
TCI-Symphony CLO 2016-a Ltd.
Symphony Asset Management LLC, | ||
As Investment Advisor | ||
By: |
/S/ Gunther Stein |
|
Name: | Gunther Stein | |
Title: | Authorized Signatory |
[Signature Page to Restructuring Support Agreement]
AGF FLOATING RATE INCOME FUND
By: Eaton Vance Management as Investment Advisor | ||
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
EATON VANCE CDO X PLC
By: Eaton Vance Management as Investment Advisor | ||
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
DaVinci Reinsurance Ltd.
By: Eaton Vance Management as Investment Advisor | ||
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
Eaton Vance Loan Holding Limited
By: Eaton Vance Management as Investment Manager | ||
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
[Signature Page to Restructuring Support Agreement]
Eaton Vance Senior Floating-Rate Trust
By: Eaton Vance Management as Investment Advisor | ||
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
Eaton Vance Floating-Rate Income Plus Fund
By: Eaton Vance Management as Investment Advisor | ||
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
Eaton Vance Floating-Rate Income Trust
By: Eaton Vance Management as Investment Advisor | ||
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
Eaton Vance International (Cayman Island) Floating-Rate Income Portfolio
By: Eaton Vance Management as Investment Advisor | ||
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
[Signature Page to Restructuring Support Agreement]
Eaton Vance Short Duration Diversified
Income Fund
By: Eaton Vance Management as Investment Advisor
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
Eaton Vance Institutional Senior Loan Fund
By: Eaton Vance Management as Investment Advisor
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
Eaton Vance Limited Duration Income Fund
By: Eaton Vance Management as Investment Advisor
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
Eaton Vance Floating Rate Portfolio
By: Boston Management and Research as Investment Advisor
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
[Signature Page to Restructuring Support Agreement]
Brighthouse Funds Trust I Brighthouse/Eaton
Vance Floating Rate Portfolio
By: Eaton Vance Management as Investment
Sub-Advisor
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
Florida Power & Light Company
By: Eaton Vance Management as Investment
Advisor
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
Pacific Select Fund Floating Rate Loan Portfolio
By: Eaton Vance Management as Investment
Sub-Advisor
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
Renaissance Investment Holdings Ltd
By: Eaton Vance Management as Investment
Advisor
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
[Signature Page to Restructuring Support Agreement]
Columbia Funds Variable Series Trust II Variable
Portfolio-Eaton Vance Floating-Rate Income Fund
By: Eaton Vance Management as Investment
Sub-Advisor
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
Senior Debt Portfolio
By: Boston Management and Research as Investment
Advisor
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
Eaton Vance VT Floating-Rate Income Fund
By: Eaton Vance Management as
Investment Advisor
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
Eaton Vance Senior Income Trust
By: Eaton Vance Management as Investment
Advisor
By: |
/S/ Michael B. Botthof |
|
Name: | Michael B. Botthof | |
Title: | Vice President |
[Signature Page to Restructuring Support Agreement]
EXHIBIT A
RESTRUCTURING TERM SHEET
Execution Version
W ALTER I NVESTMENT M ANAGEMENT C ORP .
P REPACKAGED P LAN R ESTRUCTURING T ERM S HEET
This Term Sheet is attached as Exhibit A to (a) the restructuring support agreement dated October 20, 2017 (as amended and restated), by and among holders (the Consenting Term Lenders ) of outstanding Term Loans (as defined in the Credit Agreement (defined below)) and WIMC (the Term Lender RSA ), and (b) the restructuring support agreement dated October 20, 2017 (as amended or restated), by and among holders ( Consenting Senior Noteholders ) of outstanding Senior Notes (defined below) and WIMC (the Senior Noteholder RSA and, collectively with the Term Loan RSA, the Restructuring Support Agreements ). Capitalized terms used in this Term Sheet not defined shall have the meaning ascribed to them in Annex A .
This Term Sheet is not an offer or a solicitation with respect to any securities of the Company, nor is it a solicitation of acceptances of a plan of reorganization as contemplated by sections 1125 and/or 1126 of the Bankruptcy Code. Any such offer or solicitation shall comply with all applicable securities laws and/or provisions of the Bankruptcy Code.
This Term Sheet is a settlement proposal in furtherance of settlement discussions. Accordingly, this Term Sheet is protected by rule 408 of the Federal Rules of Evidence and any other applicable statutes or doctrines protecting the use or disclosure of confidential settlement discussions.
This Term Sheet does not purport to summarize all of the terms, conditions, representations, warranties, and other provisions with respect to the transactions described herein, which transactions will be subject to the completion of definitive documents incorporating the terms set forth herein and the closing of any transaction shall be subject to the terms and conditions set forth in such definitive documents. No binding obligations will be created by this Term Sheet unless and until binding definitive documents are executed and delivered by all applicable parties.
Introduction | ||
Overview | This Term Sheet summarizes the terms of a restructuring (the Restructuring ) of the Company to be effectuated pursuant to the Plan. The Restructuring contemplates solicitation of acceptances of the Plan from holders of Term Loan Claims, Senior Notes Claims, and Convertible Notes Claims through a prepackaged solicitation. | |
Annexures & Exhibits |
Annex A : Certain Defined Terms
Exhibit 1 : Amended and Restated Credit Facility Term Sheet
Exhibit 2 : New Second Lien Notes Term Sheet
Exhibit 3 : Mandatorily Convertible Preferred Stock Term Sheet
Exhibit 4 : Warrants Term Sheet |
|
The Company | Walter Investment Management Corp. (the Debtor or the Company ). |
Claims and Interests to be Restructured |
First Lien Senior Secured Term Loan Claims : Consisting of $[1,295,215,000] in aggregate unpaid principal amount, plus interest, fees and other expenses, arising under or in connection with that certain Amended and Restated Credit Agreement, dated as of December 19, 2013 (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time in accordance with the terms thereof, the Credit Agreement , and the term loan facility thereunder, the Term Loan Facility ), by and among the Company, as the borrower, Credit Suisse AG, as administrative agent (together with any successor administrative agent, in each case, in such capacity, the Administrative Agent ), the lenders party thereto (each a Term Lender and collectively, the Term Lenders ) (the Term Loan Claims ).
Senior Notes Claims : Consisting of $[538,700,000] in aggregate outstanding principal, plus interest, fees and other expenses, of 7.875% Senior Notes due 2021 (the Senior Notes ) issued pursuant to that certain Indenture (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the Senior Notes Indenture ) by and between the Company, the guarantors on the signature pages thereto (the Senior Notes Guarantors ), and Wilmington Savings Fund Society, FSB, a national banking association, as successor trustee, dated as of December 17, 2013 (the Senior Notes Claims ). The holders of the Senior Notes are collectively referred to herein as the Senior Noteholders and each individually as a Senior Noteholder .
Convertible Notes Claims : Consisting of $[242,500,000] in aggregate outstanding principal, plus interest, fees and other expenses of 4.50% convertible senior subordinated notes due 2019 ( Convertible Notes ) issued pursuant to that certain Subordinated Indenture, dated as of January 13, 2012, by and among Walter, as issuer, Wells Fargo Bank, National Association, as Trustee, and a Supplemental Indenture thereto, dated as of January 13, 2012 (the Convertible Notes Claims ). The holders of Convertible Notes Claims are collectively referred to herein as the Convertible Noteholders and each individually as a Convertible Noteholder .
General Unsecured Claims : Consisting of any Claim against the Company (other than the Senior Notes Claims, the Convertible Notes Claims or any Intercompany Claims) as of the Commencement Date that is neither secured by collateral nor entitled to priority under the Bankruptcy Code or any order of the Bankruptcy Court (the General Unsecured Claims ).
Existing Equity Interests : Consisting of any common stock, preferred stock or other ownership interest of or in the Company pursuant to the Company Certificate of Incorporation or otherwise that are issued and outstanding as of the Petition Date (the Existing Equity Interests ). |
|
Transaction Overview | ||
Implementation: |
The Company will commence the Chapter 11 Case and implement the Restructuring pursuant to the Plan as provided in the Restructuring Support Agreements.
The solicitation of votes on the Plan from the Senior Noteholders and the Convertible Noteholders will be made pursuant to Section 4(a)(2) and/or Regulation D of the Securities Act of 1933, as amended (the Securities Act ). |
2
DIP/Exit Financing | The Company will be a guarantor of certain new warehouse refinancing agreements to be entered into by Ditech Financial LLC and Reverse Mortgage Solutions Inc., as borrowers (the DIP/Exit Facility ), which shall provide for the refinancing of existing warehouse lines of Ditech Financial LLC and Reverse Mortgage Solutions Inc.; provided that, the terms and conditions of the DIP/Exit Facility (including, but not limited to, any Definitive Documents memorializing the DIP/Exit Facility) shall be acceptable in all material respects to the Requisite Creditors. | |
Use of Cash Collateral |
The Company will be authorized to use cash collateral (as defined in section 363(a) of the Bankruptcy Code) of the Term Lenders with the consent of the Administrative Agent, acting at the direction of the Required Lenders (as defined under the Credit Agreement), subject to the following terms and conditions and such other terms and conditions that are mutually acceptable to the Company and the Required Lenders, and reasonably acceptable to the Requisite Senior Noteholders:
Adequate Protection Lien . The Administrative Agent (on behalf of itself and the Term Lenders) shall receive a replacement security interest in and lien on all assets and property of the Debtor, whether arising prepetition or postpetition of any nature whatsoever, which liens and security interests shall be subordinate only to Permitted Liens (as defined in the Credit Agreement) to the extent any such Permitted Liens are senior in priority under applicable non-bankruptcy law to the liens securing the Obligations under the Credit Agreement and a customary professional fee carve-out in an amount to be agreed upon by the Company and the Requisite Term Lenders (the Carve Out ). The adequate protection liens shall not be (i) subject or junior to any lien or security interest that is avoided and preserved for the benefit of the Debtors estate under section 551 of the Bankruptcy Code or (ii) subordinated to or made pari passu with any other lien or security interest, whether under section 364(d) of the Bankruptcy Code or otherwise, except as expressly provided in the Financing Orders.
507(b) Claim . The Administrative Agent (on behalf of itself and the Term Lenders) shall receive an administrative expense claim pursuant to Bankruptcy Code section 507(b) with priority over all other administrative expenses, subject to the Carve Out.
Adequate Protection Payments . The Debtors prompt payment of, whether incurred prior to or following the Petition Date, (i) all reasonable fees and expenses of the Administrative Agent (in accordance with the Credit Agreement), Kirkland and FTI, as provided herein, and (ii) of accrued interest at the non-default rate.
Financial Reporting . Until the Effective Date, the Debtor shall continue to provide the Administrative Agent, Kirkland, and FTI with financial and other reporting in compliance with the Prepetition Documents and any reporting described in the Financing Orders; |
3
provided that, a copy of any such financial information and reports shall simultaneously be provided to Milbank, Tweed, Hadley & McCloy LLP, and Moelis & Company. | ||
Amended and Restated Credit Facility Agreement | On the Effective Date the Company and the Term Lenders will enter into or shall be deemed to have entered into, pursuant to the Plan, the Amended and Restated Credit Facility Agreement, which will be consistent with the Amended and Restated Credit Facility Term Sheet attached hereto as Exhibit 1 (the Amended and Restated Credit Facility Agreement ). | |
New Second Lien Notes | On the Effective Date, the Company will issue secured second lien notes on the terms and conditions, and in a form and manner consistent with, the New Second Lien Notes Term Sheet attached hereto as Exhibit 2 . On the Effective Date, the agent under the Amended and Restated Credit Facility Agreement and the agent under the New Second Lien Notes shall enter into an intercreditor agreement that is acceptable to the Requisite Creditors. | |
Mandatorily Convertible Preferred Stock | On the Effective Date, the Company will issue Mandatorily Convertible Preferred Stock convertible into 73% of the total number of issued and outstanding shares of New Common Stock as of the Effective Date subject to dilution by shares of New Common Stock issued or issuable pursuant to the Management Incentive Plan and by shares of New Common Stock issued after the Effective Date, including shares of New Common Stock issuable pursuant to the Warrants (if issued), which will be in a form and manner consistent with the Mandatorily Convertible Preferred Stock Term Sheet attached hereto as Exhibit 3 (the Mandatorily Convertible Preferred Stock ). | |
Warrants | On the Effective Date, if the Class of Convertible Notes Claims is not a Rejecting Class, the Company will issue 10 year warrants in two (2) separate tranches, and which will be in a form and manner consistent with the Warrants Term Sheet attached hereto as Exhibit 4 (the Warrants ). | |
New Common Stock | On the Effective Date, the Company will issue new common stock of the Company (the New Common Stock ), as described herein. | |
Treatment of Claims and Interests | ||
Class |
Treatment |
|
DIP/Exit Facility Claims | Unimpaired; Non-Voting . On the Effective Date the debtor-in-possession refinancing facilities shall be automatically converted into exit facilities in accordance with the terms and conditions of the DIP/Exit Facility. | |
Warehouse and Repurchase Facility Claims | Unimpaired, Non-Voting . All prepetition warehouse and repurchase facility Claims will be refinanced in full to the extent outstanding on the Effective Date. | |
Other Priority Claims, Priority Tax Claims, Other Secured Claims | Unimpaired; Non-Voting . All priority tax claims, other priority claims, and other secured claims, other than those claims otherwise referenced herein, will be unimpaired under the Plan and/or paid in full in the ordinary course of business. |
4
Revolving Loan Claims | Unimpaired; Non-Voting. Holders of Revolving Loan Claims will receive, in full and final satisfaction of their Allowed Revolving Loan Claim, (i) payment in full of its Claim and termination of all letters of credit issued under the Revolving Loan Facility, which letters of credit will be refinanced, (ii) its pro rata share of an amended and restated revolving loan facility (if each Revolving Lender consents to enter into such facility), or (iii) such other consideration satisfactory to each holder of an Allowed Revolving Loan Claim. | |
Term Loan Claims | Impaired; Voting . As of the Effective Date, holders of Term Loan Claims will become bound by the Amended and Restated Credit Facility Agreement and receive, in full and final satisfaction of their Allowed Term Loan Claims on the Effective Date, their pro rata share of (i) term loans under the Amended and Restated Credit Facility Agreement (such term loans to be in an aggregate principal amount equal to the term loans then outstanding under the Credit Agreement as of the Effective Date), and (ii) any accrued and unpaid interest under the Credit Agreement as of the Effective Date. | |
Senior Notes Claims | Impaired; Voting . On the Effective Date, holders of Senior Notes Claims will receive, in full and final satisfaction of their Allowed Senior Notes Claims, their pro rata share of (a) New Second Lien Notes, (b) Mandatorily Convertible Preferred Stock, and (c) if the Class of Convertible Notes Claims is a Rejecting Class, 100% of the New Common Stock issued on the Effective Date, subject to dilution by shares of New Common Stock issuable on conversion of the Mandatorily Convertible Preferred Stock and shares of New Common Stock issued or issuable pursuant to the Management Incentive Plan and shares of New Common Stock issued after the Effective Date. On the Effective Date, the Senior Notes will be cancelled without further action by or order of the Bankruptcy Court. | |
Convertible Notes Claims | Impaired; Voting . Solely to the extent that the Class of Convertible Notes Claims is not a Rejecting Class, on the Effective Date, the holders of Convertible Notes Claims will receive, in full and final satisfaction of their Allowed Convertible Notes Claims, their pro rata share of (i) New Common Stock representing, in the aggregate, 50% of the New Common Stock issued on the Effective Date, subject to dilution by shares of New Common Stock issuable upon conversion of the Mandatorily Convertible Preferred Stock, shares of New Common Stock issued or issuable pursuant to the Management Incentive Plan and shares of New Common Stock issued after the Effective Date, including pursuant to the Warrants, and (ii) 50% of the Warrants; provided that, if the Class of Convertible Notes Claims is a Rejecting Class, then holders of Convertible Notes Claims will not receive or retain any property under the Plan on account of such Claims. On the Effective Date, the Convertible Notes will be cancelled without further action by or order of the Bankruptcy Court. | |
General Unsecured Creditors | Unimpaired; Non-Voting. Except to the extent that a holder of a General Unsecured Claim agrees to different treatment, (i) the Company or Reorganized Company, as applicable, will continue to pay or treat such General Unsecured Claim in the ordinary course of business as if the Chapter |
5
11 Case had not been commenced, or (ii) such holder will receive such other treatment so as to render such General Unsecured Claim Unimpaired, in each case subject to all defenses or disputes the Debtor may assert as to the validity or amount of such Claims. | ||
Existing Equity Interests | Impaired; Non-Voting. Solely to the extent that the Class of Convertible Notes Claims is not a Rejecting Class, on the Effective Date, holders of Existing Equity Interests will receive, in full and final satisfaction of their Allowed Existing Equity Interest, their pro rata share of (i) New Common Stock representing, in the aggregate, 50% of the New Common Stock issued on the Effective Date, subject to dilution by shares of New Common Stock issuable upon conversion of the Mandatorily Convertible Preferred Stock, shares of New Common Stock issued or issuable pursuant to the Management Incentive Plan and shares of New Common Stock issued after the Effective Date, including pursuant to the Warrants, and (ii) 50% of the Warrants; provided that, if the Class of Convertible Notes Claims is a Rejecting Class, then holders of Existing Equity Interests will not receive or retain any property under the Plan on account of such Claims. On the Effective Date, all Interests will be cancelled without further action by or order of the Bankruptcy Court. | |
Intercompany Claims | Unimpaired; Non-Voting. All Intercompany Claims will be paid, adjusted, reinstated or discharged as determined by the Company. | |
Other Key Terms | ||
Term |
Description |
|
Management Incentive Plan | Following the Effective Date, the Reorganized Company will enter into a post-Restructuring management incentive plan ( Management Incentive Plan ), under which 10% of the New Common Stock (after taking into account the shares to be issued under the Management Incentive Plan) will be reserved for issuance as awards under the Management Incentive Plan. The Company and Consenting Senior Noteholders shall work in good faith to negotiate the terms of the Management Incentive Plan and, subject to reaching agreement, such terms shall be memorialized in a term sheet filed with the Plan Supplement. All awards issued under the Management Incentive Plan will be dilutive of all other New Common Stock (after giving effect to conversion of the Mandatorily Convertible Preferred Stock and any shares issued under the Warrants) issued pursuant to the Plan. The Plan shall provide that the Management Incentive Plan will be adopted by the Board of the Reorganized Company within 60 days of the Effective Date. | |
New Common Stock and Warrants | The Reorganized Company shall use its commercially reasonable efforts to have the New Common Stock and Warrants listed on a nationally recognized exchange, as soon as practicable subject to meeting applicable listing requirements following the Effective Date. | |
Executory Contracts | All executory contracts and unexpired leases, other than those expressly identified in the Plan Supplement, will be deemed assumed. |
6
Employee Compensation and Benefit Plans | Notwithstanding anything to the contrary in the Term Sheet or any Definitive Document, all employee compensation and benefit plans, employment agreements, offer letters, award letters or key employee retention agreements (collectively, the Employee Arrangements ) shall be deemed assumed under the Plan by the Reorganized Company other than any Employee Arrangement entitling employees to Interests or consideration based on the value of Interests that have not vested into Existing Equity Interests as of the Petition Date. If an Employee Arrangement provides in part for an award or potential award of Interests or consideration based on the value of Interests that have not vested into Existing Equity Interests as of the Petition Date, such Employee Arrangement shall be assumed in all respects other than the provisions of such agreement relating to Interest awards. Notwithstanding the foregoing, if an Employee Arrangement provides in part for a payment, premium, or other award upon the occurrence of a change of control, change in control, or other similar event, then such compensation or benefit plan shall only be assumed to the extent that the Restructuring, including consummation of the Plan, shall not be treated as a change of control, change in control, or other similar event under such compensation or benefit plan. | |
Board of Directors of the Reorganized Company |
Upon the Effective Date, the Board of the Reorganized Company will consist of nine (9) members, with six (6) directors nominated by holders of the Mandatorily Convertible Preferred Stock, and three (3) directors nominated by the Company (on behalf of the holders of New Common Stock).
After the Effective Date and for a period of two years thereafter (the Initial Period ), the directors will be appointed or elected as follows:
(a) Six (6) members of the Board will be nominated and elected by a majority of the holders of the Mandatorily Convertible Preferred Stock (and, for purposes of such nomination determination, such majority will be deemed to include any shares of Common Stock previously issued upon conversion of the Mandatorily Convertible Preferred Stock and continued to be held by a holder that evidences continuous ownership) (the Preferred Stock Designees );
(b) three (3) members of the Board will be nominated by the Company Designees and elected by the holders of New Common Stock (the Company Designees ).
After the Initial Period, the holders of the Mandatorily Preferred Stock shall be entitled to nominate such numbers of directors as is proportional to their voting interest on as converted basis (which will be set forth in the Companys organizational documents).
At such time as the Company is no longer entitled to appoint the Company Designees, such director positions previously allocated to the Company shall be elected by the holders of New Common Stock, the outstanding Mandatorily Convertible Preferred Stock on an as-converted basis and any other outstanding Common Stock voting together as a single class.
The Board will be classified with directors serving for three-year staggered terms. Company Designees will serve in the class up for reelection at the second annual meeting after the Effective Date. Preferred Stock Designees and Company Designees, as applicable, may only be removed for cause. Vacancies in seats held by Preferred Stock Designees shall be filled by remaining Preferred Stock Designees and vacancies in seats held by Company Designees shall be filled by remaining Company Designees. |
7
To the extent a nominating committee exists, it will include at least two (2) Company Designees during the Company Board Designee Period.
The new governance structure of the Reorganized Company and its Board and committees will be set forth in the amended organizational documents of the Reorganized Company.
For the first 18 months after the Effective Date, any sale of all or substantially all of the business of the Company or its assets, or any change of control transaction, changes to Board composition or structure (including the size of the Board) and amendments to organizational documents affecting these rights must be approved by at least seven (7) of nine (9) directors. |
||
Charter; Bylaws | The charter, bylaws, limited liability company agreements and other organizational documents of each Reorganized Companys corporate entity will (i) be amended or amended and restated by the Reorganized Company consistent with section 1123(a)(6) of the Bankruptcy Code, if applicable, and otherwise in accordance with the Plan, and the Restructuring Support Agreements, (ii) be in form and substance reasonably acceptable to the Requisite Senior Noteholders, and (iii) notwithstanding anything to the contrary, provide that the Mandatorily Convertible Preferred Stock shall vote with New Common Stock on an as-converted basis as to all matters; provided , that during the Initial Period, the Mandatorily Convertible Preferred Stock shall (a) not vote on as-converted basis with respect the election of directors, during which time the holders of the Mandatorily Convertible Preferred Stock will have the right to nominate the Senior Notes Designees, and the holders of the New Common Stock will have the right to nominate the Company Designees, and (b) not be entitled to vote to amend certain provisions of the bylaws and/or certificate of incorporation in any manner that adversely impacts the Board representation rights of the holders of the New Common Stock or the Company Designees during the Initial Period (e.g., removal directors, nomination/election rights, etc.). | |
Cancellation of Notes, Interest, Instruments, Certificates and other Documents | Except as provided herein and in connection with the Credit Agreement, on the Effective Date, all notes, instruments, certificates evidencing debt to, or Interests in, the Company, including, without limitation, the Senior Notes, the Convertible Notes, and Existing Equity Interests, will be cancelled and obligations of the Company thereunder will be discharged. In addition, on the Effective Date, any registration rights or similar agreements with respect to Existing Equity Interests will also be cancelled and any obligations of the Company thereunder will be discharged. | |
Company Guarantees | On the Effective Date, all guarantees, indemnities, or other credit support provided by the Company to support its affiliates or subsidiaries shall be reinstated to their position immediately prior to the Petition Date. | |
Vesting of Assets | On the Effective Date, pursuant to sections 1141(b) and (c) of the Bankruptcy Code, all assets of the Companys Estate will vest in the Reorganized Company free and clear of all claims, liens, encumbrances, charges and other interests, except as otherwise provided in the Plan. |
8
Compromise and Settlement | The Plan will contain provisions for the compromise and settlement of Claims stating that, except as provided herein, the allowance, classification and treatment of Allowed Claims and Interests and their respective distributions take into account and conform to the relative priority and rights of such Claims and Interests in connection with any contractual, legal and equitable subordination rights relating thereto, whether arising under general principles of equitable subordination, section 510 of the Bankruptcy Code or otherwise. | |
Survival of Indemnification Obligations and D&O Insurance | Any obligations of the Company pursuant to its corporate charters, bylaws, limited liability company agreements, or other organizational documents to indemnify current and former officers, directors, agents, and/or employees with respect to all present and future actions, suits, and proceedings against the Company or such directors, officers, agents, and/or employees, based upon any act or omission for or on behalf of the Company will not be discharged or impaired by confirmation of the Plan or the occurrence of the Effective Date. All such obligations will be deemed and treated as executory contracts to be assumed by the Company under the Plan and will continue as obligations of the Reorganized Company. In addition, after the Effective Date, the Reorganized Company will not terminate or otherwise reduce the coverage under any directors and officers insurance policies (including any tail policy) in effect as of the Petition Date, and all members, managers, directors and officers of the Company who served in such capacity at any time prior to the Effective Date will be entitled to the full benefits of any such policy for the full term of such policy regardless of whether such members, managers, directors, and/or officers remain in such positions after the Effective Date. | |
Released Parties | Released Parties means, collectively: (a) the Company and its direct and indirect subsidiaries; (b) the Consenting Term Lenders; (c) the Administrative Agent; (d) the Consenting Senior Noteholders; (e) the Senior Notes trustee; and (f) with respect to each of the foregoing entities in clauses (a) through (e), such entities predecessors, successors and assigns, subsidiaries, affiliates, managed accounts or funds, and all of their respective current and former officers, directors, principals, shareholders, members, partners, employees, agents, advisory board members, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, management companies, fund advisors and other professionals, and such persons respective heirs, executors, estates, servants and nominees. | |
Releases |
To the extent the Restructuring is consummated, the Plan will provide for releases with language substantially to the effect of the following:
Releases by the Company 1 : As of the Effective Date, except for the rights that remain in effect from and after the Effective Date to enforce the Plan and the Definitive Documents, for good and valuable consideration, the adequacy of |
1 | For the avoidance of doubt, if any of the Companys affiliates or subsidiaries commence a chapter 11 case in connection with the Restructuring, then the references to the Company throughout the Releases, Exculpation and Injunction provisions hereof, and other applicable provisions of this Term Sheet, shall automatically be deemed to include such affiliates and subsidiaries. |
9
which is hereby confirmed, including, without limitation, the service of the Released Parties to facilitate the reorganization of the Company and the implementation of the Restructuring, and except as otherwise provided in the Plan or in the confirmation order for the Plan, the Released Parties will be deemed forever released and discharged, to the maximum extent permitted by law, by the Company, the Reorganized Company, and Estate and all affiliates or subsidiaries managed or controlled thereby, from any and all Claims, obligations, suits, judgments, damages, demands, debts, rights, causes of action, remedies, losses, and liabilities whatsoever, including any derivative claims, asserted or assertable on behalf of the Company, or the Reorganized Company (as the case may be), or the Estate, whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity, or otherwise, that the Company, or the Reorganized Company (as the case may be), or the Estate would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim or interest or other person, based on or relating to, or in any manner arising prior to the Effective Date from, in whole or in part, the Company, the chapter 11 cases, the purchase, sale, or rescission of the purchase or sale of any security of the Company, the subject matter of, or the transactions or events giving rise to, any Claim or interest that is treated in the Plan, the business or contractual arrangements between any of the Company and any Released Party, the Restructuring, the restructuring of any Claim or interest before or during the Chapter 11 Cases, the Disclosure Statement, the Restructuring Support Agreements, and the Plan and related agreements, instruments, and other documents (including the Definitive Documents), and the negotiation, formulation, or preparation thereof, the solicitation of votes with respect to the Plan, or any other act or omission, other than claims or causes of action arising out of or related to any act or omission of a Released Party that constitutes fraud or willful misconduct, as determined by a Final Order.
Releases by holders of Impaired Claims : As of the Effective Date, except (i) for the right to enforce the Plan or any right or obligation arising under the Definitive Documents that remain in effect or become effective after the Effective Date or (ii) as otherwise expressly provided in the Plan or in confirmation order for the Plan, in exchange for good and valuable consideration, including the obligations of the Debtor under the Plan and the contributions of the Released Parties to facilitate and implement the Plan, to the fullest extent permissible under applicable law, as such law may be extended or integrated after the Effective Date, the Released Parties shall be deemed conclusively, absolutely, unconditionally, irrevocably and forever, released, and discharged by
(1) the holders of Impaired Claims who voted to accept the Plan;
(2) the RSA Parties, in accordance with and subject to the terms of the Restructuring Support Agreements;
(3) any Significant Equity Holder (it being understood that the Company shall, prior to the solicitation of the Plan, exercise reasonable best efforts to obtain from any Significant Equity Holder a release of the Released Parties consistent with the below and which shall be effective only upon the Effective Date); and |
10
(4) with respect to any entity in the foregoing clauses (1) and (2), such Entitys (a) predecessors, successors and assigns, (b) any subsidiaries, affiliates, managed accounts or funds, managed or controlled by such entity and (c) all persons entitled to assert claims through or on behalf of such entities with respect to the matters for which the releasing entities are providing releases,
in each case, from any and all Claims, interests or Causes of Action whatsoever, including any derivative Claims asserted on behalf of a Debtor, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity or otherwise, that such Entity would have been legally entitled to assert (whether individually or collectively), based on, relating to, or arising prior to the Effective Date from, in whole or in part, the Debtor, the Debtors restructuring, the Chapter 11 Cases, the purchase, sale or rescission of the purchase or sale of any security of the Debtor or the Reorganized Company, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements between any Debtor and any Released Party, the restructuring of Claims and Interests before or during the Chapter 11 Cases, the negotiation, formulation, preparation, or consummation of the Plan (including the Plan Supplement), the Restructuring Support Agreements, the Definitive Documents, or any related agreements, instruments, or other documents, the solicitation of votes with respect to the Plan, in all cases based upon any act or omission, transaction, agreement, event or other occurrence taking place on or before the Effective Date; provided that nothing in this the Plan shall be construed to release the Released Parties from willful misconduct or intentional fraud as determined by a Final Order.
Releases of Guarantors and Senior Notes Guarantors . In exchange for the substantial contributions in support of the Plan, and as an integral and necessary component of the Plan, the Plan will include releases by all holders of Term Loan Claims and Senior Notes Claims (whether or not such holders voted to reject the Plan or abstained from voting on the Plan) of any Claims related to or arising from the obligations of the Guarantors (as defined in the Credit Agreement) and the Senior Notes Guarantors under the respective guarantees provided in connection with the Credit Agreement or the Senior Notes Indenture.
Notwithstanding anything to the contrary herein, any person or entity (i) releasing claims hereunder who does not provide (or is not deemed to provide), a valid and binding release of the Released Parties or (ii) who has asserted or later asserts a claim against a Released Party, shall not be (or be deemed to be) a Released Party. |
||
Injunction |
The Plan will provide for an injunction solely with respect to any Claim or Interest extinguished, discharged, or released pursuant to the Plan, with language substantially to the effect of the following:
(a) Upon entry of the confirmation order, all holders of Claims and Interests and other parties in interest, along with their respective present or |
11
former employees, agents, officers, directors, principals, and affiliates, shall be enjoined from taking any actions to interfere with the implementation or consummation of the Plan in relation to any Claim extinguished, discharged, or released pursuant to the Plan.
(b) Except as expressly provided in the Plan, the confirmation order, or a separate order of the Bankruptcy Court or as agreed to by the Debtor and a holder of a Claim against or Interest in the Debtor, all Entities who have held, hold, or may hold Claims against or Interests in the Debtor (whether proof of such Claims or Interests has been filed or not and whether or not such Entities vote in favor of, against or abstain from voting on the Plan or are presumed to have accepted or deemed to have rejected the Plan) and other parties in interest, along with their respective present or former employees, agents, officers, directors, principals, and affiliates are permanently enjoined, on and after the Effective Date, solely with respect to any Claims, Interests, and Causes of Action that will be or are extinguished, discharged, or released pursuant to the Plan from (i) commencing, conducting, or continuing in any manner, directly or indirectly, any suit, action, or other proceeding of any kind (including, without limitation, any proceeding in a judicial, arbitral, administrative or other forum) against or affecting the Released Parties or the property of any of the Released Parties, (ii) enforcing, levying, attaching (including, without limitation, any prejudgment attachment), collecting, or otherwise recovering by any manner or means, whether directly or indirectly, any judgment, award, decree, or order against the Released Parties or the property of any of the Released Parties, (iii) creating, perfecting, or otherwise enforcing in any manner, directly or indirectly, any encumbrance of any kind against the Released Parties or the property of any of the Released Parties, (iv) asserting any right of setoff, directly or indirectly, against any obligation due the Released Parties or the property of any of the Released Parties, except as contemplated or Allowed by the Plan; and (v) acting or proceeding in any manner, in any place whatsoever, that does not conform to or comply with the provisions of the Plan.
(c) By accepting distributions pursuant to the Plan, each holder of an Allowed Claim or Interest extinguished, discharged, or released pursuant to the Plan will be deemed to have affirmatively and specifically consented to be bound by the Plan, including, without limitation, the injunctions set forth in the Plan.
(d) The injunctions in the Plan shall extend to any successors of the Debtor and the Reorganized Debtor and their respective property and interests in property.
(e) The injunctions in the Plan shall extend to the Guarantors and the Senior Notes Guarantors to the extent of any Claim or Interest arising from the Credit Agreement or the Senior Notes Indenture are extinguished, discharged, or released pursuant to the Plan. |
||
Exculpation | The Plan will provide that Exculpated Parties will have the same meaning as Released Parties. |
12
The Plan will contain exculpation provisions with language substantially to the effect of the following:
To the maximum extent permitted by applicable law, no Exculpated Party will have or incur, and each Exculpated Party is hereby released and exculpated from, any claim, obligation, suit, judgment, damage, demand, debt, right, cause of action, remedy, loss, and liability for any claim in connection with or arising out of the administration of the Chapter 11 Case; the negotiation and pursuit of the Disclosure Statement, the Restructuring Support Agreements, the Restructuring Transactions, the Plan, or the solicitation of votes for, or confirmation of, the Plan; the funding or consummation of the Plan; the occurrence of the Effective Date; the administration of the Plan or the property to be distributed under the Plan; the issuance of securities under or in connection with the Plan; or the transactions in furtherance of any of the foregoing; except for fraud or willful misconduct, as determined by a Final Order. This exculpation shall be in addition to, and not in limitation of, all other releases, indemnities, exculpations and any other applicable law or rules protecting such Exculpated Parties from liability. |
||||
Conditions to Effectiveness | The Plan will be subject to usual and customary conditions to confirmation and effectiveness (as applicable), as well as such other conditions that are reasonably satisfactory to the Company and the Requisite Creditors including the following: | |||
1. |
the Definitive Documents will contain terms and conditions consistent in all respects with this Term Sheet and the Restructuring Support Agreements and will otherwise be acceptable, satisfactory or reasonably satisfactory in form and substance to the Requisite Creditors to the extent set forth in the Restructuring Support Agreements; | |||
2. |
the Bankruptcy Court will have entered the confirmation order for the Plan, and such confirmation order will not have been reversed, stayed or modified, and includes the Guarantor Releases; | |||
3. |
the Restructuring Support Agreements will not have been terminated, and will be in full force and effect; | |||
4. |
all Restructuring Expenses will have been paid in full in cash; | |||
5. |
all governmental and third party approvals and consents, including Bankruptcy Court approval, necessary in connection with the transactions contemplated by this Term Sheet will have been obtained, not be subject to unfulfilled conditions and be in full force and effect, and all applicable waiting periods will have expired without any action being taken or threatened by any competent authority that would restrain, prevent or otherwise impose materially adverse conditions on such transactions. | |||
The conditions to effectiveness may be waived in writing by the Company together with the Requisite Creditors. | ||||
Securities Exemptions | The issuance and distribution under the Plan of (i) the Mandatorily Convertible Preferred Stock, and New Common Stock, if applicable, to the Senior Noteholders, (ii) New Common Stock to the Convertible Noteholders and Existing Equity Interests; (iii) the Warrants to the Convertible Noteholders and Existing Equity Interests, and (iv) New Common Stock issuable upon the exercise of the Warrants and the conversion of the Mandatorily Convertible |
13
Preferred Stock, will be exempt from registration under the Securities Act or other applicable securities
laws without further act or action by any Person pursuant to section 1145(a) of the Bankruptcy Code and/ or any other applicable exemptions. |
||
Fees and Expenses | The Company shall pay or reimburse all reasonable and documented fees and out-of-pocket expenses (regardless of whether such fees and expenses were incurred before or after the petition date) of Kirkland & Ellis LLP, FTI Consulting Inc., Milbank, Tweed, Hadley & McCloy LLP, and Moelis & Company, in connection with the subject matter of this Term Sheet and the Restructuring pursuant to the economic terms of their respective engagement letters. The Company will also pay the fees and expenses of the Administrative Agent (including its counsel) in the manner set forth in, and to the extent required by, the Credit Agreement. | |
Retention of Jurisdiction | The Plan will provide for a broad retention of jurisdiction by the Bankruptcy Court for (a) resolution of claims, (b) allowance of compensation and expenses for pre-Effective Date services, (c) resolution of motions, adversary proceedings or other contested matters, (d) entering such orders as necessary to implement or consummate the Plan and any related documents or agreements and (e) other purposes. | |
Resolution of Disputed Claims | The Plan will provide customary procedures for the resolution of disputed Claims, including the ability (but not requirement) to establish a claims bar date pursuant to an order of the Bankruptcy Court. Once resolved, the claimants will receive distributions, if any, in accordance with the provisions of the Plan and the classification of their Allowed Claim. | |
Definitive Documents | This Term Sheet is indicative, and any final agreement will be subject to the Definitive Documents. The Definitive Documents will contain terms, conditions, representations, warranties, and covenants, each customary for the transactions described herein consistent with the terms of this Term Sheet, and in accordance with the applicable Restructuring Support Agreements. | |
Other Terms | Acceptable to the Required Parties in accordance with the applicable Restructuring Support Agreements. |
14
ANNEX A
Certain Defined Terms
15
Defined Terms | ||
Administrative Expense Claim | Means any right to payment constituting a cost or expense of administration incurred during the Chapter 11 Cases of a kind specified under section 503(b) of the Bankruptcy Code and entitled to priority under sections 507(a)(2), 507(b), or 1114(e)(2) of the Bankruptcy Code, including, without limitation, (a) the actual and necessary costs and expenses incurred after the Commencement Date and through the Effective Date of preserving the Estates and operating the businesses of the Debtor; (b) Fee Claims; (c) Restructuring Expenses; and (d) any Claim under the DIP/Exit Facility, against a Debtor. | |
Allowed | Means, with reference to any Claim or Interest, a Claim or Interest (a) arising on or before the Effective Date as to which (i) no objection to allowance or priority, and no request for estimation or other challenge, including, without limitation, pursuant to section 502(d) of the Bankruptcy Code or otherwise, has been interposed and not withdrawn within the applicable period fixed by the Plan or applicable law, or (ii) any objection has been determined in favor of the holder of the Claim or Interest by a Final Order, (b) that is compromised, settled, or otherwise resolved pursuant to the authority of the Debtor or Reorganized Company, (c) as to which the liability of the Debtor or Reorganized Debtor, as applicable, and the amount thereof are determined by a Final Order of a court of competent jurisdiction, or (d) expressly allowed hereunder; provided, however, that notwithstanding the foregoing, (x) unless expressly waived by the Plan, the Allowed amount of Claims or Interests shall be subject to and shall not exceed the limitations or maximum amounts permitted by the Bankruptcy Code, including sections 502 or 503 of the Bankruptcy Code, to the extent applicable, and (y) the Reorganized Debtor shall retain all claims and defenses with respect to Allowed Claims that are Reinstated or otherwise Unimpaired pursuant to the Plan. | |
Cash | Means legal tender of the United States of America. | |
Cause of Action | Means any action, claim, cross-claim, third-party claim, cause of action, controversy, demand, right, lien, indemnity, guaranty, suit, obligation, liability, loss, debt, damage, judgment, account, defense, remedies, offset, power, privilege, license and franchise of any kind or character whatsoever, known, unknown, foreseen or unforeseen, existing or hereafter arising, contingent or non-contingent, matured or unmatured, suspected or unsuspected, liquidated or unliquidated, disputed or undisputed, secured or unsecured, assertable directly or derivatively, whether arising before, on, or after the Petition Date, in contract or in tort, in law or in equity or pursuant to any other theory of law (including, without limitation, under any state or federal securities laws). Causes of Action also includes: (a) any right of setoff, counterclaim or recoupment and any claim for breach of contract or for breach of duties imposed by law or in equity; (b) the right to object to Claims or Interests; (c) any claim pursuant to section 362 or chapter 5 of the Bankruptcy Code; (d) any claim or defense including fraud, mistake, duress and usury and any other defenses set forth in section 558 of the Bankruptcy Code; and (e) any state law fraudulent transfer claim. |
16
Defined Terms | ||
Chapter 11 Case | Means the case under chapter 11 of the Bankruptcy Code to be commenced by the Company by no later than the Outside Petition Date, in the Bankruptcy Court and styled In re Walter Investment Management Corp. ; provided , that, to the extent that any subsidiary or affiliate of the Company commences a case under chapter 11 of the Bankruptcy Code, the Company will seek to have such case jointly administered on a procedural basis with the Companys chapter 11 case, and any reference to the Chapter 11 Case shall be deemed to include such other cases (if any) filed by the Companys subsidiaries and affiliates. | |
Claim | A claim, as defined in section 101(5) of the Bankruptcy Code, as against any Debtor. | |
Class | Any group of Claims or Interests classified by the Plan pursuant to section 1122(a)(1) of the Bankruptcy Code. | |
Confirmation Hearing | A hearing at which the Bankruptcy Court will confirm the Plan, as applicable. | |
Definitive Documents | Shall have the same meaning as in the Restructuring Support Agreements, as applicable. | |
Disclosure Statement | The disclosure statement filed by the Debtor in support of the Plan. | |
Effective Date | Shall have the same meaning as in the Restructuring Support Agreements. | |
Estate(s) | Individually or collectively, the estate or estates of a Debtor created under section 541 of the Bankruptcy Code. | |
Fee Claim | Means a Claim for professional services rendered or costs incurred on or after the Commencement Date through the Effective Date by professional persons retained by the Debtor by an order of the Bankruptcy Court pursuant to sections 327, 328, 329, 330, 331, or 503(b) of the Bankruptcy Code in the Chapter 11 Case. | |
Final Order | Means an order or judgment of a court of competent jurisdiction that has been entered on the docket maintained by the clerk of such court, which has not been reversed, vacated or stayed and as to which (a) the time to appeal, petition for certiorari, or move for a new trial, reargument or rehearing has expired and as to which no appeal, petition for certiorari, or other proceedings for a new trial, reargument, or rehearing shall then be pending, or (b) if an appeal, writ of certiorari, new trial, reargument, or rehearing thereof has been sought, such order or judgment shall have been affirmed by the highest court to which such order was appealed, or certiorari shall have been denied, or a new trial, reargument, or rehearing shall have been denied or resulted in no modification of such order, and the time to take any further appeal, petition for certiorari or move for a new trial, reargument, or rehearing shall have expired; provided, however, that no order or judgment shall fail to be a Final |
17
Defined Terms | ||
Order solely because of the possibility that a motion under Rules 59 or 60 of the Federal Rules of Civil
Procedure or any analogous Bankruptcy Rule (or any analogous rules applicable in another court of competent jurisdiction) or sections 502(j) or 1144 of the Bankruptcy Code has been or may be filed with respect to such order or judgment. |
||
Impaired | Means, with respect to a Claim, Interest, or Class of Claims or Interests, impaired within the meaning of sections 1123(a)(4) and 1124 of the Bankruptcy Code. | |
Intercompany Claim | Any Claim against any of the Companys entities held by another of the Companys entities. | |
Intercompany Interest | An Interest in any of the Companys direct or indirect subsidiaries held by another of the Companys entities or an Interest in the Company held by an affiliate of the Company (other than any Preferred Stock or Existing Equity Interest in Holdings). | |
Interests | Means any equity security (as defined in section 101(16) of the Bankruptcy Code) of a Debtor, including all shares, common stock, preferred stock, or other instrument evidencing any fixed or contingent ownership interest in any Debtor, whether or not transferable, and any option, warrant, or other right, contractual or otherwise, to acquire any such interest in a Debtor, whether fully vested or vesting in the future, including, without limitation, equity or equity-based incentives, grants, or other instruments issued, granted or promised to be granted to current or former employees, directors, officers, or contractors of the Debtor, to acquire any such interests in a Debtor that existed immediately before the Effective Date. | |
Other Secured Claim | Means a Secured Claim, other than an Administrative Expense Claim, a Claim in connection with the DIP/Exit Facility, a Priority Tax Claim, a Term Loan Claim, or a Revolving Loan Claim. | |
Petition Date | Has the same meaning as in the Restructuring Support Agreements. | |
Plan Supplement | Has the same meaning as in the Restructuring Support Agreements. | |
Priority Non-Tax Claim | Means any Claim other than an Administrative Expense Claim or a Priority Tax Claim, entitled to priority in payment as specified in section 507(a) of the Bankruptcy Code. | |
Priority Tax Claim | Means any Secured Claim or unsecured Claim of a governmental unit of the kind entitled to priority in payment as specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code. | |
Reinstate, Reinstated, or Reinstatement | Means leaving a Claim Unimpaired under the Plan. |
18
Defined Terms |
||
Rejecting Class | Means a Class that does not vote to accept the Plan in accordance with section 1126 of the Bankruptcy Code. | |
Reorganized Company | The Company as reorganized under the Plan, if applicable. | |
Restructuring Expenses | Means, with respect to, (i) the Requisite Term Lenders, the reasonable fees, costs, and expenses of (a) Kirkland & Ellis LLP and (b) one law firm acting as local counsel (if any), and (c) FTI Consulting Inc.; (ii) the Administrative Agent, to the extent provided under the Credit Agreement; (iii) the Requisite Senior Noteholders, the fees, costs, and expenses of: (a) Milbank, Tweed, Hadley & McCloy LLP, (b) one law firm acting as local counsel (if any), and (c) Moelis & Company, in each case, pursuant to the economic terms of their respective engagement letters with the Company or, in the case of the Administrative Agent, the Credit Agreement, and (2) all prepetition and postpetition reasonable and documented out-of-pocket expenses of any Consenting Senior Noteholder (excluding any individual Consenting Noteholders attorneys fees or expenses), if any, but not exceeding $200,000 in the aggregate for all Consenting Senior Noteholders; and (iv) the indenture trustee under the Senior Notes Indenture, to the extent provided under the Senior Notes Indenture, one law firm as counsel to the indenture trustee under the Senior Notes Indenture, and one firm acting as local counsel for, if any, in each case in accordance with the Senior Notes Indenture. | |
Restructuring Transactions | Has the same meaning as in the Restructuring Support Agreements. | |
Revolving Credit Facility | Has the same meaning as in the Credit Agreement. | |
Revolving Loan Claims | Means any Claims arising from or in connection to the Revolving Credit Facility. | |
Required Parties | Means the Required Parties (as defined in the Term Lender RSA) and the Required Parties (as defined in the Senior Notes RSA). | |
Requisite Creditors | Means the Requisite Term Lenders (as defined in the Term Lender RSA) and the Requisite Senior Noteholders (as defined in the Senior Noteholder RSA). | |
Requisite Senior Noteholders | Has the same meaning as in the Senior Noteholder RSA. | |
RSA Parties | Means the Consenting Senior Noteholders (as defined in the Senior Noteholder RSA) and the Consenting Term Lenders (as defined in the Term Loan RSA). | |
Significant Equity | Any person, entity or group of affiliated persons and/or entities that, as of the Petition Date, holds, controls or has the power to vote, in |
19
Defined Terms | ||
Holder | the aggregate, in excess of 15% of the total outstanding Existing Equity Interests as of such date, and has nominated an individual currently sitting on the board of directors of the Company. | |
Unimpaired | Means, with respect to a Claim, Interest, or Class of Claims or Interests, not impaired within the meaning of sections 1123(a)(4) and 1124 of the Bankruptcy Code. |
20
Execution Version
Exhibit 1
Amended and Restated Credit Facility Term Sheet
This Amended and Restated Credit Facility Term Sheet (this Credit Facility Term Sheet ) is attached as Exhibit 1 to the Term Sheet, which is attached as Exhibit A to the Amended and Restated Restructuring Support Agreement, dated as of October 20, 2017 (the RSA ). Capitalized terms used but not otherwise defined in this Credit Facility Term Sheet shall have the meanings ascribed to such terms in the RSA or in the Credit Agreement, as applicable.
In connection with the Restructuring, the Prepackaged Plan will provide that the Credit Agreement will be amended and restated (the Amended and Restated Credit Facility and such amended and restated agreement, the Amended and Restated Credit Facility Agreement ). The Amended and Restated Credit Facility will be on terms substantially consistent with the Credit Agreement except for those modifications expressly set forth below and such other immaterial modifications as may be mutually agreed.
The effectiveness of the Amended and Restated Credit Facility will be conditioned on the Effective Date.
# | Term | Amendment | ||
1 |
Definitions - Acceptable Intercreditor Agreement | Attach to the Amended and Restated Credit Facility Agreement form of a first lien/second lien intercreditor agreement to be executed in connection with issuance of the New Second Lien Notes (as defined below), which will (x) be silent second lien with no right to provide DIP financing (other than on a second lien basis or if the Amended and Restated Credit Facility is repaid in full) and (y) provide that any and all claims and obligations of the lenders under the Amended and Restated Credit Facility, including any principal, interest, penalties, fees, expenses, costs, charges, make-whole premium, prepayment premium, and/or other premium and any deficiency claim, whether secured or unsecured, shall be senior in all respects to the payment of any claim or obligation under the second lien indenture (including, for the avoidance of any doubt, any principal, interest, penalties, fees, expenses, costs, charges, make-whole premium, prepayment premium, and/or other premium and any deficiency claim, whether secured or unsecured) thereunder | ||
2 |
Definitions - Applicable Margin | L + 6.00% | ||
3 |
Definitions - Consolidated EBITDA |
To be revised to mean Adjusted EBITDA as disclosed each quarter in the filed 10Q or 10K, as applicable, of the Borrower
Plug numbers to be used for the three fiscal quarters ending immediately prior to the Effective Date, which plug numbers shall be the Adjusted EBITDA numbers reported by the Borrower in its periodic report on form 10-Q or 10K, as applicable, filed with the SEC for each such fiscal quarter. |
||
4 |
Definitions - Tranche B Term Loan Maturity Date | The Amended and Restated Credit Facility will have a maturity of June 30, 2022 |
# | Term | Amendment | ||
5 | Section 2.11 - Repayment of Term Borrowings | Scheduled additional principal amortization payment on the Effective Date of $37.5M Scheduled additional quarterly principal amortization as follows: $7.5M per quarter for fiscal year ending 2018; $10M for the first quarter of the fiscal year ending 2019; $26.7M for the second quarter of the fiscal year ending 2019; $36.7M for the third quarter of the fiscal year ending 2019; $36.7M for the fourth quarter of the fiscal year ending 2019; and $15M per quarter for each fiscal quarter ending thereafter. | ||
6 | Section 2.13(d) - Excess Cash Flow | Commencing with the fiscal year ending 2018, calculated as (but not less than zero): 50% of Excess Cash Flow; provided that in no event shall the amount of the prepayment exceed an amount equal to (i) 75% of Excess Cash Flow (calculated to include the amount of fixed amortization) minus (ii) the amount of fixed amortization | ||
7 | Section 2.25 - Incremental Facilities | Reduce each of the Aggregate Incremental Amount and Incremental Revolving Credit Commitments to $0; provided the Borrower will be permitted to incur an incremental letter of credit facility that is secured on a pari passu basis with the Term Loans in an aggregate amount not to exceed $30M (a Replacement LC Facility ) | ||
8 | Section 5.01(f) - Compliance Certificate | Borrower to provide a reaffirmation of its obligations on a quarterly basis | ||
9 | New Section 5.01(i) - Information Covenants | Add requirement to deliver prompt notice of (i) reasonable expectation to terminate, (ii) actual termination of, and/or (iii) written notice received of an event that if uncured would give rise to a termination event under, any Designated Material Contract (to be defined in a manner reasonably acceptable to the Requisite Term Lenders). | ||
10 | Section 5.21 - Designation of Subsidiaries | No new Unrestricted Subsidiary may be designated without Requisite Term Lenders consent | ||
11 | Section 6.01 - Liens Negative Covenant |
Permit the liens securing the New Second Lien Notes
Permit the posting of cash collateral in respect of GSEs, Ginnie Mae or other government agencies, and insurers in an aggregate amount not to exceed $50M at any time outstanding
Permit either (a) the posting of cash collateral to secure letters of credit; provided, that the aggregate face amount outstanding of such letters of credit shall not exceed an amount equal to $30M less the amount (if any) of any Letters of Credit outstanding and secured under the Revolving Credit Facility or (b) any liens on collateral securing any Replacement LC Facility
General liens basket - reduce existing basket of the greater of $75M and 15% of Consolidated EBITDA to $22.5M securing obligations other than third party debt for borrowed money (6.01(xxvii)) |
||
12 | Section 6.02 Consolidation, Merger, Sale of Assets, Etc. |
Sale of RMS Business to be subject to a no Event of Default condition (6.02(xvii)) |
||
13 | Section 6.04 Indebtedness Negative Covenant |
Permit the incurrence of the New Second Lien Notes (provided that (i) interest on not less than $50 million of principal amount of the New Second Lien Notes shall be paid in the form of PIK Interest (as defined in Exhibit 2 of the Term Sheet) unless otherwise agreed by the Requisite Term Lenders and (ii) no cash interest shall be payable on previously accrued PIK Interest)
Permit either (a) letters of credit in an aggregate amount not to exceed $30M at any time outstanding (provided, that in the event the Borrowers Revolving Credit Facility remains outstanding, no more than $20M of Letters of Credit may be issued thereunder) or (b) a Replacement LC Facility
Purchase money indebtedness basket - reduce existing basket of $50M to $25M (6.04(iv)) and include GAAP freeze for treatment of operating/capital leases
Acquired/assumed indebtedness basket - reduce existing basket of the greater of $100M and 15% of Consolidated EBITDA to $50M (6.04(vii)) |
2
12/31/17 | 3/31/18 | 6/30/18 | 9/30/18 | 12/31/18 | 3/31/19 | 6/30/19 | 9/30/19 |
12/31/19
and thereafter |
||||||||||||||||||||||||||||
Asset Coverage Ratio A |
1.40 | x | 1.40 | x | 1.40 | x | 1.40 | x | 1.40 | x | 1.45 | x | 1.45 | x | 1.45 | x | 1.50 | x | ||||||||||||||||||
Asset Coverage Ratio B |
1.00 | x | 1.00 | x | 1.00 | x | 1.00 | x | 1.00 | x | 1.00 | x | 1.00 | x | 1.00 | x | 1.00 | x | ||||||||||||||||||
Interest Coverage Ratio |
1.20 | x | 1.20 | x | 1.20 | x | 1.25 | x | 1.25 | x | 1.75 | x | 2.00 | x | 2.00 | x | 2.25 | x | ||||||||||||||||||
First Lien Net Leverage Ratio |
8.50 | x | 7.75 | x | 7.75 | x | 6.75 | x | 5.75 | x | 5.00 | x | 4.50 | x | 4.00 | x | 3.50 | x |
3
# | Term | Amendment | ||
17 | Section 6.10 - Modifications of Certain Agreements Negative Covenant |
Revise ability to modify junior lien notes documents and convertible notes or Permitted Refinancing thereof to prohibit amendments that result in (6.10(y)):
making the relevant maturity date earlier or making the weighted average life to maturity earlier or require additional prepayments with respect to any event
effectuating an amendment that would not be permitted under criteria for a Permitted Refinancing |
||
18 | Section 7.01 - Events of Default |
Modify Section 7.01(c)(i) (covenants without a grace period) to include Sections 5.05 (Compliance with Statutes), 5.08 (Fiscal Years) and 5.21 (Designation of Subsidiaries)
Modify Section 7.01(d) (cross defaults) to (i) remove carve-out for defaults by Securitization Entities that are not Immaterial Subsidiaries, (ii) add termination by the counterparty under any Designated Material Contract that is not otherwise replaced by a comparable commercial contract and the failure to so replace such Designated Material Contract would reasonably be expected to have a Material Adverse Effect and (iii) reduce the materiality threshold to $30M
Modify Section 7.01(e) (Bankruptcy, etc.) and 7.01(i) (Judgments) to remove carve-out for Securitization Entities that are not Immaterial Subsidiaries and modify 7.01(i) (Judgments) to reduce the materiality threshold to $30M
Modify first proviso in final paragraph of Section 7.01 to add Events of Default specified in Section 7.01(e) with respect to any Borrower or Restricted Subsidiary that is not (i) an Immaterial Subsidiary, (ii) a Securitization Entity or (iii) any entity related to the RMS Business to cause automatic acceleration |
||
19 | Conditions to Effectiveness |
The Borrower shall engage in good faith discussions with the Requisite Term Lenders to develop a structure prior to soliciting acceptances for the Plan pursuant to which, (a) a holding company is formed immediately above the Borrower, which holding company shall deliver a parent guaranty and pledge agreement pledging all of the equity interests of the Borrower to the Collateral Agent or (b) an intermediate holding company is formed immediately below the Borrower, which intermediate holding company shall hold all of the equity interests of the direct subsidiaries of the Borrower currently existing and deliver a guaranty and pledge agreement pledging all of the equity interests of such direct subsidiaries to the Collateral Agent
Executed junior lien notes documents governing new second lien notes issued to replace the Senior Unsecured Notes, in form and substance substantially consistent with the terms described on Exhibit 2 to the Term Sheet and otherwise reasonably acceptable to the Requisite Term Lenders (the New Second Lien Notes )
The cancellation of the Convertible Notes in exchange for the warrants in form and substance described on Exhibit 4 to the Term Sheet
Master Reaffirmation Agreement executed by all Credit Parties
All deposit account control agreements as required by the RSA shall remain in full force and effect or deposit account control agreements on substantially the same terms shall be executed and delivered
The Security Agreement shall be amended to require customary deposit account control agreements (with springing control) with respect to all deposit accounts (other than Excluded Accounts, such other types of accounts as reasonably agreed by the Borrower and the Requisite Term Lenders that shall be deemed to be Excluded Accounts and such other accounts as reasonably agreed by the Borrower and the Requisite Term Lenders) held by each Credit Party (including, for the avoidance of doubt, any deposit account established after the Effective Date)
Other customary conditions including, but not limited to, customary legal opinions from Borrowers counsel (including local counsel) and payment of all legal and other advisors fees and expenses as provided in the RSA and mutual releases |
||
20 | Other | Additional technical amendments to effectuate the foregoing to be included, in each case to be reasonably acceptable to the Borrower and the Requisite Term Lenders |
4
Execution Version
Exhibit 2
New Second Lien Notes Term Sheet 1
1 | Capitalized terms used but not defined in this term sheet shall have the meanings ascribed to such terms in the Restructuring Support Agreement, dated as of October 20, 2017, to which this term sheet is attached as Exhibit 2 to Exhibit A. |
2
Exhibit 3
Mandatorily Convertible Preferred Stock Term Sheet 2
Issuer | Walter Investment Management Corp. (the Issuer or the Company ) | |
Securities, Face Amount | The Issuer will issue 100,000 shares of Preferred Stock with a per share face amount of $1,000 (the Face Amount ) for an aggregate Face Amount of $100 million | |
Dividend | No entitlement to dividend except in the event of dividends paid on the New Common Stock in which case, the Preferred Stock is entitled to share pro rata in dividends paid, on an as-converted basis | |
Mandatory Conversion Date | December 31, 2022 3 | |
Conversion Rate | As of any determination date for any optional or mandatory conversion, each share of Preferred Stock will convert into such number of shares of New Common Stock as is equal to then-current Conversion Ratio. The Conversion Ratio shall be determined pursuant to a formula, such that the aggregate number of shares of New Common Stock issuable upon conversion of the entire class of Preferred Stock would, immediately after such full conversion, represent 73% of the total number of issued and outstanding shares of New Common Stock of the Company as of the effective date of the Plan, subject to dilution by shares of New Common Stock issued or issuable pursuant to the MIP and by shares of New Common Stock issued after the effective date of the Plan, including shares of New Common Stock issued pursuant to the Warrants. | |
Conversion |
At Holders Option : The Preferred Stock shall be convertible into a number of shares of New Common Stock equal to the aggregate Face Amount of the shares so converted divided by the Per Share Conversion Price (i) at the election of the holder thereof after the Effective Date 4 and (ii) as a class in its entirety, in whole but not in part, at any time after the Effective Date, at the option of the holders of 66 2/3rds of the aggregate outstanding Face Amount.
At Issuers Option : N/A
Mandatory Conversion : The Preferred Stock, as a class in its entirety, shall be mandatorily convertible at the earlier of (i) the Mandatory Conversion Date, (ii) |
2 | Capitalized terms used but not defined in this term sheet shall have the meanings ascribed to such terms in the Restructuring Support Agreement, dated as of October 20, 2017, to which this term sheet is attached as Exhibit 3 to Exhibit A. |
3 | Five year term |
4 | Subject to Section (4)(e) of the Restructuring Support Agreement, dated as of October 20, 2017, with the Consenting Senior Noteholders. |
3
at any time following one year after the Effective Date, the time that the VWAP of the New Common Stock exceeds 150% of the Conversion Price 5 per share (the Conversion Threshold ) for at least 45 trading days in a 60 consecutive trading day period, including each of the last 20 days in such 60 consecutive trading day period and (iii) a change of control transaction with a value that is greater than or equal to the Conversion Price. | ||
Redemption | The Preferred Stock is not subject to mandatory redemption. | |
Voting Rights |
Vote with New Common Stock of the Issuer on an as-converted basis as to all matters; provided, however , that during the Initial Period (which will be defined as the period from the Effective Date through the second anniversary of the Effective Date), the Preferred Stock shall (1) not vote on as-converted basis with respect the election of directors, during which time the holders of the Preferred Stock will have the right to nominate and elect six (6) directors, and the holders of the New Common Stock will have the right to nominate and elect three (3) directors, and (2) not be entitled to vote to amend certain provisions of the bylaws and/or certificate of incorporation in any manner that adversely impacts the rights of the holders of the New Common Stock to elect directors by such holders of New Common Stock during the Initial Period (e.g., removal directors, nomination/election rights, etc.).
In addition, approval of a majority of the shares of Preferred Stock then outstanding shall be required for modifications to the terms and conditions of the Preferred Stock or issuances of additional shares of stock (other than New Common Stock) ranking senior to or pari passu with the Preferred Stock as to liquidation or dividends. |
|
Ranking | Preferred Stock will rank senior (to the extent of the Liquidation Preference) in liquidation, winding-up or dissolution (including any distribution in respect thereof) to shares of New Common Stock and any other equity securities of the Issuer. | |
Liquidation Preference | In the event of a voluntary or involuntary liquidation, winding-up or dissolution, each holder of Preferred Stock will be entitled to receive the greater of (i) a liquidation preference per share of Preferred Stock, prior to any distribution with respect to any other equity security of the Issuer, equal to the Liquidation Preference, and (ii) the amount payable per share, participating on an as converted basis, upon liquidation to the holders of the New Common Stock. The Liquidation Preference shall equal (i) the Face Amount, increased by (ii) an amount equivalent to the amount that would have been determined, compounding quarterly, at a rate of seven percent (7%) per annum, on the Face Amount, to but not including, the date of any liquidation, winding-up or dissolution. Thereafter, holders of Preferred Stock will have no right or claim to the remaining assets, if any, of the Issuer. | |
Registration Rights | Customary demand and piggyback registration rights for persons beneficially owning 10% or greater of the New Common Stock or who are otherwise affiliates of the Company. |
5 | Conversion Price shall equal the aggregate Face Amount divided by the Conversion Ratio. |
4
Anti-Dilution and other |
Customary public company anti-dilution protection in connection with any: (i) subdivision or combination of outstanding the New Common Stock, (ii) stock split or stock split, or (iii) issuance of rights or warrants to all or substantially all holders of New Common Stock.
Subject to exceptions, pre-requisites and thresholds to be reasonably agreed and consistent with maintaining applicable private placement offering exemptions and orderly marketing of a securities offering, the Company will provide notice and a bona fide opportunity to participate in private offerings of equity securities of the Company after the Effective Date. |
|
Governance | None, except as set forth in the RSA and attachments thereto. |
5
Exhibit 4
Warrants Term Sheet 6
Set forth below are key illustrative terms of Series A Warrants (Series A Warrants) that will be issued pursuant to the Plan
Issuer | Walter Investment Management Corp. (the Issuer or the Company ) | |
Number of Warrants |
The Series A Warrants shall be subject to a governing warrant agreement ( Series A Warrant Agreement ), and each such warrant is exercisable for one share of New Common Stock.
The number of Series A Warrants shall be determined at the effective date of the Plan such that, in the aggregate, the holders of Convertible Notes and the Existing Shareholders (through the Series A Warrants and shares of New Common Stock issuable to them under the Plan) will receive 50% of the incremental total equity value of the Company above $325 million (the Series A Threshold ) (after giving effect to the conversion of the Preferred Stock). |
|
Exercise Price | The exercise price per Series A Warrant shall be set at a price per share of New Common Stock such that the Series A Warrants are in the money at and above the Series A Threshold (expressed on a per share basis). | |
Form of Settlement |
Full Settlement : If Full Physical Settlement is elected, the Issuer shall deliver, against payment of the Exercise Price, a number of shares of New Common Stock equal to the number of Series A Warrants exercised
Cashless Exercise : If Cashless Exercise is elected, the Issuer will withhold from issuance a number of shares of New Common Stock issuable upon the exercise of the Series A Warrants which, when multiplied by the Market Price of the New Common Stock, is equal to the aggregate price for the number of shares of New Common Stock for which the Series A Warrants are being exercised at the Exercise Price (assuming the Exercise Price for all such shares of New Common Stock was being paid in cash), and such withheld shares shall no longer be issuable under the Series A Warrants |
6 | Capitalized terms used but not defined in this term sheet shall have the meanings ascribed to such terms in the Restructuring Support Agreement, dated as of October 20, 2017, to which this term sheet is attached as Exhibit 4 to Exhibit A. |
6
Expiration Date | Close of Business on December 31, 2027 7 | |
Business Combinations | On and after merger, consolidation or similar transactions and business combinations with another person in which New Common Stock is converted into, exchanged for or otherwise changed into other securities and / or property, the Series A Warrant Agreement shall provide customary rights to receive, upon exercise, the consideration such holder would have received if such Series A Warrants had been exercised immediately prior to such transaction. | |
Anti-Dilution | Customary anti-dilution provisions, in substantially the same form as provided for the Preferred Stock. | |
Registration Rights | Customary demand and piggyback registration rights for persons beneficially owning 10% or greater of the New Common Stock or who are otherwise affiliates of the Company for Warrants and underlying warrant shares, subject to cut-back on a pari passu basis with shares issuable upon conversion of Preferred Stock. |
Set forth below are key illustrative terms of Series B Warrants (Series B Warrants) that will be issued pursuant to the Plan
Issuer | Walter Investment Management Corp. | |
Number of Warrants |
The Series B Warrants shall be subject to a governing warrant agreement ( Series B Warrant Agreement ), and each such warrant is exercisable for one share of New Common Stock.
The number of Series B Warrants shall be determined at the effective date of the Plan such that, in the aggregate, the holders of Convertible Notes and the Existing Shareholders (through the Series B Warrants, the Series A Warrants and shares of New Common Stock issuable to them under the Plan) will receive 60% of the incremental total equity value of the Company above $500 million (the Series B Threshold ) (after giving effect to the conversion of the Preferred Stock). |
|
Exercise Price | The exercise price per Series B Warrant shall be set at a price per share of New Common Stock such that the Series B Warrants are in the money at and above the Series B Threshold (expressed on a per share basis). |
7 | Ten year maturity |
7
Form of Settlement |
Full Settlement : If Full Physical Settlement is elected, the Issuer shall deliver, against payment of the Exercise Price, a number of shares of New Common Stock equal to the number of Series B Warrants exercised
Cashless Exercise : If Cashless Exercise is elected, the Issuer will withhold from issuance a number of shares of New Common Stock issuable upon the exercise of the Series B Warrants which, when multiplied by the Market Price of the New Common Stock, is equal to the aggregate price for the number of shares of New Common Stock for which the Series B Warrants are being exercised at the Exercise Price (assuming the Exercise Price for all such shares of New Common Stock was being paid in cash), and such withheld shares shall no longer be issuable under the Series B Warrants |
|
Expiration Date | Close of Business on December 31, 2027 8 | |
Business Combinations | On and after merger, consolidation or similar transactions and business combinations with another person in which New Common Stock is converted into, exchanged for or otherwise changed into other securities and / or property, the Series B Warrant Agreement shall provide customary rights to receive upon exercise the consideration such holder would have received if such Series B Warrants had been exercised immediately prior to such transaction. | |
Anti-Dilution | Customary anti-dilution provisions, in substantially the same form as provided for the Preferred Stock. | |
Registration Rights | Customary demand and piggyback registration rights for 10% or greater holders of New Common Stock, for Warrants and underlying warrant shares, subject to cut-back on a pari passu basis with shares issuable upon conversion of Preferred Stock. |
8 | Ten year maturity |
8
EXHIBIT B
FORM OF JOINDER AGREEMENT FOR CONSENTING TERM LENDERS
This Joinder Agreement to the Amended and Restated Restructuring Support Agreement, dated as of October 20, 2017 (as amended, supplemented or otherwise modified from time to time, the Agreement ), by and among Walter Investment Management Corp., and the holders of the Term Loans (together with their respective successors and permitted assigns, the Consenting Term Lenders and each, a Consenting Term Lenders) is executed and delivered by (the Joining Party ) as of , 2017. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement.
1. Agreement to be Bound . The Joining Party hereby agrees to be bound by all of the terms of the Agreement, a copy of which is attached to this Joinder Agreement as Annex I (as the same has been or may be hereafter amended, restated or otherwise modified from time to time in accordance with the provisions hereof). The Joining Party shall hereafter be deemed to be a Consenting Term Lender and a Party for all purposes under the Agreement and with respect to any and all Claims held by such Joining Party.
2. Representations and Warranties . With respect to the aggregate principal amount of Term Loans set forth below its name on the signature page hereto, the Joining Party hereby makes the representations and warranties of the Consenting Term Lenders set forth in Section 7 of the Agreement to each other Party to the Agreement.
3. Governing Law . This Joinder Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to any conflict of laws provisions which would require the application of the law of any other jurisdiction.
[Signature Page Follows]
IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above.
CONSENTING TERM LENDER | ||
By: |
|
|
Name: | ||
Title: |
Notice Address : | ||
|
||
|
||
|
||
Fax: |
Attention: |
|
|
Email: |
|
Acknowledged: | ||
WALTER INVESTMENT MANAGEMENT CORP. | ||
By: |
|
|
Name: | ||
Title: |
Exhibit 10.2
Execution Version
RESTRUCTURING SUPPORT AGREEMENT
This RESTRUCTURING SUPPORT AGREEMENT (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, and including any exhibits or schedules hereto, this Agreement ), dated as of October 20, 2017, is entered into by and between:
(i) Walter Investment Management Corp. (the Company ); and
(ii) the undersigned beneficial holders, or investment advisers or managers for the account of beneficial holders (in its respective capacity as such, the Senior Noteholders ) of the 7.875% senior notes due 2021 (the Senior Notes ) issued pursuant to that certain indenture dated as of December 17, 2013 (the Senior Notes Indenture ), by and among the Company, the guarantors and Wilmington Savings Fund Society, FSB, a national banking association, as successor trustee (the Trustee ), together with their respective successors and permitted assigns that subsequently become party hereto in accordance with the terms hereof (collectively, the Consenting Senior Noteholders ).
The Company, each Consenting Senior Noteholder, and any subsequent Person that becomes a party hereto in accordance with the terms hereof are referred to herein as the Parties and individually as a Party .
Capitalized terms used but not defined herein shall have the meanings ascribed to them, as applicable, in the restructuring term sheet attached hereto as Exhibit A (together with all exhibits and annexes attached thereto, the Term Sheet ) or the Direction (as defined below), in each case including any schedules, annexes and exhibits attached thereto, and as may be modified in accordance with Section 9 hereof, or the Senior Notes Indenture.
WHEREAS , the Parties have agreed to a restructuring of the Company and/or its capital structure (the Restructuring ) that will be implemented through a chapter 11 proceeding consistent with the terms and subject to the conditions set forth herein, including in the Term Sheet, which is the product of arms-length, good faith discussions between the Parties and their respective professionals;
WHEREAS , as of the date hereof, the Consenting Senior Noteholders in the aggregate hold, or act as the nominee, investment adviser, sub-adviser, or investment manager to entities that hold, as of the date hereof, more than 50% of the aggregate outstanding principal amount of the Senior Notes;
WHEREAS , concurrently with the execution of this Agreement, the Company is entering into the Term Loan RSA; and
WHEREAS , the Parties desire to express to each other their mutual support and commitment in respect of the matters discussed in the Term Sheet and hereunder.
NOW, THEREFORE , in consideration of the premises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:
1. | Certain Definitions. |
As used in this Agreement, the following terms have the following meanings:
(a) Alternative Transaction means any plan, dissolution, winding up, liquidation, sale or disposition, reorganization, merger or restructuring of the Company or its assets other than the Restructuring, as set forth herein, including the Term Sheet;
(b) Bankruptcy Code means title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. , as amended from time to time.
(c) Bankruptcy Court means the United States Bankruptcy Court for the Southern District of New York having jurisdiction over the Chapter 11 Case, and, to the extent of the withdrawal of any reference under 28 U.S.C. § 157, pursuant to 28 U.S.C. § 151, the United States District Court for the Southern District of New York.
(d) Claims means claim as defined in section 101(5) of the Bankruptcy Code, including, without limitation, any claim arising under or relating to the Senior Notes Indenture.
(e) Consenting Term Lenders means the Term Lenders that execute the Term Loan RSA, together with their respective successors and permitted assigns that become party thereto.
(f) Convertible Noteholders means the holders of Convertible Notes, in their respective capacities as such.
(g) Convertible Notes means the 4.50% convertible senior subordinated notes due 2019 issued pursuant to the Convertible Notes Indenture.
(h) Convertible Notes Indenture means that certain Subordinated Indenture dated as of January 13, 2012 by and between the Company and Wells Fargo Bank, National Association as Trustee, and a Supplemental Indenture thereto, dated as of January 13, 2012.
(i) Convertible Notes RSA means any restructuring support agreement that may be entered into by the Company and any holders of the Convertible Notes.
(j) Credit Agreement means that certain Amended and Restated Credit Agreement, dated as of December 19, 2013 (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time in accordance with the terms thereof, by and among the Company, as the borrower, Credit Suisse AG, as administrative agent, and the lenders party thereto.
2
(k) Definitive Documents means the documents (including any related orders, agreements, instruments, schedules or exhibits) that are contemplated by the Term Sheet and that are otherwise necessary or desirable to implement, or otherwise relate to the Restructuring, the Prepackaged Plan and the Term Sheet including: (i) the Prepackaged Plan; (ii) the documents to be filed in the supplement to the Prepackaged Plan (collectively, the Plan Supplement ); (iii) definitive documentation with respect to the Amended and Restated Credit Facility (collectively, the Amended and Restated Credit Facility Documents ); (iv) the Direction; (v) each Direction Letter; (vi) the Disclosure Statement; (vii) any motion seeking the approval of the adequacy of the Disclosure Statement and solicitation of the Prepackaged Plan; (viii) the Confirmation Order; (ix) the motion for use of cash collateral and to incur postpetition financing and any credit agreement with respect thereto (the Financing Motion ); (x) any Financing Orders; (xi) the post-Effective Date organizational documents for the Company, shareholder-related agreements, or other related documents (including the mandatorily convertible preferred stock described on Exhibit 3 to the Term Sheet and the warrants described on Exhibit 4 to the Term Sheet); and (xii) the term sheet with respect to the Management Incentive Plan, if agreed. Without prejudice to the rights of any Consenting Senior Noteholder with respect to any action that any Consenting Term Lender may take with respect to any action or failure to act of either the Company or any Consenting Term Lender with respect to the Term Loan RSA, the Term Loan RSA shall not constitute a Definitive Document for purposes of this Agreement. Each of the Definitive Documents shall contain terms and conditions consistent in all material respects with this Agreement and the Term Sheet; provided that (i) the terms of the Prepackaged Plan with respect to the treatment of the Senior Notes and the treatment of any matters with respect to the Senior Notes Indenture shall be acceptable in all respects to the Requisite Senior Noteholders and (ii) the terms and conditions of the DIP/Exit Facility (including any Definitive Documents memorializing the DIP/Exit Facility) shall be acceptable in all material respects to the Requisite Senior Noteholders.
(l) Direction means the Consent of Noteholders to Direction to Trustee attached hereto as Exhibit B, including all attachments, annexes and exhibits thereto.
(m) Disclosure Statement means the Disclosure Statement relating to the Prepackaged Plan.
(n) Effective Date means the date on which the Restructuring is consummated.
(o) Filing Conditions means the Company having received votes to accept the Prepackaged Plan by (i) holders of Term Loans satisfying the Requisite Term Lenders Threshold and (ii) holders of Senior Notes satisfying the Requisite Senior Notes Threshold.
(p) Financing Orders means any orders authorizing the Company to continue to access cash collateral and incur any postpetition financing on an interim basis or final basis consistent with the Term Sheet.
(q) Management Incentive Plan means a post-Effective Date management incentive plan for certain members of the Companys management to be determined and adopted by the board of directors of the reorganized Company post-Effective Date in accordance with the Term Sheet.
3
(r) Material Adverse Effect means any event, change, occurrence, development, circumstance or change of fact occurring after the date hereof that has had, or would reasonably be expected to have, a material adverse effect on the business, results of operations or condition (financial or otherwise) of the Company and all of its affiliates, taken as a whole; provided, however, that none of the following, either alone or in combination, will constitute, or be considered in determining whether there has been, a Material Adverse Effect: (i) any event, change, effect, occurrence, development, circumstance or change of fact arising out of, resulting from or relating to the commencement or existence of the Chapter 11 Cases, the announcement of this Agreement, the Term Loan RSA, the Prepackaged Plan and the Restructuring, or compliance by any Party with the covenants and agreements contained herein, or in the Term Loan RSA, the Prepackaged Plan or the Term Sheet, including any objections in the Bankruptcy Court in the Chapter 11 Cases, (ii) any outbreak or escalation of war or hostilities or any act of terrorism, (iii) in and of itself or as a consequence thereof, any change in the Companys stock price or trading volume or listing on the New York Stock Exchange (including, for the avoidance of doubt, any consequential effects of a delisting, as it relates to the Convertible Notes, any decrease in the ratings or ratings outlook for the Company, or any failure by the Company to meet (or the publication of any report regarding) any projections, forecasts, budgets, estimates or outlook of or relating to the Company, including with respect to revenues or earnings or other internal or external financial or operating projections, (iv) any actions, effects or changes arising from or related to any actions taken by or failed to be taken pursuant to or in accordance with this Agreement or at the request of, or consented to by, the Consenting Senior Noteholders, (v) the execution or delivery of this Agreement, the consummation of the transactions contemplated by this Agreement or the public announcement or other publicity with respect to any of the foregoing.
(s) Person means any person as defined in section 101(41) of the Bankruptcy Code, including, without limitation, any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof or other entity.
(t) Prepackaged Plan means the prepackaged chapter 11 plan of reorganization of the Company (including any annexes, supplements, exhibits, term sheets, or other attachments attached thereto, which will be consistent in all respects with the Term Sheet and this Agreement and otherwise reasonably acceptable to the Company and Requisite Senior Noteholders), to be implemented in the Restructuring in accordance with and subject to the terms and conditions of this Agreement, including the Term Sheet.
(u) Required Parties means each of (i) the Company and (ii) the Requisite Senior Noteholders.
(v) Requisite Senior Noteholders means, as of the date of determination, Consenting Senior Noteholders holding at least a majority in aggregate principal amount outstanding of the Senior Notes held by the Consenting Senior Noteholders as of such date.
4
(w) Requisite Senior Notes Threshold means 66 2/3 % of the aggregate outstanding principal amount of the Senior Notes.
(x) Requisite Term Lenders Threshold means 66 2/3 % of the aggregate outstanding principal amount of the Term Loans.
(y) SEC means the Securities & Exchange Commission.
(z) Second Lien Notes means the Series A Notes and Series B Notes described in to the Term Sheet.
(aa) Securities Act means the Securities Act of 1933, as amended.
(bb) Support Effective Date means the date on which: the counterpart signature pages to (i) this Agreement shall have been executed and delivered by the Company and Consenting Senior Noteholders holding at least the Requisite Senior Notes Threshold and (ii) the Term Loan RSA, in a form and substance reasonably acceptable to the Requisite Senior Noteholders (which shall be deemed to have occurred upon the release of signature pages by each Consenting Senior Noteholder), shall have been executed and delivered by the Company and Consenting Term Lenders holding at least the Requisite Term Lenders Threshold.
(cc) Support Period means the period commencing on the Support Effective Date and ending on the earlier of the (i) date on which this Agreement is terminated in accordance with Section 5 hereof and (ii) the Effective Date.
(dd) Term Loan RSA means the restructuring support agreement, dated as of October 20, 2017, to support the Restructuring with terms consistent with this Agreement and the Term Sheet executed by the Company and the Consenting Term Lenders satisfying the Requisite Term Lenders Threshold; provided that the Consenting Senior Noteholders shall not be deemed to be parties to, or third party beneficiaries, under, the Term Loan RSA for any purpose whatsoever.
(ee) Term Loans has the meaning set forth in the Credit Agreement.
2. | Term Sheet. |
The Term Sheet is expressly incorporated herein by reference and made part of this Agreement as if fully set forth herein. The Term Sheet, including the exhibits and annexes thereto, sets forth the material terms and conditions of the transactions contemplated by the Restructuring (collectively, the Restructuring Transactions ); provided , however , the Term Sheet is supplemented by the terms and conditions of this Agreement. In the event of any inconsistency between the Term Sheet and this Agreement, the Term Sheet shall control.
5
3. Agreements of the Consenting Senior Noteholders.
(a) Agreement to Support . During the Support Period, subject to the terms and conditions hereof, each of the Consenting Senior Noteholders agrees, severally and not jointly, that it shall:
(i) use its commercially reasonable efforts to support the Restructuring and the transactions contemplated by the Term Sheet, the Direction, and the Prepackaged Plan, and to act in good faith and take any and all reasonable actions necessary to consummate the Restructuring and the transactions contemplated by the Term Sheet, the Direction, and the Prepackaged Plan, in a manner consistent with this Agreement;
(ii) (A) promptly, and in any event within five (5) business days after the date hereof, execute, and irrevocably consent to, the Direction, (B) cause each of the Directions to be promptly executed by the DTC participant specified in such Direction, and thereafter promptly delivered for execution, and executed, by Cede & Co., (C) so long as this Agreement has not been terminated with respect to such Consenting Senior Noteholder, upon the Companys request, renew the Direction no more frequently than every 59 days, in a manner substantially consistent with the preceding clauses (A) and (B) and (D) execute and deliver such documents, and take such other actions, as may be reasonably requested by the Company or Trustee, or both, to evidence such consent by the registered holder of the Senior Notes;
(iii) refrain from initiating (or directing or encouraging the Trustee or any other party to initiate) any actions, including legal proceedings, that are inconsistent with, or that would delay, prevent, frustrate or impede the approval, confirmation or consummation, as applicable, of the Restructuring;
(iv) timely vote (pursuant to the Prepackaged Plan) or cause to be voted all of its Claims (including on account of any Term Loans and Convertible Notes owned or controlled by such Consenting Senior Noteholder) to accept the Prepackaged Plan by delivering its duly executed and completed ballot or ballots, as applicable, accepting the Prepackaged Plan on a timely basis following commencement of the solicitation of acceptances of the Prepackaged Plan in accordance with sections 1125(g) and 1126 of the Bankruptcy Code;
(v) negotiate in good faith with the Company the forms of the Definitive Documents and execute the Definitive Documents (in each case, to the extent such Consenting Senior Noteholder is a party thereto);
(vi) not change or withdraw its votes to accept the Prepackaged Plan (or cause or direct such vote to be changed or withdrawn); provided , however , that such vote shall, without any further action by the applicable Consenting Senior Noteholder, be deemed automatically revoked (and, upon such revocation, deemed void ab initio ) by the applicable Consenting Senior Noteholder at any time following the expiration of the Support Period with respect to such Consenting Senior Noteholder;
(vii) not directly or indirectly, through any Person, seek, solicit, propose, support, assist, engage in negotiations in connection with or participate in the formulation, preparation, filing or prosecution of, any plan, plan proposal, restructuring proposal, offer of dissolution, winding up, liquidation, sale or disposition, reorganization, merger or restructuring of the Company under any bankruptcy, insolvency or similar laws
6
other than the Restructuring, or take any other action that is inconsistent with or that would reasonably be expected to prevent, interfere with, delay or impede the solicitation of votes on the Restructuring, Prepackaged Plan and Disclosure Statement, and the confirmation and consummation of the Prepackaged Plan and the Restructuring;
(viii) use its commercially reasonable efforts to support and take all actions as are reasonably necessary and appropriate to obtain any and all required regulatory and/or third-party approvals to consummate the Transactions; and
(ix) support and take all reasonable actions necessary or reasonably requested by the Company to facilitate the solicitation of votes on the Prepackaged Plan by the Company, approval of the Prepackaged Plan and Disclosure Statement, and confirmation and consummation of the Prepackaged Plan and the Restructuring.
(b) Transfers .
(i) Each Consenting Senior Noteholder agrees that, for the duration of the Support Period, such Consenting Senior Noteholder shall not sell, transfer, loan, issue, participate, pledge, hypothecate, assign or otherwise dispose of (other than ordinary course pledges and/or swaps) (each, a Transfer ), directly or indirectly, in whole or in part, any of its Claims, including any beneficial ownership in any such Claims, 1 or any option thereon or any right or interest therein, unless the transferee thereof either (A) is a Consenting Senior Noteholder (with respect to a transfer by a Consenting Senior Noteholder) or (B) prior to such Transfer, agrees in writing for the benefit of the Parties to become a Consenting Senior Noteholder and to be bound by all of the terms of this Agreement applicable to Consenting Senior Noteholders (including with respect to any and all Claims it already may hold against or in the Company prior to such Transfer) by executing a joinder agreement, a form of which is attached hereto as Exhibit C (a Joinder Agreement ), and delivering an executed copy thereof within two (2) business days of such execution, to (i) Weil, Gotshal and Manges LLP ( Weil ), as counsel to the Company, and (ii) Milbank, Tweed, Hadley & McCloy LLP, as counsel to an ad hoc group of Consenting Senior Noteholders ( Milbank ), in which event (x) the transferee shall be deemed to be a Consenting Senior Noteholder hereunder to the extent of such transferred Claims and (y) the transferor shall be deemed to relinquish its rights (and be released from its obligations) under this Agreement to the extent of such transferred Claims (such transfer, a Permitted Transfer and such party to such Permitted Transfer, a Permitted Transferee ). Each Consenting Senior Noteholder agrees that any Transfer of any Claim that does not comply with the terms and procedures set forth herein shall be deemed void ab initio , and the Company and each other Consenting Senior Noteholder shall have the right to enforce the voiding of such Transfer.
1 | As used herein, the term beneficial ownership means the direct or indirect economic ownership of, and/or the power, whether by contract or otherwise, to direct the exercise of the voting rights and the disposition of, any Claims subject to this Agreement or the right to acquire such Claims. |
7
(ii) Notwithstanding anything to the contrary herein, (A) a Qualified Marketmaker 2 that acquires any Claims subject to this Agreement held by a Consenting Senior Noteholder with the purpose and intent of acting as a Qualified Marketmaker for such Claims, shall not be required to become a party to this Agreement as a Consenting Senior Noteholder, if (x) such Qualified Marketmaker transfers such Claims (by purchase, sale, assignment, or other similar means) within the earlier of ten (10) business days of its acquisition and the plan voting deadline to a Permitted Transferee and the transfer otherwise is a Permitted Transfer, and (y) such Consenting Senior Noteholder shall be solely responsible for the Qualified Marketmakers failure to comply with this Section 3(b), and (B) to the extent any Party is acting solely in its capacity as a Qualified Marketmaker, it may Transfer any ownership interests in the Claims that it acquires from a holder of Claims that is not a Consenting Senior Noteholder to a transferee that is not a Consenting Senior Noteholder at the time of such Transfer without the requirement that the transferee be or become a signatory to this Agreement or execute a Transfer Agreement.
(iii) This Section 3(b) shall not impose any obligation on the Company to issue any cleansing letter or otherwise publicly disclose information for the purpose of enabling a Consenting Senior Noteholder to Transfer any Claims. Notwithstanding anything to the contrary herein, to the extent the Company and another Party have entered into a separate agreement with respect to the issuance of a cleansing letter or other public disclosure of information, the terms of such confidentiality agreement shall continue to apply and remain in full force and effect according to its terms.
(c) Additional Claims . This Agreement shall in no way be construed to preclude the Consenting Senior Noteholders from acquiring additional Claims; provided that, to the extent any Consenting Senior Noteholder (i) acquires additional Claims, (ii) holds or acquires any other claims against the Company entitled to vote on the Prepackaged Plan, or (iii) holds or acquires any equity interests in the Company entitled to vote on the Prepackaged Plan, then, in each case, each such Consenting Senior Noteholder shall promptly notify Weil and Milbank, and each such Consenting Senior Noteholder agrees that all such Claims shall be subject to this Agreement (regardless of when or whether notice of such acquisition is given to the Company), and agrees that, for the duration of the Support Period and subject to the terms of this Agreement, it shall vote in favor of the Prepackaged Plan (or cause to be voted) any such additional Claims entitled to vote on the Prepackaged Plan (to the extent still held by it on or on its behalf at the time of such vote), in a manner consistent with Section 3(a) hereof. For the avoidance of any doubt, any obligation to vote for the Prepackaged Plan or any other plan of reorganization shall be subject to sections 1125(g) and 1126 of the Bankruptcy Code.
2 |
As used herein, the term Qualified Marketmaker means an entity that (a) holds itself out to the public and/or the applicable private markets as standing ready in the ordinary course of business to purchase from customers and sell to customers claims against, and equity interests in, the Company, including Senior Notes, or enter with customers into long and short positions in claims against the Company), in its capacity as a dealer or market maker in such claims and (b) is, in fact, regularly in the business of making a market in claims against issuers or borrowers (including debt or equity securities). |
8
(d) Preservation of Rights . Notwithstanding the foregoing, nothing in this Agreement (including any Consenting Senior Noteholders entry into this Agreement in connection with, or following, the Companys entry into the Term Loan RSA) or the Term Sheet, and neither a vote to accept the Prepackaged Plan by any Consenting Senior Noteholder, nor the acceptance of the Prepackaged Plan by any Consenting Senior Noteholder, shall: (A) be construed to limit consent and approval rights provided in this Agreement and the Definitive Documentation; (B) be construed to prohibit any Consenting Senior Noteholder from contesting whether any matter, fact, or thing is a breach of, or is inconsistent with, this Agreement, or exercising rights or remedies specifically reserved herein; (C) be construed to prohibit any Consenting Senior Noteholder from appearing as a party-in-interest in any matter to be adjudicated in the Chapter 11 Case, so long as such appearance and the positions advocated in connection therewith are not inconsistent with this Agreement and are not for the purpose of hindering, delaying, or preventing (or could not reasonably be expected to hinder, delay or prevent) the consummation of the Restructuring or the transactions contemplated herein subject to the terms and conditions hereof; (D) impair or waive the rights of any Consenting Senior Noteholder to assert or raise any objection expressly permitted under this Agreement in connection with any hearing in the Bankruptcy Court, including, without limitation, any hearing on the approval of the Disclosure Statement or confirmation of the Prepackaged Plan or (E) subject to Section 3(f), limit the ability of any Consenting Senior Noteholder to assert any rights, claims, and/or defenses under the Senior Indenture and any related documents or agreements (including, without limitation, the right of any Consenting Senior Noteholder to assert that any potential action of the Company or any of its affiliates that is inconsistent with, or any potential omission of the Company or any of its affiliates to take any action required, by the Senior Indenture and/or that a potential default or event of default has occurred under the Senior Indenture).
(e) Negative Covenants . The Consenting Senior Noteholders agree that, for the duration of the Support Period, each Consenting Senior Noteholder shall not take any action inconsistent with this Agreement, including without limitation, the Direction, including all attachments, annexes and exhibits thereto, except to the extent that any such action or inaction is expressly contemplated or permitted by this Agreement, the Prepackaged Plan, or any of the other Definitive Documents.
(f) Forbearance . Subject to the remainder of this Section 3(f) , during the period commencing on the Support Effective Date and ending on the termination of this Agreement in accordance with its terms, the Consenting Senior Noteholders hereby agree to forbear from the exercise of any rights or remedies they may have under the Senior Notes Indenture and under applicable United States or foreign law or otherwise that would be materially inconsistent with the terms of this Agreement. For the avoidance of doubt, the forbearance set forth in this Section 3(f) (i) shall automatically terminate, without the need for any further notice, upon a termination of this Agreement in accordance with the terms hereof, (ii) shall not constitute a waiver with respect to any defaults or events of default under the Indenture, and (iii) shall not bar any Consenting Senior Noteholder from filing a proof of claim or taking action to establish the amount of such claim. If the transactions contemplated hereby are not consummated, or if this Agreement is terminated for any reason, the Parties fully reserve any and all of their rights.
9
4. | Agreements of the Company. |
(a) Covenants . The Company agrees that, for the duration of the Support Period, the Company shall, and shall cause each of its subsidiaries included in the definition of Company, to:
(i) (A) support and use commercially reasonable efforts to consummate and complete the Restructuring and all transactions contemplated under this Agreement (including, without limitation, those described in the Term Sheet and once filed, the Prepackaged Plan, including, without limitation, (1) take any and all reasonably necessary actions in furtherance of the Restructuring and the transactions contemplated under this Agreement, including, without limitation, as set forth in the Term Sheet and, once filed, the Prepackaged Plan, (1) subject to the satisfaction of the Filing Conditions (unless waived by the Company), commence the Chapter 11 Case on or before November 30, 2017 (the Outside Petition Date , and the actual commencement date, the Petition Date ) and complete and file, within the timeframes contemplated herein, the Prepackaged Plan, the Disclosure Statement, and the other Definitive Documents, and (3) use commercially reasonable efforts to obtain orders of the Bankruptcy Court approving the Disclosure Statement and confirming the Prepackaged Plan within the timeframes contemplated by this Agreement; (B) use commercially reasonable efforts to obtain any and all required regulatory approvals for the Restructuring embodied in the Definitive Documents, including the Prepackaged Plan, if any; and (C) not take any action that is inconsistent with, or is intended or is reasonably likely to, alter, delay, impede or interfere with, approval of the Disclosure Statement, confirmation of the Prepackaged Plan, or consummation of the Prepackaged Plan and the Restructuring in the case of each of clauses (A) through (C) to the extent consistent with, upon the advice of counsel, the fiduciary duties of the board of directors of the Company;
(ii) not commence an avoidance action or other legal proceeding that challenges the validity, enforceability or priority of the Senior Notes or any related claims;
(iii) if the Company receives an unsolicited bona fide unsolicited proposal or expression of interest in undertaking an Alternative Transaction that the board of directors of the Company, determines in its good-faith judgment provides a higher or better economic recovery to the Companys stakeholders than that set forth in this Agreement and such Alternative Transaction is from a proponent that the board of directors of the Company has reasonably determined is capable of timely consummating such Alternative Transaction, the Company will within 48 hours of the receipt of such proposal or expression of interest, notify counsel to the Requisite Senior Noteholders of the receipt thereof, with such notice to include the material terms thereof, including the identity of the Person or group of Persons involved;
(iv) provide draft copies of all material motions or applications and other documents (including all first day and second day motions and orders, the Prepackaged Plan, the Disclosure Statement, ballots and other solicitation materials in respect of the Prepackaged Plan and any proposed amended version of the Prepackaged Plan or the Disclosure Statement, and a proposed confirmation order) the Company intends to file with the Bankruptcy Court to Milbank, if reasonably practical, at least five (5) business days prior to the date when the Company intends to file any such pleading or other document (provided that if delivery of such motions, orders or materials (other than the Prepackaged Plan, the Disclosure Statement, a confirmation order or adequate protection order) at least five (5) business days in advance is not reasonably practicable,
10
such motion, order or material shall be delivered as soon as reasonably practicable prior to filing) and shall consult in good faith with such counsel regarding the form and substance of any such proposed filing with the Bankruptcy Court;
(v) file such first day motions and pleadings reasonably determined by the Company, in form and substance reasonably acceptable to the Requisite Senior Noteholders, to be necessary, and to seek interim and final (to the extent necessary) orders, in form and substance reasonably acceptable to the Company and the Requisite Senior Noteholders, from the Bankruptcy Court approving the relief requested in such first day motions;
(vi) subject to appropriate confidentiality arrangements, provide to the Consenting Senior Noteholders professionals, upon reasonable advance notice to the Company; (A) reasonable access (without any material disruption to the conduct of the Companys business) during normal business hours to the Companys books, records, and facilities; (B) reasonable access to the respective management and advisors of the Company for the purposes of evaluating the Companys finances and operations and participating in the planning process with respect to the Restructuring; (C) prompt access to any information provided to any existing or prospective financing sources (including lenders under any debtor-in-possession and/or exit financing); and (D) prompt and reasonable responses to all reasonable diligence requests;
(vii) use its commercially reasonable efforts to support and take all actions as are reasonably necessary and appropriate to obtain any and all required regulatory and/or third-party approvals to consummate the Transactions;
(viii) promptly pay all prepetition and postpetition reasonable and documented fees and expenses of (x) Milbank, Moelis & Company ( Moelis ), and one firm acting as local counsel for Milbank, if any, in each case in accordance with the economic terms of their respective engagement letters with the Company and (y) the indenture trustee under the Senior Notes Indenture (the Indenture Trustee ), one law firm acting as primary counsel for the Indenture Trustee and one firm acting as local counsel for such primary counsel, if any, in each case in accordance with the Senior Notes Indenture;
(ix) promptly pay all prepetition and postpetition reasonable and documented out-of-pocket expenses of any Consenting Senior Noteholder incurred in connection with the Restructuring (excluding any individual Consenting Senior Noteholders attorneys fees or expenses), if any, but not exceeding $200,000 in the aggregate for all Consenting Senior Noteholders;
(x) not, nor encourage any other person or entity to, take any action which would, or would reasonably be expected to, breach or be inconsistent with this Agreement or delay, impede, appeal, or take any other negative action, directly or indirectly, to interfere with the acceptance, confirmation or consummation of the Plan or implementation of the Restructuring;
11
(xi) subject to applicable laws, use commercially reasonable efforts to, consistent with the pursuit and consummation of the Restructuring and the transactions contemplated thereby, preserve intact in all material respects the current business operations of the Company and its subsidiaries;
(xii) subject to applicable laws, use commercially reasonable efforts to, consistent with the pursuit and consummation of the Restructuring and the transactions contemplated thereby, preserve intact in all material respects the current business operations of the Company and its subsidiaries (other than as consistent with applicable fiduciary duties), keep available the services of its current officers and material employees (in each case, other than voluntary resignations, terminations for cause, or terminations consistent with applicable fiduciary duties) and preserve in all material respects its relationships with customers, sales representatives, suppliers, distributors, and others, including the warehouse lenders, in each case, having material business dealings with the Company (other than terminations for cause or consistent with applicable fiduciary duties);
(xiii) provide prompt written notice to the Requisite Senior Noteholders between the date hereof and the Effective Date of (A) receipt of any written notice from any third party alleging that the consent of such party is or may be required in connection with the transactions contemplated by the Restructuring, (B) receipt of any written notice from any governmental body in connection with this Agreement or the transactions contemplated by the Restructuring, (C) receipt of any written notice of any proceeding commenced, or, to the actual knowledge of the Company, threatened against the Company, relating to or involving or otherwise affecting in any material respect the transactions contemplated by the Restructuring, and (D) receipt of any notice of termination of the Term Loan RSA; and
(xiv) unless otherwise agreed by the Company and the applicable firm, on the date that is at least one (1) calendar day prior to the Petition Date, pay to (A) Milbank, (B) one firm acting as local counsel for Milbank, if any, (C) Moelis, (D) counsel to the Indenture Trustee, and (E) one firm acting as local counsel for primary counsel to the Indenture Trustee, if any, in each case, (x) all reasonable and documented fees and expenses accrued but unpaid as of such date, whether or not such fees and expenses are then due, outstanding, or otherwise payable in connection with this matter and (y) and fund or replenish, as the case may be, any retainers reasonably requested by such Milbank, Moelis or Milbanks local counsel, if any, in each case in accordance with the economic terms of their respective engagement letters with the Company.
(b) Automatic Stay . The Company acknowledges and agrees and shall not dispute that after the commencement of the Chapter 11 Case, the giving of any notice by any Party pursuant to this Agreement shall not be a violation of the automatic stay of section 362 of the Bankruptcy Code (and the Company hereby waives, to the greatest extent possible, the applicability of the automatic stay to the giving of such notice); provided that nothing herein shall prejudice any Partys rights to argue that the giving of notice of default or termination was not proper under the terms of this Agreement.
12
(c) Negative Covenants . The Company agrees that, for the duration of the Support Period, the Company shall not take any action inconsistent with, or omit to take any action required by the Senior Notes Indenture, except to the extent that any such action or inaction is expressly contemplated or permitted by this Agreement, the Prepackaged Plan, or any of the other Definitive Documents.
(d) Preservation of Tax Attributes . Prior to the launch of solicitation of the Prepackaged Plan, the Parties shall work together in good faith to attempt to maximize the value of the Companys tax attributes. Any trading restrictions sought by the Company (or the reorganized Company, as the case may be) shall require a supplement to the Term Sheet on terms and conditions to be agreed upon.
(e) RSA Premium .
(i) Subject to Section 4(e)(ii) , if the Company has not commenced the Chapter 11 Case by the Outside Petition Date for a reason other than the failure of the Consenting Senior Noteholders to comply in good faith with their obligations under this Agreement, the Company shall pay in cash to each Consenting Senior Noteholder on December 1, 2017, its pro rata share of $21,210,000.00 (the RSA Premium ); provided that each Consenting Senior Noteholders pro rata share of such payment shall be determined by using the proportion of (x) the principal amount of Senior Notes held by such Consenting Senior Noteholder to (y) the aggregate principal amount of all Senior Notes held by all Consenting Senior Noteholders; provided further that, if the RSA Premium is paid (i) each Consenting Senior Noteholder that has indefeasibly been paid its portion of the RSA Premium shall without further action be deemed to have waived irrevocably and for all purposes, including without limitation the Senior Notes and the Indenture and the Prepackaged Plan or any other chapter 11 plan, and to the fullest extent permitted by law, its entitlement to payment of, or a claim for, its pro rata share of the interest payment payable under the Senior Notes Indenture on December 15, 2017 (the December Interest Payment ), (ii) any amount received by such Consenting Senior Noteholder on account of the December Interest Payment shall be paid to the Company in cash within five (5) business days of its receipt (the Turnover Payment ), and (iii) such Consenting Senior Noteholder shall take all such further actions and execute and deliver such further agreements, instruments and other documents, as the Company shall reasonably request to fully effectuate the waiver and Turnover Payment required hereby. For the avoidance of doubt, a Consenting Senior Noteholders Turnover Payment shall not exceed the pro rata share of the RSA Premium received by that Consenting Senior Noteholder under this provision.
(ii) A Consenting Senior Noteholder shall not be entitled to any RSA Premium if it has not delivered to the Company its executed signature page to this Agreement prior to the expiration of the solicitation period for the Prepackaged Plan.
5. | Termination of Agreement. |
(a) This Agreement shall terminate upon the receipt of written notice to the other Parties, delivered in accordance with Section 19 hereof, from the Requisite Senior Noteholders or their counsel at any time after and during the continuance of any Noteholder Termination Event (defined below).
13
(b) A Noteholder Termination Event shall mean any of the following:
(i) the breach by the Company of (a) any covenant contained in this Agreement (including the failure to comply with the covenant contained in Section 4(c)) or (b) any other obligations of the Company set forth in this Agreement, in each case, in any material respect, and, in either respect, such breach remains uncured for a period of five (5) business days following the Companys receipt of written notice pursuant to Sections 5(a) and 19 hereto (as applicable);
(ii) any representation or warranty in this Agreement made by the Company shall have been untrue in any material respect when made or shall have become untrue in any material respect, and such breach remains uncured for a period of five (5) business days following the Companys receipt of notice pursuant to Sections 5(a) and 19 hereto (as applicable);
(iii) the Definitive Documents and any amendments, modifications, or supplements thereto filed by the Company include terms that are not materially consistent with the Term Sheet and are not otherwise acceptable to the Requisite Senior Noteholders in all respects, and such event remains unremedied for a period of three (3) business days following the Companys receipt of notice pursuant to Sections 5(a) and 19 hereto (as applicable);
(iv) a Definitive Document alters the treatment of the Senior Noteholders specified in the Restructuring Term Sheet and the Requisite Senior Noteholders have not consented to such Definitive Document;
(v) the issuance by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any ruling, judgment or order enjoining the consummation of or rendering illegal the Prepackaged Plan or the Restructuring, and either (A) such ruling, judgment or order has been issued at the request of or with the acquiescence of the Company, or (B) in all other circumstances, such ruling, judgment or order has not been not stayed, reversed or vacated within fifteen (15) calendar days after such issuance;
(vi) the Support Effective Date shall not have occurred on or before October 25, 2017;
(vii) the Company shall not have commenced solicitation of the Prepackaged Plan on or before November 6, 2017;
(viii) two business days after the voting deadline for the Prepackaged Plan, if Term Lenders holding at least the Requisite Term Lenders Threshold shall not have voted in favor of the Prepackaged Plan;
(ix) the Petition Date shall not have occurred on or before the Outside Petition Date;
14
(x) the Company shall not have filed the Prepackaged Plan, the Disclosure Statement, and motions seeking approval of the Disclosure Statement and the solicitation procedures and setting a confirmation hearing for the Prepackaged Plan within one (1) business day after the Petition Date;
(xi) the hearings to consider approval of the Disclosure Statement and confirmation of the Prepackaged Plan shall not have commenced on or before the forty-fifth (45 th ) day after the Petition Date;
(xii) the Effective Date shall not have occurred on or before the earlier of (A) seventy-five (75) days after the Petition Date or (B) January 31, 2018;
(xiii) the Bankruptcy Court enters an order that is not stayed (A) directing the appointment of an examiner with expanded powers or a trustee in the Chapter 11 Case, (B) converting the Chapter 11 Case to a case under chapter 7 of the Bankruptcy Code, (C) dismissing the Chapter 11 Case, (D) denying confirmation of the Prepackaged Plan, the effect of which would render the Prepackaged Plan incapable of consummation on the terms set forth herein, or (E) granting relief that is inconsistent with this Agreement or the Prepackaged Plan in any materially adverse respect to the Supporting Noteholders, in each case;
(xiv) the Confirmation Order is reversed or vacated by a Final Order;
(xv) any court of competent jurisdiction has entered a final, non-appealable judgment or order declaring this Agreement to be unenforceable;
(xvi) if either (i) the Company or any person or entity with proper standing files a motion, objection, application or adversary proceeding (or supports or fails to timely object to such a filing) (1) challenging the validity, enforceability, perfection or priority of, or seeking invalidation, avoidance, disallowance, recharacterization or subordination of, the obligations or Claims under the Senior Notes Indenture, (2) challenging the seniority of the obligations or Claims under the Senior Notes Indenture over any obligations or Claims under the Convertible Notes Indenture, or (3) which, if adjudged in favor of the moving party, approved, granted, or sustained by the Bankruptcy Court would impair the treatment of the Senior Notes as set forth in the Term Sheet, or (ii) the Bankruptcy Court (or any court with jurisdiction over the Chapter 11 Cases) enters an order providing relief against the interests of the Senior Noteholders with respect to any of the foregoing causes of action or proceedings, including, but not limited to, invalidating, avoiding, disallowing, recharacterizing, subordinating, or limiting the enforceability of any of the obligations or Claims arising under or related to the Senior Notes Indenture;
(xvii) the debtor-in-possession financing orders or debtor-in-possession financing contemplated by the Term Sheet is terminated;
(xviii) the Company (unless the Company is acting at the direction or instruction of the Requisite Senior Noteholders, any of their respective employees, agents, or representatives) files, enters into, votes for, expresses support for, pursues,
15
joins in, or seeks approval of, or supports (or fails to timely object to) another party in filing or seeking approval of, an Alternative Transaction or any form of plan support agreement with respect thereto;
(xix) the commencement of an involuntary bankruptcy case against the Company under the Bankruptcy Code, if such involuntary case is not dismissed within sixty (60) calendar days after the filing thereof, or if a court order grants the relief sought in such involuntary case;
(xx) if the Company (A) withdraws the Prepackaged Plan, (B) publicly announces its intention not to support the Restructuring or, the Prepackaged Plan, (C) files a motion with the Bankruptcy Court seeking the approval of an Alternative Transaction, or (D) agrees to pursue (including, for the avoidance of doubt, as may be evidenced by a term sheet, letter of intent, or similar document) or publicly announces its intent to pursue an Alternative Transaction;
(xxi) if, at any time, (x) the Company terminates the Term Loan RSA or (y) the aggregate Term Loan Claims held by the Consenting Term Lenders that are bound by the Term Loan RSA are less than the Requisite Term Lenders Threshold (each of clauses (x) and (y), a Term Loan RSA Termination ); provided, that the Company shall promptly notify Milbank of the occurrence of any Term Loan RSA Termination (and in any event shall notify Milbank no later than one (1) Business Day after such occurrence); or
(xxii) the occurrence of a Material Adverse Effect;
(xxiii) the Company amends, modifies, restates or supplements the Term Loan RSA in a manner that is materially adverse to and not acceptable to the Requisite Senior Noteholders or the term sheet attached as Exhibit A to the Term Loan RSA is modified without the consent of the Requisite Senior Noteholders;
(xxiv) the Company enters into a Convertible Notes RSA that is inconsistent with the Term Sheet or that includes terms more favorable for the Convertible Noteholders than the terms set forth in this Agreement;
(xxv) the Bankruptcy Court enters an order modifying or terminating the Companys exclusive right to file and/or solicit acceptances of a plan of reorganization (including the Prepackaged Plan);
(xxvi) the terms and conditions of the DIP/Exit Facility (including, but not limited to, any Definitive Documents memorializing the DIP/Exit Facility) are not acceptable in all material respects to the Requisite Senior Noteholders;
(xxvii) the Company or any other Credit Party (as defined in the Credit Agreement) makes, or causes to be made, any payment of principal or interest on any indebtedness constituting Term Loans (other than any payments provided for in the Term Sheet or the Financing Orders or any mandatory prepayments under the Credit Agreement) or Convertible Notes; or
16
(xxviii) the Company fails to timely pay the RSA Premium in accordance with the terms set forth in Section 4(e) of this Agreement.
(c) A Company Termination Event shall mean any of the following:
(i) the breach in any material respect by one or more of the Consenting Senior Noteholders, of any of the undertakings, representations, warranties, or covenants of the Consenting Senior Noteholders set forth herein in any material respect which remains uncured for a period of five (5) business days after the receipt of written notice of such breach pursuant to Section 5(a) and 19 hereof (as applicable), but only if the non-breaching Consenting Senior Noteholders own less than 66 2/3 % of the Claims under the Senior Notes Indenture;
(ii) the board of directors of the Company or its subsidiaries reasonably determines in good faith based upon the advice of outside counsel that continued performance under this Agreement would be inconsistent with the exercise of its fiduciary duties under applicable law; provided , that the Company shall provide notice of such determination to Milbank via email within one (1) business day after the date thereof;
(iii) the Company shall not have obtained votes accepting the Prepackaged Plan from holders of the (x) Senior Notes and (y) Term Loans, in each case, sufficient to satisfy the conditions for acceptance set forth in section 1126(c) of the Bankruptcy Code on or before the voting deadline set forth in the solicitation materials distributed in connection with the Prepackaged Plan;
(iv) the Support Effective Date shall not have occurred on or before October 25, 2017;
(v) if the Effective Date shall not have occurred on or before the earlier of (A) seventy-five (75) days after the Petition Date or (B) January 31, 2018;
(vi) if a Term Loan RSA Termination occurs; provided, that the Company shall promptly notify Milbank of the occurrence of any Term Loan RSA Termination (and in any event shall notify Milbank no later than one (1) Business Day after such occurrence);
(vii) the term sheet attached as Exhibit A to the Term Loan RSA is modified without the consent of the Requisite Senior Noteholders; or
(viii) the issuance by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any ruling, judgment or order enjoining the consummation of or rendering illegal the Prepackaged Plan or the Restructuring, and such ruling, judgment or order has not been not stayed, reversed or vacated within fifteen (15) calendar days after such issuance.
17
(d) Mutual Termination . This Agreement may be terminated by mutual agreement of the Company and the Requisite Senior Noteholders upon the receipt of written notice delivered in accordance with Section 19 hereof.
(e) Automatic Termination . This Agreement shall terminate automatically, without any further action required by any Party, upon the occurrence of the Effective Date.
(f) Effect of Termination . Upon the termination of this Agreement in accordance with this Section 5 (other than pursuant to Section 5(e)) if the Restructuring has not been consummated, and except as provided in Section 13 hereof, this Agreement shall forthwith become void and of no further force or effect and each Party shall, except as provided otherwise in this Agreement, be immediately released from its liabilities, obligations, commitments, undertakings and agreements under or related to this Agreement and shall have all the rights and remedies that it would have had and shall be entitled to take all actions, whether with respect to the Restructuring or otherwise, that it would have been entitled to take had it not entered into this Agreement, including all rights and remedies available to it under applicable law, the Senior Notes Indenture and any ancillary documents or agreements thereto; provided , however , that in no event shall any such termination relieve a Party from liability for its breach or non-performance of its obligations hereunder prior to the date of such termination. Upon any such termination of this Agreement, each vote or any consents given by any Consenting Senior Noteholder prior to such termination shall be deemed, for all purposes, to be null and void ab initio and shall not be considered or otherwise used in any manner by the Parties in connection with the Restructuring and this Agreement, in each case, without further confirmation or other action by such Consenting Senior Noteholder. If this Agreement has been validly terminated as to any Consenting Senior Noteholder in accordance with Section 5 hereto (other than pursuant to Section 5(e)) at a time when permission of the Bankruptcy Court shall be required for a Consenting Senior Noteholder to change or withdraw (or cause to change or withdraw) its vote to accept the Prepackaged Plan, the Company shall support and not oppose any attempt by such Consenting Senior Noteholder to change or withdraw (or cause to change or withdraw) such vote at such time. The Consenting Senior Noteholder shall have no liability to the Company or to each other in respect of any termination of this Agreement in accordance with the terms of this Section 5 and Section 19 hereof.
(g) If the Restructuring has not been consummated prior to the date of termination of this Agreement, nothing herein shall be construed as a waiver by any Party of any or all of such Partys rights and the Parties expressly reserve any and all of their respective rights. Pursuant to Federal Rule of Evidence 408 and any other applicable rules of evidence, this Agreement and all negotiations relating hereto shall not be admissible into evidence in any proceeding other than a proceeding to enforce its terms.
6. | Definitive Documents; Good Faith Cooperation; Further Assurances. |
Subject to the terms and conditions described herein, during the Support Period, each Party, severally and not jointly, hereby covenants and agrees to reasonably cooperate with each
18
other in good faith in connection with, and shall exercise commercially reasonable efforts with respect to the pursuit, approval, implementation, and consummation of the Prepackaged Plan and the Restructuring, as well as the negotiation, drafting, execution (to the extent such Party is a party thereto), and delivery of the Definitive Documents. Furthermore, subject to the terms and conditions hereof, each of the Parties shall take such action as may be reasonably necessary or reasonably requested by the other Parties to carry out the purposes and intent of this Agreement, including making and filing any required regulatory filings and voting any claims against or securities of the Company in favor of the Restructuring, and shall refrain from taking any action that would frustrate the purposes and intent of this Agreement; provided that no Consenting Senior Noteholder shall be required to incur any material cost, expense, or liability in connection therewith.
7. | Representations and Warranties. |
(a) Each Party, severally and not jointly, represents and warrants to the other Parties that the following statements are true, correct and complete as of the date hereof (or as of the date a Consenting Senior Noteholder becomes a party hereto):
(i) such Party is validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, and has all requisite corporate, partnership, limited liability company or similar authority to enter into this Agreement and carry out the transactions contemplated hereby and perform its obligations contemplated hereunder; and the execution and delivery of this Agreement and the performance of such Partys obligations hereunder have been duly authorized by all necessary corporate, limited liability company, partnership or other similar action on its part;
(ii) the execution, delivery and performance by such Party of this Agreement does not and will not (A) violate any material provision of law, rule or regulation applicable to it or any of its subsidiaries or its charter or bylaws (or other similar governing documents) or those of any of its subsidiaries, or (B) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation to which it or any of its subsidiaries is a party;
(iii) the execution, delivery and performance by such Party of this Agreement does not and will not require any material registration or filing with, consent or approval of, or notice to, or other action, with or by, any federal, state or governmental authority or regulatory body, except such filings as may be necessary and/or required by the SEC; and
(iv) this Agreement is the legally valid and binding obligation of such Party, enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or limiting creditors rights generally or by equitable principles relating to enforceability or a ruling of the Bankruptcy Court.
19
(b) Each Consenting Senior Noteholder severally (and not jointly), represents and warrants to the Company that, as of the date hereof (or as of the date such Consenting Senior Noteholder becomes a party hereto), such Consenting Senior Noteholder (i) is the beneficial owner of the aggregate principal amount of Senior Notes set forth below its name on the signature page hereof (or below its name on the signature page of a Joinder Agreement for any Consenting Senior Noteholder that becomes a party hereto after the date hereof) and does not beneficially own any other Senior Notes, and/or (ii) has, with respect to the beneficial owners of such Senior Notes, (A) sole investment or voting discretion with respect to such Senior Notes, (B) full power and authority to vote on and consent to matters concerning such Senior Notes or to exchange, assign and transfer such Senior Notes, and (C) full power and authority to bind or act on the behalf of, such beneficial owners.
(c) Each Consenting Senior Noteholder severally (and not jointly) makes the representations and warranties set forth in Section 21(c) hereof, in each case, to the other Parties.
8. | Disclosure; Publicity. |
(a) Subject to the provisions set forth in Section 8(b) hereof, the Company shall disseminate a Current Report on Form 8-K or a press release disclosing the existence of this Agreement and the terms hereof and of the Term Sheet (including any schedules and exhibits thereto that are filed with the Bankruptcy Court on the Petition Date) with such redactions as may be reasonably requested by Milbank to maintain the confidentiality of the items identified in Section 8(b) hereof, except as otherwise required by law. In the event that the Company fails to make the foregoing disclosures in compliance with the terms specified herein, any such Consenting Senior Noteholder may publicly disclose the foregoing, including, without limitation, this Agreement and all of its exhibits and schedules (subject to the redactions called for by Section 8 hereof), and the Company hereby waives any claims against the Consenting Senior Noteholders arising as a result of such disclosure by a Consenting Senior Noteholder in compliance with this Agreement.
(b) The Company shall submit drafts to Milbank of any press releases, public documents and any and all filings with the SEC that constitute disclosure of the existence or terms of this Agreement, any amendment to the terms of this Agreement, or any other matter relating to the Senior Notes at least three (3) business days prior to (or otherwise as reasonably practicable in advance of) making any such disclosure, and any such press releases, public documents, and other SEC filings shall be reasonably acceptable in all material respects to the Requisite Senior Noteholders. Except as required by applicable law or otherwise permitted under the terms of any other agreement between the Company and any Consenting Senior Noteholder, no Party or its advisors shall disclose to any person (including, for the avoidance of doubt, any other Consenting Senior Noteholder), other than advisors to the Company, the principal amount of the Senior Notes held by the Consenting Senior Noteholder, without such Consenting Senior Noteholders prior written consent; provided , however , that (i) if such disclosure is required by law, subpoena, or other legal process or regulation, the disclosing Party shall afford the
20
relevant Consenting Senior Noteholder a reasonable opportunity to review and comment in advance of such disclosure and shall take all reasonable measures to limit such disclosure (the expense of which, if any, shall be borne by the relevant Consenting Senior Noteholder) and (ii) the foregoing shall not prohibit the disclosure of the aggregate percentage or aggregate outstanding principal amount of the Senior Notes held by all the Consenting Senior Noteholders collectively. Notwithstanding the provisions in this Section 8 , any Party may disclose, to the extent consented to in writing by a Consenting Senior Noteholder, such Consenting Senior Noteholders individual holdings.
9. | Amendments and Waivers. |
This Agreement, including any exhibits or schedules hereto, may not be waived, modified, amended or supplemented except with the written consent of the Company and the Requisite Senior Noteholders; provided , however , that any waiver, modification, amendment or supplement to this Section 9 shall require the written consent of all of the Parties; provided , further , that any modification, amendment or change to the definition of Requisite Senior Noteholders shall require the written consent of each Consenting Senior Noteholder; provided , further , that any change, modification or amendment to this Agreement, the Term Sheet or the Prepackaged Plan that treats or affects any Consenting Senior Noteholder in a manner that is materially adverse to such Consenting Senior Noteholder shall require the written consent of such Consenting Senior Noteholder; provided , further , that if any change, modification or amendment to this Agreement, the Term Sheet or the Prepackaged Plan does not have a materially adverse effect on such Consenting Senior Noteholder, the consent of such Consenting Senior Noteholder shall not be required. In the event that an adversely affected Consenting Senior Noteholder ( Non-Consenting Senior Noteholder ) does not consent to a waiver, change, modification or amendment to this Agreement requiring the consent of each Consenting Senior Noteholder, but such waiver, change, modification or amendment receives the consent of Consenting Senior Noteholders owning at least 66 2/3 % of the aggregate outstanding principal amount of the Senior Notes, this Agreement shall be deemed to have been terminated only as to such Non-Consenting Senior Noteholder, but this Agreement shall continue in full force and effect in respect to all other Consenting Senior Noteholders who have so consented, in a way consistent with (or otherwise reasonably acceptable to the Requisite Senior Noteholders) this Agreement and the Term Sheet as waived, changed, modified, or amended, as applicable.
10. | Effectiveness. |
This Agreement shall become effective and binding on the Parties on the Support Effective Date, and not before such date; provided that signature pages executed by Consenting Senior Noteholders shall be delivered to (a) the other Consenting Senior Noteholders in a redacted form that removes such Consenting Senior Noteholders holdings of the Senior Notes or any other Claims against or interests in the Company and any schedules to such Consenting Senior Noteholders holdings (if applicable) and (b) the Company, Weil, and Milbank in an unredacted form and to be kept confidential by the Company, Weil and Milbank).
21
11. | Governing Law; Jurisdiction; Waiver of Jury Trial. |
(a) This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York, without giving effect to the conflict of laws principles thereof.
(b) Each of the Parties irrevocably agrees that any legal action, suit or proceeding arising out of or relating to this Agreement brought by any party or its successors or assigns shall be brought and determined in any federal or state court in the State of New York, and each of the Parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such proceeding arising out of or relating to this Agreement or the Restructuring Transactions. Each of the Parties agrees not to commence any proceeding relating hereto or thereto except in the courts described above in New York, other than proceedings in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in New York as described herein. Each of the Parties further agrees that notice as provided herein shall constitute sufficient service of process and the Parties further waive any argument that such service is insufficient. Each of the Parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any proceeding arising out of or relating to this Agreement or the Restructuring Transactions, (i) any claim that it is not personally subject to the jurisdiction of the courts in New York as described herein for any reason, (ii) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) that (A) the proceeding in any such court is brought in an inconvenient forum, (B) the venue of such proceeding is improper or (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. Notwithstanding the foregoing, during the pendency of the Chapter 11 Case, all proceedings contemplated by this Section 11(b) shall be brought in the Bankruptcy Court.
(c) EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
22
12. | Specific Performance/Remedies. |
It is understood and agreed by the Parties that money damages would not be a sufficient remedy for any breach of this Agreement by any Party and each non-breaching Party shall be entitled to specific performance and injunctive or other equitable relief (including attorneys fees and costs) as a remedy of any such breach, without the necessity of proving the inadequacy of money damages as a remedy, including an order of the Bankruptcy Court requiring any Party to comply promptly with any of its obligations hereunder.
13. | Survival. |
Notwithstanding the termination of this Agreement pursuant to Section 5 hereof, the agreements and obligations of the Parties in this Section 13 , and Sections 5(d) , 8 , 10 , 11 , 12 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , and 21 hereof (and any defined terms used in any such Sections) shall survive such termination and shall continue in full force and effect in accordance with the terms hereof; provided , however , that any liability of a Party for failure to comply with the terms of this Agreement shall survive such termination.
14. | Headings. |
The headings of the sections, paragraphs and subsections of this Agreement are inserted for convenience only and shall not affect the interpretation hereof or, for any purpose, be deemed a part of this Agreement.
15. | Successors and Assigns; Severability; Several Obligations. |
This Agreement is intended to bind and inure to the benefit of the Parties and their respective successors, permitted assigns, heirs, executors, administrators and representatives; provided , however , that nothing contained in this Section 15 shall be deemed to permit Transfers of the Senior Notes or claims arising under the Senior Notes other than in accordance with the express terms of this Agreement. If any provision of this Agreement, or the application of any such provision to any Person or circumstance, shall be held invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provision or part thereof and the remaining part of such provision hereof and this Agreement shall continue in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon any such determination of invalidity, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a reasonably acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible. The agreements, representations and obligations of the Parties are, in all respects, ratable and several and neither joint nor joint and several.
16. | No Third-Party Beneficiaries. |
Unless expressly stated herein, this Agreement shall be solely for the benefit of the Parties (and their respective successors, permitted assigns, heirs, executors, administrators and representatives) and no other Person shall be a third-party beneficiary hereof.
23
17. | Prior Negotiations; Entire Agreement. |
This Agreement, including the exhibits and schedules hereto (including the Term Sheet) constitutes the entire agreement of the Parties, and supersedes all other prior negotiations, with respect to the subject matter hereof and thereof, except that the Parties acknowledge that any confidentiality agreements (if any) heretofore executed between the Company and each Consenting Senior Noteholder shall continue in full force and effect.
18. | Counterparts. |
This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same agreement. Execution copies of this Agreement may be delivered by facsimile or by electronic mail in portable document format (pdf), which shall be deemed to be an original for the purposes of this paragraph.
19. | Notices. |
All notices hereunder shall be deemed given if in writing and delivered, if contemporaneously sent by electronic mail, facsimile, courier or by registered or certified mail (return receipt requested) to the following addresses and facsimile numbers:
(1) If to the Company, to:
Walter Investment Management Corp.
3000 Bayport Drive, Suite 1100
Tampa, FL 33607
Attn: John Haas, General Counsel, Chief Legal Counsel and Secretary
Email: JHaas@walterinvestment.com
With a copy to (which shall not constitute notice):
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attn: Ray C. Schrock, P.C.
Email: Ray.Schrock@weil.com
Attn: Joseph H. Smolinsky, Esq.
Email: Joseph.Smolinsky@weil.com
Attn: Sunny Singh, Esq.
Email: Sunny.Singh@weil.com
24
(2) If to a Consenting Senior Noteholder, or a transferee thereof, to the addresses or facsimile numbers set forth below following the Consenting Senior Noteholders signature (or as directed by any transferee thereof), as the case may be, with copies to:
Milbank, Tweed, Hadley & McCloy LLP
28 Liberty Street
New York, NY 10005
Attn: Dennis F. Dunne
Email: ddunne@milbank.com
and
Milbank, Tweed, Hadley & McCloy LLP
2029 Century Park East, 33 rd Floor
Los Angeles, CA 90067
Attn: Gregory A. Bray, Esq.
Haig M. Maghakian, Esq.
Email: gbray@milbank.com
hmaghakian@milbank.com
Any notice given by delivery, mail or courier shall be effective when received. Any notice given by facsimile or electronic mail shall be effective upon oral, machine or electronic mail (as applicable) confirmation of transmission.
20. | Creditors Committee. |
Notwithstanding anything herein to the contrary, if any Consenting Senior Noteholder is appointed to and serves on an official committee of unsecured creditors in the Chapter 11 Case, the terms of this Agreement shall not be construed so as to (i) limit such Consenting Senior Noteholders exercise of its fiduciary duties to any person arising from its service on such committee, and any such exercise of such fiduciary duties shall not be deemed to constitute a breach of the terms of this Agreement or (ii) require such Consenting Senior Noteholder to take any action, or to refrain from taking any action, in such persons capacity as a statutory committee member. All Parties agree they shall not oppose the participation of any of the Consenting Senior Noteholders on any official committee of unsecured creditors formed in the Chapter 11 Case; provided that nothing in this Agreement shall be construed as requiring any Consenting Senior Noteholder to serve on any statutory committee in the Chapter 11 Case.
21. | Reservation of Rights; No Admission. |
(a) Nothing contained herein shall (i) limit (A) the ability of any Party to consult with other Parties, or (B) the rights of any Party under any applicable bankruptcy, insolvency, foreclosure, or similar proceeding, including the right to appear as a party in interest in any matter to be adjudicated in order to be heard concerning any matter arising in the Chapter 11 Case in each case, so long as such consultation or appearance is consistent with such Partys obligations hereunder, or under the terms of the Prepackaged Plan; (ii) limit the ability of any Consenting Senior Noteholder to sell or enter into any transactions in connection with the Claims under the Senior Notes Indenture, or any other claims against or interests in the Company, subject to the terms of Section 3(b) hereof; (iii) limit the rights of any Consenting
25
Senior Noteholder under the Senior Notes Indenture or any agreements executed in connection with the Senior Notes Indenture; or (iv) constitute a waiver or amendment of any provision of the Senior Notes Indenture or any agreements executed in connection with the Senior Notes Indenture.
(b) Except as expressly provided in this Agreement, nothing herein is intended to, or does, in any manner waive, limit, impair, or restrict the ability of each of the Parties to protect and preserve its rights, remedies, and interests, including its claims against any of the other Parties (or their respective affiliates or subsidiaries) or its full participation in any bankruptcy case filed by the Company or any of its affiliates and subsidiaries. This Agreement, the Term Sheet, and the Prepackaged Plan are part of a proposed settlement of matters that could otherwise be the subject of litigation among the Parties. Pursuant to Rule 408 of the Federal Rule of Evidence, any applicable state rules of evidence, and any other applicable law, foreign or domestic, this Agreement and all negotiations relating thereto shall not be admissible into evidence in any proceeding other than a proceeding to enforce its terms. This Agreement shall in no event be construed as or be deemed to be evidence of an admission or concession on the part of any Party of any claim or fault or liability or damages whatsoever. Each of the Parties denies any and all wrongdoing or liability of any kind and does not concede any infirmity in the claims or defenses which it has asserted or could assert.
22. | Relationship among Consenting Senior Noteholders . |
(a) It is understood and agreed that no Consenting Senior Noteholder has any duty of trust or confidence in any kind or form with any other Consenting Senior Noteholder, and, except as expressly provided in this Agreement, there are no commitments among or between them. In this regard, it is understood and agreed that any Consenting Senior Noteholder may trade in the Claims under the Senior Notes Indenture or other debt of the Company without the consent of the Company or any other Consenting Senior Noteholder, subject to applicable securities laws, the terms of this Agreement, and any confidentiality agreement entered into with the Company; provided that no Consenting Senior Noteholder shall have any responsibility for any such trading to any other person or entity by virtue of this Agreement. No prior history, pattern, or practice of sharing confidences among or between the Consenting Senior Noteholder shall in any way affect or negate this understanding and agreement.
23. | No Solicitation; Representation by Counsel; Adequate Information. |
(a) This Agreement is not and shall not be deemed to be a solicitation for votes in favor of the Prepackaged Plan in the Chapter 11 Case by the Senior Noteholders or a solicitation to tender or exchange any of the Senior Notes. The acceptances of the Consenting Senior Noteholders with respect to the Prepackaged Plan will not be solicited until the Consenting Senior Noteholders have received the Disclosure Statement and related ballots and solicitation materials, each as approved or ratified by the Bankruptcy Court.
(b) Each Party acknowledges that it has had an opportunity to receive information from the Company and that it has been represented by counsel in connection
26
with this Agreement and the transactions contemplated hereby. Accordingly, any rule of law or any legal decision that would provide any Party with a defense to the enforcement of the terms of this Agreement against such Party based upon lack of legal counsel shall have no application and is expressly waived.
(c) Although none of the Parties intends that this Agreement should constitute, and they each believe it does not constitute, a solicitation or acceptance of a chapter 11 plan of reorganization or an offering of securities, each Consenting Senior Noteholder acknowledges, agrees and represents to the other Parties that it (i) is a qualified institutional buyer as such term is defined in Rule 144A of the Securities Act or a non-US person participating in the offering outside the United States in reliance on Regulation S under the Securities Act, (ii) is an accredited investor (as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act), (iii) understands that the securities to be acquired by it (if any) pursuant to the Restructuring Transactions have not been registered under the Securities Act and that such securities are, to the extent not acquired pursuant to section 1145 of the Bankruptcy Code, being offered and sold pursuant to an exemption from registration contained in the Securities Act, based in part upon such Consenting Senior Noteholders representations contained in this Agreement and cannot be sold unless subsequently registered under the Securities Act or an exemption from registration is available and (iv) has such knowledge and experience in financial and business matters that such Consenting Senior Noteholder is capable of evaluating the merits and risks of the securities to be acquired by it (if any) pursuant to the Restructuring Transactions and understands and is able to bear any economic risks with such investment.
24. Conflicts between RSAs. If (i) a Consenting Senior. Noteholder also is a party to the Term Loan RSA and (ii) this Agreement and the Term Loan RSA create a conflict as to any covenants or obligations required of such Consenting Senior Noteholder, then the covenants or obligations of such Consenting Senior Noteholder as to its Senior Notes claims shall be governed by this Agreement and the covenants or obligations of such Consenting Senior Noteholder as to its Term Loan claims shall governed by the Term Loan RSA.
[R EMAINDER OF P AGE I NTENTIONALLY L EFT B LANK ]
27
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their respective duly authorized officers, solely in their respective capacity as officers of the undersigned and not in any other capacity, as of the date first set forth above.
WALTER INVESTMENT MANAGEMENT CORP. | ||
WALTER INVESTMENT MANAGEMENT CORP. | ||
By: |
/s/ Anthony N. Renzi |
|
Name: Anthony N. Renzi | ||
Title: Chief Executive Officer |
S IGNATURE P AGE T O R ESTRUCTURING S UPPORT A GREEMENT
CONSENTING SENIOR NOTEHOLDERS
Canyon Capital Advisors LLC, on behalf of its participating funds and managed accounts | ||
By: |
/S/ Jonathan M. Kaplan |
|
Name: | Jonathan M. Kaplan | |
Title: | Authorized Signatory |
STS Master Fund, Ltd. | ||
By |
/S/ Brad Craig |
|
Name: | Brad Craig | |
Title: | Director |
Lion Point Master, LP | ||
By: |
/S/ James Murphy |
|
Name: | James Murphy | |
Title: | COO / CFO |
Oaktree High Yield Fund II, L.P. | ||
By: | Oaktree Fund GP II, L.P. | |
Its: | General Partner | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Authorized Signatory | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Authorized Signatory |
Oaktree Global High Yield Bond Fund, L.P. | ||
By: | Oaktree Global High Yield Bond Fund, L.P. | |
Its: | General Partner | |
By: | Oaktree Fund GP IIA, LLC | |
Its: | General Partner | |
By: | Oaktree Fund GP II, L.P. | |
Its: | General Partner | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Authorized Signatory |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Authorized Signatory |
[ Signature Page to Restructuring Support Agreement ]
OCM High Yield Trust | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manger | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
Oaktree High Yield Bond Fund, L.P. | ||
By: | Oaktree High Yield Bond Fund GP, L.P. | |
Its: | General Partner | |
By: | Oaktree Fund GP IIA, LLC | |
Its: | General Partner | |
By: | Oaktree Fund GP II, L.P. | |
Its: | General Partner | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Authorized Signatory | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Authorized Signatory |
[ Signature Page to Restructuring Support Agreement ]
Oaktree (Lux.) Funds Oaktree North American High Yield Bond Fund
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
Stichting Bedrijfstakpensioenfonds voor het Beroepsvervoer over de Weg
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
Universal-HP III | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
[ Signature Page to Restructuring Support Agreement ]
FCA US LLC Master Retirement Trust | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
Employees Retirement Fund of the City of Dallas | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
Los Angeles County Employees Retirement Association | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
[ Signature Page to Restructuring Support Agreement ]
CSAA Insurance Exchange | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
Iowa Public Employees Retirement System | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
Retirement Annuity Plan for Employees of the Army and Air Force Exchange Service |
||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
[ Signature Page to Restructuring Support Agreement ]
Trust for Retiree Medical, Dental and Life Insurance Plan for Employees of the Army and Air Force Exchange Service | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
International Paper Company Commingled Investment Group Trust | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
San Francisco City and County Employees Retirement System | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
[ Signature Page to Restructuring Support Agreement ]
PG&E Corporation Retirement Master Trust | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
Pacific Gas and Electric Company Postretirement Medical Plan Trust Non-Management Employees and Retirees | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
Wespath Funds Trust | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
[ Signature Page to Restructuring Support Agreement ]
Automobile Club of Southern California | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
Interinsurance Exchange of the Automobile Club | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
Club Pension Plan Trust | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director\ | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
[ Signature Page to Restructuring Support Agreement ]
Texas County & District Retirement System | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
State Teachers Retirement System of Ohio | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
TMCT II, LLC | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
[ Signature Page to Restructuring Support Agreement ]
Arch Reinsurance Ltd. | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director | |
Central States, Southeast and Southwest Areas Pension Fund | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director | |
Virginia Retirement System | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
[ Signature Page to Restructuring Support Agreement ]
Dow Retirement Group Trust | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director | |
Sears Holdings Pension Trust | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director | |
Barclays Multi-Manager Fund PLC | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
[ Signature Page to Restructuring Support Agreement ]
Automobile Club Inter-Insurance Exchange | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director | |
Oaktree (Lux.) Funds Oaktree Global High Yield Bond Fund | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director | |
Exelon Corporation Pension Master Retirement Trust | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
[ Signature Page to Restructuring Support Agreement ]
Teachers Retirement System of the City of New York | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director | |
New York City Police Pension Fund | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director | |
New York City Employees Retirement System | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
[ Signature Page to Restructuring Support Agreement ]
River North/Oaktree High Income Fund | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director | |
Monsanto Company Master Pension Trust | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director | |
VantageTrust III Master Collective Investment Funds Trust VT III Vantagepoint High Yield Fund | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
[ Signature Page to Restructuring Support Agreement ]
Oaktree Funds Oaktree High Yield Bond Fund | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director | |
Indiana Public Retirement System | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director | |
Central States, Southeast and Southwest Areas Health and Welfare Fund | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
[ Signature Page to Restructuring Support Agreement ]
The Salvation Army, An Illinois Corporation | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director | |
Multi Manager Access II | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director | |
White Fleet II OCM Global High Yield Responsible Fund |
||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
[ Signature Page to Restructuring Support Agreement ]
Colony Insurance Company | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director | |
Alaska Permanent Fund Corporation | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director | |
General Organization for Social Insurance | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director |
[ Signature Page to Restructuring Support Agreement ]
San Diego County Employees Retirement Association | ||
By: | Oaktree Capital Management, L.P. | |
Its: | Investment Manager | |
By: |
/S/ Alap Shah |
|
Name: | Alap Shah | |
Title: | Managing Director | |
By: |
/S/ Alan Adler |
|
Name: | Alan Adler | |
Title: | Managing Director | |
Omega Advisors, Inc., not in its individual corporate capacity but solely in its representative capacity as Investment Manager for and on behalf of its affiliated funds and managed accounts | ||
By: |
/S/ Edward Levy |
|
Name: | Edward Levy | |
Title: | Chief Financial Officer | |
CQS Aiguille du Chardonnet MF S.C.A. SICAV-SIF | ||
By: |
/S/ Paul Massey |
|
Name: | Paul Massey | |
Title: | ||
CQS ABS Master Fund Limited | ||
By: |
/S/ Paul Massey |
|
Name: | Paul Massey | |
Title: | ||
Gracechurch Opportunities Fund Limited | ||
By: |
/S/ Paul Massey |
|
Name: | Paul Massey | |
Title: |
[ Signature Page to Restructuring Support Agreement ]
EXHIBIT A
Restructuring Term Sheet
See Exhibit A to Exhibit 10.1 to this Form 8-K
EXHIBIT B
Direction
Instructions:
Please complete the form below as needed to indicate the action desired for owned issues.
All submissions must be on the participants letterhead and must have that participants medallion stamp.
You must submit completed forms via the WINS application. A user guide to the process can be found here: http://www.dtcc.com/~/media/Files/Downloads/Settlement-Asset-Services/Issuer%20Services/WINS-User-Guide-Demand-and-Dissents.pdf
For questions or additional forms, send requests via electronic mail to:
demandanddissent@dtcc.com
CONSENT OF NOTEHOLDER
TO DIRECTION LETTER
Date: [●], 2017
The Depository Trust Company
Proxy Department
55 Water Street-25 th Floor
New York, NY 10041
Attention: Demand and Dissent
Re: | Walter Investment Management Corp. 7.875% Senior Notes due 2021 Rule 144A Note CUSIP / ISIN: 93317W AB8 / US93317WAB81; Regulation S Note CUSIP / ISIN: U9312T AA5 / USU9312TAA52; Unrestricted CUSIP / ISIN: 93317W AC6 / US93317WAC64 |
[ Insert DTC Participant Name & Account Number ]
Dear Partner:
Please cause your nominee, Cede & Co., to sign one copy of the attached letter (the Consent Letter ) in order to enable our customer to exercise its right to consent with respect to $[●] principal amount of the above-referenced securities credited to our DTC Participant account on the date hereof.
In addition to acknowledging that this request is subject to the indemnification provided for in DTC Rule 6, the undersigned hereby certifies to DTC and Cede & Co, that the information and facts set forth in the Consent Letter are true and correct, including the following:
1. | The aggregate principal amount of the securities credited to our DTC Participant account that are beneficially owned by our customer, and |
2. | There have been no prior requests to DTC or Cede & Co, for execution of a letter similar to the attached Consent Letter with respect to the principal amount of securities referred to therein. |
The undersigned understands that letters similar to the attached Consent Letter are being forwarded by other beneficial owners of the above-referenced securities whose holdings, together with the principal amount referred to above, constitute a majority of the principal amount of the above-referenced securities now outstanding.
Please make the Consent Letter available for pick-up by Federal Express (Account [●]) to [●] 1 .
Very truly yours, | ||
[ INSERT NAME OF DTC PARTICIPANT ] | ||
By: | ||
Name: | ||
Title: |
Medallion Stamp
1 | To include Milbank contact details. |
CONSENT OF NOTEHOLDER
Date: October [●], 2017
Walter Investment Management Corp.
1100 Virginia Drive, Suite 100
Fort Washington, PA 19034
Attn: John J. Haas, General Counsel, Chief Legal Officer and Secretary
Wilmington Savings Fund Society, FSB
WSFS Bank Center
500 Delaware Avenue
Wilmington, Delaware 19801
RE: Walter Investment Management Corp. 7.875% Senior Notes due 2021 (the Notes) Rule 144A Note CUSIP / ISIN: 93317W AB8 / US93317WAB81; Regulation S Note CUSIP / ISIN: U9312T AA5 / USU9312TAA52; Unrestricted CUSIP / ISIN: 93317W AC6 / US93317WAC64
Reference is made to the Indenture dated as of December 17, 2013 (as amended, supplemented, restated or otherwise modified from time to time, the Indenture ) by and among Walter Investment Management Corp., a Maryland corporation (the Company ), the guarantors party thereto and Wilmington Savings Fund Society, FSB, as successor trustee (the Trustee ), relating to the Notes. Capitalized terms used herein and are not otherwise defined herein have the meanings assigned to them in the Indenture.
At the request of Participant on behalf of the undersigned Beneficial Owner (as defined below) of the Notes, Cede & Co., as the registered Holder of the Notes, hereby consents to the direction to the Trustee (the Direction ), attached hereto as Annex A , instructing the Trustee not to take any action or exercise any remedy with respect to the Indenture, the Notes or the Note Guarantees as and to the extent provided for therein.
This letter should be read in conjunction with similar letters which the undersigned understands are being forwarded by other Beneficial Owners of the Notes whose holdings, together with the principal amount of the Notes specified below, constitute a majority of the principal amount of the Notes now outstanding. Accordingly, for the purposes of Sections 6.05 and 6.14 of the Indenture, the undersigned, together with the other Beneficial Owners of the Notes, which together hold in aggregate in excess of 50% of the principal amount of the Notes outstanding, will have delivered the Direction.
While Cede & Co., is furnishing this consent letter as the registered Holder of the Notes, it does so at the request of the Participant and only as a nominal party for the true parties in interest, [●] (the Beneficial Owners ). Cede & Co. has no interest in this matter other than to take those steps which are necessary to ensure that the Beneficial Owners are not denied their rights to consent to the Amendments as the beneficial owner of the Notes, and Cede & Co. assumes no further responsibility in this matter.
Very truly yours, | ||
Cede & Co. | ||
By: |
|
|
Name: | ||
Date: |
52
Annex A
[Direction]
TRUSTEE DIRECTION
Wilmington Savings Fund Society, FSB
WSFS Bank Center
500 Delaware Avenue
Wilmington, Delaware 19801
Re: Walter Investment Management Corp. 7.875% Senior Notes due 2021 (the Notes) Rule 144A Note CUSIP / ISIN: 93317W AB8 / US93317WAB81; Regulation S Note CUSIP / ISIN: U9312T AA5 / USU9312TAA52; Unrestricted CUSIP / ISIN: 93317W AC6 / US93317WAC64
Reference is made to the Indenture dated as of December 17, 2013 (as amended, supplemented, restated or otherwise modified from time to time, the Indenture ), by and among Walter Investment Management Corp., a Maryland corporation (the Company ), the guarantors party thereto and Wilmington Savings Fund Society, FSB, as successor trustee (the Trustee), relating to the Notes.
Capitalized terms used herein and are not otherwise defined herein have the meanings assigned to them in the Indenture.
Pursuant to Section 6.05 of the Indenture, you are hereby directed, as Trustee for the Notes, not to take any action, conduct any proceeding or exercise any remedy with respect to the Indenture, the Notes or the Note Guarantees from and after the date hereof through the date that is two (2) business days after the date on which the Restructuring Support Agreement, dated as of October 20, 2017, by and among the beneficial holders, or investment advisers or managers for the account of beneficial holders of the Notes signatory thereto and with the Company, as the same may be amended, extended, renewed or replaced in accordance with the terms thereof, is terminated in accordance with the terms thereof. This direction is also a direction for purposes of Section 6.14 of the Indenture.
EXECUTION BY BENEFICIAL OWNER
The undersigned Beneficial Owner of the Notes set forth below hereby instructs the Custodian of the Notes held on behalf of the Beneficial Owner to execute this consent letter.
Name of Beneficial Owner:
(Print Name of Authorized Signature):
Signature:
(Print Name of Authorized Signature):
Signature:
Address:
Phone:
Fax:
Total Principal Amount Owned:
A. | EXECUTION BY CUSTODIAN (DTC PARTICIPANT) |
The undersigned Custodian (DTC Participant) hereby executes this consent letter pursuant to the instructions set forth above by the Beneficial Owner.
Name of Custodian:
(Print Name of Authorized Signature):
Signature:
Address:
Phone:
Fax:
Total Principal Amount With Respect
to Which This Demand Letter is Given:
B. | EXECUTION BY REGISTERED HOLDER |
The undersigned Registered Holder hereby executes this consent letter pursuant to the instructions of the Custodian (DTC Participant).
Name of Registered Holder: Cede & Co.
(Print Name of Authorized Signature):
Signature:
Address: c/o The Depository Trust Company
55 Water Street
New York, New York 10041
Phone: (212)
Fax: (212)
Total Principal Amount With Respect
To Which This Demand Letter is given:
EXHIBIT C
FORM OF JOINDER AGREEMENT FOR CONSENTING SENIOR NOTEHOLDERS
This Joinder Agreement to the Restructuring Support Agreement, dated as of October 20, 2017 (as amended, supplemented or otherwise modified from time to time, the Agreement ), by and among Walter Investment Management Corp., and the holders of the Senior Notes (together with their respective successors and permitted assigns, the Consenting Senior Noteholders and each, a Consenting Senior Noteholder) is executed and delivered by (the Joining Party) as of , 2017. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement.
1. Agreement to be Bound . The Joining Party hereby agrees to be bound by all of the terms of the Agreement, a copy of which is attached to this Joinder Agreement as Annex I (as the same has been or may be hereafter amended, restated or otherwise modified from time to time in accordance with the provisions hereof). The Joining Party shall hereafter be deemed to be a Consenting Senior Noteholder and a Party for all purposes under the Agreement and with respect to any and all Claims held by such Joining Party.
2. Representations and Warranties . With respect to the aggregate principal amount of Senior Notes set forth below its name on the signature page hereto, the Joining Party hereby makes the representations and warranties of the Consenting Senior Noteholders set forth in Section 7 of the Agreement to each other Party to the Agreement.
3. Governing Law . This Joinder Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to any conflict of laws provisions which would require the application of the law of any other jurisdiction.
[Signature Page Follows]
IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above.
CONSENTING SENIOR NOTEHOLDER | ||
By: |
|
|
Name: | ||
Title: |
Notice Address: | ||
|
||
|
||
|
Fax: |
Attention: |
|
|
Email: |
|
Acknowledged: | ||
WALTER INVESTMENT MANAGEMENT CORP. |
By: |
|
|
Name: | ||
Title: |
S IGNATURE P AGE T O R ESTRUCTURING S UPPORT A GREEMENT
Exhibit 99.1
FOR IMMEDIATE RELEASE
WALTER INVESTMENT MANAGEMENT CORP. REACHES AGREEMENT
WITH TERM LENDERS AND SENIOR NOTEHOLDERS ON FINANCIAL RESTRUCTURING
Successful Consummation of Financial Restructuring Expected to Reduce Corporate Debt by Approximately $700 Million
Operations Planned to Continue in the Ordinary Course
FORT WASHINGTON, Pa., Oct. 20, 2017 Walter Investment Management Corp. (Walter or the Company) (NYSE: WAC.BC) today announced that it has entered into a Restructuring Support Agreement (the Noteholder RSA) with certain holders (the Noteholders) of more than 50% by principal amount of the Companys 7.875% Senior Notes due 2021 (the Senior Notes) that contemplates a financial restructuring which, if consummated, is expected to strengthen the Companys balance sheet. The Company also announced that it has entered into an Amended and Restated Restructuring Support Agreement (the Term Lender RSA and, collectively with the Noteholder RSA, the RSAs) with certain lenders (the Lenders) holding term loans (the Term Loans) under the Companys Amended and Restated Credit Agreement, dated as of December 19, 2013 (the Existing Credit Agreement), in an amount more than 48% of the outstanding Term Loans. The RSAs will become effective once holders of 66 2/3 % in the aggregate of Senior Notes and Term Loans, respectively, become party to the applicable RSA (the Support Effective Date). The parties may terminate the RSAs if the Support Effective Date does not occur before October 25, 2017.
Through consummation of the transactions contemplated in the RSAs, the Company expects to reduce its outstanding corporate debt as of June 30, 2017 by approximately $700 million and enhance its financial flexibility as it continues the ongoing transformation of its business. In addition to the recoveries to the Companys Lenders and Noteholders, as described below, the RSAs also contemplate a recovery for the holders (the Convertible Noteholders) of the Companys 4.50% convertible senior subordinated notes due 2019 and the Companys existing common stockholders if the requisite number of Convertible Noteholders support the restructuring.
The Company plans to implement the terms of the RSAs by soliciting votes from the Lenders, the Noteholders, and the Convertible Noteholders on a pre-packaged chapter 11 plan of reorganization. Following the solicitation, which is intended to begin next month, the Company intends to voluntarily file a pre-packaged plan of reorganization under chapter 11 of the United States Bankruptcy Code in late November 2017, to execute the various transactions contemplated by the RSAs. Walter intends to complete the reorganization process on an expedited basis, potentially concluding by the end of 2017 and under all circumstances not later than January 31, 2018. Under the contemplated plan for reorganization agreed to in the RSAs (the Prepackaged Plan), it is intended that only the holding company will file for reorganization under chapter 11. Walters operating entities, including Ditech Financial LLC and Reverse Mortgage Solutions, Inc., are expected to remain out of chapter 11 and continue their operations in the ordinary course throughout the consummation of the financial restructuring transactions. The Company believes it has ample liquidity to support its businesses and the costs of the restructuring.
Anthony Renzi, Walters President and Chief Executive Officer, commented, We are making significant progress transforming our business, and the financial restructuring contemplated by the agreements we have reached with our lenders and noteholders are a key part of our plans. Through these agreements, we expect to quickly restructure our debt while ensuring that business will continue as normal. The support of our lenders demonstrates their confidence in our business, and we believe that we are on the right track to emerge from this process better positioned for continued growth and success.
Mr. Renzi continued, The fundamentals of our core business remain solid and we expect demand for our quality products, services and single source convenience to continue to grow. As we move forward we will continue to focus on serving our customers by enabling their dreams of homeownership and caring
for them throughout their homeownership lifecycle. We appreciate the continued support of our business counterparties and lenders, and we thank our employees for their continued hard work and dedication. We look forward to completing this financial restructuring so we can continue to execute on our strategic initiatives as we seek to create a brighter future for our company and our customers.
The Companys strategic initiatives include a focus on its core business, which in general is the origination and servicing of GSE and government mortgage loans, and the servicing of reverse mortgage loans. The Company is continuing its efforts to reduce costs, improve operational efficiency and further enhance its originations business. The Company is also making progress in improving the performance and the overall profitability of its servicing business, including moving more toward a fee for service model and away from heavy investment in mortgage servicing rights.
The terms of the RSAs include the following:
| The Company and the Lenders will become bound by the Amended and Restated Credit Facility and receive, in full and final satisfaction of their Allowed Term Loan Claims on the effective date of the Prepackaged Plan (the Plan Effective Date), their pro rata share of (i) term loans under the Amended and Restated Credit Facility Agreement (such term loans to be in an aggregate principal amount equal to the term loans then outstanding under the Credit Agreement as of the Plan Effective Date), and (ii) any accrued and unpaid interest under the Credit Agreement as of the Plan Effective Date; and |
| Noteholders will receive (i) $250 million in new Second Lien Notes due December 2024 (the Second Lien Notes), and (ii) $100 million in Mandatorily Convertible Preferred Stock (the Preferred Stock). The Preferred Stock would convert into 73% of the Common Stock pursuant to agreed conversion terms, but would be subject to dilution by shares issuable pursuant to a management incentive plan, shares issued after the effective date of the restructuring transactions, and by shares issued (if any) under the 10-year Warrants (the Warrants) expected to be received by the Convertible Noteholders and existing common stockholders. |
The Prepackaged Plan is expected to provide for recovery to the Companys existing common stockholders, who are expected to share 50/50 with the Companys existing Convertible Noteholders in a recovery comprising an aggregate of approximately 27% (13.5% each) of the Companys total equity issued on the Plan Effective Date, after giving effect to conversion of the Preferred Stock and subject to dilution by any shares issued after the effective date of the restructuring transactions or pursuant to a management incentive plan; however, upon consummation of the restructuring transactions, the Convertible Noteholders and the existing common stockholders would initially receive, in aggregate, 100% of the Companys new common stock and the Warrants, and the Noteholders would initially receive 100% of the Preferred Stock and the Second Lien Notes.
While there can be no assurance that the Warrants will become in the money and therefore exercisable, the Warrants are intended to provide the Convertible Noteholders and the Companys existing stockholders additional incremental recovery should the Warrants become exercisable, as described further in the RSAs. The recovery of the Companys existing stockholders and Convertible Noteholders is dependent upon Convertible Noteholders holding in excess of the requisite principal amount of the Convertible Notes voting to approve the Prepackaged Plan. If such approval is not obtained, existing Company stockholders and the Convertible Noteholders will not receive any recovery.
A summary of the material terms of the RSAs will be included in a Current Report on Form 8-K being filed by the Company with the Securities and Exchange Commission.
Advisors
Weil, Gotshal & Manges LLP is acting as legal counsel, Houlihan Lokey is acting as investment banking debt restructuring advisor and Alvarez & Marsal North America, LLC is acting as financial advisor to the Company in connection with the financial restructuring.
Kirkland & Ellis LLP is acting as legal counsel and FTI Consulting Inc. is acting as financial advisor to the consenting term lenders.
Milbank, Tweed, Hadley & McCloy LLP is acting as legal counsel and Moelis & Company LLC is acting as financial advisor to the consenting senior noteholders.
About Walter Investment Management Corp.
Walter Investment Management Corp. is an independent servicer and originator of mortgage loans and servicer of reverse mortgage loans. Based in Fort Washington, Pennsylvania, the Company has approximately 4,400 employees and services a diverse loan portfolio. For more information about Walter Investment Management Corp., please visit the Companys website at www.walterinvestment.com . The information on the Companys website is not a part of this release.
Cautionary Statements Regarding Forward-Looking Information
Certain statements in this press release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not historical fact are forward-looking statements. Certain of these forward-looking statements can be identified by the use of words such as believes, anticipates, expects, intends, plans, projects, estimates, assumes, may, should, could, shall, will, seeks, targets, future, or other similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors, and our actual results, performance or achievements could differ materially from future results, performance or achievements expressed in these forward-looking statements. Such statements include, but are not limited to, statements relating to the potential transactions contemplated by the RSAs, descriptions of managements strategy, plans, objectives, expectations, or intentions and descriptions of assumptions underlying any of the above matters and other statements that are not historical fact.
Forward-looking statements are subject to significant known and unknown risks, uncertainties, challenges and other important factors, and the Companys actual results, performance or achievements could differ materially from future results, performance or achievements expressed in these forward-looking statements. These forward-looking statements are based on the Companys current beliefs, intentions and expectations and are not guarantees or indicative of future performance, nor should any conclusions be drawn or assumptions be made as to any potential outcome of any proposed transactions the Company considers. Risks and uncertainties relating to the proposed financial restructuring include: the ability of the Company to comply with the terms of the RSAs, including completing various stages of the restructuring within the dates specified by the RSAs; the ability of the Company to obtain requisite support for the restructuring from various stakeholders; the ability of the Company to maintain the listing of its common stock on the New York Stock Exchange; the ability of the Company to successfully execute the transactions contemplated by the RSAs without substantial disruption to the business of, or a chapter 11 bankruptcy filing by, one or more of its primary operating or other subsidiaries; and the effects of disruption from the proposed restructuring making it more difficult to maintain business, financing and operational relationships, to retain key executives and to maintain various licenses and approvals necessary for the Company to conduct its business. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements include, but are not limited to, those factors, risks and uncertainties described in more detail under the heading Risk Factors and elsewhere in the Companys annual and quarterly reports, including amendments thereto, and other filings with the Securities and Exchange Commission.
Contact
Kimberly Perez
SVP & Chief Accounting Officer
813.421.7694
investorrelations@walterinvestment.com