Rithm Property Trust Inc DEFA14A, filed Feb 27, 2024
Rithm Property Trust Inc. (RPT)
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): February 26, 2024
GREAT AJAX CORP.
(Exact name of registrant as specified in charter)
| Maryland | 001-36844 | 46-5211870 | ||
(State
or other jurisdiction of |
(Commission File Number) |
(IRS Employer Identification No.) |
13190 SW 68th Parkway
Suite 110
Tigard, OR 97223
(Address of principal executive offices)
Registrant’s telephone number, including area code:
503- 505-5670
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols | Name of each exchange on which registered | ||
| Common stock, par value $0.01 per share | AJX | New York Stock Exchange | ||
| 7.25% Convertible Senior Notes due 2024 | AJXA | New York Stock Exchange | ||
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 (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| x | 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 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
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.
On February 26, 2024, Great Ajax Corp. (the “Company”) entered into a strategic transaction with Rithm Capital Corp. (together with its subsidiaries, “Rithm”), a global asset manager focused on real estate, credit and financial services. The following summarizes the principal transaction agreements executed by the parties.
Credit Agreement
On February 26, 2024, the Company entered into a Credit Agreement (the “Credit Agreement”) with NIC RMBS LLC, an affiliate of Rithm, as sole lender, administrative agent and collateral agent. The Credit Agreement provides, subject to certain conditions, for a delayed draw term loan facility (the “Facility”), in an aggregate amount of up to $70.0 million.
The Facility matures on February 25, 2025. Outstanding loans under the Facility will accrue interest at a rate equal to 10.0% per annum. The obligations of the Company under the Credit Agreement are guaranteed by substantially all of the Company’s non-special purpose vehicle subsidiaries (the “Subsidiary Guarantors”) and are secured by a first-priority lien on substantially all of the assets of the Company and the Subsidiary Guarantors.
The Company plans to use cash on hand, including from loan sales, as well as to access the Facility in order to repay its outstanding convertible notes (the “Existing Convertible Notes”) upon their maturity in April 2024.
The Credit Agreement contains customary conditions, representations and warranties, affirmative and negative covenants and events of default. The covenants include certain financial covenants requiring the Company to maintain compliance with (i) a quarterly minimum net asset value covenant set at the sum of $240 million plus 65% of the positive net equity capital activity of the Company, (ii) a quarterly minimum ratio covenant of the Company’s unencumbered assets to the sum of the aggregate principal amount of the loans outstanding under the Facility and of the outstanding indebtedness under the Company’s operating partnership’s 8.875% Senior Notes due 2027 set at 1.6:1.0, (iii) a quarterly maximum ratio covenant of the Company’s consolidated recourse indebtedness to its equity interests set at 4.0:1.0, (iv) a quarterly minimum liquidity covenant of $30 million and (v) a maximum ratio covenant of (i) the aggregate principal amount of the loans outstanding under the Facility to (ii) the difference between (a) the fair market value of the assets of the Borrower and its consolidated subsidiaries minus (b) the aggregate liabilities of the Borrower and its consolidated subsidiaries of 1.0:1.0.
Changes in the Management of the Company
On February 26, 2024, the Company issued a termination notice to its external manager, Thetis Asset Management LLC (the “Manager”). The Company is expected to pay the Manager the contractually stipulated termination fee substantially in shares of common stock, $0.01 par value per share (“Common Stock”), of the Company. Subject to receipt of stockholder approval, the Company will enter into a termination and release agreement (“Form of Termination and Release Agreement”) with the Manager and a new management agreement with RCM GA Manager LLC, an affiliate of Rithm (“RCM GA”), in the form agreed upon with RCM GA (“Form of Management Agreement”).
As part of the contemplated transactions, subject to receipt of approval of the Company’s stockholders, the board of directors of the Company (“Board of Directors”) will be reconstituted as follows: the Board of Directors will become a five-member board, two members of which will be existing directors, one member of which will be a director nominated by Rithm, and two members of which will be new independent directors.
Warrant Agreement
In connection with the Credit Agreement and pursuant to the Purchase Agreement (as described below), on February 26, 2024, the Company has agreed to issue (the “Warrant Issuance”) to Rithm (the “Rithm Holder”) five-year warrants (the “Warrants”) to purchase shares of Common Stock of the Company (such Common Stock issuable upon exercise of the Warrants, the “Warrant Shares”), at an exercise price per Warrant Share set at a 10% premium to the trailing five-day average closing price of the Common Stock on the New York Stock Exchange (“NYSE”) as of the date hereof. The number of Warrant Shares for which the Warrants may be exercised will equal the greater of 50% of (i) the amount drawn under the Facility and (ii) $35 million, in each case, divided by the exercise price per share.
In connection with the Warrant Issuance, the Company will enter into a warrant agreement with Equiniti Trust Company (the “Form of Warrant Agreement”), in its capacity as the Company’s warrant agent (“Warrant Agent”), in the form attached to the Purchase Agreement, pursuant to which the Warrant Agent agrees to act as the warrant agent in connection with, among other things, the issuance, registration, transfer and exercise of the Warrants. The Warrant Agreement includes a form of Warrant setting forth the number of Warrants to be held by the Rithm Holder and the terms and conditions applicable to such Warrants.
The Warrants are exercisable on the earlier of the declaration of effectiveness of a resale registration statement (described below) relating to the Warrant Shares and August 26, 2024. The number of Warrant Shares issuable upon exercise of the Warrants will be capped at 19.99% of the then-current outstanding Common Stock of the Company, unless and until such exercise is approved by the Company’s stockholders (as described below). If approval of the Company’s stockholders regarding the transactions (as described below) is not obtained, the Warrants will be repurchased by the Company at a value agreed upon by an independent third-party valuation expert.
Securities Purchase Agreement
On February 26, 2024, the Company, Great Ajax Operating Partnership L.P., the Company’s operating partnership (the “Operating Partnership”), and the Manager entered into a securities purchase agreement (the “Purchase Agreement”) with Rithm. Pursuant to the Purchase Agreement, the Company, in a private placement made in reliance on the exemption from the registration requirement of the Securities Act of 1933, as amended (the “Securities Act”), afforded by Section 4(a)(2) of the Securities Act, agreed to issue and sell (as applicable), to Rithm or its designated affiliate, (i) shares of Common Stock, at a purchase price per share of $4.87 (the “Shares”), which represents the trailing five-day average closing price of the Common Stock on the NYSE as of the date hereof for gross proceeds of approximately $14.0 million (the “Private Placement”), and (ii) the Warrants on the terms described above.
The Shares to be purchased pursuant to the Private Placement will be issued following receipt of approval of the Company’s stockholders and the satisfaction of certain other closing conditions described therein. The Company expects to use the net proceeds from the Private Placement towards repayment of any amounts borrowed under the Facility and/or repayment of the Existing Convertible Notes.
Registration Rights
In connection with the Warrant Issuance and the Private Placement, the Company agreed to enter into a registration rights agreement, in the form attached to the Purchase Agreement (the “Form of Registration Rights Agreement”), with Rithm, pursuant to which, the Company agrees to use commercially reasonable efforts to prepare and file a shelf registration statement with the Securities and Exchange Commission (the “SEC”) to register for resale the Shares and the Warrant Shares as soon as practicable, and to use commercially reasonable efforts to cause the SEC to declare the registration statement effective as soon as practicable.
The Registration Rights Agreement also includes customary piggyback registration and demand underwritten offering rights with respect to the resale from time to time by Rithm or the applicable holder of the Shares or the Warrant Shares.
In connection with the termination of the Manager, and pursuant to the Form of Termination and Release Agreement, the Company will use commercially reasonable efforts to prepare and file a registration statement to permit the resale of the Common Stock issued to the Manager.
Exchange Agreement
Concurrently with the execution of the Credit Agreement, on February 26, 2024, the Company, the Operating Partnership and the Manager entered into exchange agreements (each, an “Exchange Agreement”) with the current holders (the “Exchanging Investors”) of the Company’s currently outstanding Series A Preferred Stock and Series B Preferred Stock (the “Preferred Stock”) and the Company’s outstanding warrants (collectively, the “Exchanged Securities”). Pursuant to the Exchange Agreement, the Exchanging Investors agreed to exchange with the Company their respective Exchanged Securities for an aggregate of 12,046,222 shares of Common Stock, in accordance with the Exchanged Securities’ terms (the “Exchange”).
Until the Company obtains stockholder approval, the Exchange with respect to the Preferred Stock is limited to up to 19.99% of the outstanding shares of the Common Stock. As a result, 2,581,694 of such shares of Common Stock subject to the Exchange will be issued by the Company following the receipt of the approval of the Company’s stockholders. The Exchange is made in reliance on the exemption from the registration requirements of the Securities Act, afforded by Section 3(a)(9) of the Securities Act.
Stockholder Approval and Support Agreements
Several of the transactions and the agreements described above require the approval of the Company’s stockholders before the transactions may be completed. The Company will prepare and send to its stockholders a proxy statement which will include the recommendation of the Board of Directors and of a special committee thereof to approve the transactions described above that require stockholder approval, and will, as promptly as reasonably practicable after the proxy statement is cleared by the SEC for mailing to the Company’s stockholders, duly call, give notice of, convene and hold a stockholder meeting for the purpose of seeking the Company stockholder approval.
On February 26, 2024, the Company entered into support agreements (each, a “Support Agreement”) with its directors, executive officers and certain institutional stockholders, that, after giving effect to the Exchange, will hold 44% of the outstanding shares of Common Stock of the Company, pursuant to which such stockholders have agreed to support the transactions described above.
The foregoing descriptions of the Credit Agreement, Form of Termination and Release Agreement, Form of Management Agreement, Form of Warrant Agreement, the Purchase Agreement, Form of Registration Rights Agreement, the form of Exchange Agreement and the form of Support Agreement, are qualified in their entirety by reference to the complete terms and conditions of the Credit Agreement, Form of Termination and Release Agreement, Form of Management Agreement, Form of Warrant Agreement, the Purchase Agreement, Form of Registration Rights Agreement, the form of Exchange Agreement and the form of Support Agreement, respectively, which are attached as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.7 and 10.8, respectively, to this Current Report on Form 8-K.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information contained in Item 1.01 above with respect to the Credit Agreement is incorporated herein by reference into this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 above is incorporated by reference into this Item 3.02. The issuance of the Shares, the Warrants and the Warrant Shares (if any) will be, made in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act. The issuance of the Common Stock in the Exchange was and will be made in reliance on the exemption from registration contained in Section 3(a)(9) of the Securities Act.
Item 7.01 Regulation FD Disclosure.
On February 26, 2024, the Company issued a press release announcing the entry into the Credit Agreement, the Purchase Agreement, the Registration Rights Agreement, the Warrant Agreement, the Support Agreements and the Exchange Agreements, which is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section and shall not be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in any such filing.
Item 9.01. Financial Statements and Exhibits.
| * | Pursuant to Item 601(a)(5) of Regulation S-K, certain schedules have been omitted. The Company agrees to furnish supplementally a copy of any omitted schedule to the SEC upon request. |
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in respect of obtaining approval of the stockholders of the Company of the proposed transactions (the “Stockholder Approval”). In connection with obtaining the Stockholder Approval, the Company will file with the Securities and Exchange Commission (the “SEC”) and furnish to the Company’s stockholders a proxy statement and other relevant documents. This communication does not constitute a solicitation of any vote or approval. BEFORE MAKING ANY VOTING DECISION, GREAT AJAX’S STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS TO BE FILED THE SEC IN CONNECTION WITH THE STOCKHOLDER APPROVAL OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION. Stockholders will be able to obtain free copies of the proxy statement and other documents containing important information about the Company once such documents are filed with the SEC, through the website maintained by the SEC at http://www.sec.gov.
Participants in the Solicitation
The Company and its executive officers, directors, other members of management and employees may be deemed, under SEC rules, to be participants in the solicitation of proxies from the Company’s stockholder with respect to the proposed transaction. Information regarding the executive officers and directors of the Company is set forth in its definitive proxy statement for its 2023 annual meeting filed with the SEC on April 21, 2023, as amended. More detailed information regarding the identity of potential participants, and their direct or indirect interests, by securities holdings or otherwise, will be set forth in the proxy statement and other materials to be filed with the SEC in connection with the proposed transaction.
Forward-Looking Statements
This communication contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical in nature and can be identified by words such as “believe,” “expect,” “anticipate,” “estimate,” “project,” “plan,” “continue,” “intend,” “should,” “would,” “could,” “goal,” “objective,” “will,” “may,” “seek” or similar expressions or their negative forms. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time and are beyond our control. Forward-looking statements speak only as of the date they are made. Great Ajax does not assume any duty or obligation (and does not undertake) to update or supplement any forward-looking statements. Because forward-looking statements are, by their nature, to different degrees, uncertain and subject to numerous assumptions, risks and uncertainties, actual results or future events, circumstances or developments could differ, possibly materially, from those that the Company anticipated in its forward-looking statements, and future results and performance could differ materially from historical performance. Factors that could cause or contribute to such differences include, but are not limited to, those set forth in the section entitled “Risk Factors” in the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the SEC, and other reports filed by the Company with the SEC, copies of which are available on the SEC’s website, www.sec.gov. The list of factors presented here is not, and should not be, considered a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
| GREAT AJAX CORP. | ||
| Date: February 26, 2024 | ||
| By: | /s/ Mary Doyle | |
| Name: | Mary Doyle | |
| Title: | Chief Financial Officer |
Exhibit 10.1
Execution Version
CREDIT AGREEMENT
dated as of February 26, 2024
among
GREAT AJAX CORP.,
as Borrower,
NIC RMBS LLC,
as Sole Lender
and
NIC RMBS LLC,
as Administrative Agent and Collateral Agent
TABLE OF CONTENTS
Page
| ARTICLE 1 Definitions | 1 | |
| Section 1.01 | Defined Terms | 1 |
| Section 1.02 | Terms Generally | 29 |
| Section 1.03 | Designated Senior Indebtedness | 30 |
| ARTICLE 2 THE CREDITS | 31 | |
| Section 2.01 | Commitments | 31 |
| Section 2.02 | [Reserved] | 31 |
| Section 2.03 | Borrowing Mechanics | 31 |
| Section 2.04 | Evidence of Debt; Repayment of Loans | 31 |
| Section 2.05 | Fees and Premiums | 32 |
| Section 2.06 | Interest on Loans | 32 |
| Section 2.07 | Default Interest | 32 |
| Section 2.08 | [Reserved] | 33 |
| Section 2.09 | Repayment of Term Borrowings | 33 |
| Section 2.10 | Voluntary Prepayment | 33 |
| Section 2.11 | Mandatory Prepayments | 33 |
| Section 2.12 | Offer to Repurchase Upon Change of Control | 35 |
| Section 2.13 | Reserve Requirements; Change in Circumstances | 36 |
| Section 2.14 | Pro Rata Treatment | 37 |
| Section 2.15 | Sharing of Setoffs | 37 |
| Section 2.16 | Payments | 38 |
| Section 2.17 | Taxes | 38 |
| Section 2.18 | Duty to Mitigate; Assignment of Commitments Under Certain Circumstances | 42 |
| Section 2.19 | Defaulting Lenders | 43 |
| Section 2.20 | Protective Advances | 43 |
| ARTICLE 3 REPRESENTATIONS AND WARRANTIES | 44 | |
| Section 3.01 | Company Status | 44 |
| Section 3.02 | Power and Authority | 44 |
| Section 3.03 | No Violation | 44 |
| Section 3.04 | Approvals | 45 |
| Section 3.05 | Financial Statements; Financial Condition | 45 |
| Section 3.06 | Litigation | 46 |
| Section 3.07 | True and Complete Disclosure | 46 |
| Section 3.08 | Use of Proceeds; Margin Regulations | 46 |
| Section 3.09 | Tax Matters | 47 |
| Section 3.10 | Compliance with ERISA | 47 |
| Section 3.11 | Security Documents | 47 |
| Section 3.12 | [Reserved] | 47 |
| Section 3.13 | [Reserved] | 48 |
i
| Section 3.14 | Subsidiaries | 48 |
| Section 3.15 | Compliance with Statutes, Etc. | 48 |
| Section 3.16 | Investment Company Act | 48 |
| Section 3.17 | Insurance | 48 |
| Section 3.18 | Environmental Matters | 48 |
| Section 3.19 | Employment and Labor Relations | 49 |
| Section 3.20 | Intellectual Property, Etc. | 49 |
| Section 3.21 | [Reserved] | 50 |
| Section 3.22 | Anti-Terrorism Law | 50 |
| Section 3.23 | Foreign Corrupt Practices Act | 50 |
| Section 3.24 | 2027 Senior Notes | 51 |
| Section 3.25 | Unencumbered Retained Securities | 51 |
| ARTICLE 4 CONDITIONS OF LENDING | 51 | |
| Section 4.01 | Conditions Precedent to the Effectiveness of this Agreement | 51 |
| Section 4.02 | Conditions to the Funding of the Loan | 52 |
| ARTICLE 5 AFFIRMATIVE COVENANTS | 56 | |
| Section 5.01 | Information Covenants | 56 |
| Section 5.02 | Books, Records and Inspections | 58 |
| Section 5.03 | Maintenance of Property; Insurance | 58 |
| Section 5.04 | Existence; Franchises | 59 |
| Section 5.05 | Compliance with Statutes, Etc. | 59 |
| Section 5.06 | Compliance with Environmental Laws | 59 |
| Section 5.07 | ERISA | 60 |
| Section 5.08 | End of Fiscal Years; Fiscal Quarters | 60 |
| Section 5.09 | Conference Calls | 60 |
| Section 5.10 | Tax Matters | 60 |
| Section 5.11 | Use of Proceeds | 61 |
| Section 5.12 | Additional Security; Further Assurances; Etc. | 62 |
| Section 5.13 | Sanctions; Anti-Corruption Laws | 62 |
| Section 5.14 | Material Contracts | 62 |
| Section 5.15 | Post-Closing | 62 |
| ARTICLE 6 NEGATIVE COVENANTS | 63 | |
| Section 6.01 | Liens | 63 |
| Section 6.02 | Consolidation, Merger, Sale of Assets, Etc. | 65 |
| Section 6.03 | Restricted Payments | 68 |
| Section 6.04 | Indebtedness | 69 |
| Section 6.05 | Advances, Investments and Loans | 70 |
| Section 6.06 | Transactions with Affiliates | 72 |
| Section 6.07 | Modifications of Certain Agreements | 72 |
| Section 6.08 | Limitation on Certain Restrictions on Subsidiaries | 73 |
| Section 6.09 | Limitation on Issuance of Equity Interests | 73 |
| Section 6.10 | Business; Etc. | 73 |
| Section 6.11 | Limitation on Creation of Subsidiaries | 73 |
| Section 6.12 | Prepayments of Other Indebtedness | 74 |
ii
| Section 6.13 | [Reserved] | 74 |
| Section 6.14 | [Reserved] | 74 |
| Section 6.15 | Maintenance of Minimum Net Asset Value | 74 |
| Section 6.16 | Maintenance of Adjusted Unencumbered Assets | 74 |
| Section 6.17 | Maintenance of Consolidated Recourse Indebtedness to Equity Ratio | 74 |
| Section 6.18 | Maintenance of Minimum Liquidity | 74 |
| Section 6.19 | Maintenance of Market Value to Book Value | 74 |
| ARTICLE 7 EVENTS OF DEFAULT | 74 | |
| Section 7.01 | Events of Default | 74 |
| Section 7.02 | Application of Payment | 77 |
| ARTICLE 8 THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT | 78 | |
| ARTICLE 9 MISCELLANEOUS | 84 | |
| Section 9.01 | Notices; Electronic Communications | 84 |
| Section 9.02 | Survival of Agreement | 87 |
| Section 9.03 | Binding Effect | 88 |
| Section 9.04 | Successors and Assigns | 88 |
| Section 9.05 | Expenses; Indemnity | 93 |
| Section 9.06 | Right of Setoff | 95 |
| Section 9.07 | Applicable Law | 95 |
| Section 9.08 | Waivers; Amendment | 95 |
| Section 9.09 | Interest Rate Limitation | 97 |
| Section 9.10 | Entire Agreement | 97 |
| Section 9.11 | WAIVER OF JURY TRIAL | 97 |
| Section 9.12 | Severability | 97 |
| Section 9.13 | Counterparts | 98 |
| Section 9.14 | Headings | 98 |
| Section 9.15 | Jurisdiction; Consent to Service of Process | 98 |
| Section 9.16 | Confidentiality | 98 |
| Section 9.17 | Lender Action | 99 |
| Section 9.18 | USA PATRIOT Act Notice | 99 |
| Section 9.19 | Acknowledgement and Consent to Bail-In of Affected Financial Institutions | 100 |
| Section 9.20 | [Reserved] | 100 |
| Section 9.21 | Specific Performance | 100 |
iii
| SCHEDULE 1.01.A | Initial Subsidiary Guarantors |
| SCHEDULE 1.01.B | Specified Holders |
| SCHEDULE 1.01.C | Key Exchange Parties |
| SCHEDULE 1.01.D | Key Existing Manager Owners |
| SCHEDULE 1.01E | Specified Permitted Funding Asset Dispositions |
| SCHEDULE 2.01 | Commitments |
| SCHEDULE 3.14 | Subsidiaries |
| SCHEDULE 3.17 | Insurance |
| SCHEDULE 3.25 | Unencumbered Retained Securities |
| SCHEDULE 4.02 | Termination Fee |
| SCHEDULE 6.01 | Liens |
| SCHEDULE 6.03 | Restricted Payments |
| SCHEDULE 6.04 | Indebtedness |
| SCHEDULE 6.05 | Investments |
| EXHIBIT A | Form of Administrative Questionnaire |
| EXHIBIT B | Form of Assignment and Acceptance |
| EXHIBIT C | Form of Borrowing Request |
| EXHIBIT D | Form of Compliance Certificate |
| EXHIBIT E | Form of Guaranty |
| EXHIBIT F | Financial Covenant Indebtedness |
| EXHIBIT G | Form of Intercompany Subordination Agreement |
| EXHIBIT H | Form of Management Termination and Release Agreement |
| EXHIBIT I | [Reserved] |
| EXHIBIT J | Form of Security Agreement |
| EXHIBIT K | Form of Solvency Certificate |
| EXHIBIT L | [Reserved] |
| EXHIBIT M | Registration Rights Agreement |
| EXHIBIT N | Warrant Agreement |
iv
CREDIT AGREEMENT dated as of February 26, 2024, among GREAT AJAX CORP., a Maryland corporation (the “Borrower”), NIC RMBS LLC (the “Initial Lender”, together with the other Lenders from time to time party hereto, the “Lenders”; each capitalized term used but not defined in this introductory statement and the Recitals having the meaning given it in Article 1), and NIC RMBS LLC, as administrative agent (in such capacity, including any successor thereto, the “Administrative Agent”) and as collateral agent (in such capacity, including any successor thereto, the “Collateral Agent”) for the Lenders.
RECITALS
WHEREAS, the Borrower has requested that the Lenders establish a senior secured term loan credit facility in an aggregate principal amount not to exceed the Maximum Loan Amount (as defined below) plus any Protective Advances (as defined below).
The Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.01 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:
“2027 Senior Notes” shall mean Great Ajax Operating Partnership L.P.’s 8.875% Senior Notes due 2027 issued pursuant to a base indenture, dated as of August 26, 2022, between Great Ajax Operating Partnership L.P., as issuer, Borrower, as a guarantor, the other guarantors from time to time party thereto and Wilmington Savings Fund Society, FSB, as trustee.
“Additional Security Documents” shall have the meaning assigned to such term in Section 5.12.
“Adjusted Unencumbered Assets” shall mean, as of any date, all of the assets (excluding intangibles, non-financial prepaid assets and non-financial other assets) of the Borrower and its Subsidiaries, minus any outstanding Securitization Indebtedness and any outstanding Financial Covenant Indebtedness under a Repurchase Agreement, both gross of any deferred issuance costs, and all on a consolidated basis for the Borrower and its Subsidiaries in accordance with GAAP.
“Administrative Agent” shall have the meaning assigned to such term in the introductory statement to this Agreement.
“Administrative Questionnaire” shall mean an Administrative Questionnaire substantially in the form of Exhibit A, or such other form as may be supplied from time to time by the Administrative Agent.
“Affected Financial Institution” shall mean (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling (including all directors and officers of such Person), controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise. No Agent, Lender or other Secured Creditors shall be deemed an “Affiliate” of the Credit Parties or their Subsidiaries for purposes of Section 6.06.
“Agents” shall have the meaning assigned to such term in Article 8.
“Agreement” shall mean this Credit Agreement.
“Anti-Corruption Laws” shall have the meaning assigned to such term in Section 3.23(a).
“Anti-Money Laundering Laws” shall mean the applicable anti-money laundering statutes or jurisdictions where any of the Credit Parties conducts business and the rules and regulations thereunder, issued, administered or enforced by any Governmental Authority, including without limitation the USA PATRIOT Act and the Bank Secrecy Act.
“Applicable Assets” shall have the definition given to such term in “Repurchase Agreement”.
“Applicable Law” shall mean, as to any Person, all applicable Laws of any Governmental Authority binding upon such Person or to which such a Person is subject.
“Applicable Rate” shall mean, as of any time, a rate per annum equal to 10.00%.
“Assignment and Acceptance” shall mean an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, substantially in the form of Exhibit B or such other form as shall be approved by the Administrative Agent.
“Authorized Officer” shall mean the chief executive officer, president, any vice-president, chairman, vice chairman, secretary, any assistant secretary, treasurer, any assistant treasurer, chief operating officer or chief financial officer of the Borrower.
“Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” shall mean, (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule. and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
2
“Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy,” as now or hereafter in effect, or any successor thereto.
“Borrower” shall have the meaning assigned to such term in the introductory statement to this Agreement.
“Borrower Materials” shall have the meaning assigned to such term in Section 9.01.
“Borrowing Request” shall mean a request by the Borrower for the advance of the Loans pursuant to Section 2.01 in accordance with Section 2.03.
“Business Day” shall mean any day other than a Saturday, Sunday, any other day on which banks in New York City are authorized or required by law to close or any other day on which either the New York Stock Exchange or the Federal Reserve Bank of New York is closed.
“Capitalized Lease Obligations” shall mean, subject to Section 1.02, with respect to any Person, all rental obligations of such Person which, under GAAP, are required to be capitalized on the books of such Person, in each case taken at the amount thereof accounted for as indebtedness in accordance with such principles.
“Cash Equivalents” shall mean, as to any Person, (a) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one (1) year from the date of acquisition, (b) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within one (1) year from the date of acquisition thereof and, at the time of acquisition, having one (1) of the two (2) highest ratings obtainable from either S&P or Moody’s, (c) Dollar denominated time deposits, certificates of deposit and bankers acceptances of any Lender or any commercial bank having, or which is the principal banking subsidiary of a bank holding company having, a combined capital and surplus of at least $1,000,000,000 with maturities of not more than one (1) year from the date of acquisition by such Person, (d) repurchase obligations with a term of not more than thirty (30) days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (c) above, (e) commercial paper issued by any Person incorporated in the United States, and at the time of acquisition, rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s and in each case maturing not more than one (1) year after the date of acquisition by such Person, and (f) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (a) through (e) above. To the extent that, upon the maturity of any instrument referred to in this definition, such instrument would no longer constitute a “Cash Equivalent” due to a change in ratings of the issuer of such instrument, such instrument shall no longer constitute a Cash Equivalent except to the extent reinvested in an instrument that would otherwise qualify as a Cash Equivalent at such time.
“CERCLA” shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as the same has been amended and may hereafter be amended from time to time, 42 U.S.C. § 9601 et seq.
3
“Certificated Securities” shall have the meaning assigned to such term in the Security Agreement.
“Change in Law” shall mean (a) the adoption of any law, rule or regulation after the Closing Date, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority or the NAIC after the Closing Date or (c) compliance by any Lender (or, for purposes of Section 2.13, by any lending office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Closing Date; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued, except to the extent any items in clauses (x) or (y) are in effect as of the Closing Date.
“Change of Control” shall mean an event or series of events by which: (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”))), directly or indirectly, of 40% or more of the Equity Interests of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right); (b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (c) Borrower is managed by any Person other than (i) the manager under the Existing Management Agreement or (ii) Rithm or a Subsidiary or Affiliate thereof under the Rithm Management Agreement. Notwithstanding the foregoing, for all purposes of this Agreement, including without limitation, Sections 2.12 and 7.01, neither of the following shall be deemed to be a Change of Control (i) any Specified Change of Control or (ii) the execution and delivery of any Support Agreement.
“Change of Control Offer” shall have the meaning assigned to such term in Section 2.12(a).
4
“Change of Control Payment” shall have the meaning assigned to such term in Section 2.12(a).
“Change of Control Payment Date” shall have the meaning assigned to such term in Section 2.12(a)(ii).
“Charges” shall have the meaning assigned to such term in Section 9.09.
“Charter” shall mean the Articles of Amendment and Restatement of Borrower (except as otherwise expressly provided herein as it may be amended, amended and restated or otherwise modified from time to time).
“Claims” shall have the meaning assigned to such term in the definition of “Environmental Claims”.
“Closing Date” shall mean the first date on which the conditions specified in Section 4.01 and 4.02 are satisfied (or waived in accordance with Section 9.08) and the funding of the Loans to be made pursuant to Section 2.01 hereunder has occurred.
“Closing Date Subsidiary Guarantors” shall have the meaning assigned to such term in the definition of “Subsidiary Guarantors”.
“Code” shall mean the Internal Revenue Code of 1986.
“Collateral” shall mean all property (whether real or personal) with respect to which any security interests or liens have been granted (or purported to be granted) pursuant to any Security Document, including all Security Agreement Collateral.
“Collateral Agent” shall have the meaning assigned to such term in the introductory statement to this Agreement.
“Commitment” shall mean, with respect to each Lender, the commitment of such Lender to make Loans pursuant to Section 2.01 on the Closing Date, as such commitment may be (a) reduced or terminated from time to time and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender’s Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance or other documentation contemplated hereby pursuant to which such Lender shall have assumed its Commitment, as applicable.
“Commitment Termination Date” shall have the meaning assigned to Section 4.02.
“Communications” shall have the meaning assigned to such term in Section 9.01.
“Company” shall mean any corporation, limited liability company, partnership or other business entity (or the adjectival form thereof, where appropriate).
“Connection Taxes” shall mean, with respect to the Administrative Agent, the Collateral Agent or any Lender, Taxes imposed as a result of a present or former connection between such Administrative Agent, Collateral Agent or Lender and the jurisdiction imposing such Tax (other than connections arising from such Administrative Agent, Collateral Agent or Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to, or enforced, any Credit Document, or sold or assigned an interest in any Loan or Credit Document).
5
“Consolidated Recourse Indebtedness” shall mean, as of any determination date, the aggregate of the Borrower and its Subsidiaries’ Recourse Indebtedness determined on a consolidated basis in accordance with GAAP; provided, however, that, notwithstanding anything to the contrary contained herein, for purposes of determining compliance with the covenant in Section 6.17, Consolidated Recourse Indebtedness shall not include any Permitted Funding Indebtedness.
“Contingent Obligation” shall mean, as to any Person, any obligation of such Person as a result of such Person being a general partner of any other Person, unless the underlying obligation is expressly made non-recourse as to such general partner, and any obligation of such Person guaranteeing, having the economic effect of guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of such Person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor or (b) to advance or supply funds for the purchase or payment of any such primary obligation or any property constituting direct or indirect security therefor; provided that the term Contingent Obligation shall not include (i) endorsements of instruments for deposit or collection in the ordinary course of business, (ii) Securitization Repurchase Obligations or (iii) any customary carve-out or “bad-boy” matters for which such Person acts as a guarantor or indemnitor, such as fraud, misappropriation, breach of representation and warranty and misapplication. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith; provided, that the amount may not exceed the maximum amount of the primary obligations.
“Convertible Debt Security” shall mean debt securities of the Borrower (including the Existing Convertible Notes) issued pursuant to a transaction registered with the SEC, or exempt therefrom in reliance on Rule 144A, the terms of which provide for conversion into, or exchange for, common stock of the Borrower and cash in lieu of fractional shares of such common stock.
“Credit Documents” shall mean this Agreement, the Guaranty, the Security Agreement, the Intercompany Subordination Agreement, the Fee Letter and, after the execution and delivery thereof pursuant to the terms of this Agreement, each Note, each other Security Document and any other agreement which is designated therein as a Credit Document.
“Credit Party” shall mean each of the Borrower and each Subsidiary Guarantor.
“Default” shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.
6
“Defaulting Lender” shall mean, subject to Section 2.19(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder or (ii) pay to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due, (b) has notified the Borrower or the Administrative Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect, (c) has failed, within three (3) Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect the parent company that has, (i) become the subject of a proceeding under any Insolvency Law or, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect the parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.19(b)) upon delivery of written notice of such determination to the Borrower and each Lender.
“Disposition” or “Dispose” shall mean the sale, transfer, conveyance, license, lease or other disposition (including any Sale and Leaseback Transaction) of any property or assets by any Credit Party or Subsidiary (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes, accounts receivable or Equity Interests or any rights and claims associated therewith.
“Disqualified Lender” shall mean any competitor of Borrower or its Subsidiaries that is a U.S. residential mortgage REIT with shares traded on a national securities exchange (other than Borrower or any successor entity thereof) and any Affiliate of such Person that is clearly identifiable solely on the basis of similarity of their names or that has been specified in writing to the Administrative Agent by the Borrower from time to time.
“Dividend” shall have the meaning assigned to such term in the definition of “Restricted Payment”.
“Dollars” and the sign “$” shall each mean freely transferable lawful money of the United States.
“Domestic Subsidiary” of any Person shall mean any Subsidiary of such Person incorporated or organized in the United States or any State thereof or the District of Columbia.
7
“EEA Financial Institution” shall mean (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” shall mean any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” shall mean any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Effective Date” shall mean the first date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.08).
“Eligible Assignee” shall mean (a) a Lender, (b) an Affiliate of a Lender, (c) a Related Fund of a Lender and (d) any other Person (other than a natural person) approved by the Administrative Agent; and, unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed and, in the case of the Borrower, any such approval shall be deemed to have been given at the time the Borrower’s consent is deemed to be given pursuant to Section 9.04(b)); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include (x) Borrower or any of Borrower’s Subsidiaries or Affiliates, (y) any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (y) or (z) any Disqualified Lender.
“Environmental Claims” shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, orders, claims, liens, notices of actual or potential noncompliance, violation or liability, investigations or proceedings arising under any Environmental Law or any permit issued, or any approval given, under any such Environmental Law (hereafter, “Claims”), including (a) any and all Claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief in connection with alleged injury or threat of injury to health, safety or the environment due to the presence of, or exposure to, Hazardous Materials.
“Environmental Law” shall mean any federal, state, foreign or local statute, law, rule, regulation, ordinance, code and rule of common law now or hereafter in effect and in each case as amended, including any judicial or administrative order, consent decree or judgment, relating to the environment, natural resources, human health and safety (as such matters relate to exposure to Hazardous Materials) or Hazardous Materials, including CERCLA; the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. § 300f et seq.; the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq.; the Hazardous Material Transportation Act, 49 U.S.C. § 5101 et seq.; the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.; and any state and local or foreign counterparts or equivalents, in each case as amended from time to time.
8
“Equity Interests” shall mean, as to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
“Equity Investment” shall mean the purchase or purchases of common stock of the Borrower pursuant to the Equity Purchase Agreement.
“Equity Purchase Agreement” shall mean the Securities Purchase Agreement, of even date herewith, by and among the Borrower, the Existing Manager and Rithm (or a Subsidiary or Affiliate thereof).
“ERISA” shall mean the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that, together with any Credit Party, is treated as a “single employer” within the meaning of Section 4001 of ERISA or Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a “single employer” within the meaning of Section 414 of the Code.
“ERISA Event” shall mean (a) any Reportable Event, (b) with respect to any Plan or Multiemployer Plan, the failure to satisfy the minimum funding standard (as defined in Section 412 or 430 of the Code or Section 302 of ERISA), whether or not waived, (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan or Multiemployer Plan, (d) the filing of a notice to terminate any Plan, (e) a determination that any Plan is in “at-risk status” or any Multiemployer Plan is in “endangered status” or “critical status” (as each is defined in Section 303 and 305 of ERISA, respectively), (f) the incurrence by any Credit Party or any ERISA Affiliate of any liability (x) under Title IV of ERISA with respect to the termination of any Plan or (y) in connection with the withdrawal or partial withdrawal from any Multiemployer Plan, (g) proceedings have been instituted to terminate or appoint a trustee to administer any Plan, (h) the receipt by any Credit Party or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from any Credit Party or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent within the meaning of Title IV of ERISA or (i) the occurrence of a non-exempt “prohibited transaction” with respect to which any Credit Party is a “disqualified person” (each within the meaning of Section 4975 of the Code).
9
“EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“Event of Default” shall have the meaning assigned to such term in Section 7.01.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exchange Agreements” shall mean, collectively, those certain Exchange Agreements, dated as of the date hereof, by and among the Borrower, Great Ajax Operating Partnership L.P., a Delaware limited partnership, the Existing Manager, and the Key Exchange Parties.
“Excluded Subsidiary” shall mean each (a) Securitization Entity, (b) Subsidiary that is prohibited by (i) Applicable Law, (ii) its governing documents or (iii) that would require the consent, approval, license or authorization of any Governmental Authority or third party holder of Permitted Funding Indebtedness or the 2027 Senior Notes to guarantee the Obligations (unless such consent, approval, license or authorization has been received; provided that no Credit Party shall be required to seek such consent, approval, license or authorization), (c) non-wholly owned Subsidiary, (d) any REO Subsidiary if the Equity Interests of such REO Subsidiary are required to be pledged to secure the related Permitted Funding Indebtedness; provided that a Securitization Entity or Repo Seller shall not be an Excluded Subsidiary pursuant to clause (a) or (b)(iii) (as clause (b)(iii) relates to Permitted Funding Indebtedness) if the Permitted Funding Indebtedness incurred by such Securitization Entity or such Repo Seller is guaranteed by any Credit Party (excluding any guaranty that is solely any of the following (i) a “carve-out” or “bad-boy” guaranty and the related Securitization Entity or Repo Seller is intended to be bankruptcy remote from the Credit Parties or (ii) any guarantee that is limited to a guarantee of the performance of obligations incurred in connection with the related Permitted Funding Indebtedness, such as the performance of Securitization Repurchase Obligations and is not a guaranty of the related Permitted Funding Indebtedness).
“Excluded Taxes” shall mean any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on (or measured by) net income (however denominated), franchise Taxes and branch profits Taxes, in each case (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof), or (ii) that are Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 2.18(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.17, amounts with respect to such Taxes were payable either to such Lender's assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) any Tax attributable to such Recipient’s failure to comply with Section 2.17(f) and (d) any withholding Taxes imposed pursuant to FATCA.
10
“Executive Order” shall have the meaning assigned to such term in Section 3.22(a).
“Existing Convertible Notes” shall mean Borrower’s 7.25% Existing Convertible Notes due 2024 issued pursuant to a base indenture as supplemented by a supplemental indenture thereto, each dated as of April 25, 2017, between Borrower and Wilmington Savings Fund Society, FSB, as trustee.
“Existing Convertible Notes Redemption” shall mean the redemption of the Existing Convertible Notes by the Borrower using proceeds from the Loans.
“Existing Management Agreement” shall mean the Third Amended and Restated Management Agreement, dated as of April 28, 2020, by and between the Borrower and the Existing Manager, as amended by that First Amendment to Third Amended and Restated Management Agreement, dated as of March 1, 2023, by and among the Borrower, Great Ajax Operating Partnership L.P. and the Existing Manager.
“Existing Manager” shall mean Thetis Asset Management LLC.
“Existing Preferred Stock” shall mean Borrower’s outstanding 7.25% Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock and 5.00% Series B Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock as classified and designated by the articles supplementary to Borrower’s Charter in effect as of the Effective Date.
“Existing Warrants” shall mean the Series A Warrants and Series B Warrants issued and delivered pursuant to the Warrant Agency Agreement, dated as of May 4, 2020 (the “Warrant Agency Agreement”), by and between the Borrower and Equiniti Trust Company LLC (as successor-in-interest to American Stock Transfer & Trust Company, LLC), in its capacity as the Borrower’s warrant agent for the Existing Warrants that are outstanding as of the Closing Date.
“Fair Market Equity Value” shall mean, as of any time, an amount equal to (i) the fair market value of the assets of the Borrower and its consolidated subsidiaries at such time minus (ii) the aggregate liabilities of the Borrower and its consolidated Subsidiaries at such time.
“Fair Market Value” shall mean, with respect to any asset (including any Equity Interests of any Person), the price at which a willing buyer that is not an Affiliate of the seller, and a willing seller, would reasonably be expected to agree to purchase and sell such asset, as determined in good faith by the Borrower or the Subsidiary selling such asset, whose determination will be conclusive for all purposes under the Credit Documents, absent manifest error.
“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the Closing Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities implementing such Sections of the Code.
“Fee Letter” shall mean the fee letter dated as of the Effective Date between the Borrower and the Initial Lender.
11
“Financial Covenant Indebtedness” shall have the meaning assigned to such term in Exhibit F hereto.
“Financial Covenants” shall mean the financial covenants in Sections 6.15 through 6.19.
“Flood Laws” shall mean all Applicable Laws relating to policies and procedures that address requirements placed on federally regulated lenders under the National Flood Insurance Reform Act of 1994 and other Applicable Law related thereto.
“Foreign Lender” shall mean any Lender that is not a “United States person” within the meaning of Section 7701(a)(30) of the Code.
“Foreign Subsidiary” of any Person shall mean any Subsidiary of such Person that is not a Domestic Subsidiary.
“GAAP” shall mean generally accepted accounting principles in the United States as in effect from time to time.
“Government Official” shall have the meaning assigned to such term in Section 3.23(a).
“Governmental Authority” shall mean the government of the United States of America, any other nation or any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Granting Lender” shall have the meaning assigned to such term in Section 9.04(i).
“Guarantors” shall mean Borrower and each Subsidiary Guarantor.
“Guaranty” shall mean the Guaranty dated as of the Closing Date made by Guarantors from time to time party thereto in favor of the Administrative Agent for the benefit of the Secured Creditors, substantially in the form of Exhibit E.
“Hazardous Materials” shall mean (a) any petroleum or petroleum products, radioactive materials, asbestos, asbestos-containing material, lead, mold, urea formaldehyde foam insulation, polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or substances defined as or included in the definition of “hazardous substances,” “hazardous waste,” “hazardous materials,” “extremely hazardous substances,” “restricted hazardous waste,” “toxic substances,” “toxic pollutants,” “contaminants,” or “pollutants,” or words of similar import, under any applicable Environmental Law; and (c) any other chemical, material or substance, the exposure to, or Release of which is prohibited, limited or regulated by any Governmental Authority, or may give rise to liability under any Environmental Law.
12
“Indebtedness” shall mean, as to any Person, without duplication, (a) all indebtedness of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, including any Securitization Indebtedness, (b) the maximum amount available to be drawn or paid under all letters of credit, bankers’ acceptances, bank guaranties, surety and appeal bonds and similar obligations issued for the account of such Person and all unpaid drawings and unreimbursed payments in respect of such letters of credit, bankers’ acceptances, bank guaranties, surety and appeal bonds and similar obligations, (c) all Capitalized Lease Obligations of such Person, (d) all Contingent Obligations of such Person in respect of indebtedness and other obligations described in another clause of this definition, (e) (i) the net mark-to-market exposure under any Interest Rate Protection Agreement or any Other Hedging Agreement and, (ii) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, and (f) any obligation owed for all or any part of the deferred purchase price of property or services, including any liquidated earn-out obligations (excluding any such obligations incurred under ERISA), which purchase price is due more than six (6) months from the date of incurrence of the obligation in respect thereof. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is directly liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. Notwithstanding the foregoing, Indebtedness shall not include trade payables, accrued expenses and deferred Tax and other credits incurred by any Person in accordance with customary practices and in the ordinary course of business of such Person.
“Indemnified Taxes” shall mean (a) Taxes imposed on or with respect to any payment made by any or on account of any obligation of any Credit Party under any Credit Document, other than Excluded Taxes, and (b) to the extent not otherwise described in (a), Other Taxes.
“Indemnitee” shall have the meaning assigned to such term in Section 9.05(b).
“Information” shall have the meaning assigned to such term in Section 9.16.
“Initial Lender” shall have the meaning assigned to such term in the introductory statement to this Agreement.
“Insolvency Event” shall mean the occurrence of any of the following:
| a) | Borrower or any Credit Party becomes insolvent within the meaning of 11 U.S.C. §101(32) or any other Insolvency Law applicable to the Credit Parties; |
| b) | Borrower or any Credit Party generally does not or becomes unable to pay its debts or meet its liabilities as the same become due, or admits in writing its inability to pay its debts generally, or declares any general moratorium on its Indebtedness, or proposes a compromise or arrangement or deed of company between it and any class of its creditors; |
| c) | Borrower or any Credit Party commits an act of bankruptcy or makes an assignment of its property for the general benefit of its creditors or makes a proposal of such an assignment (or files a notice of its intention to do so); |
13
| d) | Borrower or any Credit Party institutes a proceeding seeking to adjudicate it as insolvent, or seeking liquidation, dissolution, winding-up, reorganization, restructuring, compromise, arrangement, adjustment, protection, moratorium, relief, stay of proceedings of creditors generally (or any class of creditors), or composition of it or its debts or any other relief, under any applicable Insolvency Law or at common law or in equity; |
| e) | Borrower or any Credit Party applies for the appointment of, or the taking of possession by, a receiver, interim receiver, receiver/manager, sequestrator, conservator, custodian, administrator, trustee, liquidator, voluntary administrator, receiver and manager or other similar official for it or any substantial part of its property; |
| f) | Any petition is filed, application made or other proceeding instituted against or in respect of Borrower or any Credit Party: |
| i. | seeking to adjudicate it as insolvent; |
| ii. | seeking a receiving order against it; |
| iii. | seeking liquidation, dissolution, winding-up, reorganization, restructuring, compromise, arrangement, adjustment, protection, moratorium, relief, stay of proceedings of creditors generally (or any class of creditors), deed of company arrangement or composition of it or its debts or any other relief under any Law, now or hereafter in effect relating to bankruptcy, winding-up, insolvency, reorganization, receivership, plans of arrangement or relief or protection of debtors or at common law or in equity; |
| iv. | seeking the entry of an order for relief or the appointment of, or the taking of possession by, a receiver, interim receiver, receiver/manager, sequestrator, conservator, custodian, administrator, trustee, liquidator, voluntary administrator, receiver and manager or other similar official for it or any substantial part of its property; |
and, in each case under this clause (f), such petition, application or proceeding continues undismissed, or unstayed and in effect, for a period of sixty (60) days after the institution thereof; provided that if an order, decree or judgment is granted or entered (whether or not entered or subject to appeal) against Borrower or any Credit Party thereunder in the interim, such grace period will cease to apply; provided, further, that if Borrower or any Credit Party files an answer admitting the material allegations of a petition filed against it in any such proceeding prior to such date, the grace period will cease to apply;
14
| g) | Borrower or any Credit Party takes any action, corporate or otherwise, including, an affirmative vote by the board of directors (or equivalent management or oversight body) of any Credit Party, to commence any Insolvency Event or to approve, effect, consent to or authorize any of the actions described in the clauses (a)-(f) above, or otherwise acts in furtherance thereof; |
| h) | Any other event or circumstance occurs which, under applicable Insolvency Laws, has an effect equivalent to any of the events or circumstance referred to in the other clauses of this definition. |
“Insolvency Laws” shall mean the Bankruptcy Code and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments and similar debtor relief laws from time to time in effect affecting the rights of creditors generally of the United States or other applicable jurisdictions.
“Intangible Assets” shall mean assets that are considered to be intangible assets under GAAP, including customer lists, goodwill, computer software, copyrights, trade names, trademarks, patents, franchises, licenses, unamortized deferred charges, unamortized debt discount and capitalized research and development costs.
“Intercompany Loans” shall have the meaning assigned to such term in Section 6.05(f).
“Intercompany Subordination Agreement” shall mean the Intercompany Subordination Agreement dated as of the Closing Date among the Borrower and certain subsidiaries of the Borrower and the Collateral Agent, substantially in the form of Exhibit G.
“Interest Rate Protection Agreement” shall mean any interest rate swap agreement, interest rate cap agreement, interest collar agreement, interest rate hedging agreement or any other agreement or arrangement similar to any of the foregoing.
“Investments” shall have the meaning assigned to such term in Section 6.05.
“IRS” shall mean the United States Internal Revenue Service.
“Key Exchange Parties” shall mean the Persons listed on Schedule 1.01.C.
“Key Existing Manager Owners” shall mean the Persons listed on Schedule 1.01.D.
“Laws” shall mean, collectively, all international, foreign, federal, state, provincial, territorial and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.
15
“Lenders” shall mean (a) the Persons listed on Schedule 2.01 and (b) any Person that has become a party hereto as a Lender pursuant to an Assignment and Acceptance, other than any such Person that has ceased to be a party hereto as a Lender pursuant to an Assignment and Acceptance.
“Lien” shall mean any lien (statutory or other), mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance, charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).
“Liquidity” shall mean, as of any date, cash and Cash Equivalents of Borrower and its subsidiaries consolidated under GAAP.
“Loans” shall mean collectively, (a) the term loans made by the Lenders to the Borrower pursuant to Section 2.01 and (b) the Protective Advances made by the Lenders pursuant to Section 2.20.
“Management Termination and Release Agreement” shall mean a termination and release agreement, dated on or before the Closing Date, with the Existing Manager and the Key Existing Manager Owners, in the form attached here to as Exhibit H, pursuant to which, among other things, the Existing Manager will provide the Borrower with a full release from all historical liabilities of the Borrower and the Key Existing Manager Owners will agree to receive their respective portions of the contractually stipulated termination fee in Borrower common stock.
“Margin Stock” shall have the meaning assigned to such term in Regulation U.
“Material Adverse Effect” shall mean a material adverse effect on (a) the business, operations, property, assets or financial condition of the Borrower and its Subsidiaries taken as a whole, (b) the rights or remedies of or benefits available to the Lenders, the Administrative Agent or the Collateral Agent hereunder or under any other material Credit Document, taken as a whole or (c) the ability of the Borrower or the other Credit Parties, taken as a whole, to perform its or their payment obligations to the Lenders, the Administrative Agent or the Collateral Agent hereunder or under any other material Credit Document.
“Material Contract” shall mean, with respect to any Person, each contract, lease or agreement to which such Person is a party involving aggregate consideration payable to or by such Person of an amount equal to or greater than Five Million Dollars ($5,000,000) in any twelve consecutive calendar month period.
“Maturity Date” shall mean February 25, 2025.
16
“Maximum Loan Amount” shall mean an amount selected by the Borrower, at any time and from time to time during the term of this Agreement, in an amount equal to the lesser of, without duplication:
(i) the amount resulting from:
(A) $70,000,000
minus
(B) any amounts paid by Rithm or a Subsidiary or Affiliate thereof to the Borrower for the acquisition from the Borrower of the common stock of the Borrower from the Effective Date until the first date upon which Loans are funded hereunder;
minus
(C) the aggregate principal amount that the Borrower would be required to repay the Loan pursuant to Section 2.11 (including any amounts that would be payable with only the passage of time) if the Closing Date were the date hereof and the Loan were funded on the date hereof; and
(ii) the aggregate amount required to be paid in respect of the Existing Convertible Notes to cause the Existing Convertible Note Redemption.
“Maximum Rate” shall have the meaning assigned to such term in Section 9.09.
“Moody’s” shall mean Moody’s Investors Service, Inc., or any successor thereto.
“Mortgage” shall mean a mortgage, deed of trust, trust deeds, or deed to secure debt, in form and substance reasonably satisfactory to the Required Lenders, made by a Credit Party in favor of the Collateral Agent for the benefit of the Agents and the Lenders, securing the Obligations and delivered to the Collateral Agent, in each case, as amended, amended and restated, replaced, supplemented or otherwise modified from time to time.
“Multiemployer Plan” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any Credit Party or any ERISA Affiliate (a) currently makes or is obligated to make contributions, (b) has made or was obligated, within the preceding six (6) years, to make contributions, or (c) otherwise has, or could reasonably be expected to have, any outstanding liability.
“NAIC” shall mean the National Association of Insurance Commissioners.
“Net Asset Value” shall mean, as of the date of determination, the total value of the assets less the total value of the liabilities shown on the Borrower’s consolidated balance sheet, on such date, as calculated and determined in accordance with GAAP.
17
“Net Cash Proceeds” shall mean, for any event requiring a repayment of Loans pursuant to Section 2.11(a) through (f), as the case may be, the gross cash proceeds (including any cash received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from such event, net of out-of-pocket transaction costs (including, as applicable, any underwriting, brokerage or other customary commissions and out-of-pocket legal, advisory and other fees and expenses associated therewith) received from any such event and net of taxes paid or payable as a result thereof and, in the case of a Recovery Event, net of the amount of such gross cash proceeds required to be used to permanently repay any Indebtedness which is secured by the respective property or assets destroyed, damaged, taken or otherwise underlying such Recovery Event.
“Net Equity Capital Activity” shall mean the aggregate Net Cash Proceeds from the sale by the Borrower of its Equity Interests at any time after the date of the indenture governing the 2027 Senior Notes less (i) the aggregate amount paid by the Borrower after the date of the indenture governing the 2027 Senior Notes to repurchase its Equity Interests and (ii) the aggregate amount of cash distributions made by the Borrower to the holders of its Equity Interests at any time after the date of the indenture governing the 2027 Senior Notes.
“Non-Defaulting Lender” shall mean, at any time, each Lender that is not a Defaulting Lender at such time.
“Non-Recourse Exclusions” shall mean, with respect to any Securitization or Indebtedness, (a) such representations, warranties, covenants and indemnities which are customarily (as determined by the Borrower) made by sellers of financial assets or other Securitization Assets, including Securitization Repurchase Obligations, (b) such customary (as determined by the Borrower) carve-out matters for which the Borrower or any of its Subsidiaries acts as guarantor in connection with any such Securitization or Indebtedness, such as fraud, misappropriation and misapplication of funds, misrepresentation, criminal acts, repurchase obligations for breach of representations or warranties, environmental indemnities, Insolvency Events, non-approved transfers, material adverse effect clauses and regulatory proceedings.
“Non-Recourse Indebtedness” shall mean Indebtedness in respect of which recourse for payment (except for Non-Recourse Exclusions) is contractually limited to specific assets encumbered by a Lien securing such Indebtedness.
“Non-Wholly Owned Subsidiary” shall mean, as to any Person, each Subsidiary of such Person which is not a Wholly Owned Subsidiary of such Person.
“Notes” shall mean any promissory notes issued from time to time pursuant to Section 2.04(e).
“Obligations” shall mean all amounts owing to the Administrative Agent, the Collateral Agent or any Lender pursuant to the terms of this Agreement or any other Credit Document, including all amounts in respect of any principal, premium (including the Prepayment Premium), interest (including any interest accruing after the commencement of any bankruptcy, insolvency, receivership or similar proceeding (or which would accrue but for the operation of applicable Insolvency Laws) at the rate provided for herein, whether or not such interest is an allowed or allowable claim in any such proceeding), penalties, fees, expenses, indemnifications, reimbursements, damages and other liabilities, and guarantees of the foregoing amounts.
18
“Ordinary Course of Business” shall mean the ordinary course of business (i) as conducted by similarly situated residential loan and mortgage finance businesses in good faith in a manner consistent with customary market practice for the industries in which the Borrower and its Subsidiaries operate or (ii) as conducted by the Borrower and its Subsidiaries in good faith and consistent with past practice with respect to the scope of its normal business operations. A non-qualified mortgage loan securitization of Permitted Funding Assets or Permitted Funding Indebtedness with respect to any Permitted Funding Assets, in each case, that is not otherwise prohibited hereunder shall be deemed to be in the Ordinary Course of Business.
“Other Hedging Agreements” shall mean any foreign exchange contracts, currency swap agreements, commodity agreements, credit default swap agreements or other similar arrangements, or arrangements designed to protect against fluctuations in currency values, commodity prices or credit exposures.
“Other Taxes” shall mean any and all present or future stamp, court or documentary Taxes, intangible, recording or filing Taxes or any other similar Taxes, charges or levies arising from any payment made under any Credit Document or from the execution, delivery, performance, registration or enforcement of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Credit Document, except any such Taxes that are Connection Taxes imposed with respect to any assignment (other than an assignment made pursuant to Section 2.18).
“Participant Register” shall have the meaning assigned to such term in Section 9.04(f).
“Permitted Funding Assets” shall mean (a) Residential Mortgage Loans, REO Assets, and residential mortgage backed securities, (b) any reserve accounts, collection accounts and similar other accounts (including any trust accounts) established in connection with the incurrence of Permitted Funding Indebtedness to finance the assets described in clause (a), and any amounts on deposit in (or credited to) such accounts, (c) rights and interests under any of the transaction documents (including any transfer agreements) related to any such Permitted Funding Indebtedness, (d) in each case, with respect to assets of the type described in clause (a), (b) or (c), any related rights or other assets ancillary or incidental to the acquisition or ownership of such assets and (e) Equity Interests in any Subsidiary of the Borrower whose sole assets are assets of the type described in clauses (a), (b), (c) and (d).
“Permitted Funding Indebtedness” shall mean (a) any Indebtedness under a Repurchase Agreement and (b) any Permitted Securitization Indebtedness (including, in each case, any obligations incidental to the incurrence of such Indebtedness under a Repurchase Agreement or Permitted Securitization Indebtedness, such as Securitization Repurchase Obligations).
“Permitted Liens” shall have the meaning assigned to such term in Section 6.01.
19
“Permitted Refinancing” shall mean any Indebtedness (the “refinancing Indebtedness”) issued in exchange for, or the net proceeds of which are used to refinance, renew, replace, defease, discharge or refund, other Indebtedness (the “refinanced Indebtedness”); provided that:
(a) the principal amount of such refinancing Indebtedness does not exceed the principal amount of the refinanced Indebtedness (plus all accrued interest thereon and the amount of all out-of-pocket fees, expenses and premiums incurred in connection with such exchange, refinancing, renewal, replacement, defeasance, discharge or refunding);
(b) such refinancing Indebtedness has a final maturity date not earlier than the final maturity date of, and, in the case of non-revolving credit Indebtedness, has a weighted average life to maturity equal to or greater than the weighted average life to maturity of, the refinanced Indebtedness (determined without giving effect to prior payments that reduced amortization of the refinanced Indebtedness);
(c) no Person, other than the obligors of the refinanced Indebtedness, shall be an obligor in respect of such refinancing Indebtedness;
(d) if the refinanced Indebtedness is subordinated in right of payment or in lien priority to the Obligations, the refinancing Indebtedness shall be subordinated in right of payment or in lien priority, as applicable, to the Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing the refinanced Indebtedness; and
(e) if such refinanced Indebtedness is secured, the refinancing Indebtedness with respect thereto may only be secured if and to the extent secured by the same assets (and improvements affixed thereto) that secured such refinanced Indebtedness.
“Permitted Securitization Indebtedness” shall mean Securitization Indebtedness, so long as (a) such Securitization Indebtedness is the sole obligation of the related Securitization Entity and any related REO Subsidiary (other than Securitization Repurchase Obligations, which may be obligations of other parties) and (b) in connection with any Securitization, any Indebtedness under a Repurchase Agreement used to finance the purchase or origination of any Permitted Funding Assets subject to such Securitization is repaid in connection with such Securitization to the extent of the net proceeds received by the Borrower and its Subsidiaries from the applicable Securitization Entity.
“Permitted Subordinated Debt” shall mean unsecured Indebtedness of Borrower or any Subsidiary thereof that is expressly subordinated to the Obligations in right of payment on terms approved by the Required Lenders, such approval not to be unreasonably withheld, delayed or conditioned.
“Person” shall mean any individual, partnership, joint venture, firm, corporation, association, limited liability company, trust or other enterprise or any Governmental Authority.
“Plan” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which any Credit Party or any ERISA Affiliate (i) is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA or (ii) otherwise has, or could reasonably be expected to have, any outstanding liability.
“Platform” shall have the meaning assigned to such term in Section 9.01.
20
“Preferred Equity”, as applied to the Equity Interests of any Person, shall mean Equity Interests of such Person (other than common Equity Interests of such Person) of any class or classes (however designated) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Equity Interests of any other class of such Person.
“Prepayment Premium” shall mean, with respect to any prepayment of Loans pursuant to Section 2.10(a), a premium equal to 1.00% of the principal amount prepaid.
“Protective Advance” shall have the meaning assigned to Section 2.20.
“Public Lender” shall have the meaning assigned to such term in Section 9.01.
“Put Option” shall have the meaning assigned to such term in the applicable Existing Warrant.
“Qualified REIT Subsidiary” has the meaning set forth in Section 856(i)(2) of the Code.
“Quarterly Payment Date” shall mean the last Business Day of each calendar quarter, commencing on March 31, 2024.
“Real Property” of any Person shall mean all the right, title and interest of such Person in and to land, improvements and fixtures.
“Real Property Deliverables” shall mean each of the following agreements, instruments and other documents in respect of each owned Real Property, each in form and substance reasonably satisfactory to the Required Lenders:
(a) a Mortgage duly executed by the applicable Credit Party, together with evidence of the recording of such Mortgage in such office or offices as may be necessary to create a valid and perfected Lien on such Real Property in favor of the Collateral Agent for the benefit of the Required Lenders (or evidence that such Mortgage has been deposited with such recording office or offices for recording) and that all filing and recording taxes and fees have been paid or otherwise provided for in a manner reasonably satisfactory to the Required Lenders;
(b) a paid Title Insurance Policy with respect to each Mortgage, dated as of the date such Title Insurance Policy is required to be delivered to the Collateral Agent;
(c) a current ALTA survey and a surveyor’s certificate, certified to the Collateral Agent and to the issuer of the Title Insurance Policy with respect thereto by a professional surveyor licensed in the state in which such Real Property is located;
(d) customary opinions of counsel (x) from counsel in the state where such Real Property is located with respect to the enforceability of the Mortgage to be recorded and (y) from counsel of the jurisdiction of organization of the Credit Party entering into the Mortgage as to matters relating to due authorization and execution of the Mortgage by such Credit Party;
21
(e) to the extent reasonably requested by the Collateral Agent, an ASTM 1527-21 Phase I Environmental Site Assessment (“Phase I ESA”) by an independent firm reasonably satisfactory to the Required Lenders with respect to such Real Property;
(f) such documentation and information reasonably requested by any Lender (through the Collateral Agent) to ensure that such Lender is in compliance with the Flood Laws applicable to any Real Property that is subject to a Mortgage, including, but not limited to, if required by Flood Laws obtaining flood insurance for such property, structures and contents prior to or upon such property, structures and contents becoming Collateral, and thereafter maintaining such flood insurance in full force and effect for so long as required by the Flood Laws; and
(g) such other agreements, instruments and other documents (including “bad boy” guarantees and opinions of counsel) as Collateral Agent may reasonably require and to the extent customarily required by lenders in comparable loan transactions.
“Recipient” shall mean (a) the Administrative Agent or (b) any Lender.
“Recourse Indebtedness” shall mean all Financial Covenant Indebtedness other than Non-Recourse Indebtedness and Securitization Indebtedness.
“Recovery Event” shall mean the receipt by the Borrower or any Subsidiary of any cash insurance proceeds or condemnation awards payable (a) by reason of theft, loss, physical destruction, damage, taking or any other similar event with respect to any property or assets of the Borrower or any Subsidiary or (b) under any policy of insurance required to be maintained under Section 5.03 (excluding, in each case, business interruption insurance and hazard and flood insurance maintained with respect to REO Assets).
“Register” shall have the meaning assigned to such term in Section 9.04(d).
“Registration Rights Agreement” shall mean that certain Registration Rights Agreement, dated on or before the Closing Date, by and among the Borrower and Rithm (or a Subsidiary or Affiliate thereof) in the form attached hereto as Exhibit M, pursuant to which the Borrower will agree, among other things, to file as soon as practicable the shelf registration statement for the resale of the shares of Borrower common stock issuable upon exercise of the Rithm Warrants and the shares of Borrower common stock held by Rithm and its Affiliates and to provide customary demand registration and piggyback registration rights with respect to the resale from time to time by the holders thereunder.
“Regulation U” shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.
“Regulation X” shall mean Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.
“REIT” shall mean a real estate investment trust within the meaning of and under the provisions of Sections 856 et seq. of the Code.
22
“Related Fund” shall mean, with respect to any Lender that is an insurance company, fund or commingled investment vehicle (or an affiliate of any of the foregoing) that invests in bank loans, (a) one or more of such Lender’s Affiliate or one or more cedants that have entered into a reinsurance relationship with such Lender or any Affiliate thereof, (b) any fund, insurance company or other entity managed or advised by the investment advisor (or one or more Affiliates thereof) to any Lender, or (c) any beneficiary under a trust agreement in which the investment advisor (or an Affiliate thereof) to any Lender is also the investment advisor or asset manager of the grantor under such trust agreement.
“Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective directors, trustees, officers, employees, agents, representatives and advisors of such Person and such Person’s Affiliates.
“Release” shall mean actively or passively disposing, discharging, injecting, spilling, pumping, leaking, leaching, dumping, emitting, escaping, emptying, pouring, seeping, migrating or the like, into or upon any land or water or air, or otherwise entering into the environment.
“REO Assets” of a Person shall mean any real property owned by such Person and acquired as a result of the foreclosure or other enforcement of a lien on such asset securing a loan.
“REO Subsidiary” shall mean a Subsidiary of the Borrower whose sole business purposes are (a) holding REO Assets directly or indirectly pledged in connection with any Permitted Funding Indebtedness, and (b) activities incidental or related thereto.
“Repo Buyer” shall have the definition given to such term in “Repurchase Agreement”.
“Repo Seller” shall have the definition given to such term in “Repurchase Agreement”.
“Reportable Event” shall mean an event described in Section 4043(c) of ERISA with respect to a Plan other than those events as to which the 30-day notice period is waived pursuant to the regulations promulgated thereunder.
“Repurchase Agreement” shall mean an agreement between the Borrower and/or any of its Subsidiaries, as seller (in any such case, the “Repo Seller”), and one or more banks, other financial institutions and/or other investors, lenders or other Persons, as buyer (in any such case, the “Repo Buyer”), and any other parties thereto, under which the Borrower and/or such Subsidiary or Subsidiaries, as the case may be, are permitted to finance the origination or acquisition of loans, Investments, Equity Interests, other securities, servicing rights and/or any other tangible or intangible property or assets and interests in any of the foregoing (collectively, “Applicable Assets”) by means of repurchase transactions (including reverse repos) pursuant to which the Repo Seller sells, on one or more occasions, Applicable Assets to the Repo Buyer with an obligation of the Repo Seller to repurchase such Applicable Assets on a date or dates and at a price or prices specified in or pursuant to such agreement, and which may also provide for payment by the Repo Seller of interest, fees, expenses, indemnification payments and other amounts, and any other similar agreement, instrument or arrangement, together with any and all existing and future documents related thereto (including any promissory notes, security agreements, intercreditor agreements, mortgages, other collateral documents and guarantees), in each case as the same may have been or may be amended, restated, amended and restated, supplemented, modified or refinanced in any manner (whether before, upon or after termination or otherwise) in whole or in part from time to time (including successive amendments, restatements, amendments and restatements, supplements, modifications or refinancings of any of the foregoing), and whether or not with the original or other sellers, buyers, guarantors, agents, lenders, banks, financial institutions, investors or other parties.
23
“Required Lenders” shall mean, at any time, Lenders having Loans and unused Commitments representing more than 50% of the sum of all Loans outstanding and unused Commitments at such time. The Loans and unused Commitments of any Defaulting Lender shall be disregarded in the determination of the Required Lenders at any time.
“Residential Mortgage Loan” shall mean any residential mortgage loan, manufactured housing installment sale contract and loan agreement, home equity loan, home improvement loan, fix and flip loans, single family rentals loans, multi-family loans, consumer installment sale contract or similar loan evidenced by a Residential Mortgage Note, and any installment sale contract, loan contract or chattel paper.
“Residential Mortgage Note” shall mean a promissory note, bond or similar instrument evidencing indebtedness of an obligor under a Residential Mortgage Loan, including, without limitation, all related security interests and any and all rights to receive payments due thereunder.
“Resolution Authority” shall mean an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Response Date” shall have the meaning assigned to such term in Section 2.12(a)(iii).
“Restricted Payment” shall mean (a) any payment of dividend or other distribution or return of capital, direct or indirect (whether in cash, Securities or other property), on account of any shares of any class of Equity Interests (each, a “Dividend”) of the Borrower or any of its Subsidiaries now or hereafter existing, (b) any payment, direct or indirect (whether in cash, Securities or other property), including any sinking fund, setting aside of funds or similar deposit, on account of the purchase, redemption, retirement, surrender, acquisition, cancellation or termination of any shares of any class of Equity Interests of the Borrower or any of its Subsidiaries now or hereafter existing and (c) the payment of any management fees or other amounts to the Existing Manager under the Existing Management Agreement.
“Retained Security” shall mean those securities issued under Securitizations sponsored by the Borrower, or any Subsidiary thereof, that are then held by the Borrower or any consolidated Subsidiary.
“Retained Security Refinancing Indebtedness” shall mean, with respect to any Retained Security, Indebtedness incurred after the date hereof in an amount less than or equal to the amount of existing principal Indebtedness (whether described as “purchase price” or otherwise under a Repurchase Agreement) related to any Retained Security under any Repurchase Agreement as of the date hereof that refinances or replaces such existing principal Indebtedness (or any subsequent refinancing or replacement of such existing principal Indebtedness).
“Rithm” shall mean Rithm Capital Corp.
24
“Rithm Management Agreement” shall mean the Management Agreement, to be dated within four (4) months of the Effective Date, by and between Rithm (or a Subsidiary or Affiliate thereof), as manager (or the equivalent thereof), Borrower and Great Ajax Operating Partnership L.P.
“Rithm Warrant Issuance Date” shall mean the earliest of (i) the Closing Date, (ii) the Existing Convertible Notes Redemption and (iii) the Commitment Termination Date
“Rithm Warrant Notional Amount” shall mean (i) if the Rithm Warrant Issuance Date is occurring because of the occurrence of the Closing Date, the greater of (a) 50% of the principal balance of the Loan immediately after the time the Loan is funded on the Closing Date and (b) $17,500,000 and (ii) otherwise, $17,500,000.
“Rithm Warrants” shall mean those certain warrants representing the right of Rithm (or a Subsidiary or Affiliate thereof) to purchase common stock of the Borrower in an amount equal to the Rithm Warrant Notional Amount divided by the exercise price, in each case, on the terms and subject to the conditions described in the Warrant Agreement. The Rithm Warrants shall be issued on the Rithm Warrant Issuance Date.
“S&P” shall mean S&P Global Ratings, an S&P Global business, or any successor thereto.
“Sale and Leaseback Transaction” shall mean, with respect to any Credit Party or any Subsidiary, any arrangement, directly or indirectly, with any Person whereby such Credit Party or such Subsidiary shall sell or transfer any property used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property being sold or transferred.
“Sanctioned Person” shall mean at any time any Person: (a) listed on any Sanctions-related list of designated or blocked persons; or (b) resident in or organized under the laws of a country or territory that is the subject of comprehensive restrictive Sanctions from time to time (as of the date of this Agreement, Cuba, Iran, North Korea, Syria, and the Crimea region); or (c) majority-owned or controlled by any of the foregoing.
“Sanctions” shall mean all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the United States (including without limitation the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State), (b) the European Union and enforced by its member states, (c) the United Nations, or (d) His Majesty’s Treasury.
“Secured Creditors” shall mean the Administrative Agent, the Collateral Agent, the Lenders, each Indemnitee pursuant to Section 9.05, each co-agent or sub-agent appointed by the Agent from time to time pursuant to the terms hereof and any other holders of Obligations.
“Securities” shall mean any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.
25
“Securitization” shall mean a public or private transfer, sale or financing of servicing advances, mortgage loans, installment contracts, other loans and related assets, accounts receivable, real estate assets, mortgage receivables, corporate loans, consumer loans, Investments or any other assets capable of being securitized (collectively, “Securitization Assets”) by which the Borrower and/or any of its Subsidiaries directly or indirectly participates as a seller or transferor in the securitization of a pool of specified Securitization Assets or incurs Non-Recourse Indebtedness secured by specified Securitization Assets, including any such transaction involving the sale of Securitization Assets.
“Securitization Entity” shall mean (a) any Person (whether or not a Subsidiary of the Borrower but which shall not be a direct Subsidiary of Borrower) established for the purpose of issuing asset-backed or mortgaged-backed or mortgage pass-through securities of any kind, and (b) any special purpose Subsidiary established solely for the purpose of selling, depositing or contributing Permitted Funding Assets into a Person described in clause (a) or holding securities in any related Securitization Entity, regardless of whether such person is an issuer of securities.
“Securitization Indebtedness” shall mean, for any Securitization, Financial Covenant Indebtedness of the Securitization Entity incurred in connection with such Securitization.
“Securitization Repurchase Obligation” shall mean any obligation of a seller of Securitization Assets in a Securitization to repurchase Securitization Assets arising as a result of a breach of a representation, warranty or covenant or otherwise, including as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, offset or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.
“Security Agreement” shall mean the Security Agreement dated as of the Closing Date among each of the pledgors from time to time party thereto and the Collateral Agent, substantially in the form of Exhibit J.
“Security Agreement Collateral” shall mean all “Collateral” as defined in the Security Agreement.
“Security Document” shall mean and include the Security Agreement and, after the execution and delivery thereof, each Additional Security Document.
“Specified Change of Control” shall mean any event specified in the definition of “Change of Control” occurring substantially simultaneously with, or in connection with, Rithm or any Subsidiary or Affiliate thereof becoming the manager of the Borrower or acquiring any Equity Interests of the Borrower.
26
“Specified Permitted Funding Asset Dispositions” means the proposed Dispositions of Permitted Funding Asset described on Schedule 1.01.E.
“Specified Holders” shall mean the Persons listed on Schedule 1.01.B.
“SPV” shall have the meaning assigned to such term in Section 9.04(i).
“Subsidiary” shall mean, as to any Person, (a) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one (1) or more Subsidiaries of such Person and (b) any partnership, limited liability company, association or other entity in which such Person and/or one (1) or more Subsidiaries of such Person has more than a 50% equity interest at the time. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of Borrower.
“Subsidiary Guarantor” shall mean each Subsidiary (other than the Excluded Subsidiaries) (in each case, whether existing on the Closing Date or established, created or acquired after the Closing Date), unless and until such time as the respective Subsidiary is released from all of its obligations under the Guaranty in accordance with the terms and provisions thereof. As of the Closing Date, Subsidiary Guarantors are listed on Schedule 1.01.A (the Subsidiaries listed on Schedule 1.01.A, the “Closing Date Subsidiary Guarantors”).
“Support Agreements” shall mean, collectively, those certain Support Agreements, dated as of the date hereof, by and between the Borrower and the Specified Holders.
“Swap Termination Value” shall mean, in respect of any one or more Interest Rate Protection Agreement, (a) for any date on or after the date such Interest Rate Protection Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Interest Rate Protection Agreements, as determined by the Borrower based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such agreements (which may include any Lender).
“Tax Return” shall mean any return, report or similar statement required to be filed or sent with respect to any Tax (including any attached schedules), including any information return, claim for refund, amended return or declaration of estimated Tax.
“Taxable REIT Subsidiary” has the meaning set forth in Section 856(l) of the Code.
“Taxes” shall mean any and all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Termination Date” shall have the meaning assigned to such term in Article 5.
27
“Title Insurance Policy” shall mean a mortgagee’s loan policy, in form and substance reasonably satisfactory to the Required Lenders, together with all customary endorsements made from time to time thereto and available in the state in which the Real Property is located, issued by or on behalf of a title insurance company reasonably satisfactory to the Required Lenders, insuring the Lien created by a Mortgage in an amount equal to the loan amount allocated to such real property secured by the Mortgage and on terms otherwise reasonably satisfactory to the Required Lenders and delivered thereto.
“Transactions” shall mean, collectively, (a) the execution, delivery and performance by the Credit Parties of the Credit Documents to which they are a party and the making of the Loans hereunder, (b) the use of the proceeds of the Loans as required by Section 5.11, (c) the consummation of the Existing Convertible Notes Redemption and (d) the payment of related fees and expenses.
“UCC” shall mean the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction.
“UK Financial Institution” shall mean any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” shall mean the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unencumbered Retained Securities” shall mean, as of any time, Retained Securities that are not then subject to a Lien under a Repurchase Agreement.
“United States” and “U.S.” shall each mean the United States of America.
“USA PATRIOT Act” shall mean The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).
“Warrant Agent” shall mean the “Warrant Agent” and any successor entities as defined in the Warrant Agreement.
“Warrant Agreement” shall mean that certain Warrant Agreement, to be dated on or before the Warrant Issuance Date, by and between the Borrower and Warrant Agent covering the Rithm Warrants, in the form attached hereto as Exhibit N. The Administrative Agent shall have no obligation to monitor the terms of the Warrant Agreement.
“Wholly Owned Domestic Subsidiary” shall mean, as to any Person, any Wholly Owned Subsidiary of such Person which is a Domestic Subsidiary.
28
“Wholly Owned Subsidiary” shall mean, as to any Person, (a) any corporation 100% of whose capital stock is at the time owned by such Person and/or one (1) or more Wholly Owned Subsidiaries of such Person, and (b) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one (1) or more Wholly Owned Subsidiaries of such Person has a 100% equity interest at such time (other than, in the case of a Foreign Subsidiary of the Borrower with respect to the preceding clauses (a) and (b), director’s qualifying shares and/or other nominal amount of shares required to be held by Persons other than the Borrower and its Subsidiaries under applicable law).
“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal by any Credit Party or an ERISA Affiliate from such Multiemployer Plan, as such terms are defined in Part 1 of Subtitle E of Title IV of ERISA.
“Write-Down and Conversion Powers” shall mean, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that Person or any other Person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
Section 1.02 Terms Generally.
(a) The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”; and the words “asset” and “property” shall be construed as having the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, (a) any reference in this Agreement to any Credit Document shall mean such document as amended, restated, supplemented or otherwise modified from time to time, in each case, in accordance with the express terms of this Agreement, (b) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (c) all terms of an accounting or financial nature shall be construed in accordance with GAAP as in effect from time to time; provided that if the Borrower notifies the Administrative Agent that the Borrower wishes to amend any covenant in Article 6 or any related definition to eliminate the effect of any change in GAAP occurring after the Closing Date on the operation of such covenant (or if the Administrative Agent notifies the Borrower that the Required Lenders wish to amend Article 6 or any related definition for such purpose), then the Borrower’s compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required Lenders. Notwithstanding anything to the contrary contained herein, (x) all financial covenants contained herein or in any other Credit Document shall be calculated without giving effect to any election under Accounting Standards Codification 825-7-25 or 470-20 (or any similar accounting principle) permitting a Person to value its financial liabilities at the fair value thereof or at any amount other than the outstanding principal amount thereof and (y) all obligations of any Person that are or would have been treated as operating leases for purposes of GAAP prior to the effectiveness of FASB ASC 842 shall continue to be accounted for as operating leases for purposes of all financial definitions and calculations for purpose of this Agreement (whether or not such operating lease obligations were in effect on such date) notwithstanding the fact that such obligations are required in accordance with FASB ASC 842 (on a prospective or retroactive basis or otherwise) to be treated as Capitalized Lease Obligations in the financial statements.
29
(b) The words “execution,” “signed,” “signature,” and words of like import in any Credit Document or any agreement entered into in connection therewith, including any Assignment and Acceptance, or any notice, certificate or other instrument delivered in connection therewith shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
(c) Notwithstanding anything to the contrary contained herein, solely for purposes of determining compliance with any covenant under this Agreement, if at the time of such determination, Loans that are to prepay any Existing Convertible Notes have yet to be applied for such prepayment, then in calculating the applicable covenant under this Agreement, the amount of the outstanding Existing Convertible Notes shall be reduced on a dollar for dollar basis by the amount of such outstanding Loans.
Section 1.03 Designated Senior Indebtedness. The Obligations hereunder are hereby designated by the Borrower as “Designated Senior Indebtedness” (or similar term) for all purposes of any subordinated indebtedness of the Borrower or any Subsidiary (if any).
Notwithstanding anything to the contrary contained herein, to the extent that any calculation of a financial covenant set forth in Section 6.15, Section 6.16, Section 6.17 or Section 6.18 is determined in a manner that is inconsistent with the calculation of the corresponding financial covenant in the indenture governing the 2027 Senior Notes as in effect on the date hereof (except to the extent that the Loans are included in the calculation of such financial covenant), the manner of calculating such financial covenant in the indenture governing the 2027 Senior Notes (as in effect as of the date hereof without giving effect to any amendments, supplements or modifications thereof) shall govern.
30
ARTICLE 2
THE CREDITS
Section 2.01 Commitments. Subject to the terms and conditions set forth herein, (a) each Initial Lender agrees to make a Loan to the Borrower in Dollars on the Closing Date (so long as the Closing Date occurs on or prior to the Commitment Termination Date), and (b) the Borrower agrees to borrow the Loan in an amount not to exceed the Maximum Loan Amount. Amounts paid or prepaid in respect of the Loans may not be reborrowed. The Commitment shall terminate immediately and without further action on the Closing Date, after giving effect to the funding of the Loan on such date, or, if the Closing Date has not occurred on or prior to the Commitment Termination Date, the Commitment shall terminate immediately and without further action.
Section 2.02 [Reserved].
Section 2.03 Borrowing Mechanics. Unless otherwise approved by the Initial Lender, to request the borrowing of Loans pursuant to Section 2.01 on the Closing Date, the Borrower shall notify the Administrative Agent and the Initial Lender of such request by delivering a duly completed written Borrowing Request in substantially the form of Exhibit C signed by an Authorized Officer, not later than 12:00 p.m., New York time, three (3) Business Day prior to the Closing Date and shall specify the aggregate amount required to be paid to the trustee in respect of the Existing Convertible Notes to cause the Existing Convertible Note Redemption plus the amounts required for fees and expenses with respect to the Transactions, except that such amount shall not exceed the Maximum Loan Amount. Such Borrowing Request shall be irrevocable (provided that such notice may be conditioned upon other transactions that constitute conditions under Section 4.02, in which case, such notice may be revoked or extended if such transactions are not consummated or are delayed) and shall specify the location and number of the Borrower’s account to which funds are to be disbursed. Unless the Administrative Agent agrees otherwise, the proceeds of the Loan shall be disbursed directly to the “Paying Agent” in respect of the Existing Convertible Notes to fund the Existing Convertible Notes Redemption no later than three (3) Business Days after the funding of the Loan.
The Initial Lender shall make the Loan available upon satisfaction or waiver of the conditions precedent specified herein, to the Borrower on the Closing Date in same day funds in Dollars, such funds to be credited to the account of the Borrower or to such other account or accounts as may be designated in writing to the Initial Lender by the Borrower, in compliance with this Agreement.
Section 2.04 Evidence of Debt; Repayment of Loans.
(a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the principal amount of each Loan of such Lender as provided in Section 2.09 and Section 2.11. The Borrower hereby further agrees to pay the amounts of interest payable on the Loans made to the Borrower from time to time outstanding from the Closing Date until payment in full thereof at the rates per annum, and on the dates, set forth in Section 2.06 and Section 2.07.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.
31
(c) The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower or any Guarantor and each Lender’s share thereof.
(d) The entries made in the accounts maintained pursuant to clauses (b) and (c) above shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrower to repay the Loans in accordance with their terms.
(e) Any Lender may request that Loans made by it hereunder be evidenced by a promissory note. In such event, the Borrower shall execute and deliver to such Lender a promissory note payable to such Lender and its registered assigns and in a form and substance reasonably acceptable to such Lender and the Borrower.
Section 2.05 Fees and Premiums.
(a) The Borrower agrees to pay to the Lenders, for their own account, the fees set forth in the Fee Letter at the times and in the amounts specified therein.
(b) All fees referenced in clause (a) above shall be in immediately available funds and, once paid, shall not be refundable under any circumstances.
Section 2.06 Interest on Loans.
(a) Subject to Section 2.07, the Loans shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days and calculated from and including the date of such borrowing to but excluding the date of repayment thereof) at the Applicable Rate. All calculations of interest under this Agreement shall be performed by the Administrative Agent or its designee (which may be a Lender) and such calculations shall be conclusive evidence, absent manifest error, of the correctness of such amount.
(b) Interest on each Loan shall be payable in arrears in cash on each Quarterly Payment Date or, with respect to Loans prepaid pursuant to Section 2.10(b) and Section 2.11(h), the accrued and unpaid interest on the principal so prepaid shall be payable at the time of such prepayment. All interest shall accrue to, but not including, the date of repayment or prepayment.
Section 2.07 Default Interest. If there shall have occurred and be continuing an Event of Default hereunder or if any Lender shall have made a Protective Advance hereunder, to the extent permitted by law (x) all Loans and (y) other overdue amounts outstanding under this Agreement, in each case, shall bear interest (after as well as before judgment), (a) in the case of principal, at the rate otherwise applicable to such Loan pursuant to Section 2.06 plus 3.00% per annum and (b) in all other cases, at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 360 days) equal to the Applicable Rate plus 3.00% per annum. All interest accrued under this Section 2.07 shall be payable upon demand in cash.
32
Section 2.08 [Reserved].
Section 2.09 Repayment of Term Borrowings.
(a) To the extent not previously paid, all Loans shall be due and payable on the Maturity Date in cash, together with accrued and unpaid interest on the principal amount to be paid to but excluding the date of payment.
(b) All repayments pursuant to this Section 2.09 shall be without premium or penalty.
Section 2.10 Voluntary Prepayment.
(a) The Borrower shall have the right to prepay the Loans in its discretion at any time or from time to time upon at least three (3) Business Days prior written notice to the Administrative Agent before 1:00 p.m., New York time, which prepayment shall be made at par for any prepayment (x) in whole (whether the full initial amount of the Loans or the remaining outstanding portion after giving effect to other prepayments and other adjustments), (y) in part in an amount that is not less than $1,000,000 or (z) in connection with the incurrence of Indebtedness by the Borrower under Section 6.04(c), made to the extent necessary (and only to the extent necessary) to ensure compliance with such Section 6.04(c) (in which case, the Borrower shall have delivered to the Administrative Agent a certificate executed by an Authorized Officer demonstrating the foregoing, including a calculation of compliance with such Section 6.04(c) before and after giving effect to the incurrence of such Indebtedness); provided that any prepayment in circumstances described in this Section 2.10(a) shall be subject to the Prepayment Premium.
(b) Each notice of prepayment shall specify the prepayment date and the principal amount of the Loans (or portion thereof) and the accrued and unpaid interest on such principal amount of the Loans to be prepaid, shall be irrevocable and shall commit the Borrower to prepay the Loans in the amount stated therein on the date stated therein; provided that the Borrower may provide that such notice is conditioned upon the occurrence of one (1) or more other transactions, in which case, such notice may be revoked or extended if such transactions are not consummated or are delayed.
Section 2.11 Mandatory Prepayments.
(a) [Reserved].
(b) In addition to any other mandatory repayments pursuant to this Section 2.11, after giving effect to and subject to any mandatory prepayments required under any Permitted Funding Indebtedness, within three (3) Business Days following each date on or after the Closing Date upon which the Credit Parties or any of their Subsidiaries receives any Net Cash Proceeds from any Recovery Event (other than individual Recovery Events where the Net Cash Proceeds therefrom do not exceed $2,000,000), an amount equal to 100% of such Net Cash Proceeds shall be applied on such date as a mandatory repayment in accordance with the requirements of Section 2.11(g); provided that no such prepayment shall be required pursuant to this Section 2.11(b) with respect to such portion of such Net Cash Proceeds that the Credit Parties or any of their Subsidiaries intend to reinvest or that has been reinvested in their business, in each case, in accordance with Section 2.11(i) and Section 6.10.
33
(c) In addition to any other mandatory repayments pursuant to this Section 2.11, within three (3) Business Days following each date on or after the Closing Date upon which the Credit Parties or any of their Subsidiaries receives any Net Cash Proceeds from any sale by the Borrower to Rithm (or a Subsidiary or Affiliate thereof) of Equity Interests (including the issuance of the Borrower’s common stock pursuant to its at-the-market offering program), an amount equal to 100% of such Net Cash Proceeds shall be applied on such date as a mandatory repayment in accordance with the requirements of Section 2.11(g).
(d) In addition to any other mandatory repayments pursuant to this Section 2.11, within three (3) Business Days following each date on or after the Closing Date upon which the Credit Parties or any of their Subsidiaries receives any Net Cash Proceeds from any issuance or incurrence, as applicable, by the Borrower or any Subsidiary of (x) non-asset based Indebtedness (other than non-asset based Indebtedness permitted to be incurred pursuant to Section 6.04) or (y) Permitted Funding Indebtedness attributable to the financing of any Retained Securities (other than any Retained Security Refinancing Indebtedness), an amount equal to 100% of such Net Cash Proceeds shall be applied on such date as a mandatory repayment in accordance with the requirements of Section 2.11(g).
(e) In addition to any other mandatory repayments pursuant to this Section 2.11, substantially contemporaneously with any Credit Party’s or any Subsidiary’s receipt of any Net Cash Proceeds from any exercise of any of the Rithm Warrants, an amount equal to 100% of such Net Cash Proceeds shall be applied on such date as a mandatory repayment in accordance with the requirements of Section 2.11(g).
(f) In addition to any other mandatory repayments pursuant to this Section 2.11, within three (3) Business Days following each date on or after the Closing Date upon which the Credit Parties or any of their Subsidiaries receives any Net Cash Proceeds from the Disposition of any assets (including, without limitation, (i) if consummated, each Specified Permitted Funding Asset Disposition and (ii) any other Disposition of any Permitted Funding Assets), an amount equal to 100% of such Net Cash Proceeds shall be applied on such date as a mandatory repayment in accordance with the requirements of Section 2.11(g). For the avoidance of doubt, the following are not Dispositions for purposes of this Section 2.11(f): (i) the sale of a Permitted Funding Asset under a Repurchase Agreement, (ii) the pledge of an asset for collateral security and (iii) the sale of any asset (other than any direct or indirect sale of any Permitted Funding Asset) in the Ordinary Course of Business. The direct or indirect sale of any Permitted Funding Asset (even if in the Ordinary Course of Business) is a Disposition for purposes of this Section 2.11(f).
(g) Each amount required to be applied pursuant to Section 2.11(a) through Section 2.11(f) in accordance with this Section 2.11(g) shall be applied pro rata according to the respective outstanding principal amounts of the Loans then held by the Lenders.
(h) The Borrower shall deliver to the Administrative Agent, if practicable, at least three (3) Business Days prior to each prepayment required under this Section 2.11 but in any event not later than the date and time of each prepayment required under this Section 2.11, a certificate signed by an Authorized Officer of the Borrower setting forth in reasonable detail the calculation of the amount of such prepayment. Each notice of prepayment shall specify the prepayment date, and the principal amount of the Loans (or portion thereof) to be prepaid. All prepayments of Loans pursuant to Section 2.11(a) through Section 2.11(f) shall be accompanied by accrued and unpaid interest on the principal amount to be prepaid to but excluding, the date of payment.
34
(i) With respect to any Net Cash Proceeds received with respect to any Recovery Event, the Borrower or any Subsidiary may reinvest all or any portion of such Net Cash Proceeds in its business (including in Investments not prohibited hereby) prior to the date that is the later of (i) twelve (12) months following receipt of such Net Cash Proceeds or (ii) if the Borrower or any Subsidiary enters into a legally binding commitment to reinvest such Net Cash Proceeds within twelve (12) months following receipt thereof, eighteen (18) months following receipt thereof; provided that if any Net Cash Proceeds are not reinvested by the deadline specified this Section 2.11(i), an amount equal to such Net Cash Proceeds shall be applied to the prepayment of the Loans as set forth in Section 2.11(b); provided further, that such proceeds shall not constitute Net Cash Proceeds except to the extent not so used at the end of such period, at which time such proceeds shall be deemed to be Net Cash Proceeds.
(j) Notwithstanding anything in this Section 2.11 to the contrary, the Borrower or any Subsidiary shall only be required to make a prepayment (or, prior to the Closing Date, the Maximum Loan Amount shall only be reduced in accordance with clause (i)(C) of the definition thereof) of the excess of such Net Cash Proceeds, if any, such that the Borrower and its Subsidiaries, on a consolidated basis, have no more than $50,000,000 in the aggregate of cash and Cash Equivalents after receipt of such Net Cash Proceeds and application of the prepayment; provided that this Section 2.11(j) shall not be applicable in the event of the sale of all or substantially all of assets of the Borrower (in a single or series of transactions), and, for the avoidance of doubt, including sales of the equity interests of all or a substantial portion of its Subsidiaries.
Section 2.12 Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control following the Closing Date, the Borrower will make an offer (a “Change of Control Offer”) to each Lender to repay 101% of such Lender’s outstanding Loans at par, plus accrued and unpaid interest, if any, on such outstanding Loans (the “Change of Control Payment”) within five (5) Business Days following the occurrence of such Change of Control by delivering a notice signed by an Authorized Officer of the Borrower to the Administrative Agent describing the transaction or transactions that constitute such Change of Control and stating:
(i) that the Change of Control Offer is being made pursuant to this Section 2.12;
(ii) the amount of the Change of Control Payment (including reasonably detailed calculations thereof) and the proposed date of payment, which shall be no later than five (5) Business Days after notice of such Change of Control (the “Change of Control Payment Date”); and
35
(iii) that each Lender may, at its option, accept such offer for repayment in whole or in part by notifying the Administrative Agent, which shall in turn notify the Borrower, no later than two (2) Business Days prior to the Change of Control Payment Date (such date, the “Response Date”) (it being understood and agreed that any Lender that does not accept such Change of Control Offer prior to 4:00 p.m., New York time, on the Response Date will be deemed to have declined such Change of Control Offer).
(b) On the Change of Control Payment Date, the Borrower will pay in immediately available funds to the Administrative Agent, for the account of each Lender having accepted such offer, an amount equal to the Change of Control Payment payable in respect of all Loans for which such offer has been accepted. The Borrower will deliver a notice to the Administrative Agent, for distribution to the Lenders, disclosing the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.
(c) Notwithstanding anything to the contrary in this Section 2.12, the Borrower will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and which otherwise complies with the requirements set forth in this Section 2.12.
Section 2.13 Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision of this Agreement, if any Change in Law shall impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of or credit extended by any Lender, shall subject a Lender to any Taxes (other than Indemnified Taxes and Excluded Taxes) on its loans, loan principal, commitments or other obligations, or on its deposits, reserves, other liabilities or capital attributable thereto, and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Loan or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise) by an amount deemed by such Lender to be material, then the Borrower will pay to such Lender upon demand such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.
(b) If any Lender shall have determined that any Change in Law regarding capital adequacy has the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as applicable, as specified in clause (a) above shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate delivered by it within thirty (30) days after its receipt of the same.
36
(d) Failure or delay on the part of any Lender to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section 2.13 for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions, and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof). The protection of this Section 2.13(d) shall be available to each Lender regardless of any possible contention of the invalidity or inapplicability of the Change in Law that shall have occurred or been imposed.
Section 2.14 Pro Rata Treatment. Subject to the express provisions of this Agreement which require, or permit, differing payments to be made to Non-Defaulting Lenders as opposed to Defaulting Lenders, and the provisions of Section 2.12 and Section 2.20, each Loan, each payment or prepayment of principal of any Loan, each payment of interest on the Loans, and each other payment received by any Lender by exercising any right of setoff, counterclaim or otherwise shall be allocated pro rata among the Lenders in accordance with their respective principal amounts of their outstanding Loans. Each Lender agrees that in computing such Lender’s portion of the Loans to be made hereunder, the Administrative Agent may, in its discretion, round each Lender’s percentage of the Loans to the next higher or lower whole Dollar amount.
Section 2.15 Sharing of Setoffs. Each Lender agrees that if it shall, through the exercise of a right of banker’s lien, setoff or counterclaim against the Borrower or any other Credit Party, or pursuant to a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, obtain payment (voluntary or involuntary) in respect of any Loan as a result of which the unpaid principal portion of its Loans shall be proportionately less than the unpaid principal portion of the Loans of any other Lender, it shall be deemed simultaneously to have purchased from such other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a participation in the Loans of such other Lender, so that the aggregate unpaid principal amount of the Loans and participations in Loans held by each Lender shall be in the same proportion to the aggregate unpaid principal amount of all Loans then outstanding as the principal amount of its Loans prior to such exercise of banker’s lien, setoff or counterclaim or other event was to the principal amount of all Loans outstanding prior to such exercise of banker’s lien, setoff or counterclaim or other event; provided that (i) if any such purchase or purchases or adjustments shall be made pursuant to this Section 2.15 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest, and (ii) the provisions of this Section 2.15 shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including any application of funds arising from the existence of a Defaulting Lender) or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any of its Affiliates (it being understood that the provisions of this Section 2.15 shall apply). The Borrower expressly consents to the foregoing arrangements and agrees that any Lender holding a participation in a Loan deemed to have been so purchased may exercise any and all rights of banker’s lien, setoff or counterclaim with respect to any and all moneys owing by the Borrower to such Lender by reason thereof as fully as if such Lender had made a Loan directly to the Borrower in the amount of such participation.
37
Section 2.16 Payments. The Borrower shall make each payment (including principal of or interest on the Loans or any fees or other amounts) hereunder and under any other Credit Document not later than 2:00 p.m., New York time, on the date when due in immediately available Dollars, without setoff, defense or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. Each such payment shall be made to the Administrative Agent at the account specified in writing by the Administrative Agent to the Borrower. The Administrative Agent shall promptly distribute to each Lender any payments received by the Administrative Agent on behalf of such Lender.
Section 2.17 Taxes.
(a) For purposes of this Section 2.17, the term “applicable law” includes FATCA.
(b) Any and all payments by or on account of any obligation of the Borrower or any other Credit Party hereunder or under any other Credit Document shall be made without deduction or withholding for any Indemnified Taxes except as required by applicable law; provided that, if any applicable law (as determined in the good faith discretion of the Borrower or the Administrative Agent) requires the deduction or withholding of any Taxes from any such payment by a Credit Party or the Administrative Agent, then (i) the applicable Credit Party or Administrative Agent (as the case may be) shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, (ii) if such Tax is an Indemnified Tax, then the sum payable by the applicable Credit Party shall be increased as necessary so that after making all required deductions or withholdings (including deductions and withholdings applicable to additional sums payable under this Section) the Administrative Agent and each Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions or withholdings been made.
(c) In addition, the Credit Parties shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent, timely reimburse it for the payment of any Other Taxes.
(d) (i) Indemnification by the Borrower. The Credit Parties shall jointly and severally indemnify the Administrative Agent and each Lender within 10 days after written demand therefor, for the full amount of any Indemnified Taxes payable or paid by the Administrative Agent or such Lender, as the case may be, or required to be withheld or deducted from a payment to the Administrative Agent or such Lender, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower or any other Credit Party hereunder or under any other Credit Document (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or by the Administrative Agent on behalf of itself or a Lender, shall be conclusive absent manifest error.
38
(ii) Indemnification by Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (x) any Indemnified Taxes attributable to such Lender (but only to the extent that the Credit Parties have not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Credit Parties to do so) (y) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04(f) relating to the maintenance of the Participant Register and (z) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Credit Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Credit Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this clause (d)(ii).
(e) As soon as practicable after any payment of Taxes by the Borrower or any other Credit Party to a Governmental Authority pursuant to this Section 2.17, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(f) (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under this Agreement or any other Credit Document shall deliver to the Borrower or other Credit Party (with a copy to the Administrative Agent), at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to any withholding (including backup withholding) or information reporting requirements. Upon the reasonable request of the Borrower or the Administrative Agent, any Lender shall update any form or certification previously delivered pursuant to this Section 2.17(f). If any form or certification previously delivered pursuant to this Section expires or becomes obsolete or inaccurate in any respect with respect to a Lender, such Lender shall update the form or certification or reasonably promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so. Notwithstanding anything to the contrary in the preceding four (4) sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.17(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
39
(ii) Without limiting the generality of the foregoing, if the Borrower is a “United States person” within the meaning of Section 7701(a)(30) of the Code, any Lender with respect to such Borrower shall, if it is legally eligible to do so, deliver to such Borrower and the Administrative Agent (in such number of copies reasonably requested by such Borrower and the Administrative Agent) on or prior to the date on which such Lender becomes a party hereto, duly completed and executed copies of whichever of the following is applicable:
(A) in the case of a Lender that is a “United States person” within the meaning of Section 7701(a)(30) of the Code, IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding Tax;
(B) in the case of a Foreign Lender claiming the benefits of an income Tax treaty to which the United States is a party (1) with respect to payments of interest under any Credit Document, IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such Tax treaty and (2) with respect to any other applicable payments under any Credit Document, IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such Tax treaty;
(C) in the case of a Foreign Lender for which payments under any Credit Document constitute income that is effectively connected with such Lender’s conduct of a trade or business in the United States, IRS Form W-8ECI;
(D) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code both (1) IRS Form W-8BEN or W-8BEN-E and (2) a certificate to the effect that such Lender is not (a) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (b) a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code or (c) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code;
(E) in the case of a Foreign Lender that is not the beneficial owner of payments made under any Credit Document (including a partnership or a participating Lender) (1) an IRS Form W-8IMY on behalf of itself and (2) the relevant forms prescribed in clauses (A), (B), (C), (D) and (F) of this subclause (f)(ii) that would be required of each such beneficial owner or partner of such partnership if such beneficial owner or partner were a Lender; provided however, that if the Lender is a partnership and one (1) or more of its partners are claiming the exemption for portfolio interest under Section 881(c) of the Code, such Lender may provide the certificate described in (D)(2) above on behalf of such partners; or
40
(F) any other form prescribed by law as a basis for claiming exemption from, or a reduction of, U.S. federal withholding Tax together with such supplementary documentation necessary to enable the Borrower or the Administrative Agent to determine the amount of Tax (if any) required by law to be withheld.
(G) If a payment made to a Lender under any Credit Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the applicable withholding agent, at the time or times prescribed by law and at such time or times reasonably requested by such withholding agent, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the withholding agent as may be necessary for the withholding agent to comply with its obligations under FATCA, to determine that such Lender has or has not complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this Section 2.17(f)(ii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
(g) If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.17 (including by the payment of additional amounts pursuant to this Section 2.17), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this clause (g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this clause (g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this clause (g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax Returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
(h) Without limiting the provisions of Section 9.02, each party’s obligations under this Section 2.17 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Credit Document.
41
Section 2.18 Duty to Mitigate; Assignment of Commitments Under Certain Circumstances.
(a) Designation of a Different Lending Office. In the event (i) any Lender requests compensation under Section 2.13, or (ii) requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.13 or Section 2.17, as the case may be, in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable and documented costs and expenses incurred by any Lender in connection with any such designation or assignment.
(b) Replacement of Lenders. In the event (i) any Lender delivers a certificate requesting compensation pursuant to Section 2.13, (ii) any Credit Party is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority on account of any Lender pursuant to Section 2.17 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with clause (a) of this Section 2.18, (iii) any Lender refuses to consent to any amendment, waiver or other modification of any Credit Document requested by the Borrower that requires the consent of a greater percentage of the Lenders than the Required Lenders and such amendment, waiver or other modification is consented to by the Required Lenders, or (iv) any Lender becomes a Defaulting Lender, then, in each case, the Borrower may, at its sole expense and effort (including with respect to the processing and recordation fee referred to in Section 9.04(b)), upon notice to such Lender, as the case may be, and the Administrative Agent, require such Lender to transfer and assign, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all of its interests, rights and obligations under this Agreement and related Credit Documents (or, in the case of clause (iii) above, all of its interests, rights and obligation with respect to the Loans or Commitments that is the subject of the related consent, amendment, waiver or other modification) to an Eligible Assignee that shall assume such assigned obligations and, with respect to clause (iii) above, shall consent to such requested amendment, waiver or other modification of any Credit Documents (which assignee may be another Lender, if a Lender accepts such assignment); provided that (x) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority having jurisdiction, (y) in the case of any such assignment resulting from a claim of compensation under Section 2.13 or payments required to be made pursuant to Section 2.17, such assignment will result in a reduction in such compensation or payments thereafter and (z) the Borrower or such assignee shall have paid to the affected Lender in immediately available funds an amount equal to the sum of the principal of and interest accrued to the date of such payment on the outstanding Loans of such Lender, respectively, plus all fees and other amounts accrued for the account of such Lender hereunder with respect thereto (including any amounts under Section 2.13); provided further that, if prior to any such transfer and assignment the circumstances or the amounts paid pursuant to Section 2.17, as the case may be, cease to result in amounts being payable under Section 2.17, as the case may be, or shall waive its right to further payments under Section 2.17 in respect of such circumstances or event or shall consent to the proposed amendment, waiver, consent or other modification, as the case may be, then such Lender shall not thereafter be required to make any such transfer and assignment hereunder. Each Lender hereby grants to the Administrative Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and deliver, on behalf of such Lender, as assignor, any Assignment and Acceptance necessary to effectuate any assignment of such Lender’s interests hereunder in the circumstances contemplated by this Section 2.18.
42
Section 2.19 Defaulting Lenders.
(a) Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:
(i) Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders.
(ii) Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article 8 or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 9.06 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent and the Collateral Agent hereunder; second, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; third, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and fourth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction.
(b) If the Borrower and the Administrative Agent agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice, such Lender will cease to be a Defaulting Lender; provided that except to the extent otherwise expressly agreed by the affected parties in writing, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
Section 2.20 Protective Advances. Each Lender is authorized by Borrower and the other Lenders, from time to time in any such Lender’s sole and absolute discretion (but the Lenders have absolutely no obligation), to make advances that any such Lender elects to fund to satisfy, in whole or in part, any “margin call”, “margin deficit”, “borrowing base deficiency” or the equivalent of any of the foregoing in respect of any Indebtedness of Borrower or any Subsidiary that any such Lender determines in its commercially reasonable discretion in consultation with the Borrower that the applicable obligor or obligors thereof will likely not satisfy in accordance with the requirements for such Indebtedness or when required thereby giving effect to any grace or cure periods in respect of such Indebtedness (any of such advances are herein referred to as “Protective Advances”). Any Protective Advances are payable by the Borrower on written demand to the Borrower by the Lender that made any such Protective Advance.
43
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to make the Loans, each Credit Party makes the following representations and warranties, in each case on the Closing Date, all of which shall survive the execution and delivery of this Agreement and the Notes and the making of the Loans.
Section 3.01 Company Status. Each Credit Party and its Subsidiaries (a) is a duly organized and validly existing Company in good standing under the laws of the jurisdiction of its organization, (b) has the Company power and authority to own its property and assets and to transact the business in which it is engaged and (c) is duly qualified and is authorized to do business and, to the extent applicable, is in good standing in each jurisdiction where the ownership, leasing or operation of its property or the conduct of its business requires such qualifications, except to the extent all failures with respect to the foregoing clauses (a) (other than, in the case of clause (a), any Credit Party), (b) and (c) would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 3.02 Power and Authority. Each Credit Party has the Company power and authority to execute, deliver and perform its obligations under each of the Credit Documents to which it is party and, in the case of the Borrower, to borrow hereunder, and has taken all necessary Company action to authorize the execution, delivery and performance by it of each of such Credit Documents. Each Credit Party has duly executed and delivered each of the Credit Documents to which it is party, and each of such Credit Documents constitutes its legal, valid and binding obligation enforceable in accordance with its terms, except as enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and by general equitable principles relating to enforceability (regardless of whether enforcement is sought by proceedings in equity or at law).
Section 3.03 No Violation. The execution, delivery and performance of this Agreement and the other Credit Documents, the borrowings hereunder and the use of the proceeds thereof do not or will not (a) contravene any provision of any law, statute, ordinance, code, rule or regulation or any order, writ, injunction or decree of any court or Governmental Authority applicable to any Credit Party, (b)(i) conflict with or result in any breach of, or constitute a default under, or give rise to any right to accelerate or to require the prepayment, repurchase or redemption of any obligation under, or (ii) result in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Security Documents) upon any of the property or assets of any Credit Party or any Subsidiary, in each case pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement or loan agreement, or any other agreement, contract or instrument, in each case to which any Credit Party or any Subsidiary is a party or by which it or any its property or assets is bound or to which it may be subject or (c) violate any provision of the certificate or articles of incorporation, certificate of formation, limited liability company agreement or by-laws (or equivalent organizational documents), as applicable, of any Credit Party or any Subsidiary, except to the extent all violations or contraventions with respect to the foregoing clauses (a) and (b) would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
44
Section 3.04 Approvals. Except as the failure to so obtain, make and/or authorize, as applicable, would not reasonably be expected to have a Material Adverse Effect, no order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except for (x) those that have otherwise been obtained or made on or prior to the Closing Date and which remain in full force and effect on the Closing Date and (y) filings which are necessary to perfect the security interests or liens created under the Security Documents), or exemption or other action by, any Governmental Authority is required to be obtained or made by, or on behalf of, any Credit Party to authorize, or is required to be obtained or made by, or on behalf of, any Credit Party in connection with, the execution, delivery and performance of any Credit Document or the legality, validity, binding effect or enforceability of any such Credit Document.
Section 3.05 Financial Statements; Financial Condition.
(a) (i) The audited consolidated balance sheet of Borrower and its Subsidiaries at December 31, 2022 and the related consolidated statements of income and cash flows and changes in stockholder’s equity of Borrower for the fiscal year of Borrower ended on such date, in each case furnished to the Administrative Agent for delivery to the Lenders prior to the Effective Date, present fairly in all material respects the consolidated financial position of Borrower and its Subsidiaries at the date of said financial statements and the results of operations for the period covered thereby, (ii) the unaudited consolidated balance sheet of Borrower as at September 30, 2023 and the related consolidated statements of income and cash flows and changes in stockholders’ equity of Borrower for the three-month period ended on such date, in each case furnished to the Lenders prior to the Closing Date, present fairly in all material respects the consolidated financial condition of Borrower and its Subsidiaries at the date of said financial statements and the results of operations for the respective periods covered thereby, subject to normal year-end adjustments and the absence of footnotes, and (iii) the preliminary unaudited consolidated balance sheet of Borrower and its Subsidiaries at December 31, 2023 and the related preliminary consolidated statements of income and cash flows and changes in stockholder’s equity of Borrower for the fiscal year of Borrower ended on such date, in each case furnished to the Administrative Agent for delivery to the Lenders prior to the Effective Date, present fairly in all material respects the consolidated financial position of Borrower and its Subsidiaries at the date of said financial statements and the results of operations for the period covered thereby. All such financial statements have been prepared in accordance with GAAP consistently applied and subject, in the case of the unaudited financial statements, to normal year-end audit adjustments and the absence of footnotes.
(b) On the Closing Date, and after giving effect to the Transactions and to all Indebtedness (including the Loans) being incurred or assumed and Liens created by the Credit Parties in connection therewith, (i) the sum of the fair value of the assets, of Borrower and its Subsidiaries (taken as a whole) will exceed the sum of their debts, (ii) Borrower and its Subsidiaries (taken as a whole) as of the Closing Date do not have debts outstanding, and do not intend to incur further debts, beyond their ability to pay such debts as such debts mature in the ordinary course of business and (iii) the capital of Borrower and its Subsidiaries (taken as a whole) is not unreasonably small in relation to the business of Borrower or its Subsidiaries (taken as a whole) contemplated as of the Closing Date. For purposes of this Section 3.05(b), “debt” means any liability on a claim, and “claim” means (a) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (b) right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured.
45
(c) (i) Since December 31, 2022, (ii) since December 31, 2023 and (iii) since the date hereof, after giving effect to the Transactions, there has been no event or circumstance or any change in the business, operations, property, assets or financial condition of Borrower or any of its Subsidiaries that either, individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect.
Section 3.06 Litigation. There are no actions, suits or proceedings before any arbitrator or Governmental Authority at law or in equity pending or, to the knowledge of each Credit Party, threatened in writing against the Credit Parties or any of their Subsidiaries (a) with respect to any Credit Document or (b) that has had, or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.
Section 3.07 True and Complete Disclosure. All written information (taken as a whole) (including all information contained in the Credit Documents) for purposes of or in connection with this Agreement, the other Credit Documents or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of the Borrower in writing to the Administrative Agent or any Lender will be, complete and correct on the date as of which such information is dated or certified and does not or will not contain any untrue statement of a material fact or omit a material fact necessary to make such information (taken as a whole) not misleading at such time in light of the circumstances under which such information was provided (giving effect to all supplements and updates provided thereto prior to the date hereof); provided that no representation is made with respect to information of a general economic or general industry nature. Any projections and pro forma financial information provided to the Administrative Agent or any Lender are based upon good faith estimates and assumptions believed by each Credit Party to be reasonable at the time made (it being understood that projections are not to be viewed as fact and are subject to uncertainties and contingencies and actual results may differ materially from the projections and no assurance can be given that any projections will be realized).
Section 3.08 Use of Proceeds; Margin Regulations.
(a) All proceeds of the Loans will be used by the Borrower only for the purposes specified in Section 5.11.
46
(b) No part of any Loan (or the proceeds thereof) will be used to purchase or carry any Margin Stock or to extend credit for the purpose of purchasing or carrying any Margin Stock. Neither the making of any Loan nor the use of the proceeds thereof will, whether directly or indirectly, and whether immediately, incidentally or ultimately, violate Regulation U or X.
Section 3.09 Tax Matters.
(a) (i) the Borrower and each of its Subsidiaries, as applicable, has timely filed or caused to be timely filed with the appropriate taxing authority all Tax Returns required to be filed by, or with respect to the income, properties or operations of, the Borrower and/or each Subsidiary, as applicable, and all such Tax Returns are true, correct and complete in all material respects, and (ii) the Borrower and each Subsidiary, as applicable, has paid all Taxes levied or imposed upon it or its property, income, profits and assets payable by it which have become due, except (a) Taxes that are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves are being maintained on the financial statements of the Borrower in accordance with GAAP or (b) to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.
(b) Borrower has qualified to be taxed as a REIT for U.S. federal income tax purposes for its taxable years ended December 31, 2014 through December 31, 2023. Borrower has been organized and has operated in a manner so as to continue to qualify as a REIT for U.S. federal income tax purposes for its taxable year ending on December 31, 2024. Borrower has not taken or omitted to take any action that would reasonably be expected to result in a challenge by the IRS or any other Governmental Authority to its status or qualification as a REIT for U.S. federal income tax purposes, and no such challenge to its status or qualification as a REIT for U.S. federal income tax purposes is pending, being threatened in writing or, to the knowledge of Borrower, otherwise threatened or asserted.
Section 3.10 Compliance with ERISA. Each Plan is in compliance in all material respects with its terms and the applicable provisions of ERISA and the Code, and each Credit Party and each ERISA Affiliate has complied with their respective obligations with respect to each Plan and Multiemployer Plan, except for non-compliance which, in the aggregate, would not have a Material Adverse Effect. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other ERISA Events that have occurred or are reasonably likely to occur, could reasonably be expected to have a Material Adverse Effect.
Section 3.11 Security Documents. The provisions of the Security Agreement are effective to create in favor of the Collateral Agent for the benefit of the Secured Creditors a legal, valid and enforceable security interest in all right, title and interest of the Credit Parties in the Security Agreement Collateral described therein, and, upon the taking of all actions reasonably necessary to perfect the security interests purported to be created by the Security Agreement, the Collateral Agent, for the benefit of the Secured Creditors, has a fully perfected security interest in all right, title and interest in all of the Security Agreement Collateral described therein to the extent required thereunder, subject to no other Liens other than Permitted Liens.
Section 3.12 [Reserved].
47
Section 3.13 [Reserved].
Section 3.14 Subsidiaries. As of the Closing Date, (a) Borrower has no direct Subsidiaries other than Great Ajax Operating LLC and Great Ajax Operating Partnership L.P. and (b) Schedule 3.14 sets forth the percentage ownership (direct and indirect) of Borrower in each class of Equity Interests of each of its Subsidiaries and also identifies the direct owner thereof. All outstanding Equity Interests of the Borrower have been duly and validly issued and are fully paid (except as such rights may arise under mandatory provisions of applicable statutory law that may not be waived or otherwise agreed) and have been issued free of preemptive rights, and no Subsidiary of the Borrower has outstanding any securities that are convertible into or exchangeable for its Equity Interests or outstanding any right to subscribe for or to purchase, or any options or warrants for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of or any calls, commitments or claims of any character relating to, its Equity Interests or any stock appreciation or similar rights except as set forth on Schedule 3.14.
Section 3.15 Compliance with Statutes, Etc. Each Credit Party and each Subsidiary is in compliance with all statutes, regulations and orders of, and all restrictions imposed by, all Governmental Authorities in respect of the conduct of its business and the ownership of its property (including applicable Environmental Laws), except such non-compliances as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Neither any Credit Party nor any Subsidiary is subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
Section 3.16 Investment Company Act. Neither any Credit Party nor any Subsidiary is required to register as an “investment company”, or is subject to regulation, under the Investment Company Act of 1940, as amended.
Section 3.17 Insurance. Schedule 3.17 sets forth a listing of all material insurance maintained by each Credit Party and each Subsidiary as of the Closing Date, with the amounts insured (and any deductibles) set forth therein. Each Credit Party and each Subsidiary have insurance (including self-insurance) in such amounts and covering such risks and liabilities as are consistent with normal industry practice and such insurance is in full force and effect.
Section 3.18 Environmental Matters.
(a) Each Credit Party and each Subsidiary, is and all times has been, in compliance in all material respects with all applicable Environmental Laws and the requirements of any permits issued under such Environmental Laws. There are no pending or, to the knowledge of each Credit Party, threatened Environmental Claims against any Credit Party or any Subsidiary or relating to any Real Property owned, leased or operated by any Credit Party or any Subsidiary (including any such claim arising out of the ownership, lease or operation by any Credit Party or any Subsidiary of any Real Property formerly owned, leased or operated by any Credit Party or any Subsidiary). To the knowledge of each Credit Party there are no facts, circumstances, conditions or occurrences with respect to any Credit Party or any Subsidiary, or any Real Property currently or formerly owned, leased or operated by any Credit Party or any Subsidiary or any other property that could be reasonably expected (i) to form the basis of any liability under Environmental Law of, or an Environmental Claim against, any Credit Party or any Subsidiary, or any Environmental Claim relating to any such Real Property, or (ii) to cause any Real Property owned, leased or operated by any Credit Party or any Subsidiary to be subject to any restrictions on the ownership, lease, occupancy, use or transferability of such Real Property by any Credit Party or any Subsidiary under any applicable Environmental Law.
48
(b) Hazardous Materials have not at any time been generated, used, treated or stored on, or transported to or from, or Released on, to, or from, any Real Property currently or, to the knowledge of each Credit Party, formerly owned, leased or operated by any Credit Party or any Subsidiary, or any other property where such generation, use, treatment, storage, transportation or Release has violated or could be reasonably expected to, in any material respect, violate any applicable Environmental Law or give rise to an Environmental Claim or any liability under Environmental Law.
(c) Notwithstanding anything to the contrary in this Section 3.18, the representations and warranties made in this Section 3.18 shall be untrue only if the effect of any or all facts, circumstances, occurrences, conditions, violations, claims, restrictions, failures, liabilities or noncompliance would, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 3.19 Employment and Labor Relations. Neither any Credit Party nor or any Subsidiary is engaged in any unfair labor practice that would reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect. There is (a) no unfair labor practice complaint pending against any Credit Party or any Subsidiary or, to the knowledge of each Credit Party, threatened against any of them, before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against any Credit Party or any Subsidiary or, to the knowledge of each Credit Party, threatened against any of them, (b) no strike, labor dispute, slowdown or stoppage pending against any Credit Party or any Subsidiary or, to the knowledge of each Credit Party, threatened against any Credit Party or any Subsidiary, (c) no union representation question exists with respect to the employees of any Credit Party or any Subsidiary, (d) no equal employment opportunity charges or other claims of employment discrimination are pending or, to the knowledge of each Credit Party, threatened against any Credit Party or any Subsidiary and (e) no wage and hour department investigation has been made of any Credit Party or any Subsidiary, except (with respect to any matter specified in clauses (a) through (e) above, either individually or in the aggregate) such as would not reasonably be expected to have a Material Adverse Effect.
Section 3.20 Intellectual Property, Etc. Each Credit Party and each Subsidiary, as applicable, owns or has the right to use all the patents, trademarks, domain names, service marks, trade names, copyrights, inventions, trade secrets, proprietary information and know-how of any type, whether or not written (including rights in computer programs and databases), or rights with respect to the foregoing, necessary for the present conduct of its business, without any known infringement or other violation of the rights of others which, or the failure to own or have the rights which, as the case may be, would reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.
49
Section 3.21 [Reserved].
Section 3.22 Anti-Terrorism Law.
(a) Neither any Credit Party nor any Subsidiary is in violation of any applicable Sanctions or Executive Order No. 13224 on Terrorist Financing effective September 24, 2001 (the “Executive Order”). Neither any Credit Party nor any Subsidiary and, to the knowledge of such Credit Party, no agent of any Credit Party or any Subsidiary acting on behalf of any Credit Party or any Subsidiary or any director, officer, employee or Affiliate of any Credit Party or any Subsidiary, as the case may be, is or has been any of the following:
(i) a Sanctioned Person; or
(ii) a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order.
(b) Neither any Credit Party nor any Subsidiary and, to the knowledge of such Credit Party, no agent of any Credit Party or any Subsidiary when acting on behalf of any Credit Party or any Subsidiary, as the case may be, (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of a Person described in Section 3.22(a), (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order or applicable Sanctions, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any Sanctions.
(c) Neither any Credit Party nor any Subsidiary will directly or knowingly indirectly use the proceeds of the Loans or otherwise make available such proceeds to any Person, for the purpose of financing the activities of any Sanctioned Person in violation of applicable Sanctions.
(d) For the five (5) years prior to the date of this Agreement, the operations of the Credit Parties are and have been conducted at all times in compliance with applicable know-your-customer, financial record-keeping, and reporting requirements of applicable Anti-Money Laundering Laws in all jurisdictions in which the Credit Parties conduct business.
Section 3.23 Foreign Corrupt Practices Act.
(a) For the five (5) years prior to the date of this Agreement, each Credit Party, each Subsidiary and, to the knowledge of each Credit Party, each of their directors, officers, agents, employees, and any person acting for or on behalf of any Credit Party or any Subsidiary has complied in all material respects with, and will comply with, the U.S. Foreign Corrupt Practices Act, as amended from time to time, or any other applicable anti-bribery or anti-corruption law (“Anti-Corruption Laws”), and have not made, offered, promised, or authorized, and will not make, offer, promise, or authorize, whether directly or indirectly, any payment, of anything of value to: (i) an executive, official, employee or agent of a governmental department, agency or instrumentality, (ii) a director, officer, employee or agent of a wholly or partially government-owned or -controlled company or business, (iii) a political party or official thereof, or candidate for political office, or (iv) an executive, official, employee or agent of a public international organization (e.g., the International Monetary Fund or the World Bank) (“Government Official”); while knowing or having a reasonable belief that all or some portion will be used for the purpose of unlawfully: (a) influencing any act, decision or failure to act by a Government Official in his or her official capacity, (b) inducing a Government Official to use his or her influence with a government or instrumentality to affect any act or decision of such government or entity, or (c) securing an improper advantage; in order to obtain, retain, or direct business.
50
(b) Borrower represents that it maintains on behalf of itself and its Subsidiaries (or such Subsidiaries maintain) systems of internal accounting controls as required by and reasonably designed to promote compliance with applicable Anti-Corruption Laws.
Section 3.24 2027 Senior Notes. The Borrower has delivered to the Administrative Agent a true and correct copy of the indenture governing the 2027 Senior Notes. Such indenture has not been amended, supplemented or otherwise modified.
Section 3.25 Unencumbered Retained Securities. A complete list of the Unencumbered Retained Securities as of the Effective Date is set forth on Schedule 3.25.
ARTICLE 4
CONDITIONS OF LENDING
Section 4.01 Conditions Precedent to the Effectiveness of this Agreement. The effectiveness of this Agreement is subject to the satisfaction (or waiver in accordance with the terms hereof) of the following conditions (and, in the case of each document specified in this Section to be received by the Administrative Agent and the Lenders, such document shall be in form and substance satisfactory to the Administrative Agent and each Lender):
(a) Borrower shall have duly authorized, executed and delivered this Agreement, and each other party to this Agreement shall have executed and delivered this Agreement, and this Agreement shall be in full force and effect;
(b) The Administrative Agent and the Lenders shall have received reports as of a recent date, listing all effective financing statements that name the Borrower or any Subsidiary as debtor and that are filed in their respective jurisdictions of incorporation or other organization as of the date of such report, together with copies of such other financing statements that name the Borrower or any Subsidiary as debtor (none of which shall cover any of the Collateral except (x) to the extent evidencing Permitted Liens or (y) those in respect of which the Collateral Agent and the Lenders shall have received termination statements (Form UCC-3) or such other termination statements as shall be required by local law or such other arrangements reasonably satisfactory to the Collateral Agent and the Lenders shall have been made);
(c) As of the Effective Date, no Default or Event of Default shall have occurred and be continuing;
(d) The Administrative Agent and the Lenders shall have received a certificate, dated the Effective Date and signed by an Authorized Officer of the Borrower, confirming compliance with the conditions precedent set forth in clause (c) of this Section 4.01;
51
(e) The Administrative Agent and the Lenders shall have received (a) a copy of the certificate or articles of incorporation or equivalent formation document, including all amendments thereto, of the Borrower, certified as of a recent date by the Secretary of State (or other similar official) of the state of its organization, and a certificate as to the good standing of the Borrower as of a recent date, from such Secretary of State; (b) a certificate of the Secretary or Assistant Secretary of the Borrower dated the Effective Date and certifying (i) that attached thereto is a true and complete copy of the by-laws of the Borrower as in effect on the Effective Date and at all times since a date prior to the date of the resolutions described in the following clause (ii), (ii) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors (or equivalent governing body) of the Borrower authorizing the execution, delivery and performance of the Credit Documents to which the Borrower is a party and the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the Effective Date, (iii) that the certificate or articles of incorporation or other equivalent formation document of the Borrower has not been amended since the date of the last amendment thereto furnished pursuant to clause (a) above, and (iv) as to the incumbency and specimen signature of each officer executing any Credit Document or any other document delivered in connection herewith on behalf of the Borrower; and (c) the certificate referred to in the foregoing clause (b) shall contain a certification by an Authorized Officer of the Borrower as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing such certificate pursuant to clause (b) above;
(f) the Administrative Agent and the Lenders shall have received a copy of the Exchange Agreements that are duly executed and delivered by the Borrower, Great Ajax Operating Partnership L.P., the Existing Manager and the Key Exchange Parties;
(g) the Administrative Agent and the Lenders shall have received a copy of the Support Agreements that are duly executed and delivered by the Borrower and the Specified Holders; and
(h) the Administrative Agent and the Lenders shall have received a copy of the Equity Purchase Agreement that is duly executed and delivered by the Borrower, Great Ajax Operating Partnership L.P. and the Existing Manager.
Section 4.02 Conditions to the Funding of the Loan. The obligation of each Lender to make the Loan pursuant to Section 2.01 is additionally subject to the satisfaction (or waiver in accordance with the terms hereof) of the following conditions:
(a) the Administrative Agent, the Collateral Agent and each Lender shall have received all fees and other amounts due and payable on or prior to the Closing Date, including reimbursement or payment of all out of pocket expenses required to be reimbursed or paid by the Borrower hereunder, under any other Credit Document or under the Fee Letter referred to therein (including reasonable and documented fees and expenses of counsel to the extent invoiced at least one (1) Business Day prior to the Closing Date);
(b) the Administrative Agent shall have received a written (which may be delivered via electronic mail) Borrowing Request in accordance with the requirements hereof;
52
(c) on and as of the Closing Date after giving effect to the Transactions, the representations and warranties set forth in Article 3 and in each other Credit Document shall be true and correct in all material respects, except to the extent such representations and warranties expressly relate to an earlier date;
(d) as of the Closing Date after giving effect to the Transactions, no Default or Event of Default shall have occurred and be continuing or would result therefrom;
(e) (i) the Borrower will have provided reasonably satisfactory evidence to the Administrative Agent of the delivery of the required six-months’ notice (or such shorter notice period as may be agreed by the Existing Manager) to the Existing Manager pursuant to the Existing Management Agreement that it will terminate such Existing Management Agreement without cause, pay the contractually stipulated termination fee (with the cash portion of such amount not to exceed the amount set forth in Schedule 4.02) and (ii) the Administrative Agent and the Lenders shall have received a copy of the Management Termination and Release Agreement that is duly executed and delivered by the Existing Manager and the Key Existing Manager Owners;
(f) the Borrower shall have provided evidence to the Administrative Agent of the delivery of a proxy statement in order to call a special meeting of its stockholders to, among other things, solicit the approval of its stockholders (the “Stockholder Approval”) in connection with entry into the Rithm Management Agreement, exercise of the Rithm Warrants, the consummation of the Equity Investment and other matters related to the Transactions and the consummation of the transactions contemplated by the other transaction agreements described herein;
(g) the Administrative Agent and the Lenders shall have received a certificate, dated the Closing Date and signed by an Authorized Officer of the Borrower, confirming compliance with the conditions precedent set forth in this Section 4.02;
(h) the Administrative Agent and the Lenders shall have received:
(i) evidence reasonably satisfactory to it as to the proper filing of financing statements (Form UCC-1 or the equivalent) in each jurisdiction as may be necessary or, in the reasonable opinion of the Collateral Agent and the Lenders, desirable, to perfect the security interests purported to be created by the Security Agreement; and
(ii) evidence that all other actions necessary or, in the reasonable opinion of the Collateral Agent and the Lenders, desirable to perfect and protect the security interests purported to be created by the Security Agreement have been taken (other than to the extent such actions are required or permitted to be performed after the Closing Date), including the delivery to the Collateral Agent (or its designee) of certificates in respect of the Certificated Securities or any intercompany notes, if any, pledged pursuant to the Security Agreement and required to be delivered to the Collateral Agent, accompanied by signed and undated stock powers in respect of such certificates and the Security Agreement shall be in full force and effect (provided that, notwithstanding anything to the contrary contained herein or in the Security Agreement, if the Borrower has used commercially reasonable efforts to do so, but it cannot or it is impracticable to, the delivery of such Certificated Securities, intercompany notes and stock powers shall be provided in accordance with Section 5.15 of this Agreement);
53
(i) the Administrative Agent and the Lenders shall have received a certificate from the chief financial officer of the Borrower substantially in the form attached hereto as Exhibit K certifying that the Borrower and its subsidiaries, on a consolidated basis before and after giving effect to the Transactions to occur on the Closing Date, are solvent;
(j) the Administrative Agent and the Lenders shall have received a copy of the Warrant Agreement reflecting the issuance of the Rithm Warrants that is duly executed and delivered by the Borrower and the Warrant Agent;
(k) the Administrative Agent and the Lenders shall have received a copy of the Registration Rights Agreement that is duly executed and delivered by the Borrower and Rithm;
(l) the Borrower is in compliance in all material respects with its obligations under the Equity Purchase Agreement;
(m) the Administrative Agent and the Lenders shall have received, at least five (5) Business Days prior to the Closing Date, to the extent requested, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act;
(n) the Borrower shall have: (a) completed the exchange of all of its outstanding Existing Preferred Stock with its common stock; and (b) with respect to its outstanding Existing Warrants, either (i) satisfied the Put Option with Borrower common stock or (ii) agreed, and completed, the applicable net settlement for such common stock;
(o) the Administrative Agent and the Lenders shall have received, on behalf of itself and the Lenders, a favorable written opinion of (i) Mayer Brown, counsel for the Borrower and (ii) Venable LLP, Maryland counsel to the Borrower, to be in form and substance reasonably satisfactory to the Administrative Agent and the Lenders, in each case (A) dated the Closing Date, (B) addressed to the Administrative Agent and the Lenders, and (C) covering such matters relating to the Credit Documents and the Transactions as the Administrative Agent or the Lenders shall reasonably request (including an opinion to the effect that the Credit Parties’ execution, delivery and performance of the Credit Documents do not conflict with the terms of the indenture governing the 2027 Senior Notes), and the Borrower hereby requests such counsel to deliver such opinions;
(p) the Administrative Agent and the Lenders (or their respective counsel) shall have received from each Credit Party either (i) a counterpart of each of the Security Agreement, the Guaranty and Intercompany Subordination Agreement, in each case, signed on behalf of such Person party thereto or (ii) written evidence satisfactory to the Administrative Agent and the Lenders (which may include facsimile or other electronic transmission of a signed counterpart of the Security Agreement, the Guaranty and Intercompany Subordination Agreement) that such party has signed a counterpart of the Security Agreement, the Guaranty and the Intercompany Subordination Agreement;
54
(q) there shall be no order, injunction or decree of any Governmental Authority restraining or prohibiting the funding of the Loans upon the Closing Date;
(r) the Borrower shall have consummated the Existing Convertible Notes Redemption in accordance with the satisfaction and discharge requirements set forth in Article IV of the indenture governing such Existing Convertible Notes (or shall consummate the Existing Convertible Notes Redemption substantially contemporaneously with the funding of the Loan or within three (3) Business Days following the funding of the Loan);
(s) the Administrative Agent shall have received the consolidated balance sheet of Borrower and its Subsidiaries as at December 31, 2023 and the related consolidated statements of income and stockholders’ equity and statement of cash flows for such fiscal year setting forth comparative figures where applicable for the preceding fiscal year and reported on by Moss Adams LLP or other independent certified public accountants of recognized national standing (which report shall be without a “going concern” or like qualification or exception and without any qualification or exception as to scope of audit);
(t) the Borrower is in pro forma compliance with the Financial Covenants after the funding of the Loan;
(u) the Borrower shall have caused each Credit Party’s deposit accounts (other than deposit accounts constituting Excluded Assets (as defined in the Security Agreement)) to be subject to one or more “springing” deposit account control agreements, in form and substance reasonably acceptable to the Collateral Agent, by and among the applicable Credit Parties, the Collateral Agent and the applicable related depositary institution;
(v) the Rithm Warrants shall have been issued (or will be issued substantially contemporaneously with the funding of the Loan) in an amount equal to the Rithm Warrant Notional Amount in accordance with the Warrant Agreement; and
(w) the Borrower shall have caused all of the Unencumbered Retained Securities as of the Closing Date to be (i) held by a Credit Party, and (ii) either (A) if any such Unencumbered Retained Security is in global form, subject to a securities account control agreement, in form and substance reasonably acceptable to the Collateral Agent, by and among the applicable Credit Party, the Collateral Agent and the applicable securities intermediatory in respect of the securities account to which such Unencumbered Retained Security is credited, or (B) if any such Unencumbered Retained Security is in certificated form, delivered to the Collateral Agent with appropriate endorsements in blank; provided that the Borrower shall not be required to take the steps contemplated in this clause (w) in respect of any such Unencumbered Retained Security if such Unencumbered Retained Security was Disposed of during the period between the Effective Date and the Closing Date and the Net Cash Proceeds thereof have reduced the Maximum Loan Amount to the extent contemplated by Section 2.11 hereof and the definition of “Maximum Loan Amount”.
The Closing Date shall occur in any event not later than June 30, 2024 (the “Commitment Termination Date”), and if the Closing Date shall not have occurred on or prior to the Commitment Termination Date, the Commitments hereunder shall automatically terminate and be of no further force and effect.
55
The Borrower’s acceptance of the proceeds of the Loans shall be deemed to constitute a representation and warranty by the Borrower on and as of the date of the borrowing are made as to the matters specified above in this Section (other than as to any matters required to be satisfactory to, approved by or otherwise acceptable to the Administrative Agent or any Lender or any items (including signature pages) to be delivered by the Administrative Agent or any Lender).
ARTICLE 5
AFFIRMATIVE COVENANTS
Each Credit Party covenants and agrees that, from and after the Effective Date and until the Commitments have been terminated and the principal of and interest on each Loan, all fees, all indemnities and all expenses or other amounts payable under any Credit Document shall have been paid in full in cash (other than contingent indemnification obligations and expense reimbursement for which no claim has been made) (the date on which all such conditions are satisfied, the “Termination Date”), unless the Required Lenders shall otherwise consent in writing:
Section 5.01 Information Covenants. The Borrower will furnish to the Administrative Agent which will promptly furnish to each Lender:
(a) Quarterly Financial Statements. As soon as available, and in any event within 45 days after the end of the first three (3) fiscal quarters of each fiscal year of Borrower or such later date as may be permitted by the SEC, its consolidated balance sheet and related statements of comprehensive income as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year and related statements of stockholders’ equity and cash flows as of the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding prior period or periods (or in the case of the balance sheet, as of the end of the previous fiscal year, and, in the case of the statement of shareholders’ equity, no comparative disclosure), all of which shall be certified by an Authorized Officer of the Borrower that they fairly present in all material respects in accordance with GAAP the financial condition of Borrower and its Subsidiaries as of the dates indicated and the results of their operations for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes.
(b) Annual Financial Statements. As soon as available, and in any event within 90 days after the end of each fiscal year of Borrower or such later date as may be permitted by the SEC, the consolidated balance sheet of Borrower and its Subsidiaries as at the end of such fiscal year and the related consolidated statements of income and stockholders’ equity and statement of cash flows for such fiscal year setting forth comparative figures where applicable for the preceding fiscal year and reported on by Moss Adams LLP or other independent certified public accountants of recognized national standing (which report shall be without a “going concern” or like qualification or exception and without any qualification or exception as to scope of audit).
(c) Officer’s Certificates. At the time of the delivery of the financial statements provided for in Section 5.01(a) and Section 5.01(b), a compliance certificate from an Authorized Officer of the Borrower substantially in the form of Exhibit D certifying on behalf of the Borrower that, to such officer’s knowledge after due inquiry, no Default or Event of Default has occurred and is continuing or, if any Default or Event of Default has occurred and is continuing, specifying the nature and extent thereof.
56
(d) Liquidity Report. No later than fifteen (15) days after the end of each calendar month, commencing with the month ending February 29, 2024, a report from an Authorized Officer of the Borrower in the form previously agreed among the Borrower and the Administrative Agent or a form reasonably satisfactory to the Administrative Agent certifying on behalf of the Borrower as to the following and such other items reasonably requested by the Administrative Agent (i) the Liquidity as of the close of business on the last day of such month, (ii) the outstanding obligations under the Borrower’s and its Subsidiaries’ Permitted Funding Indebtedness, (iii) the approximate market values of the Permitted Funding Assets securing or supporting such Permitted Funding Indebtedness and (iv) a description of any pending or potential sales of any Permitted Funding Assets (other than any sales under Repurchase Agreements in respect of Permitted Funding Indebtedness).
(e) Notice of Default, Litigation and Material Adverse Effect. Promptly, and in any event within five (5) Business Days after any Authorized Officer obtains knowledge thereof, notice of (i) the occurrence of any Default or Event of Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto, (ii) any litigation or governmental investigation or proceeding pending, or any written threat or notice of intention of any Person to file or commence any litigation or governmental investigation or proceeding, against any Credit Party or any Subsidiary (x) which, either individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect or (y) with respect to any material Credit Document and (iii) any other event or change that has had, or would reasonably be expected to have, a Material Adverse Effect.
(f) Material Contract Compliance. Promptly, but in any event within two (2) Business Days, notify the Administrative Agent of the occurrence of any “default” or “Event of Default” (or equivalent occurrence under any Material Contract to which any Credit Party is party.
(g) Certain Notices Related to Other Indebtedness. As soon as practicable, and in any event no later than the Business Day following the Borrower’s or any Subsidiary’s receipt thereof, (i) written notice from any holder of any Permitted Funding Indebtedness of any “event of default” or equivalent thereunder that is not waived or otherwise remedied and (ii) any “margin call”, “borrowing base deficiency” or the equivalent under any Indebtedness of the Borrower or any Subsidiary that remains unsatisfied after such Credit Party or any Subsidiary has received prior notice thereof or demand for payment thereof.
(h) USA PATRIOT Act Information. Promptly following the Administrative Agent’s or any Lender’s request therefor, all documentation and other information that the Administrative Agent or any Lender reasonably requests in order to comply with its on-going obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act.
(i) Other Information. From time to time, such other information or documents (financial or otherwise) with respect to any Credit Parties or any of their Subsidiaries as the Administrative Agent or any Lender (through the Administrative Agent) may reasonably request; provided that no Credit Party will be required to disclose, permit the inspection, examination or making copies of or abstracts from, or discussion of, any document, information or other matter (a) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by Applicable Law or any contractual obligation or (b) is subject to attorney-client or similar privilege or constitutes attorney work product.
57
Any requirement to deliver documentation, information, materials or reports or other information pursuant to this Section 5.01 shall be deemed satisfied by the posting of such documentation, information, materials or reports on EDGAR or any successor website maintained by the Securities and Exchange Commission or Borrower’s website or a subsite thereof.
Section 5.02 Books, Records and Inspections. Each Credit Party will, and will cause each Subsidiary to, keep proper books of record and accounts in which full, true and correct entries in conformity in all material respects with GAAP shall be made in relation to its business and activities. Each Credit Party will permit officers and designated representatives of the Administrative Agent or the Required Lenders to visit and inspect, under guidance of officers of such Credit Party, any of the properties of such Credit Party and to examine, copy and take extracts from the books of account of such Credit Party and discuss the affairs, finances and accounts of such Credit Party with, and be advised as to the same by, its and their officers and independent accountants, all upon reasonable prior notice and at such reasonable times during normal business hours and to such reasonable extent as the Administrative Agent or the Required Lenders may reasonably request; provided that (i) the Credit Parties shall be given a reasonable opportunity to participate in any discussions with accountants, (ii) such actions shall be at the Borrower’s sole cost and expense, and (iii) no Credit Party will be required to disclose, permit the inspection, examination or making copies of or abstracts from, or discussion of, any document, information or other matter (x) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by Applicable Law or any contractual obligation or (y) is subject to attorney-client or similar privilege or constitutes attorney work product.; provided further that (a) only the Administrative Agent on behalf of the Lenders may exercise the visitation and inspection rights of the Administrative Agent and the Lenders under this sentence and (b) except for any such visits during the continuation of an Event of Default, the Administrative Agent shall not exercise such rights more often than one (1) time during any calendar year.
Section 5.03 Maintenance of Property; Insurance.
(a) Each Credit Party will, and will cause each Subsidiary to, (i) keep all material property necessary to the business of each Credit Parties and each Subsidiary in good working order and condition, ordinary wear and tear excepted and subject to the occurrence of casualty events, and force majeure and (ii) maintain or cause to be maintained with financially sound and reputable insurance companies (determined at the time obtained and giving effect to such insurance), policies of insurance as is consistent and in accordance with industry practice for companies similarly situated owning similar properties and engaged in similar businesses as the Credit Parties and the Subsidiaries, and (iii) furnish to the Administrative Agent, upon its reasonable request therefor, full information as to such insurance carried.
58
(b) If any Credit Party or any Subsidiary shall fail to maintain or cause to be maintained insurance in accordance with this Section 5.03, the Administrative Agent shall have the right (but shall be under no obligation) to procure such insurance and the Borrower agrees to reimburse the Administrative Agent for all reasonable and documented costs and expenses of procuring such insurance, provided that the Administrative Agent shall furnish written notice to the Borrower of its intent to procure such insurance.
Section 5.04 Existence; Franchises. Each Credit Party will, and will cause each Subsidiary to, at all times preserve and keep in full force and effect its existence and all rights, privileges, franchises, licenses and permits necessary or material to its business except (other with respect to the existence of the Credit Parties) to the extent the failure to do so would not reasonably be expected to result in a Material Adverse Effect; provided that nothing in this Section 5.04 shall prevent sales of assets and other transactions by any Credit Party or any Subsidiary permitted by Section 6.02.
Section 5.05 Compliance with Statutes, Etc. Each Credit Party will, and will cause each Subsidiary to, comply with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities in respect of the conduct of its business and the ownership of its property (including applicable statutes, regulations, orders and restrictions relating to environmental standards and controls), except such non-compliances as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 5.06 Compliance with Environmental Laws.
(a) Each Credit Party will, and will cause each Subsidiary to, comply with all Environmental Laws and permits applicable to, or required by, its operations or the ownership, lease, occupancy, or use of its Real Property now or hereafter owned, leased or operated by each Credit Party and each Subsidiary, except such noncompliance that could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and will promptly pay or cause to be paid all costs and expenses incurred in connection with such compliance, and will keep or cause to be kept all such Real Property free and clear of any Liens imposed pursuant to such Environmental Laws except, in each case, for Permitted Liens related thereto. Neither any Credit Party will, nor will any Credit Party permit any Subsidiary to, generate, use, treat, store, Release or dispose of Hazardous Materials on any Real Property now or hereafter owned, leased or operated by any Credit Party or any Subsidiary, or transport Hazardous Materials to or from any such Real Property, except for Hazardous Materials generated, used, treated, stored, Released or disposed of at or transported from, any such Real Properties except, in each case, such activities as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) (i) At any time that any Credit Party or any Subsidiary are not in compliance with Section 5.06(a), or (ii) in the event that the Administrative Agent or the Lenders have exercised any of the remedies pursuant to the last clause of Section 7.01, each Credit Party will (in each case) provide, at the sole expense of the Borrower and at the request of the Administrative Agent, a non-invasive environmental site assessment report concerning the Real Property owned, leased or operated by any Credit Party or any Subsidiary that is in question, prepared by an environmental consulting firm reasonably approved by the Administrative Agent, indicating the presence or absence of Hazardous Materials or noncompliance and the potential cost of any removal or remedial action required by a Governmental Authority in connection with such Hazardous Materials or noncompliance on such Real Property. If any Credit Party or any Subsidiary fails to provide the same within 60 days after such request was made, the Administrative Agent may order the same, the cost of which shall be borne by the Borrower, and the Borrower and each other Credit Party will, and will cause each Subsidiary to, grant and hereby grants to the Administrative Agent and its agents access to such Real Property and specifically grants the Administrative Agent an irrevocable non-exclusive license, subject to the rights of tenants, to undertake such an assessment at any reasonable time upon reasonable notice to the Borrower, all at the sole expense of the Borrower.
59
Section 5.07 ERISA.
(a) Each Credit Party shall furnish written notice to the Administrative Agent promptly, and in any event within three (3) Business Days after any responsible officer of any Credit Party knows, or has reason to know, that any ERISA Event has occurred or is reasonably likely to occur that, alone or together with any other ERISA Event could reasonably be expected to result in liability of any Credit Party in an aggregate amount not to exceed $10,000,000.
(b) Each Credit Party shall, and shall cause each ERISA Affiliate to, maintain and operate each Plan in compliance in all material respects with its terms and the applicable provisions of ERISA and the Code, and each Credit Party shall, and shall cause each ERISA Affiliate to comply with their respective obligations with respect to each Multiemployer Plan, except, in each case, for non-compliance which could not reasonably be expected to result in liability of any Credit Party in an aggregate amount that would reasonably be expected to have a Material Adverse Effect.
Section 5.08 End of Fiscal Years; Fiscal Quarters. The Borrower will cause (i) its and each of its Domestic Subsidiaries’ fiscal years to end on December 31 of each calendar year and (ii) its and each of its Domestic Subsidiaries’ fiscal quarters to end on March 31, June 30, September 30 and December 31 of each calendar year.
Section 5.09 Conference Calls. Upon the reasonable request of the Administrative Agent or the Required Lenders, the Borrower shall (and shall cause appropriate members of senior management of the Borrower to) participate in a conference call with the Administrative Agent and the Lenders up to two (2) times during each fiscal year and not more than one (1) time during any fiscal quarter, at such time and on such date as may be reasonably agreed to by the Borrower and the Administrative Agent and upon reasonable prior notice.
Section 5.10 Tax Matters.
(a) The Borrower and each Subsidiary will timely pay and discharge all Taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or upon any properties belonging to it, unless (i) the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Credit Parties and each Subsidiary and shown in their financial statements, except to the extent that the failure to do so would not be reasonably expected to have a Material Adverse Effect, and (ii) in the case of a Tax or claim which has or may become a Lien against any of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral to satisfy such Tax or claim.
60
(b) For U.S. federal and other applicable income tax purposes, each Credit Party, Administrative Agent and the Lenders agrees that (a) the Loans and the Closing Date Warrant shall be treated as an “investment unit” within the meaning of Section 1273(c)(2) of the Code; (b) the “issue price” of the investment unit shall be equal to the amount of the Loans; and (c) the “issue price” of the investment unit shall be allocated between the Loans and the Closing Date Warrant based on their relative fair market values as of the Closing Date, as required by Section 1273(c)(2)(B) of the Code and Treasury Regulations Section 1.1273-2(h), and for this purpose the parties hereto in good faith will agree on the fair market value of the Loans and the fair market value of the Closing Date Warrant as soon as practical after the Closing Date. The Credit Parties, Lenders and the Administrative Agent shall file or cause to be filed all federal, state and local tax returns consistent with the tax treatment provided in this Section 5.10.(b) unless otherwise required by Applicable Law. In order to obtain “original issue discount” information with respect to the Loans in accordance with Treas. Reg. 1.1275-3(b), a Lender can contact the Chief Financial Officer of the Company at 503-444-4224.
(c) From and after the Closing Date, Borrower will continue to be organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and each Subsidiary of the Borrower will continue at all times to be a Qualified REIT Subsidiary, a Taxable REIT Subsidiary, disregarded as an entity separate from its owner under Treasury Regulation Section 301.7701-3, a REIT or is characterized as a partnership for United States Federal income tax purposes of Borrower, unless otherwise consented to by the Administrative Agent.
Section 5.11 Use of Proceeds. The Borrower and each other Credit Party will use the proceeds of the Loans, together with the proceeds of the exercise of the Rithm Warrants and the Equity Investment, only for the payment in connection with the consummation of the Existing Convertible Notes Redemption and for the payment of related fees and expenses with respect to the Transactions.
61
Section 5.12 Additional Security; Further Assurances; Etc. The Borrower and each other Credit Party shall promptly following the creation, formation, or acquisition of any Subsidiary (other than any Excluded Subsidiary) and, in any event, within sixty (60) days, (as such time period may be extended by the Administrative Agent in its sole discretion) cause such Subsidiary now existing or created, formed or acquired to (a) to the extent such Subsidiary is party to any Intercompany Loan that is evidenced by a note that is required to be delivered to the Administrative Agent pursuant to Section 6.05(f), cause such Subsidiary to deliver such note to the Administrative Agent, (b) to the extent such Subsidiary is not a Subsidiary Guarantor, notify the Administrative Agent and the Lenders of the creation, formation, or acquisition of such Subsidiary and, upon the reasonable request of the Administrative Agent or the Required Lenders, cause such Subsidiary to become a party to the Guaranty and grant a security interest in the Equity Interests (other than Equity Interests constituting Excluded Assets) owned by such Subsidiary by delivering to the Administrative Agent a duly executed supplement to the Security Agreement or such other document as the Administrative Agent shall deem appropriate for such purpose, (c) upon the request of the Administrative Agent or the Required Lenders, deliver to the Administrative Agent any Certificated Securities issued by such Subsidiary, if any, and assignments related thereto, in each case, to the extent required by the Security Agreement, (d) deliver to the Administrative Agent such updated schedules to the Credit Documents as reasonably requested by the Administrative Agent with respect to such Subsidiary, (e) deliver to the Administrative Agent counterparts, joinders or similar documents with respect to the Guaranty, the Security Agreement and the Intercompany Subordination Agreement and (f) deliver to the Administrative Agent such other security documents with respect to the Collateral as may be reasonably requested by the Administrative Agent, including with respect to any Real Property with a fair market value above $1,000,000, to the extent reasonably requested by the Administrative Agent and in compliance with Applicable Law, Real Property Deliverables, all in form, content and scope reasonably satisfactory to the Administrative Agent (collectively, the “Additional Security Documents”). All such security interests shall be granted pursuant to documentation reasonably satisfactory in form and substance to the Collateral Agent and shall constitute valid and enforceable perfected security interests in the Collateral, superior to and prior to the rights of all third Persons and enforceable against third parties and subject to no other Liens, in each case other than Permitted Liens. To the extent required pursuant to the Credit Documents, the Additional Security Documents or instruments, filings or documents related thereto shall be duly recorded or filed in such manner and in such places as are required by law to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to the Additional Security Documents and all material Taxes, fees and other charges payable in connection therewith shall be paid in full.
Section 5.13 Sanctions; Anti-Corruption Laws. Each Credit Party and each Subsidiary will materially comply with all applicable Anti-Corruption Laws, Anti-Money Laundering Laws, and Sanctions. Borrower shall maintain in effect (or shall cause its Subsidiaries to maintain in effect) policies reasonably designed to promote compliance by Borrower, its Subsidiaries, and their respective directors, officers, employees, and agents with applicable Sanctions, Anti-Money Laundering Laws, and Anti-Corruption Laws.
Section 5.14 Material Contracts. Each Credit Party shall perform and observe all the material terms and provisions of each Material Contract to be performed or observed by it, use commercially reasonable efforts to maintain each such Material Contract in full force and effect during its term, enforce each such Material Contract in accordance with its terms to the extent that it is commercially reasonable to do so, in the case of each of the foregoing, to the extent that failure to do so could reasonably be expected to result in a Material Adverse Effect.
Section 5.15 Post-Closing.
(a) No later than thirty (30) days after the Closing Date (as such time period may be extended by the Administrative Agent in its sole discretion), each of the Borrower and each Subsidiary Guarantor shall grant a security interest in the Equity Interests of each direct Subsidiary of such Person by (x) delivering to the Collateral Agent a duly executed supplement to the Security Agreement or such other document as the Collateral Agent and the Lenders shall deem appropriate for such purpose, (y) delivering supplements to Schedule 3.14 as are necessary to cause such annexes to be complete and accurate with respect to such additional Equity Interests and (z) delivering such other documents as the Collateral Agent or any Lender may reasonably request, all in form, content and scope reasonably satisfactory to the Administrative Agent.
62
(b) To the extent certificates in respect of the Certificated Securities or any intercompany notes, if any, pledged pursuant to the Security Agreement and required to be delivered to the Collateral Agent are not delivered to the Collateral Agent or its designee on or prior to the Closing Date (or, in the case of Certificated Securities delivered pursuant to clause (a) of this Section 5.15, on or prior to the date that is thirty (30) days after the Closing Date), accompanied by signed and undated stock powers or other appropriate instruments of transfer, after using commercially reasonable efforts, the Credit Parties shall deliver the same to the Collateral Agent as soon as practical thereafter but in any event no later than sixty (60) days following the Closing Date (as such time period may be extended by the Administrative Agent in its sole discretion); provided further that if such Certificated Securities or intercompany notes have not been delivered on or prior to the date that is sixty (60) days following the Closing Date (as may be extended) after using commercially reasonable efforts, the Credit Parties shall not be in breach of this Section 5.15 so long as the Credit Parties deliver a certificate to the Administrative Agent, which shall certify that such Certificated Securities or intercompany notes are not held by any third party and continue to use commercially reasonable efforts to deliver such Certificated Securities or intercompany notes.
ARTICLE 6
NEGATIVE COVENANTS
The Borrower covenants and agrees with each Lender that from and after the Effective Date and until the Termination Date, unless the Required Lenders shall otherwise consent in writing:
Section 6.01 Liens. The Borrower will not, and will not permit any of the Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien upon or with respect to any property or assets of the Borrower or any Subsidiary of the Borrower, whether now owned or hereafter acquired, or on any income or revenues or rights in respect of any thereof except (Liens described below are herein referred to as “Permitted Liens”):
(a) Liens for Taxes not yet due and payable or that are diligently being contested in good faith by appropriate proceedings and adequately disclosed and fully provided for on the financial statements of the Company in accordance with GAAP;
(b) Liens in respect of property or assets of any Credit Party or any Subsidiary imposed by law (other than Liens imposed under ERISA), which were incurred in the Ordinary Course of Business and do not secure Indebtedness for borrowed money, such as carriers’, warehousemen’s, materialmen’s and mechanics’ liens, statutory and common law landlord’s liens and other similar Liens arising in the Ordinary Course of Business, and in each case (i) which are for amounts that are not past-due for a period of more than sixty (60) days or (ii) which are being contested in good faith by appropriate proceedings, diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person to the extent required in accordance with GAAP;
(c) Liens in existence on the Effective Date which are listed, and the property subject thereto described, in Schedule 6.01, and any renewals or extensions of any such Lien upon or in the same property subject thereto;
63
(d) Liens created by or pursuant to this Agreement and the other Credit Documents;
(e) (i) non-exclusive licenses, non-exclusive sublicenses, leases or subleases granted by the Borrower or any Subsidiary of the Borrower to other Persons in the Ordinary Course of Business and not materially interfering with the conduct of the business of the Borrower or any Subsidiary and (ii) any interest or title of a lessor, sublessor or licensor under any operating lease or license agreement entered into by the Borrower or any Subsidiary in the Ordinary Course of Business and covering only the assets so leased or licensed;
(f) Liens upon assets of the Borrower or any Subsidiary of the Borrower subject to Capitalized Lease Obligations to the extent such Capitalized Lease Obligations are permitted by Section 6.04(e), provided that (i) such Liens only serve to secure the payment of Indebtedness arising under such Capitalized Lease Obligation and (i) the Lien encumbering the asset giving rise to the Capitalized Lease Obligation does not encumber any other asset of the Borrower or such Subsidiary (other than property financed by such Indebtedness and proceeds thereof and improvements affixed thereto);
(g) Liens placed upon fixed or capital assets used in the Ordinary Course of Business of the Borrower or any Subsidiary of the Borrower and placed at the time of the acquisition thereof by the Borrower or such Subsidiary or within 90 days thereafter to secure Indebtedness incurred to pay all or a portion of the purchase price thereof or to secure Indebtedness incurred solely for the purpose of financing the acquisition of any such assets, or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount, provided that (i) the Indebtedness secured by such Liens is permitted by Section 6.04(e) and (ii) in all events, the Lien encumbering the assets so acquired does not encumber any other asset of the Borrower or such Subsidiary (other than property financed by such Indebtedness and proceeds thereof or improvements thereon);
(h) easements, right-of-way, restrictions, encroachments and other similar charges or encumbrances, not securing Indebtedness and not materially interfering with the conduct of the business of the Borrower or any Subsidiary;
(i) Liens arising from precautionary UCC financing statement filings regarding operating leases, consignment arrangements or bailee arrangements entered into, or dispositions of assets by the Borrower or any Subsidiary otherwise permitted under Section 6.02 consummated in the Ordinary Course of Business;
(j) Liens arising out of the existence of judgments or awards not constituting an Event of Default under Section 7.01(j);
(k) (i) Liens (other than Liens imposed under ERISA) incurred in the Ordinary Course of Business in connection with workers compensation claims, unemployment insurance and other social security legislation and (ii) Liens securing the performance of bids, trade contracts, performance and completion guarantees, tenders, leases and contracts in the Ordinary Course of Business, statutory obligations, surety bonds, performance bonds and other obligations of a like nature incurred in the Ordinary Course of Business;
(l) (i) bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one (1) or more accounts maintained by Borrower or any Subsidiary, in each case granted in the Ordinary Course of Business and which are customary in the banking industry in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank or banks with respect to cash management and operating account arrangements and (ii) Liens of a collection bank arising under Section 4-210 of the UCC on items in the course of collection;
64
(m) Liens (i) securing Permitted Funding Indebtedness so long as any such Liens shall encumber only the Permitted Funding Assets (a) originated, acquired or funded with the proceeds of such Permitted Funding Indebtedness, or (b) otherwise established, created or in existence because of or in connection with such Permitted Funding Indebtedness or (ii) arising in connection with transfers permitted by Section 6.02(n);
(n) [Reserved].
(o) Liens on cash, Cash Equivalents and restricted accounts containing cash and Cash Equivalents in connection with the defeasance, discharge or redemption of Indebtedness; provided that such defeasance, discharge or redemption is permitted hereunder;
(p) Liens securing obligations under Interest Rate Protection Agreements not entered into for speculative purposes so long as such Liens are limited to cash, Cash Equivalents and, the Permitted Funding Assets hedged thereby;
(q) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto permitted by Section 6.04(n);
(r) Liens and rights of setoff of securities intermediaries in respect of securities accounts maintained in the ordinary course of business; and
(s) other Liens securing Indebtedness and other obligations in an aggregate amount which does not exceed $2,000,000 in the aggregate at any one time.
Section 6.02 Consolidation, Merger, Sale of Assets, Etc. The Borrower will not, and will not permit any of the Subsidiaries to, wind up, liquidate or dissolve its affairs or consummate any merger or consolidation, or Dispose of all or any part of its property or assets (other than sales of inventory in the Ordinary Course of Business, but including the issuance of Equity Interests of any Subsidiary of Borrower) (other than an issuance by the Borrower to any Wholly Owned Subsidiary of the Borrower), or consummate any Sale and Leaseback Transactions with any Person, except the following:
(a) disposition of cash and Cash Equivalents shall be permitted;
(b) the liquidation or otherwise disposition of obsolete or worn-out property or property no longer useful in the business in the Ordinary Course of Business;
(c) Investments may be made to the extent permitted by Section 6.05 and Restricted Payments to the extent permitted by Section 6.03;
65
(d) the Borrower and any Subsidiary of the Borrower may sell assets (provided that any sale of less than all the capital stock or other Equity Interests of any Subsidiary in accordance with this clause (d) shall be deemed to be an Investment by the Borrower or the applicable Subsidiary in the capital stock or other Equity Interests not so sold in an amount equal to the Fair Market Value of such capital stock or other Equity Interests), so long as (i) no Event of Default then exists or would result therefrom (including as a result of any such deemed investment), (ii) the Borrower or the respective Subsidiary receives at least Fair Market Value and (iii) immediately after giving effect to such sale, lease, conveyance and other disposition of assets (as determined on a pro forma basis), the Borrower is in compliance with the Financial Covenants;
(e) the Borrower and the Subsidiaries of the Borrower may enter into sales, leases, conveyances and other dispositions of assets, so long as (i) no Event of Default then exists or would result therefrom (including as a result of any such sale, lease, conveyance and other disposition of assets), (ii) the Borrower or the respective Subsidiary receives at least Fair Market Value and (iii) immediately after giving effect to such sale, lease, conveyance and other disposition of assets (as determined on a pro forma basis), the Borrower is in compliance with the Financial Covenants;
(f) the Borrower and any Subsidiary of the Borrower may lease (as lessee) or license (as licensee) real or personal property in the Ordinary Course of Business (so long as any such lease or license does not create a Capitalized Lease Obligation except to the extent permitted by Section 6.04(e));
(g) the Borrower and any Subsidiary of the Borrower may sell or discount, in each case without recourse and in the Ordinary Course of Business, accounts receivable arising in the Ordinary Course of Business, but only in connection with the compromise or collection of delinquent accounts receivable and not as part of any financing transaction;
(h) the Borrower and each Subsidiary of the Borrower may grant, transfer or terminate licenses, sublicenses, leases or subleases (or other grants of rights to use) to other Persons (x) in the Ordinary Course of Business, (y) existing on the Closing Date, or (z) between or among the Credit Parties;
(i) the Borrower or any Subsidiary of the Borrower may convey, sell or otherwise transfer all or any part of its business, properties and assets to another Credit Party or to any Wholly Owned Domestic Subsidiary of the Borrower;
(j) any Subsidiary of the Borrower may merge or consolidate with and into, or be dissolved or liquidated into, any Credit Party or any Wholly Owned Domestic Subsidiary, so long as (i) in the case of any such merger, consolidation, dissolution or liquidation involving the Borrower, the Credit Party is the surviving or continuing entity of any such merger, consolidation, dissolution or liquidation, (ii) in the case of a merger of any non-Wholly Owned Subsidiary with any Wholly Owned Subsidiary, the Wholly Owned Subsidiary shall be the survivor or such transaction shall be deemed an Investment by such Credit Party (directly or indirectly) in such non-Wholly Owned Subsidiary and (iii) in the case of a Subsidiary Guarantor, a Subsidiary Guarantor is the surviving or continuing entity of any such merger, consolidation, dissolution or liquidation;
66
(k) any Subsidiary of the Borrower that is not a Subsidiary Guarantor (other than a Securitization Entity, a Repo Seller or a REO Subsidiary) may convey, sell, lease or otherwise dispose of all or any part of its property or assets to, or merge or consolidate with and into, or be dissolved or liquidated into, the Borrower or any other Subsidiary, in each case so long as (i) no Event of Default shall result therefrom, (ii) in the case of any such merger, consolidation, dissolution or liquidation involving a Credit Party, such Credit Party is the surviving or continuing entity of any such merger, consolidation, dissolution or liquidation, and (iii) in the case of any such merger, consolidation, dissolution or liquidation involving a Subsidiary Guarantor (but not involving the Borrower), such Subsidiary Guarantor is the surviving or continuing entity of any such merger, consolidation, dissolution or liquidation;
(l) the Credit Parties and their Subsidiaries may liquidate or otherwise dispose of Cash Equivalents in the Ordinary Course of Business for cash or Cash Equivalents;
(m) any Subsidiary of the Credit Parties may dissolve or liquidate if such dissolution or liquidation is determined by such Credit Party to be in its best interest and is not materially disadvantageous to the Lenders;
(n) the Credit Parties (other than the Borrower) and the Subsidiaries of the Borrower may make sales, contributions, assignments or other transfers of Permitted Funding Assets (including any intermediate sales, contributions, assignments or other transfers) to Securitization Entities, Repo Sellers and REO Subsidiaries in connection with Permitted Funding Indebtedness;
(o) the modification of any Permitted Funding Assets owned by the Borrower or any of the Subsidiaries in the Ordinary Course of Business shall be permitted.
(p) the settlement, unwinding, cancellation or termination of any Interest Rate Protection Agreements;
(q) (i) the issuance of any Convertible Debt Securities permitted by Section 6.04 and (ii) delivery of common stock of Borrower upon (x) conversion, exchange or settlement of any Convertible Debt Security or (y) the exercise, unwinding, termination or cancellation of the Rithm Warrants;
(r) the discontinuation, abandonment, allowing to lapse or expire, or other disposition of any intellectual property which, in the reasonable judgment of the Borrower, is no longer economically practicable to maintain or necessary in any material respect for the conduct of the business of the Credit Parties and their Subsidiaries, taken as a whole;
(s) transfers of property subject to casualty or condemnation proceedings (including in lieu thereof) upon the receipt of the net cash proceeds therefor; and
(t) so long as no Event of Default shall have occurred and be continuing or would result therefrom, the Borrower and any Subsidiary of the Borrower may sell, transfer, convey or otherwise dispose of assets in an aggregate amount in any fiscal year of up to $2,000,000.
67
Section 6.03 Restricted Payments. The Borrower will not, and will not permit any of the Subsidiaries to, directly or indirectly, authorize, make or pay any Restricted Payments, except that:
(a) (i) any Subsidiary of the Borrower may pay Restricted Payments to the Borrower or to any Wholly Owned Domestic Subsidiary and (ii) any Non-Wholly Owned Subsidiary may pay Restricted Payments to its shareholders, members or partners generally so long as the Borrower or a Subsidiary which owns the Equity Interests in the Subsidiary paying such Restricted Payments receives at least its proportionate share thereof (based upon its relative holding of the Equity Interests in the Subsidiary making such Restricted Payments);
(b) the Borrower may make any of the following Restricted Payments so long as no (x) Event of Default under Section 7.01(a), Section 7.01(c) (solely in respect of Section 5.10(c), Section 6.15, Section 6.16, Section 6.17, Section 6.18 and Section 6.19), or Section 7.01(f) has occurred and is continuing or would result from the making of any such Restricted Payment, and (y) the Borrower is in pro forma compliance with the Financial Covenants immediately after the making of any such Restricted Payment:
(i) make payment of Dividends in the amount, and at the times, required pursuant to the Existing Preferred Stock;
(ii) pay Dividends in respect of the Equity Interests of Borrower constituting common stock in the amount, and with respect to the time period, specified in Schedule 6.03; and
(iii) pay Dividends in respect of the Equity Interests of Borrower constituting common stock at the time and in an amount of the minimum Dividend necessary to maintain Borrower’s status as a REIT under Sections 856 through 860 of the Code and avoid the payment by Borrower of any federal, state or local entity-level income or excise tax, including pursuant to Sections 857, and 4981 of the Code;
(c) [Reserved].
(d) Borrower may (A) repurchase Equity Interests in connection with the exercise of stock options or warrants to the extent such Equity Interests represent a portion of the exercise price of those stock options or warrants and (B) repurchase Equity Interests or options to purchase Equity Interests in connection with the exercise of stock options to the extent necessary to pay applicable withholding taxes;
(e) Borrower may pay cash in lieu of fractional shares upon conversion or exchange of any Convertible Debt Security;
(f) Borrower may deliver common stock and cash payments upon unwinding, termination cancellation or exercise of the Rithm Warrants;
(g) pursuant to the terms of the Existing Management Agreement, Borrower may pay the contractually stipulated termination fee; and
(h) Borrower may pay any contractually stipulated management fees pursuant to the terms of the Existing Management Agreement or the Rithm Management Agreement.
68
Section 6.04 Indebtedness. The Borrower will not, and will not permit any of the Subsidiaries to, directly or indirectly, contract for, create, incur, assume or suffer to exist any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other Credit Documents;
(b) Permitted Subordinated Debt and any Permitted Refinancing thereof;
(c) Permitted Funding Indebtedness of the Borrower or any Subsidiary of the Borrower so long as immediately after any incurrence thereof (as determined on a pro forma basis), the Borrower is in compliance with the Financial Covenants (it being understood that the Financial Covenants are not required to be re-tested in connection with the “rolling” or “continuation” of any Permitted Funding Indebtedness arising under any master repurchase agreement but the Financial Covenants are only required to be re-tested in connection with the incurrence of any new money under any Permitted Funding Indebtedness or the establishment of any new facility for Permitted Funding Indebtedness);
(d) Indebtedness of the Borrower and any Subsidiary of the Borrower under Interest Rate Protection Agreements so long as the entering into of such Interest Rate Protection Agreements are bona fide hedging activities in the Ordinary Course of Business and are not for speculative purposes;
(e) Indebtedness of the Borrower and any Subsidiary of the Borrower evidenced by Capitalized Lease Obligations described in Section 6.01(e) and purchase money Indebtedness described in Section 6.01(g), provided that in no event shall the sum of the aggregate principal amount of all Capitalized Lease Obligations and purchase money Indebtedness permitted by this clause (e) exceed $2,000,000 at any time outstanding;
(f) Indebtedness constituting Intercompany Loans to the extent permitted by Section 6.05(f);
(g) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the Ordinary Course of Business, so long as such Indebtedness is extinguished within five (5) Business Days of its incurrence;
(h) Indebtedness of Borrower and its Subsidiaries with respect to performance bonds, surety bonds, appeal bonds or customs bonds required in the Ordinary Course of Business or in connection with the enforcement of rights or claims of the Borrower or any Subsidiary or in connection with judgments that do not result in a Default or an Event of Default;
(i) Indebtedness of the Borrower and any Subsidiary of the Borrower which may be deemed to exist in connection with customary agreements providing for indemnification, purchase price adjustments and similar obligations in connection with the acquisition or disposition of assets in connection with transactions otherwise permitted hereunder, so long as any such obligations are those of the Person making the respective acquisition or sale, and are not guaranteed by any other Person;
69
(j) Indebtedness with respect to any Convertible Debt Security;
(k) Indebtedness with respect to the 2027 Senior Notes;
(l) Indebtedness existing on the date hereof and set forth in Schedule 6.04 and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof except by an amount equal to a reasonable premium or other amount paid, and reasonable fees and expenses incurred, in connection with such extension, renewal or replacement;
(m) Indebtedness representing deferred compensation to directors, officers, employees of the Borrower any Subsidiary of the Borrower incurred in the Ordinary Course of Business;
(n) Indebtedness consisting of the financing of insurance premiums in the Ordinary Course of Business;
(o) Indebtedness owed to any Person providing workers’ compensation, health, disability or other employee benefits (including contractual and statutory benefits) or property, casualty, liability or credit insurance, pursuant to reimbursement or indemnification obligations to such Person, in each case incurred in the Ordinary Course of Business;
(p) Permitted Funding Indebtedness incurred by any Securitization Entity in the Ordinary Course of Business;
(q) Any Restricted Payments permitted under Section 6.03 to the extent constituting Indebtedness; and
(r) So long as no Event of Default shall have occurred and be continuing or be caused thereby, the Borrower and any Subsidiary of the Borrower may incur other Indebtedness in an aggregate amount not to exceed $2,000,000.
Section 6.05 Advances, Investments and Loans. The Borrower will not, and will not permit any of the Subsidiaries to, directly or indirectly, make or permit to exist any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase, hold or acquire any Equity Interest, bonds, notes, debentures, evidence of indebtedness or other securities of, or acquire any assets constituting all or substantially all of the assets of or assets constituting all or substantially all of the assets of a business, division or product line of, any Person (each of the foregoing an “Investment” and, collectively, “Investments”), except that the following shall be permitted:
(a) the Borrower and any Subsidiary of the Borrower may acquire and hold accounts or notes receivables owing to any of them, if created or acquired in the Ordinary Course of Business and consistent with past practice;
(b) the Borrower and any Subsidiary of the Borrower may acquire and hold cash and Cash Equivalents;
70
(c) the Borrower and any Subsidiary of the Borrower may acquire and own REO Assets and other investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in good faith settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the Ordinary Course of Business;
(d) the Borrower and any Subsidiary of the Borrower may make loans and advances to their officers and employees in the Ordinary Course of Business (including for travel, entertainment and relocation expenses) in an aggregate amount not to exceed $100,000 at any time outstanding;
(e) the Borrower and any Subsidiary of the Borrower may enter into Interest Rate Protection Agreements to the extent permitted by Section 6.04(d) and perform their obligations thereunder;
(f) the Credit Parties and their Subsidiaries may make intercompany loans and advances between or among one another (the “Intercompany Loans”); provided that (A) to the extent that any Intercompany Loan made by a Credit Party is evidenced by a note, such note shall be delivered to the Administrative Agent in accordance with Section 5.15(b), (B) each Intercompany Loan made by any Subsidiary that is not a Credit Party to a Credit Party shall be subject to the subordination provisions contained in the Intercompany Subordination Agreement and (C) any Intercompany Loans made to any Subsidiary Guarantor or any Wholly Owned Subsidiary pursuant to this clause (f) shall cease to be permitted by this clause (f) if such Subsidiary Guarantor or Wholly Owned Subsidiary, as the case may be, ceases to constitute a Subsidiary Guarantor that is a Wholly Owned Domestic Subsidiary or a Wholly Owned Subsidiary, as the case may be;
(g) (i) the Borrower and any Subsidiary of the Borrower may make capital contributions to, or acquire Equity Interests of, any Subsidiary and (ii) any Subsidiary of the Borrower may make capital contributions to, or acquire Equity Interests of, any other Subsidiary of the Borrower, and may capitalize or forgive any Indebtedness owed to it by a Subsidiary of the Borrower;
(h) the Borrower and the Subsidiaries may own the Equity Interests of their respective Subsidiaries created or acquired in accordance with the terms of this Agreement (so long as all amounts invested in such Subsidiaries are independently justified under another provision of this Section 6.05);
(i) to the extent constituting Investments, Contingent Obligations permitted by Section 6.04;
(j) the Borrower and any Subsidiary of the Borrower may receive and hold promissory notes and other non-cash consideration received in connection with any asset sale permitted by Section 6.02;
(k) the Borrower and any Subsidiary of the Borrower may in the Ordinary Course of Business make advances in the form of a prepayment of expenses to vendors, suppliers and trade creditors, so long as such expenses were incurred in the Ordinary Course of Business and consistent with the past practice of the Borrower or such Subsidiary;
71
(l) the Borrower or any Subsidiary of the Borrower may make contributions to the capital of any Securitization Entity, any Repo Seller or any REO Subsidiary of any Permitted Funding Assets in connection with any Permitted Funding Indebtedness;
(m) (i) Investments by the Borrower or any of its Subsidiaries in Permitted Funding Assets in the Ordinary Course of Business, so long as, immediately after giving effect to such Investment (as determined on a pro forma basis), the Borrower is in compliance with the Liquidity covenant in Section 6.18, and (ii) Investments by the Borrower or any of its Subsidiaries, so long as, immediately after giving effect to such Investment (as determined on a pro forma basis), the Borrower is in compliance with the Financial Covenants;
(n) to the extent constituting an Investment, the consummation of the Transactions;
(o) the settlement, unwinding, termination or cancellation of the Rithm Warrants or any Interest Rate Protection Agreement;
(p) (i) the conversion, exchange or settlement of any Convertible Debt Security and (ii) the redemption of any Convertible Debt Security to the extent permitted by Section 6.12;
(q) Investments in existence on the Effective Date which are listed in Schedule 6.05;
(r) Bank deposits and securities accounts in the Ordinary Course of Business; and
(s) other investments, acquisitions, loans, and advances in addition to those otherwise permitted by this Section 6.05 in an amount not to exceed $2,000,000 at any one time outstanding.
Section 6.06 Transactions with Affiliates. The Borrower will not, and will not, directly or indirectly, permit any of the Subsidiaries to, enter into any transaction or series of transactions with any Affiliate, other than on terms and conditions that when taken as a whole are not less favorable to the Credit Parties or such Subsidiary as would reasonably be obtained by the Credit Parties or such Subsidiary at that time in a comparable arm’s-length transaction with a Person other than an Affiliate; provided that, the foregoing restriction shall not apply to (a) any transaction between the Borrower and any one (1) or more Subsidiaries of the Borrower or among Subsidiaries of the Borrower, in each case that is otherwise permitted by this Agreement; and (b) any transaction with an Affiliate that is approved by a majority of disinterested members of the board of directors of the Borrower in good faith.
Section 6.07 Modifications of Certain Agreements. The Borrower will not, and will not permit any of the Subsidiaries to, amend, modify, change or waive, or permit the amendment, modification or changing of, any terms of the 2027 Senior Notes, any Convertible Debt Security, Permitted Subordinated Debt and, in the case of Permitted Subordinated Debt, any Permitted Refinancing thereof permitted under Section 6.04 if such amendment, modification, change or waiver (i) would reasonably be expected to materially increase the obligations of the obligors thereunder or confers any additional material rights on the holders thereof, in each case to the extent such obligations or rights, as applicable, are materially adverse to the interests of the Lenders and (ii) decreases the weighted average life to maturity or shortens the maturity date applicable thereto.
72
Section 6.08 Limitation on Certain Restrictions on Subsidiaries. The Borrower will not, and will not permit any of the Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Subsidiary to (a) pay dividends or make any other distributions on its capital stock or any other Equity Interest or participation in its profits owned by the Borrower or any Subsidiary of the Borrower, or pay any Indebtedness owed to the Borrower or any Subsidiary of the Borrower, (b) make loans or advances to the Borrower or any Subsidiary of the Borrower or (c) transfer any of its properties or assets to the Borrower or any Subsidiary of the Borrower, except for such encumbrances or restrictions existing under or by reason of (i) Applicable Law, (ii) this Agreement and the other Credit Documents, (iii) customary provisions restricting subletting or assignment of any lease governing any leasehold interest of the Borrower or any Subsidiary of the Borrower, (iv) customary provisions restricting assignment of any licensing agreement (in which the Borrower or any such Subsidiary is the licensee) or other contract entered into by the Borrower or any such Subsidiary in the Ordinary Course of Business and which restrictions apply solely to the licensed property covered thereby or assets covered by such agreement, (v) restrictions on the transfer of any asset or any Subsidiary of the Borrower pending the close of the sale of such asset or such Subsidiary, (vi) restrictions on the transfer of any Permitted Funding Asset securing any Permitted Funding Indebtedness or the Indebtedness permitted by Section 6.04(c); provided that such restrictions are limited to the applicable individual agreements and/or the property or assets subject to such agreements, (vii) customary provisions applicable to a Securitization Entity, a Repo Seller or a REO Subsidiary; provided that such restrictions are limited to the applicable individual agreements and/or the property or assets subject to such agreements and (viii) provisions in documentation with respect to the Indebtedness permitted by Section 6.04(b) and Section 6.04(l), in each case, so long as such provisions are no more restrictive than the corresponding provisions hereof.
Section 6.09 Limitation on Issuance of Equity Interests. The Borrower will not, and will not permit any of the Subsidiaries to, issue (i) any Preferred Equity other than in the case of the Borrower or any Subsidiary of the Borrower, the issuance of Preferred Equity to any Wholly Owned Subsidiary of the Borrower or (ii) any redeemable common stock or other redeemable common Equity Interests of the Borrower or any Subsidiary of the Borrower other than in the case of Borrower and any Wholly Owned Subsidiary of the Borrower, common stock or other redeemable common Equity Interests that is or are redeemable at the sole option of the Borrower or such Subsidiary, as applicable.
Section 6.10 Business; Etc. The Borrower will not, and will not permit any of the Subsidiaries to, engage directly or indirectly in any business other than the businesses engaged in by the Credit Parties and the Subsidiaries as of the Closing Date and reasonable extensions and developments thereof and businesses reasonably similar, ancillary or complimentary to any of the foregoing.
Section 6.11 Limitation on Creation of Subsidiaries. The Borrower will not, and will not permit any of the Subsidiaries to, establish, create or acquire after the Closing Date any Subsidiary, provided that the Borrower and its Wholly Owned Subsidiaries shall be permitted to establish, create and, to the extent permitted by this Agreement, acquire Wholly Owned Subsidiaries.
73
Section 6.12 Prepayments of Other Indebtedness. The Borrower will not, and will not permit any of the Subsidiaries to, directly or indirectly, voluntarily or optionally prepay, repurchase, redeem or otherwise optionally or voluntarily satisfy or defease, or make any payment in violation of any subordination terms of, whether in cash, property, securities or a combination thereof, or otherwise acquire for consideration, or set apart any sum for the aforesaid purposes, the 2027 Senior Notes, any Convertible Debt Security, Permitted Subordinated Debt or and any other Indebtedness secured by a Lien that is junior to or subordinated in right of payment to the Obligations, except (a) pursuant to a Permitted Refinancing, and (b) the Existing Convertible Note Redemption.
Section 6.13 [Reserved].
Section 6.14 [Reserved].
Section 6.15 Maintenance of Minimum Net Asset Value. The Borrower’s Net Asset Value as of the close of business on the last day of each of its fiscal quarters shall not be less than $240,000,000 plus the greater of (i) zero dollars and (ii) 65% of Net Equity Capital Activity.
Section 6.16 Maintenance of Adjusted Unencumbered Assets. The ratio of (a) the Borrower’s Adjusted Unencumbered Assets as of the close of business on the last day of each of its fiscal quarters to (b) the sum of (i) the aggregate principal amount of the Loans outstanding as of each such date and (ii) the aggregate principal amount of the 2027 Senior Notes outstanding as of such date shall not be less than 1.6 to 1.0.
Section 6.17 Maintenance of Consolidated Recourse Indebtedness to Equity Ratio. The ratio of the Borrower’s Consolidated Recourse Indebtedness to its Equity Interests as of the close of business on the last day of each of its fiscal quarters shall not be greater than or equal to 4.00 to 1.00.
Section 6.18 Maintenance of Minimum Liquidity. The Borrower’s Liquidity as of the close of business on the last day of each of its fiscal quarters shall not be less than $30,000,000.
Section 6.19 Maintenance of Market Value to Book Value. The Borrower’s ratio of (a) the aggregate principal amount of the Loans outstanding to (b) Fair Market Equity Value shall not be less than 1:1 at any time.
ARTICLE 7
EVENTS OF DEFAULT
Section 7.01 Events of Default. Upon the occurrence of any of the following specified events following the Closing Date (each, an “Event of Default”):
(a) Payments. (i) Default shall be made in the payment of any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise or (ii) default shall be made in the payment of any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (i)) due under any Credit Document, when and as the same shall become due and payable, and in the case of this clause (ii) such default shall continue unremedied for a period of five (5) Business Days; or
74
(b) Representations, etc. Any representation, warranty or certification or other statement made or deemed made by any Credit Party herein or in any other Credit Document or in any report, certificate, financial statement or other instrument or document delivered to the Administrative Agent or any Lender pursuant hereto or thereto shall be untrue in any material respect on the date as of which made or deemed made or delivered; or
(c) Covenants. The Borrower or any Subsidiary shall (i) default in the due performance or observance by it of any term, covenant or agreement contained in Section 2.12, Section 5.01(e), Section 5.04 (with respect to the existence of the Credit Parties), Section 5.08, Section 5.10(c) (taking into account the cure provisions under Sections 856 through 860 of the Code), Section 5.11, Section 5.15(a) or Article 6, or (ii) default in the due performance or observance by it of any other term, covenant or agreement contained in this Agreement (other than those set forth in Section 7.01(a) and Section 7.01(b)) and such default shall continue unremedied for a period of 30 days after the delivery of written notice thereof to the Borrower by the Administrative Agent or the Required Lenders; or
(d) Management Agreement. Either (i) the Borrower shall have failed to enter into the Rithm Management Agreement in form and substance acceptable to the Administrative Agent on or before the four (4) month anniversary of the Effective Date or (ii) the Borrower shall have failed to terminate the Existing Management Agreement and/or failed to pay all termination fees and other amounts due thereunder on or before the six month anniversary of the Effective Date, including, in either case, as a result of the failure of the Borrower’s stockholders to approve the Rithm Management Agreement and the termination of the Existing Management Agreement at a special meeting of the stockholders; or
(e) Default Under Other Agreements. (i) Any Credit Party or any Subsidiary shall fail to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness (other than Indebtedness under the Credit Documents or Indebtedness consisting of any Interest Rate Protection Agreement) having an aggregate principal amount of more than $25,000,000, in each case beyond the applicable grace period with respect thereto, if any; (ii) any Credit Party or any Subsidiary shall fail to observe or perform any other agreement or condition relating to any Indebtedness having an aggregate principal amount of more than $25,000,000 (or in the case of any Indebtedness consisting of Interest Rate Protection Agreements, having a Swap Termination Value of more than $25,000,000 in the aggregate) or contained in any instrument or agreement evidencing, securing or relating thereto (other than Indebtedness under the Credit Documents), or any other event occurs (other than, with respect to Indebtedness consisting Interest Rate Protection Agreements, termination events or equivalent events pursuant to the terms of such Interest Rate Protection Agreement not as a result of any default thereunder by any Credit Party or any Subsidiary), the effect of which default or other event is to cause, or to permit the holder or holders or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice and any applicable grace period, if required, such Indebtedness to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity or (iii) any Credit Party or any Subsidiary shall fail to make when due one or more required payments under any Interest Rate Protection Agreement due as a result of the occurrence of an “Early Termination Date” (as defined in such Interest Rate Protection Agreement or the master agreement governing such Interest Rate Protection Agreement and including any substantially similar term) arising from an “Event of Default” or a “Termination Event” (in each case, as defined in any Interest Rate Protection Agreement or the master agreement governing such Interest Rate Protection Agreement and including any substantially similar term) with respect to which such Credit Party or Subsidiary is a “Defaulting Party” (as defined in such Interest Rate Protection Agreement or the master agreement governing such Interest Rate Protection Agreement and including any substantially similar term) where the “Non-defaulting Party” or “Non-affected Party” (in each case, as defined in such Interest Rate Protection Agreement or the master agreement governing such Interest Rate Protection Agreement or any substantially similar term), as applicable, has designated such “Early Termination Date” (or any other substantially similar term) for all outstanding transactions under the relevant master agreement governing such Interest Rate Protection Agreement, where such payments due are in an aggregate amount for all such Interest Rate Protection Agreements exceeding $25,000,000; provided that clause (e)(ii) shall not apply to (A) secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness, if such sale or transfer is permitted hereunder and under the documents providing for such Indebtedness and such Indebtedness is repaid when required under the documents providing for such documents; or (B) to any event as a result of which any Convertible Debt Security becomes convertible or exchangeable pursuant to the terms thereof; or
75
(f) Bankruptcy, etc. The occurrence of any Insolvency Event; or
(g) ERISA. An ERISA Event shall have occurred that, in the reasonable opinion of the Required Lenders, when taken together with all other such ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect; or
(h) Security Documents. Any of the material Security Documents shall cease to be in full force and effect (other than by reason of a release of Collateral in accordance with the terms hereof) or the satisfaction in full of the Obligations (other than contingent indemnification and expense reimbursement obligations for which no claim has been made), or shall cease to give the Collateral Agent for the benefit of the Secured Creditors the Liens, rights, powers and privileges purported to be created thereby (including a perfected (to the extent required under the Security Agreement) security interest in, and Lien on, all of the Collateral (other than, in the aggregate, immaterial portions of the Collateral)), in favor of the Collateral Agent, superior to and prior to the rights of all third Persons (except as permitted by Section 6.01), and subject to no other Liens (except as permitted by Section 6.01), or the Borrower or any Subsidiary shall assert in writing that any material security interest purported to be created by any Security Document is not a valid, perfected (to the extent required under the Security Agreement), first priority (except as otherwise expressly provided in this Agreement or such Security Document) security interest in the Collateral covered thereby; or
(i) Guaranties. Any material Guaranty or any provision thereof shall cease to be in full force or effect as to any Guarantor (except as a result of a release of any Guarantor in accordance with the terms thereof), or any Guarantor or any Person acting for or on behalf of such Guarantor shall deny or disaffirm in writing such Guarantor’s material obligations under the Guaranty; or
76
(j) Judgments. One (1) or more final, non-appealable judgments or decrees in an aggregate amount in excess of $25,000,000 shall be entered against the Borrower or any Subsidiary involving in the aggregate for the Borrower and each Subsidiary a liability (not paid or to the extent not covered by insurance which has not denied coverage) and such judgments and decrees either shall be final and non-appealable or shall not be satisfied, vacated, discharged or stayed or bonded pending appeal for any period of sixty (60) consecutive days and the aggregate amount of all such judgments equals or exceeds $25,000,000;
(k) Change of Recommendation/Fiduciary Out/Failure to Close. The board of directors of the Borrower changes its recommendation to stockholders of the Borrower for the Stockholder Approval, the Equity Purchase Agreement is terminated pursuant to the fiduciary out contained therein or the Equity Investment or any other transaction contemplated by the transaction agreements described herein fails to close as a result of a breach by the Borrower or the Existing Manager; or
(l) Change of Control. If the Borrower has failed to comply with the requirements of Section 2.12, the occurrence of a Change of Control;
then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent may, and upon the written request of the Required Lenders shall, by written notice to the Borrower, take any or all of the following actions (provided that, if an Event of Default specified in Section 7.01(f) shall occur with respect to the Borrower or any Subsidiary (other than any Subsidiary that is a Securitization Entity), the result which would occur upon the giving of written notice by the Administrative Agent as specified in clauses (i) and (ii) below shall occur automatically without the giving of any such notice): (i) declare the Commitments terminated, whereupon all Commitments of each Lender shall terminate immediately; (ii) declare the principal of and any accrued interest and fees in respect of all Loans and the Notes and all Obligations owing hereunder and thereunder to be, whereupon the same shall become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Credit Party, anything contained herein or in any other Credit Document to the contrary notwithstanding; (iii) enforce, as Collateral Agent, all of the Liens and security interests created pursuant to the Security Documents; and (iv) enforce the Guaranty.
Section 7.02 Application of Payment. Notwithstanding anything herein to the contrary, following the occurrence and during the continuance of an Event of Default, and notice thereof to the Administrative Agent by the Borrower or the Required Lenders, all payments received on account of the Obligations shall be applied by the Administrative Agent (or the Collateral Agent, as applicable) as follows:
(a) first, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees and disbursements and other charges of counsel payable under Article 8 and amounts payable under the Fee Letter) payable to the Administrative Agent and the Collateral Agent in their capacity as such;
77
(b) second, to the payment of that portion of Obligations constituting accrued and unpaid interest on Protective Advances ratably among the applicable Lenders in proportion to the respective amounts described in this clause (b) payable to them;
(c) third, to the payment of that portion of Obligations constituting the unpaid principal balance of Protective Advances ratably among the applicable Lenders in proportion to the respective amounts described in this clause (c) payable to them;
(d) fourth, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including fees and disbursements and other charges of counsel payable under any Credit Document) arising under the Credit Documents, ratably among them in proportion to the respective amounts described in this clause (d) payable to them;
(e) fifth, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans (other than Protective Advances), ratably among the Lenders in proportion to the respective amounts described in this clause (e) payable to them;
(f) sixth, to payment of that portion of the Obligations constituting unpaid principal of the Loans (other than Protective Advances), ratably among the Lenders in proportion to the respective amounts described in this clause (f) payable to them;
(g) seventh, to the payment in full of all other Obligations, in each case ratably among the Administrative Agent, the Collateral Agent and the Lenders based upon the respective aggregate amounts of all such Obligations owing to them in accordance with the respective amounts thereof then due and payable; and
(h) finally, the balance, if any, after all Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by law.
ARTICLE 8
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
Each Lender hereby irrevocably appoints each of Administrative Agent and the Collateral Agent (for purposes of this Article 8, the Administrative Agent and the Collateral Agent are referred to collectively as the “Agents”) as its agent and authorizes the Agents to take such actions on its behalf and to exercise such powers as are delegated to such Agents by the terms of the Credit Documents, together with such actions and powers as are reasonably incidental thereto. Without limiting the generality of the foregoing, the Agents are hereby expressly authorized to (i) execute the Credit Documents to which it is a party and any and all documents (including releases) with respect to the Collateral and the rights of the Secured Creditors with respect thereto, as contemplated by and in accordance with the provisions of this Agreement and the Security Documents and (ii) negotiate, enforce or settle any claim, action or proceeding affecting the Lenders in their capacity as such, at the direction of the Required Lenders, which negotiation, enforcement or settlement will be binding upon each Lender. Each of the Lenders acknowledges and agrees that an Agent may also act as the collateral agent or as collateral trustee for the lenders under certain other Indebtedness permitted hereunder and each Lender hereby waives any conflict of interest, now contemplated or arising hereafter, in connection therewith and agrees not to assert against such Agent or any of its Related Parties any claims, causes of action, damages or liabilities of whatever kind or nature relating thereto. The Administrative Agent may perform any of its respective duties hereunder by or through its officers, directors, agents, employees, affiliates or designees.
78
The institution serving as the Administrative Agent and/or the Collateral Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and such bank and its Affiliates may accept deposits from, lend money to, own securities of and generally engage in any kind of banking, trust, financial advisory or other business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not an Agent hereunder (including the acceptance of fees and other consideration for services in connection herewith and otherwise without having to account for the same to Lenders).
Neither Agent shall have any duties or obligations except those expressly set forth in the Credit Documents. Without limiting the generality of the foregoing, (a) neither Agent shall be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing, (b) neither Agent shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that such Agent is instructed in writing to exercise by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.08); provided that no Agent shall be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent to liability or that is contrary to any Credit Document or applicable law, including any action that may be in violation of the automatic stay under any Insolvency Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Insolvency Law, and (c) except as expressly set forth in the Credit Documents, neither Agent shall have any duty to disclose, nor shall it be liable for the failure to disclose, any information relating to any Credit Party that is communicated to or obtained by the bank serving as Administrative Agent and/or Collateral Agent or any of its Affiliates in any capacity. Neither Agent shall be liable for any action taken or not taken by it with the written consent or at the written request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.08) or in the absence of its own gross negligence or willful misconduct. Neither Agent shall be deemed to have knowledge of any Default or Event of Default unless and until written notice thereof is given to such Agent by the Borrower or a Lender, and neither Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Credit Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Credit Document, (iv) the validity, enforceability, effectiveness or genuineness of any Credit Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article 4 or elsewhere in any Credit Document, other than to confirm receipt of items expressly required to be delivered to such Agent.
Notwithstanding anything else to the contrary herein, whenever reference is made in this Agreement or any other Credit Document to any discretionary action by, consent, designation, specification, requirement or approval of, notice, request or other communication from, or other direction given or action to be undertaken or to be (or not to be) suffered or omitted by the Administrative Agent or the Collateral Agent or to any election, decision, opinion, acceptance, use of judgment, expression of satisfaction, reasonable satisfaction or other exercise of discretion, rights or remedies to be made (or not to be made) by the Administrative Agent or the Collateral Agent, it is understood that in all cases that any such permissive rights shall not be construed as a duty and such Agents shall be fully justified in failing or refusing to take any such action under this Agreement or the applicable Credit Document if it shall not have received such written instruction, advice or concurrence of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.08), as it deems appropriate. This provision is intended solely for the benefit of the Administrative Agent, the Collateral Agent and its successors and permitted assigns and is not intended to and will not entitle the other parties hereto to any defense, claim or counterclaim, or confer any rights or benefits on any party hereto.
79
Except for action expressly required of an Agent hereunder and under the other Credit Documents, each Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction by the Lenders of their indemnification obligations under Section 9.05 against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.
Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, opinion, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. Each Agent may also rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. Each Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
Each Agent may perform any and all its duties and exercise its rights and powers by or through any one (1) or more sub-agents appointed by it and shall not be responsible for any acts, omissions, negligence or misconduct of any sub-agent appointed by such Agent with due care. Each Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of each Agent and any such sub-agent.
The Agents shall not have any liability for any action taken, or errors in judgment made, in good faith by it or any of its officers, employees or agents, unless it shall have been negligent in ascertaining the pertinent facts. Nothing in this Agreement shall require an Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties or in the exercise of any of its rights or powers hereunder. In no event shall an Agent be responsible or liable for special, indirect, punitive, incidental or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether such Agent has been advised of the likelihood of such loss or damage and regardless of the form of action. No Agent nor any of its directors, officers, employees, agents or affiliates shall be responsible for nor have any duty to monitor the performance or any action of the Borrower or any other Credit Party, or any of their directors, members, officers, agents, affiliates or employee, nor shall it have any liability in connection with the malfeasance or nonfeasance by such parties. Each Agent may assume performance by all such Persons of their respective obligations. No Agent shall have any enforcement or notification obligations relating to breaches of representations or warranties of any other Person.
80
Neither the Administrative Agent nor the Collateral Agent shall be responsible or liable for any failure or delay in the performance of its obligations under this Agreement or any other Credit Document arising out of or caused, directly or indirectly, by circumstances beyond its control, including without limitation, any act or provision of any present or future law or regulation or governmental authority; acts of God; earthquakes; fires; floods; wars; terrorism; civil or military disturbances; sabotage; epidemics; pandemics; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents; labor disputes; acts of civil or military authority or governmental actions; or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility.
No Agent shall be responsible for and makes any representation as to the existence, genuineness, value or protection of any Collateral, for the legality, effectiveness or sufficiency of any Security Document, or for the creation, perfection, priority, sufficiency or protection of any liens securing the Obligations. For the avoidance of doubt, nothing herein shall require any Agent to file financing statements or continuation statements, or be responsible for maintaining the security interests purported to be created as described herein or in any other Security Document (except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder or under any other Credit Document) and such responsibility shall be solely that of the Borrower and the other Credit Parties.
If at any time an Agent is served with any judicial or administrative order, judgment, decree, writ or other form of judicial or administrative process (including orders of attachment or garnishment or other forms of levies or injunctions or stays relating to the transfer of any Collateral), such Agent is authorized to comply therewith in any manner as it or its legal counsel of its own choosing deems appropriate, and if such Agent complies with any such judicial or administrative order, judgment, decree, writ or other form of judicial or administrative process, such Agent shall not be liable to any of the parties hereto or to any other Person even though such order, judgment, decree, writ or process may be subsequently modified or vacated or otherwise determined to have been without legal force or effect. Subject to the appointment and acceptance of a successor Agent as provided below, either Agent may resign at any time by notifying the Lenders and the Borrower at least thirty (30) days in advance. Upon any such resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then such Agent’s resignation shall become effective and the Required Lenders shall thereafter perform all the duties of such Agent hereunder and/or under any other Credit Document until such time, if any, as the Required Lenders appoint a successor Administrative Agent and/or Collateral Agent, as the case may be. Upon the acceptance of its appointment as Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights (other than any right to receive any fees, expenses, indemnities or other payments due and owing to the retiring Agent and which accrued to such Agent’s resignation), powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After an Agent’s resignation hereunder, the provisions of this Article 8 and Section 9.05 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while acting as Agent.
81
Any Person (i) into which an Agent may be merged or consolidated, (ii) which may result from any merger, conversion or consolidation to which an Agent shall be a party or (iii) which may succeed to all or substantially all of the corporate trust business of an Agent, shall be the successor of such Agent hereunder and the other Credit Documents, without the execution or filing of any instrument or any further act on the part of any of the parties.
Each Lender acknowledges that it has, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any other Credit Document, any related agreement or any document furnished hereunder or thereunder.
Each Lender authorizes and directs the Collateral Agent to enter into the Security Documents for the benefit of the Lenders and the other Secured Creditors. Each Lender hereby agrees, and each holder of any Note by the acceptance thereof will be deemed to agree, that, except as otherwise set forth herein, any action taken by the Required Lenders in accordance with the provisions of this Agreement or the Security Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders. The Collateral Agent is hereby authorized on behalf of all of the Lenders, without the necessity of any notice to or further consent from any Lender, from time to time prior to an Event of Default, to take any action pursuant to the terms of this Agreement or the Security Documents with respect to any Collateral or Security Documents which may be necessary to perfect and maintain perfected the security interest in and liens upon the Collateral granted pursuant to the Security Documents.
The Lenders hereby authorize the Collateral Agent, at its option and in its discretion, to release any Lien granted to or held by the Collateral Agent upon any Collateral (i) upon the occurrence of the Termination Date, (ii) constituting property (including Equity Interests) being sold or otherwise disposed of (to Persons other than the Borrower and its Subsidiaries) upon the sale or other disposition thereof in compliance with Section 6.02, (iii) if approved, authorized or ratified in writing by the Required Lenders (or all of the Lenders hereunder, to the extent required by Section 9.08), or (iv) as otherwise may be expressly provided in the relevant Security Documents. Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Collateral Agent’s authority to release particular types or items of Collateral pursuant to this Article 8.
82
Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower, any of its Subsidiaries or any other Credit Party, that at least one of the following is and will be true: (i) such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more (a) “employee benefit plans” (as defined in ERISA) that is subject to Title I of ERISA, (b) “plans” as defined in and subject to Section 4975 of the Code or (c) Persons whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan” (“Benefit Plans”) with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments or this Agreement; (ii) the transaction exemption set forth in one or more prohibited transaction class exemptions issued by the U.S. Department of Labor, as any such exemption may be amended from time to time (“PTE”), such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to and is covered by such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement; (iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or (iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender. In addition, unless either (1) sub-clause (i) in the immediately preceding clause is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause, such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower, any of its Subsidiaries or any other Credit Party, that the Administrative Agent is not a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).
The provisions of this Article 8 are solely for the benefit of Agents and Lenders and except with respect to the appointment of successor agents and the forgoing paragraph no Credit Party shall have any rights as a third party beneficiary of any of the provisions thereof.
83
ARTICLE 9
MISCELLANEOUS
Section 9.01 Notices; Electronic Communications. Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile transmission, as follows:
(a) if to the Borrower, to each of:
Great Ajax Corp.
13190 SW 68th Parkway, Suite 110
Tigard, Oregon 97223
Attention:
Chief Executive Officer
Email: larry@aspencapital.com
and (which shall not constitute notice)
Mayer Brown LLP
1221 Avenue of the Americas
New York, New York 10020
Attention: Anna T. Pinedo; Meir Dominitz
Email: apinedo@mayerbrown.com; mdominitz@mayerbrown.com
(b) if to the Administrative Agent, to each of:
NIC RMBS LLC
799 Broadway
New
York, New York 10003
Attention: Philip Sivin
Email: psivin@rithmcap.com
and (which shall not constitute notice)
Sidley Austin LLP
1 S Dearborn St.
Chicago, Illinois 60603
Attention: Mark Werner
Phone: 312 853 7041
Email: mwerner@sidley.com
and (which shall not constitute notice)
(c) if to the Collateral Agent, to each of:
NIC RMBS LLC
799 Broadway
New
York, New York 10003
Attention: Philip Sivin
Email: psivin@rithmcap.com
84
and (which shall not constitute notice)
Sidley Austin LLP
One South Dearborn St.
Chicago, Illinois 60603
Attention: Mark Werner
Phone: 312 853 7041
Email: mwerner@sidley.com
(d) if to the Initial Lender, to each of:
NIC RMBS LLC
799 Broadway
New
York, New York 10003
Attention: Philip Sivin
Email: psivin@rithmcap.com
and (which shall not constitute notice)
Sidley Austin LLP
One South Dearborn St.
Chicago, Illinois 60603
Attention: Mark Werner
Phone: 312 853 7041
Email: mwerner@sidley.com
All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by facsimile transmission (except that, if not given during the normal business hours of the recipient on a Business Day, shall be deemed to have been given at the opening of business on the next Business Day) or on the date five (5) Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 9.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 9.01. As agreed to among the Borrower, the Administrative Agent, the Collateral Agent, and the applicable Lenders from time to time, notices and other communications may also be delivered by e-mail to the e-mail address of a representative of the applicable Person provided from time to time by such Person. Notices and other communications may also be delivered by e-mail to the e-mail address of a representative of the applicable Person provided from time to time by such Person and shall be deemed delivered upon (i) sending (or if not sent during the normal business hours of the recipient on a Business Day, at the opening of business on the next Business Day) unless a delivery failure notification (which shall not include an “out of office” or similar message) is received within one (1) hour of sending and (ii) acknowledgement of receipt by the recipient.
85
Each Credit Party hereby agrees, unless directed otherwise by the Administrative Agent or unless the electronic mail address referred to below has not been provided by the Administrative Agent to the Borrower, that it will, or will cause the Subsidiaries to, provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to the Credit Documents or to the Lenders under Article 5, including all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (ii) provides notice of any Default or Event of Default under this Agreement or any other Credit Document or (iii) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or the making of the Loans hereunder or other extension of credit hereunder (all such non-excluded communications being referred to herein collectively as “Communications”), by transmitting the Communications in an electronic/soft medium that is properly identified in a format acceptable to the Administrative Agent to an electronic mail address as directed by the Administrative Agent. In addition, each Credit Party agrees, and agrees to cause the Subsidiaries, to continue to provide the Communications to the Administrative Agent or the Lenders, as the case may be, in the manner specified in the Credit Documents but only to the extent requested by the Administrative Agent.
The Borrower hereby acknowledges that (a) the Administrative Agent may make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, the “Borrower Materials”) by posting the Borrower Materials on Intralinks or another similar electronic system (the “Platform”) and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Borrower or its securities) (each, a “Public Lender”). The Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of United States federal and state securities laws (provided that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 9.16); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated as “Public Investor;” and (z) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not marked as “Public Investor.” Notwithstanding the foregoing, the following Borrower Materials shall be marked “PUBLIC”, unless the Borrower notifies the Administrative Agent promptly that any such document contains material non-public information: (1) the Credit Documents and (2) notification of changes in the terms of this Agreement.
Each Public Lender agrees to cause at least one (1) individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable law, including United States federal and state securities laws, to make reference to Communications that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States federal or state securities laws.
86
THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. NEITHER THE ADMINISTRATIVE AGENT NOR ANY OF ITS RELATED PARTIES WARRANTS THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS OR THE ADEQUACY OF THE PLATFORM AND EACH EXPRESSLY DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS IS MADE BY THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES HAVE ANY LIABILITY TO ANY CREDIT PARTY, ANY LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, WHETHER OR NOT BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY CREDIT PARTY’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY SUCH PERSON IS FOUND IN A FINAL RULING BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Credit Documents. Each Lender agrees that receipt of notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Credit Documents. Each Lender agrees to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender’s e-mail address to which the foregoing notice may be sent by electronic transmission and that the foregoing notice may be sent to such e-mail address.
Nothing herein shall prejudice the right of the Administrative Agent, the Collateral Agent or any Lender to give any notice or other communication pursuant to any Credit Document in any other manner specified in such Credit Document.
Section 9.02 Survival of Agreement. All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Credit Document shall be considered to have been relied upon by the Lenders and shall survive the making by the Lenders of the Loans, regardless of any investigation made by the Lenders or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement or any other Credit Document is outstanding and unpaid and so long as the Commitments have not been terminated. The provisions of Section 2.13, Section 2.17 and Section 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the invalidity or unenforceability of any term or provision of this Agreement or any other Credit Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent, any Lender.
87
Section 9.03 Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrower, the Agents, the Lenders and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto.
Section 9.04 Successors and Assigns.
(a) Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Borrower, the Administrative Agent, the Collateral Agent or the Lenders that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.
(b) Each Lender may assign to one (1) or more Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it), with the prior consent of the Borrower (which consent shall not be unreasonably withheld or delayed) and with notice to the Administrative Agent; provided that (i) (A) notwithstanding anything to the contrary, no Lender may assign or transfer by participation any of its rights or obligations hereunder to any Person that is a Disqualified Lender (and any failure of the Borrower to respond to any request for consent of assignment shall not cause such Person to cease to constitute a Disqualified Lender), (B) the consent of the Borrower (1) shall not be required to any such assignment made (x) to another Lender, an Affiliate of a Lender or a Related Fund of a Lender or (y) after the occurrence and during the continuance of any Event of Default and (2) shall be deemed to have been given if the Borrower has not responded with ten (10) Business Days of a written request for such consent, (C) the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall be in an integral multiple of, and not less than, $1,000,000 (or, if less, the entire remaining amount of such Lender’s Commitment or Loans); provided that simultaneous assignments by two (2) or more Related Funds shall be combined for purposes of determining whether the minimum assignment requirement is met, (ii) the parties to each assignment shall (A) manually execute and deliver to the Administrative Agent an Assignment and Acceptance or (B) if previously agreed with the Administrative Agent, execute and deliver to the Administrative Agent an Assignment and Acceptance via an electronic settlement system acceptable to the Administrative Agent, and, in each case, shall pay to the Administrative Agent a processing and recordation fee of $3,500 (which fee may be waived or reduced in the sole discretion of the Administrative Agent), and (iii) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire (in which the assignee shall designate one (1) or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Credit Parties and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including federal and state securities laws), all applicable forms described in Section 2.17(f), and any other related documentation reasonably requested by the Administrative Agent. Upon acceptance and recording pursuant to clause (e) of this Section 9.04, from and after the effective date specified in each Assignment and Acceptance, (A) the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement and (B) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Section 2.13, Section 2.17 and Section 9.05, as well as to any fees accrued for its account and not yet paid); provided that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender having been a Defaulting Lender. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate to pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent and each Lender hereunder (and interest accrued thereon). Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this clause (b), then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs. Any assignment that is made prior to the Closing Date shall not be effective until the occurrence of the Closing Date; provided that it is understood and agreed that NIC RMBS LLC may assign all or a portion of its Commitments to any of its Affiliates and/or Related Funds on the Closing Date, and such Affiliates and/or Related Funds may fund the portion of the Loan to be funded hereunder by NIC RMBS LLC on the Closing Date (but NIC RMBS LLC shall not be relieved of its obligation to fund the Loan on the Closing Date until the funding by such Affiliates and/or Related Funds has occurred).
88
(c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and that its Commitment and the outstanding balances of its Loans, in each case without giving effect to assignments thereof which have not become effective, are as set forth in such Assignment and Acceptance; (ii) except as set forth in clause (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Credit Document or any other instrument or document furnished pursuant hereto, or the financial condition of the Borrower or any Subsidiary or the performance or observance by the Borrower or any Subsidiary of any of its obligations under this Agreement, any other Credit Document or any other instrument or document furnished pursuant hereto; (iii) such assignee represents and warrants that it is an Eligible Assignee legally authorized to enter into such Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements referred to in Section 3.05 or delivered pursuant to Section 5.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon the Administrative Agent, the Collateral Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (vi) such assignee appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent and the Collateral Agent, respectively, by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender. In the event that any Disqualified Lender or any Affiliate of a Disqualified Lender delivers an Assignment and Acceptance and the Borrower has not given its prior consent to such Assignment and Acceptance, (i) the Borrower may require such Person to assign its rights and obligations to one or more Eligible Assignees at a purchase price equal to the lesser of par and the amount such Person paid to acquire such Loan, (ii) if such Person does not execute and deliver to the Administrative Agent a duly executed Assignment and Acceptance reflecting such assignment within five (5) Business Days of the date on which such Eligible Assignee executes and such Eligible Assignee (or the Administrative Agent on its behalf) delivers such Assignment and Acceptance to such Person, then such Person shall be deemed to have executed and delivered such Assignment and Acceptance without any action on its part, (iii) no such Person shall receive any information or reporting provided by the Borrower, the Administrative Agent or any Lender, (iv) for purposes of voting, any Loans held by such Person shall be deemed not to be outstanding, and any such Person shall have no voting or consent rights with respect to “Required Lender” votes or consents, (v) for purposes of any matter requiring the vote or consent of each Lender affected by any amendment or waiver, such Person shall be deemed to have voted or consented to approve such amendment or waiver if a majority of the Loans so approves such matter (after giving effect to clause (iv)) and (vi) no such Person shall be entitled to any expense reimbursement or indemnification rights.
89
(d) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one (1) of its offices in the United States of America a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive and the Borrower, the Administrative Agent, the Collateral Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be provided to the Borrower and/or the Collateral Agent, upon its request. This Section 9.04(d) is intended to be construed so that the Loans are at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code.
(e) Upon its receipt of, and consent to, a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, an Administrative Questionnaire completed in respect of the assignee (if applicable to such assignee), the processing and recordation fee referred to in clause (b) above, if applicable, and the written consent of the Administrative Agent and, if required, the Borrower to such assignment and any applicable forms described in Section 2.17(f), the Administrative Agent shall promptly (i) accept such Assignment and Acceptance and (ii) record the information contained therein in the Register. No assignment shall be effective unless it has been recorded in the Register as provided in this clause (e).
90
(f) Each Lender may without the consent of the Borrower or the Administrative Agent sell participations to one (1) or more banks or other Persons in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participating banks or other Persons shall be entitled to the benefit of the cost protection provisions contained in Section 2.13 and Section 2.17 (subject to the requirements and limitations therein, including the requirements under Section 2.17(f) (it being understood that the documentation required under Section 2.17(f) shall be delivered to the participating Lender)) to the same extent as if they were Lenders, provided that such participating banks or other Persons shall not be entitled to receive any greater payment under Section 2.13 or Section 2.17, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after such participating banks or other Persons acquired the applicable participation, and (iv) the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Borrower relating to the Loans and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers decreasing any fees payable to such participating bank or Person hereunder or the amount of principal of or the rate at which interest is payable on the Loans in which such participating bank or Person has an interest, extending any scheduled principal payment date or date fixed for the payment of interest on the Loans in which such participating bank or Person has an interest, (which shall not in any event include a waiver of default interest or a waiver or modification of any prepayment provisions) increasing or extending the Commitments in which such participating bank or Person has an interest or releasing any Guarantor (other than in connection with the sale of such Guarantor in a transaction permitted by Section 6.02) or all or substantially all of the Collateral). To the extent permitted by law, each participating bank or other Person also shall be entitled to the benefits of Section 9.06 as though it were a Lender; provided that such participating bank or other Person agrees to be subject to Section 2.15 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any participant or any information relating to a participant’s interest in any Commitments, Loans or its other obligations under any Credit Document) except to the extent that such disclosure is necessary to establish that such Commitment, Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and the Borrower, the Lenders and the Administrative Agent shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement, notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall not have any responsibility for maintaining a Participant Register.
91
(g) Any Lender or participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.04, disclose to the assignee or participant or proposed assignee or participant any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower; provided that, prior to any such disclosure of information designated by the Borrower as confidential, each such assignee or participant or proposed assignee or participant shall execute an agreement whereby such assignee or participant shall agree (subject to customary exceptions) to preserve the confidentiality of such confidential information on terms no less restrictive than those applicable to the Lenders pursuant to Section 9.16.
(h) Any Lender may at any time assign all or any portion of its rights under this Agreement to secure extensions of credit to such Lender or in support of obligations owed by such Lender (including any such assignment or pledge in support of obligations owed to a Federal Reserve Bank or any other central banking authority); provided that no such assignment shall release a Lender from any of its obligations hereunder or substitute any such assignee for such Lender as a party hereto.
(i) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle (an “SPV”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Loan that such Granting Lender would otherwise be obligated to make to the Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPV to make any Loan and (ii) if an SPV elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPV hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPV shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one (1) year and one (1) day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPV, it will not institute against, or join any other Person in instituting against, such SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 9.04, any SPV may (i) with notice to, but without the prior written consent of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by the Borrower and Administrative Agent) providing liquidity and/or credit support to or for the account of such SPV to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPV.
92
(j) The Borrower shall not assign or delegate any of its rights or duties hereunder without the prior written consent of the Administrative Agent and each Lender, and any attempted assignment without such consent shall be null and void.
(k) Notwithstanding anything to the contrary contained herein, neither the Administrative Agent nor any Lender shall have any responsibility or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions of this Agreement relating to Disqualified Lenders or Affiliate of a Lenders or assignment or participations to Disqualified Lenders. Without limiting the generality of the foregoing, the Administrative Agent shall not (x) be obligated to ascertain, monitor or inquire as to whether any Lender or prospective Lender is a Disqualified Lender or Affiliate of a Lender or (y) have any liability with respect to or arising out of any assignment of Loans, or disclosure of confidential information to any Disqualified Lender or Affiliate of a Lender.
Section 9.05 Expenses; Indemnity.
(a) The Borrower agrees to pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent and each Related Party of any of the foregoing Persons in connection with the preparation, execution, delivery and administration of this Agreement and the other Credit Documents or in connection with any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions hereby or thereby contemplated shall be consummated) (including fees and expenses of attorneys, accountants, consultants and appraisers) but limited, with respect to legal expenses, to the reasonable and documented fees, disbursements and other charges of one (1) single firm of primary counsel and one (1) firm of additional local counsel for each applicable jurisdiction to the Administrative Agent, the Collateral Agent and the Lenders, taken as a whole and (ii) all documented (in summary form) out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent and each Lender and each Related Party of any of the foregoing Persons in connection with the enforcement or protection of its rights in connection with this Agreement and the other Credit Documents or in connection with the Loans made hereunder or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a “work-out” or pursuant to any insolvency or bankruptcy proceedings (but limited, with respect to legal expenses, to the reasonable and documented fees, disbursements and other charges of one (1) single firm of primary counsel and one (1) firm of additional local counsel for each applicable jurisdiction to the Administrative Agent, the Collateral Agent and the Lenders taken as a whole). Notwithstanding the foregoing, the Borrower shall only be required to pay eighty percent (80%) of Rithm’s and such Subsidiary’s reasonable and invoiced external legal costs and expenses related to the Credit Documents in connection with (i) the execution and delivery of this Agreement and the other Credit Documents and (ii) the funding of the Loan on the Closing Date and shall not be responsible for costs or expenses of any other type related to (i) the execution and delivery of this Agreement and the other Credit Documents or (ii) the funding of the Loan on the Closing Date. The preceding sentence shall not limit the Borrower’s obligation to pay for any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a “work-out” or pursuant to any insolvency or bankruptcy proceedings or any other and expenses under the other provisions of this Section 9.05 while an Event of Default is continuing.
93
(b) Subject to Section 9.05(a) above, the Borrower agrees to indemnify the Administrative Agent, the Collateral Agent, each Lender and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and to hold each Indemnitee harmless from, any and all losses, penalties, claims, damages, liabilities, obligations, fines and related expenses, including reasonable counsel fees, charges and disbursements (but limited, with respect to legal expenses, to the reasonable and documented fees, disbursements and other charges of one (1) single firm of primary counsel and one (1) additional firm of local counsel for each applicable jurisdiction for all Indemnitees taken as a whole (and, solely in the case of any actual or perceived conflict of interest between or among any Indemnitees, one additional counsel for each group of Indemnitees so affected)), incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of or by reason of (i) the execution or delivery of this Agreement or any other Credit Document or any agreement or instrument contemplated thereby, the performance by the parties thereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated thereby, (ii) the use of the proceeds of the Loans, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing (including in connection with the enforcement of this Section 9.05), whether or not any Indemnitee is a party thereto (and regardless of whether such matter is initiated by a third party or Credit Party or any of their respective Affiliates) or (iv) the actual or alleged presence of, or exposure to, Hazardous Materials in the indoor or outdoor air, surface water or groundwater or on the surface or subsurface of any Real Property at any time owned, leased or operated by the Borrower or any of its Subsidiaries, the generation, storage, transportation, handling, Release or disposal of Hazardous Materials by the Borrower or any of its Subsidiaries at any location, whether or not owned, leased or operated by the Borrower or any of its Subsidiaries, the non-compliance by, or liability of or relating to, the Borrower, any of its Subsidiaries or any Real Property at any time owned, leased or operated by the Borrower or any of its Subsidiaries with, relating to, or under any Environmental Law (including applicable permits thereunder), or any Environmental Claim threatened or asserted against or relating to the Borrower, any of its Subsidiaries or any Real Property at any time owned, leased or operated by the Borrower or any of its Subsidiaries; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted primarily from the gross negligence or willful misconduct of such Indemnitee. This Section 9.05(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc., arising from any non-Tax claim.
(c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, the Collateral Agent and their Related Parties under clause (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, the Collateral Agent or their Related Parties, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the Collateral Agent in its capacity as such. For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the outstanding Loans at the time.
(d) To the extent permitted by applicable law, no Credit Party shall assert, and each Credit Party hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential, incidental or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Credit Document or any agreement or instrument contemplated hereby or thereby, the Transactions or any Loan or the use of the proceeds thereof.
94
(e) All amounts due under this Section 9.05 shall be payable on written demand therefor.
Section 9.06 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, except to the extent prohibited by law, without presentment, demand, protest or other notice of any kind to any Credit Party or to any other Person, any such notice being hereby expressly waived, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender (including by branches and agencies of such Lender wherever located) to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement and other Credit Documents held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or such other Credit Document and although such obligations may be unmatured; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.19 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender under this Section 9.06 are in addition to other rights and remedies (including other rights of setoff) which such Lender may have. Each Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.
Section 9.07 Applicable Law. THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER CREDIT DOCUMENTS) AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT OR ANY SUCH OTHER CREDIT DOCUMENTS (INCLUDING ANY CLAIMS SOUNDING IN CONTRACT LAW OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Section 9.08 Waivers; Amendment.
(a) No failure or delay of the Administrative Agent, the Collateral Agent, any Lender in exercising any power or right hereunder or under any other Credit Document and no course of dealing between any other Credit Party and the Administrative Agent, the Collateral Agent or any Lender shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Collateral Agent and the Lenders hereunder and under the other Credit Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Credit Document or consent to any departure by any Credit Party therefrom shall in any event be effective unless the same shall be permitted by clause (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.
95
(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Administrative Agent (acting at the direction of the Required Lenders); provided that no such agreement shall (i) decrease the principal amount of, or extend the maturity of or any scheduled principal payment date or any date for the payment of any interest on any Loan, or waive or excuse any such payment or any part thereof, or decrease the rate of interest on any Loan, without the prior written consent of each Lender directly adversely affected thereby, (ii) decrease or extend the date for payment of any fees of any Lender without the prior written consent of such Lender; provided that only the consent of the Required Lenders shall be necessary to amend the interest rate described in Section 2.07 or to waive any obligation of the Borrower to pay interest at the interest rate provided for in Section 2.07, (iii) amend or modify the pro rata requirements of Section 2.14, the provisions of Section 9.04 or the provisions of this Section or release any Guarantor (other than in connection with the sale of such Guarantor in a transaction permitted by Section 6.02) or all or substantially all of the Collateral, without the prior written consent of each Lender, (iv) [reserved], (v) modify the protections afforded to an SPV pursuant to the provisions of Section 9.04(i) without the written consent of such SPV or (vi) reduce the percentage contained in the definition of the term “Required Lenders” without the prior written consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Collateral Agent hereunder or under any other Credit Document without the prior written consent of the Administrative Agent or the Collateral Agent.
(c) Notwithstanding the foregoing, this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Borrower (i) to add one (1) or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Credit Documents with the Loans and the accrued interest and fees in respect thereof, (ii) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders and (iii) to permit any such additional credit facilities which are term facilities to share ratably with the Loans in the application of prepayments.
(d) In addition, notwithstanding the foregoing, if the Administrative Agent and the Borrower shall have jointly identified an obvious error or any error or omission of a technical or immaterial nature in any provision of the Credit Documents, then the Administrative Agent and the Borrower shall be permitted to amend such provision and such amendment shall become effective without any further action or consent of any other party to any Credit Document if the same is not objected to in writing by the Required Lenders within five (5) Business Days after notice thereof.
96
Section 9.09 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section 9.09 shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the lesser of the Applicable Rate and the Maximum Rate to the date of repayment, shall have been received by such Lender.
Section 9.10 Entire Agreement. This Agreement and the other Credit Documents constitute the entire contract between the parties relative to the subject matter hereof. Any other previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Credit Documents. Nothing in this Agreement or in the other Credit Documents, expressed or implied, is intended to confer upon any Person (other than the parties hereto and thereto, their respective successors and assigns permitted hereunder and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Collateral Agent and the Lenders) any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Credit Documents.
Section 9.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS. EACH PARTY HERETO (A) 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 (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
Section 9.12 Severability. In the event any one (1) or more of the provisions contained in this Agreement or in any other Credit Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
97
Section 9.13 Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 9.03. Delivery of an executed signature page to this Agreement by facsimile or other form of electronic transmission (e.g. “pdf” or “tif.” via electronic mail) shall be as effective as delivery of a manually signed counterpart of this Agreement.
Section 9.14 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
Section 9.15 Jurisdiction; Consent to Service of Process.
(a) Each Credit Party hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York state court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Credit Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York state or, to the extent permitted by law, in such federal court; provided that suit for the recognition or enforcement of any judgment obtained in any such New York state or federal court may be brought in any other court of competent jurisdiction. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, the Collateral Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Credit Documents against the Borrower or its properties in the courts of any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Credit Documents in any New York state or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
Section 9.16 Confidentiality. Each of the Administrative Agent, the Collateral Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ officers, directors, employees and agents, including accountants, legal counsel and other advisors, and to numbering, administration and settlement service providers (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority or quasi-regulatory authority (such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) in connection with the exercise of any remedies hereunder or under the other Credit Documents or any suit, action or proceeding relating to the enforcement of its rights hereunder or thereunder, (e) subject to an agreement containing provisions substantially the same as those of this Section 9.16 to (i) any actual or prospective assignee of or participant (other than a Disqualified Lender) in any of its rights or obligations under this Agreement and the other Credit Documents (it being agreed that any such actual or prospective assignee or participant shall be deemed to have entered into such an agreement if such assignee or participant “clicks through” or takes other affirmative action to electronically acknowledge its agreement to any electronic notification containing provisions substantially the same as those in this Section 9.16 in accordance with the standard syndication processes of the Person disclosing such Information or customary market standards for dissemination of such type of information) or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower or any Subsidiary or any of their respective obligations, (f) with the consent of the Borrower, (g) to the extent such Information becomes publicly available other than as a result of a breach of this Section 9.16 or (h) to the Administrative Agent or any other Lender; provided that no disclosure shall be made to any Disqualified Lender. For the purposes of this Section, “Information” shall mean all information received from or on behalf of the Credit Parties or related to the Credit Parties, their Subsidiaries and their respective businesses, other than any such information that was available to the Administrative Agent, the Collateral Agent or any Lender on a nonconfidential basis prior to its disclosure by the Borrower; provided that, in the case of Information received from the Borrower after the Closing Date, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section 9.16 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord its own confidential information.
98
Section 9.17 Lender Action. Each Lender agrees that it shall not take or institute any actions or proceedings, judicial or otherwise, for any right or remedy against any Credit Party or any other obligor under any of the Credit Documents (including the exercise of any right of setoff, rights on account of any banker’s lien or similar claim or other rights of self-help), or institute any actions or proceedings, or otherwise commence any remedial procedures, with respect to any Collateral or any other property of any such Credit Party, unless expressly provided for herein or in any other Credit Document, without the prior written consent of the Administrative Agent. The provisions of this Section 9.17 are for the sole benefit of the Lenders and shall not afford any right to, or constitute a defense available to, any Credit Party.
Section 9.18 USA PATRIOT Act Notice. Each Lender and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the USA PATRIOT Act.
99
Section 9.19 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Credit Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Credit Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by an applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Credit Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.
Section 9.20 [Reserved].
Section 9.21 Specific Performance. The parties hereto agree that irreparable damage for which monetary relief, even if available, would not be an adequate remedy, would occur in the event that the parties hereto do not perform the provisions of this Agreement in accordance with its specified terms or otherwise breach such provisions. Accordingly the parties acknowledge and agree that the parties shall be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in the courts without proof of damages or otherwise, this being in addition to any other remedy to which they are entitled under this Agreement and this right of specific enforcement is an integral part of the Transactions and without that right, the parties would not have entered into this Agreement. The parties agree not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to law or inequitable for any reason, and agree not to assert that a remedy of monetary damages would provide an adequate remedy or that the parties otherwise have an adequate remedy at law. The parties acknowledge and agree that any party shall not be required to provide any bond or other security in connection with its pursuit of an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof.
[Remainder of Page Intentionally Left Blank; Signature Pages to Follow]
100
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the day and year first above written.
| GREAT AJAX CORP., | ||
| as the Borrower | ||
| By: | /s/ Lawrence A. Mendelsohn | |
| Name: | Lawrence A. Mendelsohn | |
| Title: | Chief Executive Officer | |
[Signature Page to Credit Agreement]
| NIC RMBS LLC, | ||
| as the Administrative Agent and the Collateral Agent | ||
| By: | /s/ Nicola Santoro, Jr. | |
| Name: | Nicola Santoro, Jr. | |
| Title: | Chief Financial Officer | |
[Signature Page to Credit Agreement]
| NIC RMBS LLC, | ||
| as a Lender | ||
| By: | /s/ Nicola Santoro, Jr. | |
| Name: | Nicola Santoro, Jr. | |
| Title: | Chief Financial Officer | |
[Signature Page to Credit Agreement]
EXHIBIT F
FINANCIAL COVENANT INDEBTEDNESS
“Financial Covenant Indebtedness” means, with respect to the Borrower or any of its Subsidiaries, without duplication:
(1) the principal amount of indebtedness of such Person for borrowed money;
(2) the principal amount of indebtedness of such Person evidenced by bonds, debentures, notes or other similar instruments;
(3) all payment obligations of such Person issued or assumed as the deferred purchase price of property and all payment obligations of such Person under conditional sale or other title retention agreements relating to assets purchased by such Person;
(4) the principal component of all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction (except in each case to the extent such obligations relate to trade payables or other accrued liabilities arising in the ordinary course of business);
(5) all repurchase obligations (excluding accrued interest or any portion of such obligations representing accrued interest) of such Person under Repurchase Agreements to which it is party;
(6) any commitment to make loans, advances or other Investments, or to purchase Investments, Persons or other securities or assets (but, in each case, excluding payment obligations for Investments, Persons or other securities or assets purchased in the ordinary course of business);
(7) obligations of such Person under derivative contracts; and
(8) indebtedness of other Persons of the types referred to in clauses (1) through (7) above to the extent (and only to the extent) guaranteed by the Borrower
provided, however, that, notwithstanding anything to the contrary contained herein, Financial Covenant Indebtedness shall not include:
(i) Intercompany Indebtedness;
(ii) payment obligations for securities purchased in the ordinary course of business consistent with past practice, trade accounts payable and other accrued liabilities arising in the ordinary course of business and all obligations respecting the purchase of property or assets other than those relating to payment of the purchase price of the applicable property or assets;
(iii) any commitment to make loans, advances or other Investments, or to purchase Investments, Persons or other securities or assets to the extent that there is no recourse to the Borrower or any of its Subsidiaries other than to the extent of the value of such Investments, securities or other assets;
(iv) obligations of the Borrower or any of its Subsidiaries under derivative contracts to the extent that either (a) there is no recourse to the Borrower or such Subsidiary other than for any collateral posted in connection with such derivative contracts or (b) such derivative contract is a Full Margin Derivative Contract;
(v) obligations of the Borrower or any of its Subsidiaries arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business;
(vi) (x) obligations of the Borrower or any of its Subsidiaries in respect of banker’s acceptances, workers’ compensation claims, surety, performance, bid, customs, stay, appeal, tax or similar bonds, security deposits, performance or completion guarantees and payment obligations in connection with self-insurance or similar obligations provided or obtained by the Borrower or any of its Subsidiaries in the ordinary course of business and (y) obligations of the Borrower or any of its Subsidiaries owed to (including in respect of letters of credit for the benefit of) any Person in connection with workers’ compensation, early retirement or termination obligations, pension fund obligations or contributions or similar claims, obligations, taxes or contributions for social security, wages or unemployment, health, disability or other employee benefits, or property, casualty or liability insurance provided to the Borrower or any of its Subsidiaries pursuant to reimbursement or indemnification obligations of such Person, in each case incurred in the ordinary course of business;
(vii) obligations of the Borrower or any of its Subsidiaries arising from agreements of the Borrower or a Subsidiary of the Borrower providing for indemnification, adjustment of purchase price, earn-outs or similar obligations, in each case incurred or assumed in connection with an investment in or the acquisition or disposition of any business, Investments or other securities or assets of the Borrower or a Subsidiary of the Borrower or any business, Investments, other securities or assets or Equity Interests of a Subsidiary of the Borrower, other than guarantees of obligations incurred by any Person acquiring all or any portion of such business, Investments, assets or Equity Interests for the purpose of financing such acquisition;
(viii) obligations incurred by the Borrower or any Subsidiary of the Borrower in connection with (v) insurance premium financing arrangements, (w) deferred compensation payable to directors, officers, members of management, employees or consultants of the Borrower or any of its Subsidiaries or of the Manager or any of its subsidiaries, (x) contingent obligations arising under indemnity agreements to title insurance companies to cause such title insurers to issue title insurance policies in the ordinary course of business with respect to real property of the Borrower or any of its Subsidiaries, (y) unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law and (z) obligations, contingent or otherwise, for the payment of money under any non-compete, consulting or similar arrangements entered into with the seller of a business or any other similar arrangements providing for the deferred payment of the purchase price for an Investment or other securities or assets or any other acquisition;
(ix) obligations of the Borrower or any of its Subsidiaries owed to banks and other financial institutions incurred in the ordinary course of business of the Borrower and its Subsidiaries in connection with Cash Management Obligations and other ordinary banking arrangements to provide treasury services or to manage cash balances of the Borrower or any of its Subsidiaries; and
(x) obligations consisting of promissory notes issued by the Borrower or any of its Subsidiaries to future, present or former directors, officers, employees or consultants of the Manager or any of its subsidiaries or their respective assigns, estates, heirs, family members, spouses, former spouses, domestic partners or former domestic partners to finance the purchase, redemption or other acquisition, cancellation or retirement of Equity Interests, or options, warrants, equity appreciation rights or other rights to purchase or acquire Equity Interests or other equity-based awards, of the Borrower or any of its Subsidiaries.
For purposes of determining the amount of Financial Covenant Indebtedness under any covenants, definitions or other provisions of this Agreement: (a) guarantees of, and obligations in respect of, letters of credit, bankers’ acceptances and other similar instruments relating to, or Liens securing, Financial Covenant Indebtedness that is otherwise included in the determination of a particular amount of Financial Covenant Indebtedness shall not be included and the incurrence or creation of any such guarantees, obligations or Liens shall not be deemed to be the incurrence of Financial Covenant Indebtedness; (b) unless otherwise expressly provided in this Agreement, the amount of Financial Covenant Indebtedness issued at a price that is less than the principal amount thereof shall be equal to the amount of the liability in respect thereof determined in accordance with GAAP; (c) the amount of a guarantee of Financial Covenant Indebtedness of another Person shall be the amount of such liability as determined in accordance with GAAP; (d) the amount of any commitment to make loans, advances or other Investments, or to purchase Investments, Persons or other securities or assets shall be the amount of such liability as determined in accordance with GAAP; (e) for a group of derivative contracts (which may be one derivative contract) constituting Financial Covenant Indebtedness between the Borrower or any Subsidiary and a Derivative Counterparty, the amount of Financial Covenant Indebtedness for such group shall be the excess, if any, of the aggregate liabilities in such group over the aggregate assets in such group, each as determined in accordance with GAAP; and (f) if any Person shall own, directly or indirectly, less than 100% of the outstanding common Equity Interests of any subsidiary of such Person, then only a pro rata portion of the Financial Covenant Indebtedness of such subsidiary shall be included for purposes of determining the amount of Financial Covenant Indebtedness of such Person and its subsidiaries on a consolidated basis. For purposes of clarity, it is understood and agreed that, anything in this Agreement to the contrary notwithstanding, Financial Covenant Indebtedness of variable interest entities (within the meaning of GAAP) shall not be deemed Indebtedness of any Person or any of its subsidiaries.
For purposes of this Exhibit F:
“Cash Management Obligations” means obligations of the Borrower or any Subsidiary of the Borrower in relation to (1) treasury, depository or cash management services, arrangements or agreements (including credit, debt or other purchase card programs and intercompany cash management services) or any automated clearinghouse (“ACH”) transfers of funds (including reimbursement and indemnification obligations with respect to letters of credit or similar instruments), and (2) netting services, overdraft protections, controlled disbursement, ACH transactions, return items, interstate deposit network services, supplier services, cash pooling and operational foreign exchange management, Society for Worldwide Interbank Financial Telecommunication transfers and similar programs.
“Intercompany Indebtedness” means Indebtedness of the Borrower or any of its Subsidiaries owing to the Borrower or any of its Subsidiaries.
“Investment” means any direct or indirect loan, loan origination or other extension of credit (including a guarantee), any capital contribution (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), any Equity Interests, bonds, notes, debentures or other securities or evidences of indebtedness, any servicing rights, any real property or interests in real property (including, without limitation, improvements, fixtures and accessions thereto and ground leases), and any other investment assets (whether tangible or intangible). “Investment” shall exclude extensions of trade credit in the ordinary course of business, but, unless otherwise expressly stated or the context otherwise requires, shall include acquisitions of any of the foregoing or of any Person, whether by merger, consolidation, acquisition of Equity Interests or assets or otherwise.
“Full Margin Derivative Contract” means a derivative contract between the Borrower or its Subsidiary (an “Ajax Party”) and a counterparty (the “Derivative Counterparty”) under which the Derivative Counterparty has the right on any business day to demand that the Ajax Party maintain variation margin for the benefit of the Derivative Counterparty in an amount equal to the net mark-to-market value of all derivative contracts between the Ajax Party and the Derivative Counterparty (subject, if applicable, to minimum threshold amounts and/or minimum transfer amounts each not to exceed $1.0 million).
Exhibit 10.2
Execution Version
Termination and Release Agreement
THIS TERMINATION AND RELEASE AGREEMENT (this “Agreement”) is made and entered into as of [ ]1, 2024, by and among Great Ajax Corp., a Maryland corporation (“Ajax”), Great Ajax Operating Partnership L.P., a Delaware limited partnership (the “Operating Partnership,” and together with Ajax and any current or future subsidiaries of Ajax, the “Company”), Thetis Asset Management LLC, a Delaware limited liability company (the “Manager”), solely for the purposes of Section 5 hereof, Rithm Capital Corp., a Delaware corporation (“Rithm”), and, solely for the purposes of Section 6, Aspen Yo LLC (“Aspen”). The Company, the Manager and Rithm are each sometimes referred to herein as a “Party,” and collectively as, the “Parties.” Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Management Agreement or, if such terms are not defined therein, the Term Loan Agreement or the Securities Purchase Agreement (each as defined below), as the case may be.
RECITALS
WHEREAS, the Company and the Manager are parties to that certain Third Amended and Restated Management Agreement, dated as of April 28, 2020, as amended on March 1, 2023 (the “Management Agreement”);
WHEREAS, Ajax has entered into that that certain Credit Agreement, dated as of February 26, 2024 (the “Term Loan Agreement”), with NIC RMBS LLC, a Delaware limited liability company, in its capacities as Initial Lender, Administrative Agent and Collateral Agent therein, and the other Lenders from time to time party thereto, pursuant to which, among other things, subject to the terms and conditions set forth therein, the Lenders, which are affiliates of Rithm, agreed to provide a term loan (the “Term Loan”), subject to the terms and conditions set forth therein, to the Company in the amount of up to $70 million, to enable the Company to redeem a portion of its 7.25% Convertible Senior Notes due 2024 (the “Term Loan Transaction”);
WHEREAS, Ajax, the Operating Partnership and the Manager have entered into a Securities Purchase Agreement, dated as of February 26, 2024 (the “Securities Purchase Agreement”), with Rithm, pursuant to which, among other things, subject to the terms and conditions set forth therein, the Company has agreed to issue and sell, and Rithm or one of its subsidiaries or other affiliates has agreed to purchase or accept, as applicable, shares of common stock of the Company, par value $0.01 (“Common Stock”) (the “Common Stock Sale”), and warrants representing the right to purchase shares of Common Stock of the Company (the “Warrants Issuance”), subject to the terms and conditions set forth therein;
WHEREAS, on February 26, 2024, the Company gave written notice to the Manager (the “Written Notice”) that, in connection with the consummation of the transactions contemplated by the Term Loan Agreement and the Securities Purchase Agreement, the Company intends to (i) terminate the Management Agreement, (ii) pay the Manager the value of the termination fee required thereunder in shares of Common Stock, (iii) pay the Manager in cash (not to exceed the amount set forth in Schedule 4.02 to the Term Loan Agreement) for severance payments and other fees, costs and expenses payable to third parties, incurred in connection with the termination of the Management Agreement and the transactions contemplated thereby, including, without limitation, any amounts as required to be paid to the Manager pursuant to Section 14 of the Management Agreement, and (iv) enter into this Agreement;
1 Note to Draft: Date of stockholder approval to be inserted.
WHEREAS, each owner that owns not less than 4.9% of the outstanding equity of the Manager, including Ithan Creek Master Investors CayB USB VIII, Inc. and Flexpoint Great Ajax Holdings, LLC (the “Consenting Investors” and each, a “Consenting Investor”), has consented to the termination of the Management Agreement, as required by Section 4.7 of the Operating Agreement of the Manager, dated as of July 8, 2014, by and among Larry Mendelsohn, Aspen, GA-TRS LLC, Ithan Creek Master Investors CayB USB VIII, Inc., Flexpoint Great Ajax Holdings, LLC and the Manager, and at least a majority of the shareholders of the Company has approved the same in connection with the approval of the transactions contemplated by the Term Loan Agreement and Securities Purchase Agreement, as evidenced by one or more Voting and Support Agreements, dated February 26, 2024, entered into by and between the Company and each Consenting Investor and such other shareholders;
WHEREAS, in connection with the transactions contemplated by the Term Loan Agreement and the Securities Purchase Agreement, the Company has obtained the approval of he Company’s stockholders of the transactions contemplated by the Term Loan Agreement and Securities Purchase Agreement at the special meeting of the Company’s stockholders to consider and approve of such transactions; and
WHEREAS, in connection with
the transactions contemplated by the Term Loan Agreement and the Securities Purchase Agreement, the Parties desire, subject to the terms
and conditions set forth herein, to (i) terminate the Management Agreement, effective
as of the Effective Date (as defined herein); (ii) pay the Manager the value of the termination fee required under the Management
Agreement in shares of Common Stock; (iii) pay the Manager in cash (not to exceed the amount set forth in Schedule 4.02 of the Term Loan
Agreement) for severance payments and other fees, costs and expenses payable to third parties incurred in connection with the termination
of the Management Agreement and the transactions contemplated thereby as required to be paid to the Manager including, without limitation,
any amounts as required to be paid to the Manager pursuant to Section 14 of the Management Agreement; (iv) provide the Company with a
full release by the Manager from all historical liabilities arising under the Management Agreement and provide the Manager with a full
release by the Company from all historical liabilities arising under the Management Agreement; and (v) provide for the transfer by Aspen
of all right, title and interest in and to the Licensed Marks (as defined in the Trademark License Agreement, dated July 8, 2014, by
and between the Company and Aspen (the “License Agreement”)) to the Company.
2
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. Termination of Management Agreement; Survival of Certain Provisions.
(a) Notwithstanding anything to the contrary in the Management Agreement, the Parties hereby agree that the Management Agreement, and all rights and obligations of the Company and the Manager thereunder, shall be automatically terminated and of no further force or effect as of the date hereof (the “Effective Date”), without any further notice or action by any of the Company or the Manager (such termination, the “Termination”). Notwithstanding the foregoing:
(i) For the avoidance of doubt, the Manager shall continue to be entitled to receive the quarterly Base Management Fee and the quarterly Incentive Fee (collectively, the “Management Fees”) payable to the Manager pursuant to the terms and conditions of the Management Agreement during the period beginning from the date of the Written Notice until August 24, 2024, the date that is 180 days from the date of the Written Notice (such latter date, the “Expiration Date”).
(ii) The following provisions of the Management Agreement shall survive the Termination and shall continue to remain in full force and effect: Section 6 (Reimbursement of Expenses); Section 10 (Limitation of Liability of the Manager; Indemnification); Section 14 (Action Upon Termination); Section 15 (Confidentiality); and all provisions, terms and conditions of the Management Agreement that expressly survive its termination (as set forth in Section 12(f) thereof); provided, that no survival of any such provision shall supersede the limitation set forth in Schedule 4.02 to the Term Loan Agreement regarding the cap on expenses payable by the Company in cash.
(b)
Prior to the Effective Date, (i) the Company and the Manager shall comply
in all respects with all the terms and conditions of the Management Agreement, (ii) the
Company and the Manager shall not amend the Management Agreement or this Agreement, in each case without the prior written consent of
Rithm, and (iii) except as specifically permitted or required by the Term
Loan Agreement or the Securities Purchase Agreement, as required by law, or as consented to in writing by Rithm (which consent shall
not be unreasonably withheld, delayed or conditioned), the Manager shall conduct its activities with respect to the Company, and its
obligations pursuant to the Management Agreement, in the ordinary course of business consistent with past practice in all material respects.
Further, the Manager agrees to cooperate with the Company and Rithm prior to the Effective Date and take all actions reasonably requested
by the Company or Rithm prior to the Effective Date in order to carry out and effect the Term Loan Transaction, the Common Stock Sale
and the Warrant Issuance and the transactions contemplated by the Term Loan Agreement and the Securities Purchase Agreement and the orderly
transfer of the operation and management of the Company and its investment activities to RCM GA Manager LLC, a Delaware limited liability
company and affiliate of Rithm.
2. Termination Payment.
(a) As consideration for the Termination and the other promises, undertakings and releases of the Manager hereunder, the Company shall pay to the Manager (i) the termination fee in an amount equal to twice the combined Base Management Fees and Incentive Fees earned by the Manager during the 12-month period immediately preceding the Expiration Date, calculated as of the end of the most recently completed fiscal quarter prior to the Expiration Date (the “Termination Payment”), in accordance with Section 2(b) hereof; and (ii) severance payments and other fees, costs and expenses payable to third parties, incurred in connection with the termination of the Management Agreement and the transactions contemplated thereby, including, without limitation, any amounts as required to be paid to the Manager pursuant to Section 14 of the Management Agreement (the “Cash Amount”), in accordance with Section 2(c) hereof. The Termination Payment shall be deemed to constitute, and shall in all respects satisfy all obligations with respect to, the Termination Fee.
3
(b) The Termination Payment shall be paid on the Effective Date in a number of shares of Common Stock to be issued to the Manager, which shall be equal to the quotient of (x) the dollar amount of the Termination Payment as calculated as of the Effective Date, divided by (y) the trailing five-day weighted-average price per share of the Common Stock on the New York Stock Exchange (“NYSE”), as calculated over the five days preceding the date of the Securities Purchase Agreement (such number of shares, the “Common Stock Amount”).
(c) The Cash Amount shall be paid on the Effective Date, in an amount of cash (not to exceed the amount set forth in Schedule 4.02 to the Term Loan Agreement) equal to the sum of (i) certain severance payments payable to certain employees or contractors of the Manager who provide services to the Company, and (ii) all other fees, costs and expenses payable to third parties, in each of the preceding clauses (i) and (ii), incurred in connection with the termination of the Management Agreement and the transactions contemplated thereby, including, without limitation, any amounts as required to be paid to the Manager pursuant to Section 14 of the Management Agreement. The Manager shall prepare a written statement of account in reasonable detail documenting the severance payments and other fees, costs and expenses to be reimbursed by the Company in connection with or relating to the termination of the Management Agreement and the transactions contemplated thereby and deliver the same to the Company no less than three (3) business days prior to the Effective Date.
(d) On the Effective Date, (i) the Company shall pay the Cash Amount by wire transfer, in immediately available funds, to an account designated by the Manager in writing at least three (3) business days prior to the Effective Date, and (ii) the Company shall deliver to the Manager (or its designated custodian per its delivery instructions) the Common Stock Amount in electronic, book-entry form, registered in the name of the Manager, or confirmation of instructions given by the Company to Equiniti Trust Company, LLC, in its capacity as the Company’s transfer agent for the Common Stock (the “Transfer Agent”), to register the Common Stock Amount in electronic, book-entry form.
(e) Notwithstanding anything to the contrary in the Management Agreement, the Parties acknowledge and agree that the Termination Payment, the Cash Amount (not to exceed the amount set forth in Schedule 4.02 to the Term Loan Agreement) and the Management Fees owed pursuant to Section 1(a)(i) shall be the entire amount payable to the Manager or any of its affiliates in connection with the Termination and thereafter under or in respect of the Management Agreement, unless the Securities Purchase Agreement is validly terminated pursuant to Section 5.3 thereof, and except with respect to those rights and obligations which, pursuant to Section 1 hereof, survive the Termination. For the avoidance of doubt, prior to the Termination, the Manager shall only be entitled to receive payments from the Company that are consistent with past practice and pursuant to the terms of the Management Agreement; provided, that this Section 2(e) shall not be deemed to limit any bona fide claims the Manager may have (and any payments related thereto) pursuant to Section 10, Section 12(b) or Section 14 of the Management Agreement; provided, further, that no survival of any such provision shall supersede the limitation set forth in Schedule 4.02 of the Term Loan Agreement regarding the cap on expenses payable by the Company in cash.
4
3. Further Undertakings. As soon as practicable following the date hereof, the Company shall use commercially reasonable efforts to prepare and file a registration statement under the Securities Act of 1933, as amended, with the Securities and Exchange Commission (the “SEC”). Such registration statement shall permit the public resale of the Common Stock issued to the Manager, from time to time as permitted by Rule 415 under the Securities Act (or any successor or similar provision adopted by the SEC then in effect).
4.
Waiver of Notice Requirement. Each of the Company and the
Manager hereby (i) agree that this Agreement constitutes all required notice
of termination of the Management Agreement pursuant to the terms of the Management Agreement, and (ii) waives,
whether exercisable now or at any time in the future, any and all rights to notice under the Management Agreement, to the extent relating
to the transactions contemplated by this Agreement, the Term Loan Agreement and the Securities Purchase Agreement.
5. Release.
(a) Effective as of, and contingent upon, the Termination, each of the Company, the Manager, and its respective affiliates hereby fully and unconditionally releases and forever discharges the other party and the affiliates of the other party (including, as applicable, Rithm, the affiliates of Rithm, and their respective administrators, executors, representatives, successors and assigns), and their respective directors, officers, managers, stockholders, members, partners, employees and agents, and their respective successors and assigns, from any and all actions, causes of action, suits, debts, accounts, covenants, liabilities, disputes, agreements, promises, damages, judgments, executions, claims, and demands whatsoever in law or in equity (“Claims”) that they ever had, now have, or that they or their administrators, executors, representatives, successors and assigns hereafter can or may have, arising under or pursuant to the Management Agreement, except with respect to those rights and obligations which, pursuant to Section 1 hereof, survive the Termination (provided, that, with respect to the release by the Manager, no claim shall survive for payment of any termination fee, reimbursement amount or other expenses payable to or on behalf of the Manager to the extent the amounts calculated in accordance with this Agreement (and subject to the limitation on cash payment of expenses in Schedule 4.02 of the Term Loan Agreement) are paid in accordance with the terms hereof) and those rights and obligations under this Agreement.
(b) Each of the Company and the Manager agrees that it shall not make any assignment of any Claim or any right of any kind whatsoever embodied in any of the Claims released herein, and that no other person or entity of any kind shall have any interest in any of the Claims released herein.
6. Trademark License Agreement. In connection with the transactions contemplated by this Agreement, the Company and Aspen desire that all right, title and interest of Aspen in and to the Licensed Marks shall be transferred and assigned to the Company effective as of the date hereof. Aspen and the Company shall use their respective commercially reasonable best efforts to cooperate with the other and their respective officers, employees, attorneys, accountants and other agents, and, generally, do such other reasonable acts and things in good faith as may be necessary to effectuate the intents and purposes of this Section 6, including taking reasonable action to facilitate the signing or filing of any document or the taking of reasonable action to assist the other party in complying with the terms of this Section 6.
5
7. Company Contracts and Records. Prior to the Effective Date, the Manager and each of its affiliates will deliver to the Company all material contracts and material records pertaining to the business or operations of the Company and in the Manager’s or any of its affiliates’ possession or control.
8. Successors and Assigns; Third Party Beneficiaries; Further Actions; Specific Performance; Representations and Warranties.
(a) This Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, personal representatives, successors and permitted assigns as provided in this Agreement. Rithm and its affiliates, successors and assigns shall be entitled to rely on this Agreement in connection with the consummation of the transactions contemplated by the Term Loan Agreement and the Securities Purchase Agreement. Rithm shall be an express third-party beneficiary of this Agreement (including applicable provisions of the Management Agreement) and Rithm shall be entitled to enforce any such provisions.
(b) Each Party agrees to execute and deliver such additional documents and instruments and to perform such additional acts as any Party may reasonably request or as may be reasonably necessary or appropriate to effectuate, consummate and perform the terms, provisions, or conditions of this Agreement.
(c) It is understood and agreed that money damages may not be an adequate remedy for any breach of this Agreement by any Party and that any non-breaching Party shall be entitled to seek equitable relief, including, without limitation, injunction and specific performance, as a remedy for any such actual or potential breach. Such remedies shall not be deemed to be the exclusive remedies for a breach by a Party of this Agreement, but shall be in addition to all other remedies available at law or equity to any non-breaching Party.
(d)
Each of the Parties hereby represents and warrants to the other Parties that (i) such
Party has the absolute and unrestricted right, power, and authority to (A) execute
and deliver this Agreement, and (B) perform its obligations hereunder, and (ii) such
Party has consulted with, or has been afforded the opportunity to consult with, counsel of its own choosing in connection with this Agreement
and that it enters into this Agreement of its own free will and as its independent act.
9. Survival. For the avoidance of doubt, the obligations of the Parties contained in this Agreement, which by the terms thereof contemplate performance after the Termination, shall survive the Termination.
6
10.
Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced under any present or future law or public policy, (a) such term or other provision
shall be fully separable, (b) this Agreement shall be construed and enforced as if such invalid, illegal or unenforceable provision
had never comprised a part hereof, and (c) all other conditions and provisions
of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable term or other
provision or by its severance herefrom so long as the economic or legal substance of the transactions contemplated by this Agreement
is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal
or incapable of being enforced, 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 mutually acceptable manner in order that transactions contemplated by this Agreement be consummated
as originally contemplated to the fullest extent possible.
11. Entire Agreement; Amendment. The Management Agreement and this Agreement constitute the entire understanding between the Parties with respect to the subject matter hereof and supersede all prior discussions between them relating thereto. Any amendment or modification to this Agreement shall be effective only if in writing and signed by each Party (including Rithm).
12. Headings. All headings herein are inserted only for convenience and ease of reference and are not to be considered in the interpretation of any provision of this Agreement.
13. Agreement Not to be Strictly Construed Against any Party. This Agreement shall be construed and interpreted as if each of the Parties drafted this Agreement concurrently. Any ambiguity or interpretation of this Agreement shall not be construed against any Party, and any such ambiguity or interpretation shall be determined as if each of the Parties drafted this Agreement concurrently.
14. Counterparts; Electronic Signatures. This Agreement may be executed in multiple counterparts, each of which, when executed and delivered, shall be deemed an original, and all of which when taken together shall constitute one and the same instrument. This Agreement may be executed by facsimile, pdf scan, or other form of electronic signature.
15. Governing Law; Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed by and interpreted and construed in accordance with the laws of the State of New York, without regard to conflict of laws principles thereof (except for Section 5-1401 of the New York General Obligations Law). Each Party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated hereby (whether brought against a Party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each Party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each Party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such Party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If any Party shall commence an action, suit or proceeding to enforce any provisions of this Agreement, then the prevailing Party in such action, suit or proceeding shall be reimbursed by the other Party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
7
(b) THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVES, AND AGREES TO CAUSE ITS AFFILIATES TO WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
[Signature Page Follows]
8
IN WITNESS WHEREOF, the Parties have executed this Termination and Release Agreement as of the day and year first above written.
| Great Ajax Corp. | ||
| By: | ||
| Name: Lawrence Mendelsohn | ||
| Title: Chief Executive Officer | ||
| Great Ajax Operating Partnership L.P. | ||
| Great Ajax Operating LLC, | ||
| general partner | ||
| By: Great Ajax Corp., | ||
| managing member | ||
| By: | ||
| Name: Lawrence Mendelsohn | ||
| Title: Chief Executive Officer | ||
| Thetis Asset Management LLC | ||
| By: | ||
| Name: Lawrence Mendelsohn, Manager | ||
[Signature Page to Termination and Release Agreement]
| Solely for the purposes of Section 5 hereof: | ||
| Rithm Capital Corp. | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Termination and Release Agreement]
| Solely for the purposes of Section 6 hereof: | ||
| Aspen Yo LLC | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Termination and Release Agreement]
Exhibit 10.3
MANAGEMENT AGREEMENT
This Management Agreement, dated as of [ ], 2024 (the “Agreement”), among Great Ajax Corp., a Maryland corporation (“Ajax”), Great Ajax Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership,” and together with Ajax and any current or future subsidiaries of Ajax, the “Company”), and RCM GA Manager LLC, a Delaware limited liability company (the “Manager”).
RECITALS
A. Ajax is a corporation formed on January 30, 2014 that has qualified to operate as a “real estate investment trust” (“REIT”) for U.S. federal income tax purposes beginning with its taxable year ended December 31, 2014 and has elected to receive the tax benefits accorded by Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). Ajax is the sole member of Great Ajax Operating LLC, a Delaware limited liability company that is the sole general partner of the Operating Partnership.
B. The Company desires to retain the Manager as the Company’s exclusive provider of management and other services on the terms and conditions hereinafter set forth, and the Manager wishes to be retained to provide such services.
AGREEMENT
In consideration of the premises and for other good and valuable consideration, the parties agree as follows:
1. Duties of the Manager; Exclusivity.
(a) The Company employs the Manager to provide management, corporate governance, administrative and other services to the Company pursuant to this Agreement, subject to the supervision of the Board of Directors of Ajax (the “Ajax Board of Directors”). Such services will be provided for the period and upon the terms herein set forth, in each case, in accordance with the investment objectives, policies and restrictions determined by the Ajax Board of Directors and in accordance with all applicable federal, state and local laws, rules and regulations.
(i) Without limiting the generality of the foregoing, the Manager shall for or on behalf of the Company, during the term and subject to the provisions of this Agreement, (a) perform and administer all of the day-to-day operations of the Company and any joint venture or other strategic arrangement entered into by and among the Company and one or more third-party, unaffiliated entities; (b) determine investment criteria based on the investment policies determined by, and in cooperation with, the Ajax Board of Directors; (c) source, analyze and execute acquisitions of Real Estate Assets (as defined in Section 1(a)(ii)) or such other investments that in the opinion of the Manager are suitable for the Company; (d) implement and execute securitization and financing activities; (e) analyze and execute sales of the Company’s assets and properties; (f) perform asset management and corporate governance duties; (g) perform such services as are set forth in Schedule I of this Agreement; and (h) provide the Company with such other related services as the Company may, from time to time, reasonably require.
(ii) In the event that the Company determines to incur debt or other financing for the purpose of any investment in Real Estate Assets or for other appropriate reasons, as determined by the Ajax Board of Directors, the Manager will use commercially reasonable efforts to arrange for such financing on the Company’s behalf. If, in the Manager’s judgment, it is necessary or desirable for the Company to make investments in real estate, finance or refinance Real Estate Assets through a special purpose vehicle, the Manager shall have authority to create or arrange for the creation of such special purpose vehicle and to cause the Company to make such investments in Real Estate Assets through such special purpose vehicle. For purposes of this Agreement, the term “Real Estate Assets” shall include the following assets: (a) performing, re-performing, sub-performing, non-performing and real estate owned relating to residential mortgage loans on single-family homes, multi-family residential properties, or retail, residential, office or other commercial real estate properties, (b) performing, re-performing, sub-performing, non-performing and real estate owned relating to small balance commercial mortgage loans, (c) residential mortgage-backed securities resulting from securitizations undertaken by Ajax or third parties (d) single-family homes, multi-family residential properties, retail, residential, office or other commercial real estate properties for sale or rent, (e) commercial real estate loans, real-estate related debt securities, commercial mortgage-backed securities or other investments against such properties, including CLOs, (f) other real estate assets (including pools thereof), real estate companies or real-estate related holdings (g) businesses engaged in the origination, servicing, ownership and management of commercial or residential real estate loans, properties and assets, (h) real estate investment trusts and investments therein, and (i) any other assets or investments as may be directed by the Ajax Board of Directors.
(iii) The Manager may retain, for and on behalf, and at the sole cost and expense, of the Company, such services of accountants, legal counsel, appraisers, insurers, brokers, transfer agents, registrars, developers, investment banks, financial advisors, banks and other lenders and others as the Manager deems necessary or advisable in connection with the management and operations of the Company. Notwithstanding anything contained herein to the contrary, the Manager shall have the right to cause any such services to be rendered by its employees or affiliates. The Company shall pay or reimburse the Manager or its affiliates performing such services for the cost thereof; provided, that such fees shall be no more favorable to such affiliate or business than would be obtained from a third party on an arm’s-length basis.
(iv) In addition to the services set forth in Section 1 hereof, including the services provided as set forth on Schedule I, and other than express grants of authority in this Agreement (including pursuant to Section 1(a)(iii)), the parties shall have the right to enter into statements of work (“SOWs”) to set forth the terms of any related or additional services to be performed hereunder. Any SOW shall be agreed to by each party thereto, shall be in writing, and (a) shall contain: (i) the identity of each of the service provider and the service recipient; (ii) a description of the services to be performed thereunder; (iii) the applicable performance standard for the provision of such service; (iv) the amount, schedule and method of compensation for provision of such service; and (b) may contain (i) the service recipient’s standard operating procedures for receipt of services similar to such service, including operations, compliance requirements and related training schedules; (ii) information technology support requirements of the service recipient with respect to such service; and (iii) training and support commitments with respect to such service. The terms and conditions of this Agreement shall apply to any SOW.
2
(v) When making decisions where a conflict of interest may arise, the Manager will endeavor to allocate acquisition and financing opportunities in a fair and equitable manner over time as between Ajax, the Operating Partnership and their subsidiaries and the Manager’s other funds and clients, as applicable.
(b) The Manager accepts such employment and agrees during the term hereof to use commercially reasonable efforts to render the services described herein for the compensation provided herein.
(c) During the term of this Agreement, (i) the Manager shall be the exclusive provider of management services to the Company, and (ii) none of Ajax, the Operating Partnership or any of their respective subsidiaries shall employ or contract with any other party to receive the same or substantially similar services as set forth herein without the prior written consent of the Manager, which may be withheld by the Manager in its sole discretion.
(d) The Manager shall for all purposes provided herein be deemed to be an independent contractor and, except as expressly provided or authorized herein, shall have no authority to act for or represent Ajax, the Operating Partnership or any of their respective subsidiaries in any way or otherwise be deemed an agent of Ajax, the Operating Partnership or any of their respective subsidiaries.
(e) The Company understands that the Manager and its affiliates may provide similar services to other businesses (including those competing with Ajax, the Operating Partnership or any of their respective subsidiaries) and there shall not be any restriction on the Manager, its affiliates or any of their respective directors, managers, officers or employees requiring them to provide services exclusively to Ajax, the Operating Partnership or any of their respective subsidiaries.
(f) The Manager shall keep and preserve for the period reasonably required by the Company any books and records relevant to the provision of its management, administrative and other services to the Company and shall specifically maintain all books and records with respect to the Company’s portfolio transactions and shall render to the Company such periodic and special reports as the Company may reasonably request. The Manager agrees that all records that it maintains for the Company are the property of the Company and will surrender promptly to the Company any such records upon Ajax’s or the Operating Partnership’s request, provided that the Manager may retain a copy of such records.
3
(g) Unless and until such time as the Ajax Board of Directors notifies the Manager that it has determined that it is no longer in the best interest of Ajax to continue to qualify as a REIT and Ajax’s REIT election has been revoked, the Manager shall refrain from any action that, in its commercially reasonable judgment made in good faith, would adversely and materially affect the qualification of Ajax as a REIT. If the Manager is ordered to take any action by the Ajax Board of Directors, the Manager shall promptly notify the Ajax Board of Directors if it is the Manager’s judgment that such action would adversely and materially affect such qualification. Notwithstanding the foregoing, neither the Manager nor any of its affiliates shall be liable to the Company, the Ajax Board of Directors or the Company’s stockholders, partners or members, for any act or omission by the Manager or any of its affiliates, except as provided in Section 10 hereof.
(h) Unless and until such time as the Ajax Board of Directors notifies the Manager that it has determined that it is no longer in the best interest of Ajax to continue to satisfy the requirements for exemption from registration under the Investment Company Act of 1940, as amended (the “Investment Company Act”), the Manager shall refrain from any action that, in its commercially reasonable judgment made in good faith, would adversely and materially affect the ability of Ajax to continue to satisfy such exemption requirements. If the Manager is ordered to take any action by the Ajax Board of Directors, the Manager shall promptly notify the Ajax Board of Directors if it is the Manager’s judgment that such action would adversely and materially affect such exemption. Notwithstanding the foregoing, neither the Manager nor any of its affiliates shall be liable to the Company, the Ajax Board of Directors or the Company’s stockholders, partners or members, for any act or omission by the Manager or any of its affiliates, except as provided in Section 10 hereof.
(i) For the period and on the terms and conditions set forth in this Agreement, the Company hereby constitutes, appoints and authorizes the Manager, and any officer of the Manager acting on its behalf, as its true and lawful agent and attorney-in-fact, in its name, place and stead, to negotiate, execute, deliver and enter into such credit finance, securities repurchase and reverse repurchase agreements and arrangements, warehouse finance, brokerage agreements, interest rate swap agreements, custodial agreements and such other agreements, instruments and authorizations on the Company’s behalf, on such terms and conditions as the Manager, acting in its sole and absolute discretion, deems necessary or appropriate in the performance of its services hereunder. This power of attorney is deemed to be coupled with an interest.
(j) The Manager may establish and maintain one or more bank accounts in the name of Ajax, the Operating Partnership or any of their respective subsidiaries (any such account, a “Company Account”), and may collect and deposit funds into any such Company Account or Company Accounts, and disburse funds from any such Company Account or Company Accounts, under such terms and conditions as the Ajax Board of Directors may approve; and the Manager shall from time to time render appropriate accountings of such collections and payments to the Ajax Board of Directors and, upon request, to the auditors of Ajax, the Operating Partnership or any of their respective subsidiaries.
4
2. Devotion of Time. Subject to Section 8 hereof:
(a) The Manager assumes no responsibility under this Agreement other than to render the services called for hereunder, either directly or through its subsidiaries. The Manager shall perform the services required hereunder on Business Days (as defined in Section 21 below) during hours that constitute regular business hours for each of the Company and the Manager, unless otherwise agreed. The Company shall not resell, subcontract, license, sublicense or otherwise transfer any of the services to any person whatsoever or permit use of any of the services by any person other than by the Company directly in connection with the conduct of its business in the ordinary course of its business.
(b) The Manager and its affiliates will provide the Company with a management team, including a chief executive officer, a chief financial officer (unless otherwise retained by the Company) and other appropriate personnel. The Manager is not obligated to dedicate any of its personnel exclusively to the Company, nor are the Manager or its personnel obligated to dedicate any specific portion of its or their time to the Company.
(c) Managers, partners, officers, employees, personnel and agents of the Manager or affiliates of the Manager may serve as directors, officers, employees, personnel, agents, nominees or signatories for Ajax, the Operating Partnership or any of their respective subsidiaries, to the extent permitted by their governing documents or by any resolutions duly adopted by the Ajax Board of Directors pursuant to the governing documents of Ajax or the Operating Partnership, respectively. When executing documents or otherwise acting in such capacities for Ajax, the Operating Partnership or any of their respective subsidiaries, such persons shall use their respective titles in Ajax, the Operating Partnership or any of their respective subsidiaries.
(d) The Manager shall have the exclusive right to select, employ, pay, supervise, administer, direct and discharge any of its employees who will perform services. The Manager shall be responsible for paying such employees’ compensation and benefits, except that the Company shall reimburse the Manager or its affiliates, as applicable, for the Company’s allocable share of the compensation (whether paid in cash, stock or other forms), including annual base salary, bonus, any related withholding taxes and employee benefits, paid to (i) the Manager’s personnel serving as the Company’s chief financial officer based on the percentage of his or her time spent managing the Company’s affairs and (ii) other corporate finance, tax, accounting, middle office, internal audit, legal, risk management, operations, compliance and other non-investment personnel of the Manager and its affiliates who spend all or a portion of their time managing the Company’s affairs. With respect to each service, the Manager shall use commercially reasonable efforts to have qualified individuals provide such service; provided, however, that (i) the Manager shall not be obligated to have any individual participate in the provision of any service if the Manager determines that such participation would adversely affect the Manager or its affiliates; and (ii) none of the Manager or its affiliates shall be required to continue to employ any particular individual during the applicable service period.
5
3. Representations, Warranties and Covenants of the Company. Ajax and the Operating Partnership, jointly and severally, represent, warrant and covenant to the Manager as of the date of this Agreement:
(a) Each of Ajax and the Operating Partnership is duly organized, validly existing and in good standing under the laws of the state of its formation and has full power, authority, and legal right to conduct its business as is presently conducted, and to execute, deliver, and perform its obligations under this Agreement;
(b) Each of Ajax and the Operating Partnership is duly qualified to do business and is in good standing (or is exempt from such requirement) in any state required in order to conduct business and has obtained all necessary licenses and approvals required under all applicable federal, state or local laws, rules and regulations and any other applicable requirements of any government or agency or instrumentality thereof, as such may be amended, modified or supplemented from time to time;
(c) Each of Ajax and the Operating Partnership has duly authorized by all necessary action on its part, the execution, delivery and performance of this Agreement, has duly executed and delivered this Agreement, and this Agreement, assuming due authorization, execution and delivery by the Manager, constitutes a legal, valid and binding obligation of each of Ajax and the Operating Partnership, enforceable against it in accordance with its terms except as the enforceability thereof may be limited by bankruptcy, insolvency or reorganization or similar laws affecting the enforcement of creditors’ rights generally and by the availability of equitable remedies;
(d) The execution and delivery of this Agreement by each of Ajax and the Operating Partnership and their respective performance of and compliance with the terms of this Agreement will not violate or conflict with either of their formation documents or constitute a default under or result in a breach or acceleration of, any material contract, agreement or other instrument to which either of them is a party or which may be applicable to either of them or their respective assets;
(e) Neither Ajax nor the Operating Partnership is in violation of, and the execution and delivery of this Agreement by Ajax and the Operating Partnership and their respective performance and compliance with the terms of this Agreement will not constitute a violation with respect to, any order or decree of any court or any order or regulation of any federal, state, municipal or governmental agency having jurisdiction over either of them or their respective assets, which violation might have consequences that would materially and adversely affect the condition (financial or otherwise) or the operation of the Company or its assets taken as a whole or could be reasonably be expected to have consequences that would materially and adversely affect the performance of their respective obligations and duties hereunder;
6
(f) There are no actions or proceedings against, or investigations of, either Ajax or the Operating Partnership before any court, administrative or other tribunal (i) that might prohibit its entering into this Agreement or assert the invalidity of this Agreement, (ii) seeking to prevent the consummation of the transactions contemplated by this Agreement, (iii) that might prohibit or materially and adversely affect the performance by either Ajax or the Operating Partnership of its obligations under, or the validity or enforceability of, this Agreement or (iv) seeking any determination or ruling that would adversely affect the validity and enforceability of this Agreement; and
(g) No consent, approval, authorization or order of any court or governmental agency or body or other person is required for the execution, delivery and performance by either Ajax or the Operating Partnership of, or compliance by either of them with, this Agreement or the consummation of the transactions contemplated by this Agreement, except for such consents, approvals, authorizations or orders, if any, that have been obtained prior to the date of this Agreement.
(h) The Company shall at all times maintain directors and officers liability insurance in an amount comparable to other similar businesses and shall name the Manager and its directors and officers as beneficiaries under such policy.
4. Representations, Warranties and Covenants of the Manager. The Manager represents, warrants and covenants to the Company as of the date of this Agreement:
(a) The Manager is duly organized, validly existing and in good standing under the laws of the state of its formation and has full power, authority, and legal right to conduct its business as is presently conducted, and to execute, deliver, and perform its obligations under this Agreement;
(b) The Manager has duly authorized by all necessary action on its part, the execution, delivery and performance of this Agreement, has duly executed and delivered this Agreement, and this Agreement, assuming due authorization, execution and delivery by the Company and the Operating Partnership, constitutes a legal, valid and binding obligation of the Manager, enforceable against it in accordance with its terms except as the enforceability thereof may be limited by bankruptcy, insolvency or reorganization or similar laws affecting the enforcement of creditors’ rights generally and by the availability of equitable remedies;
(c) The execution and delivery of this Agreement by the Manager and the performance of and compliance with the terms of this Agreement will not (i) violate or conflict with the Manager’s formation documents or (ii) constitute a default under or result in a breach or acceleration of, any material contract, agreement or other instrument to which the Manager is a party or which may be applicable to the Manager or its assets, except, in the case of clause (ii) as would not materially and adversely affect the condition (financial or otherwise) or the operation of the Manager or its assets or would reasonably be expected to have consequences that would materially and adversely affect the performance of its obligations and duties hereunder;
7
(d) The Manager execution is not in violation of, and the execution and delivery of this Agreement by the Manager and its performance of and compliance with the terms of this Agreement will not constitute a violation with respect to, any order or decree of any court or any order or regulation of any federal, state, municipal or governmental agency having jurisdiction over the Manager or its assets, which violation would have consequences that would materially and adversely affect the condition (financial or otherwise) or the operation of the Manager or its assets or would be reasonably be expected to have consequences that would materially and adversely affect the performance of its obligations and duties hereunder;
(e) There are no actions or proceedings against, or, to the actual knowledge of the Manager, investigations of, the Manager before any court, administrative or other tribunal (i) that would prohibit its entering into this Agreement or assert the invalidity of this Agreement, (ii) seeking to prevent the consummation of the transactions contemplated by this Agreement, (iii) that would prohibit or materially and adversely affect the performance by the Manager of its obligations under, or the validity or enforceability of, this Agreement or (iv) seeking any determination or ruling that would adversely affect the validity and enforceability of this Agreement; and
(f) No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by the Manager of, or compliance by the Manager with, this Agreement or the consummation of the transactions contemplated by this Agreement, except for such consents, approvals, authorizations or orders, if any, that have been obtained prior to the date of this Agreement or the failure of which to obtain would not materially and adversely affect the condition (financial or otherwise) or the operation of the Manager or its assets or would reasonably be expected to have consequences that would materially and adversely affect the performance of its obligations and duties hereunder.
5. Compensation of the Manager.
(a) For the services rendered under this Agreement, the Company shall pay a base management fee (the “Base Management Fee”), as described in Section 5(b) below, and an incentive management fee (the “Incentive Fee”), as described in Section 5(c) below, to the Manager. The Base Management Fee and the Incentive Fee will be calculated and payable quarterly with respect to each calendar quarter (or part thereof that this Agreement is in effect) in arrears in cash.
(b) The Base Management Fee shall equal 1.5% of the Ajax consolidated stockholders’ equity per annum. For purposes of calculating the management fee, consolidated stockholders’ equity means: the net proceeds, after deducting underwriting discounts and commissions and offering expenses payable by the Company, from any issuances of equity securities (including common stock and preferred stock), equity-linked securities (including convertible securities) and debt securities or loans that were used to replace preferred stock or convertible securities, issued by Ajax or the Operating Partnership (without double counting) since inception (allocated on a pro rata daily basis for such issuances (including any greenshoe related thereto) during the fiscal quarter of any such issuance), less (A) any amount that Ajax or the Operating Partnership pays to repurchase its common stock or units since inception, and (B) retained earnings, if negative, as of the most recent prior completed quarter in which this Agreement is effective, in each case after discussions between the Manager and the Ajax Independent Directors and approval by a majority of the Ajax Independent Directors. As a result of the calculation of consolidated stockholders’ equity set forth above, the Ajax stockholders’ equity, for purposes of calculating the Base Management Fee, could be greater or less than the amount of stockholders’ equity shown on Ajax’s consolidated financial statements. For the avoidance of doubt, any amounts deemed as a return of capital from dividends paid (determined in accordance with tax guidelines), shall not be considered a repurchase of stock. See Appendix I for the stockholders’ equity calculation as of December 31, 2023.
8
(i) For the purposes of this Agreement, “Ajax Independent Directors” shall mean the members of the Ajax Board of Directors who are not officers, employees or beneficial owners (or officers or employees of beneficial owners), directly or indirectly, of more than 5% of the equity interests in (A) the Manager or any other entity with which the Company has a material contractual relationship or (B) any person or entity directly or indirectly controlling, controlled by or under common control with the Manager, and who are otherwise “independent” in accordance with Ajax’s organizational documents and the requirements of any securities exchange on which the equity of Ajax may then be listed.
(ii) The Manager will compute each quarterly installment of the Base Management Fee within 30 days after the end of the calendar quarter with respect to which such installment is payable and promptly deliver such calculation to the Ajax Board of Directors. The amount of the installment shown in the calculation will be due and payable no later than the date which is five Business Days after the date of delivery of such computation to the Ajax Board of Directors.
(c) The Manager will be entitled to the Incentive Fee, which is payable quarterly in arrears in cash in an amount equal to 20% of the dollar amount by which (i) Earnings Available for Distribution (as defined below) exceeds the product of (A) the average common book value per share (excluding fair value marks, impairments, transaction/ deal expenses and associated tax impact and such other items that in the judgment of the Company officers should be excluded) of the common stock of Ajax (“Ajax Common Stock”) during such calendar quarter and (B) 8%. Notwithstanding either of the foregoing, no Incentive Fee will be payable to the Manager with respect to any period unless the Company’s cumulative Earnings Available for Distribution is greater than zero for the most recently completed four calendar quarters (which cumulative Earnings Available for Distribution shall be reset at the completion of every fourth quarter following the date hereof and each subsequent fourth quarter thereafter (each, a “Reset Date”) so as not to take into account prior calendar quarters), or, if less, (i) the number of completed calendar quarters since the date hereof or (ii) the number of completed calendar quarters since the last Reset Date.
(i) “Earnings Available for Distribution” is a non-GAAP financial measure and is defined as net income (loss) as determined according to GAAP, excluding tax-effected, non-cash equity compensation expense and any unrealized gains or losses from mark-to-market valuation changes (including impairments) that are included in net income for the applicable period. The amount will be adjusted to exclude on a tax-effected basis (A) one-time events pursuant to changes in GAAP, (B) transaction and deal expenses that in the opinion of the Manager should be excluded for purposes of calculating Earnings Available for Distribution and be amortized over the life of the related investment / transaction, and (C) non-cash items (including depreciation and amortization) that in the judgment of the Company’s officers should not be included in Earnings Available for Distribution, which adjustments in clauses (A), (B) and (C) shall only be excluded after discussions between the Manager and the Ajax Independent Directors and after approval by a majority of the Ajax Independent Directors. Book value per share of Ajax Common Stock shall be as set forth in the consolidated financial statements of the Company prepared in accordance with GAAP.
9
(d) Notwithstanding the foregoing, the Company, in its sole and absolute discretion, may separately compensate any of the Manager’s officers or employees in the form of equity awards granted under and in accordance with the terms of any of the Company’s equity incentive plans in place from time to time.
6. Reimbursement of Expenses.
(a) In addition to the Base Management Fee and the Incentive Fee described in Section 5 above, the Company shall pay all of its costs and expenses and, if applicable, shall reimburse the Manager (to the extent incurred by the Manager) on a monthly basis for the costs and expenses of providing services under this Agreement. Without limiting the foregoing, the Company shall pay and, if applicable, shall reimburse the Manager (to the extent incurred by the Manager) and retain all responsibility for costs and expenses relating to:
(i) the organization and corporate governance of Ajax, the Operating Partnership or any of the respective subsidiaries thereof;
(ii) the cost and expenses of any valuation firm calculating the net asset value of Ajax, the Operating Partnership or any other respective subsidiaries thereof;
(iii) fees and expenses payable to third parties, including, but not limited to, lawyers, accountants, auditors, agents, consultants or other advisors, in monitoring financial and legal affairs for Ajax, the Operating Partnership or any of their respective subsidiaries thereof;
(iv) all costs and expenses of money borrowed by Ajax, the Operating Partnership or any of their respective subsidiaries, including interest payable on debt, if any, incurred to finance investments in Real Estate Assets by Ajax, the Operating Partnership or any of their respective subsidiaries and any other principal, interest and the costs associated with the establishment and maintenance of any credit facilities, warehouse loans, repurchase agreements and other indebtedness of Ajax, the Operating Partnership or any of their respective subsidiaries (including commitment fees, accounting fees, legal fees, closing and other costs and expenses);
10
(v) all legal, audit, accounting, consulting, underwriting, brokerage, listing, filing, custodian, transfer agent, rating agency, registration and other fees and charges, printing, engraving and other expenses and taxes incurred in connection with offerings of the equity or other securities of Ajax, the Operating Partnership or any of their respective subsidiaries;
(vi) management and incentive fees payable to third parties;
(vii) fees and expenses payable to third parties, including, but not limited to, lawyers, accountants, auditors, agents, consultants or other advisors (which may include affiliates of or businesses owned by the Manager, in which case such fees shall be no more favorable to such affiliate or business than would be obtained from a third party on an arm’s-length basis) and any loan servicing fees, trustee fees, appraisal fees, insurance premiums, commitment fees, brokerage fees, guaranty fees, ad valorem taxes, costs of diligence, foreclosure, maintenance, repair and improvement of property and premiums for insurance on property owned or leased by Ajax, the Operating Partnership or any of their respective subsidiaries, in each case, relating to, or associated with, evaluating and making and monitoring investments in Real Estate Assets;
(viii) transfer agent and custodial fees;
(ix) federal, state and local registration fees;
(x) should the capital stock or other securities of Ajax, the Operating Partnership or any other respective subsidiaries thereof be listed on any securities exchange, all legal, audit, accounting, consulting, underwriting, brokerage, listing, filing, custodian, transfer agent, rating agency, registration and other fees and charges, printing, engraving and other expenses and taxes incurred in connection with such registration and listing;
(xi) federal, state and local taxes of the Company, including interest and penalties thereon;
(xii) the costs and expenses incurred with respect to administering the Company’s incentive plans;
(xiii) independent directors’ fees and expenses;
(xiv) all travel and related expenses of directors, managers, officers and employees of Ajax, the Operating Partnership or any of their respective subsidiaries and the Manager, incurred in connection with attending meetings of the Ajax Board of Directors or holders of securities of Ajax, the Operating Partnership or any of their respective subsidiaries or performing other business activities that relate to Ajax, the Operating Partnership or any of their respective subsidiaries;
11
(xv) costs of preparing and filing reports or other documents required by the Securities and Exchange Commission or any other cost of compliance with federal or state securities laws;
(xvi) all expenses relating to communications to holders of equity securities or debt securities issued by the Ajax, the Operating Partnership or any of their respective subsidiaries and the other third party services utilized in maintaining relations with holders of such securities and in complying with the continuous reporting and other requirements of governmental bodies or agencies (including, without limitation, the Securities and Exchange Commission), including any costs of computer services in connection with this function and the costs of any reports, proxy statements or other notices to stockholders, if applicable, including printing costs;
(xvii) all insurance costs incurred in connection with the operation of the businesses of Ajax, the Operating Partnership or any of their respective subsidiaries, including the portion of the directors and officers/errors and omissions liability insurance, and any other insurance premiums incurred by the Manager and allocable to Ajax, the Operating Partnership or any other respective subsidiaries thereof;
(xviii) direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors, accountants and outside legal costs, and, as applicable, the design and maintenance of the Company’s website or sites and associated with any computer software, hardware, electronic equipment or purchased information technology services from third party vendors;
(xix) costs and expenses incurred with respect to market information systems and publications, research publications and materials, and settlement, clearing and custodial fees and expenses;
(xx) costs incurred for originating, acquiring, owning and managing Real Estate Assets and protecting, maintaining, financing, refinancing, developing, modifying and disposing of Real Estate Assets, including servicing loans and property management (which costs may be payable to an affiliate or other subsidiary of the Manager, in which case such costs shall be no more favorable to such affiliate or other subsidiary than would be obtained from a third party on an arm’s-length basis);
(xxi) all third-party legal, accounting and auditing fees and expenses and other similar services relating to Ajax’s, the Operating Partnership’s or any of their respective subsidiaries’ operations (including, without limitation, all quarterly and annual audit or tax fees and expenses);
(xxii) all third-party legal, expert and other fees and expenses relating to any actions, proceedings, lawsuits, demands, causes of action and claims, whether actual or threatened, made by or against Ajax, the Operating Partnership or any of their respective subsidiaries, or which Ajax, the Operating Partnership or any of their respective subsidiaries is authorized or obligated to pay under applicable law or its organizational documents or by the Ajax Board of Directors;
12
(xxiii) any judgment or settlement of pending or threatened proceedings (whether civil, criminal or otherwise) against Ajax, the Operating Partnership or any of their respective subsidiaries, or against any director, manager or officer of Ajax, the Operating Partnership or any of their respective subsidiaries in its capacity as such for which Ajax, the Operating Partnership or any of their respective subsidiaries is required to indemnify such director, manager or officer by any court or governmental agency, or settlement of pending or threatened proceedings;
(xxiv) all expenses of organizing, modifying or dissolving Ajax, the Operating Partnership or any of their respective subsidiaries and costs preparatory to entering into a business or activity, or of winding up or disposing of a business activity of Ajax, the Operating Partnership or any of their respective subsidiaries, if any;
(xxv) expenses relating to any office or office facilities, including disaster backup recovery sites and facilities, maintained for Ajax, the Operating Partnership or any of their respective subsidiaries separate from the offices of the Manager; and
(xxvi) all other costs and expenses incurred by the Manager that are reasonably necessary to administer the business of Ajax, the Operating Partnership or any subsidiary thereof under this Agreement.
(b) Notwithstanding Section 6(a), if the Company requires services that are not expressly contemplated by the Agreement (as an example, but not as a limitation, if the Company enters into a joint venture or other strategic arrangement with third-party, unaffiliated entities, including any joint venture or arrangement that is not consolidated on the Company’s financial statements), the Company shall enter into a letter agreement, which shall be subject to approval by the Ajax Independent Directors, or by a designated Ajax Independent Director, pursuant to which, the Company will pay or, if applicable, reimburse the Manager (to the extent incurred by the Manager) for any and all of the Manager’s costs and expenses incurred (and not otherwise reimbursable from another entity) in connection with providing services relating to the initial entry to any such arrangement.
(c) The Company, at the option of the Manager, will be required to pay its pro rata portion of the rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses attributable to the personnel of the Manager and its affiliates required for the operations of Ajax, the Operating Partnership and their respective subsidiaries. These expenses will be allocated to the Company based upon the percentage of time devoted by such personnel of the Manager or its affiliates to Ajax’s, the Operating Partnership’s and their respective subsidiaries’ as calculated at each fiscal quarter end. The Manager and the Company may modify this allocation methodology, subject to the Ajax Independent Directors’ approval. Except as set forth in Section 2(d), the Manager is not entitled to be reimbursed for wages, salaries and benefits of its officers and employees.
13
(d) To the extent the Manager incurs any expense in connection with the performance of its duties hereunder that (x) benefits the Company and any other funds, entities or accounts that are managed by an affiliate of the Manager and (y) is reimbursable by the Company under this Agreement, such expense shall be allocated among the Company and such other funds, entities or accounts in a manner determined in good faith by the Manager to reflect the relative benefits to the Company and such funds, entities or accounts resulting from such expense, including, for example, in the case of most expenses, in proportion to the relative net asset values of the entities that are benefited.
(e) The Manager may engage contractors or any of its own personnel or affiliates, for and on behalf, and at the sole cost and expense, of the Company to provide professional services related to any of the services provided by the Manager hereunder, or to provide any secretarial, administrative, telephone, e-mail or other services necessary or ancillary to the services provided by the Manager hereunder, as the Manager deems necessary or advisable in connection with the management and operations of Ajax, the Operating Partnership and their respective subsidiaries pursuant to agreement(s) with terms which are then customary for agreements regarding the provision of services to companies that have assets similar in type, quality and value to the assets of Ajax, the Operating Partnership and their respective subsidiaries; provided that any such agreements entered into with affiliates of the Manager shall be on terms no more favorable to such affiliate than would be obtained from a third party on an arm’s-length basis; provided further, that without the prior approval of the Ajax Independent Directors, the Manager shall not be permitted to outsource to a non-affiliate its responsibility for the ultimate investment acquisition and disposition decisions of the Company and compliance with investment guidelines approved by the Ajax Board of Directors and any risk parameters and other policies applicable to the provision of services to the Company by the Manager adopted by the Ajax Board of Directors from time to time.
(f) The Manager shall prepare a written statement in reasonable detail documenting the costs and expenses of the Company and those incurred by the Manager on behalf of the Company during each month, and shall deliver such written statement to the Company within 30 days after the end of each month. The Company shall pay all amounts payable to the Manager pursuant to this Section 6 in cash within five Business Days after the receipt of the written statement without demand, deduction offset or delay. Any costs and expense reimbursements by the Company in accordance herewith shall be subject to adjustment at the end of each calendar year in connection with the annual audit of the Company. In connection therewith, the Manager shall prepare and deliver to the Audit Committee of the Ajax Board of Directors within 30 days after the conclusion of each such annual audit, a list of adjustments made as a result of, or in preparation for, the audit. The Audit Committee of the Board of Directors shall determine, within 30 days after receipt of such list, whether funds should be refunded by the Manager to the Company or paid by the Company to the Manager, or if any accruals for the next fiscal year should be adjusted.
14
(g) The Manager may, at its option, elect not to seek reimbursement for certain expenses during a given quarterly period, which determination shall not be deemed to construe a waiver of reimbursement for similar expenses in future periods.
(h) Notwithstanding anything contained in this Agreement to the contrary, except to the extent that the payment of additional monies is proven by the Company to have been required as a direct result of the Manager’s acts or omissions that result in the right of the Company to terminate this Agreement pursuant to Section 13 of this Agreement, the Manager shall not be required to expend money (“Excess Funds”) in connection with any expenses that are required to be paid for or reimbursed by the Company pursuant to this Agreement in excess of that contained in any applicable Company Account or otherwise made available by the Company to be expended by the Manager hereunder. Failure of the Manager to expend Excess Funds out-of-pocket shall not give rise or be a contributing factor to the right of the Company under Section 12(b) of this Agreement to terminate this Agreement due to the Manager’s unsatisfactory performance.
7. Regulatory Matters. Each of Ajax and the Operating Partnership acknowledges that the Manager is not registered as an investment adviser under the Investment Advisers Act of 1940, as amended, but that it could be required to so register. The Manager agrees that its activities will at all times be in compliance in all material respects with all applicable federal, state and local laws governing its operations and investments.
8. Other Activities of the Manager. The Manager and its affiliates, officers, managers, directors and employees may engage in any other business or render similar or different services to others, including the direct or indirect sponsorship or management of other investment based accounts or commingled pools of capital, however structured so long as its services to the Company are not materially impaired thereby. Nothing in this Agreement shall limit or restrict the right of any manager, director, member, stockholder, partner, officer or employee of the Manager or any of its affiliates to engage in any other business or to devote his, her or its time and attention in part to any other business, whether of a similar or dissimilar nature, or to receive any fees or compensation in connection therewith. Nothing in this Agreement shall in any way bind or restrict the Manager or any of its affiliates or any of their members, stockholders, managers, partners, personnel, officers, directors, employees or consultants from buying, selling or trading any securities or commodities for their own accounts or for the account of others for whom the Manager or any of its affiliates, or any of their members, stockholders, managers, partners, personnel, officers, directors, employees or consultants may be acting. It is understood that directors, officers, employees, partners and shareholders of Ajax or the Operating Partnership are or may become interested in the Manager and its affiliates, as directors, officers, employees, partners, shareholders, members, managers or otherwise, and that the Manager and directors, officers, employees, partners, stockholders, members and managers of the Manager and its affiliates are or may become similarly interested in Ajax or the Operating Partnership as shareholders, members or partners or otherwise.
15
9. Responsibility of Dual Directors, Officers and/or Employees. If any person who is a manager, director, member, stockholder, partner, officer or employee of the Manager or any of its affiliates is or becomes a director, manager, officer and/or employee of the Company and acts as such in any business of the Company, then such manager, director, member, stockholder, partner, officer and/or employee of the Manager shall be deemed to be acting in such capacity solely for the Company, as applicable, and not as a manager, partner, officer or employee of the Manager or under the control or direction of the Manager, even if paid by the Manager.
10. Limitation of Liability of the Manager; Indemnification. The Manager and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Manager (collectively, the “Indemnified Parties”) shall not be liable to Ajax, the Operating Partnership or any of their respective subsidiaries for any action taken or omitted to be taken by the Manager in connection with the performance of any of its duties or obligations under this Agreement or otherwise as the Manager of Ajax, the Operating Partnership or any of their respective subsidiaries with respect to the receipt of compensation for services, and each of Ajax and the Operating Partnership shall indemnify, defend and protect the Indemnified Parties and hold them harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) (“Losses”) incurred by the Indemnified Parties in connection with or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Operating Partnership, its members, or Ajax or its shareholders, or any of their respective subsidiaries or their respective equity holders) arising out of or otherwise based upon the performance of any of the Manager’s duties or obligations under this Agreement or otherwise as Manager of the Company; provided, that nothing contained herein shall protect or be deemed to protect the Indemnified Parties against or entitle or be deemed to entitle the Indemnified Parties to indemnification in respect of, any Losses incurred by the Indemnified Parties to have resulted primarily from the willful misconduct, bad faith or gross negligence in the performance of the Manager’s duties and obligations under this Agreement or reckless disregard of the Manager’s duties and obligations under this Agreement, as determined in a final non-appealable order of a court of competent jurisdiction; provided, however, that, to the extent permitted by applicable law, the Indemnified Parties shall not be responsible for Losses which in the aggregate are in excess of the amount of all fees actually received by the Manager from Ajax, the Operating Partnership or any of their respective subsidiaries under this Agreement.
11. No Joint Venture. Nothing in this Agreement shall be construed to make Ajax, the Operating Partnership and the Manager partners or joint venturers or impose any liability as such on any of them.
12. Term; Termination.
(a) This Agreement shall be in effect until [ ], 2027 (the “Initial Term”) and shall be automatically renewed for a successive two-year term each anniversary date thereafter (a “Renewal Term”) unless terminated by a party in accordance with this Section 12 or 13.
(b) Subject to Section 13 below, the Company may either terminate this Agreement without cause or, at the expiration of its term, elect not to renew this Agreement upon the determination of at least two-thirds of the Ajax Independent Directors that there has been unsatisfactory performance by the Manager that is materially detrimental to the Company pursuant to the following procedure. If the Company elects to terminate this Agreement without cause or not to renew this Agreement at the expiration of the Initial Term or any Renewal Term as set forth above, the Company, shall deliver to the Manager prior written notice of its determination to terminate this Agreement without cause or its intention not to renew this Agreement based upon the terms set forth in this Section 12(b) not less than 180 days prior to the termination date or expiration of the then existing term, as applicable, which notice shall designate the date, not less than 180 days from the date of the notice, on which the Manager shall cease to provide services under this Agreement, and this Agreement shall terminate on such date.
16
(c) In recognition of the level of the upfront effort required by the Manager to structure and acquire the assets of the Company and the ongoing commitment of resources by the Manager, in the event that this Agreement is terminated by the Company in accordance with the provisions of Section 12(b) of this Agreement, the Company shall pay to the Manager, on the date on which such termination is effective, a termination fee (the “Termination Fee”). The Termination Fee will be equal to three times the combined Base Management Fees plus the higher of (i) three times the Incentive Fees earned by the Manager during the 12-month period immediately preceding the date of termination, calculated as of the end of the most recently completed fiscal quarter prior to the date of termination, and (ii) the total amount of Incentive Fee that the Manager would have earned based on the total unrealized gain calculated as of the end of the most recently completed fiscal quarter prior to the date of termination. The obligation of the Company to pay the Termination Fee shall survive the termination of this Agreement.
(d) The Manager may terminate the Agreement without cause by providing written notice to Ajax no later than 180 days prior to the expiration of the Initial Term or any Renewal Term. The Company is not required to pay to the Manager the Termination Fee if the Manager terminates this Agreement pursuant to this Section 12(d).
(e) If this Agreement is terminated pursuant to Section 12, such termination shall be without any further liability or obligation of any party to the others, except with respect to the obligations provided in Sections 1(f), this Section 12, 13(b), 13(c) and 14 of this Agreement. In addition, Sections 10, 15 through 17, and 19 through 29 of this Agreement shall survive termination of this Agreement.
13. Termination for Cause.
(a) Ajax or the Operating Partnership may terminate this Agreement effective upon 30 days’ prior written notice of termination from the Ajax Board of Directors to the Manager, without payment of any Termination Fee, if
(i) the Manager, its agents or its assignees materially breaches any provision of this Agreement and such breach shall continue for a period of 30 days after written notice thereof specifying such breach and requesting that the same be remedied in such 30-day period (or 60 days after written notice of such breach if the Manager takes steps to cure such breach within 30 days of the written notice);
17
(ii) the Manager commits fraud against the Company, misappropriates or embezzles funds of the Company, or acts, or fails to act, in a manner constituting bad faith, willful misconduct, gross negligence or reckless disregard in the performance of its duties under this Agreement; provided, however, that if any of the actions or omissions described in this clause (ii) are caused by an employee, personnel and/or officer of the Manager or one of its affiliates and the Manager (or such affiliate) takes all necessary and appropriate action against such person and cures the damage caused by such actions or omissions within 30 days of the Manager’s actual knowledge of its commission or omission, the Company shall not have the right to terminate this Agreement pursuant to this Section 13(a)(ii);
(iii) the Manager is cited by a governmental authority for materially violating any law governing the performance of a service under this Agreement, which violation cannot be or has not been cured by the 30th day from the Company’s delivery of written notice of such citation to the Manager;
(iv) there is a dissolution of the Manager;
(v) the Manager commences a voluntary case or proceeding under any bankruptcy law, consents to the commencement of any bankruptcy or insolvency case or proceeding against it, or files a petition or answer or consent seeking reorganization or relief against it, consents to the entry of a decree or order for relief against it in an involuntary case or proceeding, consents to the filing of such petition or to the appointment of or taking possession by a custodian of the Manager or for all or substantially all of its property, or makes an assignment for the benefit of creditors, or admits in writing of its inability to pay its debts generally as they become due or takes any corporate action in furtherance of any such action; or
(vi) a court of competent jurisdiction enters an order or decree under any bankruptcy law that is for relief against the Manager in an involuntary case or proceeding, or adjudges the Manager bankrupt or insolvent, or approves as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Manager, or appoints a custodian of the Manager or for all or substantially all of its property, or orders the winding up or liquidation of the Manager, and any such decree or order for relief or any such other decree or order continues unstayed and in effect for a period of 120 consecutive days.
(b) The Manager may terminate this Agreement effective upon 60 days’ prior written notice of termination to Ajax in the event that the Company shall default in the performance or observance of any material term, condition or covenant contained in this Agreement and such default shall continue for a period of 30 days after written notice thereof specifying such default and requesting that the same be remedied in such 30-day period (or 60 days after written notice of such breach if the Company takes steps to cure such breach within 30 days of the written notice). The Company is required to pay to the Manager the Termination Fee if the termination of this Agreement is made pursuant to this Section 13(b).
18
(c) The Manager may terminate this Agreement in the event Ajax or the Operating Partnership becomes regulated as an “investment company” under the Investment Company Act, with such termination deemed to have occurred immediately prior to such event. The Company shall pay to the Manager the Termination Fee in the event that this Agreement is terminated pursuant to this Section 13(c); provided that no Termination Fee will be payable in the event that the requirement that Ajax or the Operating Partnership be regulated as an “investment company” resulted from the failure of the Manager to invest or operate the assets of the Company in accordance with guidelines approved by the Board of Directors of Ajax.
14. Action Upon Termination. From and after the effective date of termination of this Agreement, pursuant to Sections 12 or 13 of this Agreement, the Manager shall not be entitled to compensation for further services under this Agreement, but shall be paid all compensation accruing to the date of termination and any applicable Termination Fee. Upon any termination of this Agreement for any reason, unless Ajax otherwise requests, the Manager shall use reasonable efforts to cooperate with the Company or any persons or entity designated by the Ajax Board of Directors to succeed the Manager as the manager of the Company (a “Successor Manager”) to accomplish an orderly transfer of the operation and management of the Company and its investment activities to such Successor Manager.
15. Confidentiality. The Manager shall keep confidential any and all non-public information, written or oral, obtained by it in connection with the services rendered hereunder (“Confidential Information”) and shall not disclose Confidential Information, in whole or in part, to any person other than to its affiliates and its and their respective members, stockholders, managers, partners, personnel, officers, directors, employees, consultants, agents, advisors and representatives who need to know such Confidential Information for the purpose of rendering services hereunder, except that the Manager may disclose Confidential Information: (a) to the Company, its subsidiaries and affiliates; (b) with the prior written consent of the Ajax Board of Directors; (c) to legal counsel, accountants and other professional advisors; (d) to appraisers, creditors, financing sources, trading counterparties, other counterparties, third-party service providers to the Company, and others (in each case, both those actually doing business with the Company and those with whom the Company seeks to do business) in the ordinary course of the Company’s business; (e) to governmental officials having jurisdiction over the Company; (f) in connection with any governmental or regulatory filings of the Company or disclosure or presentations to Company investors; or (g) as required by law or legal process to which the Manager or any person to whom disclosure is permitted hereunder is a party. If, failing the entry of a protective order or the receipt of a waiver hereunder, the Manager is required to disclose Confidential Information, the Manager may disclose without liability hereunder only that portion of such information that is legally required; provided, that the Manager agrees to exercise its commercially reasonable efforts to obtain reliable assurance that confidential treatment will be accorded such information. Notwithstanding anything herein to the contrary, each of the following shall be deemed to be excluded from this Section 15: any Confidential Information that (i) is or becomes available to the public from a source other than the Manager not resulting from the Manager’s violation of this Section 15, (ii) is released by the Company to the public or to persons who are not under similar obligations of confidentiality to the Company or (iii) is obtained by the Manager from a third party without, to the best of the Manager’s actual knowledge, breach by such third party of an obligation of confidence with respect to the Confidential Information disclosed. The Manager agrees to inform each of its officers, employees and agents of the nonpublic nature of the Confidential Information and to direct such persons to treat such Confidential Information in accordance with the terms hereof. The provisions of this Section 15 shall survive the expiration or earlier termination of this Agreement for a period of one year.
19
16. Taxes. Each party hereto shall be responsible for the cost of any sales, use, privilege and other transfer or similar taxes imposed upon that party as a result of the transactions contemplated hereby. Any amounts payable under this Agreement are exclusive of any goods and services taxes, value added taxes, sales taxes or similar taxes (“Sales Taxes”) now or hereinafter imposed on the performance or delivery of services, and an amount equal to such taxes so chargeable shall, subject to receipt of a valid receipt or invoice as required below in this Section 16, be paid by the Company to the Manager in addition to the amounts otherwise payable under this Agreement. In each case where an amount in respect of Sales Tax is payable by the Company in respect of a service provided by the Manager, the Manager shall furnish in a timely manner a valid Sales Tax receipt or invoice to the Company in the form and manner required by applicable law to allow the Company to recover such tax to the extent allowable under such law. Additionally, if the Manager is required to pay “gross-up” on withholding taxes with respect to provision of the services, such taxes shall be billed separately as provided above and shall be owing and payable by the Company. Any applicable property taxes resulting from provision of the services shall be payable by the party owing or leasing the asset subject to such tax.
17. Public Announcements. No party shall make, or cause to be made, any press release or public announcement or otherwise communicate with any news media in respect of this Agreement or the transactions contemplated by this Agreement without the prior written consent of the other parties unless otherwise required by law, in which case the party making the press release, public announcement or communication shall, to the extent reasonably practicable and permitted by law, give the other parties reasonable opportunity to review and comment thereon.
18. Intellectual Property. All intellectual property of the Manager used by the Manager in performing its obligations under this Agreement shall remain the property of the Manager. All intellectual property of the Company shall remain the property of the Company.
19. Binding Nature of Agreement; Assignment. This Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and permitted assigns. This Agreement shall not be assigned by the Company without the prior written consent of the Manager, except in the case of assignment by the Company to another REIT or other organization which is a successor (by merger, consolidation, purchase of assets, or other transaction) to the Company, in which case such successor organization shall be bound under this Agreement and by the terms of such assignment in the same manner as the Company is bound under this Agreement. This Agreement shall terminate automatically in the event of its assignment, in whole or in part, by the Manager, unless such assignment is consented to in writing by the Company with the approval of a majority of the Ajax Independent Directors. The Manager may, without the approval of the Ajax Independent Directors, (a) assign this Agreement to an affiliate of the Manager and (b) delegate to one or more of its affiliates the performance of any of its responsibilities hereunder so long as it remains liable for any such affiliate’s performance, in each case so long as assignment or delegation does not require the Company’s approval under the Investment Company Act (but if such approval is required, the Company shall not unreasonably withhold, condition or delay its consent). Nothing contained in this Agreement shall preclude any pledge, hypothecation or other transfer of any amounts payable to the Manager under this Agreement. Any purported assignment in violation of this Section 19 shall be void and shall constitute a material breach of this Agreement.
20
20. Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by facsimile), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered against receipt or upon actual receipt of (a) personal delivery, (b) delivery by reputable overnight courier, (c) delivery by electronic mail (if no notice of error or non-delivery is generated) or (d) delivery by registered or certified mail, postage prepaid, return receipt requested, addressed as set forth below (or to such other address as may be hereafter notified by the respective parties hereto in accordance with this Section 20):
The Company:
Great Ajax Corp.
13190 SW 68th Parkway
Suite 110
Tigard, OR 97223
Attention: Lawrence Mendelsohn
Email: Larry@aspencapital.com
with a copy to:
Mayer Brown LLP
1221 Avenue of the Americas
New York, New York 10020
Attention: Anna T. Pinedo
E-mail: apinedo@mayerbrown.com
The Manager:
RCM GA Manager LLC
c/o Rithm Capital Corp.
799 Broadway
New York, New York 10003
Attention: Philip Sivin
Email: psivin@rithmcap.com
with a copy to:
Sidley Austin LLP
2021 McKinney Avenue, Suite 2000
Dallas, Texas 75201
Attention: William D. Howell; Courtney J. Gilberg
Email: bhowell@sidley.com; cgilberg@sidley.com
21
21. Business Day. For the purposes of this Agreement, “Business Day” means any day other than (i) a Saturday or a Sunday, or (ii) a day on which the New York Stock Exchange or Board of Governors of the Federal Reserve is closed.
22. Force Majeure. Neither party hereto shall be in default of this Agreement by reason of its delay in the performance of, or failure to perform, any of its obligations hereunder if such delay or failure is caused by strikes, acts of God, acts of the public enemy, acts of terrorism, riots or other events that arise from circumstances beyond the reasonable control of that party. During the pendency of such intervening event, each of the parties hereto shall take all reasonable steps to fulfill its obligations hereunder by other means and, in any event, shall upon termination of such intervening event, promptly resume its obligations under this Agreement.
23. Waivers; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of a party hereto, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. No term or provision of this Agreement may be amended, waived or modified unless such waiver or modification is in writing and signed by the party against whom such amendment, waiver or modification is sought to be enforced.
24. Amendments. This Agreement may not be amended, supplemented or modified except by mutual written consent of the parties.
25. Entire Agreement; Governing Law; Jurisdiction; Jury Trial Waiver. This Agreement (together with all agreements, documents and instruments referenced herein) contains the entire agreement of the parties and supersedes all prior agreements, understandings and arrangements with respect to the subject matter hereof, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. This Agreement and the rights and obligations of the parties hereunder shall be governed by and construed in accordance with the laws of the state of New York without regard to any conflicts of law provisions. The parties agree that the courts of the State of New York and the United States District Court for any district within such state shall have exclusive jurisdiction for any litigation, action or judgment relating to this Agreement, any of the transactions contemplated hereby or the rights and obligations of the parties hereunder. Each of the parties to this Agreement ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY waives TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW all right to trial by jury in any action, proceeding or counterclaim (whether based upon contract, tort or otherwise) related to or arising out of this Agreement OR THE TRANSACTIONS CONTEMPLATED HEREBY.
22
26. Counterparts. This Agreement may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument.
27. Section Headings. The section and subsection headings in this Agreement are for convenience in reference only and shall not be deemed to alter or affect the interpretation of any provisions hereof.
28. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
29. Construction. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section references are to this Agreement unless otherwise specified. The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. The words include, includes and including shall be deemed to be followed by the phrase “without limitation.”
[Signature Page Follows]
23
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above by their duly authorized representatives.
| GREAT AJAX CORP. | ||
| By: | ||
| Name: | Lawrence Mendelsohn | |
| Title: | Chief Executive Officer | |
| GREAT AJAX OPERATING PARTNERSHIP, LP | ||
| Great Ajax Operating LLC, | ||
| general partner | ||
| By: Great Ajax Corp., | ||
| managing member | ||
| By: | ||
| Name: | Lawrence Mendelsohn | |
| Title: | Chief Executive Officer | |
| RCM GA MANAGER LLC | ||
| By: | ||
| Name: | ||
| Title: | ||
[SIGNATURE PAGE TO
MANAGEMENT AGREEMENT]
Schedule I
SERVICES
FINANCE AND ACCOUNTING Services Provided:
| ¨ | Corporate Accounting |
| ¨ | Accounting Services and Reporting |
| ¨ | Accounts Payables |
| ¨ | Accounts Receivables |
| ¨ | Corporate Secretary Support |
| ¨ | Financial Reporting |
| ¨ | Payroll Services |
| ¨ | Tax (including REIT qualification and compliance) |
| ¨ | Treasury |
| ¨ | Internal Audit |
HUMAN RESOURCES Services Provided:
| ¨ | Benefits Administration |
| ¨ | Employee and Contractor On-boarding |
| ¨ | Employee Engagement |
| ¨ | HR Administration |
| ¨ | HR Strategy and Consulting |
| ¨ | HRIS Administration and Reporting |
| ¨ | Performance Management Platforms |
| ¨ | Personnel Files |
| ¨ | Recruiting |
| ¨ | Salary Administration |
| ¨ | Training and Compliance Support |
Schedule I - 1
LEGAL Services Provided:
| ¨ | Contract Review Services |
| ¨ | Corporate Governance Services |
| ¨ | Intellectual Property Maintenance Services |
| ¨ | License Maintenance Services |
| ¨ | Litigation Management |
| ¨ | Regulatory Compliance Services |
INVESTMENT COMPANY EXEMPTION Services Provided:
| ¨ | Maintaining compliance with exclusion and exemption from regulation as an investment company under the Investment Company Act of 1940, as amended, applicable to the Company |
Services Provided When and if Needed:
| ¨ | SOX Compliance and SAS 70 |
| ¨ | Business Continuity and Disaster Recovery Planning |
| ¨ | Information Security |
| ¨ | Loan Quality |
| ¨ | Quality Assurance |
| ¨ | Risk Management |
CORPORATE SERVICES Services Provided:
| ¨ | Facilities Management |
| ¨ | Mailroom Support |
| ¨ | Physical Security |
| ¨ | Travel Services |
VENDOR MANAGEMENT OPERATIONS Services Provided:
| ¨ | Contract Negotiation |
| ¨ | Vendor Compliance |
| ¨ | Vendor Management Services |
| ¨ | Insurance Risk Management |
Schedule I - 2
OTHER OPERATIONS SUPPORT
| ¨ | Capital Markets |
| ¨ | Modeling |
| ¨ | Quantitative Analytics |
| ¨ | General Business Consulting |
Schedule I - 3
Appendix I
[To come.]
Appendix I - 1
Exhibit 10.4
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of [ ], 2024 (this “Agreement”), between Great Ajax Corp., a Maryland corporation (the “Company”), and Equiniti Trust Company, a limited trust company organized under the laws of the State of New York (the “Warrant Agent” or “Equiniti”).
WHEREAS, pursuant to the Securities Purchase Agreement by and among the Company, Thetis Asset Management LLC and Rithm Capital Corp., dated February 26, 2024 (the “Securities Purchase Agreement”), the Company wishes to issue warrants (the “Warrants”) in book-entry form entitling the holder of the Warrants (the “Holder,” which term shall include Holder’s transferees, successors and assigns and “Holder” shall include, if the Warrants are held in “street name,” a Participant (as defined below) or a designee appointed by such Participant) to purchase an aggregate of up to [●]1 shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), underlying the Warrants (“Warrant Shares”);
WHEREAS, the Company wishes the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing so to act, in connection with the issuance, registration, transfer, exchange, exercise and replacement of the Warrants and, in the Warrant Agent’s capacity as the Company’s transfer agent, the delivery of the Warrant Shares (as defined below).
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated:
| (a) | “Affiliate” has the meaning ascribed to it in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). |
| (b) | “Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which the New York Stock Exchange is authorized or required by law or other governmental action to close. |
| (c) | “Close of Business” on any given date means 5:00 p.m., Eastern time, on such date; provided, however, that if such date is not a Business Day it means 5:00 p.m., Eastern time, on the next succeeding Business Day. |
| (d) | “Person” means an individual, corporation, association, partnership, limited liability company, joint venture, trust, unincorporated organization, government or political subdivision thereof or governmental agency or other entity. |
| (e) | “Warrant Certificate” means a certificate in substantially the form attached as Exhibit A hereto, representing such number of Warrant Shares (as defined below) as is indicated therein, provided that any reference to the delivery of a Warrant Certificate in this Agreement shall include delivery of notice from the Depository or a Participant (each as defined below) of the transfer or exercise of Warrant in the form of a Book-Entry Warrant (as defined below). |
1 Note to Draft: Number of Warrants to be (a) the Rithm Warrant Notional Amount (as defined in the Credit Agreement, dated as of February 26, 2024, by and among the Company and the Lenders, Administrative Agent and Collateral Agent identified therein), divided by (b) the price to be equal to a 10% premium above the trailing five-day weighted-average price of the Common Stock on the New York Stock Exchange, as of the effective date of the Securities Purchase Agreement.
All other capitalized terms used but not otherwise defined herein shall have the meaning ascribed to such terms in the Warrant Certificate.
Section 2. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company in accordance with the express terms or conditions hereof (and no implied terms and conditions), and the Warrant Agent hereby accepts such appointment.
Section 3. Book-Entry Warrants.
(a) The Warrants shall be issued as of the date of issuance in book-entry form in the name of each holder and in such amounts as instructed by the Company in writing (which may be by e-mail) (the “Book-Entry Warrants” and each, a “Book-Entry Warrant”). Ownership of beneficial interests in the Warrants shall be shown on, and the transfer of such ownership shall be effected through, records maintained by the Warrant Agent.
(b) A Holder has the right to elect, at any time or from time to time, a Warrant Exchange (as defined below) pursuant to a Warrant Certificate Request Notice (as defined below). Upon written notice by a Holder to the Warrant Agent for the exchange of some or all of such Holder’s Book-Entry Warrants for a Warrant Certificate, evidencing the same number of Warrants, which request shall be in the form attached hereto as Annex A (a “Warrant Certificate Request Notice” and the date of delivery of such Warrant Certificate Request Notice by the Holder, the “Warrant Certificate Request Notice Date” and the deemed surrender upon delivery by the Holder of a number of Book-Entry Warrants for the same number of Warrants evidenced by a Warrant Certificate, a “Warrant Exchange”), the Warrant Agent shall promptly effect the Warrant Exchange and shall promptly issue and deliver to the Holder a Warrant Certificate for such number of Warrants in the name set forth in the Warrant Certificate Request Notice. Such Warrant Certificate shall be dated the original issue date of the Warrants, shall be executed by manual signature by an authorized signatory of the Company, shall be in the form attached hereto as Exhibit A. In connection with a Warrant Exchange, the Company agrees to deliver, or to direct the Warrant Agent to deliver, the Warrant Certificate to the Holder within three (3) Business Days of the Warrant Certificate Request Notice pursuant to the delivery instructions in the Warrant Certificate Request Notice (“Warrant Certificate Delivery Date”). The Company covenants and agrees that, upon the date of delivery of the Warrant Certificate Request Notice, the Holder shall be deemed to be the holder of the Warrant Certificate. Notwithstanding anything to the contrary set forth herein, the Warrants shall be subject to all of the terms and conditions of this Agreement and the Warrant Certificate (regardless of whether a Holder has elected a Warrant Exchange); provided, that in the event of any conflict between this Agreement and the Warrant Certificate, this Agreement shall control.
Section 4. Form of Warrant Certificates. The Warrant Certificates, together with the form of election to purchase Common Stock (“Exercise Notice”) and the form of assignment attached thereto, shall be in the form of Exhibit A hereto.
Section 5. Countersignature and Registration. The Warrant Certificates shall be executed on behalf of the Company by its Chief Executive Officer or Chief Financial Officer, either electronically or by facsimile signature. The Warrant Certificates may be countersigned by the Warrant Agent, either manually or by facsimile signature. In case any officer of the Company who shall have signed any of the Warrant Certificates shall cease to be such officer of the Company before issuance and delivery by the Company, such Warrant Certificates, nevertheless, may be issued and delivered with the same force and effect as though the person who signed such Warrant Certificate had not ceased to be such officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Warrant Certificate, shall be a proper officer of the Company to sign such Warrant Certificate, although at the date of the execution of this Agreement any such person was not such an officer.
The Warrant Agent will keep or cause to be kept, at its office designated for such purposes, books for registration and transfer of the Warrant Certificates issued hereunder. Such books shall show the names and addresses of the respective Holder of the Warrant Certificates, the number of warrants evidenced on the face of each of such Warrant Certificate and the date of each of such Warrant Certificate. The Warrant Agent will create a special account for the issuance of Warrant Certificates.
2
Section 6. Transfer, Split Up, Combination and Exchange of Warrant Certificates; Mutilated, Destroyed, Lost or Stolen Warrant Certificates. Subject to the provisions of the Warrant Certificate and the last sentence of this first paragraph of Section 6, and subject to applicable law, rules or regulations, or any “stop transfer” instructions the Company may give to the Warrant Agent, at any time after the original issuance dates of the Warrants, and at or prior to the Close of Business on the Expiration Date, any Warrant Certificate or Warrant Certificates or Book-Entry Warrant or Book-Entry Warrants may be transferred, split up, combined or exchanged for another Warrant Certificate or Warrant Certificates or Book-Entry Warrant or Book-Entry Warrants, entitling the Holder to purchase a like number of shares of Common Stock as the Warrant Certificate or Warrant Certificates or Book-Entry Warrant or Book-Entry Warrants covered by the applicable request of such Holder then entitled such Holder to purchase. Any Holder desiring to transfer, split up, combine or exchange any Warrant Certificate or Book-Entry Warrant shall make such request in writing delivered to the Warrant Agent, and shall surrender the Warrant Certificate or Warrant Certificates, together with the required form of assignment and certificate duly executed and properly completed and such other documentation as the Warrant Agent may reasonably request, to be transferred, split up, combined or exchanged at the office of the Warrant Agent designated for such purpose, provided that no such surrender is applicable to the Holder of a Book-Entry Warrant. Any requested transfer of Warrants, whether in book-entry form or certificate form, shall be accompanied by evidence of authority of the party making such request that may be reasonably required by the Warrant Agent. Thereupon the Warrant Agent shall, other than with respect to any Book-Entry Warrant, subject to the last sentence of this first paragraph of Section 6, deliver to the Person entitled thereto a Warrant Certificate or Warrant Certificates, as the case may be, as so requested. The Company may require payment from the Holder of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Warrant Certificates. The Warrant Agent shall not have any duty or obligation to take any action under any section of this Agreement that requires the payment of taxes and/or charges unless and until it is satisfied that all such payments have been made.
Upon receipt by the Warrant Agent of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of a Warrant Certificate, which evidence shall include an affidavit of loss, or in the case of mutilated certificates, the certificate or portion thereof remaining, and, in case of loss, theft or destruction, of indemnity or security reasonably acceptable to the Company and the Warrant Agent and reimbursement to the Company and the Warrant Agent of all reasonable expenses incidental thereto, and upon surrender to the Warrant Agent and cancellation of the Warrant Certificate if mutilated, the Company or the Warrant Agent will make and deliver a new Warrant Certificate of like tenor to the Warrant Agent for delivery to the Holder in lieu of the Warrant Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Warrants; Exercise Price; Expiration Date.
(a) The Warrants shall be exercisable commencing on the initial exercise date set forth in the Warrant Certificate. The Warrants shall cease to be exercisable and shall terminate and become void, and all rights thereunder and under this Agreement shall cease, at or prior to the Close of Business on the Expiration Date. Subject to the foregoing and to Sections 7(b) and 7(f) below, the Holder may exercise the Warrants in whole or in part upon (i) surrender of the Warrant Certificate, if applicable, and (ii) delivery of the properly completed and duly executed Exercise Notice and, except in the case of a Net Exercise, payment of the Exercise Price, which may be made, at the option of the Holder, by wire transfer or by certified or official bank check in U.S. dollars, to the Warrant Agent at the office of the Warrant Agent designated for such purposes. The Exercise Notice for a Net Exercise shall be delivered to the Company. The Company acknowledges that the bank accounts maintained by the Warrant Agent in connection with the services provided under this Agreement will be in the Company’s name and that the Warrant Agent may receive investment earnings in connection with the investment at Warrant Agent risk and for its benefit of funds held in those accounts from time to time. Neither the Company nor the Holder will receive interest on any deposits or Exercise Price. No ink-original Exercise Notice shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Exercise Notice be required.
3
(b) An Exercise Notice for a Net Exercise shall be delivered by the Company to the Warrant Agent along with the number of Warrant Shares issuable in connection with such Net Exercise. The Warrant Agent shall have no obligation under this Agreement to calculate, the number of Warrant Shares issuable in connection with a Net Exercise, nor shall the Warrant agent have any duty or obligation to investigate or confirm whether the Company’s determination of the number of Warrant Shares issuable upon such exercise, pursuant to this Section 7, is accurate or correct.
(c) Upon the Warrant Agent’s receipt of a Warrant Certificate, if applicable, at or prior to the Close of Business on the Expiration Date set forth in such Warrant Certificate with the executed Exercise Notice and payment of the Exercise Price for the Warrant Shares to be purchased (other than in the case of a Net Exercise) and an amount equal to any applicable tax, or governmental charge referred to in Section 6 by wire transfer, or by certified check or bank draft payable to the order of the Warrant Agent, the Warrant Agent shall cause the Warrant Shares underlying such Warrant Certificate or Book-Entry Warrant to be delivered to or upon the order of the Holder of such Warrant Certificate or Book-Entry Warrant registered in such name or names as may be designated by such Holder, no later than the Warrant Share Delivery Date or Share Delivery Date. If the Company is then a participant in the DWAC system of the Depository Trust Company (the “Depository”) and there is either (i) an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (ii) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, then the Warrant Shares shall be transmitted by the Warrant Agent to the Holder by crediting the account of the Holder’s broker with the Depository through its DWAC system. Notwithstanding anything else to the contrary in this Agreement, except in the case of a Net Exercise, if any Holder fails to duly deliver payment to the Warrant Agent of an amount equal to the aggregate Exercise Price of the Warrant Shares to be purchased upon exercise of such Holder’s Warrant as set forth in Section 7(a) hereof by the Warrant Share Delivery Date, the Warrant Agent will not obligated to deliver such Warrant Shares (via DWAC or otherwise) until following receipt of such payment, and the applicable Warrant Share Delivery Date shall be deemed extended by one day for each day (or part thereof) until such payment is delivered to the Warrant Agent. With respect to the exercise of any Book-Entry Warrants, the Warrant Agent shall, as promptly as practicable following any exercise, execute and deliver a written confirmation evidencing the book-entry registration of the Warrant Shares in the Holder’s name, and if the Book-Entry Warrants shall not have been exercised in full, a new book-entry position for the number of Warrants Shares as to which the Book-Entry Warrants shall not have been exercised.
(d) The Warrant Agent shall deposit all funds received by it in payment of the Exercise Price for all Warrants in the account of the Company maintained with the Warrant Agent for such purpose (or to such other account as directed by the Company in writing) and shall advise the Company via email at the end of each day on which Exercise Notices are received or funds for the exercise of any Warrant are received of the amount so deposited to its account.
4
(e) In case the Holder shall exercise fewer than all Warrants evidenced by any Warrant Certificate (if applicable), upon the request of the Holder, a new Warrant Certificate evidencing the number of Warrants equivalent to the number of Warrants remaining unexercised may be issued by the Warrant Agent to such or to its duly authorized assigns in accordance with Section 11 of the Warrant Certificate, subject to the provisions of Section 6 hereof.
(f) The Holder may not exercise the Warrants in whole or in part prior to the earlier of (i) the date of effectiveness of the Resale Registration Statement (as such term is defined in the Securities Purchase Agreement) and (ii) [●]2, 2024.
(g) To the extent the Warrant Agent requires the Company to provide the Warrant Agent any instruction, confirmation or information prior to effecting any request of the Holder pursuant to this Agreement, including, for the avoidance of doubt, in order to effect the issuance of any Warrant, effect the exercise of any Warrant or provide ownership or other information with respect to any Warrant, the Company shall promptly provide such instruction, confirmation or information to the Warrant Agent.
Section 8. Cancellation and Destruction of Warrant Certificates. All Warrant Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the Warrant Agent for cancellation or in canceled form, or, if surrendered to the Warrant Agent, shall be canceled by it, and no Warrant Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the Warrant Agent for cancellation and retirement, and the Warrant Agent shall so cancel and retire, any other Warrant Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Warrant Agent shall deliver all canceled Warrant Certificates to the Company, or shall, at the written request of the Company, destroy such canceled Warrant Certificates, and in such case shall deliver a certificate of destruction thereof to the Company, subject to any applicable law, rule or regulation requiring the Warrant Agent to retain such canceled Certificates.
Section 9. Certain Covenants; Reservation and Availability of Shares of Common Stock or Cash.
(a) The Company covenants and agrees that it will cause to be reserved and kept available out of its authorized and unissued shares of Common Stock or its authorized and issued shares of Common Stock held in its treasury, free from preemptive rights, the number of shares of Common Stock that will be sufficient to permit the exercise in full of all outstanding Warrants.
(b) The Warrant Agent will create a special account for the issuance of Common Stock upon the exercise of Warrants.
(c) The Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect of the original issuance or delivery of the Warrant Certificates or certificates evidencing Common Stock upon exercise of the Warrants. The Company shall not, however, be required to pay any tax or governmental charge which may be payable in respect of any transfer involved in the transfer or delivery of Warrant Certificates or the issuance or delivery of certificates for Common Stock in a name other than that of the Holder of the Warrant Certificate evidencing Warrants surrendered for exercise or to issue or deliver any certificate for shares of Common Stock upon the exercise of any Warrants until any such tax or governmental charge shall have been paid (any such tax or governmental charge being payable by the Holder of such Warrant Certificate at the time of surrender) or until it has been established to the Company’s reasonable satisfaction that no such tax or governmental charge is due.
2 Note to Draft: The date that is six months from the Date of Issuance of the Warrants.
5
Section 10. Common Stock Record Date. Each Person in whose name any certificate for shares of Common Stock is issued upon the exercise of Warrants shall for all purposes be deemed to have become the holder of record for the Common Stock represented thereby on, and such certificate shall be dated, the date on which submission of the Exercise Notice was made, provided that any Warrant Certificate evidencing such Warrant was duly surrendered (if applicable) and, except in the case of a Net Exercise, payment of the Exercise Price (and any applicable transfer taxes) was received on or prior to the Warrant Share Delivery Date; provided, further, however, that, if the date of submission of the Exercise Notice is a date upon which the Common Stock transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such shares on, and such certificate shall be dated, the next succeeding day on which the Common Stock transfer books of the Company are open.
Section 11. Adjustment of Exercise Price, Number of Shares of Common Stock or Number of the Company Warrants. The Exercise Price, the number of shares of Common Stock covered by each Warrant and the number of Warrants outstanding are subject to adjustment from time to time as provided in Section 2 of the Warrant Certificate.
Section 12. Fractional Shares of Common Stock.
(a) The Company shall not issue fractions of Warrants or distribute Warrant Certificates which evidence fractional Warrants. Whenever any fractional Warrant would otherwise be required to be issued or distributed, the actual issuance or distribution shall reflect a rounding of such fraction to the nearest whole Warrant (rounded down).
(b) The Company shall not issue fractions of shares of Common Stock upon exercise of Warrants or distribute stock certificates which evidence fractional shares of Common Stock. Whenever any fraction of a share of Common Stock would otherwise be required to be issued or distributed, the actual issuance or distribution in respect thereof shall be made in accordance with Section 3 of the Warrant Certificate.
Section 13. Concerning the Warrant Agent.
(a) The Company covenants and agrees to indemnify and to hold the Warrant Agent harmless against any costs, expenses (including reasonable fees and expenses of its legal counsel), losses or damages, which may be paid, incurred or suffered by or to which it may become subject, arising from or out of, directly or indirectly, any claims or liability resulting from its actions or omissions as Warrant Agent pursuant hereto; provided, that such covenant and agreement does not extend to, and the Warrant Agent shall not be indemnified with respect to, such costs, expenses, losses and damages incurred or suffered by the Warrant Agent as a result of, or arising out of, its fraud, gross negligence, bad faith, or willful misconduct (each as determined by a final non-appealable court of competent jurisdiction). The costs and reasonable expenses incurred by the Warrant Agent in enforcing this right of indemnification shall be paid by the Company.
(b) Upon the assertion of a claim for which the Company may be required to indemnify the Warrant Agent, the Warrant Agent shall promptly notify the Company of such assertion, and shall keep the other party reasonably advised with respect to material developments concerning such claim. However, failure to give such notice shall not affect the Warrant Agent’s right to and the Company’s obligations for indemnification hereunder, except to the extent the Company is actually prejudiced thereby.
6
(c) Neither party to this Agreement shall be liable to the other party for any consequential, indirect, punitive, special or incidental damages under any provisions of this Agreement or for any consequential, indirect, punitive, special or incidental damages arising out of any act or failure to act hereunder even if that party has been advised of or has foreseen the possibility of such damages.
(d) Notwithstanding anything contained herein to the contrary, the rights and obligations of the parties set forth in this Section 13 shall survive termination of this Agreement, the expiration of the Warrants or the resignation, removal or replacement of the Warrant Agent.
Section 14. Purchase or Consolidation or Change of Name of Warrant Agent. Any Person into which the Warrant Agent or any successor Warrant Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Warrant Agent or any successor Warrant Agent shall be party, or any Person succeeding to the stock transfer or other shareholder services business of the Warrant Agent or any successor Warrant Agent, shall be the successor to the Warrant Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such Person would be eligible for appointment as a successor Warrant Agent under the provisions of Section 16. In case at the time such successor Warrant Agent shall succeed to the agency created by this Agreement any of the Warrant Certificates shall have been countersigned but not delivered, any such successor Warrant Agent may adopt the countersignature of the predecessor Warrant Agent and deliver such Warrant Certificates so countersigned; and in case at that time any of the Warrant Certificates shall not have been countersigned, any successor Warrant Agent may countersign such Warrant Certificates either in the name of the predecessor Warrant Agent or in the name of the successor Warrant Agent; and in all such cases such Warrant Certificates shall have the full force provided in the Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and at such time any of the Warrant Certificates shall have been countersigned but not delivered, the Warrant Agent may adopt the countersignature under its prior name and deliver Warrant Certificates so countersigned; and in case at that time any of the Warrant Certificates shall not have been countersigned, the Warrant Agent may countersign such Warrant Certificates either in its prior name or in its changed name; and in all such cases such Warrant Certificates shall have the full force provided in the Warrant Certificates and in this Agreement.
Section 15. Duties of Warrant Agent. The Warrant Agent undertakes the duties and obligations imposed by this Agreement upon the following express terms and conditions (and no implied terms and conditions), by all of which the Company, by its acceptance hereof, shall be bound and shall not assume any obligations or relationship of agency or trust with the Holder or any other Person:
(a) The Warrant Agent may consult with legal counsel selected by it (who may be legal counsel for the Company).
(b) Whenever in the performance of its duties under this Agreement the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the Chief Executive Officer, Chief Financial Officer or any Vice President of the Company; and such certificate shall be full authorization and protection to the Warrant Agent and the Warrant Agent shall incur no liability for or in respect of any action taken, suffered or omitted to be taken by it under the provisions of this Agreement in reliance upon such certificate.
(c) Subject to the limitations set forth in Section 13, the Warrant Agent shall be liable hereunder only for its own fraud, gross negligence, bad faith or willful misconduct, or for a breach by it of this Agreement.
7
(d) The Warrant Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Warrant Certificates (except its countersignature thereof) by the Company or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only.
(e) The Warrant Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Warrant Agent) or in respect of the validity or execution of any Warrant Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant Certificate; nor shall it be responsible for the adjustment of the Exercise Price or the making of any change in the number of shares of Common Stock required under the provisions of Section 11 or 12 or responsible for the manner, method or amount of any such change or adjustment or the ascertaining of the existence of facts that would require any such adjustment or change (except with respect to the exercise of Warrants evidenced by Warrant Certificates after actual notice of any adjustment of the Exercise Price); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Warrant Certificate or as to whether any shares of Common Stock will, when issued, be duly authorized, validly issued, fully paid and nonassessable.
(f) The Warrant Agent is hereby authorized to accept instructions with respect to the performance of its duties hereunder from the Chief Executive Officer, Chief Financial Officer or any Vice President of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable and shall be indemnified and held harmless for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer, provided the Warrant Agent carries out such instructions without fraud, gross negligence, bad faith or willful misconduct.
(g) The Warrant Agent and any shareholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities of the Company (subject to federal securities laws) or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other Person.
(h) The Warrant Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorney or agents, and the Warrant Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorney or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, provided reasonable care was exercised in the selection and continued employment thereof
(i) The Warrant Agent shall not be obligated to expend or risk its own funds or to take any action that it believes would expose or subject it to expense or liability or to a risk of incurring expense or liability, unless it has been furnished with assurances of repayment or indemnity satisfactory to it.
(j) The Warrant Agent shall not be liable or responsible for any failure of the Company to comply with any of its obligations relating to any registration statement filed with the Securities and Exchange Commission or this Agreement, including without limitation obligations under applicable regulation or law.
(k) The Warrant Agent may rely on and be fully authorized and protected in acting or failing to act upon (a) any guaranty of signature by an “eligible guarantor institution” that is a member or participant in the Securities Transfer Agents Medallion Program or other comparable “signature guarantee program” or insurance program in addition to, or in substitution for, the foregoing; or (b) any law, act, regulation or any interpretation of the same even though such law, act, or regulation may thereafter have been altered, changed, amended or repealed.
8
(l) In the event the Warrant Agent believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction, request or other communication, paper or document received by the Warrant Agent hereunder and the Warrant Agent immediately notifies the Company of such ambiguity or uncertainty, the Warrant Agent, may, in its sole discretion, refrain from taking any action, and shall be fully protected and shall not be liable in any way to Company, the Holder or any other Person for refraining from taking such action, unless the Warrant Agent receives written instructions signed by the Company which eliminates such ambiguity or uncertainty to the satisfaction of Warrant Agent.
This Section 15 shall survive the expiration of the Warrants, the termination of this Agreement and the resignation, replacement or removal of the Warrant Agent.
Section 16. Change of Warrant Agent. The Warrant Agent may resign and be discharged from its duties under this Agreement upon sixty (60) days’ notice in writing sent to the Company and to each transfer agent of the Common Stock, and to the Holder. The Company may remove the Warrant Agent or any successor Warrant Agent upon notice in writing, sent to the Warrant Agent or successor Warrant Agent, as the case may be, and, in the event that the Warrant Agent or one of its affiliates is not also the transfer agent for the Company, to each transfer agent of the Common Stock, and to the Holder. If the Warrant Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Warrant Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Warrant Agent or by the Holder, then the Holder may apply to any court of competent jurisdiction for the appointment of a new Warrant Agent, provided that, for purposes of this Agreement, the Company shall be deemed to be the Warrant Agent until a new warrant agent is appointed. Any successor Warrant Agent, whether appointed by the Company or by such a court, shall be a Person, other than a natural person, organized and doing business under the laws of the United States or of a state thereof, in good standing, which is authorized under such laws to exercise stock transfer powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Warrant Agent a combined capital and surplus of at least $50,000,000. After appointment, the successor Warrant Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Warrant Agent without further act or deed, but the predecessor Warrant Agent shall deliver and transfer to the successor Warrant Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose, but such predecessor Warrant Agent shall not be required to make any additional expenditure (without prompt reimbursement by the Company) or assume any additional liability in connection with the foregoing. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Warrant Agent and, in the event that the Warrant Agent or one of its affiliates is not also the transfer agent for the Company, to each transfer agent of the Common Stock, and mail a notice thereof in writing to the Holder. However, failure to give any notice provided for in this Section 16, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Warrant Agent or the appointment of the successor Warrant Agent, as the case may be.
Section 17. Issuance of New Warrant Certificates. Notwithstanding any of the provisions of this Agreement or of the Warrants to the contrary, the Company may, at its option, issue new Warrant Certificates evidencing Warrants in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Exercise Price per share and the number or kind or class of shares of stock or other securities or property purchasable under the several Warrant Certificates made in accordance with the provisions of this Agreement.
9
Section 18. Notices. Notices or demands authorized by this Agreement to be given or made (i) by the Warrant Agent or by the Holder to or on the Company, (ii) by the Company or by the Holder to or on the Warrant Agent or (iii) by the Company or the Warrant Agent to the Holder, shall be deemed given when in writing (a) on the date delivered, if delivered personally, (b) on the first Business Day following the deposit thereof with Federal Express or another recognized overnight courier, if sent by Federal Express or another recognized overnight courier, (c) on the fourth Business Day following the mailing thereof with postage prepaid, if mailed by registered or certified mail (return receipt requested), and (d) the date of transmission, if such notice or communication is delivered via facsimile or e-mail attachment at or prior to 5:30 p.m. (Eastern time) on a Business Day and (e) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile or e-mail attachment on a day that is not a Business Day or later than 5:30 p.m. (Eastern time) on any Business Day, in each case to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
| (a) | If to the Company, to: |
Great Ajax Corp.
13190 SW 68th Parkway
Suite 110
Tigard, OR 97223
Attention: Lawrence Mendelsohn
Email: Larry@aspencapital.com
With a copy to:
Mayer Brown LLP
1221 Avenue of the Americas
Attention: Anna T. Pinedo
E-mail: apinedo@mayerbrown.com
| (b) | If to the Warrant Agent, to: |
Equiniti Trust Company, LLC
48 Wall Street, 22nd Floor
New York, NY 10005
Attention: Reorg Department
Email: ReorgWarrants@equiniti.com
With a copy to:
Equiniti Trust Company, LLC
48 Wall Street, 22nd Floor
New York, NY 10005
Attention: Legal Department
Email: legalteamUS@equiniti.com
(c) If to the Holder, to the address of such Holder as shown on the registry books of the Company. Any notice required to be delivered by the Company to the Holder may be given by the Warrant Agent on behalf of the Company. Notwithstanding any other provision of this Agreement, where this Agreement provides for notice of any event to a Holder, such notice shall be sufficiently given if given to the Depository (or its designee) pursuant to the procedures of the Depository or its designee.
10
Section 19. Supplements and Amendments. The Company and the Warrant Agent may not supplement or amend this Agreement without the approval of the Holder.
Section 20. Further Assurances. Each party hereto agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the other party hereto for the carrying out or performing by any party of the provisions of this Agreement.
Section 21. Successors. All covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective successors and permitted assigns hereunder.
Section 22. Benefits of this Agreement. Nothing in this Agreement or the Warrant Certificate shall be construed to give any Person other than the Company, the Holder and the Warrant Agent any legal or equitable right, remedy or claim under this Agreement or the Warrant Certificate; but this Agreement and the Warrant Certificate shall be for the sole and exclusive benefit of the Company, the Warrant Agent and the Holder.
Section 23. Governing Law; Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without giving effect to the conflicts of law principles thereof. The Company hereby agrees that any action, proceeding or claim against it arising out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Section 24. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 24.
Section 25. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. A signature to this Agreement transmitted electronically shall have the same authority, effect and enforceability as an original signature.
Section 26. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Agreement and the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.
11
Section 27. Force Majeure. Notwithstanding anything to the contrary contained herein, the Warrant Agent will not be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war, or civil unrest, it being understood that the Warrant Agent shall use reasonable best efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.
Section 28. Entire Agreement. The parties hereto acknowledge that there are no agreements or understandings, written or oral, between them with respect to matters contemplated hereunder other than as set forth herein and the Warrant Certificates, and that this Agreement and the Warrant Certificates contain the entire agreement between them with respect to the subject matter hereof and thereof.
Section 29. Fees; Expenses.
As consideration for the services provided by Equiniti (the “Services”), the Company shall pay to Equiniti the fees set forth on Schedule 1 hereto (the “Fees”). If the Company requests that Equiniti provide additional services not contemplated hereby, the Company shall pay to Equiniti fees for such services at Equiniti’s reasonable and customary rates, such fees to be governed by the terms of a separate agreement to be mutually agreed to and entered into by the parties hereto at such time (the “Additional Service Fee”; together with the Fees, the “Service Fees”).
(a) The Company shall reimburse Equiniti for all reasonable and documented expenses incurred by Equiniti (including, without limitation, reasonable and documented fees and disbursements of counsel) in connection with the Services (the “Expenses”); provided, however, that Equiniti reserves the right to request advance payment for any out-of-pocket expenses. The Company agrees to pay all Service Fees and Expenses within thirty (30) days following receipt of an invoice from Equiniti. Equiniti may adjust the Service Fees by up to the annual percentage of change in the latest Consumer Price Index of All Urban Consumers United States City Average, as published by the U.S. Department of Labor, Bureau of Labor Statistics, plus three percent (3%). Further, Equiniti may adjust the Service Fees to reflect cost increases due to (i) changes mandated by legal or regulatory requirements, or (ii) additional services requested by the Company that are not ordinarily provided by Equiniti to its customers generally without charging fees.
(b) Upon termination of this Agreement for any reason, Equiniti shall assist the Company with the transfer of records of the Company held by Equiniti. Equiniti shall be entitled to reasonable additional compensation as may be agreed with the Company and reimbursement of any Expenses for the preparation and delivery of such records to the successor agent or to the Company, and for maintaining records and/or Stock Certificates that are received after the termination of this Agreement.
12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.
| GREAT AJAX CORP. | |||
| By: | |||
| Name: | Lawrence Mendelsohn | ||
| Title: | Chief Executive Officer | ||
| EQUINITI TRUST COMPANY | |||
| By: | |||
| Name: | |||
| Title: | |||
13
Schedule 1
Fees
| Acceptance Fee | $3,000.00 |
| Monthly Administration Fee for Warrants –per database | $450.00 |
| Per Exercise of Warrants | $50.00 |
SPECIAL SERVICES
Services not included herein (including, without limitation, trustee and custodial services, exchange/tender offer services and stock dividend disbursement services) but requested by the Company may be subject to additional charges.
Out-of-pocket Expenses
All customary out-of-pocket expenses will be billed in addition to the foregoing fees. These charges include, but are not limited to, printing and stationery, freight and materials delivery, postage and handling.
The foregoing fees apply to services ordinarily rendered by Equiniti and are subject to reasonable adjustment based on final review of documents.
Exhibit 10.5
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this “Agreement”) is dated as of February 26, 2024 (the “Effective Date”), among Great Ajax Corp., a Maryland corporation (the “Company”), Great Ajax Operating Partnership L.P., a Delaware limited partnership (the “Operating Partnership”), Thetis Asset Management LLC, a Delaware limited liability company (the “Manager”), and Rithm Capital Corp., a Delaware corporation (the “Purchaser”).
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company, the Operating Partnership, the Manager and the Purchaser hereby agree as follows:
ARTICLE
1.
PURCHASE AND SALE
1.1 Common Stock. On the Closing Date (as defined below), upon the terms and subject to the conditions set forth herein, including the Company Stockholder Approval (as defined below), the Company agrees to sell and issue, and the Purchaser agrees to purchase, $14.0 million in shares (the “Shares”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”), at a purchase price per share equal to the trailing five-day average closing price of the Common Stock (the “Purchase Price”) on the New York Stock Exchange (“NYSE”), as calculated over the five days preceding the Effective Date.
1.2 Warrant Agreement.
(a) On the Rithm Warrant Issuance Date (as defined in the Credit Agreement, dated as of the date hereof, by and among the Company and the Lenders, the Administrative Agent and the Collateral Agent identified therein (the “Loan Agreement”)), the Company agrees to issue, and the Purchaser agrees to accept (or to designate one of its subsidiaries or other affiliates to accept), warrants (the “Warrants”) representing the right of the Purchaser (or a designated subsidiary or other affiliate of the Purchaser) to purchase a number of shares of Common Stock (the “Warrant Shares”) equal to, (a)(i) if the Rithm Warrant Issuance Date is occurring because of the occurrence of the closing of the transactions contemplated by the Loan Agreement (the “Loan Closing Date”), the greater of 50% of (x) $35,000,000 or (y) the principal balance of the Loan (as defined in the Loan Agreement) immediately after the time the Loan is funded on the Loan Closing Date or, (ii) if the Rithm Warrant Issuance Date is occurring because of the Existing Convertible Notes Redemption or the Commitment Termination Date (each as defined in the Loan Agreement), 50% of $35,000,000, in each case, divided by (b) the Exercise Price (as defined in the Warrant Agreement), to be issued on the terms and subject to the conditions set forth in the Warrant Agreement (the “Warrant Agreement”), to be entered into in the form attached hereto as Exhibit A, by and between the Company and Equiniti Trust Company, in its capacity as the Company’s warrant agent (the “Warrant Agent”). The Warrants and the Shares are hereinafter collectively called the “Securities.”
1.3 Deliveries.
(a) On the Rithm Warrant Issuance Date, the Company shall issue, or cause to be issued, the Warrants to the Purchaser and shall deliver to the Purchaser (or its designated custodian per its delivery instructions) the Warrant Agreement duly executed by the Company and the Warrant Agent.
(b) The completion of the purchase and sale of the Shares being purchased hereunder (the “Closing”) shall occur remotely via the exchange of documents and signatures on the Business Day following the satisfaction of all conditions for Closing set forth below (the “Closing Conditions”), other than Closing Conditions that by their nature are to be satisfied or, if applicable, waived at the Closing, or on such later date or at such different location as the parties shall agree to in writing (the “Closing Date”). “Business Day” shall mean any day other than (i) a Saturday or a Sunday, or (ii) a day on which commercial banks in New York City, New York are authorized or required by applicable Law to close.
(c) At the Closing, the Purchaser shall deliver, or cause to be delivered, to an account designated by the Company, via wire transfer of immediately available funds, the Purchase Price as set forth in Section 1.1 above, and the Company shall deliver, or cause to be delivered, to the Purchaser (or its designated custodian per its delivery instructions) the Shares issuable to the Purchaser pursuant to this Agreement in electronic, book-entry form, registered in the name of the Purchaser, or confirmation of instruction given by the Company to Equiniti Trust Company, LLC, in its capacity as the Company’s transfer agent for the Common Stock (the “Transfer Agent”), to register the Shares in electronic, book-entry form with respect to the number of Shares set forth in Section 1.1 above and bearing an appropriate legend referring to the fact that the Shares were sold in reliance upon the exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), provided by Section 4(a)(2) thereof.
1.4 Closing Conditions.
(a) The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:
(1) receipt by the Company of the required approval (such approval, the “Company Stockholder Approval”) at the annual or special meeting (the “Stockholder Meeting”) of the Company’s stockholders held to obtain the approval of the Company’s stockholders in connection with (i) the entry by the Company into a Management Agreement by and among the Company, the Operating Partnership and RCM GA Manager, LLC, a Delaware limited liability company and an affiliate of the Purchaser, dated as of the Closing Date, a form of which is attached hereto as Exhibit B (the “Rithm Management Agreement”), (ii) the election of one (1) director designated by the Purchaser and two (2) independent directors to the Company’s board of directors (the “Company Board”) and (iii) Section 312.03 of the NYSE Listed Company Manual in order for the Company to issue 20% or more of its Common Stock in connection with the Transaction Documents (as defined below) (collectively, the “Stockholder Proposals”);
(2) the accuracy in all material respects on the Closing Date of the representations and warranties made by the Purchaser (unless as of a specific date therein, in which case they shall be accurate as of such date);
2
(3) a certificate, to the effect set forth in the preceding clauses (a)(2) signed by an authorized officer of the Purchaser and dated as of the Closing Date;
(4) receipt by the Company of a wire transfer to the account designated by the Company of immediately available funds in the full amount of the Purchase Price for the Shares being purchased hereunder;
(5) receipt by the Company of an applicable IRS Form W-8 or W-9 from the Purchaser; and
(6) entry of the Purchaser and the Company to the Loan Agreement and receipt by the Company of the proceeds of the Term Loan.
(b) The obligations of the Purchaser hereunder in connection with the Closing are subject to the following conditions being met:
(1) the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company, the Operating Partnership and the Manager contained herein (unless as of a specific date therein, in which case they shall be accurate as of such date); provided, that the representations and warranties of the Company or the Manager (A) set forth in Sections 2.1(b), 2.1(h), 2.1(i), 2.1(j), 2.1(l), 2.2(a) and 2.2(f) or (B) that are qualified by materiality (including Material Adverse Effect or Manager Material Adverse Effect (each as defined below)) shall require accuracy in all respects;
(2) the fulfillment in all material respects of those undertakings of the Company and the Manager to be fulfilled prior to the Closing;
(3) a certificate, dated as of the Closing Date, in a form reasonably satisfactory to and approved by the Purchaser, signed by an authorized officer of the Company, certifying that the conditions in the preceding clauses (b)(1) and (b)(2) (in each case, solely with respect to the Company) have been fulfilled;
(4) a certificate, dated as of the Closing Date, in a form reasonably satisfactory to and approved by the Purchaser, signed by an authorized officer of the Manager, certifying that the conditions in the preceding clauses (b)(1) and (b)(2) (in each case, solely with respect to the Manager) have been fulfilled;
(5) receipt by the Purchaser of a termination and release agreement, dated on or before the Closing Date, among the Company, the Operating Partnership, the Manager and, solely for the purposes of Section 5 thereof, Rithm Capital Corp., a form of which is attached hereto as Exhibit C (the “Management Termination and Release Agreement”), which shall have been duly executed by the Company, the Operating Partnership, the Manager and Rithm Capital Corp., pursuant to which, among other things, the Third Amended and Restated Management Agreement, dated as of April 28, 2020, by and among the Company, the Operating Partnership and the Manager (as amended, the “Management Agreement”) shall be terminated;
3
(6) receipt by the Purchaser of a legal opinion from Mayer Brown LLP, counsel to the Company, the Operating Partnership and the Manager, dated as of the Closing Date and in form and substance reasonably satisfactory to the Purchaser, as to the status of the Company as a real estate investment trust (a “REIT”); provided that, prior to rendering such opinion, the Purchaser shall be given a reasonable opportunity to review representations contained in the accompanying officer’s certificate and finds them reasonably acceptable;
(7) receipt by the Purchaser of the Registration Rights Agreement, dated as of the Closing Date, between the Company and the Purchaser, a form of which is attached hereto as Exhibit D (the “Registration Rights Agreement”), which shall have been duly executed by the Company;
(8) the resignation of the members of the Company Board (as defined below), other than Paul Friedman and Mary Haggerty;
(9) the surrender or disposition of the Company’s equity ownership (including the warrants held by the Company) in Gregory Funding LLC;
(10) the qualification of the Purchaser as a Registered Investment Advisor under the Investment Advisers Act of 1940, as amended;
(11) receipt by the Purchaser of the Rithm Management Agreement, which shall have been duly executed by the Company and the Operating Partnership; and
(12) receipt by the Purchaser of the Shares issuable to the Purchaser pursuant to this Agreement in electronic, book-entry form, registered in the name of the Purchaser, or confirmation of instruction given by the Company to the Transfer Agent to register the Shares in electronic, book-entry form with respect to the number of Shares set forth in Section 1.1 above and bearing an appropriate legend referring to the fact that the Shares were sold in reliance upon the exemption from registration under the Securities Act, provided by Section 4(a)(2) thereof.
ARTICLE
2.
REPRESENTATIONS AND WARRANTIES
2.1 Representations, Warranties and Covenants of the Company and the Operating Partnership. The Company and the Operating Partnership, jointly and severally, hereby represent and warrant to, and covenant with, the Purchaser as of the date of this Agreement and the Closing Date, unless otherwise specified:
(a) The Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”), since January 1, 2023. The SEC Reports (i) as of the time they were filed (or if subsequently amended, when amended, and as of the date hereof), complied, and comply, in all material respects with the requirements of the Securities Act and the Exchange Act, as the case may be, and (ii) did not, at the time they were filed (or if subsequently amended or superseded by an amendment or other filing, then, on the date of such subsequent filing), contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
4
(b) Each of the Company and each of the subsidiaries of the Company identified in Exhibit 21.1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (each, a “Subsidiary” and collectively, the “Subsidiaries”) has been duly incorporated, formed or organized and is validly existing as a corporation, general or limited partnership or limited liability company in good standing under the laws of its respective jurisdiction of incorporation, formation or organization with full power and authority to own its respective properties and to conduct its respective businesses as described in the SEC Reports, and, in the case of the Company and the Operating Partnership, to execute and deliver this Agreement, the Registration Rights Agreement, the Loan Agreement, the Rithm Management Agreement and the Warrant Agreement (collectively, the “Transaction Documents”) and to consummate the transactions contemplated herein and therein.
(c) The Company and each of the Subsidiaries is duly qualified or licensed and in good standing in each jurisdiction in which it conducts its businesses or in which it owns or leases real property or otherwise maintains an office and in which the failure, individually or in the aggregate, to be so qualified or licensed would have a material adverse effect on the assets, business, operations, earnings, prospects, properties or condition (financial or otherwise) of the Company and the Subsidiaries taken as a whole (any such effect or change, where the context so requires, is hereinafter called a “Material Adverse Effect”). Except as disclosed in the SEC Reports, no Subsidiary is prohibited or restricted, directly or indirectly, from paying dividends to the Company, or from making any other distribution with respect to such Subsidiary’s capital stock or from repaying to the Company or any other Subsidiary any amounts that may from time to time become due under any loans or advances to such Subsidiary from the Company or such other Subsidiary, or from transferring any such Subsidiary’s property or assets to the Company or to any other Subsidiary. Other than as disclosed or described in the SEC Reports, neither the Company nor any Subsidiary owns, directly or indirectly, any capital stock or other equity securities of any other corporation or any ownership interest in any partnership, joint venture or other association.
(d) The Company and the Subsidiaries are in compliance in all material respects with all applicable laws, rules, regulations, orders, decrees and judgments, including those relating to transactions with affiliates.
(e) Neither the Company nor any Subsidiary is in breach of or in default under (nor has any event occurred that with notice, lapse of time, or both would constitute a breach of, or default under), (i) its respective charter, bylaws, agreement of limited partnership, operating agreement or other similar organizational documents (the “Organizational Documents”), (ii) the performance or observance of any obligation, agreement, covenant or condition contained in any contract, license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Company or any Subsidiary is a party or by which any of them or their respective properties is bound, or (iii) any federal, state, local or foreign law, regulation or rule or any decree, judgment, permit or order (each, a “Law”) applicable to the Company or any Subsidiary, except, in the case of clauses (ii) and (iii) above, for such breaches or defaults that would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.
5
(f) The issuance and sale of the Securities, the execution, delivery and performance of the Transaction Documents, and the consummation of the transactions contemplated herein and thereunder (including the issuance upon any exercise of the Warrants of the Warrant Shares) will not (A) conflict with, or result in any breach of, or constitute a default under (nor constitute any event that, with notice, lapse of time or both, would constitute a breach of, or default under), (i) any provision of the Organizational Documents of the Company or any Subsidiary, (ii) any provision of any contract, license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Company or any Subsidiary is a party or by which any of them or their respective properties may be bound or affected, or under any Law applicable to the Company or any Subsidiary, except in the case of this clause (ii) for such breaches or defaults that would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect; or (B) result in the creation or imposition of any lien, charge, claim or encumbrance upon any property or asset of the Company or any Subsidiary. The Company has reserved from its duly authorized capital stock the maximum number of Warrant Shares issuable pursuant to the Warrants.
(g) The consolidated financial statements, including the notes thereto, included in the SEC Reports present fairly the consolidated financial position of the Company and the Subsidiaries as of the dates indicated and their consolidated results of operations and changes in financial position and cash flows for the periods specified; such financial statements have been prepared in conformity with generally accepted accounting principles as applied in the United States (“GAAP”) and on a consistent basis during the periods involved and in accordance with Regulation S-X promulgated by the United States Securities and Exchange Commission (the “Commission”); all disclosures contained in the SEC Reports, or incorporated by reference therein, regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Securities Act, to the extent applicable.
(h) All of the outstanding shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and nonassessable. All of the outstanding shares of capital stock, partnership interests and membership interests, as the case may be, of the Subsidiaries have been duly authorized and are validly issued, fully paid and nonassessable securities thereof and, except as disclosed in the SEC Reports, all of the outstanding shares of capital stock, partnership interest or membership interests, as the case may be, of the Subsidiaries are directly or indirectly owned of record and beneficially by the Company. Except as disclosed in the SEC Reports, there are no outstanding (i) securities or obligations of the Company or any of the Subsidiaries convertible into or exchangeable for any capital stock of the Company or any such Subsidiary, (ii) warrants, rights or options to subscribe for or purchase, from the Company or any such Subsidiary, any such capital stock or any such convertible or exchangeable securities or obligations or (iii) obligations of the Company or any such Subsidiary to issue any shares of capital stock, any such convertible or exchangeable securities or obligation, or any such warrants, rights or options. All issued and outstanding units of partnership interest in the Operating Partnership owned by the Company are owned free and clear of any perfected security interest or any other security interests, claims, liens or encumbrances.
6
(i) When issued and delivered to the Purchaser against payment therefor on the Closing Date pursuant to this Agreement, the Shares will be duly and validly authorized and issued, fully paid and non-assessable, and will not be subject to any statutory and contractual preemptive rights, first refusal rights or similar rights, and the issuance of the Shares will not be in violation of the Organizational Documents of the Company or any contract or agreement with any person. The Shares, when issued and delivered against payment therefor as provided herein, will be free of any restriction upon the voting or transfer thereof pursuant to the Company’s Charter (as defined below) or bylaws or any agreement or other instrument to which the Company is a party other than the restrictions on ownership and transfer set forth in the Company’s Charter.
(j) The Warrants have been duly and validly authorized and, when issued by the Company, will not have been issued in violation of the Organizational Documents of the Company or any contract or agreement with any person. The Warrant Shares have been duly and validly authorized and reserved for issuance by the Company, and, when issued upon exercise of the Warrants in accordance with the terms of the Warrant Agreement, will be fully paid and nonassessable, and the issuance of the Warrant Shares, if any, will not be subject to any statutory or contractual preemptive right, right of first refusal or other similar rights, and the issuance of the Warrant Shares will not be in violation of the Organizational Documents of the Company or any contract or agreement with any person; the Warrant Shares, when issued and delivered against payment therefor as provided in the Warrant Agreement, will be free of any restriction upon the voting or transfer thereof pursuant to the Company’s Charter or bylaws or any agreement or other instrument to which the Company is a party other than the restrictions on ownership and transfer set forth in the Company’s Charter.
(k) No approval, authorization, consent or order of or filing with any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency is required in connection with the execution, delivery and performance of the Transaction Documents by the Company or the Operating Partnership, as applicable, its consummation of the transactions contemplated herein or thereunder (including the Company’s sale and delivery of the Shares and the Company’s issuance of the Warrant Shares upon exercise of the Warrants), other than such as have been obtained, or will have been obtained, at the Closing Date.
(l) Each of the Transaction Documents has been duly authorized, executed and delivered by the Company and the Operating Partnership, as applicable, and each is a legal, valid and binding agreement of the Company and the Operating Partnership, enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and by general equitable principles.
(m) There are no actions, suits, proceedings, inquiries or investigations pending or, to the knowledge of the Company, threatened against the Company or any Subsidiary or any of their respective officers and directors or to which the properties, assets or rights of any such entity are subject, at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority, arbitral panel or agency, which could result in a judgment, decree, award or order that could, or could reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.
7
(n) Moss Adams LLP, whose reports on the consolidated financial statements of the Company and the Subsidiaries are filed with the Commission as part of the SEC Reports, is, and was during the periods covered by its reports, an independent registered public accounting firm as required by the Securities Act and the Exchange Act, and is registered with the Public Company Accounting Oversight Board.
(o) Each of the Company and the Subsidiaries has timely filed all tax returns required to be filed (except in any case in which the failure to so file would not, or would not reasonably be expected to, individually or in the aggregate, result in a Material Adverse Effect) and has paid all taxes required to be paid and any other assessment, fine or penalty levied against it, to the extent that any of the foregoing would otherwise be delinquent, except, in all cases, for any such tax, assessment, fine or penalty that is being contested in good faith and except in any case in which the failure to so pay would not, or would not reasonably be expected to, individually or in the aggregate, result in a Material Adverse Effect.
(p) The descriptions in the SEC Reports of the legal or governmental proceedings, contracts, leases and other legal documents therein described present fairly the information required to be shown, and there are no legal or governmental proceedings, contracts, leases, or other documents of a character required to be described in the SEC Reports or to be filed as exhibits to the SEC Reports that are not described or filed as required. All agreements between the Company or any of the Subsidiaries and third parties expressly referenced in the SEC Reports are legal, valid and binding obligations of the Company or one or more of the Subsidiaries, enforceable in accordance with their respective terms, except to the extent enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general equitable principles.
(q) Each of the Company and the Subsidiaries maintains insurance (issued by insurers of recognized financial responsibility) of the types and in the amounts generally deemed adequate for their respective businesses and consistent with insurance coverage maintained by similar companies in similar businesses, including, but not limited to, insurance covering real and personal property owned or leased by the Company and the Subsidiaries against theft, damage, destruction, acts of vandalism and all other risks customarily insured against, all of which insurance is in full force and effect.
(r) Each of the Company and the Subsidiaries has all necessary licenses, authorizations, consents and approvals and has made all necessary filings required under any Law and in connection with the issuance and sale of the Securities, the Warrant Shares to be issued upon exercise of the Warrants, or the consummation by the Company and the Operating Partnership of the transactions contemplated hereby, other than the registration of the Shares or the Warrant Shares upon exercise of the Warrants under the Securities Act, which has been or will be effected. Each of the Company and the Subsidiaries has obtained all necessary licenses, authorizations, consents and approvals from other persons required in order to conduct their respective businesses as described in the SEC Reports, except to the extent that any failure to have any such licenses, authorizations, consents or approvals, to make any such filings or to obtain any such authorizations, consents or approvals would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect; neither the Company nor any of the Subsidiaries is required by any applicable law to obtain accreditation or certification from any governmental agency or authority in order to provide the products and services that it currently provides or that it proposes to provide as set forth in the SEC Reports; neither the Company, nor any of the Subsidiaries is in violation of, in default under, or has received any notice regarding a possible violation, default or revocation of any such license, authorization, consent or approval or any federal, state, local or foreign law, regulation or rule or any decree, order or judgment applicable to the Company or any of the Subsidiaries the effect of which could reasonably be expected to result in a Material Adverse Effect; and no such license, authorization, consent or approval contains a materially burdensome restriction that is not adequately disclosed in the SEC Reports.
8
(s) Each of the Company and the Subsidiaries have good and marketable title in fee simple to all real property, if any, and good title to all personal property owned by them, in each case free and clear of all liens, security interests, pledges, charges, encumbrances, mortgages and defects, except such as are disclosed in the SEC Reports or such as do not materially and adversely affect the value of such property and do not interfere with the use made or proposed to be made of such property by the Company and the Subsidiaries; and any real property and buildings held under lease by the Company or any Subsidiary are held under valid, existing and enforceable leases, with such exceptions as are disclosed in the SEC Reports or are not material and do not interfere with the use made or proposed to be made of such property and buildings by the Company or such Subsidiary.
(t) The Company and each of the Subsidiaries maintain effective internal control over financial reporting (as defined under Rules 13a-15 and 15d-15 under the Exchange Act) and a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and (v) the interactive data in eXtensible Business Reporting Language incorporated by reference in the SEC Reports fairly presents the information called for in all material respects and is prepared in accordance with the Commission’s rules and guidelines applicable thereto; and since the date of the last audited financial statements of the Company included in the SEC Reports, the Company is not aware of (a) any significant deficiency or material weakness in the design or operation of its internal controls over financial reporting that is reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information to management and the Company Board, or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
(u) The Company and each of the Subsidiaries have established and maintain disclosure controls and procedures (as such term is defined in Rule 13a-15 under the Exchange Act), which (i) are designed to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to the Company’s principal executive officer and its principal financial officer by others within those entities, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared, and (ii) are effective in all material respects to perform the functions for which they were established.
9
(v) There is and has been no failure on the part of the Company and the Subsidiaries and any of the officers and directors of the Company and the Subsidiaries, in their capacities as such, to comply in all material respects with the provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder and with which the Company is required to comply, including Section 402 related to loans and Sections 302 and 906 related to certifications.
(w) Commencing with its taxable year ended December 31, 2014, the Company has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (“Code”); the present and contemplated method of operation of the Company and the Subsidiaries does and will enable the Company to continue to meet the requirements for qualification and taxation as a REIT under the Code for its taxable year ending December 31, 2024, and thereafter and all statements regarding the Company’s qualification and taxation as a REIT and descriptions of the Company’s organization and method of operation (inasmuch as they relate to the Company’s qualification and taxation as a REIT) set forth in the SEC Reports are accurate and fair summaries of the legal or tax matters described therein in all material respects.
(x) The Company and each Subsidiary owns or possesses adequate licenses or other rights to use all patents, trademarks, service marks, trade names, copyrights, software and design licenses, trade secrets, manufacturing processes, other intangible property rights and know-how (collectively “Intangibles”) necessary to entitle the Company and each Subsidiary to conduct its business as described in the SEC Reports, and neither the Company nor any Subsidiary has received notice of infringement of or conflict with (and neither the Company nor any Subsidiary knows of any such infringement of or conflict with) asserted rights of others with respect to any Intangibles that would, or would reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.
(y) Except for the financial advisory fee to Piper Sandler & Co. and BTIG, LLC, no brokerage or finder’s fees or commissions are or will be payable by the Company or any of the Subsidiaries to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other person with respect to the transactions contemplated herein.
(z) Neither the Company nor any of its Subsidiaries is, and after giving effect to the offering and sale of the Securities or the issuance of any Warrant Shares following exercise of the Warrants will be, an “investment company” or an entity “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940.
(aa) The Shares, and the Warrant Shares will, when issued, conform in all material respects to the descriptions thereof contained in the SEC Reports, this Agreement and the Articles of Amendment and Restatement of the Company, effective as of June 30, 2014 (as amended and supplemented, the “Charter”) and the Warrants conform in all material respects to the descriptions thereof contained in this Agreement and the Warrant Agreement.
10
(bb) Except as disclosed in the SEC Reports, there are no persons with registration or other similar rights to have any equity or debt securities, including securities that are convertible into or exchangeable for equity securities, registered pursuant to any registration statement or otherwise registered by the Company or the Operating Partnership under the Securities Act, all of which registration or similar rights are fairly summarized in the SEC Reports.
(cc) Except as would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect, neither the Company nor the Subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products, asbestos-containing materials or mold (collectively, “Hazardous Materials”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “Environmental Laws”). Each of the Company and the Subsidiaries has all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements. There are no pending or, to the knowledge of the Company or the Operating Partnership, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigations or proceedings relating to any Environmental Law against the Company or the Subsidiaries. To the knowledge of the Company or the Operating Partnership, there are no events or circumstances that would reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Company or the Subsidiaries relating to Hazardous Materials or any Environmental Laws.
(dd) Neither the Company nor any Subsidiary is in violation of or has received notice of any violation with respect to any federal or state law relating to discrimination in the hiring, promotion or pay of employees, nor any applicable federal or state wages and hours law, nor any state law precluding the denial of credit due to the neighborhood in which a property is situated, the violation of any of which would, or would reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.
(ee) The Company and each of the Subsidiaries are in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, including the regulations and published interpretations thereunder (“ERISA”); no “reportable event” (as defined in ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for which the Company or any of the Subsidiaries would have any liability; the Company and each of the Subsidiaries have not incurred and do not expect to incur liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “pension plan” or (ii) Section 412 or 4971 of the Code; and each “pension plan” for which the Company and each of its Subsidiaries would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification.
11
(ff) Except as otherwise disclosed in the SEC Reports, there are no outstanding loans, extensions of credit or advances or guarantees of indebtedness by the Company or any of the Subsidiaries to or for the benefit of any of the officers or directors of the Company or any of the Subsidiaries or any of the members of the families of any of them.
(gg) All securities issued by the Company, any of the Subsidiaries or any trusts established by the Company or any Subsidiary, have been or will be issued and sold in compliance with (i) all applicable federal and state securities laws, (ii) the laws of the applicable jurisdiction of incorporation of the issuing entity and, (iii) to the extent applicable to the issuing entity, the requirements of the NYSE.
(hh) No relationship, direct or indirect, exists between or among the Company or any of the Subsidiaries on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company or any of the Subsidiaries on the other hand, which is required by the Securities Act to be described in the SEC Reports, which is not so described.
(ii) There are no existing or, to the knowledge of the Company or the Operating Partnership, threatened labor disputes with the employees of the Company or any of the Subsidiaries that would, or would reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect; no labor dispute exists between any officers of the Company, on the one hand, and the employer of each such individual on the other hand.
(jj) Neither the Company nor any of the Subsidiaries, nor any officer or director purporting to act on behalf of the Company or any of the Subsidiaries, nor the Manager or its affiliates acting on behalf of the Company or any of the Subsidiaries, has at any time (i) made any unlawful contributions to any candidate for political office, or failed to disclose fully any such contributions, in violation of Law, (ii) made any payment to any state, federal or foreign governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or allowed by applicable law, (iii) made any payment outside the ordinary course of business to any investment officer or loan broker or person charged with similar duties of any entity to which the Company or any of the Subsidiaries sells or from which the Company or any of the Subsidiaries buys loans or servicing arrangements for the purpose of influencing such agent, officer, broker or person to buy loans or servicing arrangements from or sell loans to the Company or any of the Subsidiaries, or (iv) engaged in any transactions, maintained any bank account or used any corporate funds except for transactions, bank accounts and funds that have been and are reflected in the normally maintained books and records of the Company and the Subsidiaries; neither the Company nor any of the Subsidiaries or, to the knowledge of the Company, any director, officer, agent, employee or affiliate of such entities is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, and the rules and regulations thereunder (the “FCPA”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA and the Company and the Subsidiaries and, to the knowledge of the Company, their affiliates have conducted their businesses in compliance with the FCPA.
12
(kk) Neither the Company nor the Subsidiaries, nor, to the Company’s or the Operating Partnership’s knowledge, any employee or agent of the Company or the Subsidiaries, has made any payment of funds of the Company or the Subsidiaries or received or retained any funds in violation of any law, rule or regulation, including without limitation, the “know your customer” and anti-money laundering laws of any jurisdiction (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or the Subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or the Operating Partnership, threatened.
(ll) Neither the Company nor the Subsidiaries, nor, to the knowledge of the Company or the Operating Partnership, any director, officer, agent, employee or affiliate of the Company or the Subsidiaries, nor the Manager or its affiliates acting on behalf of the Company or any Subsidiary, is currently subject to any U.S. sanctions administered by the United States Government, including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively, “Sanctions”); and the Company will not directly or indirectly use the proceeds of the offering of the Securities hereunder, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject of Sanctions or in any other manner that will result in a violation by any person (including any person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions. For the past five years, the Company and the Subsidiaries have not knowingly engaged in and are not now knowingly engaged in any dealings or transactions with any person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any country subject to Sanctions.
(mm) Subsequent to the respective dates as of which information is given in the SEC Reports, and except as may be otherwise stated in such documents, there has not been (A) any Material Adverse Effect or any development that could reasonably be expected to result in a Material Adverse Effect, whether or not arising in the ordinary course of business, (B) any transaction that is material to the Company and the Subsidiaries taken as a whole, contemplated or entered into by the Company or any of the Subsidiaries, (C) any obligation, contingent or otherwise, directly or indirectly incurred by the Company or any Subsidiary that is material to the Company and the Subsidiaries taken as a whole, or (D) any dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock.
2.2 Representations and Warranties of the Manager. The Manager hereby makes the following representations and warranties to the Purchaser as of the date hereof, unless otherwise specified:
(a) The Manager has been duly organized and is validly existing as a limited liability company in good standing under the laws of the state of Delaware with full power and authority to own its respective properties and to conduct its respective businesses as described in the SEC Reports and to consummate the transactions contemplated herein.
(b) The Manager is duly qualified or licensed and in good standing in each jurisdiction in which it conducts its businesses or in which it owns or leases real property or otherwise maintains an office and in which the failure, individually or in the aggregate, to be so qualified or licensed would have a material adverse effect on the assets, business, operations, earnings, prospects, properties or condition (financial or otherwise) of the Manager, including the Manager’s provision of management and other services to the Company and the Subsidiaries (any such effect or change, where the context so requires, is hereinafter called a “Manager Material Adverse Effect”).
13
(c) The Manager is in compliance in all material respects with all applicable laws, rules, regulations, orders, decrees and judgments, including those relating to transactions with affiliates.
(d) The Manager is not in breach of or in default under (nor has any event occurred that with notice, lapse of time, or both would constitute a breach of, or default under), (i) its operating agreement, bylaws or other similar organizational documents (the “Manager Organizational Documents”), (ii) the performance or observance of any obligation, agreement, covenant or condition contained in any license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Manager is a party or by which any of it or its respective properties is bound (together with the Manager Organizational Documents, the “Manager Agreements”), or (iii) any Law applicable to the Manager, except, in the case of clauses (ii) and (iii) above, for such breaches or defaults which would not, or would not reasonably be expected to, individually or in the aggregate, have a Manager Material Adverse Effect.
(e) The execution, delivery and performance of this Agreement and consummation of the transactions contemplated herein, and compliance by the Manager with its obligations under the Management Termination and Release Agreement, will not: (A) conflict with, or result in any breach of, or constitute a default under (nor constitute any event that, with notice, lapse of time, or both would constitute a breach of, or default under), (i) any provision of the Manager Organizational Documents, or (ii) any provision of any contract, license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Manager is a party or by which any of it or its respective properties may be bound or affected, or under any Law applicable to the Manager, except in the case of this clause (ii) for such breaches or defaults that would not, or would not reasonably be expected to, individually or in the aggregate, have a Manager Material Adverse Effect; or (B) result in the creation or imposition of any lien, charge, claim or encumbrance upon any property or asset of the Manager.
(f) This Agreement has been duly authorized, executed and delivered by the Manager and is a legal, valid and binding agreement of the Manager enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and by general equitable principles.
(g) The Manager has all necessary licenses, authorizations, consents and approvals and has made all necessary filings required under any Law, and has obtained all necessary authorizations, consents and approvals from other persons, required in order to conduct its business as described in the SEC Reports, except to the extent that any failure to have any such licenses, authorizations, consents or approvals, to make any such filings or to obtain any such authorizations, consents or approvals would not, or would not reasonably be expected to, individually or in the aggregate, have a Manager Material Adverse Effect; the Manager is not required by any applicable law to obtain accreditation or certification from any governmental agency or authority in order to provide the products and services that it currently provides or that it proposes to provide as set forth in the SEC Reports; the Manager is not in violation of, in default under, or has received any notice regarding a possible violation, default or revocation of any such license, authorization, consent or approval or any federal, state, local or foreign law, regulation or rule or any decree, order or judgment applicable to the Manager the effect of which could, or could reasonably be expected to, individually or in the aggregate, result in a Manager Material Adverse Effect; and no such license, authorization, consent or approval contains a materially burdensome restriction that is not adequately disclosed in the SEC Reports.
14
(h) None of the Manager or any of its respective directors, officers, representatives or affiliates has taken, nor will take, directly or indirectly, any action that is designed to or that has constituted or that might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities or the Warrant Shares to be issued upon exercise of the Warrants, or to result in a violation at Regulation M under the Exchange Act.
(i) There are no actions, suits, proceedings, inquiries or investigations pending or, to the knowledge of the Manager, threatened against the Manager or any of its respective officers and directors or to which the properties, assets or rights of any such entity are subject, at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority, arbitral panel or agency that could result in a judgment, decree, award or order that would, or would be reasonably likely to, individually or in the aggregate, result in a Manager Material Adverse Effect.
2.3 Representations, Warranties and Covenants of the Purchaser. The Purchaser represents and warrants to, and covenants with, the Company and the Operating Partnership, as of the date of this Agreement and the Closing Date, that:
(a) Experience. The Purchaser is knowledgeable, sophisticated and experienced in financial and business matters in making, and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the purchase of the Securities and has the ability to bear the economic risks of an investment in the Securities and the Purchaser has had an opportunity to discuss this investment with representatives of the Company and ask questions of them.
(b) Own Account. The Purchaser understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws).
15
(c) Institutional Accredited Investor. The Purchaser is an institutional “accredited investor” as defined in Rule 501(a)(1), (2), (3), (7), (8), (9), (12), and (13) under the Securities Act.
(d) Reliance on Exemptions. The Purchaser understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Securities. The Purchaser understands that the Securities cannot be resold without registration under, or a specific exemption from the registration requirements of, the Securities Act and state securities laws.
(e) Access to Information. The Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits and schedules thereto) and the SEC Reports and has been afforded, (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.
(f) Investment Decision. The Purchaser understands that nothing in this Agreement or any other materials presented to the Purchaser in connection with the purchase and sale of the Securities constitutes legal, tax or investment advice. The Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Securities.
(g) Legends. The Purchaser understands that, until such time as the Securities and the Warrant Shares may be sold pursuant to Rule 144 under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold and except if and to the extent otherwise provided below in this Section 2.3, the Securities and the Warrant Shares will bear a restrictive legend in substantially the following form:
“THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SHARES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH OTHER APPLICABLE LAWS.”
16
The Shares and Warrant Shares shall not be required to contain any legend (including the legends set forth above in this Section 2.3 hereof) while a registration statement covering the resale of such Shares and Warrant Shares is effective under the Securities Act. The Company shall cause its counsel to issue a legal opinion to the Transfer Agent if required by the Transfer Agent to effect the removal of the legends hereunder, provided that such legends are not required pursuant to the foregoing provisions of this paragraph.
(h) Stop Transfer. When issued, the Securities purchased hereunder and any Warrant Shares may be subject to a stop transfer order with the Transfer Agent that restricts the transfer of such Shares except upon receipt by the Transfer Agent of a written confirmation from the Purchaser to the effect that the Purchaser has satisfied its prospectus delivery requirements or upon receipt by the Transfer Agent of written instructions from the Company authorizing such transfer.
(i) Organization; Authority; Validity; Enforcement. The Purchaser is duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The Purchaser further represents and warrants to, and covenants with, the Company that (i) the Purchaser has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, (ii) the making and performance of this Agreement by the Purchaser and the consummation of the transactions herein contemplated will not violate any applicable provision of the organizational documents of the Purchaser or conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any material agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which the Purchaser is a party or, any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental agency or body applicable to the Purchaser, (iii) no consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental agency or body is required on the part of the Purchaser for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement, (iv) upon the execution and delivery of this Agreement, this Agreement shall constitute a legal, valid and binding obligation of the Purchaser, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application relating to or the enforcement of creditor’s rights and the application of equitable principles relating to the availability of remedies, and (v) there is not in effect any order enjoining or restraining the Purchaser from entering into or engaging in any of the transactions contemplated by this Agreement.
(j) Material Non-Public Information. The Purchaser acknowledges that it and its representatives are aware that the U.S. securities laws prohibit any person who has material non-public information about an issuer from purchasing or selling, directly or indirectly, securities of such issuer (including entering into hedge transactions involving such securities), or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities.
17
ARTICLE
3.
INDEMNIFICATION
3.1 Indemnification.
(a) For the purpose of this Section 3.1: the term “Purchaser Affiliate” shall mean any affiliate of the Purchaser, including a transferee who is an affiliate of the Purchaser, and any person who controls the Purchaser or any affiliate of the Purchaser within the meaning of Section 15 of the Securities Act, including Rule 405 promulgated thereunder, or Section 20 of the Exchange Act.
(b) The Company agrees to indemnify and hold harmless the Purchaser and each Purchaser Affiliate, against any losses, claims, actions, damages, liabilities or expenses (including the reasonable cost of investigation and any legal, attorneys’ or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim) (collectively, “Losses”), joint or several, to which the Purchaser or Purchaser Affiliates may become subject or incur, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company, which consent shall not be unreasonably withheld or delayed), insofar as any such Losses (or actions in respect thereof as contemplated below) (i) arise out of or are based in whole or in part on any breach in the representations, warranties and covenants of the Company or the Manager contained in this Agreement, or any failure of the Company to perform its obligations hereunder or under law; or (ii) arise out of or are based in whole or in part on any application or other document, or any amendment or supplement thereto, executed by the Company or the Manager or based upon written information furnished by or on behalf of the Company filed in any jurisdiction (domestic or foreign) in order to qualify the Securities or the Warrant Shares issuable upon exercise of the Warrants under the securities or blue sky laws thereof or filed with the Commission or any securities association or securities exchange, and will promptly reimburse the Purchaser and each Purchaser Affiliate for any legal and other expenses as such expenses are reasonably incurred by the Purchaser or the Purchaser Affiliate in connection with investigating, defending or preparing to defend, settling, compromising or paying any such Losses; provided, however, that the Company will not be liable for amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the written consent of the Company, which consent shall not be unreasonably withheld or delayed, and the Company will not be liable in any such case to the extent that any such Losses primarily arise out of or are primarily based upon the breach by the Purchaser of any of the representations or warranties made by the Purchaser herein. The indemnity agreement set forth in this Section 3.1(b) shall be in addition to any liability to which the Company or the Manager may otherwise have.
(c) The Purchaser will indemnify and hold harmless the Company, each of its directors, each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against any Losses to which the Company, each of its directors, each controlling person or the Operating Partnership may become subject or incur, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation) insofar as such Losses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) the failure of the Purchaser to comply with the covenants and agreements contained in Section 2.3 hereof; or (ii) any breach in the representations or warranties made by the Purchaser herein; provided, however, that the Purchaser will not be liable for amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the written consent of the Purchaser, which consent shall not be unreasonably withheld or delayed, and the Purchaser will not be liable in any such case to the extent that any such Losses primarily arise out of or are primarily based upon the breach by the Company or the Manager of any of the representations, warranties or covenants made by the Company or the Manager herein.
18
(d) Procedures. Promptly after receipt by an indemnified party under Section 3.1 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under Section 3.1 promptly notify each such indemnifying party in writing thereof, but the failure or delay to notify such indemnifying parties will not relieve such indemnifying parties from any liability that they may have to any indemnified party under the indemnity agreement contained in Section 3.1, except to the extent that its ability to defend is actually impaired by such failure or delay. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from any indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party, and the indemnified party shall have reasonably concluded, based on the advice of counsel reasonably satisfactory to the indemnifying party, that there may be a conflict of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties, and the cost of such defense shall constitute indemnifiable Losses hereunder. Upon receipt of notice from the indemnifying party to such indemnified party of its election to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under Section 3.1 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, reasonably satisfactory to such indemnifying party, representing all of the indemnified parties who are parties to any one action or series of related actions in the same jurisdiction (other than local counsel in any such jurisdiction)) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party. In no event shall any indemnifying party be liable for any settlement or in respect of any amounts paid in settlement of any claim, action or proceeding unless the indemnifying party shall have approved in writing the terms of such settlement; provided, however, that such consent shall not be unreasonably withheld or delayed. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened claim, action or proceeding in respect of which any indemnified party is or could have been a party and indemnification could have been sought hereunder by such indemnified party from all Losses that are the subject matter of such claim, action or proceeding, unless such settlement (x) includes an unconditional release of such indemnified party, in form and substance reasonably satisfactory to such indemnified party, from all liability on claims that are the subject matter of the subject claim, action or proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any indemnified party.
19
ARTICLE
4.
COVENANTS
4.1 Conduct of Business Prior to the Closing. From the date hereof until the Closing, except as otherwise provided in this Agreement or as consented to in advance in writing by the Purchaser (which consent shall not be unreasonably withheld, conditioned or delayed), each of the Company and the Manager shall cause the Company and the Subsidiaries to: (a) conduct their businesses in all material respects in the ordinary course of business consistent with past practice; and (b) use commercially reasonable efforts to maintain and preserve intact the current organization and business of the Company and the Subsidiaries and to preserve the rights, franchises, goodwill and relationships of the key customers, lenders, suppliers, regulators and others having material business relationships with the Company and the Subsidiaries.
4.2 Exchange of Warrants for Common Stock. From the date hereof until the earlier of the Closing and any termination of this Agreement in accordance with its terms, the Company and the Manager shall use their respective reasonable best efforts to enter into exchange agreements in substantially the form of the exchange agreements entered into by the Company and the Manager concurrently with the execution of this Agreement (the “Exchange Agreements”) with the holders of the Company’s outstanding warrants (the “Warrant Holders”) who are not yet party to an Exchange Agreement, pursuant to which, in each case, the applicable Warrant Holders agree to exchange their existing warrants for Common Stock on the terms and subject to the conditions therein.
4.3 Management Agreement and Management Termination Fee. From the date hereof until the earlier of the Closing and any termination of this Agreement in accordance with its terms, (i) the Company and the Manager shall use their respective reasonable best efforts to cause any members of the Manager who are not yet party to the Management Termination and Release Agreement to execute a joinder (or any agreement of similar effect) thereto, pursuant to which such members will commit to receive their respective portions of the Management Agreement termination fee in Common Stock.
4.4 Company Service Marks. From the date hereof until the earlier of the Closing and any termination of this Agreement in accordance with its terms, each of the parties hereto will use reasonable best efforts to (i) transfer the ownership of the marks, logos and corporate names licensed to the Company (the “Licensed Marks”) under the Trademark License Agreement, dated July 8, 2014, by and between the Company and Aspen Yo LLC, or (ii) ensure that the Company continues to have an exclusive right to use the Licensed Marks following the termination of the Management Agreement.
20
4.5 Most Favored Nations Representations and Warranties. From the date hereof until the earlier of the Closing and any termination of this Agreement in accordance with its terms, if the Company agrees to sell any securities of the Company or any Subsidiary to a third party (a “Third Party Purchaser”), and the documentation in connection with the sale of such securities includes representations and warranties regarding the Company or any Subsidiary that are more favorable (“MFN R&Ws”) than those in this Agreement, the Company will promptly provide the Purchaser with written notice thereof, together with a copy of the MFN R&Ws. In the event the Purchaser determines in good faith that the MFN R&Ws are more favorable to the Third Party Purchaser than the representations and warranties in this Agreement in any respect, the Purchaser will notify the Company in writing, and promptly following receipt of such written notice, the Company will agree to amend and restate this Agreement to include the MFN R&Ws.
4.6 Preparation of the Proxy Statement; Stockholder Meeting.
(a) As promptly as reasonably practicable following the date of this Agreement, the Company shall prepare and file with the Commission a preliminary proxy statement to be sent to the Company’s stockholders in connection with the Company Stockholders Meeting (“Proxy Statement”). Subject to Section 5.1, the Proxy Statement shall include the Company Recommendation. The Purchaser shall cooperate with the Company in the preparation of the Proxy Statement, and shall furnish all information concerning it, any of its affiliates and any transaction any of them have or are contemplating entering into in connection with this Agreement that is necessary or appropriate in connection with the preparation of the Proxy Statement, and provide such other assistance, as may be reasonably requested in the connection with the preparation, filing and distribution of the Proxy Statement. The parties hereto shall use their respective reasonable best efforts to have the Proxy Statement cleared by the Commission as promptly as reasonably practicable after such filing. Prior to filing or mailing the Proxy Statement or any related documents (or in each case, any amendment or supplement thereto other than filings under the Exchange Act either not related to this Agreement or that relate to an Alternative Proposal (as defined below)) or responding to any comments of the Commission with respect thereto, to the extent reasonably practicable, the Company shall provide the Purchaser with an opportunity to review and comment on such document or response and shall consider in good faith any comments on such document or response reasonably proposed by the Purchaser. The Company shall notify the Purchaser promptly of the receipt of any comments to the Proxy Statement from the Commission or its staff and of any request by the Commission or its staff for amendments or supplements to the Proxy Statement or for additional information and will supply the Purchaser with copies of all correspondence between the Company and the Commission or its staff with respect to the Proxy Statement or the Transactions.
(b) If, at any time prior to the Stockholder Meeting, any information relating to the Company or the Purchaser, any of its affiliates or any transaction any of them have or are contemplating entering into in connection with this Agreement, is discovered by the Company or the Purchaser that should be set forth in an amendment or supplement to the Proxy Statement so that such document would not include any misstatement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading, the party that discovers such information shall as promptly as practicable notify the other party. Following such notification, the Company shall file with the Commission an appropriate amendment or supplement describing such information as promptly as reasonably practicable after the Purchaser has had a reasonable opportunity to review and comment thereon, and, to the extent the Company determines it is required by applicable Law, the Company shall disseminate such amendment or supplement to the stockholders of the Company.
21
(c) Subject to Section 5.1, the Company shall, as promptly as reasonably practicable after the Proxy Statement is cleared by the Commission for mailing to the Company’s stockholders, duly call, give notice of, convene and hold the Stockholder Meeting for the purpose of seeking the Company Stockholder Approval.
(d) Notwithstanding any provision of this Agreement to the contrary, the Company may, in its reasonable discretion, adjourn, recess or postpone the Stockholder Meeting and may change the record date thereof, (i) to the extent necessary, in the judgment of the Company Board, to ensure that any required supplement or amendment to the Proxy Statement is provided to the stockholders of the Company within a reasonable amount of time in advance of the Stockholder Meeting, (ii) if as of the time for which the Stockholder Meeting is originally scheduled (as set forth in the Proxy Statement) there are insufficient shares of Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Stockholder Meeting or to the extent that at such time the Company has not received proxies sufficient to allow the receipt of the Company Stockholder Approval at the Stockholder Meeting or (iii) to the extent the Company determines in good faith that failure to do so would be inconsistent with the Company’s obligations under applicable Law; provided, that the Company shall reconvene the Stockholder Meeting as promptly as practicable following such time as the matters described in clauses (i) through (iii) have been resolved, and in no event shall the Stockholder Meeting be (A) postponed or adjourned for (1) more than ten (10) Business Days for any individual postponement or adjournment or (2) except for any postponement or adjournment pursuant to clause (i), more than twenty (20) Business Days in the aggregate or (B) reconvened on a date that is later than five (5) Business Days prior to the Outside Date. Subject to Section 5.1, the Company Board shall recommend that the Company’s stockholders approve the Stockholder Proposals (the “Company Recommendation”), and the Company shall, unless there has been a Change of Company Recommendation or this Agreement has been terminated in accordance with its terms, use its reasonable best efforts to solicit from its stockholders proxies as promptly as possible in favor of the Stockholder Proposals, and shall take all other action necessary or advisable to secure the required vote or consent of its stockholders.
22
ARTICLE
5.
MISCELLANEOUS
5.1 No Solicitation; Change of Company Recommendation.
(a) Except as permitted by this Section 5.1, from and after the date hereof, until the earlier of the Closing and the termination of this Agreement, (i) the Manager and the Company shall, and shall cause their respective subsidiaries and other controlled affiliates and shall use their respective reasonable best efforts to cause their respective officers, directors, managers, employees, financial advisors, attorneys, agents advisors and representatives (collectively, “Representatives”) to, cease as of the date hereof any solicitations, discussions or negotiations with any persons that may be ongoing prior to the date hereof with respect to any Alternative Proposal and (ii) the Manager and the Company shall not, and shall cause their respective subsidiaries and other controlled affiliates, and shall use their reasonable best efforts to cause their respective Representatives not to, (A) initiate, solicit, knowingly encourage or knowingly facilitate the submission of any Alternative Proposal, (B) furnish any non-public information regarding the Company or any of its subsidiaries to any third person in connection with or in response to an Alternative Proposal by such third person or (C) participate in any discussions or negotiations with any third person with respect to any Alternative Proposal made by such third person; provided, that, notwithstanding anything to the contrary in this Section 5.1(a), if the Company receives any inquiry, expression of interest, proposal or offer that constitutes or could reasonably be expected to lead to an Alternative Proposal from any third person, the Company may (1) inform such third person that the Company is contractually prohibited from engaging in discussions with, or otherwise responding to, such third person in response thereto and (2) seek clarification of the terms and conditions thereof so as to determine whether such inquiry, expression of interest, proposal, offer or Alternative Proposal constitutes or could reasonably be expected to lead to a Superior Proposal.
(b) Notwithstanding anything to the contrary contained in this Agreement, if, at any time following the execution and delivery of this Agreement and prior to the earlier of the Company obtaining the Company Stockholder Approval or the termination of this Agreement, (i) the Company has received a written Alternative Proposal from a person after the date of this Agreement that did not result from a material breach of Section 5.1(a) and (ii) the Company Board (or any committee thereof) determines in good faith, after consultation with its financial advisor and outside legal counsel, that such Alternative Proposal constitutes or could reasonably be expected to lead to a Superior Proposal, then the Company, its subsidiaries and other affiliates and their respective Representatives may (A) furnish information, including with respect to the Company and its subsidiaries, to the person making such Alternative Proposal and (B) participate in discussions or negotiations with the person making such Alternative Proposal in connection with such Alternative Proposal; provided, however, that the Company will not, and will not permit its subsidiaries and other affiliates and their respective Representatives to, disclose any material non-public information regarding the Company to such person without the Company first entering into a confidentiality agreement that contains confidentiality terms no less favorable to the Company in the aggregate in the good faith judgment of the Company than those contained in the Confidentiality Agreement (as defined below) (an “Acceptable Confidentiality Agreement”) with such person if such person is not already party to a confidentiality agreement with the Company. For the avoidance of doubt, all information provided to the Purchaser pursuant to this Section 5.1(b) will be subject to the terms of that certain Non-Disclosure Agreement, dated as of October 26, 2023 (the “Confidentiality Agreement”), by and between the Company and the Purchaser.
23
(c) Except as set forth in Section 5.1 (d), from the date hereof until the earlier of the Closing and the termination of this Agreement in accordance with its terms, neither the Company Board nor any committee thereof will (i) adopt, authorize, approve or recommend any Alternative Proposal, (ii) withhold, modify or amend, in a manner adverse to the Purchaser, the Company Recommendation or fail to include the Company Recommendation in the Proxy Statement (any action set forth in the foregoing clause (i) or (ii), a “Change of Company Recommendation”) or (iii) allow the Company or any of its subsidiaries to enter into any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement or other similar agreement to effect any Alternative Transaction (other than an Acceptable Confidentiality Agreement) or requiring the Company to abandon, terminate or fail to consummate the Transactions.
(d) Notwithstanding anything to the contrary contained in this Agreement, at any time prior to receipt of the Company Stockholder Approval, the Company Board (or any committee thereof) may make a Change of Company Recommendation (and, if so desired by the Company Board (or any committee thereof), terminate this Agreement, pursuant to Section 5.3.6 in order to cause the Company to enter into a definitive agreement with respect to an Alternative Proposal) if:
(i) (A) an Alternative Proposal (that did not result from a material breach of Section 5.1(a)) is made to the Company by a third person and (B) the Company Board (or any committee thereof) determines in good faith, after consultation with its outside financial advisors and outside legal counsel, that such Alternative Proposal constitutes a Superior Proposal;
(ii) the Company provides the Purchaser prior written notice of the Company’s intention to make a Change of Company Recommendation (a “Notice of Superior Proposal Change of Recommendation”), which notice shall identify the person making such Superior Proposal and include the draft of the definitive agreement to effect such Superior Proposal;
(iii) if requested by the Purchaser, the Company has negotiated, and directed any applicable Representative of the Company or any of its subsidiaries to negotiate, with the Purchaser during the three (3) Business Days following the date of such Notice of Superior Proposal Change of Recommendation with respect to any changes to the terms of this Agreement proposed by the Purchaser in a binding irrevocable written offer; and
(iv) taking into account any changes to the terms of this Agreement offered by the Purchaser in a binding irrevocable written offer to the Company pursuant to clause (iii) above, the Company Board (or any committee thereof) has determined in good faith, after consultation with its financial advisors and outside legal counsel, that such Alternative Proposal would continue to constitute a Superior Proposal if such changes irrevocably offered in writing by the Purchaser were to be given effect; provided, that any material amendment to the terms of such Alternative Proposal (whether or not in response to any changes proposed by the Purchaser pursuant to clause (iii) above) shall require a new Notice of Superior Proposal Change of Recommendation and an additional two (2) day period from the date of such notice during which the terms of clause (iii) above and this clause (iv) shall apply mutatis mutandis (other than the number of Business Days).
24
(e) For purposes of this Agreement:
(i) “Alternative Proposal” shall refer to any proposal, offer or inquiry contemplating or otherwise relating to any Alternative Transaction (as defined below) other than an offer, proposal or inquiry by the Purchaser or any of its affiliates.
(ii) “Alternative Transaction” shall refer to any transaction or series of related transactions involving: (A) any merger, consolidation, share exchange, business combination, issuance of securities, direct or indirect acquisition of securities, recapitalization, tender offer, exchange offer or other similar transaction in which (1) a person or “group” (as defined in the Exchange Act and the rules promulgated thereunder) of persons directly or indirectly acquires, or if consummated in accordance with its terms would acquire, beneficial or record ownership or control of securities representing 9.9% or more of the outstanding shares of any class of voting or equity securities of the Company (or any parent company resulting from such transaction), or (2) the Company issues securities representing 9.9% or more of the outstanding shares of any class of voting or equity securities of the Company (or any parent company resulting from such transaction); (B) any sale, lease, assignment, license, exchange, transfer, acquisition or disposition of any rights or assets (including equity interests of any Subsidiary of the Company) that constitute or account for (1) a majority of the consolidated net revenues of the Company and its Subsidiaries, consolidated net income of the Company and its Subsidiaries or consolidated book value of the Company and its Subsidiaries, or (2) a majority of the fair market value of the assets of the Company and its Subsidiaries; (C) any sale of all or substantially all of the assets or properties constituting, or the sale of control of, the business conducted by the Company and its Subsidiaries, including any sale of a majority of the equity interests of the Operating Partnership; (D) any liquidation or dissolution of the Company; (E) the appointment of a third party manager of the Company (other than the Purchaser or any of its affiliates) or the retention of the Manager as the manager of the Company; or (F) any combination of the foregoing.
(iii) “Superior Proposal” shall mean a bona fide Alternative Proposal obtained after the date of this Agreement that did not result from a breach of Section 5.1(a), which the Company Board determines in good faith (after consultation with its outside counsel and financial advisor) (A) to be reasonably likely to be consummated if accepted and (B) to be more favorable to the Company’s stockholders from a financial point of view than the transactions contemplated by the Transaction Documents, in each case, taking into account at the time of determination all relevant circumstances, including the various legal, financial and regulatory aspects of such proposal, all the terms and conditions of such proposal and this Agreement, any changes to the terms of this Agreement offered by the Purchaser in response to such Alternative Proposal and the ability of the person making such Alternative Proposal to consummate the transactions contemplated by such Alternative Proposal (based upon, among other things, expectation of obtaining required approvals or any necessary financing)
(f) Nothing contained in this Section 5.1 or elsewhere in this Agreement shall prohibit the Company from: (i) taking and disclosing to the Company’s stockholders a position with respect to a tender or exchange offer by a third party contemplated by Rule 14e-2(a) or making a statement required under Rule 14d-9 under the Exchange Act (including any “stop, look and listen” letter or similar communication of the type contemplated by Rule 14d-9(f) under the Exchange Act) or (ii) making any disclosure to the Company’s stockholders if, in the good faith judgment of the Company Board, after consultation with outside legal counsel, the failure to so disclose would reasonably be expected to constitute a breach of its duties to the Company or the Company’s stockholders under applicable law.
25
5.2 Fees and Expenses. Except as set forth in this Agreement, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of the Securities and any Warrant Shares upon exercise of the Warrants to the Purchaser. Notwithstanding the foregoing, if (i) there is a Change of Company Recommendation and this Agreement is terminated by the Purchaser or the Company pursuant to Section 5.3.4, (ii) the Company terminates this Agreement pursuant to Section 5.3.6 or (iii) the Purchaser terminates this Agreement pursuant to Section 5.3.5, the Company shall: (A) pay to the Purchaser a break-up fee in an amount equal to $2,000,000 (the “Break-up Fee”), (B) reimburse all of the Purchaser’s legal fees incurred by the Purchaser incident to the negotiation, preparation, execution, delivery and performance of the Transaction Documents in an amount not to exceed $1,000,000 (the “Reimbursement Expense”), (C) repurchase the Warrants at fair market value as determined by an independent third party using the Black-Scholes model (with values under such model based on standard assumptions as determined by such independent third party) and (D) pay to the Purchaser the outstanding balance of the Loan, as provided under Section 7.01(k) of the Loan Agreement.
5.3 Termination. This Agreement may be terminated prior to the Closing Date, whether before or after the Company Stockholder Approval:
5.3.1 by mutual written consent of the Company and the Purchaser;
5.3.2 by either the Company or the Purchaser, upon written notice to the other party, if the Closing shall not have occurred on or prior to 5:00 p.m., Eastern Time, on August 26, 2024 (the “Outside Date”); provided, however, that a party shall not be permitted to terminate this Agreement pursuant to this Section 5.3.2 if the failure to consummate the Closing by the Outside Date is attributable to the breach by such party (including, in the case of the Company, the Manager) of any provision of this Agreement;
5.3.3 by either the Company or the Purchaser, upon written notice to the other party, if a court of competent jurisdiction or other governmental authority of competent jurisdiction shall have issued a final and non-appealable order, decree or ruling, or shall have taken any other action, having the effect of permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the Transaction Documents; provided, however, that the right to terminate this Agreement under this Section 5.3.2 shall not be available to a party if the issuance of such final, non-appealable Order, decree or ruling is attributable to the breach by such party (including, in the case of the Company, the Manager) of any provision of this Agreement;
26
5.3.4 by either the Company or the Purchaser, upon written notice to the other party, if: (i) the Stockholder Meeting (including any adjournments or postponements thereof) shall have been held and the Company’s stockholders shall have taken a vote on the matters subject to the Company Stockholder Approval and (ii) the Company Stockholder Approval was not obtained;
5.3.5 by Purchaser, upon written notice to the Company, if any of the Company’s or the Manager’s representations and warranties shall have been inaccurate, or any of the Company’s or the Manager’s covenants or agreements contained in this Agreement shall have been breached, in any case, so as to cause the failure of a Closing Condition, and any such inaccuracy or breach is not curable within thirty (30) days following notice of such inaccuracy or breach, or, if curable, is not cured within thirty (30) days following notice of such inaccuracy or breach;
5.3.6 by the Company, in accordance with Section 5.1(d);
5.3.7 by the Company, upon written notice to the Purchaser, if any of the Purchaser’s representations and warranties shall have been inaccurate, or any of the Purchaser’s covenants or agreements contained in this Agreement shall have been breached, in any case, so as to cause the failure of a Closing Condition, and any such inaccuracy or breach is not curable within thirty (30) days following notice of such inaccuracy or breach, or, if curable, is not cured within thirty (30) days following notice of such inaccuracy or breach; or
5.3.8 by the Purchaser, upon written notice to the Company, if trading in any securities of the Company has been suspended by the Commission or by the NYSE, or if trading generally on the NYSE or in the Nasdaq over-the-counter market has been suspended (including an automatic halt in trading pursuant to market-decline triggers, other than those in which solely program trading is temporarily halted), or limitations on prices for trading (other than limitations on hours or numbers of days of trading) have been fixed, or maximum ranges for prices for securities have been required, by such exchange or FINRA or the over-the-counter market or by order of the Commission or any other governmental authority.
5.4 Entire Agreement. This Agreement, together with the exhibits, schedules and certificates referred to herein or delivered pursuant hereto, and the Transaction Documents contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.5 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via electronic mail at or prior to 5:30 p.m. (Eastern Time) on a day on which the NYSE is open for trading (“Trading Day”), (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via electronic mail on a day that is not a Trading Day or later than 5:30 p.m. (Eastern Time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.
27
5.6 Further Assurances. Each party agrees to cooperate with the other and their respective officers, employees, attorneys, accountants and other agents, and, generally, do such other reasonable acts and things in good faith as may be necessary to effectuate the intents and purposes of this Agreement, subject to the terms and conditions hereof and compliance with applicable Law, including taking reasonable action to facilitate the filing of any document or the taking of reasonable action to assist the other parties hereto in complying with the terms hereof.
5.7 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed by the Company and the Purchaser. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
5.8 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
5.9 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. No party to this Agreement may assign this Agreement or any rights or obligations hereunder without the prior written consent of each other party to this Agreement (other than by merger). Notwithstanding the foregoing, no prior written consent shall be required for the Purchaser to assign this Agreement or any rights or obligations hereunder to a Purchaser Affiliate.
5.10 Governing Law; Jurisdiction; Waiver of Jury Trial.
5.10.1 All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof; provided, that all matters relating to the duties of the members of the Company Board (or any committee thereof) shall be governed by the laws of the State of Maryland. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
28
5.10.2 EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.10.2.
5.11 Survival. All covenants and agreements contained in this Agreement that by their terms contemplate performance thereof following the Closing or otherwise expressly by their terms survive the Closing will survive the Closing until fully performed. All representations and warranties made by the Company, the Operating Partnership or the Purchaser in this Agreement shall survive until the eighteen (18)-month anniversary of the Closing.
5.12 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.
5.13 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
29
5.14 Remedies. The parties hereto hereby expressly recognize and acknowledge that immediate, extensive and irreparable damage would result, no adequate remedy at law would exist and damages would be difficult to determine in the event that any provision of this Agreement is not performed in accordance with its specific terms or otherwise breached. It is hereby agreed that the parties hereto shall be entitled to specific performance of the terms hereof and immediate injunctive relief and other equitable relief, without the necessity of proving the inadequacy of money damages as a remedy, and the parties hereto further hereby agree to waive any requirement for the securing or posting of a bond or other undertaking in connection with the obtaining of such injunctive or other equitable relief. Such remedy shall, however, be in addition to any other remedies whatsoever which either party hereto may otherwise have. Each of the parties hereto hereby acknowledges that the existence of any other remedy contemplated by this Agreement does not diminish the availability of specific performance of the obligations hereunder or any other injunctive relief. The parties hereto further agree not to (a) oppose the granting, or raise any objection to the availability or granting, of the equitable remedy of specific performance or other equitable relief to prevent or restrain breaches or threatened breaches of this Agreement or (b) assert that a remedy of specific performance is (i) unenforceable, invalid, contrary to Law or inequitable, in any case, on the basis that a remedy of monetary damages would provide an adequate remedy for any breach of this Agreement or (ii) not an appropriate remedy for any reason at law or equity. Notwithstanding the foregoing, if the Company becomes obligated to pay the Break-up Fee and the Reimbursement Expense pursuant to Section 5.2, and actually pays such Break-up Fee and such Reimbursement Expense, each of the parties hereto acknowledges and agrees that the right of the Purchaser to receive the Break-up Fee and the Reimbursement Expense in accordance with Section 5.2 shall (x) constitute liquidated damages with respect to any claim which the Purchaser would otherwise be entitled to assert against the Company or any of its respective assets, with respect to any such termination of this Agreement, and (y) be the sole and exclusive remedy of the Purchaser against or with respect to the Company for any Loss suffered as a result of any breach of any covenant or agreement, the failure of the transactions contemplated by this Agreement to be consummated, or otherwise relating to or arising out of this Agreement or the transactions contemplated hereby. If the Company does not become obligated to pay the Break-up Fee or the Reimbursement Expense and does not pay such Break-up Fee or such Reimbursement Expense after becoming obligated to do so, the Purchaser shall retain all of its rights pursuant to this Agreement and pursuant to applicable Law. While the Purchaser may pursue a grant of specific performance under this Section 5.14, under no circumstances shall the Purchaser be permitted or entitled to receive both a grant of specific performance and payment of both the Break-up Fee and the Reimbursement Expense.
5.15 Interpretation.
5.15.1 When a reference is made herein to an Article, Section or Exhibit, such reference shall be to an Article, Section of, or Exhibit to, this Agreement unless otherwise indicated. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part hereof as if set forth in full herein.
5.15.2 Whenever the words “include,” “includes” or “including” are used in this Agreement and are not followed by the words “without limitation”, they shall be deemed to be followed by the words “without limitation.”
5.15.3 Unless the context requires otherwise, “or” shall be construed in the inclusive sense of “and/or”, words using the singular or plural number in this Agreement also include the plural or singular number, respectively, the use of any gender herein shall be deemed to include the other genders, words denoting natural persons shall be deemed to include business entities and vice versa and references to a person are also to its permitted successors and assigns.
30
5.15.4 References to “dollars” or “$” in this Agreement are to U.S. dollars and all payments hereunder shall be made in U.S. dollars.
5.15.5 References to “U.S.” in this Agreement are to the United States of America.
5.15.6 The terms “hereof,” “herein,” “herewith,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement.
5.15.7 References herein to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder whether or not reference is made to such amendments, rules or regulations. Notwithstanding the foregoing, for purposes of any representations and warranties contained in this Agreement that are made as of a specific date or dates, references to any statute shall be deemed to refer to such statute, as amended, and to any rules or regulations promulgated thereunder, in each case, as of such date or dates.
5.15.8 The phrases “the date of this Agreement,” “the date hereof” and terms of similar import, unless the context otherwise appears, shall be deemed to refer to the date set forth in the first paragraph of this Agreement.
5.15.9 The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if” unless the context in which such phrase is used shall dictate otherwise.
5.15.10 All terms used herein with initial capital letters have the meanings ascribed to them in this Agreement, unless otherwise specified herein, and all terms defined in this Agreement will have such defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.
5.15.11 Any agreement or instrument defined or referred to herein means such agreement or instrument as from time to time amended, modified, or supplemented, including by waiver or consent, and references to all attachments thereto and instruments incorporated therein. References to any contract (including this Agreement) or organizational document are to the contract or organizational document as amended, modified, supplemented or replaced from time to time, unless otherwise stated.
5.15.12 All time periods within or following which any payment is to be made or act to be done shall be calculated by excluding the date on which the period commences and including the date on which the period ends and by extending the period to the first succeeding Business Day if the last day of the period is not a Business Day, if applicable.
5.15.13 Any requirement to provide “access” or “cooperate” (or derivative forms of those and other similar terms) shall be interpreted as requiring only electronic or telephonic access or cooperation and shall not require in-person meetings.
(Signature Pages Follow)
31
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| GREAT AJAX CORP. | Address for Notice: | ||
| 13190 SW 68th Parkway | |||
| Suite 110 | |||
| Tigard, OR 97223 | |||
| Email: larry@aspencapital.com | |||
| By: | /s/ Lawrence Mendelsohn | ||
| Name: | Lawrence Mendelsohn | ||
| Title: | Chief Executive Officer | ||
| GREAT AJAX OPERATING | Address for Notice: | ||
| PARTNERSHIP L.P. | 13190 SW 68th Parkway | ||
| Suite 110 | |||
| Tigard, OR 97223 | |||
| Email: larry@aspencapital.com | |||
| By: | /s/ Lawrence Mendelsohn | ||
| Name: | Lawrence Mendelsohn | ||
| Title: | Member | ||
| THETIS ASSET MANAGEMENT LLC | Address for Notice: | ||
| 13190 SW 68th Parkway | |||
| Suite 110 | |||
| Tigard, OR 97223 | |||
| Email: larry@aspencapital.com | |||
| By: | /s/ Lawrence Mendelsohn | ||
| Name: | Lawrence Mendelsohn | ||
| Title: | Manager | ||
With a copy to (which shall not constitute notice):
Anna T. Pinedo
Mayer Brown LLP
1221 Avenue of the Americas
New York, NY 10020
Tel: (212) 506-2275
Email: apinedo@mayerbrown.com
Signature Page to Securities Purchase Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| RITHM CAPITAL CORP. | ||
| By: | /s/ Nicola Santoro Jr. | |
| Name: | Nicola Santoro Jr. | |
| Title: | Chief Financial Officer | |
Address for Notice to Purchaser:
Rithm Capital Corp.
799 Broadway
New York, New York 10003
Attention: Philip Sivin
Email: psivin@rithmcap.com
With a copy to (which shall not constitute notice):
Sidley Austin LLP
2021 McKinney Avenue
Suite 2000
Dallas, TX 75201
Attention: William D. Howell; Courtney J. Gilberg
Email: bhowell@sidley.com; cgilberg@sidley.com
Signature Page to Securities Purchase Agreement
Exhibit 10.6
Form of Execution Version
REGISTRATION RIGHTS AGREEMENT
BETWEEN
GREAT AJAX CORP.
AND
RITHM CAPITAL CORP.
This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of [ ], 2024 between Great Ajax Corp., a Maryland corporation (the “Company”), and Rithm Capital Corp., a Delaware corporation (the “Purchaser”).
WHEREAS, this Agreement is entered into in connection with the issuance and sale of the Common Stock (as defined below) and the Warrants (as defined below) to the Purchaser pursuant to the Securities Purchase Agreement, dated as of February 26, 2024 (the “Securities Purchase Agreement”), by and among the Company, Great Ajax Operating Partnership L.P., Thetis Asset Management LLC and the Purchaser;
WHEREAS, the Company has agreed to provide the registration and other rights set forth in this Agreement for the benefit of the Purchaser pursuant to the Securities Purchase Agreement; and
WHEREAS, it is a condition to the funding obligations in favor of the Company under the Credit Agreement, dated as of February 26, 2024, by and among the Company and the Lenders, Administrative Agent and Collateral Agent identified therein, that this Agreement be executed and delivered.
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each party hereto, the parties hereby agree as follows:
Article
I
DEFINITIONS
Section 1.01 Definitions. Capitalized terms used herein without definition shall have the meanings given to them in the Securities Purchase Agreement. The terms set forth below are used herein as so defined:
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
“Agreement” has the meaning specified therefor in the introductory paragraph of this Agreement.
“Business Day” means any day other than a Saturday, Sunday, any federal legal holiday or day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Closing Date” has the meaning specified therefor in the Securities Purchase Agreement.
“Common Stock” means the Company’s common stock, par value $0.01 per share.
“Company” has the meaning specified therefor in the introductory paragraph of this Agreement.
“Effective Date” means, with respect to a particular Shelf Registration Statement, the date of effectiveness of such Shelf Registration Statement.
“Effectiveness Deadline” means the date which is four Business Days after (i) the Company receives written notification from the Staff of the SEC (the “SEC Staff”) that a Registration Statement will not become subject to any review or comment process by the SEC Staff or (ii) the date that the SEC Staff provides verbal or written indication to the Company that it has completed its review of a Registration Statement.
“Effectiveness Period” means the period beginning on the Effective Date for the Registration Statement and ending at the time all Registrable Securities covered by such Registration Statement have ceased to be Registrable Securities.
“Electing Holders” has the meaning specified therefor in Section 2.04 of this Agreement.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Governmental Authority” means any federal, state, local or foreign government, or other governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body.
“Holder” means the record holder of any Registrable Securities.
“Included Registrable Securities” has the meaning specified therefor in Section 2.02(a) of this Agreement.
“Launch” has the meaning specified therefor in Section 2.04 of this Agreement.
“Law” means any statute, law, ordinance, regulation, rule, order, code, governmental restriction, decree, injunction or other requirement of law, or any judicial or administrative interpretation thereof, of any Governmental Authority.
“Losses” has the meaning specified therefor in Section 2.08(a) of this Agreement.
“Managing Underwriter” means, with respect to any Underwritten Offering, the book-running lead manager of such Underwritten Offering.
“NYSE” means The New York Stock Exchange, Inc.
“Opt-Out Notice” has the meaning specified therefor in Section 2.02(a) of this Agreement.
“Person” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other entity.
“Post-Launch Withdrawing Selling Holders” has the meaning specified therefor in Section 2.04 of this Agreement.
“Purchaser” has the meaning specified therefor in the introductory paragraph of this Agreement.
2
“Registrable Securities” means (i) the Common Stock issued to the Purchaser pursuant to the Securities Purchase Agreement and (ii) the Common Stock issued or issuable to the Purchaser upon the due exercise of the Warrants.
“Registration Expenses” has the meaning specified therefor in Section 2.07(b) of this Agreement.
“Registration Statement” has the meaning specified therefor in Section 2.01 of this Agreement.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Securities Purchase Agreement” has the meaning specified therefor in the introductory paragraph of this Agreement.
“Selling Expenses” has the meaning specified therefor in Section 2.07(b) of this Agreement.
“Selling Holder” means a Holder who is selling Registrable Securities under a Registration Statement pursuant to the terms of this Agreement.
“Selling Holder Indemnified Persons” has the meaning specified therefor in Section 2.08(a) of this Agreement.
“Shelf Registration Statement” means a registration statement under the Securities Act to permit the public resale of the Registrable Securities from time to time as permitted by Rule 415 under the Securities Act (or any successor or similar provision adopted by the SEC then in effect).
“Underwritten Offering” means an offering (including an offering pursuant to a Shelf Registration Statement) in which Registrable Securities are sold to one or more underwriters on a firm commitment basis for reoffering to the public or an offering that is a “bought deal” with one or more investment banks.
“Underwritten Offering Notice” has the meaning specified therefor in Section 2.04 of this Agreement.
“VWAP Price” means, for each such period of measurement, the volume weighted average closing price of a share of Common Stock on the national securities exchange on which the Common Stock is then listed (or admitted to trading).
“Warrants” means the Warrants to be issued pursuant to the Securities Purchase Agreement and the Warrant Agreement, dated February [ ], 2024, by and between the Company and Equiniti Trust Company.
Section 1.02 Registrable Securities. Any Registrable Security shall cease to be a Registrable Security at the earliest of the following: (a) when a registration statement covering such Registrable Security becomes or has been declared effective by the SEC and such Registrable Security has been sold or disposed of pursuant to such effective registration statement; (b) when such Registrable Security has been sold or disposed of (excluding transfers or assignments by a Holder to an Affiliate) pursuant to Rule 144 under the Securities Act (or any successor or similar provision adopted by the SEC then in effect) under circumstances in which all of the applicable conditions of Rule 144 (as then in effect) are met; (c) when such Registrable Security is held by the Company or one of its direct or indirect subsidiaries; or (d) when such Registrable Security has been sold or disposed of in a private transaction in which the transferor’s rights under this Agreement are not assigned to the transferee of such securities pursuant to Section 2.09 hereof.
3
Article
II
REGISTRATION RIGHTS
Section 2.01 Shelf Registration.
As soon as practicable, but in any event on or prior to the earlier of (a) the closing of the transactions contemplated by the Securities Purchase Agreement and (ii) any termination of the Securities Purchase Agreement in accordance with its terms, the Company shall use commercially reasonable efforts to prepare and file a Shelf Registration Statement with the SEC to permit the public resale of all Registrable Securities on the terms and conditions specified in this Section 2.01 (a “Registration Statement”). The Registration Statement filed with the SEC pursuant to this Section 2.01 shall be on Form S-3 or, if Form S-3 is not then available to the Company, on Form S-1 or such other form of registration statement as is then available to effect a registration for resale of the Registrable Securities, covering the Registrable Securities, and shall contain a prospectus in such form as to permit any Selling Holder covered by such Registration Statement to sell such Registrable Securities pursuant to Rule 415 under the Securities Act (or any successor or similar provision adopted by the SEC then in effect) at any time beginning on the Effective Date for such Registration Statement. The Company shall use commercially reasonable efforts to cause a Registration Statement filed pursuant to this Section 2.01 to be declared effective as soon as practicable, but in any event no later than the Effectiveness Deadline, and shall respond as promptly as practicable to any comments received from the SEC or the SEC Staff in connection therewith. A Registration Statement shall provide for the resale pursuant to any method or combination of methods legally available to, and requested by, the Selling Holders, including by way of an Underwritten Offering, if such an election has been made pursuant to Section 2.04 of this Agreement. During the Effectiveness Period, the Company shall use commercially reasonable efforts to cause a Registration Statement filed pursuant to this Section 2.01 to remain effective, and to be supplemented and amended to the extent necessary to ensure that such Registration Statement is available or, if not available, that another registration statement is available for the resale of the Registrable Securities until the date on which all Registrable Securities have ceased to be Registrable Securities. The Company shall prepare and file a supplemental listing application with the NYSE (or such other national securities exchange on which the Registrable Securities are then listed and traded) to list the Registrable Securities covered by a Registration Statement and shall use commercially reasonable efforts to have such Registrable Securities approved for listing on the NYSE (or such other national securities exchange on which the Registrable Securities are then listed and traded) by the Effective Date of such Registration Statement, subject only to official notice of issuance. Within two Business Days of the Effective Date of a Registration Statement, the Company shall notify the Selling Holders of the effectiveness of such Registration Statement.
When effective, a Registration Statement (including the documents incorporated therein by reference) will comply as to form in all material respects with all applicable requirements of the Securities Act and the Exchange Act and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any prospectus contained in such Registration Statement, in the light of the circumstances under which a statement is made). If the Managing Underwriter of any proposed Underwritten Offering of Registrable Securities (other than an Underwritten Offering of Included Registrable Securities pursuant to Section 2.02) advises the Company that the inclusion of all of the Selling Holders’ Registrable Securities that the Selling Holders intend to include in such Underwritten Offering exceeds the number that can be sold in such Underwritten Offering without being likely to have an adverse effect on the price, timing or distribution of the Registrable Securities offered or the market for the Registrable Securities, then the Registrable Securities to be included in such Underwritten Offering shall include the number of Registrable Securities that such Managing Underwriter advises the Company can be sold without having such adverse effect, with such number to be allocated (i) first, to the Selling Holders, allocated among such Selling Holders pro rata on the basis of the number of Registrable Securities held by each such Selling Holder or in such other manner as such Selling Holders may agree, and (ii) second, to any other holder of securities of the Company having rights of registration that are neither expressly senior nor subordinated to the Holders in respect of the Registrable Securities. The Company has received the necessary consents, or otherwise obtained a waiver, from each applicable holder who has existing rights pursuant to any registration rights agreement with the Company that would otherwise be violated by the rights granted hereunder.
4
Section 2.02 Piggyback Rights.
(a) Participation. So long as a Holder has Registrable Securities, if the Company proposes to file (i) a shelf registration statement other than a Registration Statement contemplated by Section 2.01, (ii) a prospectus supplement to an effective shelf registration statement relating to the sale of equity securities of the Company for its own account or that of another Person, or both, other than a Registration Statement contemplated by Section 2.01, and Holders may be included without the filing of a post-effective amendment thereto, or (iii) a registration statement, other than a shelf registration statement, in each case, for the sale of shares of Common Stock in an Underwritten Offering for its own account or that of another Person, or both, then promptly following the selection of the Managing Underwriter for such Underwritten Offering, the Company shall give written notice of such Underwritten Offering to the Holders of the then-outstanding Registrable Securities and such notice shall offer such Holders the opportunity to include in such Underwritten Offering such number of Registrable Securities (the “Included Registrable Securities”) as each such Holder may request in writing; provided, however, that if the Company has been advised by the Managing Underwriter that the inclusion of Registrable Securities for sale for the benefit of the Holders will have an adverse effect on the price, timing or distribution of the shares of Common Stock in the Underwritten Offering, then (x) if no Registrable Securities can be included in the Underwritten Offering in the opinion of the Managing Underwriter, the Company shall not be required to offer such opportunity to the Holders, or (y) if any Registrable Securities can be included in the Underwritten Offering in the opinion of the Managing Underwriter, then the amount of Registrable Securities to be offered for the accounts of Holders shall be determined based on the provisions of Section 2.02(b). Any notice required to be provided in this Section 2.02(a) to Holders shall be provided on a Business Day and receipt of such notice shall be confirmed by the Holder. Each such Holder shall then have five Business Days after notice has been delivered to request in writing the inclusion of Registrable Securities in the Underwritten Offering. If no written request for inclusion from a Holder is received within the specified time, each such Holder shall have no further right to participate in such Underwritten Offering. If, at any time after giving written notice of its intention to undertake an Underwritten Offering and prior to the closing of such Underwritten Offering, the Company shall determine for any reason not to undertake or to delay such Underwritten Offering, the Company may, at its election, give written notice of such determination to the Selling Holders and, (1) in the case of a determination not to undertake such Underwritten Offering, shall be relieved of its obligation to sell any Included Registrable Securities in connection with such terminated Underwritten Offering, and (2) in the case of a determination to delay such Underwritten Offering, shall be permitted to delay offering any Included Registrable Securities as part of such Underwritten Offering for the same period as the delay in the Underwritten Offering. Any Selling Holder shall have the right to withdraw such Selling Holder’s request for inclusion of such Selling Holder’s Registrable Securities in such Underwritten Offering by giving written notice to the Company of such withdrawal at or prior to the time of pricing of such Underwritten Offering. Any Holder may deliver written notice (an “Opt-Out Notice”) to the Company requesting that such Holder not receive notice from the Company of any proposed Underwritten Offering; provided, however, that such Holder may later revoke any such Opt-Out Notice in writing. Following receipt of an Opt-Out Notice from a Holder (unless subsequently revoked), the Company shall not be required to deliver any notice to such Holder pursuant to this Section 2.02(a) and such Holder shall no longer be entitled to participate in Underwritten Offerings by the Company pursuant to this Section 2.02(a).
5
(b) Priority. If the Managing Underwriter of any proposed Underwritten Offering of shares of Common Stock included in an Underwritten Offering involving Included Registrable Securities pursuant to this Section 2.02 advises the Company and the Selling Holders that the total number of shares of Common Stock that the Selling Holders and any other Persons intend to include in such Underwritten Offering exceeds the number of shares of Common Stock that can be sold in such Underwritten Offering without being likely to have an adverse effect on the price, timing or distribution of shares of the Common Stock offered or the market for the shares of Common Stock, then the shares of Common Stock to be included in such Underwritten Offering shall include the number of Registrable Securities that such Managing Underwriter advises the Company can be sold without having such adverse effect, with such number to be allocated (i) first, to the Company or other party or parties requesting or initiating such registration or to any other holder of securities of the Company having rights of registration pursuant to an existing registration rights agreement and (ii) second, by the Selling Holders who have requested participation in such Underwritten Offering and by the other holders of shares of Common Stock (other than holders of Registrable Securities) with registration rights entitling them to participate in such Underwritten Offering, allocated among such Selling Holders and other holders pro rata on the basis of the number of Registrable Securities or shares of Common Stock proposed to be sold by each applicable Selling Holder or other holder in such Underwritten Offering (based, for each such participant, on the percentage derived by dividing (x) the number of shares of Common Stock proposed to be sold by such participant in such Underwritten Offering by (y) the aggregate number of shares of Common Stock proposed to be sold by all participants in such Underwritten Offering) or in such manner as they may agree. The allocation of shares of Common Stock to be included in any Underwritten Offering, other than an Underwritten Offering involving Included Registrable Securities pursuant to this Section 2.02, shall be governed by Section 2.01.
Section 2.03 Delay Rights.
Notwithstanding anything to the contrary contained herein, the Company may, upon written notice to (i) all Holders, delay the filing of a Registration Statement required under Section 2.01, or (ii) any Selling Holder whose Registrable Securities are included in a Registration Statement or other registration statement contemplated by this Agreement, suspend such Selling Holder’s use of any prospectus that is a part of such Registration Statement or other registration statement (in which event the Selling Holder shall discontinue sales of the Registrable Securities pursuant to such Registration Statement or other registration statement contemplated by this Agreement but may settle any previously made sales of Registrable Securities) if the Company (x) is pursuing an acquisition, merger, reorganization, disposition or other similar transaction and the Company determines in good faith that the Company’s ability to pursue or consummate such a transaction would be materially adversely affected by any required disclosure of such transaction in such Registration Statement or other registration statement or (y) has experienced some other material non-public event the disclosure of which at such time, in the good faith judgment of the Company, would materially adversely affect the Company; provided, however, in no event shall (A) filing of such Registration Statement be delayed under clauses (x) or (y) of this Section 2.03 for a period that exceeds 90 calendar days or (B) such Selling Holders be suspended under clauses (x) or (y) of this Section 2.03 from selling Registrable Securities pursuant to such Registration Statement or other registration statement for a period that exceeds an aggregate of 60 calendar days in any 180 calendar-day period or 120 calendar days in any 365 calendar-day period, in each case, exclusive of days covered by any lock-up agreement executed by a Selling Holder in connection with any Underwritten Offering. Upon disclosure of such information or the termination of the condition described above, the Company shall provide prompt written notice, but in any event within one Business Day of such disclosure or termination, to the Selling Holders whose Registrable Securities are included in such Registration Statement and shall promptly terminate any suspension of sales it has put into effect and shall take such other reasonable actions to permit registered sales of Registrable Securities as contemplated in this Agreement.
6
Section 2.04 Underwritten Offerings.
In the event that any Holder (the “Electing Holder”) elects to include, other than pursuant to Section 2.02 of this Agreement, at least the lesser of (i) $5.0 million of Registrable Securities in the aggregate (calculated based on the expected gross proceeds of the Underwritten Offering of such Registrable Securities) and (ii) 100% of the then outstanding Registrable Securities held by such Electing Holder under a Registration Statement pursuant to an Underwritten Offering, the Company shall, upon request by the Electing Holders (such request, an “Underwritten Offering Notice”), retain underwriters to permit the Electing Holders to effect such sale through an Underwritten Offering; provided, however, that each Holder, together with its Affiliates, shall have the option and right to require the Company to effect not more than four Underwritten Offerings in the aggregate, subject to a maximum of one Underwritten Offering during any 90-day period. Upon delivery of such Underwritten Offering Notice to the Company, the Company shall as soon as practicable (but in no event later than one Business Day following the date of delivery of the Underwritten Offering Notice to the Company) deliver notice of such Underwritten Offering Notice to all other Holders, who shall then have two Business Days from the date that such notice is given to them to notify the Company in writing of the number of Registrable Securities held by such Holder that they want to be included in such Underwritten Offering. In connection with any Underwritten Offering under this Agreement, the Holders of a majority of the Registrable Securities being sold in such Underwritten Offering shall be entitled to select the Managing Underwriter or Underwriters, but only with the consent of the Company, which shall not be unreasonably withheld, delayed or conditioned. In connection with an Underwritten Offering contemplated by this Agreement in which a Selling Holder participates, such Selling Holder and the Company shall be obligated to enter into an underwriting agreement that contains such representations, covenants, indemnities and other rights and obligations as are customary in underwriting agreements for firm commitment offerings of securities. No Selling Holder may participate in such Underwritten Offering unless such Selling Holder agrees to sell its Registrable Securities on the basis provided in such underwriting agreement and completes and executes all questionnaires, powers of attorney, indemnities and other documents reasonably required under the terms of such underwriting agreement. Each Selling Holder may, at its option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters also be made to and for such Selling Holder’s benefit and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement also be conditions precedent to its obligations. The Selling Holder shall not be required to (a) make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Selling Holder, its authority to enter into such underwriting agreement and to sell, and its ownership of, the securities whose offer and resale will be registered, on its behalf, its intended method of distribution and any other representation required by Law, or (b) to undertake any indemnification obligations to the Company or the underwriters with respect thereto, except as otherwise provided in Section 2.08. If a Selling Holder disapproves of the terms of an underwriting, such Selling Holder may elect to withdraw therefrom by notice to the Company, the Electing Holders and the Managing Underwriter; provided, however, that any such withdrawal must be made no later than the time of pricing of such Underwritten Offering. No such withdrawal or abandonment shall affect the Company’s obligation to pay Registration Expenses pursuant to Section 2.07; provided, however, that if (A) certain Selling Holders withdraw from an Underwritten Offering after the public announcement at launch (the “Launch”) of such Underwritten Offering (such Selling Holders, the “Post-Launch Withdrawing Selling Holders”), and (B) all Selling Holders withdraw from such Underwritten Offering prior to pricing, other than in either clause (A) or (B) as a result of the occurrence of any event that would reasonably be expected to permit the Company to exercise its rights to suspend the use of a Registration Statement or other registration statement pursuant to Section 2.03, then the Post-Launch Withdrawing Selling Holders shall pay for all reasonable Registration Expenses incurred by the Company during the period from the Launch of such Underwritten Offering until the time all Selling Holders withdraw from such Underwritten Offering.
7
Section 2.05 Sale Procedures.
In connection with its obligations under this Article II, the Company shall, as expeditiously as possible:
(a) use its reasonable best efforts to prepare and file with the SEC such amendments and supplements to a Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for the Effectiveness Period and as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Registration Statement;
(b) if a prospectus supplement will be used in connection with the marketing of an Underwritten Offering from a Registration Statement and the Managing Underwriter at any time shall notify the Company in writing that, in the sole judgment of such Managing Underwriter, inclusion of detailed information to be used in such prospectus supplement is of material importance to the success of the Underwritten Offering of such Registrable Securities, the Company shall use its reasonable best efforts to include such information in such prospectus supplement;
(c) furnish to each Selling Holder (i) as far in advance as reasonably practicable before filing a Registration Statement or any other registration statement contemplated by this Agreement or any supplement or amendment thereto, upon request, copies of reasonably complete drafts of all such documents proposed to be filed (including exhibits and each document incorporated by reference therein to the extent then required by the rules and regulations of the SEC), and provide each such Selling Holder the opportunity to object to any information pertaining to such Selling Holder and its plan of distribution that is contained therein and make the corrections reasonably requested by such Selling Holder with respect to such information prior to filing a Registration Statement or such other registration statement or supplement or amendment thereto, and (ii) such number of copies of such Registration Statement or such other registration statement and the prospectus included therein and any supplements and amendments thereto as such Selling Holder may reasonably request in order to facilitate the sale or other disposition of the Registrable Securities covered by such Registration Statement or other registration statement;
(d) if applicable, use its reasonable best efforts to register or qualify the Registrable Securities covered by a Registration Statement or any other registration statement contemplated by this Agreement under the securities or blue sky laws of such jurisdictions as the Selling Holders or, in the case of an Underwritten Offering, the Managing Underwriter, shall reasonably request; provided, however, that the Company shall not be required to qualify generally to transact business in any jurisdiction where it is not then required to so qualify or to take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject;
(e) promptly notify each Selling Holder, at any time when a prospectus relating thereto is required to be delivered by any of them under the Securities Act, of (i) the filing of a Registration Statement or any other registration statement contemplated by this Agreement or any prospectus or prospectus supplement to be used in connection therewith, or any amendment or supplement thereto, and, with respect to such Registration Statement or any other registration statement or any post-effective amendment thereto, when the same has become effective; and (ii) the receipt of any written comments from the SEC with respect to any filing referred to in clause (i) and any written request by the SEC for amendments or supplements to such Registration Statement or any other registration statement or any prospectus or prospectus supplement thereto;
8
(f) promptly notify each Selling Holder, at any time when a prospectus relating thereto is required to be delivered by such Selling Holder under the Securities Act, of (i) the happening of any event as a result of which the prospectus or prospectus supplement contained in a Registration Statement or any other registration statement contemplated by this Agreement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any prospectus contained therein, in the light of the circumstances under which a statement is made); (ii) the issuance or express threat of issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or any other registration statement contemplated by this Agreement, or the initiation of any proceedings for that purpose; or (iii) the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction. Following the provision of such notice, the Company agrees to as promptly as practicable amend or supplement the prospectus or prospectus supplement or take other appropriate action so that the prospectus or prospectus supplement does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and to take such other commercially reasonable action as is necessary to remove a stop order, suspension, threat thereof or proceedings related thereto;
(g) upon request and subject to appropriate confidentiality obligations, furnish to each Selling Holder copies of any and all transmittal letters or other correspondence with the SEC or any other governmental agency or self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering of Registrable Securities;
(h) in the case of an Underwritten Offering, furnish, or use its reasonable best efforts to cause to be furnished, to the underwriters upon request, (i) an opinion of counsel for the Company dated the date of the closing under the underwriting agreement and (ii) a “comfort” letter, dated the pricing date of such Underwritten Offering and a letter of like kind dated the date of the closing under the underwriting agreement, in each case, signed by the independent public accountants who have certified the Company’s financial statements included or incorporated by reference into the applicable registration statement, and each of the opinion and the “comfort” letter shall be in customary form and covering substantially the same matters with respect to such registration statement (and the prospectus and any prospectus supplement included therein) as have been customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to the underwriters in Underwritten Offerings of securities by the Company and such other matters as such underwriters and Selling Holders may reasonably request;
(i) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement, covering a period of twelve months beginning within three months after the Effective Date of such Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;
(j) make available to the appropriate representatives of the Managing Underwriter and Selling Holders access to such information and the Company personnel as is reasonable and customary to enable such parties to establish a due diligence defense under the Securities Act; provided, that the Company need not disclose any non-public information to any such representative unless and until such representative has entered into a confidentiality agreement with the Company;
(k) if the minimum listing standards of the NYSE are satisfied, use its reasonable best efforts to cause all Registrable Securities registered pursuant to this Agreement to be listed on each securities exchange or nationally recognized quotation system on which the Common Stock are then listed or quoted;
9
(l) use its reasonable best efforts to cause the Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the Selling Holders to consummate the disposition of such Registrable Securities;
(m) provide a transfer agent and registrar for all Registrable Securities covered by such registration statement not later than the Effective Date of such registration statement;
(n) enter into customary agreements and take such other actions as are reasonably requested by the Selling Holders or the underwriters, if any, in order to expedite or facilitate the disposition of Registrable Securities (including, making appropriate officers of the Company available to participate in any “road show” presentations before analysts, and other customary marketing activities), provided, however, that in the event the Company, using reasonable best efforts, is unable to make such appropriate officers of the Company available to participate in connection with any “road show” presentations and other customary marketing activities (whether in person or otherwise), the Company shall make such appropriate officers available to participate via conference call or other means of communication in connection with no more than one “road show” presentation per Underwritten Offering;
(o) if requested by a Selling Holder, (i) incorporate in a prospectus supplement or post-effective amendment such information as such Selling Holder reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering, and (ii) make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment;
(p) if reasonably required by the Company’s transfer agent, the Company shall promptly deliver any authorizations, certificates, opinions or directions required by the transfer agent which authorize and direct the transfer agent to transfer Registrable Securities without legend upon sale by the Holder of such Registrable Securities under a Registration Statement; and
Notwithstanding anything to the contrary in this Section 2.05, the Company shall not name a Holder as an underwriter as defined in Section 2(a)(11) of the Securities Act in any Registration Statement without such Holder’s consent. If the staff of the SEC requires the Company to name any Holder as an underwriter as defined in Section 2(a)(11) of the Securities Act, and such Holder does not consent thereto, then such Holder’s Registrable Securities shall not be included on such Registration Statement and the Company shall have no further obligations hereunder with respect to Registrable Securities held by such Holder, unless such Holder has not had an opportunity to conduct customary underwriter’s due diligence with respect to the Company at the time such Holder’s consent is sought.
Each Selling Holder, upon receipt of notice from the Company of the happening of any event of the kind described in Section 2.05(f), shall forthwith discontinue offers and sales of the Registrable Securities by means of a prospectus or prospectus supplement until such Selling Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 2.05(f) or until it is advised in writing by the Company that the use of the prospectus may be resumed and has received copies of any additional or supplemental filings incorporated by reference in the prospectus, and, if so directed by the Company, such Selling Holder shall, or shall request the Managing Underwriter, if any, to deliver to the Company (at the Company’s expense) all copies in their possession or control, other than permanent file copies then in such Selling Holder’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.
10
Section 2.06 Cooperation by Holders.
The Company shall have no obligation to include Registrable Securities of a Holder in a Registration Statement or in an Underwritten Offering who has failed to timely furnish after receipt of a written request from the Company such information that the Company determines, after consultation with its counsel, is reasonably required in order for the registration statement or prospectus supplement, as applicable, to comply with the Securities Act.
Section 2.07 Expenses.
(a) Expenses. The Company shall pay all reasonable Registration Expenses as determined in good faith by the Company, including, in the case of an Underwritten Offering, the reasonable Registration Expenses of an Underwritten Offering, regardless of whether any sale is made pursuant to such Underwritten Offering. Each Selling Holder shall pay its pro rata share of all Selling Expenses in connection with any sale of its Registrable Securities hereunder. Each Selling Holder’s pro rata allocation of Selling Expenses shall be the percentage derived by dividing (i) the number of Registrable Securities sold by such Selling Holder in connection with such sale by (ii) the aggregate number of Registrable Securities sold by all Selling Holders in connection with such sale. In addition, except as otherwise provided in Section 2.08 hereof, the Company shall not be responsible for legal fees incurred by Holders in connection with the exercise of such Holders’ rights hereunder.
(b) Certain Definitions. “Registration Expenses” means all expenses incident to the Company’s performance under or compliance with this Agreement to effect the registration of Registrable Securities on a Registration Statement pursuant to Section 2.01 or an Underwritten Offering covered under this Agreement, and the disposition of such Registrable Securities, including, without limitation, all registration, filing, securities exchange listing and NYSE fees, all registration, filing, qualification and other fees and expenses of complying with securities or blue sky laws, fees of the Financial Industry Regulatory Authority, Inc., fees of transfer agents and registrars, all word processing, duplicating and printing expenses, any transfer taxes, and the fees and disbursements of counsel and independent public accountants for the Company, including the expenses of any special audits or “comfort” letters required by or incident to such performance and compliance, and the reasonable fees and disbursements of one counsel for the Selling Holders participating in such Registration Statement or Underwritten Offering to effect the disposition of such Registrable Securities, selected by the Holders of a majority of the Registrable Securities initially being registered under such Registration Statement or other registration statement as contemplated by this Agreement. “Selling Expenses” means all underwriting discounts and selling commissions or similar fees or arrangements allocable to the sale of the Registrable Securities, and fees and disbursements of counsel to the Selling Holders, except for the reasonable fees and disbursements of counsel for the Selling Holders required to be paid by the Company pursuant to Section 2.08.
Section 2.08 Indemnification.
(a) By the Company. The Company shall indemnify and hold harmless each Selling Holder thereunder, its directors, officers, managers, stockholders, members, partners, employees and agents, and their respective successors and assigns, and each Person, if any, who controls such Selling Holder within the meaning of the Securities Act and the Exchange Act, and its directors, officers, managers, stockholders, members, partners, employees or agents, and their respective successors and assigns (collectively, the “Selling Holder Indemnified Persons”), against any losses, claims, damages, expenses or liabilities (including reasonable attorneys’ fees and expenses) (collectively, “Losses”), joint or several, to which such Selling Holder Indemnified Person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact (in the case of any prospectus, in light of the circumstances under which such statement is made) contained in (which includes documents incorporated by reference in) a Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus, prospectus supplement or final prospectus contained therein, or any amendment or supplement thereof, or any free writing prospectus relating thereto or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in light of the circumstances under which they were made) not misleading, or any violation or alleged violation by the Company of the Securities Act or any other similar federal or state securities laws or any rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and shall reimburse each such Selling Holder Indemnified Person for any legal or other expenses reasonably incurred by them in connection with investigating, defending or resolving any such Loss or actions or proceedings; provided, however, that the Company shall not be liable in any such case if and to the extent that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Selling Holder Indemnified Person in writing specifically for use in such Registration Statement or such other registration statement, or prospectus supplement, as applicable. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Selling Holder Indemnified Person, and shall survive the transfer of such securities by such Selling Holder.
11
(b) By Each Selling Holder. Each Selling Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, officers, employees and agents and each Person, if any, who controls the Company within the meaning of the Securities Act or of the Exchange Act, and its directors, officers, employees and agents, to the same extent as the foregoing indemnity from the Company to the Selling Holders, but only with respect to information regarding such Selling Holder furnished in writing by or on behalf of such Selling Holder expressly for inclusion in such Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus, prospectus supplement or final prospectus contained therein, or any amendment or supplement thereof, or any free writing prospectus relating thereto; provided, however, that the liability of each Selling Holder shall not be greater in amount than the dollar amount of the proceeds (net of any Selling Expenses) received by such Selling Holder from the sale of the Registrable Securities giving rise to such indemnification.
(c) Notice. Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission to so notify the indemnifying party shall not relieve it from any liability that it may have to any indemnified party. The indemnifying party shall be entitled to participate in and, to the extent it so desires, to assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified party and, after written notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 2.08 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however, that, (i) if the indemnifying party has failed to timely assume the defense or employ counsel reasonably acceptable to the indemnified party or (ii) if the defendants in any such action include both the indemnified party and the indemnifying party and counsel to the indemnified party shall have concluded that there may be reasonable defenses available to the indemnified party that are different from or additional to those available to the indemnifying party, or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, then the indemnified party shall have the right to select a separate counsel and to assume such legal defense and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other reasonable expenses related to such participation to be reimbursed by the indemnifying party as incurred. Notwithstanding any other provision of this Agreement, no indemnifying party shall settle any action brought against any indemnified party with respect to which such indemnified party is entitled to indemnification hereunder without the consent of the indemnified party, unless the settlement thereof imposes no liability or obligation on, and includes a complete and unconditional release from all liability of, and does not contain any admission of wrongdoing by, the indemnified party.
12
(d) Contribution. If the indemnification provided for in this Section 2.08 is held by a court or government agency of competent jurisdiction to be unavailable to any indemnified party or is insufficient to hold them harmless in respect of any Losses, then each such indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of such indemnified party, on the other hand, in connection with the statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations; provided, however, that in no event shall such Selling Holder be required to contribute an aggregate amount in excess of the dollar amount of proceeds (net of Selling Expenses) received by such Selling Holder from the sale of Registrable Securities giving rise to such indemnification. The relative fault of the indemnifying party on the one hand and the indemnified party on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact has been made by, or relates to, information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this paragraph were to be determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to herein. The amount paid by an indemnified party as a result of the Losses referred to in the first sentence of this paragraph shall be deemed to include any legal and other expenses reasonably incurred by such indemnified party in connection with investigating, defending or resolving any Loss that is the subject of this paragraph. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.
(e) Other Indemnification. The provisions of this Section 2.08 shall be in addition to any other rights to indemnification or contribution that an indemnified party may have pursuant to law, equity, contract or otherwise.
Section 2.09 Rule 144 Reporting.
With a view to making available the benefits of certain rules and regulations of the SEC that may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its reasonable best efforts to:
(a) make and keep public information regarding the Company available, as those terms are understood and defined in Rule 144 under the Securities Act (or any successor or similar provision adopted by the SEC then in effect), at all times from and after the date hereof;
(b) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act at all times from and after the date hereof; and
(c) so long as a Holder owns any Registrable Securities, furnish, unless otherwise available electronically at no additional charge via the SEC’s EDGAR system, to such Holder forthwith upon request a copy of the most recent annual or quarterly report of the Company, and such other reports and documents as such Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing such Holder to sell any such securities without registration.
13
Section 2.10 Transfer or Assignment of Registration Rights.
The rights to cause the Company to register Registrable Securities granted to the Purchaser by the Company under this Article II may be transferred or assigned by the Purchaser to one or more transferees or assignees of Registrable Securities, subject to the transfer restrictions provided in the Securities Purchase Agreement, provided, however, that (a) the Company is given written notice prior to any said transfer or assignment, stating the name and address of each of the transferee or assignee and identifying the Registrable Securities with respect to which such registration rights are being transferred or assigned and (b) each such transferee or assignee assumes in writing responsibility for its portion of the obligations of the Purchaser under this Agreement.
Section 2.11 Limitation on Subsequent Registration Rights.
From and after the date hereof, the Company shall not, without the prior written consent of the Holders of a majority of the then outstanding Registrable Securities, enter into any agreement with any current or future holder of any equity securities of the Company that (a) is inconsistent with or grants registration rights that are superior in any respect to the rights granted to the Purchaser in this Agreement or otherwise conflicts with the provisions hereof or (b) limits the number of Registrable Shares that would otherwise be included pursuant to this Agreement. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the then outstanding Registrable Securities file or have declared effective a registration statement for equity securities before the initial Registration Statement required pursuant to Section 2.01 is declared effective
Article
III
MISCELLANEOUS
Section 3.01 Communications.
All notices and other communications provided for or permitted hereunder shall be made in writing by electronic mail, courier service or personal delivery:
(a) if to the Purchaser:
Rithm Capital Corp.
799 Broadway
New York, New York 10003
Attention: Philip Sivin
Email: psivin@rithmcap.com
with a copy to (which shall not constitute notice):
Sidley Austin LLP
2021 McKinney Avenue
Suite 2000
Dallas, TX 75201
Attention: William D. Howell; Courtney J. Gilberg
Email: bhowell@sidley.com; cgilberg@sidley.com
and (b) if to the Company:
Great Ajax Corp.
9400 SW Beaverton-Hillsdale Hwy
Suite 131
Beaverton, Oregon 97005
Attention: Lawrence Mendelsohn
Email: larry@aspencapital.com
14
with a copy to (which shall not constitute notice):
Mayer Brown LLP
1221 Avenue of the Americas
New York, NY 10020
Attention: Anna Pinedo
Telephone: (212) 506-2275
Email: apinedo@mayerbrown.com
All such notices and communications shall be deemed to have been received at the time delivered by hand, if personally delivered; when transmitted (without any error notice or notice of non-delivery generated), if sent via electronic mail; and when actually received, if sent by courier service.
Section 3.02 Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties, including subsequent Holders of Registrable Securities, to the extent permitted herein. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement; provided, however, the parties hereto hereby acknowledge that the persons set forth in Section 2.08 are express third-party beneficiaries of the obligations of the parties hereto set forth in Section 2.08.
Section 3.03 Aggregation of Registrable Securities.
All Registrable Securities held or acquired by Persons who are Affiliates of one another shall be aggregated together for the purpose of determining the availability of any rights and applicability of any obligations under this Agreement.
Section 3.04 Recapitalization, Exchanges, Etc. Affecting the Common Stock.
The provisions of this Agreement shall apply to the full extent set forth herein with respect to any and all capital stock or other securities of the Company or any successor or assign of the Company (whether by merger, acquisition, consolidation, reorganization, sale of assets or otherwise) that may be issued in respect of, in exchange for or in substitution of, the Registrable Securities, and shall be appropriately adjusted for combinations, unit splits, recapitalizations, pro rata distributions of units and the like occurring after the date of this Agreement.
Section 3.05 Specific Performance.
Damages in the event of breach of this Agreement by a party hereto may be difficult, if not impossible, to ascertain, and it is therefore agreed that each such Person, in addition to and without limiting any other remedy or right it may have, shall have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach, and enforcing specifically the terms and provisions hereof, and each of the parties hereto hereby waives any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief. The existence of this right shall not preclude any such Person from pursuing any other rights and remedies at law or in equity that such Person may have.
15
Section 3.06 Counterparts.
This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, including facsimile or .pdf counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute one and the same Agreement.
Section 3.07 Headings.
The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
Section 3.08 Governing Law; Jurisdiction; Waiver of Jury Trial.
This Agreement, including all issues and questions concerning its application, construction, validity, interpretation and enforcement, shall be construed in accordance with, and governed by, the laws of the State of New York without regard to the choice of law principles thereof. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States federal courts in New York County (and the appellate courts thereof) for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 3.09 Severability of Provisions.
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting or impairing the validity or enforceability of such provision in any other jurisdiction.
Section 3.10 Entire Agreement.
This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the rights granted by the Company set forth herein. This Agreement and the Securities Purchase Agreement supersede all prior agreements and understandings between the parties with respect to such subject matter.
16
Section 3.11 Amendment.
This Agreement may be amended only by means of a written amendment signed by the Company and the Holders of a majority of the then outstanding Registrable Securities, and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written consent to such amendment, action or omission to act, of the Holders of a majority of the then outstanding Registrable Securities; provided, however, that, in any case, no such amendment or waiver shall materially and adversely affect the rights of any Holder hereunder without the consent of such Holder.
Section 3.12 No Presumption.
If any claim is made by a party relating to any conflict, omission or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular party or its counsel.
Section 3.13 Obligations Limited to Parties to Agreement.
Each of the parties hereto covenants, agrees and acknowledges that no Person other than the Purchaser (and its permitted transferees and assignees) and the Company shall have any obligation hereunder. No recourse under this Agreement or under any documents or instruments delivered in connection herewith or therewith shall be had against any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of the Purchaser or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate thereof, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable Law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the Purchaser or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate thereof, as such, for any obligations of the Purchaser under this Agreement or any documents or instruments delivered in connection herewith or therewith or for any claim based on, in respect of or by reason of such obligation or its creation, except in each case for any transferee or assignee of the Purchaser hereunder.
Section 3.14 Assignments and Transfers by the Company.
This Agreement may not be assigned by the Company (whether by operation of law or otherwise) without the prior written consent of the Holders of a majority of the then outstanding Registrable Securities; provided, however, that the Company may assign its rights and delegate its duties hereunder to any surviving or successor entity in connection with a merger or consolidation of the Company with another entity, or a sale, transfer or other disposition of all or substantially all of the Company’s assets to another entity, without the prior written consent of such Holders, after notice duly given by the Company to each Holder.
Section 3.15 Further Assurances.
The parties hereto shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.
17
Section 3.16 Interpretation.
Article and Section references are to this Agreement, unless otherwise specified. All references to instruments, documents, contracts and agreements are references to such instruments, documents, contracts and agreements as the same may be amended, supplemented and otherwise modified from time to time, unless otherwise specified. The words “include,” “includes” and “including” or words of similar import shall be deemed to be followed by the words “without limitation.” Whenever any determination, consent or approval is to be made or given by the Purchaser or another Holder under this Agreement, such action shall be in the Purchaser’s or such other Holder’s sole discretion unless otherwise specified. Unless expressly set forth or qualified otherwise (e.g., by “Business” or “trading”), all references herein to a “day” are deemed to be a reference to a calendar day.
(Signature pages follow)
18
IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written.
| GREAT AJAX CORP. | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Registration Rights Agreement]
| PURCHASER: | ||
| RITHM CAPITAL CORP. | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Registration Rights Agreement]
Exhibit 10.7
Execution Version
EXCHANGE AGREEMENT
This Exchange Agreement (this “Agreement”) is dated as of February 26, 2024, among Great Ajax Corp., a Maryland corporation (the “Company”), Great Ajax Operating Partnership L.P., a Delaware limited partnership (the “Operating Partnership”), Thetis Asset Management LLC, a Delaware limited liability company (the “Manager”), and the exchanging investor set forth in Schedule I hereto (the “Exchanging Investor”). The Company, the Operating Partnership, the Manager and the Exchanging Investor are collectively referred to as the “Parties” and each, a “Party”.
BACKGROUND
Prior to the date hereof, the Parties entered into one or more Securities Purchase Agreements (each a “Securities Purchase Agreement”), pursuant to which the Company issued to the Exchanging Investor, and the Exchanging Investor purchased or received from the Company, as applicable, (i) shares (the “Series A Shares”) of the Company’s 7.25% Series A Fixed-to-Floating Rate Preferred Stock, liquidation preference $25.00 per share (the “Series A Preferred Stock”); (ii) shares (the “Series B Shares,” and together with the Series A Shares, the “Shares”) of the Company’s 5.00% Series B Fixed-to-Floating Rate Preferred Stock, liquidation preference $25.00 per share (the “Series B Preferred Stock,” and together with the Series A Preferred Stock, the “Preferred Stock”); (iii) Series A warrants (each, a “Series A Warrant”) issued and delivered pursuant to one or more Warrant Agency Agreements (each, a “Warrant Agency Agreement”), between the Company and Equiniti Trust Company (formerly known as American Stock Transfer & Trust Company, LLC) (“Equiniti Trust Company”), in its capacity as the Company’s warrant agent (the “Warrant Agent”) for the Series A Warrants, to purchase shares of common stock, par value $0.01 per share of the Company (“Common Stock”), and (iv) Series B warrants (each, a “Series B Warrant” and together with the Series A Warrant, the “Warrants”) issued and delivered pursuant to one or more Warrant Agency Agreements between the Company and the Warrant Agent for the Series B Warrants, to purchase shares of Common Stock.
As of the date hereof, the undersigned Exchanging Investor is the beneficial owner of, as applicable, the number of Series A Shares, Series B Shares, Series A Warrants and Series B Warrants, shown opposite such Exchanging Investor’s name on Schedule I hereto (together, the “Exchanged Securities”).
Exchanging Investor desires to exchange with the Company (the “Exchange”) the Exchanged Securities for a combination of (a) an aggregate number of newly-issued shares of Common Stock (the “New Common Shares”) shown opposite such Exchanging Investor’s name under the heading “Initial Common Stock Consideration” on Schedule I hereto (the “Initial Common Stock Consideration”); (b) a further aggregate number of New Common Shares (such shares, the “Post-Approval Common Shares”), to be issued after the meeting of the Company’s stockholders and subject to receiving approval at that meeting from such stockholders (the “Stockholder Meeting Approval”) to, approve the transactions contemplated by the Securities Purchase Agreement, as shown opposite such Exchanging Investor’s name under the heading “Post-Approval Common Stock Consideration” on Schedule I hereto (the “Post-Approval Common Stock Consideration” and, together with the Initial Common Stock Consideration, the “Common Stock Consideration”); (c) cash, as consideration in lieu of fractional shares in the issuance of the Initial Common Stock Consideration and the Post-Approval Common Stock Consideration, in the amount shown opposite such Exchanging Investor’s name under the heading “Preferred Stock Cash Consideration” on Schedule I hereto (the “Preferred Stock Cash Consideration”); (d) a further aggregate number of New Common Shares (such shares, the “Warrant Common Shares”) shown opposite such Exchanging Investor’s name under the heading “Common Stock Consideration for Series A and Series B Warrants” on Schedule I hereto (the “Warrant Common Stock Consideration”); (e) cash, as consideration in lieu of fractional shares in the issuance of the Warrant Common Stock Consideration, in the amount shown opposite such Exchanging Investor’s name under the heading “Warrant Cash Consideration” on Schedule I hereto (the “Warrant Cash Consideration,” together with the Preferred Stock Cash Consideration, the “Cash Consideration” and, together with the Common Stock Consideration, the “Exchange Consideration”), in a transaction exempt from registration requirements of the Securities Act of 1933 (the “Securities Act”), pursuant to the provisions of Section 3(a)(9) thereof.
The Exchange is a condition to, and shall occur substantially simultaneously with, the closing of the transactions contemplated by the Credit Agreement, dated as of the date hereof, by and among the Company and the Lenders, the Administrative Agent and the Collateral Agent identified therein (the “Loan Agreement”).
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I.
Exchange
1.1 Exchange.
1.1.1 Preferred Stock Exchange. On the Initial Closing Date (as defined below), upon the terms and subject to the conditions set forth herein, (X) the undersigned Exchanging Investor of Preferred Stock agrees to exchange the full amount of Series A Shares and Series B Shares, as applicable, shown opposite such Exchanging Investor’s name on Schedule I hereto (the “Preferred Stock Exchange”) for the Initial Common Stock Consideration and Cash Consideration and (Y) the Company agrees to (a) issue to the Exchanging Investor of Preferred Stock, the number of New Common Shares as set forth under the heading “Initial Common Stock Consideration” on Schedule I hereto opposite such Exchanging Investor’s name and (b) pay to such Exchanging Investor the amount of cash in U.S. dollars as set forth under the heading “Preferred Stock Cash Consideration” on Schedule I hereto opposite such Exchanging Investor’s name.
1.1.2 Subsequent Issuance of Common Stock. On the Stockholder Approval Closing Date (as defined below), upon the terms and subject to the conditions set forth herein including receiving the requisite Stockholder Meeting Approval, (X) the Company agrees to issue to the Exchanging Investor of Preferred Stock, the number of New Common Shares as set forth under the heading “Post-Approval Common Stock Consideration” on Schedule I hereto opposite such Exchanging Investor’s name (such issuance, the “Post-Approval Issuance”), and (Y) the Exchanging Investor of Preferred Stock agrees to accept the Post-Approval Issuance in connection with the amount of Series A Shares and Series B Shares, as applicable, that the Exchanging Investor had previously exchanged in the Preferred Stock Exchange, as described in Section 1.1.1 above.
2
1.1.3 Warrants Exchange. On the Initial Closing Date (as defined below), upon the terms and subject to the conditions set forth herein, (X) the Company agrees to (a) issue to the Exchanging Investor of Warrants the number of New Common Shares as set forth under the heading “Common Stock Consideration for Series A and Series B Warrants Exchanged” on Schedule I hereto opposite such Exchanging Investor’s name and (b) pay to such Exchanging Investor the amount of cash in U.S. dollars as set forth under the heading “Warrant Cash Consideration” on Schedule I hereto opposite such Exchanging Investor’s name, and (Y) the Exchanging Investor of Warrants agrees to exchange the amount of Series A Warrants and Series B Warrants, as applicable, shown opposite such Exchanging Investor’s name on Schedule I hereto, for such Warrant Common Stock Consideration and Warrant Cash Consideration (the “Warrants Exchange”)
1.2 Exchange Procedures.
(a) The completion of the Exchange described in Section 1.1.1 and Section 1.1.3 above (the “Initial Closing” and such date, the “Initial Closing Date”) shall occur remotely via the exchange of documents and signatures on (i) the Business Day following the satisfaction of all of the conditions to the Closing set forth in Section 1.3 (the “Closing Conditions”) (other than the Closing Conditions that by their nature are to be satisfied at the Closing), or (ii) such later date or at such different location as the Parties shall agree to in writing with the written consent of Rithm Capital Corp. The completion of the Post-Approval Issuance hereunder (the “Subsequent Closing” and, together with the Initial Closing, the “Closings” and each, a “Closing;” and such date, the “Stockholder Approval Closing Date” and, together with the Initial Closing Date, the “Closing Dates” and each, a “Closing Date”) shall occur remotely via the exchange of documents and signature on (i) the Business Day following the annual or special meeting of the Company’s stockholders, held to obtain the vote of the Company’s stockholders to approve, among other things, the transactions contemplated by the Securities Purchase Agreement. “Business Day” shall mean any day other than (i) a Saturday or a Sunday, or (ii) a day on which commercial banks in New York City, New York are authorized or required by applicable Law to close.
(b) No later than 9:30 a.m., Eastern Time, on the Initial Closing Date, the Exchanging Investor shall cause the custodian through which such Exchanging Investor holds its Exchanged Securities to (i) post a DWAC request to Equiniti Trust Company, in its capacity as the Company’s transfer agent (the “Transfer Agent”) for the Preferred Stock, and in its capacity as the Warrant Agent for the Warrants, as applicable, in each case, to effect the cancellation of the Exchanged Securities of the Exchanging Investor, in accordance with the procedures of The Depository Trust Company (“DTC”), and (ii) post a DWAC request to the Transfer Agent, in its capacity as the Company’s transfer agent for the Common Stock, for receipt of the number of New Common Shares as set forth under the heading “Initial Common Stock Consideration” on Schedule I hereto opposite the Exchanging Investor’s name on Schedule I hereto.
3
(c) On the Initial Closing Date, the Company or the Transfer Agent, at the Company’s direction, shall deliver (i) the Initial Common Stock Consideration to the DTC account and (ii) the Cash Consideration by wire transfer of immediately available funds to the account(s), in each case, specified by the Exchanging Investor in Exhibit A hereto, against delivery of the Exchanged Securities. On the Stockholder Approval Closing Date, the Company or the Transfer Agent, at the Company’s direction, shall deliver the Post-Approval Common Stock Consideration to the DTC account specified by the Exchanging Investor in Exhibit A hereto. Effective as of the Initial Closing, the Exchanging Investor shall cease to own the Exchanged Securities exchanged pursuant to Section 1.1, and the Company shall be entitled to instruct the appropriate parties to immediately thereafter cancel or retire the Exchanged Securities on the books and records of the Company, the Transfer Agent and the Warrant Agent, as applicable.
(d) Effective as of the Initial Closing, each Exchanged Security and the rights, covenants, agreements and obligations of the Parties thereunder or contemplated thereby will terminate and be of no further force and effect, all of the obligations of the Company under each and every of the Exchanged Securities will thereupon be released, extinguished and terminated, and the Exchanging Investor shall irrevocably relinquish any right or interest that the Exchanging Investor may have had, may have or may acquire in the future with respect to the Exchanged Securities, including, but not limited to, the right to (i) exercise the Exchanged Securities into any equity of the Company or (ii) require the Company to purchase any of the Exchanged Securities in accordance with their terms.
(e) The Company and the Exchanging Investor agree to comply with the supplemental exchange procedures set forth in Exhibit A hereto.
1.3 Closing Conditions.
(a) The obligations of the Company hereunder in connection with each Closing are subject to the following conditions, any one or more of which may be waived by the Company:
(i) cancellation or retirement of the Exchanged Securities being exchanged hereunder in connection with the Exchange;
(ii) the accuracy on the date hereof and the Closing Date of the representations and warranties made by the Exchanging Investor in this Agreement;
(iii) the fulfillment in all material respects of those undertakings of the Exchanging Investor to be fulfilled prior to the Closing; and
(iv) no injunction, restraining order, action or order of any nature by a governmental or regulatory authority shall have been issued, taken or made and no action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority of competent jurisdiction that would, as of each Closing Date, prevent or materially interfere with the consummation of the transactions contemplated by this Agreement.
4
(b) The obligations of the Exchanging Investor in connection with each Closing are subject to the following conditions, any one or more of which may be waived by such Exchanging Investor:
(i) receipt by the Exchanging Investor of the applicable Common Stock Consideration in connection with the Exchange pursuant to this Agreement, in electronic, book-entry form, registered in the name of the Exchanging Investor, or confirmation of instruction given by the Company to the Transfer Agent to register the applicable Common Stock Consideration in electronic, book-entry form with respect to the number of Shares set forth in Section 1.1 above;
(ii) receipt by the Exchanging Investor of a wire transfer to the account designated by such Exchanging Investor of same-day funds in the full amount of the Cash Consideration in connection with the Exchange pursuant to this Agreement;
(iii) the accuracy on the date hereof and each Closing Date of the representations and warranties made by the Company and the Operating Partnership in this Agreement;
(iv) the fulfillment in all material respects of those undertakings of the Company to be fulfilled prior to each Closing; and
(v) no injunction, restraining order, action or order of any nature by a governmental or regulatory authority shall have been issued, taken or made and no action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority of competent jurisdiction that would, as of each Closing Date, prevent or materially interfere with the consummation of the transactions contemplated by this Agreement.
ARTICLE II.
REPRESENTATIONS, WARRANTIES and covenants
2.1 Representations, Warranties and Covenants of the Company and the Operating Partnership. The Company and the Operating Partnership, jointly and severally, hereby represent and warrant to, and covenant with, the Exchanging Investor as of the date of this Agreement, the Initial Closing Date and the Stockholder Approval Closing Date, unless otherwise specified:
(a) Each of the Company and each of the subsidiaries of the Company identified in Exhibit 21.1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (“Form 10-K”) (each, a “Subsidiary” and collectively, the “Subsidiaries”) has been duly incorporated, formed or organized and is validly existing as a corporation, general or limited partnership or limited liability company in good standing under the laws of its respective jurisdiction of incorporation, formation or organization with full power and authority to own its respective properties and to conduct its respective businesses as described the Form 10-K and in reports and other documents required to be filed by the Company under the Securities Act and the Securities Exchange Act of 1934 (as amended, the “Exchange Act”), since January 1, 2023 (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”). Each of the Company and the Operating Partnership has the power, authority and capacity to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the Exchange contemplated hereby. The execution, delivery and performance of this Agreement and each other instrument or document executed and delivered by the Company and the Operating Partnership in connection with this Agreement and the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and the Operating Partnership, as applicable.
5
(b) The Company and each of the Subsidiaries is duly qualified or licensed and in good standing in each jurisdiction in which it conducts its businesses or in which it owns or leases real property or otherwise maintains an office and in which the failure, individually or in the aggregate, to be so qualified or licensed would have a material adverse effect on the assets, business, operations, earnings, prospects, properties or condition (financial or otherwise) of the Company and the Subsidiaries taken as a whole, (any such effect or change, where the context so requires, is hereinafter called a “Material Adverse Effect”).
(c) This Agreement has been duly authorized, executed and delivered by the Company and the Operating Partnership and constitutes a legal, valid and binding obligation of the Company and the Operating Partnership, enforceable against the Company and the Operating Partnership in accordance with its terms, except that such enforcement may be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and general principles of equity, whether such enforceability is considered in a proceeding at law or in equity (the “Enforceability Exceptions”).
(d) The execution, delivery and performance of this Agreement and the consummation of the Exchange will not (A) conflict with, or result in any breach of, or constitute a default under (nor constitute any event which with notice, lapse of time or both would constitute a breach of, or default under), (i) any provision of the respective charter, bylaws, agreement of limited partnership, operating agreement or other similar organizational documents (the “Organizational Documents”) of the Company or any Subsidiary, (ii) any provision of any contract, license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Company or any Subsidiary is a party or by which any of them or their respective properties may be bound or affected, or under any federal, state, local or foreign law, regulation or rule or any decree, judgment, permit or order (each, a “Law”) applicable to the Company or any Subsidiary, except in the case of this clause (ii) for such breaches or defaults that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; or (B) result in the creation or imposition of any lien, charge, claim or encumbrance upon any property or asset of the Company or any Subsidiary.
(e) When delivered to the Exchanging Investor pursuant to the Exchange in accordance with the terms of this Agreement, the New Common Shares, assuming the truth and accuracy of the representations and warranties and compliance with the covenants of the Exchanging Investor herein, will be validly issued, fully paid and non-assessable and free and clear of any Liens (as defined in Section 2.3(c)) and will not be subject to any statutory and contractual preemptive rights, first refusal rights or similar rights. Assuming the accuracy of the Exchanging Investor’s representations and warranties and compliance with the covenants of the Exchanging Investor herein, the New Common Shares (a) will be issued in the Exchange exempt from the registration requirements of the Securities Act pursuant to Section 3(a)(9) of the Securities Act and (b) will be issued in compliance with all applicable state and federal Laws and, at the Closing, will be free of any restrictive legend and any restrictions on resale by such Exchanging Investor subject to the applicable conditions set forth in and pursuant to Rule 144 promulgated under the Securities Act.
6
(f) All of the outstanding shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and nonassessable. All of the outstanding shares of capital stock, partnership interests and membership interests, as the case may be, of the Subsidiaries have been duly authorized and are validly issued, fully paid and nonassessable securities thereof and, except as disclosed in the SEC Reports, all of the outstanding shares of capital stock, partnership interest or membership interests, as the case may be, of the Subsidiaries are directly or indirectly owned of record and beneficially by the Company or another Subsidiary. Except as disclosed in the SEC Reports or as contemplated by the Loan Agreement and the transactions being consummated in connection therewith (including pursuant to the Securities Purchase Agreement, dated as of the date hereof, by and among the Company, the Operating Partnership, the Manager and Rithm Capital Corp.), there are no outstanding (i) securities or obligations of the Company or any of the Subsidiaries convertible into or exchangeable for any capital stock of the Company or any such Subsidiary, (ii) warrants, rights or options to subscribe for or purchase from the Company or any such Subsidiary any such capital stock or any such convertible or exchangeable securities or obligations or (iii) obligations of the Company or any such Subsidiary to issue any shares of capital stock, any such convertible or exchangeable securities or obligation, or any such warrants, rights or options. All issued and outstanding units of partnership interest in the Operating Partnership owned by the Company are owned free and clear of any Liens.
(g) No approval, authorization, consent or order of or filing with any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency is required in connection with the execution, delivery and performance of this Agreement by the Company or the Operating Partnership, the consummation of the Exchange or their consummation of the transactions contemplated herein, other than such as have been obtained, or will have been obtained at the Closing Date.
(h) There are no actions, suits, proceedings, inquiries or investigations pending or, to the knowledge of the Company or the Operating Partnership, threatened against the Company or any Subsidiary or any of their respective officers and directors or to which the properties, assets or rights of any such entity are subject, at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority, arbitral panel or agency which could result in a judgment, decree, award or order that could reasonably be expected to have a Material Adverse Effect or that would reasonably be expected to materially impede the consummation of the Exchange.
7
(i) The New Common Shares conform in all material respects to the description of Common Stock contained in the SEC Reports, this Agreement, and the Articles of Amendment and Restatement of the Company, effective as of June 30, 2014 (as amended, the “Charter”).
(j) The SEC Reports (i) as of the time they were filed (or if subsequently amended, when amended, and as of the date hereof), complied, and comply, in all material respects with the requirements of the Securities Act and the Exchange Act, as the case may be, and (ii) did not, at the time they were filed (or if subsequently amended or superseded by an amendment or other filing, then, on the date of such subsequent filing), contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
(k) Neither the Company nor any of its Subsidiaries nor any of their respective officers, directors, employees or agents has incurred any liability for any commissions or other remuneration in connection with the Exchange.
(l) It is not necessary in connection with the Exchange, in the manner contemplated herein, to register the offer and sale of the New Common Shares under the Securities Act in reliance on the exemption from registration set forth under Section 3(a)(9) of the Securities Act. Neither the Company nor anyone acting on the Company’s behalf has received any commission or remuneration directly or indirectly in connection with or in order to solicit or facilitate the Exchange.
(m) No later than 9:30 a.m., Eastern Time, on the first (1st) Business Day following the date of this Agreement, the Company shall file with the SEC a current report on Form 8-K announcing the Exchange, including all required exhibits thereto, which current report the Company acknowledges and agrees will disclose all material terms of the Exchange.
2.2 Representations and Warranties of the Manager. The Manager hereby makes the following representations and warranties to the Exchanging Investor as of the date hereof, the Initial Closing Date and the Stockholder Approval Closing Date, unless otherwise specified:
(a) The Manager has been duly organized and is validly existing as a limited liability company in good standing under the laws of the state of Delaware with full power and authority to own its properties and to conduct its businesses as described in the SEC Reports and to consummate the transactions contemplated herein and therein.
(b) The Manager is duly qualified or licensed and in good standing in each jurisdiction in which it conducts its businesses or in which it owns or leases real property or otherwise maintains an office and in which the failure, individually or in the aggregate, to be so qualified or licensed would have a material adverse effect on the assets, business, operations, earnings, prospects, properties or condition (financial or otherwise) of the Manager (any such effect or change, where the context so requires, is hereinafter called a “Manager Material Adverse Effect”).
8
(c) The Manager is not in breach of or in default under (nor has any event occurred that with notice, lapse of time, or both would constitute a breach of, or default under), (i) its operating agreement, bylaws or other similar organizational documents (the “Manager Organizational Documents”), (ii) the performance or observance of any obligation, agreement, covenant or condition contained in any license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Manager is a party or by which any of it or its respective properties is bound (together with the Manager Organizational Documents, the “Manager Agreements”), or (iii) any Law applicable to the Manager, except, in the case of clauses (ii) and (iii) above, for such breaches or defaults which would not, individually or in the aggregate, reasonably be expected to have a Manager Material Adverse Effect.
(d) The execution, delivery and performance of this Agreement and consummation of the transactions contemplated herein will not conflict with, or result in any breach of, or constitute a default under (nor constitute any event which with notice, lapse of time, or both would constitute a breach of, or default under), (i) any provision of the Manager Organizational Documents, or (ii) any provision of any contract, license, indenture, mortgage, deed of trust, loan or credit agreement or other agreement or instrument to which the Manager is a party or by which any of it or its respective properties may be bound or affected, or under any Law applicable to the Manager, except in the case of this clause (ii) for such breaches or defaults which would not, individually or in the aggregate, reasonably be expected to have a Manager Material Adverse Effect.
(e) This Agreement has been duly authorized, executed and delivered by the Manager and constitutes a legal, valid and binding obligation of the Manager enforceable against the Manager in accordance with its terms, except that such enforcement may be limited by the Enforceability Exceptions.
(f) There are no actions, suits, proceedings, inquiries or investigations pending or, to the knowledge of the Manager, threatened against the Manager or any of its respective officers and directors or to which the properties, assets or rights of any such entity are subject, at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority, arbitral panel or agency that could result in a judgment, decree, award or order reasonably likely to result in a Manager Material Adverse Effect or that would reasonably be expected to materially impede the consummation of the Exchange.
2.3 Representations, Warranties and Covenants of the Exchanging Investor. The Exchanging Investor represents and warrants to the Company and the Operating Partnership, as of the date of this Agreement, the Initial Closing Date and the Stockholder Approval Closing Date, that:
(a) The Exchanging Investor is a corporation, limited partnership, limited liability company or other entity, as the case may be, duly formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation.
9
(b) The Exchanging Investor has all requisite corporate (or other applicable entity) power and authority to execute and deliver this Agreement and to carry out and perform its obligations under the terms hereof and the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by the Exchanging Investor and constitutes the valid and binding obligation of the Exchanging Investor, enforceable in accordance with its terms, except that such enforcement may be subject to the Enforceability Exceptions.
(c) As of the date hereof and as of immediately prior to the Initial Closing, the Exchanging Investor is and will be the sole record and beneficial owner of the Exchanged Securities shown opposite such Exchanging Investor’s name on Schedule I hereto. A holding period of at least one year has elapsed with respect to such Exchanged Securities within the meaning of Rule 144(d) under the Securities Act. The Exchanging Investor has good, valid and marketable title to its Exchanged Securities, free and clear of all liens, mortgages, pledges, security interests, restrictions, charges, encumbrances or adverse claims, rights or proxies of any kind (“Liens”), other than those Liens (i) arising by operation of applicable Law, (ii) arising by operation of the Organizational Documents of the Company or (iii) those created by or imposed by or on the Company. When the Exchanged Securities are exchanged, the Company will acquire good, marketable and unencumbered title thereto, free and clear of all Liens. None of the Exchanging Investors has, nor prior to the Initial Closing, will have, in whole or in part, other than pledges or security interests that an Exchanging Investor may have created in favor of a prime broker under and in accordance with its prime brokerage agreement with such broker, (x) assigned, transferred, hypothecated, pledged, exchanged, or otherwise disposed of any of its Exchanged Securities (other than to the Company pursuant hereto), or (y) given any person or entity any transfer order, power of attorney or other authority of any nature whatsoever with respect to its Exchanged Securities.
(d) The execution, delivery and performance of this Agreement by the Exchanging Investor and compliance by the Exchanging Investor with all provisions hereof and the consummation of the transactions contemplated hereby, will not (i) require any consent, approval, authorization or other order of, or qualification with, any court or governmental body or agency (except as may be required under the securities or “blue sky” laws of the various states), (ii) constitute a breach or violation of any of the terms or provisions of, or result in a default under, (x) the Organizational Documents of the Exchanging Investor or (y) any material indenture, loan agreement, mortgage, lease or other agreement or instrument to which the Exchanging Investor is a party or by which the Exchanging Investor is bound, or (iii) violate or conflict with any applicable Law applicable to the Exchanging Investor, excluding such consents, approvals, authorizations, orders, qualifications, breaches, violations or defaults that would not, individually or in the aggregate, reasonably be expected to prevent or materially impair the ability of the Exchanging Investor to consummate the transactions contemplated hereby.
(e) Each Exchanging investor will comply with all applicable Laws in effect necessary for such Exchanging Investor to consummate the transactions contemplated hereby, including the Exchange, and, prior to each Closing, obtain any consent, approval or permission required for the transactions contemplated hereby, including the Exchange, and the Laws to which such Exchanging Investor is subject, and the Company shall have no responsibility therefor.
(f) The Exchanging Investor has such knowledge, skill and experience in business, financial and investment matters so that it is capable of evaluating the merits and risks with respect to the Exchange and an investment in the New Common Shares. With the assistance of the Exchanging Investor’s professional advisors, to the extent that the Exchanging Investor has deemed appropriate, the Exchanging Investor has made its own legal, tax, accounting and financial evaluation of the merits and risks of the Exchange and an investment in the New Common Shares, and the consequences of the Exchange and this Agreement and the Exchanging Investor has made its own independent decision that the investment in the New Common Shares is suitable and appropriate for the Exchanging Investor. The Exchanging Investor has considered the suitability of the New Common Shares as an investment in light of the Exchanging Investor’s circumstances and financial condition and is able to bear the risks associated with such an investment.
10
(g) The Exchanging Investor confirms that it is not relying on any communication (written or oral) of the Company or its Affiliates or representatives as investment advice or as a recommendation to acquire the New Common Shares or the Cash Consideration in the Exchange. It is understood that information provided by the Company or any of its Affiliates and representatives shall not be considered investment advice or a recommendation to participate in the Exchange, and that none of the Company, or any of its Affiliates or representatives is acting or has acted as an advisor to the Exchanging Investor in deciding to participate in the Exchange.
(h) The Exchanging Investor is familiar with the business and financial condition and operations of the Company and the Exchanging Investor has had the opportunity to conduct its own investigation of the Company and the Common Stock. The Exchanging Investor has had access to the filings of the Company with the SEC and such other information concerning the Company and the Common Stock as it deems necessary to enable it to make an informed investment decision concerning the Exchange. The Exchanging Investor has been offered the opportunity to ask such questions of the Company and its representatives and received answers thereto, as it deems necessary to enable it to make an informed investment decision concerning the Exchange.
(i) The Exchanging Investor is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act.
(j) The Exchanging Investor is not directly, or indirectly through one or more intermediaries, controlling or controlled by, or under direct or indirect common control with, the Company.
(k) The Exchanging Investor is acquiring the New Common Shares solely for its own beneficial account, for investment purposes, and not with a view to, or for resale in connection with, any “distribution” of the New Common Shares within the meaning of the Securities Act. The Exchanging Investor understands that the offer and sale of the New Common Shares have not been registered under the Securities Act or any state securities laws and the New Common Shares are being issued without registration under the Securities Act by reason of specific exemption(s) under the provisions thereof, which depend in part upon the investment intent of the Exchanging Investor and the accuracy of the other representations and warranties made by the Exchanging Investor in this Agreement. The Exchanging Investor understands that the Company is relying upon the truth and accuracy of, and such Exchanging Investor’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Exchanging Investor set forth herein in order to determine the availability of such exemptions and the eligibility of such Exchanging Investor to acquire the Common Stock Consideration.
11
(l) The Exchanging Investor acknowledges that the terms of the Exchange have been mutually negotiated between the Exchanging Investor and the Company. The Exchanging Investor was given a meaningful opportunity to negotiate the terms of the Exchange.
(m) The Exchanging Investor acknowledges it did not become aware of the Exchange through any form of general solicitation or advertising within the meaning of Rule 502 under the Securities Act or otherwise through a “public offering” under Section 4(a)(2) of the Securities Act. The Exchanging Investor has not been apprised of the offering of the New Common Shares by means of any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.
(n) The Exchanging Investor acknowledges that in connection with the Exchange, in the manner contemplated herein, the Company intends to rely on the exemption from registration set forth under Section 3(a)(9) and/or Section 4(a)(2) of the Securities Act. The Exchanging Investor knows of no reason why such exemptions are not available.
(o) The Exchanging Investor acknowledges that the Company may issue appropriate stop-transfer instructions to its Transfer Agent and may make appropriate notations to the same effect in its books and records to ensure compliance with the provisions of this Section 2.3.
(p) The Exchanging Investor acknowledges and understands that at the time of the Closing, the Company may be in possession of material non-public information not known to the Exchanging Investor that may impact the value of the Exchanged Securities and the Common Stock (“Information”) that the Company has not disclosed to the Exchanging Investor. The Exchanging Investor acknowledges that they have not relied upon the non-disclosure of any such Information for purposes of making their decision to participate in the Exchange. The Exchanging Investor understands, based on its experience, the disadvantage to which the Exchanging Investor is subject due to the disparity of information between the Company, on the one hand, and the Exchanging Investor, on the other hand. Notwithstanding this, the Exchanging Investor has deemed it appropriate to participate in the Exchange. The Exchanging Investor agrees that the Company and its directors, officers, employees, agents, stockholders and affiliates shall have no liability to the Exchanging Investor or its beneficiaries whatsoever due to or in connection with the Company’s use or non-disclosure of the Information, and the Exchanging Investor hereby irrevocably waives any claim that it might have based on the failure of the Company to disclose the Information.
(q) The Exchanging Investor further acknowledges that it and its representatives are aware that the U.S. securities laws prohibit any person who has material non-public information about an issuer from purchasing or selling, directly or indirectly, securities of such issuer (including entering into hedge transactions involving such securities), or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities.
12
ARTICLE III.
MISCELLANEOUS
3.1 Fees and Expenses. Except as set forth in this Agreement, each Party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such Party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including any fees required for same-day processing of any instruction letter delivered by the Company in connection with the Exchange), stamp taxes and other taxes and duties levied in connection with the delivery of the New Common Shares.
3.2 Entire Agreement. This Agreement, together with the exhibits, schedules and other agreements, certificates or other instruments referred to herein or delivered pursuant hereto, contains the entire understanding of the Parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the Parties acknowledge have been merged into such documents, exhibits and schedules.
3.3 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via electronic mail at or prior to 5:30 p.m. (Eastern Time) on a day on which the NYSE is open for trading (“NYSE Trading Day”), (b) the next NYSE Trading Day after the date of transmission, if such notice or communication is delivered via electronic mail on a day that is not a NYSE Trading Day or later than 5:30 p.m. (Eastern Time) on any NYSE Trading Day, (c) the second (2nd) NYSE Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the Party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.
3.4 Further Assurances. Each Party agrees to cooperate with the other, to cause their respective officers, employees, attorneys, accountants and other agents, and, generally, to do such other reasonable acts and things in good faith as may be necessary to effectuate the intents and purposes of this Agreement, subject to the terms and conditions hereof and compliance with applicable Law, including taking reasonable action to facilitate the filing of any document or the taking of reasonable action to assist the other Parties in complying with the terms hereof.
3.5 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed by the Company, the Operating Partnership and the Exchanging Investor. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any Party to exercise any right hereunder in any manner impair the exercise of any such right.
13
3.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
3.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and permitted assigns. No Party may assign this Agreement or any rights or obligations hereunder without the prior written consent of each other Party (other than by merger).
3.8 Governing Law; Jurisdiction; Waiver of Jury Trial.
3.8.1 All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each Party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a Party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each Party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each Party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such Party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If any Party shall commence an action, suit or proceeding to enforce any provisions of this Agreement, then the prevailing Party in such action, suit or proceeding shall be reimbursed by the other Party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
3.8.2 EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 3.8.2.
14
3.9 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each Party and delivered to each other Party, it being understood that the Parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.
3.10 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the Parties shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the Parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
3.11 Remedies. The Parties hereby expressly recognize and acknowledge that immediate, extensive and irreparable damage would result, no adequate remedy at law would exist and damages would be difficult to determine in the event that any provision of this Agreement is not performed in accordance with its specific terms or otherwise breached. It is hereby agreed that the Parties shall be entitled to specific performance of the terms hereof and immediate injunctive relief and other equitable relief, without the necessity of proving the inadequacy of money damages as a remedy, and the Parties further hereby agree to waive any requirement for the securing or posting of a bond or other undertaking in connection with the obtaining of such injunctive or other equitable relief. Such remedy shall, however, be in addition to any other remedies whatsoever which a Party may otherwise have. The Parties hereby acknowledges that the existence of any other remedy contemplated by this Agreement does not diminish the availability of specific performance of the obligations hereunder or any other injunctive relief. The Parties further agree not to (a) oppose the granting, or raise any objection to the availability or granting, of the equitable remedy of specific performance or other equitable relief to prevent or restrain breaches or threatened breaches of this Agreement or (b) assert that a remedy of specific performance is (i) unenforceable, invalid, contrary to Law or inequitable, in any case, on the basis that a remedy of monetary damages would provide an adequate remedy for any breach of this Agreement or (ii) not an appropriate remedy for any reason at law or equity.
3.12 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the Parties and their respective successors and permitted assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person, other than Rithm Capital Corp.
3.13 Tax Treatment. The Parties agree to treat, for U.S. federal income tax purposes, (i) the Preferred Stock Exchange for Initial Common Stock Consideration and Post-Approval Common Stock Consideration as a “recapitalization” within the meaning of Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended (the “Code”), (ii) the payment of the Preferred Stock Cash Consideration paid as a redemption under Section 302 of the Code, and (iii) the Warrants Exchange as repayment of debt instruments represented by the Warrants. The Parties hereby adopt this Agreement as a “plan of reorganization” within the meaning of Treasury Regulation Section 1.368-2(g) with respect to such Preferred Stock Exchange. The Parties will prepare and file all tax returns in a manner consistent with the intended tax treatment set forth in this Section 3.13 and will not take any inconsistent position on any tax return or during the course of any audit, litigation or other proceeding with respect to taxes, except as otherwise required by a determination within the meaning of Section 1313(a) of the Code.
15
3.14 Interpretation.
3.14.1 When a reference is made herein to an Article, Section or Exhibit, such reference shall be to an Article, Section of, or Exhibit to, this Agreement unless otherwise indicated. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part hereof as if set forth in full herein.
3.14.2 Whenever the words “include,” “includes” or “including” are used in this Agreement and are not followed by the words “without limitation”, they shall be deemed to be followed by the words “without limitation.”
3.14.3 Unless the context requires otherwise, “or” shall be construed in the inclusive sense of “and/or”, words using the singular or plural number in this Agreement also include the plural or singular number, respectively, the use of any gender herein shall be deemed to include the other genders, words denoting natural persons shall be deemed to include business entities and vice versa and references to a Person are also to its permitted successors and assigns.
3.14.4 References to “dollars” or “$” in this Agreement are to U.S. dollars and all payments hereunder shall be made in U.S. dollars.
3.14.5 References to “U.S.” in this Agreement are to the United States of America.
3.14.6 The terms “hereof,” “herein,” “herewith,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement.
3.14.7 References herein to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder whether or not reference is made to such amendments, rules or regulations. Notwithstanding the foregoing, for purposes of any representations and warranties contained in this Agreement that are made as of a specific date or dates, references to any statute shall be deemed to refer to such statute, as amended, and to any rules or regulations promulgated thereunder, in each case, as of such date or dates.
3.14.8 The phrases “the date of this Agreement,” “the date hereof” and terms of similar import, unless the context otherwise appears, shall be deemed to refer to the date set forth in the first paragraph of this Agreement.
16
3.14.9 The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if” unless the context in which such phrase is used shall dictate otherwise.
3.14.10 All terms used herein with initial capital letters have the meanings ascribed to them in this Agreement, unless otherwise specified herein, and all terms defined in this Agreement will have such defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.
3.14.11 Any agreement or instrument defined or referred to herein means such agreement or instrument as from time to time amended, modified, or supplemented, including by waiver or consent, and references to all attachments thereto and instruments incorporated therein. References to any contract (including this Agreement) or organizational document are to the contract or organizational document as amended, modified, supplemented or replaced from time to time, unless otherwise stated.
3.14.12 All time periods within or following which any payment is to be made or act to be done shall be calculated by excluding the date on which the period commences and including the date on which the period ends and by extending the period to the first succeeding Business Day if the last day of the period is not a Business Day, if applicable.
3.14.13 Any requirement to provide “access” or “cooperate” (or derivative forms of those and other similar terms) shall be interpreted as requiring only electronic or telephonic access or cooperation and shall not require in-person meetings.
(Signature Pages Follow)
17
IN WITNESS WHEREOF, the Parties have caused this Exchange Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| GREAT AJAX CORP. | Address for Notice: | |
| 13190 SW 68th Parkway | ||
| Suite 110 | ||
| Tigard, OR 97223 | ||
| Email: larry@aspencapital.com |
| By: | |||
| Name: | |||
| Title: |
| GREAT AJAX OPERATING PARTNERSHIP L.P. | Address for Notice: | |
| 13190 SW 68th Parkway | ||
| Suite 110 | ||
| Tigard, OR 97223 | ||
| Email: larry@aspencapital.com |
| By: | |||
| Name: | |||
| Title: |
THETIS ASSET MANAGEMENT LLC |
Address for Notice: | |
| 13190 SW 68th Parkway | ||
| Suite 110 | ||
| Tigard, OR 97223 | ||
| Email: larry@aspencapital.com |
| By: | |||
| Name: | |||
| Title: |
With a copy to (which shall not constitute notice):
Anna T. Pinedo
Mayer Brown LLP
1221 Avenue of the Americas
New York, NY 10020
Tel: (212) 506-2275
Email: apinedo@mayerbrown.com
Signature Page to Exchange Agreement
IN WITNESS WHEREOF, the Parties have caused this Exchange Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
EXCHANGING INVESTOR
By:
Its:
| By: | ||
| Name: | ||
| Title: | ||
| Email: | ||
| Facsimile: | ||
Jurisdiction of Exchanging Investor’s Executive Offices:
Address for Notice to Exchanging Investor:
c/o [ ]
Telephone:
Facsimile:
Email:
With a copy to (which shall not constitute notice):
[ ]
EIN: [ ]
Signature Page to Exchange Agreement
EXHIBIT A
Supplemental Exchange Procedures
The Exchange shall occur in accordance with the provisions of the Exchange Agreement and the supplemental exchange procedures set forth in this Exhibit A (together, the “Exchange Procedures”); provided that each of the Company and the Exchanging Investor acknowledges that the delivery of the Common Stock Consideration to the Exchanging Investor may be delayed due to procedures and mechanics within the systems of the Transfer Agent, Warrant Agent, The Depository Trust Company (“DTC”) or the New York Stock Exchange (“NYSE”) (including the procedures and mechanics regarding the listing of the New Common Shares on the NYSE) or other events beyond the Company’s control and that such a delay will not be a breach of this Agreement so long as (i) the Company is using its reasonable best efforts to effect such delivery or (ii) such delay arises due to a failure by the Exchanging Investor to deliver settlement instructions; provided, further, that no delivery of Common Stock Consideration or Cash Consideration will be made until the Exchanged Securities have been received for exchange in accordance with the Exchange Procedures and no accrued interest will be payable by reason of any delay in making such delivery.
All questions as to the form of all documents and the validity and acceptance of the Exchanged Securities and the Exchange Consideration will be determined by the Company, in its sole discretion, which determination shall be final and binding and the Company may request such additional instruments or other documents of conveyance or transfer from the Exchanging Investor prior to the acceptance of any Exchanged Securities for the Exchange.
The Exchanging Investor hereby irrevocably (a) waives any and all other rights with respect to such Exchanged Securities and (b) releases and discharges the Company and its affiliates and representatives from any and all claims, actions, causes or rights, whether known or unknown, contingent or matured, that the undersigned may now have, or may have in the future, arising out of, or related to, such Exchanged Securities.
Exhibit A
Notice to Exchanging Investor
To ensure timely settlement, please follow the instructions as set forth on this and the following pages.
These instructions supersede any prior instructions you received. Your failure to comply with these instructions may delay your receipt of the Exchange Consideration.
To deliver Exchanged Securities:
You must post, no later than 9:30 a.m, Eastern Time, a withdrawal request for the Exchanged Securities through the DTC via DWAC. It is important that this instruction be submitted and the DWAC posted on the Closing Date.
To receive Exchange Consideration:
To Receive Common Stock Consideration: You must direct your eligible DTC participant through which you wish to hold a beneficial interest in the New Common Shares to be issued upon exchange to post on the Closing Date no later than 9:30 a.m., Eastern Time, a one-sided deposit instruction through DTC via DWAC for the Common Stock Consideration deliverable in respect of the Exchanged Securities. It is important that this instruction be submitted and the DWAC posted on the Closing Date.
The DTC Participant number of Equiniti Trust Company (formerly known as American Stock Transfer & Trust Company, LLC), the Transfer Agent and Registrar for the Common Stock, is: [ ].
Closing: On each Closing Date, after the Company receives your delivery instructions as set forth above and a withdrawal request in respect of the Exchanged Securities has been posted as specified above, and subject to the satisfaction of the conditions to the applicable Closing as set forth in your Exchange Agreement, the Company will deliver the Exchange Consideration in respect of the Exchanged Securities in accordance with the delivery instructions above on the Initial Closing Date or the Stockholder Approval Closing Date, as applicable.
Please complete and fill in the information requested on the following pages, with respect to the Exchanged Securities and Exchange Consideration.
Exhibit A
| Exchanging Investor: | |
| Investor Address: | |
| Telephone: | |
| Country of Residence: | |
| Taxpayer Identification Number: | |
EXCHANGED SECURITIES:
Account for existing [Series A][Series B] Preferred Stock: | |
| DTC Participant Number: | |
| DTC Participant Name: | |
| DTC Participant Phone Number: | |
| DTC Participant Contact Email: | |
| FFC Account #: | |
| Account # at Bank/Broker: | |
| |
| Account for existing [Series A][Series B] Warrants: | |
| DTC Participant Number: | |
| DTC Participant Name: | |
| DTC Participant Phone Number: | |
| DTC Participant Contact Email: | |
| FFC Account #: | |
| Account # at Bank/Broker: | |
Exhibit A
EXCHANGE CONSIDERATION:
Account for delivery of new Common Stock Consideration: | |
| DTC Participant Number: | |
| DTC Participant Name: | |
| DTC Participant Phone Number: | |
| DTC Participant Contact Email: | |
| FFC Account #: | |
| Account # at Bank/Broker: | |
| Wire instructions for Cash Consideration: | |
| Bank Name: | |
| Bank Address: | |
| ABA Routing #: | |
| Account Name: | |
| Account Number: | |
| FFC Account Name: | |
| FFC Account #: | |
| Contact Person: | |
| Exchanging Investor Address: | |
| Telephone: | |
| Country of Residence: | |
| Taxpayer Identification Number: | |
Exhibit A
Exhibit 10.8
Execution Version
GREAT AJAX CORP.
VOTING AND SUPPORT AGREEMENT
This Voting and Support Agreement (this “Agreement”), dated as of February 26, 2024 is made by and among Rithm Capital Corp., a Delaware corporation (“Rithm”), Great Ajax Corp., a Maryland corporation (the “Company”), and the undersigned holders (each a “Stockholder”) of shares of Common Stock (as defined below) of the Company. Each of Rithm, the Company and the Stockholders are referred herein collectively as the “Parties.”
WHEREAS, as of the date hereof, each of the Stockholders “beneficially owns” (as such term is defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), and is entitled to dispose of (or to direct the disposition of) and to vote (or to direct the voting of) shares of common stock, par value $0.01 per share of the Company (the “Common Stock”), in such amounts as set forth on Schedule A hereto (such shares of Common Stock, together with any additional shares of Common Stock that are hereafter issued to, or otherwise acquired or owned, beneficially or of record, by, such Stockholder during the Voting Period (as defined below), including by reason of any stock split, stock dividend, distribution, reclassification, recapitalization or other transaction, or pursuant to the exercise, exchange or conversion of, or other transaction involving, any and all warrants, options, rights or other securities, distribution or otherwise, are collectively referred to herein as the “Subject Shares”);
WHEREAS, concurrently with the execution of this Agreement, the Company is entering into a Credit Agreement (the “Loan Agreement”) with the Lenders, Administrative Agent and Collateral Agent identified therein, pursuant to which, among other things, subject to the terms and conditions set forth therein, the Lenders, which are affiliates of Rithm, will provide a term loan (the “Term Loan”) to the Company in the amount of up to $70 million, to enable the Company to redeem a portion of its 7.25% Convertible Senior Notes due 2024 (the “Term Loan Transaction”);
WHEREAS, concurrently with the execution of this Agreement, the Company, Great Ajax Operating Partnership L.P., a Delaware limited liability company, Thetis Asset Management LLC (“Thetis”), a Delaware limited liability company, are entering into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Rithm, pursuant to which, among other things, subject to the terms and conditions set forth therein, the Company proposes to sell and issue, and Rithm agrees to purchase or accept, as applicable, (i) $14.0 million of shares of Common Stock (the “Common Stock Sale”) and (ii) warrants (“Warrants”) representing the right to purchase shares of Common Stock (the “Warrant Shares”), subject to the terms and conditions of that certain Warrant Agreement (the “Warrant Agreement”), to be entered into concurrently with the funding of the Term Loan under the Loan Agreement, between the Company and Equiniti Trust Company, a limited trust company organized under the laws of the State of New York, as the Company’s Warrant Agent (the “Warrants Issuance” and, together with the Common Stock Sale, the “Equity Transaction”);
WHEREAS, concurrently with the execution of this Agreement, the Company has given written notice to Thetis that the Company intends to (i) terminate its existing Third Amended and Restated Management Agreement, dated as of April 28, 2020, with Thetis as Manager (as amended, the “Thetis Management Agreement”), (ii) pay Thetis the value of the termination fee required thereunder entirely in shares of Common Stock, and (iii) enter into a Termination and Release Agreement with Thetis (the “Termination and Release Agreement”), pursuant to which, among other things, subject to the terms and conditions set forth therein, Thetis will provide the Company with a full release from all historical liabilities of the Company (collectively, the “Thetis Management Agreement Termination”);
WHEREAS, in connection with the closing of the Securities Purchase Agreement, the Company intends to complete the Thetis Management Agreement Termination and, subject to receipt of stockholder approval, intends to enter into a new Management Agreement (the “Rithm Management Agreement”) with an affiliate or other subsidiary of Rithm (the “Rithm Manager”), pursuant to which the Company will retain the Rithm Manager as the Company’s exclusive provider of management and other services on the terms and subject to the conditions therein (collectively, the “Management Transaction” and, together with the Term Loan Transaction and Equity Transaction, the “Transactions”);
WHEREAS, in connection with the funding of the Term Loan under the Loan Agreement and the closing of the Securities Purchase Agreement, the Company intends to enter into a Registration Rights Agreement (the “Registration Rights Agreement” and, together with the Loan Agreement, Securities Purchase Agreement, Warrant Agreement, Termination and Release Agreement and Rithm Management Agreement, the “Transaction Agreements”) with Rithm, pursuant to which, among other things, subject to the terms and conditions set forth therein, the Company will agree to prepare and file a shelf registration statement with the Securities and Exchange Commission (the “SEC”) allowing for the resale by Rithm of the Warrant Shares underlying the Warrants and the shares of Common Stock it acquired in the Common Stock Sale;
WHEREAS, pursuant to Sections 312.03(c) and 312.03(d) of the New York Stock Exchange (“NYSE”) Listed Company Manual, shareholder approval is required prior to the issuance by a company of 20% or more of its common stock, or an issuance that will result in a change of control of the company;
WHEREAS, pursuant to the terms of the Securities Purchase Agreement, the Company intends to call and hold a special meeting of the Company’s stockholders (the “Stockholder Meeting”) to obtain the approval of the Company’s stockholders in connection with (i) the entry by the Company into the Rithm Management Agreement, (ii) the decrease of the size of the Company’s board of directors to five (5) total members and the election of one (1) director designated by the Purchaser, and (iii) Section 312.03 of the NYSE Listed Company Manual in order for the Company to issue 20% or more of its Common Stock in connection with the Transaction Agreements (collectively, the “Proposals”);
WHEREAS, the Common Stock Sale and the exercise of the Warrants issued pursuant to the Warrants Issuance are each contingent upon the receipt of approval of the Proposals at the Stockholder Meeting;
2
WHEREAS, as a condition to and in order to induce Rithm to enter into the Transaction Agreements and cause the Transactions to be consummated, Rithm has required each Stockholder to enter, and each Stockholder is entering, into this Agreement; and
WHEREAS, all capitalized terms used in this Agreement without definition herein shall have the meanings ascribed to them in the Securities Purchase Agreement.
NOW, THEREFORE, in consideration of the promises and mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the Parties hereby agrees as follows:
1. Agreement to Vote Shares.
(a) Voting. Subject to the terms of this Agreement, the Stockholder hereby irrevocably and unconditionally agrees that, during the period from the date hereof through the Expiration Date (such period, the “Voting Period”), at every annual or special meeting of the stockholders of the Company held with respect to the matters specified in Section 1(a)(ii), however called, including any adjournment or postponement thereof, the Stockholder shall:
(i) appear at such meeting (in person or by proxy) or otherwise cause the Subject Shares to be counted as present thereat for purposes of determining a quorum;
(ii) be present (in person or by proxy) and vote (or cause to be voted), in person or by proxy, the Subject Shares (A) in favor of the approval of each of the Proposals and (B) without limitation of the preceding clause (i), in favor of any proposal to adjourn or postpone the Stockholder Meeting (and, if applicable, any subsequent annual or special meeting of the stockholders of the Company held with respect to approval of the Proposals (a “Subsequent Stockholder Meeting”)) to a later date solely if there are not sufficient votes for approval of the Proposals on the date on which the Stockholder Meeting (or, if applicable, a Subsequent Stockholder Meeting) is held. Any such vote will be cast or consent will be given in accordance with the procedures applicable thereto so as to ensure that it is duly counted for purposes of determining that a quorum is present and for purposes of recording the results of such vote or consent.
(b) Information for Proxy Statement. The Stockholder and its affiliates will furnish to the Company all information concerning such Stockholder and its affiliates as the Company may reasonably request in connection with the preparation and filing of the proxy statement to be delivered to the Company’s stockholders in advance of the Stockholder Meeting (the “Proxy Statement”). The Stockholder consents to the Company publishing and disclosing in any filing to the extent required under applicable law, the Stockholder’s identity and ownership of the Subject Shares, and the nature of the Stockholder’s commitments, arrangements and understandings under this Agreement; provided that the Company shall have consulted with the Stockholder in advance of any such disclosure and shall accept any reasonable comments provided by the Stockholder or its counsel with respect to such disclosure prior to making such disclosure.
(c) Acquisition of Additional Shares. During the Voting Period, the Stockholder shall notify the Company reasonably promptly in writing of the direct or indirect acquisition of record or beneficial ownership of additional shares of Common Stock after the date of this Agreement, if any, all of which shall be considered Subject Shares and be subject to the terms of this Agreement as though owned by the Stockholder on the date of this Agreement.
3
2. Restriction on Transfer; Non-Interference; etc. The Stockholder hereby covenants and agrees that the Stockholder shall not, during the Voting Period, without the prior written consent of the Company, (i) sell, transfer, pledge, encumber, assign, distribute, gift or otherwise dispose of (including by merger or otherwise by operation of law) any Subject Shares (collectively, a “Transfer”), (ii) enter into any voting trust, proxy, contract, option or other arrangement or understanding with respect to any Transfer (whether by actual disposition or effective economic disposition due to hedging, cash settlement or otherwise) of, any of the Subject Shares or any interest therein; (iii) grant a proxy or power of attorney with respect to, or create or permit to exist any limitation on the Stockholder’s voting rights (except for such agreements or limitations that would not adversely affect the Stockholder’s ability to perform its obligations under this Agreement and other than any such proxy, power of attorney or other authorization consistent with, and for purposes of complying with, the provisions of Section 1(a) hereof) (“Encumbrance”) with respect to its Subject Shares, or (iv) take, or agree to take, any action that would have the effect of preventing or delaying the Stockholder from performing any of its obligations under this Agreement, including by agreeing (whether or not in writing) to take any of the actions referred to in the foregoing clauses (i), (ii) and (iii) of this Section 2; provided further that any Transfer, Encumbrance or other action described in the foregoing clauses (i) through (iv) shall be null and void ab initio to the fullest extent permitted by applicable law.
3. Representations and Warranties of Stockholder. Each Stockholder hereby, severally but not jointly, represents and warrants to the Company and Rithm as follows:
(a) Authority. Such Stockholder has all necessary corporate, limited liability company, trust or partnership power and authority to execute, deliver and perform its obligations under this Agreement. The execution, delivery and performance of this Agreement by such Stockholder and the consummation by it of the Transactions have been duly and validly authorized by all necessary legal action, and no further consent or authorization of the Stockholder or any other person is required. This Agreement constitutes a legal, valid and binding obligation of the Stockholder; provided that, with respect to each such agreement, the enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar Laws from time to time in effect affecting the enforcement of creditors’ rights and remedies generally and by general principles of equity (regardless of whether such principles are considered in a proceeding in equity or at law).
(b) No Violations. The execution and delivery of this Agreement by the Stockholder does not, and the performance of this Agreement by the Stockholder shall not, (i) conflict with or result in any violation of any provision of the Stockholder’s bylaws, charter, or other organizational or governing documents, in the event that such Stockholder is a corporation, partnership, trust or other entity, (ii) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any material agreement to which the Stockholder is a party or by which the Stockholder is bound or by which the Subject Shares are bound or affected; (iii) violate any law, statute, rule, regulation which the Stockholder is subject to or any order, arbitration award, judgment or decree to which such Stockholder is a party or by which such Stockholder is bound; (iv) require any consent or approval under, violate, conflict with, result in a material breach of or constitute a default (or an event that with notice or lapse of time or both would become a material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of any contract, agreement, arrangement, instrument, note, bond, mortgage, lease, license, permit, understanding or other obligation that is binding on the Stockholder; or (v) result in the creation of any liens or Encumbrances upon any of the Subject Shares, and, in the case of each the preceding clauses (ii) through (v), would not reasonably be expected to materially and adversely affect the ability of the Stockholder to perform its obligations hereunder.
4
(c) Consent and Approvals. The execution and delivery of this Agreement by the Stockholder does not, and the performance of this Agreement by the Stockholder shall not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental entity by the Stockholder (except for filings pursuant to the Exchange Act, or any other state securities or “blue sky” Laws).
(d) Ownership of Subject Shares. The Stockholder holds, beneficially or of record, good and valid title to the Subject Shares and has the power to vote, without restriction, such Subject Shares on all matters brought before Stockholders of capital stock of the Company. As of the date of this Agreement, the Stockholder beneficially owns, directly or indirectly, only the number of shares of Common Stock as described opposite its name as set forth on Schedule A hereto and Schedule A includes all affiliates of the Stockholder that own any securities of the Company beneficially or of record and reflects all shares of Common Stock in which the Stockholder or its affiliates has any interest or right to acquire, whether through derivative securities, voting agreements or otherwise (whether or not such Common Stock can be acquired within sixty (60) days). The Stockholder has not appointed or granted any proxy, which appointment or grant is still effective, with respect to the Subject Shares and none of the Subject Shares is subject to any voting trust or other agreement, arrangement or restriction with respect to the voting of the Subject Shares, except as contemplated by this Agreement and except for customary arrangements with the Stockholder’s prime broker and/or custodian.
(e) Qualified Institutional Buyer. The Stockholder is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, as amended.
4. No Limitation. Notwithstanding anything in this Agreement to the contrary, nothing herein shall in any way restrict any officer or director of the Company from taking any action (or failing to take any action) in good faith in his or her capacity as a director or officer of the Company (including to the extent permitted by the Securities Purchase Agreement), or in the exercise of his or her fiduciary duties in his or her capacity as a director or officer of the Company, and no action taken in good faith in any such capacity as an officer or director of the Company shall be deemed to constitute a breach of this Agreement. All rights, ownership and economic benefits of and relating to the Subject Shares shall remain vested in and belong to the Stockholder, and, notwithstanding anything in this Agreement to the contrary, Stockholder shall not be limited or restricted in any way from voting in its sole discretion on any matter other than the matters referred to in Section 1(a)(ii) hereof.
5
5. No Legal Actions. Each Stockholder will not in its capacity as a stockholder of the Company bring, commence, institute, maintain, prosecute or voluntarily aid any action which (i) challenges the validity or seeks to enjoin the operation of any provision of this Agreement or (ii) alleges that the execution and delivery of this Agreement by such Stockholder, either alone or together with the other voting agreements and proxies to be delivered in connection with the execution of the Transaction Agreements constitutes a breach of any fiduciary duty of the Company Board or any member thereof.
6. Other Remedies; Specific Performance. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a Party will be deemed cumulative with, and not exclusive of, any other remedy conferred hereby, or by law or equity upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy. The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof without the need of posting bond in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.
7. Termination. This Agreement and the obligations of the Parties under this Agreement may only be terminated upon the mutual consent set forth in a written instrument signed by all Parties; provided, however, that this Agreement shall automatically terminate, without any action by the Parties, upon the first to occur of (a) the Closing of the Equity Transaction, (b) the termination of the Securities Purchase Agreement in accordance with its terms, (c) as to each Stockholder, the date such Stockholder no longer owns any Subject Shares, or (d) December 31, 2024 (any such effective date of termination, the “Expiration Date”).
8. Publication. Each Stockholder hereby permits the Company to publish and disclose, including in any document or schedule filed with the SEC and in the press releases announcing the Transactions contemplated by the Transaction Agreement, and any other disclosures or filings required by applicable Law (the “Announcement Release”), the Agreement, such Stockholder’s identity and ownership of the Subject Shares and the nature of such Stockholder’s commitments, arrangements and understandings under this Agreement, in each case, to the extent the Company determines that such information is required to be disclosed by applicable Law (or in the case of the Announcement Release, to the extent the information contained therein is consistent with other disclosures being made by the Company).
9. Further Assurances. Each Stockholder shall, from time to time, execute and deliver, or cause to be executed and delivered, such additional or further consents, documents and other instruments as the Company or Rithm may reasonably request for the purpose of effectively carrying out the Transactions.
10. Notice. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or sent by overnight courier (providing proof of delivery), by facsimile transmission (providing confirmation of transmission) or by electronic transmission (upon confirmation of receipt of transmission) as the case may be, to the Company or Rithm at the applicable address set forth in the Securities Purchase Agreement, or to each Stockholder at his, her or its address or email address (upon confirmation of receipt of transmission) set forth on Schedule A attached hereto (or at such other address for a Party as shall be specified by like notice).
6
11. Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions of this Agreement or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If a final judgment of a court of competent jurisdiction declares that any term or provision of this Agreement is invalid or unenforceable, the Parties agree that the court making such determination shall have the power to limit such term or provision, to delete specific words or phrases or to replace such term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be valid and enforceable as so modified. In the event such court does not exercise the power granted to it in the prior sentence, the Parties agree to replace such invalid or unenforceable term or provision with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term or provision.
12. Assignability. This Agreement shall be binding upon, and shall be enforceable by and inure solely to the benefit of, the Parties and their respective successors and assigns; provided, however, that neither this Agreement nor any of a Party’s rights or obligations hereunder may be assigned or delegated by such Party without the prior written consent of the other Parties, and any attempted assignment or delegation of this Agreement or any of such rights or obligations by such Party without the other Party’s prior written consent shall be void and of no effect. Nothing in this Agreement, express or implied, is intended to or shall confer upon any person (other than the Parties) any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
13. No Waivers. No waivers of any breach of this Agreement extended by the Company to such Stockholder shall be construed as a waiver of any rights or remedies of the Company, as applicable, with respect to any other stockholder of the Company who has executed an agreement substantially in the form of this Agreement with respect to the Subject Shares held or subsequently held by such Stockholder or with respect to any subsequent breach of Stockholder or any other such Stockholder of the Company. No waiver of any provisions hereof by any Party shall be deemed a waiver of any other provisions hereof by any such Party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such Party.
14. Applicable Law; Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to the principles of conflicts of law thereof. Each Party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the Transactions (whether brought against a Party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each Party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any Transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each Party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such Party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either Party shall commence an action, suit or proceeding to enforce any provisions of this Agreement, then the prevailing Party in such action, suit or proceeding shall be reimbursed by the other Party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
7
15. WAIVER OF JURY TRIAL. THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVES, AND AGREES TO CAUSE ITS AFFILIATES TO WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
16. Entire Agreement; Counterparts; Exchanges by Facsimile. This Agreement and the other agreements referred to in this Agreement constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among or between any of the Parties with respect to the subject matter hereof and thereof. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. The exchange of a fully executed Agreement (in counterparts or otherwise) by all Parties by facsimile or electronic transmission via “.pdf” shall be sufficient to bind the Parties to the terms and conditions of this Agreement.
17. Amendment. This Agreement may not be amended, supplemented or modified, and no provisions hereof may be modified or waived, except by an instrument in writing signed on behalf of each Party hereto; provided, however, that the rights or obligations of any Stockholder may be waived, amended or otherwise modified in a writing signed by the Company and such Stockholder.
18. Fees and Expenses. Except as otherwise specifically provided herein, each Party hereto shall bear its own expenses in connection with this Agreement and the Transactions.
8
19. Voluntary Execution of Agreement. This Agreement is executed voluntarily and without any duress or undue influence on the part or behalf of the Parties. Each of the Parties hereby acknowledges, represents and warrants that (i) it has read and fully understood this Agreement and the implications and consequences thereof; (ii) it has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of its own choice, or it has made a voluntary and informed decision to decline to seek such counsel; and (iii) it is fully aware of the legal and binding effect of this Agreement.
20. No Ownership Interest. Except as otherwise provided herein, nothing contained in this Agreement shall be deemed to vest in the Company any direct or indirect ownership or incidence of ownership of or with respect to the Subject Shares. All rights, ownership and economic benefits of and relating to the Subject Shares shall remain vested in and belong to the Stockholder. Nothing in this Agreement shall be interpreted as creating or forming a “group” with any other person, including with the Company, any Stockholder or any other person, for the purposes of Rule 13d-5(b)(1) of the Exchange Act or for any other similar provision of applicable law. The Company acknowledges and agrees that the obligations of each Stockholder under this Agreement shall be several (and not joint) and no Stockholder shall be responsible in any way for the actions or omissions of the other Stockholders.
21. Delay. No failure or delay on the part of any Party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to a Party at law or in equity or otherwise.
22. No Benefit to Others. Except as expressly set forth in this Agreement, the representations, warranties, covenants and agreements contained in this Agreement are for the sole benefit of the parties hereto, and their respective successors and permitted assigns, and they shall not be construed as conferring, and are not intended to confer, any rights on any other person.
23. Independence of Obligations. The covenants and obligations of the Stockholder set forth in this Agreement shall be construed as independent of any other contract or other arrangement between the Stockholder, on the one hand, and the Company or Rithm, on the other hand. The existence of any claim or cause of action by the Stockholder against the Company or Rithm shall not constitute a defense to the enforcement of any of such covenants or obligations against the Stockholder. Nothing in this Agreement shall limit any of the rights or remedies of the Company or Rithm under any Transaction Agreement, or any of the rights or remedies of the Company or Rithm or any of the obligations of the Stockholder under any agreement between the Stockholder and the Company or Rithm, as applicable, or any certificate or instrument executed by the Stockholder in favor of the Company or Rithm; and nothing in the Transaction Agreements or in any other such agreement, certificate or instrument, shall limit any of the rights or remedies of the Company or Rithm or any of the obligations of the Stockholder under this Agreement.
24. Construction.
(a) For purposes of this Agreement, whenever the context requires: the singular number shall include the plural, and vice versa; the masculine gender shall include the feminine and neuter genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender shall include masculine and feminine genders.
9
(b) The Parties agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation.”
(d) Except as otherwise indicated, all references in this Agreement to “Sections,” and “Schedules” are intended to refer to Sections of this Agreement and Schedules to this Agreement, respectively.
(e) The underlined headings contained in this Agreement are for convenience of reference only, shall not be deemed to be a part of this Agreement and shall not be referred to in connection with the construction or interpretation of this Agreement.
[Remainder of Page has Intentionally Been Left Blank]
10
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed by their Parties as of the date first indicated above.
| STOCKHOLDER: | ||
| By: | ||
| Name: | ||
| Title: | ||
| GREAT AJAX CORP. | ||
| By: | ||
| Name: | ||
| Title: | ||
| RITHM CAPITAL CORP. | ||
| By: | ||
| Name: | ||
| Title: | ||
Schedule I
Exhibit 99.1
RITHM CAPITAL CORP. AND GREAT AJAX CORP. ANNOUNCE A STRATEGIC TRANSACTION
New York – February 26, 2024 – Rithm Capital Corp. (NYSE: RITM; “Rithm”), a global asset manager focused on real estate, credit and financial services, and Great Ajax Corp. (NYSE: AJX; “Great Ajax”), a real estate investment trust, announced today that they have entered into a strategic transaction.
As part of the strategic transaction, Great Ajax has entered into a one-year term loan agreement with a subsidiary of Rithm for up to $70 million. Great Ajax plans to use borrowings under the term loan, as well as cash on hand and cash from loan sales, to repay its outstanding convertible notes.
In connection with the loan agreement, Great Ajax issued a termination notice to its external manager, Thetis Asset Management LLC (the “Manager”). Subject to the receipt of shareholder approval, Great Ajax will enter into a management agreement with an affiliate of Rithm to serve as its external manager. The transaction will enable Great Ajax to shift its strategic direction and capitalize on commercial real estate investment opportunities.
“We are excited to grow our asset management platform through this strategic transaction with Great Ajax, which represents another step forward in our evolution as a global alternative asset manager,” said Michael Nierenberg, Chairman, Chief Executive Officer and President of Rithm. “We believe Great Ajax will be well-positioned to execute on a commercial real estate-focused strategy and generate significant value for shareholders.”
“We are pleased Great Ajax’s stockholders will have the opportunity to benefit from the experience and track record of the Rithm team going forward,” said Lawrence Mendelsohn, Chairman and Chief Executive Officer of Great Ajax. “We look forward to working closely with Rithm to complete the transaction promptly and reposition Great Ajax to execute on unique investment opportunities in a dynamic commercial real estate market.”
Additional Transaction Details
In connection with the execution of the term loan agreement, Great Ajax will issue five-year warrants to Rithm, based on amounts drawn under the loan facility (subject to a specified minimum), exercisable for shares of Great Ajax’s common stock.
Great Ajax and Rithm have also entered into a securities purchase agreement, pursuant to which Great Ajax will issue Rithm $14 million in Great Ajax common stock. The closing of the purchase, as well as other aspects of the strategic transaction, are subject to Great Ajax stockholder approval.
Great Ajax plans to seek stockholder approval of the transaction at an annual and special meeting of the stockholders of Great Ajax. Great Ajax has entered into support and exchange agreements with certain institutional stockholders, pursuant to which shares of Great Ajax preferred stock and shares underlying the warrants will be exchanged for shares of common stock and such stockholders have agreed to support the strategic transactions. After giving effect to the exchange, stockholders representing more than 40% of the shares of Great Ajax’s common stock will have entered into support agreements.
For more information about this transaction, please see Great Ajax’s Current Report on Form 8-K, accessible on Great Ajax’s website.
Advisors
Citi is acting as the exclusive financial advisor to Rithm and Sidley Austin LLP is serving as legal counsel to Rithm. Piper Sandler & Co. is acting as exclusive financial advisor to Great Ajax and Mayer Brown LLP is acting as legal advisor to Great Ajax. BTIG, LLC is acting as exclusive financial advisor to the special committee of the Great Ajax board of directors and Sheppard Mullin LLP is acting as legal advisor to the special committee of the Great Ajax board of directors.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in respect of obtaining approval of the stockholders of Great Ajax of the proposed transactions (the “Stockholder Approval”). In connection with obtaining the Stockholder Approval, Great Ajax will file with the Securities and Exchange Commission (the “SEC”) and furnish to the Company’s stockholders a proxy statement and other relevant documents. This communication does not constitute a solicitation of any vote or approval. BEFORE MAKING ANY VOTING DECISION, GREAT AJAX’S STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS TO BE FILED THE SEC IN CONNECTION WITH THE STOCKHOLDER APPROVAL OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION. Stockholders will be able to obtain free copies of the proxy statement and other documents containing important information about the Company once such documents are filed with the SEC, through the website maintained by the SEC at http://www.sec.gov.
Participants in the Solicitation
Great Ajax and its executive officers, directors, other members of management and employees may be deemed, under SEC rules, to be participants in the solicitation of proxies from Great Ajax’s stockholder with respect to the proposed transaction. Information regarding the executive officers and directors of Great Ajax is set forth in its definitive proxy statement for its 2023 annual meeting filed with the SEC on April 21, 2023, as amended. More detailed information regarding the identity of potential participants, and their direct or indirect interests, by securities holdings or otherwise, will be set forth in the proxy statement and other materials to be filed with the SEC in connection with the proposed transaction.
Forward-Looking Statements
This communication contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical in nature and can be identified by words such as “believe,” “expect,” “anticipate,” “estimate,” “project,” “plan,” “continue,” “intend,” “should,” “would,” “could,” “goal,” “objective,” “will,” “may,” “seek” or similar expressions or their negative forms. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time and are beyond our control. Forward-looking statements speak only as of the date they are made. Rithm and Great Ajax do not assume any duty or obligation (and do not undertake) to update or supplement any forward-looking statements. Because forward-looking statements are, by their nature, to different degrees, uncertain and subject to numerous assumptions, risks and uncertainties, actual results or future events, circumstances or developments could differ, possibly materially, from those that Rithm and Great Ajax anticipated in its forward-looking statements, and future results and performance could differ materially from historical performance. Factors that could cause or contribute to such differences include, but are not limited to, those set forth in the section entitled “Risk Factors” in Rithm and Great Ajax’s most recent Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q filed with the SEC, and other reports filed by Rithm and Great Ajax with the SEC, copies of which are available on the SEC’s website, www.sec.gov. The list of factors presented here is not, and should not be, considered a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements.
About Rithm Capital Corp.
Rithm Capital (NYSE: RITM) is a global asset manager focused on real estate, credit and financial services. Rithm makes direct investments and operates several wholly-owned operating businesses. Rithm’s businesses include Sculptor Capital Management, Inc., an alternative asset manager, as well as Newrez LLC and Genesis Capital LLC, leading mortgage origination and servicing platforms. Rithm seeks to generate attractive risk-adjusted returns across market cycles and interest rate environments. Since inception in 2013, Rithm has delivered approximately $5.0 billion in dividends to shareholders. Rithm is organized and conducts its operations to qualify as a real estate investment trust (REIT) for federal income tax purposes and is headquartered in New York City.
About Great Ajax Corp.
Great Ajax (NYSE: AJX) is a real estate investment trust that focuses primarily on acquiring, investing in and managing re-performing loans (“RPLs”) and non-performing loans (“NPLs”) secured by single-family residences and commercial properties. In addition to its continued focus on RPLs and NPLs, it also originates and acquires small balance commercial mortgage loans secured by multi-family retail/residential and mixed-use properties. Great Ajax is externally managed by Thetis Asset Management LLC, an affiliated entity. Great Ajax’s mortgage loans and other real estate assets are serviced by Gregory Funding LLC, an affiliated entity.
Rithm
Investor Relations
(212) 850-7770
ir@rithmcap.com
Media
Jon Keehner / Sarah Salky / Erik Carlson
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
ritm-jf@joelefrank.com
Great Ajax
Mary Doyle
Chief Financial Officer
(503) 444-4224
mary.doyle@great-ajax.com