RESTRUCTURING SUPPORT AGREEMENT (Convertible Notes) This RESTRUCTURING SUPPORT AGREEMENT (Convertible Notes) (together with all exhibits, schedules and attachments hereto, as amended, supplemented or otherwise modified from time to time, this...
RESTRUCTURING SUPPORT AGREEMENT (Convertible Notes) This RESTRUCTURING SUPPORT AGREEMENT (Convertible Notes) (together with all exhibits, schedules and attachments hereto, as amended, supplemented or otherwise modified from time to time, this “Agreement”), dated as of October 14, 2020, by and among (i) EMERGENT CAPITAL, INC., a Florida corporation (“Emergent Capital” and, collectively with each of its direct and indirect subsidiaries, “Emergent”) and (ii) the undersigned beneficial holders, or investment advisers or managers for the account of beneficial holders, of the 5.0% Senior Unsecured Convertible Notes due 2023 (the “Convertible Notes”) issued pursuant to that certain Indenture dated as of July 28, 2017 (as amended, supplemented or otherwise modified from time to time, the “Convertible Notes Indenture”) between Emergent Capital and U.S. Bank, National Association, as trustee, together with their respective successors and permitted assigns that subsequently become party hereto in accordance with the terms hereof (each, a “Supporting Noteholder”). Each of Emergent, the Supporting Noteholders, and any subsequent Person that becomes a party hereto in accordance with the terms hereof is referred to herein as a “Party” and collectively as the “Parties.” Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Term Sheet (as defined herein). WHEREAS: A. The Parties have negotiated in good faith at arm’s length and agreed to undertake a financial restructuring of the existing debt and Equity Interests of Emergent Capital in accordance with, and subject to the terms and conditions set forth in, this Agreement and in the term sheet attached hereto as Exhibit A (as may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, the “Term Sheet”) (such restructuring shall be hereinafter referred to as the “Restructuring”). B. The Restructuring contemplates Emergent Capital and certain of its subsidiaries commencing a voluntary case (the “Chapter 11 Case”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) through a chapter 11 plan of reorganization consistent with the terms of this Agreement and the Term Sheet and otherwise in form and substance acceptable to the Required Supporting Noteholders (such plan, together with all exhibits, schedules and attachments thereto, as amended, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement, the “Plan”). C. As of the date hereof, the Supporting Noteholders, in the aggregate, beneficially own, or are the nominee, investment manager or advisor for beneficial holders of, a majority of the aggregate outstanding principal amount of the Convertible Notes. D. Subject to the terms and conditions set forth in this Agreement, the Parties have agreed to support (i) the commencement of the Chapter 11 Case to implement this Agreement and the Restructuring and (ii) confirmation of the Plan by the Bankruptcy Court.
NOW, THEREFORE, in consideration of the covenants and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Party, intending to be legally bound hereby, agrees as follows: 1. Definitions. The following terms used in this Agreement shall have the following definitions: “Business Day” means any day other than Saturday, Sunday and any day that is a legal holiday or a day on which banking institutions in Wilmington, Delaware are authorized by law or other governmental action to close. “Claim” has the meaning ascribed to such term in section 101(5) of title 11 of the United States Code. “Confirmation Hearing” means the hearing before the Bankruptcy Court on confirmation of the Plan. “Corporate Governance Documents” means the principal corporate governance documents of Lamington Road Designated Activity Company, including the articles of incorporation or certificates of formation, by-laws, and/or company agreements, or any equivalent in Lamington Road Designated Activity Company’s jurisdiction of organization. “Court Date” means any Business Day on which the Bankruptcy Court is open. “Disclosure Statement” means, in respect of the Plan, the disclosure statement that is prepared and distributed in accordance with, among other things, sections 1125, 1126(b), and 1145 of the Bankruptcy Code, Rule 3018 of the Federal Rules of Bankruptcy Procedure and other applicable law, and all exhibits, schedules, supplements, modifications and amendments thereto. “Effective Date” means the date on which the Plan becomes effective. “Emergent Claims and Interests” means all Claims against and Equity Interests of Emergent Capital. “Encumbrance” means any charge, covenant, easement, encumbrance, pledge, security interest, mortgage, deed of trust, hypothecation, lien, defect in title, restriction on transfer or other similar restriction or right of any kind or nature, whether voluntarily incurred or imposed by or arising under contract or Law. “Equity Interests” means, with respect to any Person, the shares (or any class thereof) of capital stock (including common stock and preferred stock), limited liability company interests, partnership interests and any other equity, ownership, or profits interests of such Person, and options, warrants, rights, stock appreciation rights, phantom units, incentives, commitments, calls, redemption rights, repurchase rights or other securities or agreements to acquire or subscribe for, or which are convertible into, or exercisable or exchangeable for, the shares (or any class thereof) of capital stock (including common stock and preferred stock), limited liability - 2 -
company interests, partnership interests and any other equity, ownership, or profits interests of such Person (in each case whether or not arising under or in connection with any employment agreement). “Person” means an individual, a partnership, a joint venture, a limited liability company, a corporation, a trust, an unincorporated organization, governmental authority or regulatory body, a group or any legal entity or association. “Petition Date” means the date the Chapter 11 Case is commenced in the Bankruptcy Court. “Restructuring Support Period” means the period commencing on the Agreement Effective Date (or, in the case of any Supporting Noteholder that becomes a party hereto after the Agreement Effective Date, as of the date such Supporting Noteholder becomes a party hereto) and ending on the earlier of (i) the Effective Date and (ii) the date on which this Agreement is terminated in accordance with Section 7 hereof. “Required Supporting Noteholders” means, as of any date of determination, the Supporting Noteholders who collectively hold or control with discretionary authority a majority of the aggregate principal amount of the Convertible Notes held or controlled by all of the Supporting Noteholders as of such date. “Senior Noteholder RSA” means that certain Restructuring Support Agreement, dated as of the date hereof, as amended, restated, supplemented or otherwise modified from time to time, by and among Emergent and certain beneficial holders, or investment advisors or managers for the account of beneficial holders, of the 8.5% Senior Secured Notes due 2021 (the “Senior Notes”) issued pursuant to that certain Amended and Restated Indenture, dated as of July 28, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “Senior Notes Indenture”), between Emergent and Wilmington Trust, National Association, as trustee. “Tax Authority” means the Internal Revenue Service and any state, local, or foreign government, agency or instrumentality, charged with the administration of any applicable law relating to Taxes. “Tax” or “Taxes” means (a) all federal, local or foreign taxes, charges, fees, imposts, levies or other assessments, including all income, gross receipts, escheat, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever imposed by a governmental authority; and (b) all interest, penalties, fines, additions to tax or additional amounts imposed by any Tax Authority in connection with any item described in clause (a). 2. Exhibits Incorporated by Reference. Each of the exhibits attached hereto is expressly incorporated herein and made a part of this Agreement, and all references to this Agreement shall include the exhibits. Unless otherwise provided herein, in the event the terms - 3 -
and conditions set forth in the Term Sheet and this Agreement are inconsistent, the terms and conditions contained in the Term Sheet shall govern. 3. Effectiveness. This Agreement shall become effective and binding upon each of the undersigned Persons as of the date (the “Agreement Effective Date”) when (a) the Parties have executed and delivered signed copies of this Agreement, (b) Emergent has received executed signature pages to this Agreement from the Supporting Noteholders (or advisors, nominees or investment managers for beneficial holder(s)) which collectively represent a majority of the aggregate principal amount of the Convertible Notes and (c) the Senior Noteholder RSA shall have been executed by beneficial holders, or investment advisors or managers for the account of beneficial holders, of the Senior Notes who, in the aggregate, hold at least a majority of the aggregate principal amount of the Senior Notes and such Senior Noteholder RSA shall have become effective in accordance with the terms thereof and shall have been delivered to Stroock (as defined below), counsel to the Supporting Noteholders. With respect to any Person that becomes a party to this Agreement by executing and delivering a Transferee Joinder Agreement after the Agreement Effective Date, this Agreement shall become effective as to such Person at the time such Transferee Joinder Agreement is executed and delivered to counsel to Emergent and counsel to the Required Supporting Noteholders. 4. Definitive Documents; Good Faith Cooperation; Further Assurances. The “Definitive Documents” shall include all (a) documents implementing, achieving, and relating to the Restructuring, including, without limitation, the Plan, the Disclosure Statement, the plan supplement and the compilation of documents contained therein, ballots and other solicitation materials in respect of the Plan (the “Solicitation Materials”), any “first day” motions, the organizational documents (including, without limitation, any Corporate Governance Documents), shareholder and member related agreements, or other related transactional or corporate documents (including, without limitation, any agreements and documents described in the Plan and the exhibits thereto), (b) motions or pleadings seeking approval or confirmation of any of the foregoing transactional or corporate documents, including the motion or motions to approve the Disclosure Statement, confirm the Plan, and ratify the solicitation procedures, and the order or orders approving the Disclosure Statement and the solicitation procedures and confirming the Plan (the “Confirmation Order”), and (c) any other documents governing the Series A Notes, Series B Notes, the PPNs, the PPN Options, the SARs, the Warrants and Grantor Trust Certificates (each as defined in the Term Sheet). The Definitive Documents, whether filed with the Bankruptcy Court or otherwise finalized, shall be consistent in all material respects with this Agreement and the Term Sheet and shall otherwise be acceptable to Emergent and the Required Supporting Noteholders in their sole discretion. Any amendments, modifications or supplements to the Definitive Documents shall be consistent with this Agreement, the Term Sheet, and the Plan in all respects, and shall otherwise be in form and substance acceptable to the Required Supporting Noteholders in their sole discretion. Each Party hereby covenants and agrees to cooperate with each other in good faith in connection with, and shall exercise commercially reasonable efforts with respect to, the pursuit, approval, implementation and consummation of the Restructuring, as well as the negotiation, drafting, execution and delivery of the Definitive Documents, including the scheduling of necessary hearings with the Bankruptcy Court. Further, subject to the terms hereof, each of the Parties shall take such action as may be reasonably necessary or reasonably requested by the other Parties to carry out the - 4 -
purposes and intent of this Agreement, and shall refrain from taking any action that would frustrate the purposes and intent of this Agreement. 5. Commitment of Supporting Noteholders. (a) Voting, Support. Each of the Supporting Noteholders hereby agrees that, for the duration of the Restructuring Support Period, it shall, subject to the terms and conditions hereof: (i) subject to the receipt of the Disclosure Statement and Solicitation Materials, (A) vote all Emergent Claims and Interests held by such Supporting Noteholder as of the voting record date set forth in the Disclosure Statement to accept the Plan, by delivering its duly executed and completed ballots accepting the Plan on a timely basis following the commencement of the solicitation pursuant to the Solicitation Materials (the “Solicitation”), (B) to the extent it is permitted to elect whether to opt out of the releases set forth in the Plan, not “opt out” of any releases under the Plan by timely delivering its duly executed and completed ballot or ballots indicating such election, and (C) not change, withdraw or revoke such vote (or cause or direct such vote to be changed, withdrawn or revoked); provided, however, that such vote may be revoked (and, upon such revocation, deemed void ab initio) by such Supporting Noteholder at any time following the expiration or termination of the Restructuring Support Period (it being understood that any termination of the Restructuring Support Period shall entitle such Supporting Noteholder to change its vote in accordance with section 1127(d) of the Bankruptcy Code); (ii) not (A) direct any administrative agent, collateral agent or indenture trustee (as applicable) to take any action inconsistent with such Supporting Noteholder’s obligations under this Agreement and, if any applicable administrative agent, collateral agent or indenture trustee takes any action inconsistent with such Supporting Noteholder’s obligations under this Agreement, such Supporting Noteholder shall use its reasonable best efforts to request that such administrative agent, collateral agent or indenture trustee (as applicable) cease and refrain from taking any such action, or (B) exercise any right or remedy for the enforcement, collection or recovery of any claim against Emergent Capital except in a manner consistent with this Agreement, the Plan or the Definitive Documents; (iii) not (A) object to, delay, impede or take any other action to interfere with, delay or postpone acceptance, confirmation or implementation of the Plan, (B) directly or indirectly solicit, encourage, propose, file, support, participate in the formulation of or vote for, any restructuring, sale of assets (including pursuant to section 363 of the Bankruptcy Code), merger, workout or plan of reorganization for Emergent and its affiliated debtors and debtors-in-possession other than the Plan or (C) otherwise take any action that would in any material respect interfere with, delay or postpone the consummation of the Restructuring; and - 5 -
(iv) not exercise any right or remedy for the enforcement of any default or Event of Default (as defined in the Convertible Notes Indenture and the Convertible Notes, as applicable) that exists or that might otherwise occur under the Convertible Notes Indenture and the Convertible Notes, as applicable, by reason of any failure of Emergent Capital to comply with the provisions of such indentures or notes; (v) use good faith efforts to negotiate and document the Definitive Documents and take such actions it deems reasonable and appropriate to obtain Bankruptcy Court approval of the Restructuring; and (vi) to the extent such Supporting Noteholder is a party, execute and deliver any agreements reasonably required to effectuate and consummate the Restructuring. (b) Notwithstanding anything in this Agreement to the contrary, no Supporting Noteholder shall (x) be required to incur, assume, become liable in respect of or suffer to exist any expenses, liabilities or other obligations, or agree to or become bound by any commitments, undertakings, concessions, indemnities or other arrangements that could result in expenses, liabilities or other obligations to such Supporting Noteholder, or (y) be construed as providing any commitment or obligation to advance any funds to, or purchase any securities of, Emergent or any of its affiliates. (c) Transfers. (i) Each Supporting Noteholder agrees that, during the Restructuring Support Period, such Supporting Noteholder shall not (A) sell, transfer, assign, pledge, grant a participation interest in or otherwise dispose of, directly or indirectly, its right, title or interest in respect of any Emergent Claims and Interests (or any associated securities or debt instruments) that such Supporting Noteholder controls, in whole or in part, or (B) deposit any of such Emergent Claims and Interests (or any associated securities or debt instruments) into a voting trust, or grant any proxies, or enter into a voting agreement with respect to any such Emergent Claims and Interests (or any associated securities or debt instruments) (the actions described in clauses (A) and (B) are collectively referred to herein as a “Transfer” and the Supporting Noteholder making such Transfer is referred to herein as the “Transferor”), unless the transferee of such Emergent Claims and Interests (the “Transferee”) either (i) is a Supporting Noteholder at the time of such Transfer or (ii) prior to the effectiveness of such Transfer agrees in writing to be bound by the terms of this Agreement applicable to Supporting Noteholders by executing a Transferee Joinder Agreement substantially in the form attached hereto as Exhibit B (the “Transferee Joinder Agreement”), and the Transferee promptly delivers an executed copy thereof to (1) Xxxxxxxxx Xxxxx Xxxxx & Xxxxx LLP, counsel to Emergent, and (2) Stroock & Stroock & Xxxxx LLP (“Stroock”), counsel to certain of the Supporting Noteholders holding Convertible Notes. Upon compliance with the foregoing, the Transferor shall be deemed to relinquish its rights (and be released from its obligations, except for any claim for breach of this Agreement that occurs prior to such Transfer) under this Agreement to the extent of such transferred rights and obligations and the Transferor shall have no liability arising from or related to the failure of the - 6 -
Transferee to comply with the terms and conditions of this Agreement, and the Transferee shall be deemed a Supporting Noteholder hereunder. Any Transfer made in violation of this Section 5(c)(i) shall be deemed null and void ab initio and of no force or effect, regardless of any prior notice provided to Emergent and/or any Supporting Noteholder, and shall not create any obligation or liability of Emergent or any other Supporting Noteholder to the purported Transferee. Notwithstanding anything in this Agreement to the contrary and for the avoidance of doubt, if any Party executes and becomes bound by this Agreement solely as to a specific business unit or division, no affiliate of such Party or other business unit or division within any such Party shall be subject to this Agreement unless they separately execute this Agreement or a Transferee Joinder Agreement. Notwithstanding the foregoing, the restrictions on Transfer set forth in this Section 5(c) shall not apply to the grant of any Encumbrances on any Emergent Claims and Interests in favor of a bank or broker-dealer holding custody of such Emergent Claims and Interests in the ordinary course of business and which Encumbrance is released upon the Transfer of such Emergent Claims and Interests. (ii) Notwithstanding Section 5(c)(i), a Supporting Noteholder may Transfer any Emergent Claim to an entity that is acting in its capacity as a Qualified Marketmaker (as defined herein) (a “Qualified Transfer”) without the requirement that the Qualified Marketmaker be or become a Supporting Noteholder, provided that such Qualified Transfer shall only be valid if the Qualified Marketmaker subsequently Transfers all right, title and interest in such Emergent Claim to a Transferee that is a Supporting Noteholder (or becomes a Supporting Noteholder at the time of the Transfer pursuant to a Transferee Joinder Agreement). For purposes hereof, a “Qualified Marketmaker” shall mean an entity that (A) holds itself out to the market as standing ready in the ordinary course of its business to purchase from customers and sell to customers Emergent Claims and Interests (including debt securities or other debt) or enter with customers into long and short positions in Emergent Claims and Interests (including debt securities or other debt), in its capacity as a dealer or market maker in such Emergent Claims and Interests and (B) is in fact regularly in the business of making a market in Emergent Claims and Interests against issuers or borrowers (including debt securities or other debt). (d) Additional Claims and Equity Interests. This Agreement shall in no way be construed to preclude the Supporting Noteholders from acquiring additional Emergent Claims and Interests, and each Supporting Noteholder agrees that if any Supporting Noteholder acquires additional Emergent Claims and Interests then such Claims and Equity Interests shall be subject to this Agreement (including the obligations of the Supporting Noteholders under this Section 5), and such Supporting Noteholder shall promptly notify the Debtor and Stroock of the acquisition of such Emergent Claims and Interests. (e) Several Not Joint. The agreements and obligations of the Supporting Noteholders in this Section 5 shall be made or incurred, respectively, solely on such Supporting Noteholder’s own behalf and not on behalf of any other Supporting Noteholders and shall be several and not joint. - 7 -
6. Commitment of Emergent. For the duration of the Restructuring Support Period, Emergent agrees, that it shall: (a) support and take all actions that are necessary and appropriate to facilitate approval of the Disclosure Statement, confirmation of the Plan and consummation of the Restructuring in accordance with, and within the time frames contemplated by, this Agreement (including within the deadlines set forth in Section 7(a)); (b) support and consummate the Restructuring in accordance with this Agreement, including the good faith negotiation and preparation of the Definitive Documents; (c) execute and deliver any other required agreements to effectuate and consummate the Restructuring; (d) promptly, and in no event later than one (1) business day of its receipt thereof, deliver to the Supporting Noteholders any written proposal, offer, bid, term sheet, or agreement with respect to any sale, disposition, new-money investment, restructuring, reorganization, merger, amalgamation, acquisition, consolidation, dissolution, debt investment, equity investment, financing, use of cash collateral, joint venture, partnership, liquidation, tender offer, recapitalization, plan of reorganization, share exchange, business combination, or similar transaction involving Emergent or the debt, equity, or other interests in Emergent, other than the Restructuring; (e) unless otherwise required by the Bankruptcy Court, cause the amount of the Emergent Claims and Interests held by the Supporting Noteholders as set forth on the signature pages attached to this Agreement (or, with respect to any Supporting Noteholder that becomes a party hereto after the date hereof, to any Joinder Agreement) to be redacted to the extent this Agreement is (A) filed on the docket maintained in the Chapter 11 Case or (B) otherwise made publicly available; provided, that if such disclosure is required, then Emergent shall afford the relevant Supporting Noteholder a reasonable opportunity to review and comment in advance of such disclosure and shall take all reasonable measures to limit such disclosure; (f) provide prompt written notice (in accordance with Section 27 hereof) to the Supporting Noteholders between the Agreement Effective Date and the Effective Date of (i) the occurrence, or failure to occur, of any event of which Emergent knows, or has reason to believe such occurrence or failure would be likely to cause or result in (A) any covenant of Emergent contained in this Agreement not to be satisfied or (B) any condition precedent contained in the Plan not to timely occur or become impossible to satisfy, (ii) receipt of any notice from any third party alleging that the consent of such party is or may be required in connection with the transactions contemplated by the Restructuring, (iii) receipt of any notice from any governmental unit in connection with this Agreement or the transactions contemplated by the Restructuring, (iv) receipt of any notice of any proceeding commenced, or, to the actual knowledge of Emergent, threatened against Emergent, relating to or involving or otherwise affecting in any material respect the transactions contemplated by the Restructuring, (v) any failure of Emergent to comply with or satisfy any covenant, condition or agreement to be - 8 -
complied with or satisfied by it hereunder and (vi) the occurrence of a Termination Event (as defined below); (g) act in good faith and use reasonable best efforts to support and complete successfully the Solicitation in accordance with the terms of this Agreement; (h) implement and consummate the Restructuring by the applicable milestones set forth in Section 7(a) of this Agreement; (i) not amend or modify, or file a pleading seeking authority to amend or modify, any of the Definitive Documents or the Restructuring in a manner that is inconsistent with this Agreement or is not otherwise acceptable to the Required Supporting Noteholders; (j) not execute, deliver and/or file any Definitive Document (including any amendment, supplement or modification of, or any waiver to, any Definitive Document) that, in whole or in part, is not consistent in all material respects with this Agreement or is not otherwise acceptable to the Required Supporting Noteholders, or file any pleading seeking authorization to accomplish or effectuate any of the foregoing; (k) timely file a formal written response in opposition to any objection filed with the Bankruptcy Court by any Person with respect to entry of the Confirmation Order and any of the other Definitive Documents, as applicable; (l) timely file a formal objection to any motion filed with the Bankruptcy Court seeking the entry of an order modifying or terminating Emergent’s exclusive right to file and/or solicit acceptances of a plan of reorganization, directing the appointment of an examiner with expanded powers or a trustee, converting the Chapter 11 Case to a case under chapter 7 of the Bankruptcy Code, dismissing the Chapter 11 Case or for relief that (i) is inconsistent with this Agreement in any material respect or (ii) would, or would reasonably be expected to, frustrate the purposes of this Agreement, including by preventing the consummation of the Restructuring; (m) act in good faith and use reasonable best efforts to seek the assumption of this Agreement through an order entered on or prior to December 4, 2020; (n) timely obtain any and all required regulatory approvals and third-party approvals of the Restructuring; (o) not take any actions inconsistent with, or that are intended or reasonably likely to interfere with, this Agreement, the Plan and the Restructuring; (p) not directly or indirectly seek or solicit any discussions relating to, or enter into any agreements relating to, any alternative proposal other than the Restructuring, nor shall Emergent solicit or direct any Person to undertake any of the foregoing; - 9 -
(q) not assume or reject each executory contract (including any employment agreement or employee benefit plan) or unexpired lease without the support of the Required Supporting Noteholders; (r) not announce publicly, or announce to any of the Supporting Noteholders or other holders of Emergent Claims and Interests, its intention not to support the Restructuring; (s) not grant or agree to grant (including pursuant to a key employee retention or incentive plan or other similar agreement) any additional or any increase in the wages, salary, bonus, commissions, retirement benefits, pension, severance or other compensation or benefits (including in the form of any vested or unvested Equity Interests of any other kind or nature) of any director, manager, officer or employee of, or any consultant or advisor that is retained or engaged by Emergent other than as expressly contemplated by this Agreement; (t) not enter into, adopt or establish any new compensation or benefit plans or arrangements (including employment agreements and any retention, success or other bonus plans), or amend any existing compensation or benefit plans or arrangements (including employment agreements); (u) not incur any Encumbrance, other than as expressly contemplated by this Agreement; (v) not authorize, create or issue any additional Equity Interests in Emergent Capital, or redeem, purchase, acquire, declare any distribution on or make any distribution on any Equity Interests in Emergent Capital, other than as expressly contemplated by this Agreement; (w) (i) provide draft copies of all material motions or applications and other Definitive Documents (including among others all “first day” and “second day” motions and orders, the Plan, the Disclosure Statement, the Solicitation Materials and any proposed amended version of the Plan or the Disclosure Statement, the Confirmation Order that Emergent intends to file with the Bankruptcy Court) to counsel for the Supporting Noteholders, at least three (3) Business Days prior to the date when Emergent intends to file any such pleading or other document (provided, that if delivery of such motions, orders or materials (other than the Plan, the Disclosure Statement, the Solicitation Materials and the Confirmation Order) at least three (3) Business Days in advance is not reasonably practicable, such motion, order or material shall be delivered as soon as reasonably practicable prior to filing, but in no event later than one (1) Business Day in advance of any filing thereof), (ii) consult in good faith with the Required Supporting Noteholders’ counsel regarding the form and substance of each of the Definitive Documents in advance of the filing, execution, distribution or use (as applicable) thereof, and (iii) negotiate in good faith, execute, perform its obligations under, and consummate the transactions contemplated by, the Definitive Documents to which it is (or will be) a party; and (x) promptly (1) deliver to Stroock a copy of any notices received or delivered by Emergent pursuant to any other restructuring support agreement or similar agreement entered into by Emergent and (2) notify Stroock of any amendment, supplement, modification, consent - 10 -
or waiver to any other restructuring support agreement or similar agreement entered into by Emergent. 7. Termination. (a) Supporting Noteholder Termination. This Agreement shall automatically terminate one (1) Business Day following the delivery of written notice from the Required Supporting Noteholders (or their counsel) to Emergent in accordance with Section 27, at any time after any of the following: (i) a material breach (without giving effect to any materiality qualifiers therein) by Emergent of any of its covenants, undertakings, obligations, representations or warranties contained in this Agreement or the Definitive Documents, and, to the extent such breach is curable, such breach remains uncured for a period of five (5) Business Days; (ii) the Petition Date shall not have occurred on or before October 16, 2020; (iii) Emergent shall have failed to file the Plan and the Disclosure Statement within one (1) Business Day following the Petition Date; (iv) the Disclosure Statement shall not have been approved by the Bankruptcy Court on or before November 16, 2020 (v) the Confirmation Order shall not been entered by the Bankruptcy Court on or before December 18, 2020; (vi) if, on or prior to the commencement of the Confirmation Hearing, the Definitive Documents are not consistent in all material respects with the Term Sheet and not otherwise acceptable to the Required Supporting Noteholders; (vii) Emergent withdraws the Plan without the consent of the Required Supporting Noteholders; (viii) Emergent files, propounds or otherwise supports any plan of reorganization or restructuring transaction other than the Plan and the Restructuring; (ix) Emergent files any motion or application seeking authority to sell all or a portion of its assets without the consent of the Required Supporting Noteholders; (x) the amendment, modification of, or the filing of a pleading seeking to amend or modify, the Plan, the Disclosure Statement or any other Definitive Documents, by Emergent, which amendment, modification or filing is materially inconsistent with this Agreement, the Term Sheet, or the Definitive Documents and is not acceptable to the Required Supporting Noteholders; - 11 -
(xi) the filing by Emergent of any motion or other request for relief seeking (A) voluntary dismissal of any of the Chapter 11 Case, (B) conversion of the Chapter 11 Case to chapter 7 of the Bankruptcy Code, or (C) appointment of a trustee or an examiner with expanded powers pursuant to section 1104 of the Bankruptcy Code in any of the Chapter 11 Case; (xii) the entry of an order by the Bankruptcy Court or any other court with appropriate jurisdiction (A) dismissing the Chapter 11 Case, (B) converting the Chapter 11 Case to a case under chapter 7 of the Bankruptcy Code, (C) appointing a trustee or an examiner with expanded powers pursuant to section 1104 of the Bankruptcy Code with respect to the Chapter 11 Case, (D) making a finding of fraud, dishonesty, or material misconduct by any officer or director of Emergent or (E) that would have the effect of prohibiting consummation of the Restructuring; (xiii) the entry of an order by the Bankruptcy Court avoiding, disallowing, subordinating or recharacterizing any claim, lien, or interest held by any Supporting Noteholder arising under the Convertible Notes Indenture; (xiv) Emergent publicly announces, or announces to any of the Supporting Noteholders or any other holder of Emergent Claims and Interests, its intention to support or pursue an alternative transaction or not support the Restructuring; (xv) any court of competent jurisdiction or other competent governmental or regulatory authority shall have issued an order making illegal or otherwise restricting, preventing, or prohibiting the Restructuring in a manner that cannot be reasonably remedied by Emergent or the Supporting Noteholders; (xvi) the Effective Date shall not have occurred, or shall not be reasonably likely to occur, by December 31, 2020; (xvii) the exclusive right of Emergent to file and solicit a chapter 11 plan pursuant to section 1121 of the Bankruptcy Code shall have terminated; (xviii) the Bankruptcy Court grants relief terminating, annulling, or modifying the automatic stay (as set forth in section 362 of the Bankruptcy Code) with regard to any assets of Emergent having an aggregate fair market value in excess of $250,000; (xix) the filing of any motion or pleading by Emergent in the Chapter 11 Case that is materially inconsistent with the terms and conditions of this Agreement, the Term Sheet or the Definitive Documents and is not acceptable to the Required Supporting Noteholders; or (xx) the occurrence of any termination event under any other restructuring support agreement or similar agreement entered into by Emergent. (b) Emergent Termination. This Agreement shall automatically terminate with respect to all Parties one (1) Business Day following the delivery of written notice from - 12 -
(b) each nominee, investment manager or advisor acting on behalf of beneficial holders of the Convertible Notes represents and warrants to Emergent and the other Supporting Noteholders that it has the legal authority to so act and to bind the applicable beneficial holder; and (c) other than pursuant to this Agreement, such Noteholder Claims are free and clear of any equity, option, proxy, voting restriction, right of first refusal or other limitation on disposition of any kind, that might adversely affect in any way such Supporting Noteholder’s performance of its obligations contained in this Agreement at the time such obligations are required to be performed. 9. [Reserved]. 10. Business Continuance; Access. (a) Except as contemplated by this Agreement or with the prior written consent of the Required Supporting Noteholders, Emergent covenants and agrees that, between the Agreement Effective Date and the Effective Date, Emergent shall (i) operate its business and the business of its direct and indirect subsidiaries in the ordinary course in a manner consistent with past practice in all material respects (other than any changes in operations (A) resulting from or relating to the filing or prosecution of the Chapter 11 Case or (B) imposed by the Bankruptcy Court), (ii) preserve intact its business organization and relationships with third parties and employees in the ordinary course of business in a manner that is consistent with past practice and in compliance with law, (iii) maintain its books and records on a basis consistent with prior practice and in compliance with law, and (iv) maintain its good standing and legal existence under the laws of the state in which it is incorporated, organized or formed, except to the extent that any failure to maintain its good standing arises solely as a result of the filing of the Chapter 11 Case. (b) Subject to the entry by any Supporting Noteholder and its advisors (each, a “Representative”) into a confidentiality agreement reasonably acceptable to Emergent (provided, that, Emergent acknowledges and agrees that the existing confidentiality agreements between the Supporting Noteholders, their advisors and Emergent are acceptable), at the reasonable request and upon reasonable notice of one or more such Supporting Noteholders or advisors, Emergent agrees to respond to reasonable information requests from such Supporting Noteholders and their Representatives (each of whom shall be bound by a confidentiality agreement in favor of Emergent), and provide reasonable access to Emergent’s senior management personnel regarding Emergent’s business, the Chapter 11 Case, and the general status of ongoing operations, during normal business hours and at other reasonable times in a manner that does not unreasonably interfere with the normal business operations of Emergent. - 15 -
11. Representations. (a) Each Party represents to each other Party that, as of the date of this Agreement: (i) such Party is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its organization, and has all requisite corporate, partnership, or limited liability company power and authority to enter into this Agreement on behalf of itself and any other party for which it has authority to sign and to carry out the transactions contemplated by, and perform its respective obligations under, this Agreement; (ii) the execution, delivery and performance of this Agreement by such Party does not and shall not (A) violate any provision of law, rule or regulation applicable to it or any of its subsidiaries or its organizational documents or those of any of its subsidiaries (B) conflict with its organizational documents or (C) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligations to which it or any of its subsidiaries is a party; (iii) the execution, delivery and performance by it of this Agreement, or effectuation of the Restructuring, does not and shall not require any registration or filing with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body, except such filing as may be necessary and/or required for disclosure by the Securities and Exchange Commission or pursuant to state securities or “blue sky” laws, and the approval, if necessary, by the Bankruptcy Court of Emergent’s authority to enter into and implement this Agreement; and (iv) subject to the provisions of sections 1125 and 1126 of the Bankruptcy Code, this Agreement is the legally valid and binding obligation of such Party on behalf of itself and any other party for which it has authority to sign, enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent transfer or other similar laws, both foreign and domestic, relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability. (b) Emergent represents and warrants to the Supporting Noteholders that, as of the Effective Date: (i) the aggregate outstanding indebtedness under the Senior Notes Indenture is not less than $48,758,887 in aggregate outstanding principal amount and such amounts (together with accrued interest, default interest, premiums, makewhole amounts, fees and other obligations thereon) are outstanding and owing by Emergent without defense, offset, or counterclaim, and that interest will continue to accrue on the Senior Notes at the contract rate during the pendency of the Chapter 11 Case; - 16 -
22. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to such state’s choice of law provisions which would require the application of the law of any other jurisdiction. By its execution and delivery of this Agreement, each of the Parties irrevocably and unconditionally agrees for itself that any legal action, suit or proceeding against it with respect to any matter arising under or arising out of or in connection with this Agreement or for recognition or enforcement of any judgment rendered in any such action, suit or proceeding, may be brought in the United States District Court for the District of Delaware, and by execution and delivery of this Agreement, each of the Parties irrevocably accepts and submits itself to the exclusive jurisdiction of such court, generally and unconditionally, with respect to any such action, suit or proceeding. Notwithstanding the foregoing consent to jurisdiction, if the Chapter 11 Case is commenced by Emergent, each Party agrees that the Bankruptcy Court shall have exclusive jurisdiction of all matters arising out of or in connection with this Agreement so long as the Bankruptcy Court has jurisdiction over Emergent. 23. WAIVER OF TRIAL BY JURY. EACH PARTY HERETO 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 HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHTS SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) 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, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 23. 24. Arms’ Length Negotiations; Interpretation. This Agreement is the product of arm’s-length negotiations among the Parties, and in the enforcement or interpretation hereof, is to be interpreted in a neutral manner, and any presumption with regard to interpretation for or against any Party by reason of that Party having drafted or caused to be drafted this Agreement, or any portion hereof, shall not be effective in regard to the interpretation hereof. This Agreement shall be interpreted in accordance with section 102 of the Bankruptcy Code. 25. Tax Matters. Emergent shall not, without the prior written consent of the Supporting Noteholders, take or fail to take any action, the taking or failure to take of which has or will have material adverse tax consequences for Emergent or holders of Noteholder Claims; the foregoing such actions include, without limitation, (a) making any Tax election; (b) entering into any contract with respect to Taxes; (c) extending the statute of limitations in respect of any Taxes; or (d) settling any Tax claim or assessment. - 19 -
Person shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the Indemnifying Party shall not be liable for the expenses of more than one separate counsel representing the Indemnified Persons who are parties to such Proceedings), (ii) the Indemnifying Party shall not have employed counsel reasonably satisfactory to such Indemnified Person to represent such Indemnified Person within a reasonable time after notice of commencement of the Proceedings or (iii) the Indemnifying Party shall have authorized in writing the employment of counsel for such Indemnified Person. (c) The Indemnifying Party shall not be liable for any settlement of any Proceedings effected without its written consent (which consent shall not be unreasonably withheld or delayed). If any settlement of any Proceeding is consummated with the written consent of the Indemnifying Party or if there is a final judgment for the plaintiff in any such Proceedings, the Indemnifying Party agrees to indemnify and hold harmless each Indemnified Person from and against any and all losses, claims, damages, liabilities and expenses by reason of such settlement or judgment in accordance with, and subject to the limitations of, the provisions of this Section 26. The Indemnifying Party shall not, without the prior written consent of an Indemnified Person (which consent shall not be unreasonably withheld or delayed), effect any settlement of any pending or threatened Proceedings in respect of which indemnity has been sought hereunder by such Indemnified Person unless such settlement (i) includes an unconditional release of such Indemnified Person in form and substance reasonably satisfactory to such Indemnified Person from all liability on the claims that are the subject matter of such Proceedings and (ii) 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 Person. 27. Notices. All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally, by email, courier, or mailed (first class postage prepaid) to the Parties at the following addresses, emails or facsimile numbers: If to Emergent: Emergent Capital, Inc. 0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000 Xxxx Xxxxx, Xxxxxxx 00000 Attention: Xxxxxxx Xxxxx (xxxxxx@xxxxxxxxxxxxxxx.xxx) with a copy to (which shall not constitute notice): Xxxxxxxxx Xxxxx Xxxxx & Xxxxx LLP 00000 Xxxxx Xxxxxx Xxxxxxxxx, 00xx Xxxxx Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000 Attention: Xxxxxxx X. Xxxxxxxxx, Esq. (xxxxxxxxxx@xxxxxxx.xxx) Maxim X. Xxxxxx, Esq. (xxxxxxx@xxxxxxx.xxx) If to the Supporting Noteholders: - 21 -
Exchange Act of 1934, or (b) a solicitation of votes for the acceptance of a chapter 11 plan of reorganization (including the Plan) for the purposes of sections 1125 and 1126 of the Bankruptcy Code or otherwise. Solicitation of acceptance of the Restructuring will not be solicited from any holder of Notes until such holder has received the disclosures required under or otherwise in compliance with applicable law. 33. Remedies Cumulative. All rights, powers, and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any right, power, or remedy thereof by any Party shall not preclude the simultaneous or later exercise of any other such right, power, or remedy by such Party, except as otherwise provided herein. 34. No Participation on Committee. Notwithstanding anything herein to the contrary, no Supporting Noteholder should be appointed to, or agree to serve on, an official committee of unsecured creditors in the Chapter 11 Case during the Restructuring Support Period. 35. Other Restructuring Support Agreements. To the extent the Senior Noteholder RSA or any other restructuring support agreement or similar agreement entered into by Emergent (or any amendment, restatement, supplement or modification thereto) includes terms or conditions that are more favorable to the non-Emergent party thereto than the terms and conditions in this Agreement as they apply to the Supporting Noteholders, then this Agreement shall automatically be amended to include such more favorable provisions. [Remainder of page intentionally left blank] - 24 -
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed and delivered on the date first written above. EMERGENT CAPITAL, INC. By: /s/ Xxxxxx Xxxxxxxx ________________ Name: Xxxxxx Xxxxxxxx _____________ Title: SVP & CFO __________________ [Signature Page to Restructuring Support Agreement (Convertible Notes) (Emergent Capital, Inc.)]
[Noteholder Signature Pages on File with Debtor’s Counsel] SUPPORTING NOTEHOLDERS: (on behalf of itself and the following funds: ) By:/s/ _______________________________ Name ____________________________ Title: ____________________________ Notice Address: _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ E-mail: __________________________ Attention: ________________________ Aggregate Principal Amount of 8.5% Senior Secured Notes due 2021 Beneficially Owned: $[________________________] Aggregate Principal Amount of 5.0% Unsecured Convertible Notes Beneficially Owned: $[________________________] Number of Equity Interests in Emergent Beneficially Owned: [________________________]
EXHIBIT A Term Sheet
Term Sheet Lamington Road DAC Series A Notes, Series B Notes, Grantor Trust Certificates and Profit Participating Notes Issuer: Lamington Road DAC (the “Company” or the “Issuer”) Co-Issuer: [Lamington Road Trust] (the “Trust” or the “Co-Issuer”) Board of On the Closing Date, the Company shall have a Board of Directors (the Directors: “Board of Directors”) comprised of five people: two directors designated by the holders of a majority of the aggregate principal amount outstanding of the Series A Notes (as defined below) (each, a “Series A Director”; together, the “Series A Directors”); one director designated by the holders of a majority of the aggregate outstanding amount of Series B Notes (as defined below) (the “Series B Director; one director designated by the holders of a majority of the outstanding PPN (as defined below) holders1 (the “Equity Director”)2; and one Irish citizen (the “Irish Director”).3 A director shall serve until he or she resigns, is removed or otherwise vacates his or her seat in accordance with the Constitution and Articles of Association of the Company (the “Constitution”). In the event of a vacancy, the class of Restructuring Securities (as defined below) with designation rights then in effect for such vacant seat shall designate a nominee for election. The Series A Directors shall serve on the Board of Directors until no amount remains outstanding on the Series A Notes. If no Series A Notes are outstanding and no other amounts are due and owing on the Series A Notes, the Series A Directors shall promptly resign. Upon such event, holders of the outstanding Series B Notes shall fill one of the two vacancies created by the resignation of the Series A Directors, and holders of the outstanding PPNs shall fill the other vacancy created by the resignation of the Series A Directors. Once no amounts remain outstanding and no other amounts are due and owing on the Series B 1 The trust agreement governing the issuance of the Trust Certificates (as defined below) shall include a mechanism permitting the holders of Trust Certificates to direct the Trustee to designate the PPN certificate holders’ designated member of the Board of Directors. If a majority in aggregate outstanding amount of Trust Certificates (as defined below) do not direct the Trustee, the Trustee shall rely on the direction of a majority of Trust Certificate holders providing such direction. This mechanism shall apply to any votes of the PPN class under the Indenture. 2 The initial Equity Director shall be selected by a majority vote of the non-conflicted equity directors of the Board of Directors of Emergent Capital, Inc. 3 The initial Irish Director shall be a person acceptable to the Series A Directors, the Series B Director and the Equity Director.
Notes, the Series B Directors shall promptly resign and the size of the Board of Directors shall be reduced to three directors. Each director who is appointed by a class of stakeholders may only be removed for cause (in accordance with Section 117 of the Constitution and subject to the “Redemptions” section below). Upon any such director’s removal, replacement, resignation or other vacation of a Board seat, such vacancy shall be filled by holders of the same class of Restructuring Securities as originally designated such director, voting with a plurality standard, so long as the designation entitlement of such class is then in effect; provided that, for so long as any Series A Directors or Series B Director(s) remain on the Board of Directors, with respect to votes by the class of PPNs to remove a director or fill a vacancy, only those votes cast by PPN holders who do not at such time hold any Series A Notes or Series B notes will be counted; and provided, further, that any vacancy of the Irish Director seat shall be filled by majority vote of the other directors then serving. A quorum shall be present for purposes of taking action if at least a majority of the then-serving members of the Board of Directors are present at a duly called meeting.4 For all Board of Directors meetings involving a vote that will require Defined Majority Approval (as defined below), all of the then-serving members of the Board of Directors entitled to participate in the relevant vote must be present at a duly called meeting; provided, however, that if the same director is not present at consecutive duly called meetings, the number of directors required to be present to constitute a quorum for Defined Majority Approval shall be reduced by one. Actions shall require a majority of the members of the Board of Directors present and voting to approve, except for the following: These items shall require a Defined Majority Approval (as defined below) unless otherwise required by law: Fundamental Transactions (non-ordinary course transactions), including • sale of the company • change in control • acquisitions • divestitures • investments • change in type of business • winding up/dissolution • Senior management decisions, including selection of manager of the Company, including hiring, firing, 4 The Constitution shall be amended to reflect the quorum requirement and to refer to or incorporate as Irish counsel determines, the Defined Majority requirements. All governance rights of specific parties must be contractual rather than in the Constitution.
promotion, compensation • Decisions/dealing with Jade Mountain • Incurrence or material modification of (i) debt, including notes, PPNs and other instruments that would be senior, structurally senior, or pari passu to the Series A Notes or the Series B Notes, (ii) guarantees or (iii) liens, in any case other than ordinary course trade debt • Related Party transactions • Changes to corporate governance Reduction of Minimum Cash Balance after December 31, 2022 “Defined Majority Approval” shall mean: If 5 directors are voting, 4 are required to approve; If 4 directors are voting, 3 are required to approve; and If 3 or 2 directors are voting, 2 are required to approve. In addition, no Series A Director or Series B Director, as applicable, shall vote on any matter which involves: a conflict of interest to such director in light of his designation by the Series A note holders or the Series B note holders, as applicable, provided that, for the avoidance of doubt, a debt issuance that is senior, structurally senior or pari passu to the Series A Notes or the Series B Notes shall not be considered a conflict of interest transaction and a director, including any director designated by the Series A note holders or the Series B note holders shall be entitled to vote on such transaction, so long as no other conflict of interest exists or other restriction on voting applies any transaction pursuant to which the outstanding principal and interest amount of either the Series A Notes or the Series B Notes, is paid in full (with respect to the applicable directors); provided that this shall not apply if both the Series A Notes and the Series B Notes would be paid in full any material modifications to the terms of either the Series A Notes or the Series B Notes (with respect to the applicable directors); provided that this shall not apply if both the Series A Notes and the Series B Notes would be adversely affected by such modifications. A professional manager will be appointed by the Board, whose duties will solely be administrative duties. The manager shall be selected by a majority of the Series A Directors, Series B Director and Equity Director. Securities As described more fully below, on the Closing Date, the Issuer or the Co- Issuance: Issuer, as applicable, shall issue to Emergent Capital, Inc. (“Emergent”) those instruments identified below, and the Issuer shall, in turn, distribute
to the applicable holders: 8.5% Senior Secured Notes due 2021 of Emergent (the “8.5% Senior Secured Notes”): Emergent shall exchange all 8.5% Senior Secured Notes for Series A Notes issued by the Company (the “Series A Notes”), as more fully set forth herein; 5.0% Senior Unsecured Convertible Notes due 2023 of Emergent (the “5.0% Convertible Notes”): Emergent shall exchange all 5.0% Convertible Notes for Series B Notes issued by the Company (the “Series B Notes”), as more fully set forth herein. Existing Emergent Equity: Emergent shall exchange all (w) existing shares of Emergent’s common stock, (x) vested warrants exercisable for Emergent’s common stock, (y) shares of outstanding restricted stock (the “Existing Restricted Stock”) issued pursuant to Emergent’s 2010 Omnibus Incentive Plan (the “Incentive Plan”), which shares of Existing Restricted Stock will vest on the Closing Date in accordance with their terms, and (z) shares of Emergent’s common stock to be issued upon the vesting of outstanding restricted stock units (the “Existing RSUs”) issued pursuant to the Incentive Plan, which Existing RSUs will vest on the Closing Date in accordance with their terms, with Grantor Trust Certificates issued by the Company (the “Trust Certificates”), each Trust Certificate representing one profit participating note (“PPN”), as more fully set forth herein. Existing Emergent Options: Emergent shall exchange for all of its existing outstanding stock options, if any (the “Existing Options”) issued pursuant to the Incentive Plan, options to purchase Trust Certificates, each of which represents one PPN (the “PPN Options”), the terms of which PPN Options shall be conformed to those of the Existing Options to the extent possible, and as more fully set forth herein. Existing Stock Appreciation Rights: Emergent shall exchange all outstanding stock appreciation rights (the “Existing SARs”) issued pursuant to the Incentive Plan with appreciation rights exercisable for Trust Certificates, each of which represents one PPN (the “SARs”), the terms of which SARs shall be conformed to those of the Existing SARs to the extent possible, and as more fully set forth herein; Existing Unvested Warrants: Emergent shall exchange all existing unvested warrants (the “Existing Warrants”) to purchase common stock of Emergent, with warrants in the Company to purchase Trust Certificates, each of which represents one PPN (the “Warrants”), the terms of which Warrants shall be conformed to those of the Existing Warrants to the extent possible, and as more fully set forth herein. The Trust Certificates, the Series A Notes, the Series B Notes, the PPNs,
the PPN Options, the SARs and the Warrants are collectively referred to as the “Restructuring Securities”. Reporting: Every six (6) months, the Board of Directors shall meet, review the prior six (6) months’ operating performance and review and approve the applicable periodic financial reporting, regulatory and securities filings. Redemptions: Every six (6) months, after fulfilling its semi-annual reporting obligations noted above, the Board of Directors shall review the Company’s existing and pro forma cash position and, subject to the Company’s right to make Open Market Repurchases (as defined below), effectuate any redemptions of Restructuring Securities in accordance with the terms and conditions of the “Payment Priority” section below. Failure to comply with the terms and conditions of the Payment Priority Waterfall (as defined below) shall constitute an event of default under each of the Restructuring Securities. In the event of any redemption by the Issuer of any Series A Notes or Series B Notes, the series of notes to be redeemed shall be selected pro rata by the Trustee in accordance with the provisions of the Indenture. Investors: The holders of the existing 8.5% Senior Secured Notes, 5.0% Convertible Notes, Common Stock and Common Stock Warrants issued by Emergent. Indenture: The agreement between the Issuer and the Indenture Trustee setting forth the terms of the Restructuring Securities (other than the Trust Certificates), to be governed by New York law. The Indenture shall set forth the rights of each class of securities, including without limitation: Director removal, nomination and election rights, as set forth under “Board of Directors” above. Consent rights over amendments to the Indenture that would adversely affect such class, as set forth under “Amendments and Waivers” for each of the Series A Notes and the Series B Notes below. Consent rights over any amendments to the Indenture that would change the Payment Priority Waterfall, as set forth under “Amendments and Waivers” for each of the Series A Notes and the Series B Notes below. Indenture A U.S.-domiciled trust company (or its affiliate) acceptable to the holders Trustee: of a majority of each of the Series A Notes and the Series B Notes. Closing Date: The date on which the closing occurs. Payment The Company shall retain a minimum cash balance of at least $5,000,000
Priority: (the “Minimum Cash Balance”) until such time that all of the Series A Notes and Series B Notes are retired or repurchased following the Closing Date to fund operating expenses and contingencies and a nominal profit amount; provided that the Board of Directors may reduce the Minimum Cash Balance, (a) by $1,000,000 no more often than once every six (6) months through December 31, 2022 until the Minimum Cash Balance reaches $3,000,000, acting by majority vote, and (b) if additional reduction is desired after December 31, 2022, to $2,000,000, acting by Defined Majority Approval. The Minimum Cash Balance shall be reported as of June 15 and December 15 of each year, and shall be certified by a director, manager or officer of the Company as true and correct. Falling below the Minimum Cash Balance will not constitute an event of default under any of the Restructuring Securities. On any date up to and including December 31, 2022, the Company may, at its option, but subject to approval by the Company’s Board of Directors (without requiring a Defined Majority Approval), repurchase the Series A Notes and/or the Series B Notes in the open market, provided that the Minimum Cash Balance is maintained immediately following such repurchasing transaction (“Open Market Repurchases”). For so long as the Minimum Cash Balance is maintained, any funds held by the Company in excess of the Minimum Cash Balance and remaining after any Open Market Repurchases (“Available Funds”) shall be distributed to the holders of the Restructuring Securities in accordance with the following payment priority waterfall outlined below (the “Payment Priority Waterfall”). Cash interest on the Series A Notes and Series B Notes shall be paid only to the extent of Available Funds, as detailed in the Payment Priority Waterfall. Payment Priority Waterfall: 1) First, holders of the Series A Notes shall receive, on a semi-annual basis5, all accrued and unpaid interest in full, including any arrears, and for the avoidance of doubt such interest payment shall not include a catch-up cash interest payment for any PIK interest that has been previously capitalized as principal, but shall include any increase in cash interest payable as a result of such PIK Interest capitalization on the previous payment dates. If insufficient Available Funds exist to pay interest on the Series A Notes, in full, such Available Funds shall be used to make cash interest payments on a pro rata basis to holders of the Series A 5 June 30 and December 31 of each year.
Notes, and any remaining interest owed shall be paid as PIK Interest and capitalized as principal. 2) Second, holders of the Series B Notes shall receive, on a semi- annual basis6, all accrued and unpaid interest in full, including any arrears, and for the avoidance of doubt such interest payment shall not include a catch-up cash interest payment for any PIK Interest that has been previously capitalized as principal, but shall include any increase in cash interest payable as a result of such capitalization on the previous payment dates. If insufficient Available Funds exist to pay interest on the Series B Notes, in full, such Available Funds shall be used to make cash interest payments on a pro rata basis to holders of the Series B Notes, and any remaining interest owed shall be paid as PIK Interest and capitalized as principal. 3) Third, after December 31, 2022, the retirement of Class D Units outstanding in White Eagle Asset Portfolio, LP (“White Eagle”) until all such Class D Units are retired. 4) Fourth, after December 31, 2022, until all Series A Notes have been redeemed or repaid in full, the Company shall redeem any and all of the Series A Notes at a price equal to the outstanding principal amount of the Series A Notes being redeemed plus accrued and unpaid interest thereon on a semi-annual basis that is substantially contemporaneous with its semi-annual Board of Directors’ meeting and/or reporting obligations, provided that the Minimum Cash Balance is maintained immediately following such redemption. 5) Fifth, after December 31, 2022, until sufficient Series B Notes, including Accrued Series B PIK Interest (as defined below), such that the outstanding principal amount of Series B Notes (including Accrued Series B PIK Interest) does not exceed $30 million have been redeemed or repaid, the Company shall redeem any and all of the Series B Notes at a price equal to the outstanding principal amount of the Series B Notes being redeemed plus accrued and unpaid interest thereon on a semi-annual basis that is substantially contemporaneous with its semi-annual Board of Directors’ meeting and/or reporting obligations, provided that the Minimum Cash Balance is maintained immediately following such redemption. 6) Sixth, after December 31, 2022, 50% of the Available Funds shall 6 June 30 and December 31 of each year.
Exchange Ratio: Each $100 of the Augmented Principal Amount of the Senior Secured Notes shall be exchanged on the Closing Date into $100 of Series A Notes. Interest: The Series A Notes initially will be entitled to interest in cash at a rate of 8.5% per annum compounded and payable semi-annually, subject to increase as described below. At the Issuer’s election, and subject to the Payment Priority Waterfall, the Issuer may pay all or a portion of interest in the form of additional Series A Notes in lieu of cash (“PIK Interest”). If the Issuer so elects, any PIK Interest initially shall accrue and be paid at a rate of 11.5% per annum compounded and payable semi-annually, and subject to increase as described below. Interest will be payable semi- annually in arrears and will be computed on the basis of a 360-day year. With respect to any Series A Notes that remain outstanding on or after July 15, 2021, the Series A Notes will be entitled to interest in cash at a rate of 9.75% per annum compounded and payable semi-annually, or PIK Interest, at the Issuer’s election, at a rate of 14% per annum compounded and payable semi-annually. Upon and during the existence of any Events of Default (defined below), the applicable interest rate will increase by 2% per annum during the continuation of the default. Final Maturity: The Series A Notes shall mature 100 years from the Closing Date (the “Final Maturity Date”). The Issuer shall be obligated to repay the unpaid principal balance of the Series A Notes, together with all accrued and unpaid interest thereon (including all PIK Interest), on the Final Maturity Date. Mandatory The Issuer shall redeem the outstanding Series A Notes for cash at a price Redemption: equal to the unpaid principal balance thereof plus all accrued and unpaid interest, upon the earlier of: (i) the Final Maturity Date; (ii) the acceleration of all obligations under the Series A Notes following the occurrence of an Event of Default; and (iii) a Deemed Liquidation.8 Optional The Series A Notes may be repaid at the option of the Issuer, in whole and Redemption: not in part, at any time before the Final Maturity Date, at a price equal to the then outstanding principal amount plus all accrued and unpaid interest 8 Deemed Liquidation shall mean, in substance but not necessarily in form, (a) a sale, transfer, lease or other disposition, in a single transaction or series of related transactions, of all or substantially all of the assets of (i) the Company or (ii) White Eagle Asset Portfolio, LP or (b) the consummation of any transaction (including any merger or consolidation or whether by operation of law or otherwise), the result of which is that any one third party purchaser (or group of affiliated third party purchasers) becomes the beneficial owner, directly or indirectly, of more than fifty percent (50%) of the then outstanding Trust Certificates issued pursuant to the Grantor Trust Agreement (as discussed below in the section “Trust Certificates”) or of the surviving entity of any such merger or consolidation.
insufficient Available Funds exist to make such payment, the remainder of any accrued but unpaid interest shall be capitalized and added to the existing principal of the 5.0% Convertible Notes (the “Existing Convertible Note Principal”) (the sum of the Existing Convertible Note Principal and any capitalized accrued but unpaid interest, the “Aggregate Principal Amount of the Convertible Notes”). Exchange Ratio: Each $100 of the Aggregate Principal Amount of the Convertible Notes shall be exchanged on the Closing Date into (a) $100 of Series B Notes and (b) Trust Certificates representing 10 PPNs. Interest: The Series B Notes initially will be entitled to interest in cash at the rate of 5.0% per annum compounded semi-annually, subject to increase as described below. At the Issuer’s election, the Issuer may pay all or a portion of interest in the form of additional Series B Notes in lieu of cash (“PIK Interest”). The aggregate amount of PIK Interest that is capitalized as principal under the Series B Notes from and after the Closing Date shall be referred to as the “Accrued Series B PIK Interest”. If the Issuer so elects, any PIK Interest initially shall accrue and be paid at a rate of 7.0% per annum compounded semi-annually. Interest will be payable semi- annually in arrears and will be computed on the basis of a 360-day year. With respect to any Series B Notes that remain outstanding after February 15, 2023, the cash interest rate shall increase to 6.0% and the PIK Interest Rate shall increase to 8.0%. Upon and during the existence of any Events of Default (defined below), the applicable interest rate will increase by 2.0% per annum during the continuation of the default. To the extent that the Company does not elect to pay interest on the Series B Notes as PIK Interest, any such accrued and unpaid cash interest shall be paid to holders of the Series B Notes before the Issuer uses any funds to redeem the Series A Notes; Final Maturity: The Series B Notes shall mature on the Final Maturity Date. The Issuer shall be obligated to repay the unpaid principal balance of the Series B Notes, together with all accrued and unpaid interest thereon (including all PIK Interest), on the Final Maturity Date. Mandatory The Issuer shall redeem the outstanding Series B Notes for cash at a price Redemption: equal to the unpaid principal balance thereof plus all accrued and unpaid interest, upon the earlier of (i) the Final Maturity Date; (ii) the acceleration of all obligations under the Series B Notes following the occurrence of an Event of Default; and (iii) a Deemed Liquidation. Optional The Series B Notes may be repaid at the option of the Issuer, in whole and
Certificates: Each Trust Certificate will represent one PPN having a principal amount equal to the greater of (i) the closing price of Emergent’s common stock immediately preceding an Emergent bankruptcy filing or (ii) the closing price of Emergent’s common stock immediately preceding the Closing Date. The Grantor Trust Trustee will hold the PPNs underlying the Trust Certificates and the Investors will have rights as provided in the Grantor Trust Agreement. Grantor Trust The agreement between the Company and the Grantor Trust Trustee Agreement: setting forth the terms of the Trust Certificates, to be governed by Cayman Islands law. Grantor Trust A U.S.-domiciled trust company (or its affiliate) acceptable to the holders Trustee: of a majority of Series B Notes.
EXHIBIT B Form of Transferee Joinder Agreement The undersigned (“Transferee”) hereby acknowledges that it has read and understands the Restructuring Support Agreement (Convertible Notes) dated as of October 14, 2020 (as amended or modified, the “Agreement”),9 by and among Emergent, the Supporting Noteholders, and the transferor to the Transferee of any Emergent Claims and Interests (each such transferor, a “Transferor”), and agrees, with respect to the Emergent Claims and Interests set forth below (the “Transferred Emergent Claims and Interests”), to be bound by the terms and conditions thereof, and shall be deemed a “Transferee” as applicable, under the terms of the Agreement with respect to the Transferred Emergent Claims and Interests. The Transferee specifically agrees to be bound by the terms and conditions of the Agreement with respect to the Transferred Emergent Claims and Interests, and makes all representations and warranties contained therein as of the date of the Transfer and with respect to the Transferred Emergent Claims and Interests, including the agreement to be bound by the vote for the Plan of the Transferor if such vote was cast before the effectiveness of the Transfer addressed herein. Date Executed: ______________________________________ Name: Title: Address: E-mail address(es): Telephone: Facsimile Class(es) of Emergent Claims and Interests Subject to Transfer: 8.5% Senior Secured Notes due 2021 Amount of Emergent Claims and Interests Subject to Transfer: $___________________ 9 Capitalized terms not used but not otherwise defined herein shall have the meanings ascribed to such terms in the Agreement.
5.0% Senior Unsecured Convertible Notes due 2023 Amount of Emergent Claims and Interests Subject to Transfer: $___________________ Emergent Equity Interests Number of Equity Interests Subject to Transfer: ___________________