FRONT YARD RESIDENTIAL CORPORATION Item 1.01 Entry into a Material Definitive Agreement
On
The Merger Agreement provides that, among other things, upon the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger ("Effective Time"), the Company will merge with and into Merger Sub (the "Merger"), with Merger Sub as the successor in the Merger and continuing as a wholly owned subsidiary of Parent.
Pursuant to the Merger Agreement, each share of common stock, par value
At the Effective Time, each outstanding stock option held by our employees to purchase Shares (the "Company Options"), whether vested or unvested, shall be cancelled immediately prior to the Effective Time in exchange for the right to receive a cash payment in an amount equal to (A) the number of Shares underlying the Company Option immediately prior to the Effective Time multiplied by (B) the excess (if any) of the Merger Consideration over the applicable exercise price of the Company Option. Each outstanding restricted stock unit with respect to the Shares held by our employees and non-employee directors (the "Company RSUs"), whether vested or unvested, shall be cancelled immediately prior to the Effective Time in exchange for the right to receive a cash payment equal to (A) the number of Shares underlying such Company RSU (irrespective of whether any performance goals have been met), multiplied by (B) the Merger Consideration.
The parties' obligation to consummate the Merger is subject to the satisfaction or waiver of conditions set forth in the Merger Agreement, including: (i) the approval of the Merger by the holders of a majority of the outstanding Shares entitled to vote thereon, (ii) the absence of any law or governmental order prohibiting the Merger, (iii) the Company's receipt of a tax opinion relating to the REIT status of the Company, (iv) (A) each of the existing lender consents to the Merger under certain of the Company's existing credit facilities shall remain in full force and effect and, if in escrow pending the consummation of the Merger, shall be released from escrow at the closing, and shall be effective not later than, and substantially concurrently with, the consummation of the Merger, and (B) a consent to the Merger under the Company's credit facility with the Federal Home Loan Mortgage Corporation shall have been delivered to the Company, shall be in full force and effect and shall be effective not later than, and substantially concurrently with, the consummation of the Merger, (v) no specified event of default or financial covenant event of default shall have occurred and be continuing under any of the existing credit facilities and (vi) certain other customary conditions relating to the parties' representations and warranties in the Merger Agreement and the performance of their respective obligations.
The Company has made customary representations and warranties in the Merger Agreement. The Merger Agreement also contains customary covenants and agreements, including covenants and agreements relating to the conduct of the Company's business between the date of the signing of the Merger Agreement and the closing of the transactions contemplated under the Merger Agreement. The
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representations and warranties made by the Company are, subject to certain
limited exceptions, qualified by disclosures made in its disclosure schedules
and
The Merger Agreement also contains covenants by the Company not to participate in any discussions or negotiations with any person making any proposal for an alternative transaction, and requiring the board of directors of the Company (the "Board") to recommend to its stockholders that they approve the transactions contemplated by the Merger Agreement, in each case, subject to certain exceptions. The Board may change its recommendation in certain circumstances specified in the Merger Agreement in response to an unsolicited proposal for an alternative transaction or following an intervening event.
Under the Merger Agreement, each of the Company and Parent has also agreed to use reasonable best efforts to consummate the Merger.
Parent has obtained equity and debt financing commitments for the transactions
contemplated by the Merger Agreement, the proceeds of which will be used by
Parent to pay the Merger Consideration and all related fees and expenses. The
Pretium Investor and the
The Merger Agreement contains certain termination rights for the Company and
Parent, and provides that, upon termination of the Merger Agreement by the
Company or Parent upon specified conditions, the Company will be required to pay
Parent a termination fee equal to
The Merger Agreement also provides that Parent will be required to pay the
Company a reverse termination fee of
In addition to the foregoing termination rights, and subject to certain
limitations, either party may terminate the Merger Agreement if the Merger is
not consummated by
In connection with the Merger Agreement, Parent has entered into a voting and
support agreement (the "Voting Agreements") with
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The foregoing description of the Merger Agreement and the Merger does not purport to be complete and is qualified in its entirety by the terms and conditions of the Merger Agreement and any related agreements. The Merger Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of such agreement or other specific dates. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating such agreement. The Merger Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company, Parent or any other party to the Merger Agreement or any related agreement. In particular, the representations, warranties, covenants and agreements contained in the Merger Agreement, which were made only for purposes of such agreement and as of specific dates, were for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties (including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts) and may be subject to standards of . . .
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On
The foregoing description of the CIC Agreements is a summary only and is qualified in its entirety by the full text of the agreements, which are attached hereto as Exhibits 10.1, 10. 2, 10.3, 10.4 and 10.5, and incorporated herein by reference.
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Item 9.01 Financial Statements and Exhibits
(d) Exhibits 2.1* Agreement and Plan of Merger, dated as ofOctober 19, 2020 , by and amongFront Yard Residential Corporation ,Pretium Midway Holdco, LP and Midway AcquisitionCo 10.1 Amended and Restated Change in Control Severance Agreement, datedOctober 19, 2020 , by and betweenFront Yard Residential Corporation andRene Dittrich 10.2 Amended and Restated Change in Control Severance Agreement, datedOctober 19, 2020 , by and betweenFront Yard Residential Corporation and George G. Ellison 10.3 Amended and Restated Change in Control Severance Agreement, datedOctober 19, 2020 , by and betweenFront Yard Residential Corporation andStephen H. Gray 10.4 Amended and Restated Change in Control Severance Agreement, datedOctober 19, 2020 , by and betweenFront Yard Residential Corporation and Robin N. Lowe 10.5 Amended and Restated Change in Control Severance Agreement, datedOctober 19, 2020 , by and betweenFront Yard Residential Corporation andMichael G. Lubin
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