| Item 1.01. |
Entry into a Material Definitive Agreement.
|
On June 17, 2022, New Residential Investment Corp. (the “Company”) entered into definitive agreements with its external manager, FIG LLC (the “Manager”), to internalize
the Company’s management function and operate as an internally managed real estate investment trust (the “Internalization”), effective upon the entry into the Internalization Agreement (as defined below) (such time, the “Effective Time” and June 17,
2022, the “Effective Date”). Since the completion of the spin-off of the Company from Drive Shack Inc. (formerly Newcastle Investment Corp.) on May 15, 2013, the Manager has been responsible for managing the Company’s operations, subject to the
supervision of the Company’s board of directors. As described in more detail below, on June 17, 2022, the Company agreed with the Manager to terminate the Third Amended and Restated Management and Advisory Agreement, dated as of May 7, 2015 (the
“Management and Advisory Agreement”), between the Company and the Manager, and arranged for the Manager to continue to provide certain services for a transition period.
Each of the agreements described under this Item 1.01, and the transactions contemplated thereby, were negotiated and unanimously approved by a special committee (the
“Special Committee”) comprised solely of Kevin Finnerty, Patrice Le Melle, Pamela Lenehan, Robert McGinnis, David Saltzman and Andrew Sloves, each of whom are independent and disinterested members of the board of directors of the Company. The Special
Committee was advised by independent counsel and an independent financial advisor.
Internalization Agreement
On June 17, 2022, the Company entered into an Internalization Agreement (the “Internalization Agreement”) with the Manager. Under the Internalization Agreement, the
Management and Advisory Agreement was terminated at the Effective Time, except that certain indemnification and other obligations will survive. In connection with the termination of the Management and Advisory Agreement, the Company has agreed to pay
$400 million to the Manager, with $200 million paid on the Effective Date, $100 million payable on September 15, 2022 and $100 million payable on December 15, 2022 (less an agreed amount payable by the Manager to the Company related to the
pre-Internalization portion of certain annual bonuses for 2022). As described in the Internalization Agreement, the Company has made or intends to extend offers of employment to certain employees of the Manager or its affiliates who provide services
to the Company, including the persons who currently serve as the Chief Executive Officer & President (as described below under Item 5.02) and the Chief Financial Officer and Chief
Accounting Officer of the Company. The terms of any offer letters or similar employment arrangements that are entered into between the Company and the person who currently serves as the Chief Financial Officer and Chief Accounting Officer of the
Company will be described in subsequent filings in accordance with applicable disclosure rules. Under the Internalization Agreement, the Manager has agreed not to, without the prior written consent of the Company, sell or otherwise transfer or
dispose of any shares of capital stock of the Company or any securities convertible into, or exercisable or exchangeable for, shares of capital stock of the Company held by the Manager immediately prior to the Effective Time for 90 days after the
Effective Date, subject to certain exceptions. The Manager has also agreed to be subject to certain non-solicitation restrictions for a period of five years following August 1, 2022 relating to the employees of the Manager who accept employment with
the Company pursuant to the terms of Internalization Agreement.
The information set forth herein with respect to the Internalization Agreement is qualified in its entirety by the full text of the Internalization Agreement, which is
filed as Exhibit 10.1 hereto and incorporated into this Item 1.01 by reference.
Transition Services Agreement
On June 17, 2022, the Company also entered into a Transition Services Agreement (the “Transition Services Agreement”) with the Manager. Under the Transition Services
Agreement, the Manager is required to continue to provide the Company with all of the services provided by the Manager to the Company and its affiliates immediately prior to the Effective Date (the “Services”) for a transition period during which the
Company will procure alternative providers. The Services will be provided for a fee intended to be equal to the Manager’s cost of providing the Services, including the allocated cost of, among other things, overhead, employee wages and compensation,
rent and related real estate expenses and actually incurred out-of-pocket expenses. The Company may elect to terminate any individual Service at any time upon written notice to the Manager. The Transition Services Agreement will terminate on the
earliest to occur of (i) the date on which no remaining Service is to be provided under the Transition Services Agreement or (ii) December 31, 2022, unless terminated earlier (x) by mutual agreement of the parties, (y) by either the Manager or the
Company in the event of a material breach by the non-terminating party that is not cured within thirty (30) days following written notification thereof, or (z) by the Manager if the Company fails to pay any sum overdue and payable for a period of at
least thirty (30) days.
The information set forth herein with respect to the Transition Services Agreement is qualified in its entirety by the full text of the Transition Services Agreement,
which is filed as Exhibit 10.2 hereto and incorporated into this Item 1.01 by reference.