Pg 1 of 16 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x : In re: : Chapter 11 : TOISA LIMITED, et al., : Case No. 17-10184 (SCC) : Debtors. 1 : (Jointly Administered) : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x ORDER APPROVING TERM SHEET UNDER BANKRUPTCY CODE SECTIONS 105(a), 362 AND FED. R. BANKR. P. 9019 Upon the application (the Motion ) 2 of Toisa Limited ( Toisa ) and certain of its affiliates, as debtors and debtors in possession in the above-captioned cases (collectively, the Debtors ), by their attorneys, Togut, Segal & Segal LLP, for entry of an order pursuant to Rule 9019(b) of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ) approving the Term Sheet [Dkt No. 416]; and the Declarations in support thereof by Richard W. Baldwin and Robert Hennebry that were admitted into evidence at the hearing to consider the Motion on January 18, 2018 (the Hearing ); and only one objection to the Motion having been filed by the United States Trustee ( UST ) (the Objection ) [Dkt No. 431]; and a Joint Reply to the Objection having 1 The Debtors in these chapter 11 cases are as follows: Trade Prosperity, Inc.; Toisa Limited; United Courage, Inc.; Trade Vision, Inc.; United Journey, Inc.; United Kalavryta, Inc.; Trade Sky, Inc.; Trade Industrial Development Corporation; United Honor, Inc.; Trade Will, Inc.; United Leadership Inc.; United Seas, Inc.; United Dynamic, Inc.; United Emblem, Inc.; United Ideal Inc.; Trade Unity, Inc.; Trade Quest, Inc.; Trade Spirit, Inc.; Trade Resource, Inc.; United Ambassador, Inc.; Edgewater Offshore Shipping, Ltd.; United Banner, Inc.; Toisa Horizon, Inc.; and Trade and Transport Inc. 2 Capitalized terms not defined herein shall have the meanings ascribed to them in the Motion.
Pg 2 of 16 been filed by the Debtors and Creditors Committee [Dkt No. 442]; and the Informal Committee having filed a Statement in Support of the Motion [Dkt No. 443]; and it appearing that this Court has jurisdiction to consider the Motion and relief requested therein pursuant to 28 U.S.C. 157 and 1334 and the Amended Standing Order of Reference M-431, dated January 31, 2012 (Preska, C.J.); and it appearing that this matter is a core proceeding pursuant to 28 U.S.C. 157(b); and it appearing that venue being proper in this Court pursuant to 28 U.S.C. 1408 and 1409; and it being represented that the relief requested in the Motion was supported by all the members of the Informal Committee and the Creditors Committee and is in the best interests of the Debtors estates; and it appearing that due and appropriate notice of the Motion has been given under the circumstances of these Chapter 11 cases; and it appearing that no other or further notice need be provided; and upon the record in these Chapter 11 cases and upon the record made at the Hearing which was So Ordered by the Court at the conclusion thereof; and after due deliberation thereon; and good and sufficient cause appearing therefore; it is hereby: ORDERED, that the UST s Objection is overruled; and it is further ORDERED that the Motion is granted and subject to the provisions of the Term Sheet, the Term Sheet, including the Form of Shareholder Release and releases provided by the Shareholder, are approved and will be implemented in accordance therewith and under any Chapter 11 plan subject to the terms of the Term Sheet; and it is further;
Pg 3 of 16 ORDERED, that due and sufficient notice of the Hearing and the Motion was provided pursuant to Bankruptcy Rule 9019 and the order shortening notice for same; and it is further ORDERED, that the stay provisions of 11 U.S.C. 362 apply to all claims of the Debtors and the Debtors Chapter 11 estate that are the subject of the Shareholder Release (as set forth in the Form of Shareholder Release) or the Lender Release (as set forth in the Term Sheet) and the Court expressly reserves jurisdiction, including its exclusive jurisdiction pursuant to 28 U.S.C. 1334(e), to enforce the stay provisions of 11 U.S.C. 362 and over any and all disputes, actions, contested matters, or other proceedings brought with respect to the Settlement, this Order, or and any and all claims of the Debtors and the Debtor s Chapter 11 estate that are the subject of the claims released pursuant to the Shareholder Release or the Lender Release; and it is further; ORDERED, that the Informal Committee and its members and the Creditors Committee and its members may not bring any claims of the Debtors and the Debtors Chapter 11 estates that are the subject of the Shareholder Release (as set forth in the Form of Shareholder Release), and the Shareholder may not bring any claims of the Debtors and the Debtors Chapter 11 estates that are the subject of the Lender Release (as set forth in the Term Sheet), without prior Court approval; and it is further; ORDERED, that the Debtors are authorized to take all necessary actions to carry out this Order; and it is further;
Pg 4 of 16 ORDERED, that notwithstanding any provision in the Bankruptcy Code or the Bankruptcy Rules to the contrary, including, but not limited to Bankruptcy Rules 1018, 3020(e), 6004(h), 7062 and 9014, (a) this Order shall be effective immediately and enforceable upon its entry; and it is further ORDERED, that the Court shall retain exclusive jurisdiction to hear and determine any and all matters arising from the interpretation or implementation of this Order. Date: New York, New York January 22, 2018 /S/ Shelley C. Chapman HONORABLE SHELLEY C. CHAPMAN UNITED STATES BANKRUPTCY JUDGE
Pg 5 of 16 Exhibit 1 Term Sheet
Pg 6 of 16 Toisa Limited, et al. Case No. 17-10184 (SCC) Shareholder Term Sheet On September 29, 2017, the Court entered its Mediation Order 1 scheduling a mediation that commenced in London, England on November 2 and 3, 2017 to facilitate discussions regarding the structure and material content of a Chapter 11 plan that comports with the requirements of the Bankruptcy Code [Dkt. No. 318]. This mediation term sheet (the Term Sheet ) memorializes the agreement reached between Mr. Gregory Callimanopulos (the Shareholder ), the Debtors, 2 the members of the Informal Committee of Secured Lenders (the Informal Committee ), 3 and the Official Committee of Unsecured Creditors and its individual members (the Creditors Committee ) (collectively, the Parties ). Term Sheet Toisa Limited Board Composition The existing seven-member board of directors of Toisa Limited will be re-constituted to a three-member board (the Toisa Board ) comprised of the following three (3) independent directors: Len Hoskinson, Scott Vogel and Alan Jacobs; 4 The Shareholder shall cause all seven directors to resign from the existing Toisa board, including the Shareholder and Joseph Bondi; and One of the independent directors shall be appointed chairman of the Toisa Board. To the extent necessary, the existing by-laws or equivalent governing documents of Toisa Limited shall be amended and modified to provide for the three- 1 2 3 4 Unless otherwise defined, capitalized terms shall have the meaning ascribed in the Mediation Order. Trade Prosperity, Inc.; Toisa Limited; United Courage, Inc.; Trade Vision, Inc.; United Journey, Inc.; United Kalavryta, Inc.; Trade Sky, Inc.; Trade Industrial Development Corporation; United Honor, Inc.; Trade Will, Inc.; United Leadership Inc.; United Seas, Inc.; United Dynamic, Inc.; United Emblem, Inc.; United Ideal Inc.; Trade Unity, Inc.; Trade Quest, Inc.; Trade Spirit, Inc.; Trade Resource, Inc.; United Ambassador, Inc.; Edgewater Offshore Shipping, Ltd.; United Banner, Inc.; Toisa Horizon, Inc.; and Trade and Transport Inc. An Informal Committee has been formed consisting of the following lenders: BNP Paribas S.A., Citibank Europe, plc UK Branch, Citibank N.A. London Branch, Commerzbank AG, Commonwealth Bank of Australia, Credit Agricole Corporate and Investment Bank, Danish Ship Finance A/S, DNB (UK) Limited, DVB Bank America N.V., Export-Import Bank of China, HSH Nordbank AG, ING Bank N.V., London Branch, National Bank of Greece S.A., Royal Bank of Scotland plc, and Unicredit Bank AG. The independent directors shall be independent from, and not under the control of, any Lender. -1-
Pg 7 of 16 Term Sheet member Toisa Board and any other necessary changes and shall be in form and substance acceptable to the Informal Committee. Voting Rights: Each Director shall have one vote. Shareholder Equity D&O Insurance Chief Restructuring Officer Disposition of the Shareholder s equity interests in the Debtors will be dealt with under a chapter 11 plan in accordance with the priorities and applicable confirmation standards under the Bankruptcy Code and applicable laws. The Debtors will procure and maintain usual and customary D&O Insurance for the directors and officers of Toisa Limited. The Toisa Board will appoint Joff Mitchell as the Chief Restructuring Officer of Toisa Limited ( Toisa CRO ). The Toisa CRO will report to the Toisa Board or any committee that may be delegated authority by the Toisa Board. The Toisa CRO will be empowered to make dayto-day, ordinary course management decisions on behalf of the Debtors. The scope of the Toisa CRO s management authority shall be set forth in the Toisa CRO s retention application, which shall be in form and substance acceptable to the Informal Committee. Director and Officer Indemnification The documents describing corporate governance shall provide for the indemnification of the directors and officers of Toisa Limited to the fullest extent permitted by law. Any obligations of the Debtors pursuant to their organizational documents to indemnify officers, directors, employees, and agents, serving in such capacities on and after the petition date (including the independent directors) (i) shall not be discharged or impaired by confirmation of the proposed plan and (ii) shall be deemed and treated as executory contracts to be assumed by the Debtors under the proposed plan; provided, -2-
Pg 8 of 16 Term Sheet however, that the Debtors shall not indemnify officers, directors, agents, or employees of the Debtors for any claims or causes of action arising out of or relating to any act or omission that is a criminal act or constitutes fraud, willful misconduct or gross negligence or for any other acts or omissions that are excluded under the terms of the organizational documents. After the effective date of any plan (the Plan Effective Date ), the Reorganized Debtors shall not terminate or otherwise reduce the coverage under any D&O insurance policies (including any tail policy ) then in effect. Marine Management Bulk Services, Inc. ( MMBS ); Sealion Do Brasil Navegação Ltda ( SBN ); and Sealion Shipping, Ltd. ( Sealion ); (collectively the Affiliate Companies ) The management of the Affiliate Companies will report to the Toisa CRO, and will cooperate with the Toisa CRO with respect to the operation and management of the Affiliate Companies. The Affiliate Companies will continue to provide services to the Debtors pursuant to the terms of the existing management agreements. The existing agreements between the Debtors and the Affiliate Companies shall not be amended or modified prior to the Plan Effective Date without the consent of the Toisa CRO. Nothing herein shall limit the Debtors ability to replace the Affiliate Companies or modify, reject or terminate the existing management agreements in connection with any plan or as otherwise allowed under the Bankruptcy Code. Brokerage and Management Corporation ( B&M ); Marine Management Services M.C. ( MMS ); and Trade and Transport (UK) Ltd. ( TATUK ) (collectively the Non-Affiliate Companies ) The Shareholder and the management of the Non-Affiliate Companies will reasonably cooperate with Toisa Limited and with the Toisa CRO with respect to the operation and management of the Non-Affiliate Companies through the Plan Effective Date. The Non-Affiliate Companies will continue to provide agency services to the Debtors pursuant to the existing agency agreements. -3-
Pg 9 of 16 Term Sheet The existing agreements between the Debtors and the Non-Affiliate Companies shall not be amended or modified prior to the Plan Effective Date without the consent of the Toisa CRO. The Non-Affiliate Companies shall be responsible for the payment of any severance and redundancies, and any and all obligations, including any wind down costs, if and when it takes place payable by or incurred by the Non- Affiliate Companies. Notwithstanding the existence of any agreements or documents that may provide otherwise (including any management or agency agreements), neither the Debtors, the Informal Committee, the Affiliate Companies, nor the members of the Informal Committee shall have any liability for the foregoing obligations or be responsible for the payment of any severance or redundancies, or any other obligations, including any wind down costs payable by or incurred by the Non-Affiliate Companies, and the Non-Affiliate Companies shall not seek compensation from any Debtor, the Informal Committee, any Affiliate Company or any member of the Informal Committee in respect of any costs, expenses, losses, liabilities, or other matters which are not incurred directly in the course of such Non-Affiliate Companies performance of services required to be performed under the applicable management or agency agreement. Nothing herein shall limit the Debtors ability to replace the Non-Affiliate Companies or modify, reject or terminate the existing management and/or agency agreements in connection with any plan or as otherwise allowed under the Bankruptcy Code. Releases As of the Plan Effective Date, and pursuant to and as shall be reflected in any reorganization or liquidating plan in these cases, the Shareholder shall release the Debtors, the Informal Committee and the individual -4-
Pg 10 of 16 Term Sheet members thereon, and the Creditors Committee, and each of their respective current and former officers and directors, professionals, advisors, accountants, attorneys, investment bankers, consultants, employees, and other representatives (each solely in its capacity as such), from liability to the maximum extent permitted under applicable law for all claims and causes of action, arising directly or derivatively, known or unknown, based on, relating to or arising out of the Debtors and their estates, the chapter 11 cases, any prepetition credit facilities and loan documents, the Debtors restructuring efforts, this Term Sheet, and the Plan, in each case other than claims and causes of action arising out of or related to any act or omission that is a criminal act or constitutes fraud, willful misconduct or gross negligence. Any releases of the Shareholder to be provided by third parties (other than Parties to this Term Sheet) shall not be inconsistent with the Shareholder Release. Shareholder Release As of the Plan Effective Date, in exchange and consideration for the Shareholder s agreement to (i) facilitate a proposed plan, (ii) facilitate the settlement, collection or recovery of any refunds on account of vessel construction contracts or account receivables, (iii) facilitate a change in governance of the Debtors, (iv) reasonably cooperate with the Toisa CRO to assist through the Plan Effective Date, and (v) other nonmonetary contributions, cooperation and support to be provided by the Shareholder, the Shareholder shall be granted a release in the form of Exhibit A (the Shareholder Release ) attached hereto. For purposes of the Shareholder Release, the term Shareholder shall have the meaning in Exhibit A. Exculpation and Injunction Protections As of the Plan Effective Date, the Debtors, the Shareholder, the Informal Committee and the individual members thereon, and the Creditors Committee, and each of their respective current and former officers and directors, professionals, advisors, accountants, attorneys, investment bankers, consultants, employees, and other -5-
Pg 11 of 16 Term Sheet representatives (each solely it its capacity as such), shall be granted standard exculpation and injunction protections under any plan, governing any liability to the maximum extent permitted under applicable law for their actions in connection with and during the chapter 11 cases, the Debtors restructuring efforts, this Term Sheet, any plan, and any exit credit facilities and loan documents, except to the extent arising out of or related to any act or omission that is a criminal act or constitutes fraud, willful misconduct or gross negligence. 9019 Motion The Debtors agree to seek Bankruptcy Court approval of this Term Sheet by filing a motion for approval of this Term Sheet pursuant to Federal Rule of Bankruptcy Procedure 9019 (the 9019 Motion ). The Shareholder agrees to cause the governance changes described in this Term Sheet to occur upon entry of an order by the Bankruptcy Court approving the 9019 Motion, which order shall not have been stayed. Fees and Expenses The Debtors shall pay Bracewell LLP, counsel to the Shareholder, for reasonable and documented fees and expenses incurred in connection with the mediation, the negotiation and execution of the Term Sheet, the negotiation and execution of the Plan and related documents; and matters relating to the transition and other transactions contemplated in the Term Sheet, Plan and related documents. Aircraft Purchase Creditors Committee Reservation of Rights The Parties will not oppose the entry of the proposed order submitted to the Bankruptcy Court on December 14, 2017 seeking approval of the Shareholder s purchase of the G550 aircraft. In exchange for the Creditors Committee s support of this Term Sheet, the Creditors Committee expressly reserves the right to raise the following issue for negotiations in connection with the Chapter 11 plan process: Whether or not and to what extent, if at all, the -6-
Pg 12 of 16 Term Sheet Shareholder Release (including for avoidance and recovery of the Dividend (as defined in the Shareholder Release provision)) set forth in this Term Sheet for inclusion in any Chapter 11 plan should affect the allowance of the Lenders or any other Parties claims in these cases. For the avoidance of doubt, the Lenders dispute that the agreement to support the Shareholder Release should affect in anyway whatsoever their claims (including but not limited to adequate protection or diminution claims. For the avoidance of doubt nothing in the Creditors Committee Reservation of Rights shall in any way prejudice the agreements reached under the Term Sheet and the release therein in favor of the Shareholder. -7-
Pg 13 of 16 Definitions FORM OF SHAREHOLDER RELEASE Affiliate Companies means collectively Marine Management Bulk Services, Inc., Sealion Do Brasil Navegação Ltda and Sealion Shipping, Ltd. Avoidance Action means any claim or Cause of Action of an Estate arising out of or maintainable pursuant to sections 510, 541, 542, 543, 544, 545, 547, 548, 549, 550, 551, or 553 of the Bankruptcy Code or under any other similar applicable nonbankruptcy law. Bankruptcy Code means Title 11 of the United States Code, as now in effect or hereafter amended, to the extent such amendments apply to the Chapter 11 Cases. Bankruptcy Court means the United States Bankruptcy Court for the Southern District of New York, or any other court with jurisdiction over the Chapter 11 Cases. Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure and the local rules of the Bankruptcy Court, as now in effect or hereafter amended, to the extent such amendments apply to the Chapter 11 Cases. Cause of Action means any action, proceeding, agreement, Claim, Interest, cause of action, controversy, demand, debt, right, action, Avoidance Action, Lien, indemnity, guaranty, suit, obligation, liability, remedy, damage, judgment, account, defense, offset, power, privilege, recoupment, crossclaim, counterclaim, third-party claim, indemnity claim, contribution claim or any other claim, whether known or unknown, contingent or non-contingent, foreseen or unforeseen, matured or unmatured, existing or hereafter arising on or before the Plan Effective Date, suspected or unsuspected, liquidated or unliquidated, disputed or undisputed, secured or unsecured, asserted or capable of assertion, directly or derivatively, whether pending in litigation or otherwise, in contract or in tort, by statute, in law or in equity or pursuant to any other theory of law. Without limiting the generality and scope of the foregoing, this provision shall (1) include any potential claims relating to (a) the Shareholder s exercise of his fiduciary duties with regard to the HHI contract and settlement, the Diavaz contract and settlement, the Pelagidis litigation, any other claims arising out of any newbuild contract or dispute, or the defense of the IRS claims; (b) the recoupment of costs relating to personal use of corporate aircraft or other corporate property; (c) the recoupment of the payment of any personal expenses by any Debtor, directly or indirectly, to or for the benefit of the Shareholder; (d) any and all dividends made by any Debtor, directly or indirectly, to the Shareholder; and (e) any transfer or reallocation of value made by any Debtor, directly or indirectly, to or for the benefit of the Shareholder; and (2) exclude any potential claims arising out of or related to any act or omissions that constitutes gross negligence, fraud, willful misconduct or criminal conduct. Chapter 11 Case(s) means the cases under chapter 11 of the Bankruptcy Code commenced by the Debtors in the Bankruptcy Court. Claim means a claim as defined in section 101(5) of the Bankruptcy Code. -8-
Pg 14 of 16 Debtors means collectively Trade Prosperity, Inc.; Toisa Limited; United Courage, Inc.; Trade Vision, Inc.; United Journey, Inc.; United Kalavryta, Inc.; Trade Sky, Inc.; Trade Industrial Development Corporation; United Honor, Inc.; Trade Will, Inc.; United Leadership Inc.; United Seas, Inc.; United Dynamic, Inc.; United Emblem, Inc.; United Ideal Inc.; Trade Unity, Inc.; Trade Quest, Inc.; Trade Spirit, Inc.; Trade Resource, Inc.; United Ambassador, Inc.; Edgewater Offshore Shipping, Ltd.; United Banner, Inc.; Toisa Horizon, Inc.; and Trade and Transport Inc. Effective Date means the effective date of any plan of reorganization confirmed by the Bankruptcy Court. Estate(s) means, individually, the estate of any of the Debtors and, collectively, the estates of all of the Debtors created under section 541 of the Bankruptcy Code. Informal Committee of Secured Lenders means the informal committee of secured lenders in the Chapter 11 Cases, the members of which are BNP Paribas S.A., Citibank Europe, plc UK Branch, Citibank N.A. London Branch, Commerzbank AG, Commonwealth Bank of Australia, Credit Agricole Corporate and Investment Bank, Danish Ship Finance A/S, DNB (UK) Limited, DVB Bank America N.V., Export-Import Bank of China, HSH Nordbank AG, ING Bank N.V., London Branch, National Bank of Greece S.A., Royal Bank of Scotland plc, and Unicredit Bank AG. Interest means any equity security, including a limited liability company membership interest, in a Debtor as defined in section 101(16) of the Bankruptcy Code, including all issued, unissued, authorized or outstanding shares of capital stock of the Debtors, together with any warrants, options or contractual rights to purchase or acquire such equity securities at any time and all rights arising with respect thereto. Lien means a lien as defined in section 101(37) of the Bankruptcy Code. Non-Affiliate Companies means collectively Brokerage and Management Corporation, Marine Management Services M.C. and Trade and Transport (UK) Ltd. Official Committee of Unsecured Creditors means the official committee of unsecured creditors appointed by the Office of the United States Trustee (the UST ) on May 18, 2017 (Docket No. 161) as such committee has been and may be reconstituted by the UST from time to time. Person means an individual, corporation, partnership, joint venture, association, joint stock company, limited liability company, limited liability partnership, trust, estate, unincorporated organization, or other entity. Reorganized Debtors means collectively the Debtors on or after the effective date of any plan of reorganization confirmed by the Bankruptcy Court and consummated in the Chapter 11 Cases. Shareholder means Gregory Callimanopulos in his individual capacity, in his capacity as a direct or indirect affiliate, shareholder, member, partner, equity holder or interest holder of any entity, -9-
Pg 15 of 16 including Ocala Enterprises Inc., owning any direct or indirect interest in any Debtor or any of the Affiliate Companies or the Non-Affiliate Companies, and in his capacity as an officer and director of certain of the Debtors. -10-
Pg 16 of 16 Release of Shareholder In exchange and consideration for the Shareholder s agreement to facilitate the expeditious reorganization or liquidation of the Debtors in the Chapter 11 Cases and provide other non-monetary contributions, cooperation and support, effective on and after the Effective Date, the Debtors, the Informal Committee of Secured Lenders and the individual lender members thereon, and the Official Committee of Unsecured Creditors, to the fullest extent permissible under applicable law, shall conclusively, absolutely, unconditionally, irrevocably, and forever release and discharge the Shareholder from any and all Causes of Action, including any derivative Causes of Action asserted or capable of assertion directly or on behalf of a Debtor or any other Person, that such Person would have been legally entitled to assert (whether individually or collectively), based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Debtors restructuring or liquidation, the Chapter 11 Cases, the purchase, sale, or rescission of the purchase or sale of any security of the Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in a plan of reorganization or liquidation in the Chapter 11 Cases, any Cause of Action, the business or contractual arrangements (including, but not limited to, agreements with the Affiliate Companies or Non-Affiliate Companies) between any Debtor, Reorganized Debtor (as applicable) or Estate and the Shareholder, the restructuring of Claims and Interests before or during the Chapter 11 Cases, including, but not limited to, the negotiation, formulation, or preparation of any plan of reorganization or liquidation in the Chapter 11 Cases, including any supplements or a disclosure statement related thereto or any other related agreements, instruments, or other documents, or any other act or omission, transaction, agreement, event or other occurrence pertaining to the Debtors and taking place on or before the Effective Date, provided, however that nothing contained herein shall release the Shareholder from any Causes of Action arising from or related to any act or omission that constitutes gross negligence, fraud, willful misconduct, or criminal conduct, and any and all such Causes of Action are expressly preserved; provided further, however, that solely with respect to the dividends paid (either directly or indirectly) to the Shareholder by Toisa Limited on or about May 31, 2016, in an amount totaling $20,000,000 (the Dividends ), the Debtors, the Informal Committee of Secured Lenders and the individual lender members thereon, and the Official Committee of Unsecured Creditors and the individual members thereon, shall be deemed to have released, and may not assert against the Shareholder or any immediate, mediate or subsequent transferee, any Cause of Action for actual fraudulent conveyances under Sections 544 and 548 of the Bankruptcy Code or other applicable law. -11-