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Item
1.01
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Entry
into a Material Definitive Agreement
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Capitalized
terms used but not defined herein have the meanings set forth in the respective exhibits filed with this Form 8-K.
Third
Amended and Restated Senior Credit Facility with LNV Corporation
On
June 28, 2021, GWG DLP Funding IV, LLC (“DLP IV”), an indirect subsidiary of GWG Holdings, Inc. (“GWG” or the
“Company”), entered into a Third Amended and Restated Loan and Security Agreement with LNV Corporation, as lender, and CLMG
Corp., as the administrative agent on behalf of the lenders under the agreement (the "Third Amended Facility"). The Third Amended
Facility replaced a Second Amended and Restated Loan and Security Agreement, dated November 1, 2019, that previously governed the Company’s
senior credit facility (the “Second Amended Facility”). The Third Amended Facility resulted in an additional advance of $52.5
million (the “Third A&R Advance”) from LNV Corporation, paid on June 28, 2021.
In
conjunction with entering into the Third Amended Facility, GWG DLP Funding V, LLC (“DLP V”), another indirect subsidiary
of the Company, transferred life insurance policies having an aggregate face value of approximately $298.3 million to DLP IV which were
pledged as additional collateral to the Third Amended Facility (the “Third A&R Advance Collateral”), and DLP IV received
proceeds of approximately $51.2 million (net of certain fees and expenses incurred in connection with the negotiation and entry into
the Third Amended Facility). After giving effect to such advance, the principal amount outstanding under the Third Amended Facility on
June 28, 2021 was approximately $231.5 million.
Under
the Third Amended Facility, all advances bear interest at a rate of the Benchmark Rate plus the Applicable Margin, or the Default Rate
if an event of default has occurred and is continuing. For purposes of the Third Amended Facility, (i) the Benchmark Rate is the greater
of (a) the sum of (i) the Federal Funds Rate plus (ii) one-half of one percent (0.50%) and (b) one and one half of one percent (1.50%);
(ii) the Applicable Margin is seven and one half percent (7.50%); and (iii) the Default Rate is the Benchmark Rate plus nine and one
half percent (9.50%).
The
Third A&R Advance may be repaid in whole but not in part at any time prior to the Conversion Date, and may be repaid in whole or
in part following the Conversion Date. For purposes of the Third Amended Facility, Conversion Date is the earliest to occur of (i) an
event of default, (ii) an unmatured event of default, and (iii) December 1, 2021. No yield maintenance fee is required with respect to
the payment in full of all Third A&R Advances prior to the Conversion Date.
Upon
the occurrence of a Prepayment Event, the Third A&R Advance may be repaid with a Prepayment Premium equal to the amount of the Third
A&R Advance multiplied by (i) ten percent (10%) on or prior to August 31, 2021, (ii) fifteen percent (15%) from September 1, 2021
through and including September 30, 2021, (iii) twenty percent (20%) from October 1, 2021 through and including October 31, 2021, and
(iv) twenty-five percent (25%) from November 1 through and including November 30, 2021, in each case less (a) the Third Amended Facility
structuring paid by the Borrower, minus (b) the accrued interest on the Third A&R Advance paid by the Borrower prior to the Prepayment
Event, minus (c) the accrued but unpaid interest on the Third A&R Advance prior to the Prepayment Event. For purposes of the Third
Amended Facility, a Prepayment Event is the date (on or before November 30, 2021) on which the Borrower shall have irrevocably paid the
Third A&R Advance obligations in full and in cash.
Upon
repayment of the Third A&R Advance in accordance with the terms of the Third Amended Facility, the Third A&R Advance Collateral
is required to be released.
Amendments
to Secured Credit Agreements with HCLP Nominees, L.L.C.
In
addition, on June 28, 2021, HCLP Nominees, L.L.C., the Company, GWG Life, LLC, GWG DLP Funding V Holdings, LLC and the Company’s
consolidated subsidiaries Beneficient Capital Company II, L.L.C. (f/k/a Beneficient Capital Company, L.L.C.) (the “Borrower”),
Beneficient Company Holdings, L.P., and The Beneficient Company Group, L.P. entered into Amendment No. 2 to the Second Amended and Restated
Credit Agreement among the parties and Amendment No. 2 to the Second Amended and Restated Second Lien Credit Agreement among the parties
(the “HCLP Credit Agreement Amendments”). The HCLP Credit Agreement Amendments eliminate the previous obligation of the Company
or GWG Life, LLC to assume the obligations of the Borrower under the Second Amended and Restated Credit Agreement and the Second Amended
and Restated Second Lien Credit Agreement upon the issuance of trust charters from the Texas Department of Banking.
The
foregoing descriptions of the Third Amended Facility and the HCLP Credit Agreement Amendments are qualified in their entirety by the
terms of such agreements, which are filed as exhibits to this Form 8-K and incorporated herein by reference.