[a10qexhibitfinalimage1.jpg]     
May 22, 2016
  
Resource Capital Corp.
712 5th Avenue, 12th Floor
New York, New York 10019
Attention: Chief Executive Officer
    Board of Directors
 
Ladies and Gentlemen:
 
Reference is made to that certain Second and Amended Restated Management
Agreement, dated as of June 14, 2012, by and among Resource Capital Corp. (“you”
or the “Company”), Resource Capital Manager, Inc. (the “Manager”) and Resource
America, Inc. (“Resource America”) (as amended or amended and restated, the
“Management Agreement”). Resource America, Inc. and C-III Capital Partners LLC
(“Parent”) are contemporaneously herewith executing a definitive transaction
agreement (the “Merger Agreement”) in the form attached hereto as Exhibit A
providing for the merger of Resource America with a wholly owned subsidiary of
Parent, with Resource America surviving as the continuing entity and a wholly
owned subsidiary of Parent (the “Merger”).
 
1.
By countersigning below, you hereby waive the Company’s right under Section
15(a)(iv) of the Management Agreement to terminate the Management Agreement as a
result of the Change of Control (as defined in the Management Agreement) of the
Manager resulting from the Merger. You also represent and warrant that the
Special Committee of independent directors of the Board of Directors of the
Company has duly authorized and approved the execution of this letter and the
waiver described in the preceding sentence.

2.
Attached as Exhibit B is a true, correct and complete copy of the resolutions of
the board of directors of the Company (the “Board”) appointing the persons set
forth therein to the Board, subject to and effective upon the closing of the
Merger.

3.
Resource America agrees that it shall pay $1,500,000 to the Company at the
closing of the Merger (the “Closing”), by wire transfer of immediately available
funds to a bank account designated in writing by the Company at least three (3)
business days prior to the Closing.

Please send (i) a countersigned copy of this letter by e-mail to
JBrotman@resourceamerica.com and (ii) a countersigned original of this letter to
the following address:
 
Resource Capital Manager, Inc. c/o Resource America, Inc. 1845 Walnut Street,
18th Floor
Philadelphia, PA 19103
Attention: Jeffrey Brotman, EVP and Senior Counsel

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[a10qexhibitfinalimage2.jpg]

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Exhibit A
 
Merger Agreement    

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AGREEMENT AND PLAN OF MERGER
dated as of
May 22, 2016
by and among
RESOURCE AMERICA, INC.,
C-III CAPITAL PARTNERS LLC,
and
REGENT ACQUISITION INC.

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TABLE OF CONTENTS
 
 
 
 
 
 
ARTICLE 1
 
DEFINITIONS
 
 
 
Section 1.01
 
Definitions
 
  2
Section 1.02
 
Other Definitional and Interpretative Provisions
 
15
 
ARTICLE 2
 
THE MERGER; EFFECT ON THE CAPITAL STOCK; EXCHANGE OF CERTIFICATES
 
 
 
Section 2.01
 
The Merger
 
16
Section 2.02
 
Closing
 
16
Section 2.03
 
Effective Time
 
16
Section 2.04
 
Effects of the Merger
 
17
Section 2.05
 
Effect of the Merger on Capital Stock of the Company and Merger Sub
 
17
Section 2.06
 
Certain Adjustments
 
17
Section 2.07
 
Appraisal Shares
 
18
Section 2.08
 
Payment of Merger Consideration
 
18
Section 2.09
 
Further Assurances
 
21
Section 2.10
 
Treatment of Company Equity Awards
 
21
 
ARTICLE 3
 
THE SURVIVING CORPORATION
 
 
 
Section 3.01
 
Surviving Corporation Matters
 
22
 
ARTICLE 4
 
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
 
 
Section 4.01
 
Corporate Existence and Power
 
23
Section 4.02
 
Corporate Authorization
 
23
Section 4.03
 
Governmental Authorization
 
23
Section 4.04
 
Non-contravention
 
24
Section 4.05
 
Capitalization
 
25
Section 4.06
 
Subsidiaries
 
26
Section 4.07
 
SEC Filings and the Sarbanes-Oxley Act
 
27
Section 4.08
 
Financial Statements
 
28
Section 4.09
 
Disclosure Documents
 
29
Section 4.10
 
Absence of Certain Changes
 
29
Section 4.11
 
No Undisclosed Material Liabilities
 
29
Section 4.12
 
Compliance with Laws and Court Orders; Governmental Authorizations
 
30
Section 4.13
 
Litigation
 
30

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Section 4.14
 
Properties
 
30
Section 4.15
 
Intellectual Property
 
31
Section 4.16
 
Taxes
 
32
Section 4.17
 
Employee Benefit Plans
 
33
Section 4.18
 
Labor Matters
 
34
Section 4.19
 
Environmental Matters
 
35
Section 4.20
 
Material Contracts
 
35
Section 4.21
 
Finders’ Fees, etc.
 
38
Section 4.22
 
Opinion of Financial Advisor
 
38
Section 4.23
 
Related Party Transactions
 
38
Section 4.24
 
Antitakeover Statutes
 
38
Section 4.25
 
Insurance
 
38
Section 4.26
 
Broker-Dealer and Other Regulated Subsidiaries
 
39
Section 4.27
 
Material Advisory Contracts
 
40
Section 4.28
 
Joint Ventures
 
41
Section 4.29
 
Funds and Managed REITs
 
41
Section 4.30
 
Anti-Corruption
 
42
Section 4.31
 
Material Broker-Dealers
 
42
Section 4.32
 
REIT Status
 
43
Section 4.33
 
CDO Issuers
 
43
Section 4.34
 
No Additional Representations
 
43
 
ARTICLE 5
 
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
 
 
 
Section 5.01
 
Corporate Existence and Power
 
44
Section 5.02
 
Corporate Authorization
 
44
Section 5.03
 
Governmental Authorization
 
44
Section 5.04
 
Non-contravention
 
45
Section 5.05
 
Merger Sub
 
45
Section 5.06
 
Disclosure Documents
 
45
Section 5.07
 
Sufficient Funds
 
45
Section 5.08
 
Financial Statements
 
46
Section 5.09
 
Solvency
 
46
Section 5.10
 
Litigation
 
46
Section 5.11
 
No Member Vote Required
 
46
Section 5.12
 
Finders’ Fees, etc
 
46
Section 5.13
 
No Additional Representations
 
46
 
ARTICLE 6
 
COVENANTS OF THE COMPANY
 
 
 
Section 6.01
 
Conduct of the Company
 
47
Section 6.02
 
Company Stockholder Meeting
 
50
Section 6.03
 
Cooperation
 
51
Section 6.04
 
Public Fund Advisory Contract Consents; Public Fund Proxy Statements
 
52

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ARTICLE 7
 
COVENANTS OF PARENT AND MERGER SUB
 
 
 
Section 7.01
 
Conduct of Parent
 
54
Section 7.02
 
Obligations of Merger Sub
 
54
Section 7.03
 
Director and Officer Indemnification
 
54
Section 7.04
 
Employee Matters
 
56
Section 7.05
 
Section 15(f) of the Investment Company Act
 
59
 
ARTICLE 8
 
COVENANTS OF PARENT AND THE COMPANY
 
 
 
Section 8.01
 
Efforts
 
59
Section 8.02
 
Proxy Statement
 
62
Section 8.03
 
No Solicitation
 
63
Section 8.04
 
Public Announcements
 
67
Section 8.05
 
Notices of Certain Events
 
67
Section 8.06
 
Access to Information
 
67
Section 8.07
 
Section 16 Matters
 
68
Section 8.08
 
Stock Exchange De-listing; 1934 Act Deregistration
 
68
Section 8.09
 
Stockholder Litigation
 
68
Section 8.10
 
Managed Entities
 
68
Section 8.11
 
Closing Payment by Parent
 
69
 
ARTICLE 9
 
CONDITIONS TO THE MERGER
 
 
 
Section 9.01
 
Conditions to Obligations of Each Party
 
69
Section 9.02
 
Conditions to the Obligations of Parent and Merger Sub
 
70
Section 9.03
 
Conditions to the Obligations of the Company
 
71
 
ARTICLE 10
 
TERMINATION
 
 
 
Section 10.01
 
Termination
 
72
Section 10.02
 
Effect of Termination
 
73
Section 10.03
 
Termination Fees
 
73

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ARTICLE 11
 
MISCELLANEOUS
 
 
 
Section 11.01
 
No Survival of Representations and Warranties
 
75
Section 11.02
 
Amendment and Modification
 
75
Section 11.03
 
Extension; Waiver
 
75
Section 11.04
 
Expenses
 
76
Section 11.05
 
Disclosure Letter References
 
76
Section 11.06
 
Notices
 
76
Section 11.07
 
Counterparts
 
77
Section 11.08
 
Entire Agreement; Third Party Beneficiaries
 
77
Section 11.09
 
Severability
 
77
Section 11.10
 
Assignment
 
78
Section 11.11
 
Governing Law
 
78
Section 11.12
 
Enforcement; Exclusive Jurisdiction
 
78
Section 11.13
 
WAIVER OF JURY TRIAL
 
79

DISCLOSURE LETTERS
Company Disclosure Letter
Parent Disclosure Letter

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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of May 22, 2016,
is by and among Resource America, Inc., a Delaware corporation (the “Company”),
C-III Capital Partners LLC, a Delaware limited liability company (“Parent”), and
Regent Acquisition Inc., a Delaware corporation and a wholly owned subsidiary of
Parent (“Merger Sub”). Parent, Merger Sub and the Company are referred to
individually as a “Party” and collectively as “Parties”.
W I T N E S S E T H:
WHEREAS, the Parties intend that, on the terms and subject to the conditions set
forth in this Agreement, Merger Sub will merge with and into the Company, with
the Company surviving the merger as the surviving corporation (the “Merger”) and
each of the Company’s issued and outstanding shares of common stock, par value
$0.01 per share (the “Company Stock”), other than shares of Company Stock owned,
directly or indirectly, by Parent, the Company or Merger Sub, will be converted
into the right to receive the Merger Consideration (as defined herein);
WHEREAS, the Boards of Directors of the Company and Merger Sub and the manager
of Parent have each unanimously (i) determined that the Merger, this Agreement
and the transactions contemplated hereby, are fair and in the best interests of
their respective companies and stockholders or members, as applicable, and
(ii) approved and declared advisable this Agreement, the Merger and the other
transactions contemplated hereby;
WHEREAS, Parent, as sole stockholder of Merger Sub, has adopted this Agreement
and approved the Merger by written consent in accordance with the General
Corporation Law of the State of Delaware (the “DGCL”);
WHEREAS, the Board of Directors of the Company (the “Company Board”) has
unanimously resolved to recommend that the Company’s stockholders approve the
adoption of this Agreement;
WHEREAS, contemporaneously with the execution and delivery of this Agreement,
and as a condition and a mutual inducement to Parent and Merger Sub’s
willingness to enter into this Agreement, each of the stockholders listed on
Schedule 1 has entered into a voting agreement with Parent, substantially in the
form attached hereto as Exhibit A (each, a “Voting Agreement”);
WHEREAS, contemporaneously with the execution and delivery of this Agreement,
and as a condition and a mutual inducement to Parent and Merger Sub’s
willingness to enter into this Agreement, each of the individuals listed on
Schedule 2 has entered into an employment agreement with the Company (together,
the “Employment Agreements”), each of which shall become effective at the time
of Closing;
WHEREAS, contemporaneously with the execution and delivery of this Agreement,
and as a condition and a mutual inducement to Parent and Merger Sub’s
willingness to enter into this Agreement, each of the individuals listed on
Schedule 3 has entered into an amendment to his employment agreement with the
Company (together, the “Employment Agreement Amendments”), which shall become
effective as of immediately prior to the Closing; and

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WHEREAS, Parent, the Company and Merger Sub desire to make certain
representations, warranties, covenants and agreements specified herein in
connection with this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, the Parties hereto agree
as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions. (a) As used herein, the following terms have the
following meanings:
“1933 Act” means the U.S. Securities Act of 1933, as amended.
“1934 Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Advisers Act” means the Investment Advisers Act of 1940, and the rules and
regulations promulgated thereunder, as amended.
“Advisory Client” shall mean any Person to which the Company or any of its
Subsidiaries or Trapeza, directly or indirectly, provides investment advisory
services pursuant to an Advisory Contract.
“Advisory Contract” shall mean any investment advisory, sub-advisory, investment
management, collateral management, collateral administration, trust or similar
agreement with any Advisory Client to which the Company or any of its
Subsidiaries or Trapeza is a party, including those with the Public Funds,
Private Funds, Managed REITs and CDO Issuers.
“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly controls or is controlled by, or is under common control with such
Person.
“Apartment REIT III” means Resource Apartment REIT III, Inc., a Maryland
corporation.
“Broker-Dealer” shall mean a “broker” or “dealer” (as defined in Sections
3(a)(4) and 3(a)(5) of the 1934 Act).
“Business Day” means any day that is not a Saturday, a Sunday or other day that
(i) is a statutory holiday under the federal Laws of the United States or
(ii) is otherwise a day on which banks in New York, New York are authorized or
obligated by Law or executive order to close.
“CDO Issuer” means an issuer of any collateralized debt obligation or
collateralized loan obligation that is a party to an Advisory Contract with the
Company or any of its Subsidiaries or Trapeza pursuant to which the Company or
any of its Subsidiaries or Trapeza serves as a collateral manager, collateral
administrator or in a similar capacity.
 
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“Closing Date” means the date of the Closing.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company Acquisition Proposal” means any proposal, indication of interest or
offer from any Person or “group” (as defined under Section 13(d) of the 1934 Act
and the rules and regulations thereunder) (other than Parent and its
Subsidiaries or Affiliates) relating to (i) any direct or indirect acquisition
or purchase of the business or assets (including equity interests in
Subsidiaries) of the Company or any of its Subsidiaries representing 25% or more
of the consolidated revenues, net income or assets of the Company, (ii) any
issuance, sale or other disposition, directly or indirectly, to any Person or
group of securities representing 25% or more of the total voting power of the
Company, (iii) any tender offer or exchange offer that if consummated would
result in any Person or group, directly or indirectly, beneficially owning 25%
or more of any class of equity securities of the Company, (iv) any merger,
consolidation, amalgamation, share exchange, business combination, joint
venture, reorganization, recapitalization, liquidation, dissolution, or similar
transaction involving the Company or any of its Subsidiaries that would
(A) result in any Person or group, directly or indirectly, beneficially owning
25% or more of the total voting power of the outstanding common stock of the
Company or the surviving entity or (B) result in the Company’s stockholders
immediately prior to the consummation of such transaction beneficially owning
less than 75% of the total voting power of the outstanding common stock of the
Company or the surviving entity, or (v) any combination of the foregoing.
“Company Adverse Recommendation Change” means any of the following actions by
the Company Board: (i) withholding or withdrawing (or modifying or qualifying in
a manner adverse to Parent) or proposing publicly to withhold or withdraw (or
modify or qualify in a manner adverse to Parent), the Company Board
Recommendation, (ii) failing to include the Company Board Recommendation in the
Proxy Statement, in each case, subject to the terms and conditions of this
Agreement, (iii) approving, recommending, or otherwise declaring to be advisable
or publicly proposing to approve, recommend or determine to be advisable any
Company Acquisition Proposal, (iv) following any Company Acquisition Proposal
structured as a tender offer or exchange offer, failing, within ten
(10) Business Days of the commencement thereof pursuant to Rule 14d-2 of the
1934 Act, to recommend against acceptance of any such tender offer or exchange
offer by the Company’s stockholders (it being understood that the Company Board
or any committee thereof may elect to take no position with respect to a Company
Acquisition Proposal until the close of business on the tenth (10th) Business
Day after the commencement of such tender offer or exchange offer pursuant to
Rule 14e-2 under the 1934 Act without such action in and of itself being
considered a Company Adverse Recommendation Change) or (v) publicly announcing
an intention, or resolve, to take any of the foregoing actions.
“Company Balance Sheet” means the consolidated balance sheet of the Company as
of March 31, 2016 and the footnotes thereto.
“Company Balance Sheet Date” means March 31, 2016.
 
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“Company Benefit Plan” means each “employee benefit plan,” as defined in
Section 3(3) of ERISA, whether or not subject to ERISA, and each other plan,
policy, program, agreement or arrangement relating to stock options, stock
purchases, equity compensation, deferred compensation, bonus, severance,
retention, employment, profit-sharing, change of control, vacation, fringe
benefits, supplemental benefits or other employee benefits, in each case,
maintained, sponsored or contributed to (or required to be maintained, sponsored
or contributed to) by the Company or any of its Subsidiaries for the benefit of
any current or former employee, officer or director of the Company or any of its
Subsidiaries, other than a Multiemployer Plan.
“Company Disclosure Letter” means the disclosure letter delivered by the Company
to Parent and Merger Sub in connection with, and upon the execution of, this
Agreement.
“Company Material Adverse Effect” means: any effect, change, development,
occurrence or event that has a material adverse effect on the business or
financial condition of the Company and its Subsidiaries, taken as a whole,
excluding any effect, change, development, occurrence or event resulting from or
arising out of (A) changes in or affecting the financial, securities or credit
markets or general economic, regulatory or political conditions in the United
States or any foreign jurisdiction, including changes in interest and exchange
rates, except to the extent any such effect, change, development, occurrence or
event has a materially disproportionate effect on the Company and its
Subsidiaries, taken as a whole, relative to other participants in the industries
in which the Company operates, (B) changes or conditions generally affecting the
asset management business or the subsegments thereof in which the Company
operates, except to the extent any such effect, change, development, occurrence
or event has a materially disproportionate effect on the Company and its
Subsidiaries, taken as a whole, relative to other participants in the industries
in which the Company operates, (C) geopolitical conditions, the outbreak or
escalation of hostilities, civil disobedience, acts of war, sabotage or
terrorism or any escalation or worsening of the foregoing or any natural
disasters (including hurricanes, tornadoes, floods or earthquakes) or pandemic,
except to the extent any such effect, change, development, occurrence or event
has a materially disproportionate effect on the Company and its Subsidiaries,
taken as a whole, relative to other participants in the industries in which the
Company operates, (D) any failure by the Company and its Subsidiaries to meet
any internal or published projections, forecasts or predictions in respect of
financial or operating performance for any period (it being understood that this
clause (D) shall not prevent a Party from asserting that any effect, change,
development, occurrence or event that may have contributed to such failure and
that are not otherwise excluded from the definition of Company Material Adverse
Effect may be taken into account in determining whether there has been a Company
Material Adverse Effect), (E) changes or proposed changes in Law or
authoritative interpretation thereof, except to the extent any such effect,
change, development, occurrence or event has a materially disproportionate
effect on the Company and its Subsidiaries, taken as a whole, relative to other
participants in the industries in which the Company operates, (F) changes or
proposed changes to, or the implementation of, the proposed amendments to NASD
Rule 2340 and FINRA Rule 2310 described in FINRA Regulatory Notice 15-02 and any
changes or proposed changes to, or the implementation of, the United States
Department of Labor’s proposed amendments to the definition of “fiduciary” and
related proposals, including the Best Interest Contract Exemption and Exemption
for Principal Transactions in Certain Debt Securities, (G) changes in GAAP or
authoritative interpretation thereof, (H) the taking of any specific action
expressly required or expressly permitted by, or the failure to take any
specific
 
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action expressly prohibited by, this Agreement, (I) any change in the market
price or trading volume of the Company’s securities or in its credit ratings (it
being understood that this clause (I) shall not prevent a Party from asserting
that any effect, change, development, occurrence or event that may have
contributed to such failure and that are not otherwise excluded from the
definition of Company Material Adverse Effect may be taken into account in
determining whether there has been a Company Material Adverse Effect), and
(J) the negotiation, execution, delivery, announcement, pendency or performance
of this Agreement or the transactions contemplated hereby, including the impact
thereof on the relationships, contractual or otherwise, of the Company or any of
its Subsidiaries with investors, employees, customers, suppliers or partners and
including any litigation arising in connection with or relating to this
Agreement or the transactions contemplated hereby.
“Company Non-Employee Director Stock Plans” means the Company’s
2012 Non-Employee Director Deferred Stock Plan, the Company’s 2002 Non-Employee
Director Deferred Stock and Deferred Compensation Plan, and the Company’s
1997 Non-Employee Director Deferred Stock and Deferred Compensation Plan.
“Company Stock Plans” means the Company’s Amended and Restated Omnibus Equity
Compensation Plan, the Company’s Amended and Restated 2005 Omnibus Equity
Compensation Plan, the Company’s 2002 Key Employee Stock Option Plan, the
Company’s 1999 Key Employee Stock Option Plan and the Company’s 1997 Key
Employee Stock Option Plan.
“Competition Laws” means the Sherman Antitrust Act, as amended, the Clayton
Antitrust Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other U.S. Laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization,
lessening of competition or restraint of trade.
“Confidentiality Agreement” means, the Confidentiality Agreement, dated May 3,
2016, by and between the Company and Parent.
“Contract” means any written or oral agreement, arrangement, contract,
understanding, instrument, note, bond, mortgage, indenture, deed of trust,
lease, license or other commitment.
“control” (including its correlative meanings “controlled” and “under common
control with”) means possession, directly or indirectly, of power to direct or
cause the direction of management or policies of a Person (whether through
ownership of 50% or more of such Person’s securities or partnership or other
ownership interests, or by Contract or otherwise).
“Disclosure Letter” means, as the context requires, the Company Disclosure
Letter and/or the Parent Disclosure Letter.
“Diversified Income Fund” means Resource Real Estate Diversified Income Fund.
 
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“Environmental Claim” means any claim, action, suit, proceeding, Order, demand
or notice (written or oral) alleging potential or actual Liability (including
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, attorneys’ fees,
fines or penalties) arising out of, based on, resulting from or relating to
(i) the presence, Release of, or exposure to any Hazardous Substances,
(ii) circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law; or (iii) any other matters covered or regulated by, or
for which liability is imposed under, Environmental Laws.
“Environmental Law” means any Law or Order relating to pollution, the
protection, restoration or remediation of or prevention of harm to the
environment or natural resources, or the protection of human health and safety,
including any Law or Order relating to: (i) the exposure to, or Releases or
threatened Releases of, Hazardous Substances; (ii) the generation, manufacture,
processing, distribution, use, treatment, containment, disposal, storage,
transport or handling of Hazardous Substances; or (iii) recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous
Substances.
“Environmental Permits” means all Governmental Authorizations relating to or
required by Environmental Laws.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” of any entity means each entity that is or has been at any
relevant time treated as a single employer with such entity for purposes of
Section 4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the Code.
“FCA” means the Financial Conduct Authority of the United Kingdom of Great
Britain and Northern Ireland.
“FCA Approval” means each required notification from the FCA, pursuant to
Section 189(4)(a) of the FSMA, that the FCA approves of Parent (and any other
potential controllers in Parent’s group, to the extent required) acquiring
control of any Subsidiaries of the Company or Joint Venture that is registered
with the FCA, to the extent required by applicable Law, or shall have been
treated as giving such approval pursuant to Section 189(6) of the FSMA.
“FINRA” means the Financial Industry Regulatory Authority.
“FINRA Approval” means the written approval from FINRA pursuant to NASD Rule
1017 (or such other applicable rule promulgated by FINRA) in connection with the
Merger.
“FSMA” means the Financial Services and Markets Act (2000) of the United Kingdom
of Great Britain and Northern Ireland.
“Fund SEC Documents” means the reports, schedules, forms, statements,
prospectuses, registration statements and other documents required to be filed
or furnished, as the case may be, by any Public Fund or Managed REIT with, or
furnished to, the SEC (together with any exhibits and schedules thereto and
other information incorporated therein).
 
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“GAAP” means generally accepted accounting principles in the United States.
“Governmental Authority” means any (i) nation or government, any federal, state,
city, town, municipality, county, local or other political subdivision thereof
or thereto and any department, commission, board, bureau, instrumentality,
agency, merger control authority, (ii) any federal, state, local or foreign
court, tribunal or arbitrator, (iii) any national securities exchange, or
(iv) other governmental entity or quasi-governmental entity or self-regulatory
body or authority created or empowered under a statute (or rule, regulation or
ordinance promulgated thereunder) or at the direction of any governmental
authority (including FINRA), including those set forth in clauses (i), (ii) or
(iii) of this definition, and that is empowered thereunder or thereby to
exercise executive, legislative, judicial, taxing, regulatory or administrative
powers or functions of or pertaining to government.
“Governmental Authorization” means any licenses, approvals, clearances, permits,
certificates, waivers, amendments, consents, exemptions, variances, expirations
and terminations of any waiting period requirements, other actions by, and
notices, filings, registrations, qualifications, declarations and designations
with, and other authorizations and approvals issued by or obtained from a
Governmental Authority.
“Hazardous Substance” means any material, substance, chemical, or waste (or
combination thereof) that (i) is listed, defined, designated, regulated or
classified as hazardous, toxic, radioactive, dangerous, a pollutant, a
contaminant, petroleum, oil, or words of similar meaning or effect under any Law
or Order relating to pollution, waste, the environment, or the protection of
human health and safety; or (ii) can form the basis of any Liability under any
Law or Order relating to pollution, waste, the environment, or the protection of
human health and safety.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
“Innovation Office REIT” means Resource Innovation Office REIT, Inc., a Maryland
corporation.
“Intellectual Property Rights” means any and all intellectual property rights or
similar proprietary rights throughout the world, including all (i) patents,
trademarks, service marks, trade names, domain names, copyrights, designs and
trade secrets, (ii) applications for and registrations of patents, trademarks,
service marks, trade dress, trade names, domain names, copyrights and designs,
(iii) processes, formulae, methods, schematics, technology, know-how, data,
computer software programs and applications, and (iv) trade secrets and other
tangible or intangible proprietary or confidential information and materials.
“Intervening Event” means an effect, change, development, occurrence or event
that was not known to the Company Board as of or prior to the date of this
Agreement or, if known, the material consequences of which (based on facts known
to the Company Board as of the date of this Agreement) were not known by the
Company Board; provided, however, that in no event will any of the following
constitute an Intervening Event: (i) the receipt, existence or terms of a
Company Acquisition Proposal; and (ii) changes in market price or trading volume
of the Company Stock, in and of itself.
 
7

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“Investment Company Act” means the Investment Company Act of 1940, as amended,
and the rules and regulations promulgated thereunder.
“JFSC” means the Jersey Financial Services Commission.
“JFSC Approval” means the written approval from the JFSC that the JFSC approves
of Parent (and any other potential controller in Parent’s group to the extent
required) acquiring control of any Joint Venture that is registered with the
JFSC, to the extent required by applicable Law.
“Joint Venture” means any Person in which the Company or any of its Subsidiaries
holds (or holds the right or option to acquire) 50% or less of the equity
interests therein that is governed by the terms of a joint venture agreement,
alliance agreement, partnership agreement, limited partnership agreement,
limited liability company operating agreement (or the equivalent) pursuant to
which the Company or any of its Subsidiaries is a party (it being understood
that LEAF Commercial Capital, Inc. and its Subsidiaries shall be deemed Joint
Ventures of the Company).
“Joint Venture Agreement” means any joint venture agreement, alliance agreement,
partnership agreement, limited partnership agreement, limited liability company
operating agreement (or the equivalent), together with all amendments, amendment
and restatements, addendums and joinders in respect of which any Joint Venture
is governed.
“Joint Venture Partner” means any Person, other than the Company or a Subsidiary
of the Company, which holds (or holds the right or option to acquire) an equity
interest in a Joint Venture.
“knowledge” means (i) with respect to the Company, the actual knowledge of each
of the individuals listed in Section 1.01(b) of the Company Disclosure Letter
and (ii) with respect to Parent, the actual knowledge of each of the individuals
listed in Section 1.01(b) of the Parent Disclosure Letter.
“Laws” means any United States, federal, state or local or any foreign law (in
each case, statutory, common or otherwise), constitution, treaty, convention,
ordinance, code, rule, statute, regulation or other similar requirement enacted,
issued, adopted, promulgated, entered into or applied by a Governmental
Authority.
“Liability” means any and all liabilities, obligations, debts and commitments of
any kind, character or description, whether known or unknown, asserted or not
asserted, absolute or continent, fixed or unfixed, matured or unmatured, accrued
or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or
unsecured, due or to become due, determined, determinable or otherwise, whenever
or however incurred or arising.
“Licensed Intellectual Property Rights” means any and all material Intellectual
Property Rights owned by a Third Party and licensed or sublicensed to the
Company or any of its Subsidiaries or for which the Company or any of its
Subsidiaries has obtained a covenant not to be sued.
 
8

--------------------------------------------------------------------------------

“Lien” means, with respect to any property or asset, any mortgage, lien, pledge,
charge, security interest, restriction, right of way, easement, or title defect
or encumbrance of any kind in respect of such property or asset, including any
restriction on the use, voting, transfer, receipt of income or other exercise of
any attributes of ownership.
“Managed REIT” means each of RCC, Opportunity REIT, Opportunity REIT II,
Apartment REIT III and Innovation Office REIT.
“Minimum Net Capital Requirement” means the then current minimum net capital any
Broker-Dealer is required to have and maintain pursuant to SEC Rule 15c3-1.
“Multiemployer Plan” means a “multiemployer plan” as defined in Section 3(37) of
ERISA.
“Opportunity REIT” means Resource Real Estate Opportunity REIT, Inc., a Maryland
corporation.
“Opportunity REIT II” means Resource Real Estate Opportunity REIT II, Inc., a
Maryland corporation.
“Order” means any order, writ, injunction, decree, consent decree, judgment,
award, injunction, settlement or stipulation issued, promulgated, made, rendered
or entered into by or with any Governmental Authority (in each case, whether
temporary, preliminary or permanent).
“Owned Intellectual Property Rights” means any and all Intellectual Property
Rights owned or purported to be owned by the Company or any of its Subsidiaries.
“Parent Disclosure Letter” means the disclosure letter delivered by Parent to
the Company in connection with, and upon the execution of, this Agreement.
“Parent Material Adverse Effect” means any effect, change, development,
occurrence or event that would prevent, materially delay or materially impair
the consummation by Parent or Merger Sub of the Merger and other transactions
contemplated by this Agreement in accordance with the terms of this Agreement
(including payment of the Merger Consideration hereunder).
“Permitted Liens” means (i) Liens for Taxes not yet due and payable or that are
being contested in good faith by appropriate proceedings and for which adequate
reserves (as determined in accordance with GAAP) have been established on the
Company Balance Sheet, (ii) Liens in favor of carriers, warehousemen, repairmen,
mechanics, workmen, materialmen, construction or similar Liens or other
encumbrances arising in the ordinary course of business with respect to amounts
not yet overdue or the validity of which is being contested in good faith by
appropriate proceedings or that are otherwise not material, (iii) pledges or
deposits in connection with workers’ compensation, unemployment insurance, and
other social security legislation arising in the ordinary course of business,
(iv) Liens reflected in the Company Balance Sheet, (v) non-exclusive licenses of
Intellectual Property Rights in the ordinary course
 
9

--------------------------------------------------------------------------------

of business, the written terms and conditions of the license applicable thereto
being made available to Parent, (vi) purchase money security interests,
equipment leases, or similar financing arrangements with respect to equipment or
other assets acquired for use in the business of the Company and its
Subsidiaries, (vii) with respect to any Real Property Lease, Liens that do not
materially impair the value or use of such Real Property Lease or are being
contested in the ordinary course of business in good faith, or (viii) with
respect to real property, (A) Liens imposed or promulgated by operation of
applicable Law, (B) zoning regulations, permits, licenses and similar Liens
imposed or promulgated by any Governmental Authority, (C) title defects or
irregularities, (D) easements, covenants, rights of way and other similar
restrictions of record, provided that in the case of the foregoing subclauses
(A) through (D), such Liens would not, individually or in the aggregate,
reasonably be expected to impair the continued use and operation of the
applicable real property for the purposes for which it is currently used in
connection with the Company’s and its Subsidiaries’ businesses.
“Person” means an individual, corporation, partnership, limited liability
company, association, company, joint venture, estate, trust, association other
entity or organization of any kind or nature, including a Governmental
Authority, or group (within the meaning of Section 13(d)(3) of the 1934 Act).
“Private Fund” means any pooled investment vehicle for which the Company or any
of its Subsidiaries acts as investment adviser, investment sub-adviser, general
partner, managing member, manager, sponsor or in a similar capacity that is not
registered under the Investment Company Act or the securities of which are not
and have not been offered under a registration statement under the 1933 Act.
“Proceeding” means any suit, action, claim, proceeding, arbitration, mediation,
audit or hearing (in each case, whether civil, criminal or administrative)
commenced, brought, conducted or heard by or before, or otherwise involving, any
Governmental Authority.
“Public Fund” means any pooled investment vehicle (including each portfolio or
series thereof, if any) for which the Company or any of its Subsidiaries acts as
investment adviser, investment sub-adviser, general partner, managing member,
sponsor, manager or in a similar capacity, and which is registered as an
investment company under the Investment Company Act, including Diversified
Income Fund and Resource Credit Income Fund.
“RCC” means Resource Capital Corporation, a Maryland corporation.
“REIT” means a real estate investment trust within the meaning of Section 856
et. seq. of the Code.
“REIT Election Year” means (i) with respect to RCC, the taxable year ended
December 31, 2005, (ii) with respect to Opportunity REIT, the taxable year ended
December 31, 2010, (iii) with respect to Opportunity REIT II, the taxable year
ended December 31, 2014, (iv) with respect to Apartment REIT III, the taxable
year ending December 31, 2016 and (v) with respect to Innovation Office REIT,
the taxable year ending December 31, 2016.
 
10

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“Release” means any release, spill, emission, discharge, leaking, pouring,
dumping or emptying, pumping, injection, deposit, disposal, dispersal, leaching
or migration into the indoor or outdoor environment (including soil, ambient
air, surface water, groundwater and surface or subsurface strata) or into or out
of any property, including the movement of Hazardous Substances through or in
the air, soil, surface water, groundwater or property.
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002, as amended.
“SEC” means the Securities and Exchange Commission.
“Subsidiary” means, with respect to any Person, another Person (other than a
natural Person), of which such first Person owns directly or indirectly (a) an
aggregate amount of the voting securities, other voting ownership or voting
partnership interests to elect or appoint a majority of the board of directors
or other governing body or (b) more than 50% of the equity interests therein (it
being understood that LEAF Commercial Capital, Inc. and its Subsidiaries shall
not be deemed direct or indirect Subsidiaries of the Company or the Company’s
Subsidiaries).
“Superior Proposal” means a bona fide written Company Acquisition Proposal from
any Person (other than Parent and its Subsidiaries or Affiliates) (with all
references to “25% or more” in the definition of Company Acquisition Proposal
being deemed to reference “50% or more”) providing for a transaction which the
Company Board determines in its good faith judgment is more favorable to its
stockholders from a financial point of view than the transactions contemplated
by this Agreement after taking into account the likelihood and timing of
consummation (as compared to the transactions contemplated hereby) and such
other matters that the Company Board deems relevant, including legal, financial
(including the financing terms of any such Company Acquisition Proposal),
regulatory and other aspects of such Company Acquisition Proposal.
“Tax” means any tax, customs, duty, fee or other like assessment or charge of
any kind whatsoever, together with any interest, penalty, addition to tax or
additional amount imposed by any Governmental Authority (a “Taxing Authority”)
responsible for the imposition of any such tax, customs, duty, fee, assessment
or charge (domestic or foreign).
“Tax Return” means any report, return, document, declaration or other
information or filing (including any amendment thereof) required to be supplied
to any Taxing Authority with respect to Taxes, including elections, information
returns, schedules or claims for refund, any documents with respect to or
accompanying payments of estimated Taxes, or with respect to or accompanying
requests for the extension of time in which to file any such report, return,
document, declaration or other information.
“Tax Sharing Agreements” means all existing agreements binding a party or any of
its Subsidiaries that provide for the allocation, apportionment, sharing or
assignment of any Tax Liability or benefit (excluding any indemnification
agreement or arrangement pertaining to the sale or lease of assets or
subsidiaries and any commercially reasonable indemnity, sharing or similar
agreements or arrangements where the inclusion of a Tax indemnification or
allocation provision is customary or incidental to an agreement the primary
nature of which is not Tax sharing or indemnification).
 
11

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“Third Party” means any Person other than Parent, the Company or any of their
respective Affiliates.
“Trapeza” means Trapeza Capital Management, LLC and its Subsidiaries.
“Treasury Regulations” means the regulations promulgated under the Code.
(b) Each of the following terms is defined in the Section set forth opposite
such term:
 

--------------------------------------------------------------------------------

 
 
 
Term
 
Section
1933 Act
 
Section 1.01(a)
1934 Act
 
Section 1.01(a)
2016 Bonus Amount
 
Section 7.04(c)
Acceptable Confidentiality Agreement
 
Section 8.03(a)
Acceptable Interim IAA
 
Section 6.04(a)
Action
 
Section 7.03(a)
Advisers Act
 
Section 1.01(a)
Advisory Client
 
Section 1.01(a)
Advisory Contract
 
Section 1.01(a)
Affiliate
 
Section 1.01(a)
Agreement
 
Preamble
Alternative Acquisition Agreement
 
Section 8.03(a)
Apartment REIT III
 
Section 1.01(a)
Appraisal Shares
 
Section 2.07
Bonus Plan Participant
 
Section 7.04(c)
Book-Entry Shares
 
Section 2.05(c)
Broker-Dealer
 
Section 1.01(a)
Business Day
 
Section 1.01(a)
Capitalization Date
 
Section 4.05(a)
Cause
 
Section 7.04(a)
CDO Issuer
 
Section 1.01(a)
Certificate
 
Section 2.05(c)
Certificate of Merger
 
Section 2.03
Change of Control Consents
 
Section 4.04(b)
Closing
 
Section 2.02
Closing Date
 
Section 1.01(a)
CMA
 
Section 8.01(a)
Code
 
Section 1.01(a)
Company
 
Preamble
Company Acquisition Proposal
 
Section 1.01(a)
Company Adverse Recommendation Change
 
Section 1.01(a)
Company Balance Sheet
 
Section 1.01(a)
Company Balance Sheet Date
 
Section 1.01(a)

 
12

 
 
 

--------------------------------------------------------------------------------

Company Benefit Plan
 
Section 1.01(a)
Company Board
 
Recitals
Company Board Recommendation
 
Section 4.02(b)
Company Deferred Stock Unit
 
Section 2.10(c)
Company Disclosure Letter
 
Section 1.01(a)
Company Equity Awards
 
Section 2.10(c)
Company Indemnified Party
 
Section 7.03(a)
Company Material Adverse Effect
 
Section 1.01(a)
Company Material Contract
 
Section 4.20(a)
Company Non-Employee Director Stock Plans
 
Section 1.01(a)
Company Option
 
Section 2.10(a)
Company Real Property
 
Section 4.14(a)
Company Restricted Stock Award
 
Section 2.10(b)
Company SEC Documents
 
Section 4.07(a)
Company Securities
 
Section 4.05(b)
Company Stock
 
Recitals
Company Stock Plans
 
Section 1.01(a)
Company Stockholder Approval
 
Section 4.02(a)
Company Stockholder Meeting
 
Section 6.02
Company Subsidiary Securities
 
Section 4.06(b)
Company Termination Fee
 
Section 10.03(a)
Competition Laws
 
Section 1.01(a)
Confidentiality Agreement
 
Section 1.01(a)
Consents and Approvals
 
Section 4.03
Continuation Period
 
Section 7.04(a)
Continuing Employee
 
Section 7.04(a)
Contract
 
Section 1.01(a)
control
 
Section 1.01(a)
D&O Insurance
 
Section 7.03(c)
DGCL
 
Recitals
Disclosure Letter
 
Section 1.01(a)
Diversified Income Fund
 
Section 1.01(a)
Effective Time
 
Section 2.03
Employment Agreement Amendments
 
Recitals
Employment Agreements
 
Recitals
End Date
 
Section 10.01(b)(i)
Environmental Claim
 
Section 1.01(a)
Environmental Law
 
Section 1.01(a)
Environmental Permits
 
Section 1.01(a)
ERISA
 
Section 1.01(a)
ERISA Affiliate
 
Section 1.01(a)

--------------------------------------------------------------------------------

FCA
 
Section 1.01(a)
FCA Approval
 
Section 1.01(a)
FINRA
 
Section 1.01(a)
FINRA Approval
 
Section 1.01(a)
FSMA
 
Section 1.01(a)
Fund SEC Documents
 
Section 1.01(a)

 
13

 
 
 
GAAP
 
Section 1.01(a)
Governmental Authority
 
Section 1.01(a)
Governmental Authorization
 
Section 1.01(a)
Hazardous Substance
 
Section 1.01(a)
HSR Act
 
Section 1.01(a)
Innovation Office REIT
 
Section 1.01(a)
Intellectual Property Rights
 
Section 1.01(a)
internal controls
 
Section 4.07(f)
Intervening Event
 
Section 1.01(a)
Investment Company Act
 
Section 1.01(a)
JFSC
 
Section 1.01(a)
JFSC Approval
 
Section 1.01(a)
Joint Venture
 
Section 1.01(a)
Joint Venture Agreement
 
Section 1.01(a)
Joint Venture Partner
 
Section 1.01(a)
knowledge
 
Section 1.01(a)
Laws
 
Section 1.01(a)
Liability
 
Section 1.01(a)
Licensed Intellectual Property Rights
 
Section 1.01(a)
Lien
 
Section 1.01(a)
Managed Entities
 
Section 8.10(a)
Managed REIT
 
Section 1.01(a)
Material Advisory Contracts
 
Section 4.27
Material Broker-Dealer
 
Section 4.31
Merger
 
Recitals
Merger Consideration
 
Section 2.05(b)
Merger Fund
 
Section 2.08(a)
Merger Sub
 
Preamble
Minimum Net Capital Requirement
 
Section 1.01(a)
Multiemployer Plan
 
Section 1.01(a)
New IAA
 
Section 6.04(a)
Opportunity REIT
 
Section 1.01(a)

--------------------------------------------------------------------------------

Opportunity REIT II
 
Section 1.01(a)
Order
 
Section 1.01(a)
Owned Intellectual Property Rights
 
Section 1.01(a)
Owned Real Property
 
Section 4.14(a)
Parent
 
Preamble
Parent Disclosure Letter
 
Section 1.01(a)
Parent Material Adverse Effect
 
Section 1.01(a)
Parent Plans
 
Section 7.04(b)
Parties
 
Preamble
Party
 
Preamble
Paying Agent
 
Section 2.08(a)
Permitted Liens
 
Section 1.01(a)

 
14

 
 
 

--------------------------------------------------------------------------------

Person
 
Section 1.01(a)
Premium Cap
 
Section 7.03(c)
Private Fund
 
Section 1.01(a)
Proceeding
 
Section 1.01(a)
Proxy Date
 
Section 6.02
Proxy Statement
 
Section 4.09
Public Fund
 
Section 1.01(a)
Public Fund Board Approval
 
Section 6.04(a)
Public Fund Proxy Statement
 
Section 6.04(b)
Public Fund Shareholder Approval
 
Section 6.04(a)
Public Fund Shareholder Meeting
 
Section 6.04(b)
RCC
 
Section 1.01(a)
Real Property Lease
 
Section 4.14(a)
REIT
 
Section 1.01(a)
REIT Election Year
 
Section 1.01(a)
Release
 
Section 1.01(a)
Release of Claims
 
Section 7.04(a)
Representatives
 
Section 8.06(a)
Resignations
 
Section 8.10(a)
Sarbanes-Oxley Act
 
Section 1.01(a)
SEC
 
Section 1.01(a)
Section 262
 
Section 2.07
Subsidiary
 
Section 1.01(a)
Superior Proposal
 
Section 1.01(a)
Surviving Corporation
 
Section 2.01
Tax
 
Section 1.01(a)
Tax Return
 
Section 1.01(a)
Tax Sharing Agreements
 
Section 1.01(a)
Taxing Authority
 
Section 1.01(a)
Third Party
 
Section 1.01(a)
Transaction Litigation
 
Section 8.09
Trapeza
 
Section 1.01(a)
Treasury Regulations
 
Section 1.01(a)
Voting Agreement
 
Recitals

Section 1.02 Other Definitional and Interpretative Provisions. The words
“hereof”, “herein” and “hereunder” and words of like import used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The descriptive headings used herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement. References to Articles,
Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and
Schedules of this Agreement unless otherwise specified. All Exhibits and
Schedules annexed hereto or referred to herein are hereby incorporated in and
made a part of this

--------------------------------------------------------------------------------

Agreement as if set forth in full herein. Any capitalized terms used in any
Exhibit or Schedule but not otherwise defined therein, shall
 
15

--------------------------------------------------------------------------------

have the meaning as defined in this Agreement. Any singular term in this
Agreement shall be deemed to include the plural, and any plural term the
singular. The definitions contained in this Agreement are applicable to the
masculine as well as to the feminine and neuter genders of such term. Whenever
the words “include”, “includes” or “including” are used in this Agreement, they
shall be deemed to be followed by the words “without limitation”, whether or not
they are in fact followed by those words or words of like import. “Writing”,
“written” and comparable terms refer to printing, typing and other means of
reproducing words (including electronic media) in a visible form. References to
any statute shall be deemed to refer to such statute as amended from time to
time and to any rules or regulations promulgated thereunder. References to any
Contract are to such Contract as amended, modified or supplemented (including by
waiver or consent) from time to time in accordance with the terms hereof and
thereof. References to “the transactions contemplated by this Agreement” or
words with a similar import shall be deemed to include the Merger. References to
any Person include the successors and permitted assigns of such Person.
References herein to “$” or dollars will refer to United States dollars, unless
otherwise specified. References to any period of days will be deemed to be to
the relevant number of calendar days unless otherwise specified. The phrase
“made available” shall be deemed to include any documents filed or furnished
with the SEC. This Agreement will be construed as if drafted jointly by the
Parties hereto, and no presumption or burden of proof will arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.
ARTICLE 2
THE MERGER; EFFECT ON THE CAPITAL STOCK; EXCHANGE OF CERTIFICATES
Section 2.01 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the DGCL, at the Effective Time (as
defined below), Merger Sub shall be merged with and into the Company, whereupon
the separate existence of Merger Sub will cease and the Company shall continue
as the surviving corporation (the “Surviving Corporation”). As a result of the
Merger, the Surviving Corporation shall become a wholly owned Subsidiary of
Parent.
Section 2.02 Closing. Subject to the provisions of this Agreement, the closing
of the Merger (the “Closing”) shall take place in New York City at the offices
of Wachtell, Lipton, Rosen & Katz, New York, New York on the second Business Day
following the satisfaction or, to the extent permitted hereunder, waiver of the
conditions set forth in Article 9 (except for any conditions that by their
nature can only be satisfied on the Closing Date, but subject to the
satisfaction of such conditions or waiver by the Party entitled to waive such
conditions), unless another date, time or place is agreed to in writing by
Parent and the Company.
Section 2.03 Effective Time. Subject to the provisions of this Agreement, as
soon as practicable on the Closing Date, the Company shall file with the
Secretary of State of the State of Delaware the certificate of merger relating
to the Merger (the “Certificate of Merger”), executed and acknowledged in
accordance with the relevant provisions of the DGCL. The Merger shall become
effective at the time that the Certificate of Merger has been duly filed with
the Secretary of State of the State of Delaware, or at such later time as Parent
and the Company shall agree and specify in the Certificate of Merger (the time
the Merger becomes effective, the “Effective Time”).
 
16

--------------------------------------------------------------------------------

Section 2.04 Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in this Agreement and the applicable provisions
of the DGCL. Without limiting the generality of the foregoing, at the Effective
Time, the Surviving Corporation shall possess all of the property, rights,
privileges, immunities, powers and franchises of the Company and Merger Sub and
be subject to all of the obligations, liabilities and duties of the Company and
Merger Sub, all as provided under the DGCL.
Section 2.05 Effect of the Merger on Capital Stock of the Company and Merger
Sub. At the Effective Time, by virtue of the Merger and without any action on
the part of any holder of any securities of the Company or Merger Sub:
(a) All shares of Company Stock that are owned, directly or indirectly, by
Parent, the Company (including shares held as treasury stock or otherwise) or
Merger Sub immediately prior to the Effective Time shall be automatically
cancelled and shall cease to exist and no consideration shall be delivered in
exchange therefor.
(b) Each share of Company Stock issued and outstanding immediately prior to the
Effective Time (other than (i) shares to be cancelled in accordance with Section
2.05(a), (ii) subject to the provisions of Section 2.07, Appraisal Shares, or
(iii) shares subject to Company Restricted Stock Awards, which are subject to
the provisions of Section 2.10(b)) shall at the Effective Time be converted into
the right to receive $9.78 in cash, without interest (the “Merger
Consideration”), less any withholding in accordance with Section 2.08(b)(i).
(c) As of the Effective Time, all shares of Company Stock converted into the
right to receive the Merger Consideration pursuant to this Section 2.05 shall
automatically be cancelled and shall cease to exist, and each holder of (1) a
certificate that immediately prior to the Effective Time represented any such
shares of Company Stock (a “Certificate”) or (2) shares of Company Stock held in
book-entry form (“Book-Entry Shares”) shall cease to have any rights with
respect thereto, except (subject to Section 2.07) the right to receive the
Merger Consideration.
(d) Each share of capital stock of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock, par value $0.01 per
share, of the Surviving Corporation.
Section 2.06 Certain Adjustments. Notwithstanding anything in this Agreement to
the contrary, if, from the date of this Agreement until the earlier of (i) the
Effective Time or (ii) any termination of this Agreement in accordance
with Article 10, the outstanding shares of Company Stock shall have been changed
into a different number of shares or a different class by reason of any
reclassification, stock split (including a reverse stock split),
recapitalization, split-up, combination or other similar transaction, or a stock
dividend thereon shall be declared with a record date within said period, then
the Merger Consideration shall be appropriately adjusted to provide the holders
of Company Stock (including Company Equity Awards) the same economic effect as
contemplated by this Agreement prior to such event. Nothing in this Section
2.06 shall be construed to permit any Party to take any action that is otherwise
prohibited or restricted by any other provision of this Agreement.
 
17

--------------------------------------------------------------------------------

Section 2.07 Appraisal Shares. Notwithstanding anything in this Agreement to the
contrary, shares of Company Stock that are outstanding immediately prior to the
Effective Time and that are held by any Person who is entitled to demand and
properly demands appraisal of such shares (“Appraisal Shares”) pursuant to, and
who complies in all respects with, Section 262 of the DGCL (“Section 262”) shall
not be converted into the right to receive the Merger Consideration as provided
in Section 2.05, but rather the holders of Appraisal Shares shall be entitled to
payment by the Surviving Corporation of the “fair value” of such Appraisal
Shares in accordance with Section 262; provided, however, that if any such
holder shall fail to perfect or otherwise shall waive, withdraw or lose the
right to appraisal under Section 262, then the right of such holder to be paid
the fair value of such holder’s Appraisal Shares shall cease and such Appraisal
Shares shall be deemed to have been converted as of the Effective Time into, and
to have become exchangeable solely for, the right to receive the Merger
Consideration as provided in Section 2.05. The Company shall provide prompt
notice to Parent of any demands received by the Company for appraisal of any
shares of Company Stock, withdrawals of such demands and any other instruments
served pursuant to Section 262 received by the Company. Parent shall have the
right to participate in and direct all negotiations and proceedings with respect
to such demands. Prior to the Effective Time, the Company shall not, without the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands, or agree to do any of the foregoing.
Section 2.08 Payment of Merger Consideration. (a) Prior to the Effective Time,
Parent shall (i) enter into a customary exchange agreement with a nationally
recognized financial institution designated by Parent and reasonably acceptable
to the Company (the “Paying Agent”), and (ii) deposit with the Paying Agent for
the benefit of the holders of shares of Company Stock cash in an aggregate
amount necessary to pay the Merger Consideration (such cash provided to the
Paying Agent, hereinafter referred to as the “Merger Fund”). The Paying Agent
shall deliver the Merger Consideration to be issued pursuant to Section 2.05 out
of the Merger Fund. Except as provided in Section 2.08(g), the Merger Fund shall
not be used for any other purpose.
(b) Payment Procedures.
(i) Certificates. Parent shall instruct the Paying Agent to mail, as soon as
reasonably practicable after the Effective Time and in any event not later than
the third Business Day following the Closing Date, to each holder of record of a
Certificate whose shares of Company Stock were converted into the right to
receive the Merger Consideration pursuant to Section 2.05, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in customary form and have such
other provisions as Parent and the Company reasonably agree) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent, together with such letter of transmittal, duly
executed, and such other documents
 
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as may reasonably be required by the Paying Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor, and Parent shall
cause the Paying Agent to pay and deliver in exchange thereof as promptly as
practicable, the aggregate Merger Consideration in respect thereof, and the
Certificate so surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of Company Stock that is not registered in the transfer
records of the Company, payment may be made to a Person other than the Person in
whose name the Certificate so surrendered is registered, if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer (and
accompanied by all documents reasonably required by the Paying Agent) and the
Person requesting such payment shall pay any transfer or other similar Taxes
required by reason of the payment to a Person other than the registered holder
of such Certificate or establish to the satisfaction of the Paying Agent that
such Tax has been paid or is not applicable. Except with respect to Appraisal
Shares, until surrendered as contemplated by this Section 2.08(b), each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration into
which the shares of Company Stock theretofore represented by such Certificate
have been converted pursuant to Section 2.05(b). No interest shall be paid or
accrue on any cash payable upon surrender of any Certificate.
(ii) Book-Entry Shares. Notwithstanding anything to the contrary contained in
this Agreement, any holder of Book-Entry Shares shall not be required to deliver
a Certificate or an executed letter of transmittal to the Paying Agent to
receive the Merger Consideration that such holder is entitled to receive
pursuant to this Article 2. In lieu thereof, each holder of record of one or
more Book-Entry Shares whose shares of Company Stock were converted into the
right to receive the Merger Consideration pursuant to Section 2.05 shall
automatically upon the Effective Time be entitled to receive, and Parent shall
cause the Paying Agent to pay and deliver, the Merger Consideration with respect
to such Book-Entry Shares as promptly as practicable after the Effective Time.
No interest shall be paid or accrue on any cash payable upon conversion of any
Book-Entry Shares.
(c) The Merger Consideration paid in accordance with the terms of this Article
2 upon the surrender of the Certificates (or, immediately, in the case of the
Book-Entry Shares) shall be deemed to have been paid in full satisfaction of all
rights pertaining to such shares of Company Stock. At the Effective Time, the
share transfer books of the Company shall be closed, and thereafter there shall
be no further recording or registration of transfers of shares of Company Stock.
If, after the Effective Time, any Certificates formerly representing shares of
Company Stock are presented to the Surviving Corporation or the Paying Agent for
any reason, they shall be cancelled and exchanged as provided in this Article 2.
(d) Any portion of the Merger Fund that remains undistributed to the former
holders of Company Stock for one year after the Effective Time shall be returned
to Parent, upon demand, and any former holder of Company Stock who has not
theretofore complied with this Article 2shall thereafter look only to Parent for
payment of its claim for the Merger Consideration.
 
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(e) None of Parent, Merger Sub, the Company, the Surviving Corporation or the
Paying Agent, or any employee, officer, director, agent or Affiliate of any of
them, shall be liable to any Person in respect of any amount delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar Law. Any Merger Consideration remaining unclaimed by former holders of
Company Stock immediately prior to such time as such amounts would otherwise
escheat to or become property of any Governmental Authority shall, to the
fullest extent permitted by applicable Law, become the property of the Surviving
Corporation free and clear of any claims or interest of any Person previously
entitled thereto.
(f) In the event any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit, in form and substance reasonably acceptable to
Parent, of that fact by the Person claiming such Certificate to be lost, stolen
or destroyed and, if required by Parent or the Paying Agent, the posting by such
Person of a bond in reasonable amount as Parent or the Paying Agent may direct,
as indemnity against any claim that may be made against it or the Surviving
Corporation with respect to such Certificate, the Paying Agent will issue the
Merger Consideration in exchange for such lost, stolen or destroyed Certificate.
(g) The Paying Agent shall invest the Merger Fund as directed by
Parent; provided, however, that no such investment income or gain or loss
thereon shall affect the amounts payable to holders of Company Stock. Any
interest, gains and other income resulting from such investments shall be the
sole and exclusive property of Parent payable to Parent upon its request, and no
part of such interest, gains and other income shall accrue to the benefit of
holders of Company Stock; provided, however, that any investment of such cash
shall in all events be limited to direct short-term obligations of, or
short-term obligations fully guaranteed as to principal and interest by, the
U.S. government, in commercial paper rated A-1 or P-1 or better by Moody’s
Investors Service, Inc. or Standard & Poor’s Corporation, respectively, or in
certificates of deposit, bank repurchase agreements or banker’s acceptances of
commercial banks with capital exceeding $10 billion (based on the most recent
financial statements of such bank that are then publicly available), and that no
such investment or loss thereon shall affect the amounts payable to holders of
Company Stock pursuant to this Article 2. If for any reason (including losses)
the cash in the Merger Fund shall be insufficient to fully satisfy all of the
payment obligations to be made in cash by the Paying Agent hereunder, Parent
shall promptly deposit cash into the Merger Fund in an amount which is equal to
the deficiency in the amount of cash required to fully satisfy such cash payment
obligations.
(h) Parent, Merger Sub, the Company, the Surviving Corporation or the Paying
Agent shall be entitled to deduct and withhold from the consideration or amounts
otherwise payable to any former holder of Company Stock or holder of Company
Equity Awards pursuant to this Agreement such amounts as may be required to be
deducted and withheld with respect to the making of such payment under the Code,
or under any provision of state, local or foreign tax Law. Any amount deducted
or withheld pursuant to this Section 2.08(h) and paid over to the relevant
Taxing Authority shall be treated as having been paid to the holder of Company
Stock or Company Equity Awards in respect of which such deduction or withholding
was made. Parent or the applicable withholding agent shall pay, or shall cause
to be paid, all amounts so deducted or withheld to the appropriate Taxing
Authority within the period required under applicable Law.
 
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Section 2.09 Further Assurances. If, at any time after the Effective Time, the
Surviving Corporation shall determine that any actions are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or Merger Sub acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, then the officers and directors
of the Surviving Corporation shall be authorized to take all such actions as may
be necessary or desirable to vest all right, title or interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
Section 2.10 Treatment of Company Equity Awards.
(a) Company Options. As of immediately prior to the Effective Time, by virtue of
the Merger and without any action on the part of the holders thereof, each
option to purchase shares of Company Stock granted under any Company Stock Plan
(each, a “Company Option”) that is outstanding and unexercised immediately prior
to the Effective Time shall become fully vested (to the extent not vested) and
be cancelled and converted into the right to receive an amount in cash equal to
the product of (i) the total number of shares of Company Stock subject to such
Company Optionmultiplied by (ii) the excess, if any, of the Merger Consideration
over the exercise price per share of such Company Option. Any Company Option for
which the exercise price per share equals or exceeds the Merger Consideration
shall be cancelled as of immediately prior to the Effective Time for no
consideration. The Surviving Corporation or one of its Subsidiaries, as
applicable, shall pay to the holders of Company Options (through the applicable
payroll system, if practical) the cash amounts described in this Section
2.10(a), less such amounts as are required to be withheld or deducted under the
Code or any provision of state, local or foreign Tax Law with respect to the
making of such payment, within five (5) Business Days following the Effective
Time.
(b) Company Restricted Stock Awards. As of immediately prior to the Effective
Time, by virtue of the Merger and without any action on the part of the holders
thereof, each outstanding award of restricted Company Stock granted under any
Company Stock Plan (each, a “Company Restricted Stock Award”) shall become fully
vested (with any performance-based vesting conditions deemed fully satisfied),
and shall be cancelled and converted into the right to receive an amount in cash
equal to the product of (i) the total number of shares of Company Stock subject
to such Company Restricted Stock Award multiplied by (ii) the Merger
Consideration. The Surviving Corporation or one of its Subsidiaries, as
applicable, shall pay to the holders of Company Restricted Stock Awards (through
the applicable payroll system, if practical) the cash amounts described in
thisSection 2.10(b), less such amounts as are required to be withheld or
deducted under the Code or any provision of state, local or foreign Tax Law with
respect to the making of such payment, within five (5) Business Days following
the Effective Time.
(c) Deferred Stock Units. Prior to the Effective Time, the Company shall take
all actions necessary (including adopting any necessary resolutions of the
Company Board (or any appropriate committee thereof) and providing all required
notices in connection therewith) to terminate each of the Company Non-Employee
Director Stock Plans, effective as of the Effective Time and subject to the
occurrence of the Effective Time. As of immediately prior to the
 
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Effective Time, by virtue of the Merger and without any action on the part of
the holders thereof, each deferred stock unit (each, a “Company Deferred Stock
Unit” and, together with the Company Options and the Company Restricted Stock
Awards, the “Company Equity Awards”) that is granted under any Company
Non-Employee Director Stock Plan and outstanding immediately prior the Effective
Time shall become fully vested (to the extent unvested) and shall be cancelled
and converted into the right to receive an amount in cash equal to the product
of (i) the total number of shares of Company Stock subject to such Company
Deferred Stock Unit multiplied by (ii) the Merger Consideration. The Surviving
Corporation or one of its Subsidiaries, as applicable, shall pay to the holders
of Company Deferred Stock Units (through the applicable payroll system, if
practical) the cash amounts described in this Section 2.10(c), less such amounts
as are required to be withheld or deducted under the Code or any provision of
state, local or foreign Tax Law with respect to the making of such payment,
within five (5) Business Days following the Effective Time.
(d) Certain Tax Considerations. The actions contemplated by this Section
2.10 shall be taken in accordance with Section 409A of the Code.
(e) Company Actions. Prior to the Effective Time, the Company shall take all
actions necessary to effectuate the actions contemplated by this Section 2.10.
ARTICLE 3
THE SURVIVING CORPORATION
Section 3.01 Surviving Corporation Matters. (a) At the Effective Time, the
certificate of incorporation of the Company, as in effect immediately prior to
the Effective Time, but as amended as set forth on Exhibit B hereto, shall be
the certificate of incorporation of the Surviving Corporation until further
amended in accordance with applicable Law.
(b) At the Effective Time, the bylaws of the Surviving Corporation shall be
amended so as to read in their entirety as the by-laws of Merger Sub as in
effect immediately prior to the Effective Time, except the references to Merger
Sub’s name shall be replaced by references to “Resource America, Inc.” until
further amended in accordance with the provisions thereof and applicable Law.
(c) From and after the Effective Time, until their successors have been duly
elected or appointed and qualified, or until their earlier death, resignation or
removal: (i) the directors of Merger Sub immediately prior to the Effective Time
shall be the initial directors of the Surviving Corporation and (ii) the initial
officers of the Surviving Corporation shall be those individuals designated by
Parent.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (a) as disclosed in the Company SEC Documents publicly filed or furnished
by the Company to the SEC on or after December 31, 2014 and prior to the date of
this Agreement (other than any risk factor disclosure
 

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under the heading “Risk Factors” or disclosure set forth in any “forward looking
statements” or “market risk” disclaimer or other forward-looking disclosures
that are cautionary or predictive in nature) or (b) subject to Section 11.05, as
set forth in the Company Disclosure Letter, the Company represents and warrants
to Parent and Merger Sub as follows:
Section 4.01 Corporate Existence and Power. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. The Company has all corporate power and authority to own, lease and
operate its assets and carry on its business as now conducted and is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary, except where any
failure to have such power or authority or to be so qualified would not
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect. Prior to the date of this Agreement, the Company has
delivered or made available to Parent true and complete copies of the
certificate of incorporation and bylaws of the Company and the certificate of
incorporation and bylaws (or similar organizational or governing documents) of
each Subsidiary of the Company, in each case as amended to date and as in effect
on the date of this Agreement. Neither the Company nor any of its Subsidiaries
is in violation of, or in conflict with, or in default under, its certificate of
incorporation or bylaws (or similar organizational or governing documents).
Section 4.02 Corporate Authorization. (a) The execution, delivery and
performance by the Company of this Agreement and, subject to receipt of the
Company Stockholder Approval, the consummation by the Company of the
transactions contemplated hereby are within the Company’s corporate power and
authority and have been duly authorized by all necessary corporate action on the
part of the Company. The affirmative vote of the holders of a majority of the
outstanding shares of Company Stock (the “Company Stockholder Approval”) is the
only vote of the holders of any of the Company’s capital stock necessary in
connection with the consummation of the transactions contemplated hereby, and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby,
other than, with respect to the Merger, (i) the Company Stockholder Approval and
(ii) the filing of a certificate of merger with respect to the Merger with the
Delaware Secretary of State. This Agreement, assuming due authorization,
execution and delivery by Parent and Merger Sub, constitutes a valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting
creditors’ rights generally and by general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at Law).
(b) At a meeting duly called and held, as of the date of this Agreement, the
Company Board unanimously has (i) determined that this Agreement and the
transactions contemplated hereby are fair to and in the best interests of the
Company’s stockholders, (ii) approved and declared advisable this Agreement and
the transactions contemplated hereby and (iii) resolved to recommend adoption of
this Agreement by its stockholders (such recommendation, the “Company Board
Recommendation”).
 
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Section 4.03 Governmental Authorization. The execution, delivery and performance
by the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby require no action by or in respect of, or
filing with, any Governmental Authority, other than (i) the filing of a
certificate of merger with respect to the Merger with the Delaware Secretary of
State and appropriate documents with the relevant authorities of other states in
which the Company is qualified to do business, (ii) compliance with any
applicable requirements of the HSR Act and any Competition Laws,
(iii) compliance with any applicable requirements of the 1933 Act, the 1934 Act
and any other applicable state or federal securities laws, (iv) compliance with
any applicable requirements of the NASDAQ Global Select Market, (v) any required
consent, non-objection, approval, order or authorization of, or registration,
declaration or filing with or from, FINRA, the FCA or the JFSC (clauses (i),
(ii), (iii), (iv) and (v), collectively the “Consents and Approvals”) and
(vi) any actions or filings the absence of which have not had and would not
reasonably be expected, individually or in the aggregate, to (x) have a Company
Material Adverse Effect or (y) prevent, materially delay or materially impair
the ability of the Company to perform its obligations under this Agreement or to
consummate the Merger.
Section 4.04 Non-contravention. (a) The execution, delivery and performance by
the Company of this Agreement and the consummation of the transactions
contemplated hereby by the Company do not and will not (i) assuming the
authorizations, consents and approvals referred to inSection 4.03 and the
Company Stockholder Approval are obtained, contravene, conflict with, or result
in any violation or breach of any provision of the certificate of incorporation
or bylaws of the Company or the equivalent organizational or governing documents
of any Subsidiary of the Company, (ii) assuming the authorizations, consents and
approvals referred to in Section 4.03 and the Company Stockholder Approval are
obtained, contravene, conflict with or result in a violation or breach of any
provision of any Law or Order, (iii) assuming the authorizations, consents and
approvals referred to inSection 4.03 and the Company Stockholder Approval are
obtained, require any consent or other action by any Person under, constitute a
default or a violation, or an event that, with or without notice or lapse of
time or both, would constitute a default or a violation, under or of, or cause
or permit the termination, cancellation, acceleration or other change of any
right or obligation or the loss of any benefit to which the Company or any of
its Subsidiaries is entitled under, any provision of any agreement or other
instrument binding upon the Company, any of its Subsidiaries or Trapeza, any
obligation to which the Company, any of its Subsidiaries or Trapeza is a party
or by which the Company or any of its Subsidiaries or any of their respective
assets may be bound or any license, franchise, permit, certificate, approval or
other similar authorization affecting, or relating in any way to, the assets or
business of the Company and its Subsidiaries, or (iv) result in the creation or
imposition of any Lien (other than a Permitted Lien) on any asset of the Company
or any of the Company’s Subsidiaries, except, in the case of each of clauses
(ii), (iii) and (iv), which have not had, and would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.
(b) The Company has obtained the written consent or waiver of each of the
Managed REITs under its Advisory Contract in connection with the Merger, in each
case, a true, correct and complete copy of which has been delivered to Parent
(the “Change of Control Consents”). Each Change of Control Consent is valid and
binding and in full force and effect, and the Company has not waived or released
any right, claim or benefit thereunder.
 
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Section 4.05 Capitalization. (a) The authorized capital stock of the Company
consists of 49,000,000 shares of Company Stock, par value $0.01 per share, and
1,000,000 shares of preferred stock, par value $1.00 per share, of the Company.
As of May 20, 2016 (the “Capitalization Date”), there were outstanding
20,830,289 shares of Company Stock (including 1,684,761 shares subject to
Company Restricted Stock Awards (assuming any performance-based vesting
conditions are fully satisfied)). As of the Capitalization Date, (i) there were
(A) outstanding Company Stock Options to purchase an aggregate of 134,000 shares
of Company Stock, (B) 318,770 shares of Company Stock subject to outstanding
Company Deferred Stock Units, (C) no shares of preferred stock of the Company
outstanding, and (D) no shares of other series of common stock of the Company
outstanding, and (ii) 470,352 shares of Company Stock were available for
issuance of future awards under the Company Stock Plans and 112,475 shares of
Company Stock were available for issuance of future awards under the Company
Non-Employee Director Stock Plans.
(b) Except (x) as set forth in Section 4.05(a), and (y) for any Company Equity
Awards that are granted in accordance with the terms of this Agreement, there
are no issued, reserved for issuance or outstanding (i) shares of capital stock
or other voting securities of or other ownership interests in the Company,
(ii) securities of the Company convertible into or exchangeable for shares of
capital stock or other voting securities of or other ownership interests in the
Company, (iii) warrants, calls, options or other rights to acquire from the
Company, or other obligation of the Company to issue, any shares of capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or other voting securities of or other ownership interests in the
Company or (iv) restricted shares, stock appreciation rights, performance units,
contingent value rights, “phantom” stock or similar securities or rights issued
or granted by the Company or any of its Subsidiaries that are derivative of, or
provide economic benefits based, directly or indirectly, on the value or price
of, any shares of capital stock or other voting securities of or other ownership
interests in the Company (the items in clauses (i) through (iv) being referred
to collectively as the “Company Securities”).
(c) There are no outstanding obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any of the Company
Securities. Neither the Company nor any of its Subsidiaries is a party to any
voting trust, proxy, voting agreement or other similar agreement with respect to
the voting of any Company Securities. All outstanding shares of capital stock of
the Company have been, and all shares that may be issued pursuant to any equity
compensation plan or arrangement will be, when issued in accordance with the
respective terms thereof, duly authorized and validly issued, fully paid and
nonassessable and free of preemptive rights. No Subsidiary of the Company owns
any shares of capital stock of the Company or any Company Securities. There are
no outstanding bonds, debentures, notes or other indebtedness of the Company
having the right to vote (whether on an as-converted basis or otherwise) (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which stockholders of the Company may vote.
(d) Section 4.05(d) of the Company Disclosure Letter sets forth for each holder
of Company Equity Awards outstanding as of the date of this Agreement (i) the
name of the holder of each Company Equity Award, (ii) the maximum number of
shares of Company Stock underlying or issuable in respect of such Company Equity
Award, (iii) the date of grant of such Company Equity Award, and (iv) the
vesting schedule and/or performance metrics, as applicable, for such Company
Equity Award.
 
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Section 4.06 Subsidiaries. (a) Each Subsidiary of the Company is an entity duly
incorporated or otherwise duly organized, validly existing and (where applicable
or recognized) in good standing under the laws of its jurisdiction of
incorporation or organization, except, in the case of any such Subsidiary, where
the failure to be so incorporated, organized, existing or in good standing has
not had and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Each Subsidiary of the Company has
all corporate, limited liability company or comparable power and authority to
own, lease and operate its assets and carry on its business as now conducted,
except for those powers or Governmental Authorizations the absence of which has
not had, and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Each such Subsidiary is duly
qualified to do business as a foreign entity and is in good standing in each
jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified has not had, and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Except as set forth in Section 4.06(a) of the Company
Disclosure Letter (such Section 4.06(a) to include the type of and percentage of
voting, equity, profits, capital and other beneficial interest held by the
Company in such Subsidiary), each Subsidiary of the Company is directly or
indirectly wholly owned by the Company.
(b) All of the outstanding capital stock or other voting securities of or other
ownership interests in each Subsidiary of the Company that are owned by the
Company, directly or indirectly, are so owned free and clear of any Lien and
free of any other limitation or restriction (including any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other voting
securities or other ownership interests), in each case other than (w) Liens
existing under the terms of the certificate of incorporation, limited liability
company agreement, limited partnership agreement, bylaws or other organizational
documents of such Subsidiary (x) statutory or other liens for Taxes or
assessments which are not yet due or delinquent or the validity of which is
being contested in good faith by appropriate proceedings and for which adequate
reserves are being maintained, (y) transfer and other restrictions under
applicable federal and state securities Laws and (z) in the case of Subsidiaries
that are immaterial to the Company and its Subsidiaries, taken as a whole,
immaterial Liens. There are no issued, reserved for issuance or outstanding
(i) securities of the Company or any of its Subsidiaries convertible into, or
exchangeable for, shares of capital stock or other voting securities of or other
ownership interests in any Subsidiary of the Company, (ii) warrants, calls,
options or other rights to acquire from the Company or any of its Subsidiaries,
or other obligations of the Company or any of its Subsidiaries to issue, any
shares of capital stock or other voting securities of or other ownership
interests in or any securities convertible into, or exchangeable for, any shares
of capital stock or other voting securities of or other ownership interests in
any Subsidiary of the Company or (iii) restricted shares, stock appreciation
rights, performance units, contingent value rights, “phantom” stock or similar
securities or rights issued or granted by the Company or any of its Subsidiaries
that are derivative of, or provide economic benefits based, directly or
indirectly, on the value or price of, any capital stock or other voting
securities of or other ownership interests in any Subsidiary of the Company (the
items in clauses (i) through (iii) being referred to collectively as the
“Company Subsidiary Securities”). There are no outstanding obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any of the Company Subsidiary Securities.
 
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Section 4.07 SEC Filings and the Sarbanes-Oxley Act. (a) The Company has timely
filed with or furnished to the SEC (including following any extensions of time
for filing provided by Rule 12b-25 promulgated under the 1934 Act) all reports,
schedules, forms, statements, prospectuses, registration statements and other
documents required to be filed or furnished, as the case may be, by the Company
since December 31, 2014 (collectively, together with any exhibits and schedules
thereto and other information incorporated therein, the “Company SEC
Documents”).
(b) As of its filing date (or, if amended or supplemented, as of the date of the
most recent amendment or supplement filed prior to the date of this Agreement),
each Company SEC Document complied in all material respects with the applicable
requirements of the 1933 Act and the 1934 Act and the Sarbanes-Oxley Act, and
any rules and regulations promulgated thereunder, as the case may be.
(c) As of its filing date (or, if amended or supplemented, as of the date of the
most recent amendment or supplement filed prior to the date of this Agreement),
each Company SEC Document filed or furnished pursuant to the 1934 Act did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(d) Each Company SEC Document that is a registration statement or prospectus,
including any financial statements or schedules included or incorporated by
reference therein, as amended or supplemented, if applicable, filed pursuant to
the 1933 Act, as of the date such registration statement or prospectus was filed
or became effective, as applicable, or, if amended or supplemented, and as of
the date of such amendment or supplemental filing made at least two (2) Business
Days prior to the date of this Agreement, did not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in any
material respect. As of the date hereof, none of the Company’s Subsidiaries is
required to file periodic reports with the SEC pursuant to Section 13(a) or
15(d) of the 1934 Act.
(e) The Company has established and maintains disclosure controls and procedures
(as defined in Rule 13a-15 under the 1934 Act). Such disclosure controls and
procedures are reasonably designed to ensure that: material information relating
to the Company, including its consolidated Subsidiaries, is made known to the
Company’s principal executive officer and its principal financial officer by
others within those entities, particularly during the periods in which the
periodic reports required under the 1934 Act are being prepared, and that all
such information is communicated in a timely fashion to the Company’s principal
executive officer and principal financial officer to allow timely decisions
regarding the disclosure of such information in the Company’s periodic and
current reports required under the 1934 Act. For purposes of this Agreement,
“principal executive officer” and “principal financial officer” shall have the
meanings given to such terms in the Sarbanes-Oxley Act.
 
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(f) The Company and its Subsidiaries have established and maintained a system of
internal controls over financial reporting (as defined in Rule 13a-15 under the
1934 Act) (“internal controls”). Such internal controls are sufficient to
provide reasonable assurance regarding the reliability of the Company’s
financial reporting and the preparation of Company financial statements for
external purposes in accordance with GAAP. The Company has disclosed, based on
its most recent evaluation of internal control prior to the date of this
Agreement, to the Company’s auditors and audit committee (i) any significant
deficiencies and material weaknesses in the design or operation of internal
controls which are reasonably likely to adversely affect the Company’s ability
to record, process, summarize and report financial information and (ii) any
fraud, whether or not material, that involves management or other employees who
have a significant role in internal controls.
(g) Neither the Company nor any of its Subsidiaries has extended or maintained
credit, arranged for the extension of credit, or renewed an extension of credit,
in the form of a personal loan to or for any executive officer of the Company
(as defined in Rule 3b-7 under the 1934 Act) or director of the Company in
violation of Section 402 of the Sarbanes-Oxley Act.
(h) Since the Company Balance Sheet Date, there has been no transaction, or
series of similar transactions, agreements, arrangements or understandings, nor
is there any proposed transaction as of the date of this Agreement, or series of
similar transactions, agreements, arrangements or understandings to which the
Company or any of its Subsidiaries was or is to be a party, that would be
required to be disclosed under Item 404 of Regulation S-K promulgated under the
1933 Act that has not been disclosed in the Company SEC Documents publicly filed
or furnished with the SEC prior to the date of this Agreement.
(i) As of the date of this Agreement, there are no outstanding or unresolved
comments in comment letters received from the SEC staff with respect to any of
the Company SEC Documents, and, to the knowledge of the Company, none of the
Company SEC Documents are subject to ongoing SEC review.
(j) Each of the principal executive officer and principal financial officer of
the Company (or each former principal executive officer and principal financial
officer of the Company, as applicable) has made all certifications required by
Rule 13a-14 and 15d-14 under the 1934 Act and Sections 302 and 906 of the
Sarbanes-Oxley Act and any related rules and regulations promulgated by the SEC
and the NASDAQ Global Select Market, and the statements contained in any such
certifications are complete and correct in all material respects.
Section 4.08 Financial Statements. The audited consolidated financial statements
and unaudited consolidated interim financial statements of the Company included
or incorporated by reference in the Company SEC Documents (including all related
notes and schedules thereto) (a) fairly present in all material respects, the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and their consolidated results of operations,
stockholders’ equity and cash flows for the periods then ended (subject to
normal year-end audit adjustments in the case of any unaudited interim financial
statements), (b) comply in all material respects with the applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, and (c) have been prepared in accordance with
 
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GAAP applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto and except, in the case of the unaudited interim
statements, as may be permitted under Form 10-Q of the 1934 Act).
Section 4.09 Disclosure Documents. The information supplied or to be supplied by
or on behalf of the Company for inclusion or incorporation by reference in the
definitive proxy statement to be sent to the Company stockholders in connection
with the Merger and the other transactions contemplated by this Agreement
(including a letter to stockholders, notice of meeting and form of proxy
accompanying the proxy statement and any amendments or supplements thereto, the
“Proxy Statement”), at the date it is first mailed to the Company stockholders
or at the time of the Company Stockholder Meeting, will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. Notwithstanding the
foregoing provisions of this Section 4.09, no representation or warranty is made
by the Company with respect to information or statements made or incorporated by
reference in the Proxy Statement which were not supplied by or on behalf of the
Company.
Section 4.10 Absence of Certain Changes. (a) From the Company Balance Sheet Date
through the date of this Agreement, (i) the business of the Company and its
Subsidiaries has been conducted in the ordinary course of business consistent
with past practice in all material respects, (ii) there has not been any effect,
event, occurrence or development that has had or would reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect and
(iii) neither the Company nor its Subsidiaries has taken any action that, if
taken after the date of this Agreement, would have required the consent of
Parent under clauses (d), (e), (g), (h), (k), (o), (p) or (q) of Section 6.01.
(b) Since the date of this Agreement, there has not been any effect, event,
occurrence or development that has had or would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 4.11 No Undisclosed Material Liabilities. There are no liabilities or
obligations of the Company or any of its Subsidiaries that would be required by
GAAP to be reflected on the consolidated balance sheet of the Company (including
the notes thereto), other than:
(a) liabilities or obligations disclosed, reflected, reserved against or
otherwise provided for in the Company Balance Sheet;
(b) liabilities or obligations incurred in the ordinary course of business since
the Company Balance Sheet Date;
(c) liabilities or obligations arising out of this Agreement or the transactions
contemplated hereby; and
(d) liabilities or obligations that have not had, and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
 
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Section 4.12 Compliance with Laws and Court Orders; Governmental Authorizations.
(a) Except for matters that have not had and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, the
Company and each of its Subsidiaries is and since December 31, 2014 has been in
compliance with, and to the knowledge of the Company, is not under investigation
by a Governmental Authority with respect to, any Law or Order. This section does
not relate to Intellectual Property Rights matters, Tax matters, employee
benefits matters or environmental matters, each of which are the subjects
of Sections 4.15,4.16, 4.17 and 4.19, respectively.
(b) Except as has not had and would not reasonably be expected to, individually
or in the aggregate, (i) have a Company Material Adverse Effect or
(ii) materially delay or materially impair the ability of the Company to perform
its obligations under this Agreement or to consummate the Merger, the Company
and each of its Subsidiaries has all Governmental Authorizations necessary for
the ownership and operation of its businesses as presently conducted, and each
such Governmental Authorization is in full force and effect. Except as would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, (i) the Company and each of its Subsidiaries is and
since December 31, 2014, has been in compliance with the terms of all
Governmental Authorizations necessary for the ownership and operation of its
businesses and (ii) since December 31, 2014, neither the Company nor any of its
Subsidiaries has received written notice from any Governmental Authority
alleging any conflict with or breach of any such Governmental Authorization.
Section 4.13 Litigation. Except as has not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect or would not reasonably be expected, individually or in the aggregate, to
prevent the ability of the Company to perform its obligations under this
Agreement or to consummate the Merger, (a) there is no Proceeding pending
against, or, to the knowledge of the Company, threatened by or against the
Company or any of its Subsidiaries or their respective assets or properties, and
(b) there are no investigations or inquiries pending or, to the knowledge of the
Company, threatened by Governmental Authorities against the Company or any of
its Subsidiaries or any malfeasance of any other Person for whom the Company or
any of its Subsidiaries may be liable. Except as has not had and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, neither the Company nor any Company Subsidiary, nor any
of the Company’s or any Company Subsidiary’s respective property, is subject to
any outstanding Order.
Section 4.14 Properties. (a) The Company or one of its Subsidiaries owns good
and marketable fee simple title or valid leasehold interest (as applicable) to
the real properties owned by the Company or any of its Subsidiaries as of the
date of this Agreement (the “Owned Real Property”) and the leases, subleases,
licenses or other occupancies to which the Company or any of its Subsidiaries is
a party as tenant for real property (the “Real Property Lease”, together with
the Owned Real Property, the “Company Real Property”) and all property and
assets reflected on the Company Balance Sheet or acquired after the Company
Balance Sheet Date, in each case, free and clear of all Liens, except (i) for
Permitted Liens, (ii) for the property and assets that have been disposed of
since the Company Balance Sheet Date in the ordinary course of business
consistent with past practice and (iii) as would not reasonably be expected to
be, individually or in the aggregate, material to the Company and its
Subsidiaries, taken as a whole.
 
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Section 4.14(a) of the Company Disclosure Letter sets forth a true and complete
list (including addresses) of all Company Real Property. Except as has not had
and would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect, none of the Company, any Company Subsidiary
or any Owned Real Property is in default under any agreement evidencing any Lien
or other agreement affecting the Owned Real Property.
(b) With respect to each Real Property Lease under which the Company or any of
its Subsidiaries leases, subleases, licenses or otherwise occupies any real
property (i) such Real Property Lease is valid, binding and in full force and
effect, (ii) there are no written disputes with respect to any Real Property
Lease and (iii) neither the Company or any of its Subsidiaries, as applicable,
nor, to the knowledge of the Company, any other party to the Real Property Lease
is in breach or default under such Real Property Lease, and, to the knowledge of
the Company, no event has occurred or circumstance exists which, with the
delivery of notice, the passage of time or both, would constitute such a breach
or default, except in each case of clauses (i) through (iii) as has not had and
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. True and complete copies of all Real Property
Leases, in each case as in effect as of the date hereof, together with all
material amendments, modifications, supplements, renewals, extensions and
associated guarantees relating thereto, have been made available to Parent.
Section 4.15 Intellectual Property. (a) Except as has not had and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, the Company and its Subsidiaries own or have a valid
and enforceable license to use all Intellectual Property Rights necessary to, or
material and used or held for use in, the conduct of the business of the Company
and its Subsidiaries as currently conducted, and the Company and its
Subsidiaries are currently taking commercially reasonable actions that are
reasonably necessary to maintain and protect each material Owned Intellectual
Property Right that they own.
(b) Neither the Company nor any of its Subsidiaries has infringed,
misappropriated or otherwise violated any Intellectual Property Right of any
Person except as has not had, and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. There is no
Proceeding pending against, or, to the knowledge of the Company, threatened
against, the Company or any of its Subsidiaries (A) based upon, or challenging
or seeking to deny or restrict, the rights of the Company or any of its
Subsidiaries in any of the Owned Intellectual Property Rights or Licensed
Intellectual Property Rights, (B) alleging that any Owned Intellectual Property
Right or Licensed Intellectual Property Right is invalid or unenforceable, or
(C) alleging that the use of any of the Owned Intellectual Property Rights or
Licensed Intellectual Property Rights or that the conduct of the business of the
Company or any of its Subsidiaries do or may conflict with, misappropriate,
infringe or otherwise violate any Intellectual Property Right of any Person,
except for matters that have not had and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
(c) None of the material Owned Intellectual Property Rights has been adjudged
invalid or unenforceable in whole or part, and to the knowledge of the Company,
all issued or registered material Owned Intellectual Property Rights are valid
and enforceable in all respects, except where the failure to be valid or
enforceable has not had and would not
 
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reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. To the knowledge of the Company, no Person has
infringed, misappropriated or otherwise violated any material Owned Intellectual
Property Right, except as has not had and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
Section 4.16 Taxes. Except as has not had, and would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect:
(a)  (i) Each income or franchise Tax Return and each other Tax Return required
to be filed with any Taxing Authority by the Company or any of its Subsidiaries
have been filed when due (taking into account extensions) and is true and
complete;
(ii) the Company and each of its Subsidiaries have timely paid to the
appropriate Taxing Authority all Taxes due and payable (whether or not shown, or
required to be shown, on any Tax Return);
(iii) the Company and each of its Subsidiaries have complied with all applicable
laws, rules, and regulations relating to the payment and withholding of Taxes
and have, within the time and in the manner prescribed by law, withheld and paid
over to the proper Governmental Authority all amounts required to be so withheld
and paid over, except, in each case of clauses (ii) and (iii), with respect to
matters contested in good faith and for which adequate accruals or reserves have
been established, in accordance with GAAP, on the Company Balance Sheet;
(iv) there is no Proceeding pending or, to the Company’s knowledge, threatened
against, and there is no written claim or deficiency asserted, with respect to
the Company or any of its Subsidiaries in respect of any Tax; and
(v) there are no Liens for Taxes on any of the assets of the Company or any of
its Subsidiaries other than Permitted Liens.
(b) During the two-year period ending on the date of this Agreement, neither the
Company nor any of its Subsidiaries was a distributing corporation or a
controlled corporation in a transaction intended to be governed by Section 355
of the Code.
(c) Neither the Company nor any of its Subsidiaries is or has been a “United
States real property holding corporation” within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
(d) Neither the Company nor any of its Subsidiaries is, or was, a party to any
Tax Sharing Agreement (other than an agreement exclusively between or among the
Company and its Subsidiaries or among the Company’s Subsidiaries) and no Person
has raised in writing, or to the knowledge of the Company, threatened to raise,
a claim against the Company or any of its Subsidiaries for any breach of any Tax
Sharing Agreement and none of the transactions contemplated by this Agreement
will give rise to any obligation to make any payments for Taxes after the
Effective Time.
 
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(e) Neither the Company nor any of its Subsidiaries has been a member of an
affiliated, combined or unitary group filing a consolidated federal, state,
local or foreign income Tax Return (other than a group the common parent of
which is or was the Company or any of its Subsidiaries).
(f) Neither the Company nor any of its Subsidiaries has any liability for the
Taxes of any Person (other than the Company or any of its Subsidiaries) under
Treasury Regulations Section 1.1502-6 (or any similar provision of state, local
or foreign Law), as a transferee or successor, by Contract or otherwise.
(g) Neither the Company nor any of its Subsidiaries has participated in a
“listed transaction,” or to the knowledge of the Company, any “reportable
transactions,” within the meaning of Treasury Regulations Section 1.6011-4(b).
(h) During the past six (6) years, no jurisdiction in which neither the Company
nor any of its Subsidiaries files income or franchise Tax Returns has asserted
that the Company or any of its Subsidiaries is or may be liable for income or
franchise Tax in that jurisdiction.
Section 4.17 Employee Benefit Plans. (a) Section 4.17 of the Company Disclosure
Letter contains a correct and complete list identifying each material Company
Benefit Plan. The Company has made available to Parent the following with
respect to each material Company Benefit Plan (to the extent applicable):
(i) copies of such material Company Benefit Plan, all material amendments
thereto and all related trust documents, (ii) the most recent annual report
(Form 5500), if any, required under ERISA or the Code in connection with such
Company Benefit Plan, (iii) the most recent actuarial report and audited
financial statements for such Company Benefit Plan, (iv) the most recent summary
plan description, if any, required under ERISA with respect to such Company
Benefit Plan, and (v) the most recent Internal Revenue Service determination or
opinion letter issued with respect to any such Company Benefit Plan intended to
be qualified under Section 401(a) of the Code. No Company Benefit Plan is
mandated by a government other than the United States or subject to the Laws of
a jurisdiction outside of the United States.
(b) No Company Benefit Plan to which the Company, any of its Subsidiaries, any
of their respective ERISA Affiliates made, or was required to make,
contributions, or which any of them maintained or sponsored, during the past
six (6) years, is (or was) subject to Section 302 or Title IV of ERISA or
Section 412 or 430 of the Code. None of the Company, any of its Subsidiaries or
any of their respective ERISA Affiliates contributes to, or has during the past
six (6) years contributed to, a Multiemployer Plan or a plan that has two or
more contributing sponsors at least two of whom are not under common control
within the meaning of Section 4063 of ERISA.
(c) Except as has not had, and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect: (i) each
Company Benefit Plan intended to qualify under Section 401(a) of the Code has
received a favorable determination or opinion letter from the Internal Revenue
Service upon which it may rely regarding its tax-qualified status under the Code
and, to the Company’s knowledge, no event has occurred that
 
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would reasonably be expected to cause the loss of such qualification, (ii) all
payments required to be paid by the Company or any of its Subsidiaries pursuant
to the terms of a Company Benefit Plan or by applicable Law with respect to all
prior periods have been made or provided for by the Company or its Subsidiaries
or their respective ERISA Affiliates in accordance with GAAP, the provisions of
such Company Benefit Plan or applicable Law, (iii) no proceeding has been
instituted or, to the Company’s knowledge, is threatened against or involving
any of the Company Benefit Plans (other than non-material routine claims for
benefits and appeals of such claims), (iv) each Company Benefit Plan complies in
form and has been administered, maintained and operated in all material respects
in accordance with its terms and applicable Law, including, without limitation,
ERISA and the Code, (v) no Company Benefit Plan is under, and neither the
Company nor its Subsidiaries has received any written notice of, an audit or
investigation by the Internal Revenue Service, U.S. Department of Labor, Pension
Benefit Guaranty Corporation or any other Governmental Authority, (vi) no
Company Benefit Plan provides any employer premium subsidies with respect to
post-retirement health and/or welfare benefits to any current or former employee
of the Company or its Subsidiaries, except as required under Section 4980B of
the Code, Part 6 of Title I of ERISA or any other applicable state or local Law,
(vii) there is no binding promise or commitment to create any additional Company
Benefit Plan or modify any existing Company Benefit Plan, and (viii) no
non-exempt prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) has occurred.
(d) None of the execution and delivery of this Agreement, the obtaining of the
Company Stockholder Approval or the consummation of the Merger or other
transactions contemplated by this Agreement will (whether alone or together with
any other event) (i) entitle any current or former employee, officer or director
of the Company or its Subsidiaries to severance or termination pay,
(ii) accelerate the time of payment or vesting or trigger any payment or funding
(through a grantor trust or otherwise) of compensation or benefits under, any
Company Benefit Plan, (iii) increase the amount payable or trigger any other
financial or material obligation pursuant to any Company Benefit Plan or
(iv) result in any amounts payable to any “disqualified individual” (within the
meaning of Section 280G of the Code) failing to be deductible for federal income
tax purposes by virtue of Section 280G of the Code or subject to an excise tax
under Section 4999 of the Code. Neither the Company nor any of its Subsidiaries
has any obligation to gross-up, indemnify or otherwise reimburse any current or
former employee, officer or director of the Company or any of its Subsidiaries
for any Tax incurred by such individual under Section 409A or 4999 of the Code.
(e) Assuming the Closing occurs on or prior to December 31, 2016, the maximum
amount of cash severance payable, as a result of the Merger, to each of the
executives whose names are set forth in Section 4.17(e) of the Company
Disclosure Letter under their respective employment agreements (as set forth
in Section 4.17(e) of the Company Disclosure Letter) is set forth in Section
4.17(e) of the Company Disclosure Letter.
Section 4.18 Labor Matters. Except as has not had, and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect: (i) there are no labor organizational campaigns, petitions or demands
for recognition at the Company or any of its Subsidiaries; (ii) there are no
unfair labor practice charges, grievances, arbitrations or other complaints or
union matters before the National Labor Relations Board or other labor
 
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board of Governmental Authority in respect of employees of the Company and its
Subsidiaries; and (iii) there currently are not, and since December 31, 2014
there have not been, or, to the Company’s knowledge, threatened, any strikes,
slowdowns, lockouts, organized labor disputes or work stoppages.
Section 4.19 Environmental Matters. (a) Except as has not had, and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, there is no Environmental Claim pending or, to the
knowledge of the Company, threatened against the Company, any of its
Subsidiaries or, to the knowledge of the Company, against any Person whose
Liability for such Environmental Claims the Company or any of its Subsidiaries
has or may have retained or assumed either contractually or by operation of law.
(b) Except as has not had, and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, the Company
and its Subsidiaries are and, since December 31, 2014, have been in compliance
with all Environmental Laws and have obtained, maintained and been in compliance
with all Environmental Permits, and all such Environmental Permits are in good
standing.
(c) Except as has not had, and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, (i) neither
the Company nor any of its Subsidiaries has caused, and to the knowledge of the
Company, no other Person has caused any release of a Hazardous Substance that
would be required to be investigated or remediated by the Company or its
Subsidiaries under any Environmental Law and (ii) there is no site to which the
Company or any of its Subsidiaries has transported or arranged for the transport
of Hazardous Substances which, to the knowledge of the Company, is the subject
of any Action under Environmental Law.
Section 4.20 Material Contracts. (a) Section 4.20(a) of the Company Disclosure
Letter sets forth, as of the date of this Agreement, a true and complete list of
each of the following types of Contracts (excluding any Company Benefit Plans)
to which the Company, any of its Subsidiaries or, in the case of clause
(iv) below, Trapeza, is a party or by which any of their respective properties
or assets is bound and which:
(i)  (A) contains any exclusivity or similar provision that is binding on the
Company or any of its Subsidiaries or (B) otherwise limits or restricts the
Company or any of its Subsidiaries from (1) engaging or competing in any line of
business in any location or with any Person, (2) selling any products or
services of or to any other Person or in any geographic region or (3) obtaining
products or services from any Person;
(ii) includes (A) any arrangement under which the Company grants any “most
favored nation” terms and conditions, right of first refusal or right of first
offer or similar right to a Third Party or (B) other than leases entered into in
the ordinary course of business, any arrangement between the Company and a Third
Party that limits or purports to limit in any respect the ability of the Company
or its Subsidiaries to own, operate, sell, license, transfer, pledge or
otherwise dispose of any assets or business;
(iii) is a Joint Venture Agreement;
 
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(iv) is an Advisory Contract with a Managed REIT, a Private Fund, a Public Fund
or a CDO Issuer;
(v) is a loan, guarantee of indebtedness or credit agreement, note, bond,
mortgage, indenture or other binding commitment (other than letters of credit
and those between the Company and its Subsidiaries) relating to indebtedness for
borrowed money in an amount in excess of $1,000,000 individually;
(vi) is a Contract with respect to an interest, rate, currency or other swap or
derivative transaction (other than those between the Company and its wholly
owned Subsidiaries) with a fair value in excess of $1,000,000;
(vii) is a material Contract with respect to Licensed Intellectual Property
Rights (other than commercially available software or hardware);
(viii) is an acquisition agreement, asset purchase or sale agreement, stock
purchase or sale or purchase agreement or other similar agreement pursuant to
which (A) the Company reasonably expects that it is required to pay total
consideration including assumption of debt after the date of this Agreement to
be in excess of $1,000,000, (B) any other Person has the right to acquire any
material assets of the Company or any of its Subsidiaries after the date of this
Agreement with a purchase price of more than $1,000,000 or (C) any other Person
has the right to acquire any interests in the Company or any of its
Subsidiaries, excluding, in the case of clauses (A) and (B), acquisitions or
dispositions of supplies, inventory, merchandise or products in the ordinary
course of business or of supplies, inventory, merchandise, products, properties
or other assets that are obsolete, worn out, surplus or no longer used or useful
in the conduct of business of the Company or its Subsidiaries;
(ix) is a Contract (or series of related Contracts) for the acquisition or
disposition of assets or equity interests of any Person pursuant to which the
Company or any Subsidiary has continuing “earn-out” or similar obligation, or
for which an indemnification claim has been made in writing, that would
reasonably be expected to result in the Company or any of its Subsidiaries
making payments in excess of $1,000,000 in the aggregate;
(x) is a Contract (or series of related Contracts) that obligates the Company or
any of its Subsidiaries to make any capital commitment, loan or capital
expenditure in an amount in excess of $1,000,000 in the aggregate after the date
of this Agreement;
(xi) is a mortgage, indenture, guarantee, loan or credit agreement, security
agreement or other Contract providing for or securing indebtedness for borrowed
money, whether as borrower or lender, in each case in excess of $1,000,000,
other than (A) accounts receivables and payables, and (B) loans to direct or
indirect wholly owned Subsidiaries of the Company;
(xii) other than the organizational documents of the Company and its
Subsidiaries, is a Contract which obligates the Company or any of its
Subsidiaries to
 
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indemnify any past or present directors, officers or trustees of the Company or
any of its Subsidiaries or has any current, or ongoing obligations to, or rights
in favor of such Persons;
(xiii) is a settlement or similar Contract with any Governmental Authority or
Order of a Governmental Authority to which the Company or any of its
Subsidiaries is subject involving future performance by the Company or any of
its Subsidiaries which is material to the Company and its Subsidiaries, taken as
a whole;
(xiv) is a Contract (other than employment-related Contracts) containing change
in control provisions or other similar payment obligations that would reasonably
be expected to involve aggregate payments by the Company and its Subsidiaries in
excess of $1,000,000 in connection with the consummation of the transactions
contemplated hereby;
(xv) is a Contract involving aggregate payment(s) by the Company in excess of
$2,000,000 and which cannot be cancelled by the Company without penalty upon
notice of 60 days or less;
(xvi) is a dealer-manager agreement, selling agreement or similar Contract with
a Material Broker-Dealer or between a Subsidiary of the Company that is a
Broker-Dealer, on the one hand, and a Public Fund or Managed REIT, on the other
hand; and
(xvii) is a Contract that would be required to be filed by the Company pursuant
to Item 601(b)(10) of Regulation S-K under the 1934 Act or disclosed by the
Company under Item 1.01 on a Current Report on Form 8-K.
Each Contract of the type described in clauses (i) through (xvii), and each
Employment Agreement or Employment Agreement Amendment, is referred to herein as
a “Company Material Contract”).
(b) Except as has not had, and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, each
Company Material Contract is valid and binding and in full force and effect and,
to the Company’s knowledge, enforceable against the other party or parties
thereto in accordance with its terms. The Company and/or its Subsidiaries party
thereto, as applicable, and, to the knowledge of the Company, each other party
thereto, has performed its obligations required to be performed by it, as and
when required, under each Company Material Contract, except for failures to
perform that have not had, and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. Except for
breaches, violations or defaults which have not had, and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, neither the Company nor any of its Subsidiaries, nor to the Company’s
knowledge any other party to a Company Material Contract, has violated any
provision of, or taken or failed to take any act which, with or without notice,
lapse of time, or both, would constitute a default under the provisions of such
Company Material Contract, and neither the Company nor any of its Subsidiaries
has received written notice that it has breached, violated or
 
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defaulted under any Company Material Contract. True and complete copies of the
Company Material Contracts and any material amendments thereto have been made
available to Parent prior to the date of this Agreement.
Section 4.21 Finders’ Fees, etc. Except for Evercore Group L.L.C., there is no
investment banker, broker or finder that has been retained by or is authorized
to act on behalf of the Company or any of its Subsidiaries who might be entitled
to any fee or commission from the Company or any of its Affiliates in connection
with the transactions contemplated by this Agreement.
Section 4.22 Opinion of Financial Advisor. The Company Board has received the
opinion of Evercore Group L.L.C., financial advisor to the Company, to the
effect that, as of the date of such opinion, and based upon and subject to the
factors and assumptions set forth therein, the Merger Consideration to be
received by the holders of Company Stock entitled to receive such Merger
Consideration pursuant to this Agreement is fair to such holders from a
financial point of view.
Section 4.23 Related Party Transactions. No current director, officer or
Affiliate of the Company or any of its Subsidiaries is a party to, or directly
or indirectly benefits from, any Contract, arrangement, transaction or
understanding with the Company or any of its Subsidiaries of a type that would
be required to be disclosed under Item 404 of Regulation S-K under the 1933 Act.
Section 4.24 Antitakeover Statutes. The Company has taken all action necessary
to exempt the Merger, this Agreement, the Voting Agreements and the transactions
contemplated hereby and thereby from Section 203 of DGCL, and, accordingly,
neither such provision of the DGCL nor any other antitakeover or similar statute
or regulation applies or purports to apply to any such transactions. No other
“control share acquisition,” “fair price,” “moratorium” or other antitakeover
laws enacted under U.S. state or federal laws apply to this Agreement, the
Voting Agreements or any of the transactions contemplated hereby or thereby.
Section 4.25 Insurance. Except as has not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, (a) each of the insurance policies and self-insurance programs and
arrangements relating to the business, assets and operations of the Company is
in full force and effect, (b) neither the Company nor any of its Subsidiaries is
in breach or default of any of the insurance policies (including any breach or
default with respect to the payment of premiums), and (c) such policies provide
coverage in such amounts and against such risks as are consistent with the past
business practice of the Company and its Subsidiaries and with applicable Law.
Since December 31, 2014, through the date of this Agreement, neither the Company
nor any of its Subsidiaries has received any written notice regarding any actual
or possible: (x) cancellation or invalidation of any such insurance policy,
other than such cancellation or invalidation that has not had and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect; or (y) written notice of refusal of any coverage or
rejection of any claim under any such insurance policy that if not paid has not
had and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. With respect to each Proceeding
that has been filed or investigation initiated against the Company or any of its
Subsidiaries since
 
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December 31, 2014, no insurance carrier has issued a denial of coverage or a
reservation of rights with respect to any such Proceeding or investigation, or
informed any of the Company nor any of its Subsidiaries of its intent to do so,
other than a denial or reservation that has not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 4.26 Broker-Dealer and Other Regulated Subsidiaries. (a) The Company and
each of its Subsidiaries that is required to be registered as a Broker-Dealer
with the SEC under the 1934 Act is so registered, and, to the knowledge of the
Company is duly registered, licensed or qualified where it is required to be so
registered under applicable state Laws, except where the failure to be so
registered, licensed or qualified would not, individually or in the aggregate,
reasonably be expected to be material to the Company and its Subsidiaries, taken
as a whole.
(b) The Company and each of its Subsidiaries that is engaged in the investment
advisory or investment management activities is, to the extent required under
the Advisers Act, duly registered as an investment adviser under the Advisers
Act.
(c) The Company and each of its Subsidiaries that is required to be registered
under the FSMA is duly registered with the FCA.
(d) Each applicable Subsidiary of the Company has publicly filed or made
available to Parent prior to the date hereof true, correct and complete copies
of (i) the Uniform Application for Broker-Dealer Registration on Form BD and the
Uniform Application for Investment Adviser Registration on Form ADV, as filed
with FINRA or the SEC, respectively, by each such applicable Subsidiary of the
Company, and (ii) each application for FCA authorization, approval of such
application and any scope of permission or similar notices. To the knowledge of
the Company, such forms are in compliance with all applicable Laws, except where
the failure to be in compliance would not, individually or in the aggregate,
reasonably be expected to be material to the Company and its Subsidiaries, taken
as a whole.
(e) Each of the applicable Subsidiaries of the Company is a member in good
standing of FINRA and each other Governmental Authority where the conduct of its
business requires membership or association.
(f) Each of the applicable Subsidiaries of the Company has established,
maintains and enforces written compliance and supervisory policies and
procedures and maintains books and records in compliance with all applicable
Laws, and each of the applicable Subsidiaries of the Company has been and
remains in compliance with such policies and procedures, in each case, except
where the failure to establish, maintain, enforce or comply would not,
individually or in the aggregate, has not had and reasonably be expected to have
a Company Material Adverse Effect.
(g) To the knowledge of the Company, the directors, officers, employees,
“associated persons” (as defined in the 1934 Act) and independent contractors of
each of the applicable Subsidiaries of the Company who are required to be
registered, licensed or qualified with any Governmental Authority as a
registered principal, registered representative or registered investment adviser
representative is duly and properly registered, licensed or qualified as such,
 
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and has been so registered, licensed or qualified at all times while in the
employ or under contract with such applicable Subsidiary, and such licenses are
in full force and effect, or are in the process of being registered as such
within the time periods required by applicable Law, except where the failure to
be so registered, licensed or qualified has not had and would not, individually
or in the aggregate, reasonably be expected to result in a Company Material
Adverse Effect.
(h) Each of the applicable Subsidiaries of the Company has timely made or given
all required filings, applications, notices and amendments with or to each
Governmental Authority that regulates such applicable Subsidiary or its business
and all such filings, applications, notices and amendments are accurate,
complete and up to date, except where the failure to do so has not had and would
not, individually or in the aggregate, reasonably be expected to result in a
Company Material Adverse Effect.
(i) No disciplinary proceeding or order is pending or, to the knowledge of the
Company, threatened against the Company, its applicable Subsidiaries nor, to the
knowledge of the Company, any of their respective directors, officers,
employees, independent contractors, registered representatives or “associated
persons” (as defined in the 1934 Act). None of FINRA, the SEC or any other
Governmental Authority has commenced or to the knowledge of the Company,
threatened any action or proceeding to revoke, limit, suspend or qualify any
such membership, registration, license or qualification. The Company and each of
its applicable Subsidiaries is in compliance with all applicable regulatory net
capital requirements, including the Minimum Net Capital Requirements applicable
to each Subsidiary of the Company that is a Broker-Dealer, except where the
failure to be in compliance would not, individually or in the aggregate,
reasonably be expected to be material to the Company and its Subsidiaries, taken
as a whole. The Company and each of its applicable Subsidiaries is in compliance
with all applicable regulatory requirements for the protection of customer funds
and securities, except where such failure to do so would not, individually or in
the aggregate, reasonably be expected to be material to the Company and its
Subsidiaries, taken as a whole.
(j) Except as disclosed on the Form BD or Form U4 or U5 or as has not had and
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, none of the Company’s Subsidiaries that is
required to be registered as a Broker-Dealer nor any of their respective
directors, officers, employees, independent contractors, registered
representatives or “associated persons” (as defined in the 1934 Act) is
ineligible to serve as a Broker-Dealer or an associated person of a
Broker-Dealer under Section 15(b) of the 1934 Act (including being subject to
any “statutory disqualification,” as defined in Section 3(a)(39) of the 1934
Act).
Section 4.27 Material Advisory Contracts. Except as would not, individually or
in the aggregate, reasonably be expected to be material to the Company and its
Subsidiaries, taken as a whole, each Advisory Contract with each Managed REIT
and Diversified Income Fund (collectively, the “Material Advisory Contracts”) is
valid and binding and in full force (except for the automatic termination of the
Material Advisory Contract with Diversified Income Fund that will occur under
the Investment Company Act as a result of the Closing) and effect and, to the
knowledge of the Company, enforceable against the other party or parties thereto
in accordance with its terms. Except as would not, individually or in the
aggregate, reasonably be
 
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expected to be material to the Company and its Subsidiaries, taken as a whole,
(a) the Company and/or its Subsidiaries party thereto, as applicable, and, to
the knowledge of the Company, each other party thereto, has performed its
obligations required to be performed by it in all material respects, as and when
required, under each Material Advisory Contract, (b) neither the Company nor any
of its Subsidiaries, nor to the knowledge of the Company any other party to a
Material Advisory Contract, has violated any provision of, or taken or failed to
take any act which, with or without notice, lapse of time, or both, would
constitute a default under the provisions of such Material Advisory Contract or
give rise to a right of termination by the counterparty to such Material
Advisory Contract (except for an automatic termination of the Material Advisory
Contract with Diversified Income Fund that occurs under the Investment Company
Act as a result of the Closing, if applicable), and (c) as of the date hereof,
neither the Company nor any of its Subsidiaries has received written notice that
it has breached, violated or defaulted under any Material Advisory Contract.
Section 4.28 Joint Ventures. Except as, individually or in the aggregate, has
not had and would not reasonably be expected to have a Company Material Adverse
Effect, (i) all of the capital obligations of the Company and its Subsidiaries
and, to the knowledge of the Company, all of the capital obligations of any
Joint Venture Partner, with respect to any Joint Venture, have been fully
funded, (ii) to the knowledge of the Company, there are no pending capital
calls, and (iii) as of the date of this Agreement, no right of first offer or
similar right under any Joint Venture Agreement as to or affecting any equity
interests in any Joint Venture has been exercised by the Company or any of its
Subsidiaries, on the one hand, or any Joint Venture Partner, on the other hand,
nor is the exercise of any such right now pending or proposed, and no such right
would become exercisable as a result of the entry into this Agreement or the
consummation of the transactions contemplated hereby.
Section 4.29 Funds and Managed REITs.
(a) Each Public Fund is, and at all times required under applicable Law has
been, duly registered with the SEC as an investment company under the Investment
Company Act. No Private Fund is required to register as an investment company
under the Investment Company Act. Neither the Company nor any of its
Subsidiaries acts as investment adviser, investment sub-adviser, general
partner, managing member, sponsor or manager of any pooled investment vehicle
other than the Public Funds, the Private Funds listed on Section 4.29(a) of the
Company Disclosure Letter and the Managed REITs.
(b) Each Public Fund, Private Fund and Managed REIT is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has the requisite corporate, trust, company, partnership power
and authority or similar power and authority, to own its properties and to carry
on its business conducted as of the date of this Agreement, and is qualified to
do business in each jurisdiction where it is required to be so qualified under
applicable Law, except for such failures to have such power and authority or to
be so qualified that, individually or in the aggregate, have not had and would
not reasonably be expected to have a Company Material Adverse Effect.
 
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(c) Except for matters that have not had and would not reasonably be expected to
have, individually or in the aggregate, (x) to the knowledge of the Company, a
material adverse effect with respect to the applicable Public Fund, Private Fund
or Managed REIT or (y) a Company Material Adverse Effect, (i) each Public Fund,
Private Fund and Managed REIT is, and since December 31, 2014 has been, in
compliance with, and to the knowledge of the Company, is not under investigation
by a Governmental Authority with respect to, any Law or Order, (ii) as of the
date hereof, there is no Proceeding pending against, or, to the knowledge of the
Company, threatened against any Public Fund, Private Fund or Managed REIT or any
of their respective assets or properties, and (iii) as of the date hereof, no
Public Fund, Private Fund or Managed REIT, and none of their respective assets
or properties, is subject to any outstanding Order.
(d) Except as has not had and would not reasonably be expected to have,
individually or in the aggregate, (x) to the knowledge of the Company, a
material adverse effect with respect to the applicable Public Fund or the
Managed REIT or (y) a Company Material Adverse Effect, (i) each Public Fund and
Managed REIT has, since December 31, 2014, filed all Fund SEC Documents in
compliance with applicable Law, and (ii) since December 31, 2014, each Public
Fund’s and Managed REIT’s Fund SEC Documents did not at the time they were filed
(if required to be filed), and did not during the period of their authorized
use, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were or are made, not
misleading.
Section 4.30 Anti-Corruption. Except as would not be material to the Company and
its Subsidiaries, taken as a whole, the Company and its Subsidiaries have been
and are in compliance with all applicable anti-corruption Laws, including the
U.S. Foreign Corrupt Practices Act of 1977, as amended (15 U.S.C. § 78dd-1, et
seq.), and neither the Company nor any of its Subsidiaries nor, to the knowledge
of the Company, any director, officer, agent or employee of the Company or any
of its Subsidiaries acting on its behalf has, directly or indirectly, given,
made, offered or received or agreed to give, make, offer or receive any payment,
bribe, gift, contribution, expenditure or other advantage: (i) which would
violate any applicable Law; or (ii) to or for a public official with the
intention of: (A) improperly influencing any act or decision of such public
official; (B) inducing such public official to do or omit to do any act in
violation of his lawful duty; or (C) securing any improper advantage, in each
case in order to obtain or retain business or any business advantage.
Section 4.31 Material Broker-Dealers. (a) Section 4.31 of the Company Disclosure
Letter sets forth (i) a true and complete list of the top ten (10) Third Party
Broker-Dealers for sales of securities of each Managed REIT and Diversified
Income Fund, by dollar volume, since the date of inception of each such entity
through April 30, 2016 on an entity-by-entity basis (each, a “Material
Broker-Dealer”), and (ii) the total dollar volume of sales of securities of each
such entity by each Material Broker-Dealer.
(b) Except as would not, individually or in the aggregate, reasonably be
expected to be material to the Company and its Subsidiaries, taken as a whole,
neither the Company nor any of its Subsidiaries has received written notice as
of the date hereof that it has breached, violated or defaulted under any Company
Material Contract of the type described in Section 4.20(a)(xvi).
 
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Section 4.32 REIT Status. To the knowledge of the Company:
(a)  (i) RCC, for all of its taxable years, commencing with its REIT Election
Year and through and including its taxable year ended December 31, 2015, has
been subject to taxation as a REIT and has satisfied all the requirements to
qualify as a REIT, and has so qualified, for U.S. federal Tax purposes, for such
taxable years, (ii) RCC has been organized and operated since January 1, 2016 to
the date hereof, and intends to continue to operate, in such a manner so as to
continue to qualify as a REIT for U.S. federal income Tax purposes, and
(iii) each Subsidiary of RCC has been since the later of its acquisition or
formation, and continues to be, treated for U.S. federal and state income Tax
purposes as (A) a partnership (or a disregarded entity) and not as a corporation
or an association or publicly traded partnership taxable as a corporation, (B) a
“qualified REIT subsidiary” within the meaning of Section 856(i)(2) of the Code
or (C) a “taxable REIT subsidiary” within the meaning of Section 856(l) of the
Code;
(b) each of Opportunity REIT and Opportunity REIT II for all of its taxable
years, commencing with its REIT Election Year and through and including its
taxable year ended December 31, 2015, has been subject to taxation as a REIT and
has satisfied all the requirements to qualify as a REIT, and has so qualified,
for U.S. federal Tax purposes, for such taxable years;
(c) each Managed REIT (other than RCC, which is addressed in Section 4.32(a))
has been organized and operated since January 1, 2016 to the date hereof, and
intends to continue to operate, in such a manner so as to qualify or continue to
qualify as a REIT for U.S. federal income Tax purposes; and
(d) each Subsidiary of each Managed REIT (other than RCC, which is addressed
in Section 4.32(a)) has been since the later of its acquisition or formation,
and continues to be, treated for U.S. federal and state income Tax purposes as
(i) a partnership (or a disregarded entity) and not as a corporation or an
association or publicly traded partnership taxable as a corporation, (ii) a
“qualified REIT subsidiary” within the meaning of Section 856(i)(2) of the Code
or (iii) a “taxable REIT subsidiary” within the meaning of Section 856(l) of the
Code.
Section 4.33 CDO Issuers. Section 4.33 of the Company Disclosure Letter sets
forth a true and complete list of all CDO Issuers. Except as has not had and
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, the Company and each of its Subsidiaries and,
to the knowledge of the Company, Trapeza has complied with the terms of each
Advisory Contract with a CDO Issuer.
Section 4.34 No Additional Representations. Except for the representations and
warranties made by Parent and Merger Sub in Article 5, the Company acknowledges
that none of Parent, Merger Sub or any other Person makes any express or implied
representation or warranty whatsoever and specifically (but without limiting the
foregoing), that none of Parent, Merger Sub or any other Person makes any
representation or warranty with respect to (a) Parent or its Subsidiaries or any
of their respective businesses, affairs, operations, assets, liabilities,
conditions (financial or otherwise), prospects or any other matter relating to
Parent or its Subsidiaries or (b) any documentation, forecasts, budgets,
projections, estimates or other information (including the accuracy or
completeness of, or the reasonableness of the assumptions
 
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underlying, such documentation, forecasts, budgets, projections, estimates or
other information) provided by Parent or any other Person, including in any
“data rooms” or management presentations. The Company has not relied on any such
information or any representation or warranty not set forth in Article 5.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the Parent Disclosure Letter, Parent and Merger Sub
represent and warrant to the Company as follows:
Section 5.01 Corporate Existence and Power. Parent is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware. Merger Sub is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware. Each of
Parent and Merger Sub has all limited liability or corporate power and
authority, as applicable, to own, lease and operate its assets and carry on its
business as now conducted and is duly qualified to do business as a foreign
limited liability company or corporation, as applicable, and is in good standing
in each jurisdiction where such qualification is necessary, except where any
failure to have such power or authority or to be so qualified would not
reasonably be expected, individually or in the aggregate, to have a Parent
Material Adverse Effect.
Section 5.02 Corporate Authorization. The execution, delivery and performance by
Parent and Merger Sub of this Agreement and the consummation by Parent and
Merger Sub of the transactions contemplated hereby are within the limited
liability or corporate power, as applicable, and authority of Parent and Merger
Sub have been duly authorized by all necessary limited liability or corporate
action, as applicable, on the part of Parent and Merger Sub. No other limited
liability company or corporate proceeding on the part of Parent or Merger Sub is
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby, other than, with respect to the Merger, the filing of the
certificate of merger with respect to the Merger with the Delaware Secretary of
State. This Agreement, assuming due authorization, execution and delivery by the
Company, constitutes a valid and binding agreement of each of Parent and Merger
Sub, enforceable against Parent and Merger Sub in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting
creditors’ rights generally and by general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at Law).
Section 5.03 Governmental Authorization. The execution, delivery and performance
by Parent and Merger Sub of this Agreement and the consummation by Parent and
Merger Sub of the transactions contemplated hereby require no action by or in
respect of, or filing with, any Governmental Authority, other than (i) the
filing of the certificate of merger with respect to the Merger with the Delaware
Secretary of State and appropriate documents with the relevant authorities of
other states in which Parent is qualified to do business, (ii) compliance with
any applicable requirements of the HSR Act and any non-U.S. Competition Laws,
(iii) compliance with any applicable requirements of the 1933 Act, the 1934 Act
and any other applicable state or
 
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federal securities laws, (iv) any required consent, non-objection, approval,
order or authorization of, or registration, declaration or filing with or from,
FINRA and (v) any actions or filings the absence of which would not reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
Section 5.04 Non-contravention. The execution, delivery and performance by
Parent and Merger Sub of this Agreement and the consummation by Parent and
Merger Sub of the transactions contemplated hereby do not and will not
(i) assuming the authorizations, consents and approvals referred to in Section
5.03 are obtained, contravene, conflict with, or result in any violation or
breach of any provision of the organizational documents of Parent and Merger
Sub, (ii) assuming the authorizations, consents and approvals referred to
in Section 5.03 are obtained, contravene, conflict with or result in a violation
or breach of any Law or Order or (iii) assuming the authorizations, consents and
approvals referred to in Section 5.03 are obtained, require any consent or other
action by any Person under, constitute a default or a violation, or an event
that, with or without notice or lapse of time or both, would constitute a
default or a violation, under or of, or cause or permit the termination,
cancellation, acceleration or other change of any right or obligation or the
loss of any benefit to which Parent or any of its Subsidiaries is entitled under
any provision of any agreement or other instrument binding upon Parent or any of
its Subsidiaries or any license, franchise, permit, certificate, approval or
other similar authorization affecting, or relating in any way to, the assets or
business of Parent and any of its Subsidiaries, in the case of each of clauses
(ii) and (iii), which have not had and would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
Section 5.05 Merger Sub. Since its date of incorporation, Merger Sub has not
carried on any business or conducted any operations other than the execution of
this Agreement, the performance of its obligations hereunder and matters
ancillary thereto.
Section 5.06 Disclosure Documents. None of the information supplied or to be
supplied by or on behalf of Parent or Merger Sub for inclusion or incorporation
by reference in the Proxy Statement will, at the date it is first mailed to the
Company stockholders or at the time of the Company Stockholder Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing provisions of this Section 5.06, no
representation or warranty is made by the Company with respect to information or
statements made or incorporated by reference in the Proxy Statement which were
not supplied by or on behalf of Parent or Merger Sub.
Section 5.07 Sufficient Funds. As of the date hereof, Parent has, and through
Closing, Parent will have, immediately available to it unrestricted funds,
including cash and other liquid assets, sufficient to consummate the Merger and
the other transactions contemplated hereby and required for the satisfaction of
all of Parent’s and Merger Sub’s obligations under this Agreement, including the
payment of the full Merger Consideration and the consideration in respect of the
Company Equity Awards under Article 2, to fund any required refinancings or
repayments of any existing indebtedness and to pay all related fees and
expenses.
 
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Section 5.08 Financial Statements. The audited consolidated financial statements
(including all related notes thereto) delivered by Parent to the Company’s
Representative by e-mail on May 9, 2016 (the “Parent Financial Statement”)
fairly present in all material respects, in conformity with applicable
accounting practices applied on a consistent basis (except as may be indicated
therein or in the notes thereto), the consolidated financial position of Parent
and its consolidated Subsidiaries as of the date thereof and their consolidated
results of operations and cash flows for the period then ended.
Section 5.09 Solvency. Immediately after giving effect to the consummation of
the transactions contemplated by this Agreement: (a) the fair saleable value
(determined on a going-concern basis) of the assets of Parent and its
Subsidiaries, taken as a whole, will be greater than the total amount of their
liabilities, taken as a whole (including all liabilities, whether or not
reflected in a balance sheet prepared in accordance with GAAP, and whether
direct or indirect, fixed or contingent, secured or unsecured, disputed or
undisputed); (b) Parent and its Subsidiaries will be able to pay their debts and
obligations in the ordinary course of business as they become due; and
(c) Parent and its Subsidiaries will have adequate capital to carry on their
businesses and all businesses in which they are about to engage.
Section 5.10 Litigation. Except as has not had and would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect, there is no Proceeding pending against, or, to the knowledge of Parent,
threatened against Parent or any of its Subsidiaries.
Section 5.11 No Member Vote Required. No vote of the members of Parent or the
holders of any other securities of Parent (equity or otherwise) is required by
Law, the certificate of formation or limited liability company agreement of
Parent in order for Parent to consummate the Merger.
Section 5.12 Finders’ Fees, etc. Except as set forth on Section 5.12 of the
Parent Disclosure Letter, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
Parent or any of its Subsidiaries who might be entitled to any fee or commission
from Parent or any of its Affiliates in connection with the transactions
contemplated by this Agreement.
Section 5.13 No Additional Representations. Except for the representations and
warranties expressly made by the Company in Article 4, each of Parent and Merger
Sub acknowledges that neither the Company nor any other Person makes any express
or implied representation or warranty whatsoever and specifically (but without
limiting the foregoing), that neither the Company nor any other Person makes any
representation or warranty with respect to (a) the Company or its Subsidiaries
or any of their respective businesses, affairs operations, assets, liabilities,
conditions (financial or otherwise), prospects or any other matter relating to
the Company or its Subsidiaries or (b) any documentation, forecasts, budgets,
projections, estimates or other information (including the accuracy or
completeness of, or the reasonableness of the assumptions underlying, such
documentation, forecasts, budgets, projections, estimates or other information)
provided by the Company or any other Person, including in any “data rooms” or
management presentations. Neither Parent nor Merger Sub has relied on any such
information or any representation or warranty not set forth in Article 4.
 
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ARTICLE 6
COVENANTS OF THE COMPANY
Section 6.01 Conduct of the Company. (a) From the date of this Agreement until
the Effective Time, except as expressly required or expressly permitted pursuant
to this Agreement, as set forth in Section 6.01 of the Company Disclosure
Letter, as consented to in writing by Parent (such consent not to be
unreasonably withheld, conditioned or delayed), or as required by applicable Law
or Order, the Company shall, and shall cause each of its Subsidiaries to, use
reasonable best efforts (i) to conduct its business in the ordinary course
consistent with past practice, (ii) to the extent consistent with the foregoing,
to preserve intact its business operations, organization and ongoing businesses
and relationships with Third Parties, (iii) to obtain the renewal and prevent
the termination or non-renewal of any Advisory Contract, if applicable (except
for an automatic termination of an Advisory Contract with a Public Fund that
occurs under the Investment Company Act as a result of the Closing, if
applicable) and (iv) not to take any action, or fail to take any action, that
would reasonably be expected to cause any Managed REIT to fail to qualify as a
REIT; provided, that (A) no action by the Company or its Subsidiaries with
respect to matters expressly permitted in the subclauses of the next sentence
shall be deemed a breach of this sentence unless such action would constitute a
breach of such subclauses and (B) the failure to obtain the renewal of an
Advisory Contract shall not in and of itself be deemed to be a violation of
this Section 6.01. Without limiting the generality of the foregoing, from the
date of this Agreement until the Effective Time, except as expressly required or
expressly permitted pursuant to this Agreement, as set forth in Section 6.01 of
the Company Disclosure Letter, as consented to in writing by Parent (such
consent not to be unreasonably withheld, conditioned or delayed) or as required
by applicable Law or Order, the Company shall not, nor shall it permit any of
its Subsidiaries to:
(b) amend (or, in the case of any material Subsidiary of the Company, materially
amend) the certificate of incorporation, bylaws or other similar organizational
documents (whether by merger, consolidation or otherwise) of the Company or any
of its material Subsidiaries;
(c) split, combine or reclassify any shares of capital stock or other equity
interests of the Company or any of its Subsidiaries or declare, set aside or pay
any dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of the capital stock or other equity interests
of the Company or its Subsidiaries, or redeem, repurchase or otherwise acquire
or offer to redeem, repurchase, or otherwise acquire, directly or indirectly,
any Company Securities or any Company Subsidiary Securities, except for (i) the
declaration, setting aside or payment of any dividends or other distributions by
any of its Subsidiaries payable solely to the Company or any of its wholly owned
Subsidiaries, (ii) repurchases of shares of Company Stock in the ordinary course
of business consistent with past practices (including as to volume) at then
prevailing market prices pursuant to any existing share repurchase program
disclosed in the Company SEC Documents; provided, that the price paid per share
of Company Stock shall not exceed the Merger Consideration, (iii) regular
quarterly cash dividends on the Company Stock and Company Equity Awards of not
more than $0.06 per share per quarter, consistent with past practice as to
timing of declaration, record date and payment date, and (iv) acquisitions, or
deemed acquisitions, of Company Stock in connection with (A) the
 
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forfeiture of Company Equity Awards pursuant to the terms thereof, (B) the
payment of the exercise price of Company Stock Options and (C) Tax withholding
obligations in connection with the exercise, vesting or settlement of Company
Equity Awards;
(d) (i) issue, deliver or sell, or authorize the issuance, delivery or sale of,
any shares of any Company Securities or Company Subsidiary Securities, other
than (A) the issuance of any shares of the Company Stock upon the exercise of
Company Stock Options or the settlement of Company Equity Awards that are
outstanding at the date of this Agreement and (B) the issuance, delivery or sale
of any shares of Company Subsidiary Securities to the Company or any of its
Subsidiaries, or (ii) amend any term of any Company Security (in each case,
whether by merger, consolidation or otherwise);
(e) acquire (by merger, consolidation, acquisition of stock or assets or
otherwise), directly or indirectly, any assets, securities, properties,
interests or businesses, in excess of $1,000,000 in the aggregate, other than
(i) supplies and materials in the ordinary course of business of the Company and
its Subsidiaries in a manner that is consistent with past practice and
(ii) pursuant to Contracts in effect on the date of this Agreement that are set
forth in Section 6.01(e) of the Company Disclosure Letter;
(f) sell, license, lease or otherwise transfer, or abandon or create or incur
any Lien on, directly or indirectly, any of the Company’s or its Subsidiaries’
assets, securities, properties, interests or businesses in excess of $1,000,000
in the aggregate, other than (i) sales of inventory or obsolete equipment in the
ordinary course of business consistent with past practice, (ii) sales, leases or
transfers that are pursuant to Contracts in effect as of the date of this
Agreement that are set forth in Section 6.01(f) of the Company Disclosure
Letter, (iii) Permitted Liens, or (iv) sales, licenses, leases or other
transfers to the Company or any of its wholly owned Subsidiaries; provided,
that, nothing in this Section 6.01(f), including the exclusions contained in
subclauses (i) through (iv) of this Section 6.01(f), shall be deemed to permit
any action prohibited by Section 6.01(s);
(g) make any loans, advances or capital contributions to, or investments in, any
other Person, other than loans, advances or capital contributions to, or
investments in, the Company or any of its wholly owned Subsidiaries;
(h) create, incur or assume any indebtedness for borrowed money or guarantees
thereof or issue or sell any debt securities in an amount in excess of
$1,000,000 in the aggregate, except for (i) indebtedness under the Company’s and
its Subsidiaries’ revolving working capital credit facilities that are in effect
at the date of this Agreement, (ii) guarantees of indebtedness of the Company or
any of its wholly owned Subsidiaries (which indebtedness is in effect as of the
date of this Agreement or is entered into in compliance with this Section 6.01)
and (iii) indebtedness or guarantees between or among the Company and any of its
wholly owned Subsidiaries or between or among any of the Company’s wholly owned
Subsidiaries;
(i) except as otherwise permitted by the other subclauses of this Section 6.01,
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other Person
except wholly owned Subsidiaries of the Company;
 
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(j) except as otherwise permitted by the other subclauses of this Section
6.01 or the capital expenditure budget attached as Section 6.01(j) of the
Company Disclosure Letter, incur or commit to any capital expenditures in an
amount in excess of $1,000,000 in the aggregate;
(k) settle or compromise any suit, action, claim, proceeding or investigation,
in each case made or pending against the Company or any of its Subsidiaries,
other than, in each case, a settlement solely for monetary damages (without any
admission of liability) not in excess of $500,000 individually or $1,000,000 in
the aggregate;
(l) enter into any new line of business that is materially different from the
Company’s and its Subsidiaries’ businesses;
(m) form any Subsidiary (other than a wholly owned Subsidiary) or new fund;
(n) other than as may be reasonably necessary to comply with the terms of this
Agreement or in connection with any matter to the extent specifically permitted
by another subsection of this Section 6.01(n), (i) terminate any Company
Material Contract or Contract that would be a Company Material Contract if
entered into after the date hereof (except an automatic termination of any such
Contract in accordance with its terms, other than an Advisory Contract that
automatically terminates, which shall be subject to Section 6.01(iii)) or
(ii) other than in the ordinary course of business consistent with past practice
in the case of Company Material Contracts or Contracts that would be a Company
Material Contract if entered into after the date hereof of the type described in
clauses (vii) and (xvi) of Section 4.20(a), (A) amend or modify (other than
immaterial amendments or modifications) any Company Material Contract or waive,
release or assign any material rights, claims or benefits under any Company
Material Contract or (B) enter into (other than renewals consistent with the
terms thereof) any Contract that would have been a Company Material Contract had
it been entered into prior to the date of this Agreement;
(o) except (x) as required pursuant to a Company Benefit Plan in effect on the
date of this Agreement and made available to Parent, or (y) as otherwise
required by applicable Law, (i) except as provided in the ordinary course of
business consistent with past practice with respect to non-management level
employees of the Company or its Subsidiaries, grant, pay or provide any
severance or termination payments or benefits to any employee, individual
independent contractor or director of the Company or any of its Subsidiaries,
(ii) accelerate the time of payment or vesting of, or the lapsing of
restrictions with respect to, or fund or otherwise secure the payment of, any
compensation or benefits to any employee, individual independent contractor or
director of the Company or any of its Subsidiaries, (iii) other than in the
ordinary course of business consistent with past practice (including employee
promotions) and other than the Company’s annual increases in base salaries or
hourly base wage rates, as applicable, for non-management level employees having
an annual base salary rate under $200,000, increase the compensation or benefits
payable to any employee, individual independent contractor or director of the
Company or any of its Subsidiaries, (iv) enter into, amend or terminate any
employment agreement or enter into any severance or retention agreement
(excluding offer letters that provide for at-will employment and no severance,
termination or change in control payments or benefits) with any employee,
individual independent contractor, officer or director of the Company or any of
its Subsidiaries, (v) adopt, enter into, terminate or amend any Company Benefit
Plan (or any
 
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plan, agreement, program, policy or other arrangement that would be a Company
Benefit Plan if it were in existence as of the date of this Agreement),
(vi) hire any person to be an employee with a title of “Vice President” or above
or having an annual base salary rate of $200,000 or more (other than any person
to fill, in the ordinary course of business consistent with past practice, any
position that is existing as of the date hereof that is currently, or
subsequently becomes, vacant), or (vii) terminate the employment (other than for
cause) of any employee of the Company or any of its Subsidiaries having an
annual base salary rate of $200,000 or more;
(p) change the Company’s methods of financial accounting, except as required by
concurrent changes in GAAP or in Regulation S-X of the 1934 Act (or any
interpretation thereof), any Governmental Authority or applicable Law;
(q) (i) make, change or rescind any material election with respect to Taxes,
(ii) change any material method of Tax accounting, other than as required by any
Governmental Authority or applicable Law, (iii) amend any material Tax Return,
or (iv) agree or settle any material claim or assessment in respect of Taxes for
an amount materially in excess of the amount accrued or reserved with respect
thereto on the Company Balance Sheet;
(r) adopt or publicly propose a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a dissolution, in
each case, of the Company or any of its Subsidiaries;
(s) sell, transfer or otherwise dispose of all or any portion of the equity
interests in any Subsidiary of the Company that is a party to a Material
Advisory Contract or assign or transfer any Material Advisory Contract, in each
case, by merger, consolidation, sale of equity interests, share exchange or
otherwise;
(t) amend or modify the compensation payable by the Company or any other
material obligations of the Company contained in the engagement letter with
Evercore Group, L.L.C., or engage other financial advisers in connection with
the transactions contemplated by this Agreement, in any such case, other than in
connection with a Company Acquisition Proposal that is made to the Company or
otherwise publicly disclosed after the date of this Agreement; or
(u) agree, resolve or commit to do any of the foregoing.
Section 6.02 Company Stockholder Meeting. As promptly as practicable (and in any
event, within five (5) Business Days) after the date the Proxy Statement is
cleared by the SEC, the Company shall (i) acting through the Company Board, in
accordance with applicable Law and its certificate of incorporation and bylaws,
give notice of a meeting of its stockholders for the purpose of voting on the
approval and adoption of this Agreement in accordance with DGCL (the “Company
Stockholder Meeting”), and (ii) in accordance with applicable Law, cause the
Proxy Statement to be disseminated to the Company Shareholders as of the record
date established by the Company Board for the Company Stockholder Meeting (the
date of such dissemination, the “Proxy Date”). In connection with the Company
Stockholder Meeting, the Company shall subject to Section 8.03(b) andSection
8.03(c), recommend approval and adoption of this Agreement and the other
transactions contemplated hereby by the Company’s stockholders in the Proxy
Statement. Subject to Section 8.03(b) and Section 8.03(c), the
 
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Company shall duly call, convene and hold the Company Shareholders’ Meeting as
promptly as reasonably practicable following the Proxy Date and use its
reasonable best efforts to solicit from its stockholders proxies in favor of the
adoption of this Agreement and take all other actions reasonably necessary or
advisable to secure the adoption of this agreement by the Company’s
stockholders. The Company shall not, without the prior written consent of
Parent, adjourn or postpone the Company Stockholder Meeting; provided, however,
that the Company shall have the right to make one or more successive
postponements or adjournments of the Company Stockholder Meeting (i) if on a
date on which the Company Stockholder Meeting is scheduled, the Company has not
received proxies representing a sufficient number of shares of Company Stock to
obtain the Company Stockholder Approval, whether or not a quorum is present or
(ii) to the extent necessary to ensure that any amendment or supplement to the
Proxy Statement is timely provided to the holders of Company Stock. Regardless
of whether there is a Company Adverse Recommendation Change, the Company
Stockholder Meeting shall be held in accordance with the terms hereof unless
this Agreement is terminated in accordance with Article 10.
Section 6.03 Cooperation. (a) In the event Parent and Merger Sub seek to obtain
any debt or equity financing in connection with the transactions contemplated by
this Agreement, the Company shall, and shall cause its Subsidiaries to, provide
all reasonable cooperation necessary for the arrangement of such financing as
may be reasonably requested by Parent and Merger Sub. Each of Parent and Merger
Sub expressly acknowledges and agrees that its obligation to consummate the
transactions contemplated by this Agreement is not subject to any condition or
contingency with respect to any financing or funding.
(b) At Parent’s request, the Company shall reasonably cooperate with Parent in
coordinating introductions to and meetings with Third Party Broker-Dealers with
which the Company and its Subsidiaries have ongoing business relationships.
(c) Notwithstanding anything in this Section 6.03 to the contrary, neither the
Company nor any of its Subsidiaries shall be required to take or permit the
taking of any action pursuant to this Section 6.03 that would: (i) require the
Company, its Subsidiaries or any Persons who are directors of the Company or its
Subsidiaries to pass resolutions or consents to approve or authorize the
execution of the financing or execute or deliver any certificate, document,
instrument or agreement or agree to any change or modification of any existing
certificate, document, instrument or agreement, (ii) cause any representation or
warranty in this Agreement to be breached by the Company or any of its
Subsidiaries, (iii) require the Company, any of its Subsidiaries, or any of its
or their stockholders, agents or other Representatives to pay any commitment or
other similar fee or incur any other expense, liability or obligation in
connection with the financing prior to the Closing or have any obligation under
any agreement, certificate, document or instrument be effective until the
Closing, (iv) cause any director, officer or employee, stockholder, agent or
other Representative of the Company or any of its Subsidiaries to incur any
personal liability, (v) conflict with, result in a violation or breach of, or a
default (with or without notice, lapse of time, or both) under, the
organizational documents of the Company or its Subsidiaries or any Laws,
(vi) reasonably be expected to materially conflict with, result in a material
violation or breach of, or a default (with or without notice, lapse of time, or
both) under, any Contract to which the Company or any of its Subsidiaries is a
party, (vii) provide access to or disclose information that the Company or any
of its Subsidiaries
 
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determines would jeopardize any attorney-client privilege of the Company or any
of its Subsidiaries; (viii) prepare any financial statements or information that
are not available to it and prepared in the ordinary course of its financial
reporting practice, (ix) require the Company or any of its Subsidiaries to enter
into any instrument or agreement, or require the Company, any of its
Subsidiaries or any of its or their respective officers, directors, employees,
stockholders, attorneys, accountants or other Representatives to deliver any
certificate, document or instrument, that is effective prior to the occurrence
of the Closing or that would be effective if the Closing does not occur or
(x) unreasonably interfere with the ongoing operation of the Company and its
Subsidiaries. Nothing contained in this Section 6.03 or otherwise shall require
the Company or any of its Subsidiaries, prior to the Closing, to be an issuer or
other obligor with respect to the financing. Each of the Company and its
Subsidiaries hereby consents to the reasonable use of its logos in connection
with the financing, provided that such use is disclosed to the Company or its
Subsidiaries, as applicable, in writing prior to the time that it is so used,
such logos are used in a manner that could not reasonably be expected to harm or
disparage the Company, its Subsidiaries or their marks and on such other
customary terms and conditions as the Company or applicable Subsidiary shall
reasonably impose. Parent shall, promptly upon request by the Company, reimburse
the Company for all reasonable out-of-pocket costs incurred by the Company or
its Subsidiaries or their respective Representatives in connection with such
cooperation and shall indemnify and hold harmless the Company and its
Subsidiaries and their respective Representatives from and against any and all
losses suffered or incurred by them in connection with the arrangement of the
financing, any action taken by them at the request of Parent pursuant to
this Section 6.03 and any information used in connection therewith (other than
information provided in writing by the Company or its Subsidiaries specifically
in connection with its obligations pursuant to this Section 6.03); provided,
that Parent shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld, delayed or
conditioned).
Section 6.04 Public Fund Advisory Contract Consents; Public Fund Proxy
Statements. (a) With respect to each Public Fund, the Company shall, and shall
cause its Subsidiaries to, in accordance with applicable Law, use reasonable
best efforts to: (i) as promptly as practicable after the date of this
Agreement, and to the extent required by applicable Law or the terms of any
Contract or any organizational document of such Public Fund, (x) obtain the
approval of a majority of the trustees of such Public Fund and a majority of the
trustees of such Public Fund who are not “interested persons” (as such term is
defined in Section 2(a)(19) of the Investment Company Act) of such Public Fund
(“Public Fund Board Approval”) of a new investment advisory agreement between
such Public Fund and the applicable Subsidiary of the Company (a “New IAA”) that
(A) becomes effective as of the later of the Closing Date or approval of such
New IAA by the vote of a “majority of the outstanding voting securities” (as
defined in the Investment Company Act) of such Public Fund (“Public Fund
Shareholder Approval”) and (B) contains terms substantially the same as (but
with identical advisory fees as set forth in the applicable Advisory Contract)
the Advisory Contract between such Subsidiary and such Public Fund as in effect
on the date of this Agreement (or, if amended after the date hereof as permitted
by this Agreement, as in effect on the date of such amendment), and (y) cause
such Public Fund’s board of trustees to recommend approval of such New IAA to
the shareholders of such Public Fund; (ii) cause the board of trustees of such
Public Fund to call a meeting of the shareholders of such Public Fund to approve
the New IAA for such Public Fund, such meeting to occur as soon as practicable,
subject to the requirements of applicable Law, following the date of
 
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this Agreement; (iii) as promptly as practicable after the date of this
Agreement, and to the extent required by applicable Law or the terms of any
Contract or any organizational document of a Public Fund, obtain Public Fund
Board Approval of an “interim contract” (within the meaning of Rule 15a-4 under
the Investment Company Act) between such Public Fund and the applicable
Subsidiary of the Company that (x) becomes effective upon the Closing in the
event the Closing occurs prior to Public Fund Shareholder Approval of such New
IAA and (y) contains terms substantially the same as (but with identical
advisory fees as set forth in the applicable Advisory Contract) the Advisory
Contract between such Subsidiary and such Public Fund as in effect on the date
of this Agreement (or, if amended after the date hereof as permitted by this
Agreement, as in effect on the date of such amendment thereof) (an “Acceptable
Interim IAA”); and (iv) cooperate with Parent in connection with taking the
actions and obtaining the approvals described in clauses (i) through (iii) above
and in Section 8.10(a), including making the directors, officers and employees
of the Company and its Subsidiaries reasonably available for presentations to
such Public Fund’s board of trustees and for assisting in the preparation of the
proxy statements, any presentations or other materials, or any communications to
be made to such Public Fund’s board of trustees in furtherance of taking the
actions and obtaining the approvals described in clauses (i) through (iii) above
and Section 8.10(a).
(b) As promptly as reasonably practicable following the receipt of each Public
Fund Board Approval, the Company or one of its Subsidiaries shall (in
coordination with each Public Fund) use reasonable best efforts to: (i) prepare
and file proxy materials for a shareholder meeting of such Public Fund (A) for
the purpose of voting on the approval of the New IAA for such Public Fund and
(B) with respect to Diversified Income Fund, to elect each of the trustees
thereof appointed by the board of trustees of Diversified Income Fund (other
than any individual resigning as a trustee effective as of immediately prior to
the Effective Time, as set forth on Section 8.10(a) of the Parent Disclosure
Letter) (such proxy materials, a “Public Fund Proxy Statement” and such
shareholder meeting, a “Public Fund Shareholder Meeting”); (ii) in accordance
with applicable Law, cause a Public Fund Proxy Statement to be mailed to the
shareholders of such Public Funds as of the record date established by the
Public Fund’s board of trustees for such Public Fund Shareholder Meeting; and
(iii) duly call, convene and hold such Public Fund’s Public Fund Shareholder
Meeting as promptly as reasonably practicable following the mailing of the
Public Fund Proxy Statement. The Company shall use its reasonable best efforts
to solicit from the shareholders of each Public Fund proxies in favor of the
approval of its New IAA and, with respect to Diversified Income Fund, elect each
of the existing trustees thereof appointed by the board of trustees of
Diversified Income Fund (other than any individual resigning as a trustee
effective as of immediately prior to the Effective Time, as set forth
on Section 8.10(a) of the Parent Disclosure Letter), and take all other actions
reasonably necessary or advisable to secure the Public Fund Shareholder Approval
of such New IAA and the election of such trustees. The Company shall provide
Parent with a reasonable opportunity to review and comment on the Public Fund
Proxy Statements, or any amendment or supplement thereto, prior to their filing
with the SEC. The Company shall use its reasonable best efforts to notify Parent
reasonably promptly of the receipt of any comments, whether written or oral,
from the SEC and of any request by the SEC for amendments or supplements to the
Public Fund Proxy Statement and shall provide Parent with (i) copies of all
correspondence between the Company, any of its Subsidiaries or the Public Funds,
on the one hand, and the SEC, on the other hand, with respect to the Public Fund
Proxy Statements, and (ii) a reasonable opportunity to review and comment on the
response to those comments and requests. The Company (in coordination with the
 
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applicable Public Fund) shall use its reasonable best efforts to resolve, and
Parent agrees to consult and cooperate with the Company in resolving, all SEC
comments with respect to the Public Fund Proxy Statements as promptly as
reasonably practicable after receipt thereof.
(c) Parent shall cooperate with the Company and its Subsidiaries in taking the
actions and obtaining the approvals described in Section 6.04(a) and
in Section 8.10(a) and shall furnish to the Company, its Subsidiaries and
respective Representatives such information and assistance as the Company, its
Subsidiaries and their respective Representatives may reasonably request in
connection with seeking the Public Fund Board Approval and the Public Fund
Shareholder Approval for each Public Fund, including making the directors,
officers and employees of Parent and its Subsidiaries reasonably available for
presentations to such Public Fund’s board of trustees and for assisting, at the
Company’s, its Subsidiaries’ or their respective Representatives’ request, in
the preparation of the proxy statements, any presentations or other materials,
or any communications to be made to such Public Fund’s board of trustees in
furtherance of taking the actions and obtaining the approvals described
in Section 6.04(a) and in Section 8.10(a). Each Party agrees that none of the
information supplied by or on behalf of it in writing expressly for use in the
proxy statement to be filed with the SEC in connection with obtaining the Public
Fund Shareholder Approvals, as amended or supplemented by any amendment or
supplement filed with the SEC, will, at the date it is first mailed to the
shareholders of the Public Funds or at the time of the shareholder meeting of
the Public Funds held to obtain the Public Fund Shareholder Approvals, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
ARTICLE 7
COVENANTS OF PARENT AND MERGER SUB
Section 7.01 Conduct of Parent. From the date of this Agreement until the
Effective Time or the earlier termination of this Agreement pursuant to Article
10, neither Parent nor Merger Sub shall take or agree to take any action
(including entering into any agreements with respect to any acquisitions,
mergers, consolidations or business combinations) which would reasonably be
expected to result, individually or in the aggregate, in (a) a Parent Material
Adverse Effect or (b) the imposition of a material condition or conditions on
any Consents and Approvals.
Section 7.02 Obligations of Merger Sub. Parent shall cause Merger Sub to perform
when due its obligations under this Agreement and to consummate the Merger
pursuant to the terms and subject to the conditions set forth in this Agreement.
Section 7.03 Director and Officer Indemnification. (a) From and after the
Effective Time, Parent and Merger Sub agree that all rights to indemnification,
advancement of expenses and exculpation of each former and present director or
officer of the Company or any of its Subsidiaries and each person who served as
a director, officer, member, trustee, fiduciary or employee of another
corporation, partnership, joint venture, trust, pension or other employee
benefit plan or enterprise if such service was at the request or for the benefit
of the Company or any of its Subsidiaries (each, together with such person’s
heirs, executors or administrators, a
 
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“Company Indemnified Party”), against all claims, losses, liabilities, damages,
judgments, inquiries, fines and reasonable fees, costs and expenses, including
attorneys’ fees and disbursements, incurred in connection with any Proceeding or
investigation with respect to matters existing or occurring at or prior to the
Effective Time (including this Agreement and the transactions and actions
contemplated hereby), arising out of or pertaining to the fact that the Company
Indemnified Party is or was an officer or director of the Company or any of its
Subsidiaries or is or was serving at the request of the Company or any of its
Subsidiaries as a director or officer of another Person, whether asserted or
claimed prior to, at or after the Effective Time as provided in their respective
certificates of incorporation or by-laws (or comparable organizational
documents) as in effect on the date of this Agreement or in any agreement, a
true and complete copy of which agreement has been provided by the Company to
Parent prior to the date of this Agreement, to which the Company or any of its
Subsidiaries is a party, shall survive the Merger and continue in full force and
effect in accordance with their terms. For a period of no less than six
(6) years after the Effective Time, Parent and the Company shall cause to be
maintained in effect the provisions in the certificates of incorporation and
bylaws and comparable organizational documents of the Surviving Corporation and
each Subsidiary of the Company (or in such documents of any successor to the
business of the Surviving Corporation) regarding exculpation, indemnification
and advancement of expenses in effect as of immediately prior to the Effective
Time or in any agreement to which the Company or any of its Subsidiaries is a
party, in each case in effect immediately prior to the Effective Time, and shall
not amend, repeal or otherwise modify any such provisions or the exculpation,
indemnification or advancement of expenses provisions of the Surviving
Corporation’s certificate of incorporation and bylaws set forth in Exhibit B in
any manner that would adversely affect the rights thereunder of any individual
who immediately before the Effective Time was a Company Indemnified
Party; provided, however, that all rights to indemnification in respect of any
actual or threatened claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative (each, an “Action”) pending or
asserted or any claim made within such period shall continue until the
disposition of such Action or resolution of such claim.
(b) For a period of no less than six (6) years after the Effective Time, Parent
and the Surviving Corporation shall indemnify and hold harmless (and advance
funds in respect of the foregoing) each Company Indemnified Party to the fullest
extent permitted under applicable Law against any costs or expenses (including
advancing attorneys’ fees and expenses in advance of the final disposition of
any claim, suit, proceeding or investigation to each Company Indemnified Party),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any actual or threatened Action arising out of or
pertaining to the fact that the Company Indemnified Party is or was an officer
or director of the Company or any of its Subsidiaries or is or was serving at
the request of the Company or any of its Subsidiaries as a director or officer
of another Person, whether asserted or claimed prior to, at or after the
Effective Time, but subject to Parent’s and the Surviving Corporation’s receipt
of an undertaking by or on behalf of such Company Indemnified Party to repay
such amount if it shall ultimately be determined that such Company Indemnified
Party is not entitled to be indemnified. Parent and the Surviving Corporation
shall reasonably cooperate with the Company Indemnified Party in the defense of
any such Action. Notwithstanding anything to the contrary set forth in this
Agreement, neither Parent nor the Surviving Corporation shall be liable for any
settlement effected without its prior written consent (which consent shall not
be unreasonably withheld, delayed or conditioned).
 
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(c) Parent shall cause the Surviving Corporation, and the Surviving Corporation
hereby agrees, to either (i) continue to maintain in effect for a period of no
less than six (6) years after the Effective Time the Company’s directors’ and
officers’ insurance policies (the “D&O Insurance”) in place as of the date of
this Agreement or (ii) purchase comparable D&O Insurance for such six (6)-year
period from a carrier with comparable or better credit ratings to the Company’s
existing directors’ and officers’ insurance policies, in each case, with
coverage for the persons who are covered by the Company’s existing D&O
Insurance, with terms, conditions, retentions and levels of coverage at least as
favorable to the insured individuals as the Company’s existing D&O Insurance
with respect to matters existing or occurring at or prior to the Effective
Time; provided, that in no event shall Parent or the Surviving Corporation be
required to expend for such policies pursuant to this sentence an aggregate
premium amount in excess of 300% of the amount per annum the Company paid in its
last full fiscal year, which amount is set forth in Section 7.03(c) of the
Company Disclosure Letter (the “Premium Cap”); and provided, further, that if
the aggregate premiums of such insurance coverage exceed such amount, the
Surviving Corporation shall be obligated to obtain a policy with the greatest
coverage available, with respect to matters occurring prior to the Effective
Time, for a cost not exceeding the Premium Cap. At the Company’s option, the
Company may purchase, prior to the Effective Time, a prepaid “tail policy” for a
period of no more than six (6) years after the Effective Time with coverage for
the persons who are covered by the Company’s existing D&O Insurance, with terms,
conditions, retentions and levels of coverage at least as favorable to the
insured individuals as the Company’s existing D&O Insurance with respect to
matters existing or occurring at or prior to the Effective Time, in which event
Parent shall cease to have any obligations under the first sentence of
thisSection 7.03(c); provided, that the aggregate premium for such policies
shall not exceed the Premium Cap. In the event the Company elects to purchase
such a “tail policy,” the Surviving Corporation shall (and Parent shall cause
the Surviving Corporation to use commercially reasonable efforts to) maintain
such “tail policy” in full force and effect and continue to honor its
obligations thereunder.
(d) In the event that either Parent or the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other Person and
is not the continuing or surviving corporation or entity of such consolidation
or merger, or (ii) transfers or conveys all or substantially all of its
properties, rights and other assets to any Person, then, and in each such case,
Parent or the Surviving Corporation shall cause proper provision to be made so
the successors and assigns of Parent or the Surviving Corporation, as the case
may be, succeed to or assume the applicable obligations of such Party set forth
in this Section 7.03.
(e) The provisions of this Section 7.03 shall survive consummation of the
Merger, are intended to be for the benefit of, and will be enforceable by, each
indemnified or insured person hereunder (including the Company Indemnified
Parties), his or her heirs and his or her representatives and are in addition
to, and not in substitution for, any other rights to indemnification or
contribution that any such person may have by contract, at Law or otherwise.
Section 7.04 Employee Matters. (a) From and after the Effective Time, the
Surviving Corporation shall, and Parent shall cause the Surviving Corporation
to, honor all Company Benefit Plans in accordance with their terms as in effect
immediately prior to the Effective Time. During the one-year period following
the Effective Time (the “Continuation Period”), Parent shall provide, or shall
cause to be provided, to each employee of the Company and its
 
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Subsidiaries who continues to be employed by Parent or its Subsidiaries
(including the Surviving Corporation and its Subsidiaries) immediately following
the Effective Time (each, a “Continuing Employee”), with (i) a base salary or
hourly rate that is at least equal to the base salary or hourly rate provided to
each such Continuing Employee immediately prior to the Closing Date,
(ii) commission, cash bonus and long-term incentive opportunities, as
applicable, that are no less favorable than the commission, cash bonus and
long-term incentive opportunities provided to each such Continuing Employee
immediately prior to the Closing Date (except that no equity-based compensation
shall be considered or taken into account for purposes of determining whether
opportunities are no less favorable), and (iii) employee benefits that are no
less favorable in the aggregate than the employee benefits provided to each such
Continuing Employee immediately prior to the Closing Date. In addition and
notwithstanding anything to the contrary in the foregoing two sentences, during
the Continuation Period (or such longer period as may be required by applicable
Law), Parent shall provide, or shall cause to be provided, to each Continuing
Employee identified on Section 7.04(a) of the Company Disclosure Letter whose
employment is terminated without Cause (as defined in Section 7.04(a) of the
Company Disclosure Letter) during such period with the severance benefits set
forth in Section 7.04(a) of the Company Disclosure Letter; provided that the
receipt of any such severance shall be conditioned upon and subject to the
execution (and non-revocation) by such employee of a customary release of claims
in favor of Parent and its Affiliates (in substantially the form used by the
Company as of the date hereof with respect to terminations of employment, a copy
of which has been made available to Parent prior to the date hereof) (a “Release
of Claims”).
(b) If any Continuing Employee becomes eligible to participate in any “employee
benefit plan,” as defined in Section 3(3) of ERISA maintained by Parent or any
of its Subsidiaries (collectively, the “Parent Plans”), then, for purposes of
determining eligibility to participate, vesting and benefit accrual, service
with the Company or any of its Subsidiaries (as well as service with any
predecessor employer of the Company or any such Subsidiary) prior to the
Effective Time shall be treated as service with Parent or any of its
Subsidiaries solely to the extent recognized by the Company and its Subsidiaries
prior to the Effective Time under the comparable Company Benefit
Plan; provided, however, that (A) such service shall not be recognized to the
extent that such recognition would result in any duplication of benefits, (B) no
recognition of service shall be required under any newly established plan for
which prior service of similarly situated employees of Parent is not taken into
account, and (C) Parent shall not be required to provide service credit for any
equity or equity-based compensation under any Parent Plan or any benefit accrual
purposes under any Parent Plan that is a defined benefit pension plan. In
addition, subject to the terms of the applicable Parent Plan and applicable Law,
Parent shall use commercially reasonable efforts to (i) waive, or caused to be
waived, all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable to
Continuing Employees under any Parent Plan that is a welfare benefit plan in
which such Continuing Employees may be eligible to participate after the
Effective Time solely to the extent such conditions and exclusions and waiting
periods were satisfied or did not apply to such employees under the
corresponding welfare plan maintained by the Company prior to the Effective
Time, and (ii) provide each Continuing Employee with credit for any co-payments
and deductibles paid prior to the Closing Date during the plan year in which the
Effective Time occurs in satisfying any applicable deductible or out-of-pocket
requirements under any Parent Plans that are welfare plans in which such
Continuing Employee is eligible to participate after the Effective Time solely
to the extent credited under the corresponding welfare plan maintained by the
Company prior to the Effective Time.
 
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(c) The Company shall pay, or Parent shall cause the Surviving Corporation or an
Affiliate thereof to pay, as applicable, annual bonuses in respect of the
2016 fiscal year as follows:
(i) Prior to the Effective Time, the Company shall establish a bonus amount
pursuant to the Company’s annual bonus or revenue-sharing plans or arrangements
for each participant therein (each, a “Bonus Plan Participant”) for the portion
of the 2016 fiscal year that ends on the earlier of December 31, 2016 and the
Closing Date (the “2016 Bonus Amount”) in an amount no greater than the product
of (i) the annual cash bonus received by such Bonus Plan Participant in respect
of the 2015 fiscal year multiplied by (ii) either (A) one (1) (if the Closing
Date occurs on or after December 31, 2016) or (B) a fraction, the numerator of
which is the number of days during the 2016 fiscal year through and including
the Closing Date and the denominator of which is 366 (if the Closing Date occurs
prior to December 31, 2016).
(ii) If the Effective Time occurs prior to the time the Company would pay annual
bonuses in respect of the 2016 fiscal year in the ordinary course of business,
then no later than March 15, 2017, Parent shall cause the Surviving Corporation
or an Affiliate thereof to pay to each Bonus Plan Participant who is
continuously employed through the payment date, an annual bonus in respect of
the entire 2016 fiscal year, which amount shall be no less than such person’s
2016 Bonus Amount; provided, however, that if, prior to the payment of annual
bonuses in respect of the 2016 fiscal year, a Bonus Plan Participant’s
employment is terminated without Cause or such Bonus Plan Participant’s
employment terminates in a manner entitling such Bonus Plan Participant to
severance or termination payments under an employment or other agreement with
the Company or any of its Affiliates, then Parent shall cause the Surviving
Corporation or an Affiliate thereof to pay to such Bonus Plan Participant a
prorated bonus in respect of the 2016 fiscal year in an amount equal to the
product of (A) the annual cash bonus earned by such Bonus Plan Participant in
respect of the 2015 fiscal year multiplied by (B) a fraction, the numerator of
which is the number of days the Participant was employed by the Company, the
Surviving Corporation or an Affiliate thereof during the 2016 fiscal year and
the denominator of which is 366. Any such prorated bonus shall be paid to the
Bonus Plan Participant within sixty (60) days following such Bonus Plan
Participant’s termination of employment, subject to such Bonus Plan
Participant’s execution of a Release of Claims that becomes effective and
non-revocable under applicable law within the sixty (60)-day period following
such termination of employment.
(iii) If the Effective Time has not occurred by the time the Company would pay
annual bonuses in respect of the 2016 fiscal year in the ordinary course of
business, then the Company shall pay each Bonus Plan Participant an annual bonus
in respect of the 2016 fiscal year in an amount equal to his or her 2016 Bonus
Amount in the ordinary course of business.
 
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(d) Nothing contained in this Section 7.04, expressed or implied, shall (i) be
treated as the establishment, amendment or modification of any Company Benefit
Plan or Parent Plan or constitute a limitation on rights to amend, modify, merge
or terminate after the Effective Time any Company Benefit Plan or Parent Plan,
(ii) give any current or former employee, officer, director or other independent
contractor of the Company and its Subsidiaries (including any beneficiary or
dependent thereof) any third-party beneficiary or other rights, or
(iii) obligate Parent or any of its Affiliates to (A) maintain any particular
Company Benefit Plan or Parent Plan or (B) retain the employment or services of
any current or former employee, officer, director or other independent
contractor.
Section 7.05 Section 15(f) of the Investment Company Act. From and after the
Effective Time, Parent and Merger Sub shall use reasonable best efforts to
assure that (a) for a period of not less than three (3) years following the
Effective Time, at least seventy five percent (75%) of the members of the board
of trustees of each Public Fund are not “interested persons” (as such term is
defined in Section 2(a)(19) of the Investment Company Act) of the investment
adviser of the Public Fund, (b) for a period of not less than two (2) years
following the Effective Time, there is not imposed on any Public Fund an “unfair
burden” (within the meaning of Section 15(f) of the Investment Company Act) as a
result of the transaction contemplated by the Merger Agreement, including the
Merger, or any express or implied terms, conditions or understandings applicable
thereto; provided, however, that if Parent or any of its Affiliates obtains an
order from the SEC as contemplated by Section 15(f)(3) of the Investment Company
Act, then this covenant shall be deemed to be modified to the extent necessary
to permit Parent, Merger Sub and their Affiliates to act in accordance with the
representations and conditions contained in the application upon which such
order was granted. Notwithstanding anything to the contrary contained herein,
the covenants of the Parties contained in this Section 7.05 are intended only
for the benefit of Persons who are “affiliated persons” (as such term is defined
in Section 2(a)(3) of the Investment Company Act) of the Company or its
Subsidiaries as of immediately prior to the Effective Time and for no other
Person.
ARTICLE 8
COVENANTS OF PARENT AND THE COMPANY
Section 8.01 Efforts. (a) Subject to Section 8.01(b) and Section 8.01(c) and the
terms and conditions set forth in this Agreement, each of the Company and Parent
shall use its reasonable best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, and assist and cooperate with the other in
doing, all things necessary, proper or advisable under applicable Law or Order
to consummate and make effective the Merger and the other transactions
contemplated by this Agreement as promptly as practicable (and in any event no
later than the End Date). Without limiting the generality of the foregoing,
subject to Section 8.01(b) and Section 8.01(c) and the terms and conditions set
forth in this Agreement, each of Parent, Merger Sub and the Company shall
cooperate with the other and use, and shall cause each of its respective
Subsidiaries to use, their respective reasonable best efforts to (i) prepare and
file as promptly as practicable, and in any event within the time prescribed by
any applicable Law or Competition Law, all documentation to effect all necessary
notices, reports and other filings and to obtain as promptly as practicable all
consents, registrations, approvals, permits and authorizations necessary or
advisable to be obtained from, or renewed with, any Governmental
 
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Authority (including the Consents and Approvals), in each case in order to
consummate as promptly as practicable the transactions contemplated by this
Agreement, (ii) furnish as promptly as practicable all information to any
Governmental Authority as may be required by such Governmental Authority in
connection with the foregoing, (iii) obtain all consents, registrations,
approvals, permits and authorizations necessary, proper or advisable to be
obtained from, or renewed with, any other Person (including the Consents and
Approvals), in each case in order to consummate as promptly as practicable the
transactions contemplated by this Agreement; provided, that under no
circumstances shall the Company or any of its Subsidiaries be required to make
any payment to any Person to secure such Person’s consent and (iv) obtain all
consents, approvals and authorizations that are necessary or advisable as a
result of the transactions contemplated hereby under (A) any Contract to which
the Persons listed on Section 8.01(a)(iv)(A) of the Company Disclosure Letter is
a party and (B) if requested by Parent, any Contract to which the Persons listed
on Section 8.01(a)(iv)(B) of the Company Disclosure Letter is a
party; provided, further, that, the failure to obtain any of the consents,
registrations, approvals, permits or authorizations referenced in clauses
(iii) or (iv) above (other than any consents, approvals or events required
pursuant to Section 9.01(c) and Section 9.01(d)) shall not constitute the
failure to satisfy a condition to the obligation of either Party to consummate
the transactions contemplated by this Agreement. Notwithstanding the foregoing
and without limiting the generality thereof: (x) the Parties shall (A) prepare
and file a notification with respect to the transactions contemplated by this
Agreement pursuant to the HSR Act with the Federal Trade Commission and the
Antitrust Division of the Department of Justice within ten (10) Business Days
from the date hereof, (B) seek early termination of any waiting periods under
the HSR Act and (C) to the extent required by applicable Law or pursuant to an
Advisory Contract, inform each Advisory Client (and other required Persons) in
writing of the transactions contemplated by this Agreement by sending such
Advisory Client a notice thereof, in form and substance reasonably satisfactory
to Parent, and use reasonable best efforts to seek such Advisory Client’s (and
other required Persons’) consent to the continuation of its applicable Advisory
Contract (except for any approvals of the board of trustees or shareholders of
the Public Funds, which are addressed in Section 6.04); provided, however, that,
to the extent consistent with applicable Law or SEC pronouncements or unless
affirmative consent is required by the applicable Advisory Contract, such
consent may take the form of a so-called implied or negative consent; (x) the
Parties shall, and shall cause their respective Subsidiaries and Representatives
to, and the Company shall use reasonable best efforts to cause its applicable
Joint Ventures to, prepare and, as promptly as practicable following the date of
this Agreement, submit or cause to be submitted to the FCA each required FSMA
Section 178 Notification with respect to the transactions contemplated by this
Agreement (provided, that the Company shall not be required to cause any such
Joint Venture to take any action to the extent the Company does not have the
right to cause such Joint Venture to take such action pursuant to the terms of
the applicable Joint Venture Agreement); (y) the Parties shall, and shall cause
their respective Subsidiaries and Representatives to, and the Company shall use
reasonable best efforts to cause its applicable Joint Ventures to, prepare and,
as promptly as practicable following the date of this Agreement, submit or cause
to be submitted any and all filings with the JFSC to obtain the JFSC Approval
with respect to the transactions contemplated by this Agreement (provided, that
the Company shall not be required to cause any such Joint Venture to take any
action to the extent the Company does not have the right to cause such Joint
Venture to take such action pursuant to the terms of the applicable Joint
Venture Agreement); and (z) the Company shall
 
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prepare and, as promptly as practicable following the date of this Agreement,
submit or cause to be submitted to FINRA for each Subsidiary of the Company that
is a Broker-Dealer, a substantially complete Continuing Membership Application
(“CMA”) for approval of a change in control or ownership pursuant to FINRA
(NASD) Rule 1017(a)(4) satisfying the standards of FINRA (NASD) Rule 1014. The
Parties acknowledge and agree that nothing contained in this Agreement shall
obligate the Company prior to the Closing to make or cause to be made for any
Subsidiary of the Company that is a Broker-Dealer an application to FINRA for
approval of a material change in business pursuant to FINRA (NASD) Rule
1017(a)(5), except to the extent required by FINRA.
(b) Each Party shall furnish to the other such necessary information and
assistance as the other Party may reasonably request in connection with the
preparation of any necessary filings or submissions for any Governmental
Authority. Except as required by law or regulation and subject to Section
8.01(c), each Party or its attorneys shall provide the other Party or its
attorneys the opportunity to review and make copies of all correspondence,
filings, communications or memoranda setting forth the substance thereof between
such Party or its representatives, on the one hand, and any Governmental
Authority, on the other hand, with respect to this Agreement or the transactions
contemplated in this Agreement (omitting any information that constitutes a
competitively sensitive or transaction related business secret of either Party).
Parent will pay all filing fees in connection with any filings in connection
with approvals of Governmental Entities to the transactions contemplated
hereby; provided, that Parent shall pay only 50% of the costs and expenses
associated with any Continuing Membership Application pursuant to FINRA (NASD)
Rule 1017 in connection with the consummation of the transactions contemplated
hereby.
(c) Notwithstanding anything to the contrary set forth herein and subject to the
terms and conditions set forth in this Agreement, without in any way limiting
the generality of the undertakings under this Section 8.01, each of the Company,
Parent and Merger Sub shall each use their respective reasonable best efforts
to: (i) promptly provide to each and every Governmental Authority such
information and documents as may be requested by such Governmental Authority in
connection with obtaining the consents and approvals set forth in this Section
8.01 or that are necessary, proper or advisable to permit consummation of the
transactions contemplated by this Agreement; (ii) promptly take any and all
actions necessary to avoid or eliminate each and every impediment under any
applicable Law so as to enable the consummation of the transactions contemplated
hereby, including the Merger, to occur as soon as reasonably possible (and in
any event no later than the End Date); and (iii) promptly take any and all
actions necessary to avoid or overcome the entry of any action, including any
administrative or judicial action, Order, decision or determination (in each
case, whether temporary, preliminary or permanent) that would materially delay,
restrain, restrict, prevent, enjoin or otherwise prohibit the consummation of
the transactions contemplated hereby on or prior to the End Date; provided,
that, notwithstanding anything to the contrary contained herein, the Company and
its Subsidiaries shall not be obligated to make any changes to their respective
business or operations pursuant to clauses (ii) and (iii) of this Section
8.01(c) unless such actions are conditional or contingent on the Closing
occurring in accordance with the terms of this Agreement.
 
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(d) In the event that any Governmental Authority requires any acts, omissions or
restrictions in connection with obtaining the consents and approvals
contemplated by Section 8.01, no adjustment shall be made to the aggregate
Merger Consideration.
(e) Subject to applicable Law, Competition Law, applicable Orders and all
privileges, including attorney-client privileges, each Party shall keep the
other apprised of the status of matters relating to the completion of the
transactions contemplated by this Agreement, including: (i) prior to submitting
any document or information (whether formally or informally, in draft form or
final form) to any Governmental Authority with respect to the Competition Law of
such Governmental Authority applicable to this Agreement, the FINRA Approval,
any FCA Approval or the JFSC Approval sending reasonably in advance to the other
Party a copy of such document or information (omitting any information that
constitutes a competitively sensitive or transaction related business secret of
the other Party); (ii) promptly sending to the other Party a copy of all
documents, information, correspondence or other communications relating to this
Agreement sent to, or received by the Party (or its Representatives) from, any
third-party or Governmental Authority relating to the Competition Law of such
Governmental Authority, the FINRA Approval, any FCA Approval, the JFSC Approval
or the transactions contemplated by this Agreement; (iii) promptly informing the
other Party of any communications, conversations or telephonic calls received
from any Governmental Authority with respect to the Competition Law of such
Governmental Authority applicable to this Agreement, the FINRA Approval, any FCA
Approval or the JFSC Approval, and not initiating any of the foregoing without
giving reasonable prior notice to the other Party and reasonable opportunity to
participate in any such communication, conversation or telephonic call;
(iv) sending reasonably in advance to the other Party any undertaking or
agreement (whether oral or written) that it or any of its Subsidiaries proposes
to make or enter into with any Governmental Authority with respect to the
transactions contemplated by this Agreement; (v) allowing the other Party and
its Representatives to attend and participate at any meeting with, or hearing
organized by, any Governmental Authority relating to the transactions
contemplated by this Agreement, to the extent permitted by such Governmental
Authority and to the extent reasonably practicable; and (vi) in connection with
the FINRA Approval, any FCA Approval and the JFSC Approval, provide the other
Party with a reasonable opportunity to review and comment on each CMA or other
applicable filing and any response to any additional information in connection
with any CMA or other applicable filing, in each case prior to the submission
thereof (including the proposed final version thereof).
Section 8.02 Proxy Statement. (a) As promptly as reasonably practicable after
the execution of this Agreement, the Company shall prepare (with Parent’s
cooperation) and file with the SEC the Proxy Statement to be sent to the
stockholders of the Company relating to the Company Stockholder Meeting. The
Company shall use its reasonable best efforts to ensure that the Proxy Statement
complies as to form with the rules and regulations promulgated by the SEC under
the 1934 Act. Subject to Section 8.03, the Proxy Statement shall include (i) a
statement to the effect that the Company Board has determined that this
Agreement and the Merger are advisable and (ii) the recommendation of the
Company Board in favor of adoption of this Agreement by the Company’s
stockholders. As promptly as reasonably practicable after the Proxy Statement
shall have been cleared by the SEC, the Company shall cause the Proxy Statement
to be mailed to its stockholders entitled to vote at the Company Stockholder
Meeting.
 
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(b) Each of the Company and Parent shall furnish all information concerning such
Person and its Subsidiaries to the other, and provide such other assistance, as
may be reasonably requested by such other Party to be included therein and shall
otherwise reasonably assist and cooperate with the other in the preparation,
filing and distribution of the Proxy Statement and the resolution of any
comments received from the SEC. The Company shall provide Parent, Merger Sub and
their counsel reasonable opportunity to review and comment on the Proxy
Statement and any amendment or supplement thereto, in each case prior to the
filing thereof with the SEC. If at any time prior to the receipt of the Company
Stockholder Approval, any information relating to the Company or Parent, or any
of their respective Subsidiaries, directors or officers, should be discovered by
the Company or Parent which is required to be set forth in an amendment or
supplement to the Proxy Statement, so that such document would not include any
misstatement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the Party which
discovers such information shall promptly notify the other Party and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by applicable Law,
disseminated to the stockholders of the Company.
(c) The Company shall notify Parent promptly of the receipt of any comments,
whether written or oral, from the SEC or the staff of the SEC and of any request
by the SEC or the staff of the SEC for amendments or supplements to the Proxy
Statement or for additional information and shall provide Parent with (A) copies
of all correspondence between the Company or any of its Affiliates, on the one
hand, and the SEC or the staff of the SEC, on the other hand, with respect to
the Proxy Statement and (B) a reasonable opportunity to participate in the
response to those comments and requests. The Company agrees to consult with
Parent prior to responding to SEC comments with respect to the Proxy Statement.
The Company shall use its reasonable best efforts to resolve, and Parent agrees
to consult and cooperate with the Company in resolving, all SEC comments with
respect to the Proxy Statement as promptly as reasonably practicable after
receipt thereof and to cause the Proxy Statement in definitive form to be
cleared by the SEC and mailed to the Company Shareholders as promptly as
reasonably practicable following filing with the SEC.
Section 8.03 No Solicitation. (a) The Company and its controlled Affiliates
shall, and the Company shall instruct its Representatives to, immediately cease
any discussions or negotiations with any Person that may be ongoing with respect
to a Company Acquisition Proposal. From and after the date of this Agreement
until the earlier to occur of the Effective Time or the termination of this
Agreement in accordance with Article 10, neither the Company nor any of its
Subsidiaries nor any of their respective officers or directors shall, and the
Company shall instruct its and its Subsidiaries’ Affiliates and other
Representatives not to, directly or indirectly, (i) solicit, initiate or
knowingly encourage (including by way of furnishing any non-public information),
or knowingly take any other action designed to facilitate, any inquiry or the
making or submission of any inquiry, proposal, indication of interest or offer
which constitutes, or would reasonably be expected to lead to, a Company
Acquisition Proposal, (ii) subject to Section 8.03(b), approve or recommend, or
propose to approve or recommend, a Company Acquisition Proposal, (iii) subject
to Section 8.03(b), approve or recommend, or propose to approve or recommend, or
execute or enter into any letter of intent, memorandum of understanding, merger
agreement or other agreement, arrangement or understanding relating to a
 
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Company Acquisition Proposal (other than an Acceptable Confidentiality
Agreement) or a Superior Proposal (each an “Alternative Acquisition Agreement”),
(iv) enter into, continue or otherwise participate in any discussions or
negotiations regarding any Company Acquisition Proposal, or (v) publicly
announce an intention to do any of the foregoing; provided, however, that if,
prior to obtaining the Company Stockholder Approval, following the receipt of a
bona fide written Company Acquisition Proposal that the Company Board determines
in good faith, after consultation with the Company’s outside financial advisors
and outside legal counsel, is or could reasonably be expected to lead to a
Superior Proposal and that was unsolicited and made after the date of this
Agreement in circumstances not otherwise involving a breach of this Agreement,
the Company may, in response to such Company Acquisition Proposal and subject to
compliance with Section 8.03(b), furnish information with respect to the Company
to the Person making such Company Acquisition Proposal and engage in discussions
or negotiations with such Person regarding such Company Acquisition
Proposal; provided, that (A) prior to furnishing, or causing to be furnished,
any such nonpublic information relating to the Company to such Person, the
Company enters into a confidentiality agreement with the Person making such
Company Acquisition Proposal (an “Acceptable Confidentiality Agreement”) that
(x) does not contain any provision that would prevent the Company from complying
with its obligation to provide any disclosure to Parent required pursuant to
this Section 8.03 and (y) contains confidentiality provisions that in the
aggregate are no less restrictive on such Person than those contained in the
Confidentiality Agreement as in effect immediately prior to the execution of
this Agreement (it being understood that an Acceptable Confidentiality Agreement
need not contain any standstill or non-solicitation provision), and (B) promptly
(but in any event within twenty-four (24) hours) following furnishing any such
nonpublic information to such Person, the Company furnishes such nonpublic
information to Parent (to the extent such nonpublic information has not been
previously so furnished to Parent or its Representatives).
(b) Except as permitted pursuant to this Section 8.03(b) or Section 8.03(c), the
Company Board shall not (i) effect a Company Adverse Recommendation Change or
(ii) cause or permit the Company or any of its Subsidiaries to enter into any
Alternative Acquisition Agreement. Notwithstanding anything to the contrary in
this Agreement, if (A) a written Company Acquisition Proposal that was not
solicited in violation of this Agreement is made to the Company by a Third Party
and such Company Acquisition Proposal is not withdrawn and (B) the Company Board
concludes in good faith, after consultation with the Company’s outside financial
advisors and outside legal counsel, that such Company Acquisition Proposal
constitutes a Superior Proposal, then prior to receipt of the Company
Stockholder Approval, and subject to compliance with this Section 8.03(b), the
Company Board may (x) effect a Company Adverse Recommendation Change or
(y) cause the Company to terminate this Agreement in accordance with the
procedures set forth in Section 10.01(d)(ii) if the Company Board concludes in
good faith, after consultation with the Company’s outside legal counsel, that
the failure to make a Company Adverse Recommendation Change or cause the Company
to terminate this Agreement in accordance with the procedures set forth
in Section 10.1(d)(ii) would be reasonably likely to be inconsistent with its
fiduciary duties under applicable Laws; provided, however, that, prior to making
any Company Adverse Recommendation Change or terminating this Agreement:
(i) the Company Board shall provide Parent at least four (4) Business Days’
prior written notice of its intention to take such action, which notice shall
include the information with respect to the Superior Proposal that is specified
in this
 
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Section 8.03(b) and the material terms and conditions thereof (including the
identity of the Third Party making the Superior Proposal, as well as a complete
copy of the Superior Proposal that is the basis of such action);
(ii) during the four (4) Business Days following such written notice (or such
shorter period as is specified below), the Company Board and its Representatives
shall negotiate in good faith with Parent (to the extent Parent desires to
negotiate) regarding any revisions to the terms of the transactions contemplated
hereby proposed by Parent in response to such Superior Proposal; and
(iii) at the end of such four (4) Business Days, the Company Board concludes in
good faith, after consultation with the Company’s outside legal counsel and
financial advisors (and taking into account any adjustment or modification of
the terms of this Agreement proposed in writing by Parent), that the Company
Acquisition Proposal continues to be a Superior Proposal and that the failure to
make such Company Adverse Recommendation Change or cause the Company to
terminate this Agreement in accordance with the procedures set forth
inSection 10.1(d)(ii) would still be reasonably likely to be inconsistent with
its fiduciary duties under applicable Laws.
Any material amendment or modification to any Superior Proposal (including any
change to the financial terms thereof) will be deemed to be a new Company
Acquisition Proposal for purposes of this Section 8.03, and the Company shall
promptly (and in any event within 24 hours of occurrence) notify Parent of any
such new Company Acquisition Proposal and the Parties shall comply with the
provisions of this Section 8.03(b) with respect thereto, but with references
therein to “4 Business Days” deemed to be references to “3 Business
Days”; provided, that in the event there is a Company Adverse Recommendation
Change made in compliance with this Section 8.03(b) with respect to a Superior
Proposal, the Company shall only enter into an Alternative Acquisition Agreement
with respect thereto by terminating this Agreement in accordance with Section
10.01(d)(ii).
(c) Notwithstanding anything to the contrary in this Agreement, following the
occurrence of an Intervening Event, if the Company Board concludes in good
faith, after consultation with the Company’s outside legal counsel, that the
failure to make a Company Adverse Recommendation Change in response to such
Intervening Event would reasonably be expected to be inconsistent with the
Company Board’s fiduciary duties under applicable Laws, then prior to receipt of
the Company Stockholder Approval, and subject to compliance with this Section
8.03(c), the Company Board may effect a Company Adverse Recommendation
Change; provided, however, that, prior to making any Company Adverse
Recommendation Change:
(i) the Company Board shall provide Parent at least four (4) Business Days’
prior written notice of its intention to take such action, which notice shall
include the reasons underlying the Board’s decision to make a Company Adverse
Recommendation Change, including a description of the Intervening Event that is
the basis of such action;
(ii) during the four (4) Business Days following such written notice, the
Company Board and its Representatives shall negotiate in good faith with Parent
(to the extent Parent desires to negotiate) regarding any revisions to the terms
of the transactions contemplated hereby proposed by Parent in response to such
Intervening Event; and
 
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(iii) at the end of such four (4) Business Days, the Company Board concludes in
good faith, after consultation with the Company’s outside legal counsel, that
the Intervening Event continues to warrant an Adverse Recommendation Change and
that the failure to make a Company Adverse Recommendation Change would still
reasonably be expected to be inconsistent with its fiduciary duties under
applicable Laws (after taking into account any revisions to this Agreement made
or irrevocably committed to in writing by Parent during such four (4) Business
Days if such revisions were to be given effect).
(d) In addition to the obligations of the Company and Parent set forth
in Section 8.03(a), Section 8.03(b) and Section 8.03(c), the Company shall
(i) promptly (and in any event within 48 hours) notify Parent orally and in
writing of any proposal, indication of interest or offer which constitutes a
Company Acquisition Proposal that are received by, or any discussions or
negotiations are sought to be initiated regarding a Company Acquisition Proposal
with, the Company (or any of its Representatives), indicating, in connection
with such notice, the identity of the Person or group of Persons making the
proposal, indication of interest or offer and the material terms and conditions
of any such proposal, indication of interest or offer (including, if applicable,
copies of any written proposals or offers, including proposed agreements),
(ii) keep Parent reasonably informed, on a reasonably prompt basis (and in any
event within 48 hours) of the status of any discussions or negotiations with
respect to any such proposals or offers and the details of any material changes
to the status or material terms of any such proposal, indication of interest or
offer (including any material amendments thereto or any change to the scope or
material terms or conditions thereof, and including copies of definitive
agreements) and (iii) indicate to Parent promptly (and in any event within 48
hours) whether the Company has furnished nonpublic information to such Person or
group of Persons.
(e) Nothing contained in this Section 8.03 or Section 8.04 shall prohibit the
Company Board from (i) disclosing to their stockholders a position contemplated
by Rules 14d-9 and 14e-2(a) promulgated under the 1934 Act or from making a
“stop, look and listen” statement pending disclosure of its position thereunder
or (ii) making any disclosure to its stockholders if the Company Board
determines in good faith, after consultation with the Company’s outside counsel,
that the failure to make such disclosure would reasonably be likely to be
inconsistent with the directors’ exercise of theirs fiduciary obligations to the
Company’s stockholders under applicable Laws; provided, however, that in no
event shall the Company Board effect a Company Adverse Recommendation Change
except in accordance with the provisions of this Section 8.03.
(f) Without limiting the foregoing, it is agreed that any violation of the
restrictions set forth in this Section 8.03 by any Representative or controlled
Affiliate of the Company acting on behalf of the Company or its Affiliates shall
be deemed to be a breach of this Section 8.03 by the Company.
 
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Section 8.04 Public Announcements. The initial press release with respect to the
execution of this Agreement and the transactions contemplated hereby shall be in
a form reasonably acceptable to Parent and the Company. Thereafter, Parent and
the Company (unless the Company Board has made a Company Adverse Recommendation
Change) shall consult with the other Party before (a) participating in any media
interviews, (b) engaging in meetings or calls with analysts, institutional
investors or other similar Persons and (c) providing any statements (including
press releases) which are public or are reasonably likely to become public, in
any such case to the extent relating to the transactions contemplated hereby.
None of the limitations set forth in this Section 8.04 shall apply to any
disclosure of any information concerning this Agreement or the transactions
contemplated by this Agreement (i) which the Company deems appropriate in its
reasonable judgment, in light of its status as a publicly owned company,
including to securities analysts and institutional investors and in press
interviews; and (ii) in connection with any dispute between the Parties
regarding this Agreement or the transactions contemplated by this Agreement.
Section 8.05 Notices of Certain Events. Each of the Company and Parent shall
promptly notify and provide copies to the other of (i) any written notice from
any Person alleging that the approval or consent of such Person is or may be
required in connection with the Merger or the other transactions contemplated by
this Agreement, (ii) any written notice or other communication from any
Governmental Authority or securities exchange in connection with the Merger or
the other transactions contemplated by this Agreement, and (iii) the occurrence
of any event which would or would be reasonably likely to (A) prevent or
materially delay the consummation of the Merger or the other transactions
contemplated hereby or (B) result in the failure of any condition to the Merger
set forth in Article 9 to be satisfied; provided, that the delivery of any
notice pursuant to this Section 8.05 shall not (i) affect or be deemed to modify
any representation, warranty, covenant, right, remedy, or condition to any
obligation of any Party hereunder or (ii) update any section of the Company
Disclosure Letter or the Parent Disclosure Letter, and provided, further, that
the failure to comply with this Section 8.05shall not constitute a breach or
noncompliance of a covenant by such Party for determining the satisfaction of
the conditions set forth in Section 9.02 or Section 9.03.
Section 8.06 Access to Information. (a) Upon reasonable notice, and subject to
applicable Law, the Company shall (and shall cause its Subsidiaries to) afford
to Parent, its Subsidiaries and its and their respective officers, agents,
employees, financing sources, consultants, professional advisers (including
attorneys, accountants and financial advisors) (“Representatives”) reasonable
access during normal business hours, under direct supervision of a designated
employee of the Company, and upon reasonable prior notice to the Company during
the period prior to the Effective Time, to all its and its Subsidiaries’
properties, books, contracts, commitments, records, officers and employees and,
during such period as Parent may from time to time reasonably request, and
during such period the Company shall (and shall cause its Subsidiaries to)
furnish promptly to Parent all other information concerning it, its Subsidiaries
and each of their respective businesses, properties and personnel as Parent may
reasonably request; provided, however, that the Company may restrict the
foregoing access and the disclosure of information to the extent that, in the
reasonable good faith judgment of the Company, (i) any Law applicable to the
Company or its Subsidiaries requires the Company or its Subsidiaries to restrict
or prohibit access to any such properties or information, (ii) the information
is subject to confidentiality obligations to a Third Party, (iii) such
disclosure would result in disclosure of any trade secrets of Third Parties,
(iv) disclosure of any such information or document would reasonably be expected
to result in the loss of attorney-client privilege
 

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(provided, that, with respect to the matters set forth in subclauses (i) to
(iv) herein, the Company and/or its counsel shall use their reasonable best
efforts to enter into such joint defense agreements or other arrangements, as
appropriate, so as to allow for such disclosure in a manner that does not
violate any Law or obligations to a Third Party or result in the loss of
attorney client privilege (as applicable)) or (v) such access would unreasonably
disrupt the operations of the Company or any of its Subsidiaries.
(b) With respect to the information disclosed pursuant to Section 8.06(a), each
of Parent and the Company shall comply with, and shall cause such party’s
Representatives to comply with, all of its obligations under the Confidentiality
Agreement, which agreement shall remain in full force and effect in accordance
with its terms.
Section 8.07 Section 16 Matters. Prior to the Effective Time, the Company shall
take all such steps as may be required to cause any dispositions of Company
Stock (including derivative securities with respect to Company Stock) resulting
from the transactions contemplated by this Agreement by each individual who is
subject to the reporting requirements of Section 16(a) of the 1934 Act with
respect to the Company to be exempt under Rule 16b-3 promulgated under the 1934
Act, to the extent permitted by applicable Law.
Section 8.08 Stock Exchange De-listing; 1934 Act Deregistration. Prior to the
Effective Time, the Company shall cooperate with Parent and shall take, or cause
to be taken, all actions, and do or cause to be done all things, necessary,
proper or advisable on its part under applicable Laws and rules and policies of
the NASDAQ Global Select Market to enable the de-listing by the Surviving
Corporation of the Company Stock from the NASDAQ Global Select Market and the
deregistration of the Company Stock and other securities of the Company under
the 1934 Act as promptly as practicable after the Effective Time.
Section 8.09 Stockholder Litigation. Each Party hereto shall promptly notify the
other Parties hereto in writing of any litigation related to this Agreement, the
Merger or the other transactions contemplated by this Agreement that is brought,
or, to the knowledge of such Party, threatened in writing, against such Party
and/or its directors (any such litigation, a “Transaction Litigation”) and shall
keep such other Party reasonably informed on a current basis with respect to the
status thereof. Subject to the fiduciary duties of each Party’s board of
directors and except in any litigation or proceeding where the Parties may be
adverse to each other, each Party shall give the other Party the opportunity to
participate, subject to a customary joint defense agreement, in (but not
control) the defense or settlement of any Transaction Litigation, and no Party
shall settle, agree to any undertakings or approve or otherwise agree to any
waiver that may be sought in connection with such Transaction Litigation,
without the prior written consent of the other Party (which shall not be
unreasonably withheld, delayed or conditioned).
Section 8.10 Managed Entities.
(a) With respect to each Managed REIT and each of the entities set forth
on Section 8.10 of the Company Disclosure Letter (collectively, the “Managed
Entities”), the Company shall, and shall cause its controlled Affiliates to:
(i) obtain resignations from each of the individuals set forth on Section
8.10(a) of the Parent Disclosure Letter as a director, trustee and/or officer of
each of the Managed Entities, which shall become effective immediately prior
 
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to the Effective Time (collectively, the “Resignations”) and (ii) use reasonable
best efforts to cause the appointment of those individuals set forth on Section
8.10(b) of the Parent Disclosure Letter selected by Parent to fill the vacancies
thereby created, to be effective immediately prior to the Effective Time.
(b) The Company shall notify Parent in writing promptly if, to the knowledge of
the Company, the Company or any of its Affiliates receives a bona fide proposal
or offer made by any Person relating to a merger, consolidation, asset
acquisition, share exchange, business combination or similar transaction or the
acquisition of fifty percent (50%) or more of the equity interests in any of the
Managed Entities, whether in one transaction or a series of related
transactions, and to keep Parent reasonably informed of the status and material
terms of any such bona fide proposals or offers on a current basis.
(c) The Company shall use reasonable best efforts to permit the attendance of a
representative of Parent, solely in an observer status, at each meeting of the
investment committee for any Advisory Client and provide such representative
with the same information that is provided to the members of such investment
committee in connection with any such meeting, subject to clauses (i) through
(v) of the proviso set forth in Section 8.06(a).
Section 8.11 Closing Payment by Parent. At the Closing, Parent shall, or shall
cause one of its Subsidiaries to, pay to the Company, by wire transfer of
immediately available funds to the account designated by the Company at least
three (3) Business Days prior to the Closing Date, the amount set forth
on Section 8.11 of the Company Disclosure Letter, which amount shall be used to
make the payments required or permitted to be made by the Company at the Closing
in connection with the consummation of the transactions contemplated by this
Agreement, as agreed by the Parties (it being understood that if such payment is
made to the Company prior to the Effective Time and the Closing does not occur
for any reason, then the entire amount of such payment shall be promptly
returned to Parent).
ARTICLE 9
CONDITIONS TO THE MERGER
Section 9.01 Conditions to Obligations of Each Party. The obligations of Parent,
Merger Sub and the Company to consummate the Merger are subject to the
satisfaction, at or prior to the Closing, of the following conditions (which may
be waived, in whole or in part, to the extent permitted by Law, by the mutual
consent of Parent and the Company):
(a) Stockholder Approval. The Company shall have obtained the Company
Stockholder Approval.
(b) Statutes and Injunctions. No Law, Order (whether temporary, preliminary or
permanent) or other legal restraint or prohibition entered, enacted,
promulgated, enforced or issued by any Governmental Authority of competent
jurisdiction shall be in effect which prohibits, makes illegal, enjoins,
prevents or prohibits the consummation of the Merger.
(c) HSR Act. The waiting period under the HSR Act relating to the transactions
contemplated by this Agreement shall have expired or been terminated.
 
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(d) FINRA Approval. The FINRA Approval shall have been obtained and be in full
force and effect. Notwithstanding the foregoing, this condition will, subject to
the following proviso, be deemed satisfied and the Closing may occur prior to
obtaining the FINRA Approval;provided, that (i) the Closing does not occur prior
to the 31st day following the date on which FINRA has deemed the CMA to be
substantially complete, as indicated in a written notice (which may be by
electronic mail) delivered by FINRA to the Company; and (ii) this condition will
not be satisfied if at any time prior to the Closing FINRA has advised the
Company or Parent that it has imposed or will impose substantial operating
restrictions on any Subsidiary of Parent or the Company that is a Broker-Dealer
prior to or following the Closing.
(e) FCA Approvals. The FCA Approvals shall have been obtained and be in full
force and effect.
(f) JFSC Approval. The JFSC Approval shall have been obtained and be in full
force and effect.
Section 9.02 Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate the Merger are subject to the
satisfaction on or prior to the Closing Date of the following conditions (which
may be waived in whole or in part by Parent):
(a) (i) the representations and warranties of the Company contained in Section
4.04(b) (Change of Control Consents) and Section 4.10(b) (Absence of Certain
Changes), shall be true and correct in all respects, in each case at and as of
the date of this Agreement and as of the Closing as if made at and as of the
Closing, (ii) the representations and warranties of the Company contained
in Section 4.05(a) (Capitalization) shall be true and correct in all but de
minimis respects, in each case at and as of the date of this Agreement and as of
the Closing as if made at and as of the Closing (other than any such
representations and warranties that by their terms address matters only at and
as of another specified time, which shall be true and correct in all but de
minimis respects only at and as of such time), (iii) the representations and
warranties of the Company contained (A) in the first sentence ofSection
4.01 (Corporate Existence and Power), (B) in Section 4.02 (Corporate
Authorization), Section 4.17(e) (Employee Benefits), Section 4.21 (Finders’
Fees), Section 4.22 (Opinion of Financial Advisor), Section 4.24 (Antitakeover
Statutes), and Section 4.31(a) (Material Broker-Dealer) and (C) Section
4.32(a) (REIT Status for RCC) shall be true and correct in all material
respects, in each case at and as of the date of this Agreement and as of the
Closing as if made at and as of the Closing (other than any such representations
and warranties that by their terms address matters only at and as of another
specified time, which shall be true and correct in all material respects only at
and as of such time), and (iv) all other representations and warranties of the
Company contained in this Agreement shall be true and correct (without giving
effect to any “materiality,” Company Material Adverse Effect or “all material
respects” qualifications set forth therein), in each case at and as of the date
of this Agreement and as of the Closing as if made at and as of the Closing
(other than any such representations and warranties that by their terms address
matters only as of another specified time, which shall be true and correct only
at and as of such time), except, in the case of this clause (iv), where the
failure of such representations and warranties to be so true and correct has not
had and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect;
 
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(b) the Company shall have performed in all material respects all of its
covenants and obligations hereunder required to be performed by it at or prior
to the Closing;
(c) Parent and Merger Sub shall have received a certificate signed by an
executive officer of the Company certifying that the conditions set forth
in Section 9.02(a) and Section 9.02(b) have been satisfied;
(d) the Company shall have received, and Parent shall have been furnished with
copies of, the Resignations;
(e) No Material Advisory Contract shall have terminated (except for the
automatic termination of the Material Advisory Contract with Diversified Income
Fund that will occur under the Investment Company Act as a result of the
Closing) or, if applicable, not renewed, and each such Material Advisory
Contract shall be in full force and effect in accordance with its terms; and
(f) Diversified Income Fund shall have entered into an Acceptable Interim IAA
and such Acceptable Interim IAA shall be in full force and effect; provided,
that this condition will be deemed to be satisfied in the event that Public Fund
Shareholder Approval of a New IAA with Diversified Income Fund has been obtained
and such New IAA is in full force and effect.
Section 9.03 Conditions to the Obligations of the Company . The obligation of
the Company to consummate the Merger is subject to the satisfaction on or prior
to the Closing Date of the following conditions (which may be waived in whole or
in part by the Company):
(a)(i) the representations and warranties of Parent and Merger Sub contained in
the first two sentences of Section 5.01 (Corporate Existence and Power) and
in Section 5.02 (Corporate Authorization) and Section 5.12 (Finders’ Fees) shall
be true and correct in all material respects, in each case at and as of the date
of this Agreement and as of the Closing as if made at and as of the Closing
(other than any such representations and warranties that by their terms address
matters only at and as of another specified time, which shall be true and
correct in all material respects only at and as of such time), and (ii) all
other representations and warranties of Parent and Merger Sub contained in this
Agreement shall be true and correct (without giving effect to any “materiality,”
Parent Material Adverse Effect or “all material respects” qualifications set
forth therein), in each case at and as of the date of this Agreement and as of
the Closing as if made at and as of the Closing (other than any such
representations and warranties that by their terms address matters only as of
another specified time, which shall be true and correct in all respects only at
and as of such time), except, in the case of this clause (ii), where the failure
of such representations and warranties to be so true and correct has not had and
would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect;
(b) each of Parent and Merger Sub shall have performed in all material respects
all of its covenants and obligations hereunder required to be performed by it at
or prior to the Closing; and
 
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(c) the Company shall have received a certificate signed by an executive officer
of Parent certifying that the conditions set forth in Section
9.03(a) and Section 9.03(b) have been satisfied.
ARTICLE 10
TERMINATION
Section 10.01 Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, whether before or after
the Company Stockholder Approval has been obtained (except as otherwise stated
below):
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent:
(i) if the Merger is not consummated on or before February 22, 2017 (the “End
Date”); provided, however, that the right to terminate this Agreement under
this Section 10.01(b)(i) shall not be available to a Party if the failure of the
Merger to be consummated on or before such date was primarily due to the failure
of such Party to perform any of its obligations under this Agreement;
(ii) if any Governmental Authority of competent jurisdiction shall have issued
an Order permanently restraining, enjoining or otherwise prohibiting the Merger
and such Order shall have become final and non-appealable; provided, however,
that the right to terminate this Agreement under this Section 10.01(b)(ii) shall
not be available to a Party if such Order was primarily due to the failure of
such Party to perform any of its obligations under this Agreement;
(iii) if any Law shall have been promulgated, entered enacted or issued or be
applicable to the Merger by any Governmental Authority that prohibits, prevents,
or makes illegal the consummation of the Merger; or
(iv) if the Company Stockholder Approval shall not have been obtained upon a
vote taken thereon at the Company Stockholder Meeting duly convened therefor or
at any adjournment or postponement thereof;
(c) by Parent:
(i) if, prior to the receipt of the Company Stockholder Approval, a Company
Adverse Recommendation Change shall have occurred; or
(ii) if the Company shall have breached or failed to perform any of its
representations, warranties, covenants or agreements set forth in this
Agreement, which breach or failure to perform (i) would give rise to the failure
of a condition set forth in Section 9.02(a) orSection 9.02(b) if such conditions
were tested as of the date of such breach or failure to perform and (ii) is
incapable of being cured by the Company by the End Date, or, if capable of being
cured, is not cured within forty-five (45) days of receipt
 
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of written notice from Parent; provided, that Parent shall not have the right to
terminate this Agreement pursuant to this Section 10.01(c)(ii) if Parent is then
in breach of any of its representations, warranties, covenants or agreements
under this Agreement such that the conditions set forth in either Section
9.03(a) or Section 9.03(b) would not be satisfied;
(d) by the Company:
(i) if Parent shall have breached or failed to perform any of its
representations, warranties, covenants or agreements set forth in this
Agreement, which breach or failure to perform (i) would give rise to the failure
of a condition set forth in Section 9.03(a) or Section 9.03(b) if such
conditions were tested as of the date of such breach or failure to perform and
(ii) is incapable of being cured by Parent by the End Date, or, if capable of
being cured, is not cured within forty-five (45) days of receipt of written
notice from the Company; provided, that the Company shall not have the right to
terminate this Agreement pursuant to this Section 10.01(d)(i) if the Company is
then in breach of any of its representations, warranties, covenants or
agreements under this Agreement such that the conditions set forth in
either Section 9.02(a) or Section 9.02(b) would not be satisfied; or
(ii) prior to the Company Stockholder Approval, in order to enter into an
Alternative Acquisition Agreement with respect to a Superior Proposal in
accordance with the terms of Section 8.03; provided that (A) substantially
concurrent with the termination of this Agreement, the Company enters into an
Alternative Acquisition Agreement providing for a Superior Proposal that did not
result from a breach of this Agreement and (B) prior to or concurrently with
such termination, the Company pays to Parent in immediately available funds the
Company Termination Fee.
Section 10.02 Effect of Termination. In the event of the termination of this
Agreement by either Parent or the Company as provided in Section 10.01, written
notice thereof shall forthwith be given by the terminating Party to the other
Party specifying the provision hereof pursuant to which such termination is
made. In the event of the termination of this Agreement in compliance
with Section 10.01, this Agreement shall be terminated and this Agreement shall
forthwith become void and have no effect, without any Liability or obligation on
the part of any Party (or any stockholder, director, officer, employee, agent,
consultant or representative of such Party), other than Section 8.04,
this Section 10.02, Section 10.03, and Article 11, which provisions shall
survive such termination; provided, however, that nothing in this Section 10.02
shall relieve any Party from Liability for any fraud or willful or intentional
breach of this Agreement, in which case the aggrieved Party shall be entitled to
all rights and remedies available at law or in equity. No termination of this
Agreement shall affect the obligations of the Parties contained in the
Confidentiality Agreement.
Section 10.03 Termination Fees. (a) In the event that this Agreement is
terminated (x) by Parent pursuant to Section 10.01(c)(i) (or by the Company
pursuant to Section 10.01(b)(iv) and at the time of such termination Parent
would have been permitted to terminate this Agreement pursuant
toSection 10.01(c)(i)) or (y) by the Company pursuant to Section 10.01(d)(ii),
then the Company shall pay, by wire transfer of immediately available funds, to
Parent a fee in the amount of $6,725,000 (the “Company Termination Fee”) at or
prior to the
 
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termination of this Agreement in the case of a termination pursuant to Section
10.01(d)(ii) or as promptly as practicable (and, in any event, within two
Business Days following such termination) in the case of a termination pursuant
to Section 10.01(c)(i).
(b) In the event that this Agreement is terminated (i) by the Company or Parent
pursuant to Section 10.01(b)(iv) or (ii) by Parent pursuant to Section
10.01(c)(ii) as a result of (A) a breach of or failure to perform any covenant
or agreement contained in this Agreement or (B) a willful breach of any
representation or warranty contained in this Agreement and, in any such case,
(I) at any time after the date of this Agreement and prior to the taking of a
vote to adopt this Agreement at the Company Stockholder Meeting or at any
adjournment or postponement thereof, a Company Acquisition Proposal shall have
been publicly announced or publicly made known and (II) within nine (9) months
after such termination, the Company shall have entered into an agreement with
respect to any Company Acquisition Proposal, or any Company Acquisition Proposal
shall have been consummated, then the Company shall pay, by wire transfer of
immediately available funds, to Parent the Company Termination Fee on the
earlier to occur of the Company entering into an agreement with respect to such
Company Acquisition Proposal or the consummation of such Company Acquisition
Proposal; provided, however, that for purposes of the definition of “Company
Acquisition Proposal” in this Section 10.03(b), references to “25%” shall be
replaced by “50%.”
(c) In the event that this Agreement is terminated (x) by the Company or Parent
pursuant to Section 10.01(b)(iv) or Section 10.01(c)(ii) as a result of a breach
of or failure to perform any covenant or agreement contained in this Agreement
and, (y) prior to such termination, the Company shall have materially breached
any of its obligations under Section 8.03, which material breach, if curable by
the Company, shall not have been cured within five (5) Business Days following
the Company’s receipt of written notice of such material breach and (z) which
material breach shall have resulted in a Company Acquisition Proposal being
publicly made, then the Company shall pay, by wire transfer of immediately
available funds, to Parent the Company Termination Fee as promptly as
practicable (and, in any event, within two Business Days following such
termination).
(d) The Parties acknowledge that the agreements contained in this Section
10.03 are an integral part of the transactions contemplated by this Agreement
and that, without these agreements, the Parties would not enter into this
Agreement; accordingly, if the Company fails promptly to pay any amount due
pursuant to this Section 10.03, and, in order to obtain such payment, Parent
commences a suit that results in a judgment against the Company for any amount
due pursuant to this Section 10.03, the Company shall pay Parent its costs and
expenses (including reasonable attorneys’ fees and expenses) in connection with
such suit, together with interest on the amount due pursuant to this Section
10.03 from the date such payment was required to be made until the date of
payment at the prime lending rate as published in The Wall Street Journal in
effect on the date such payment was required to be made. All payments under
this Section 10.03 shall be made by wire transfer of immediately available funds
to an account designated in writing by Parent. In no event shall a Company
Termination Fee be payable more than once.
 
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(e) Each Party agrees that notwithstanding anything in this Agreement to the
contrary (other than with respect to claims for, or arising out of or in
connection with fraud) (A) in the event that this Agreement is terminated under
circumstances where the Company Termination Fee would be payable pursuant to
this Section 10.03, the payment of the Company Termination Fee shall be the sole
and exclusive remedy of Parent, its Subsidiaries, stockholders, Affiliates,
officers, directors, employees and Representatives against the Company or any of
its Representatives or Affiliates for, (B) in no event will Parent seek to
recover any other money damages or seek any other remedy (including any remedy
for specific performance, except solely in compliance with Section 11.12 hereof)
based on a claim in law or equity with respect to, (1) any loss suffered,
directly or indirectly, as a result of the failure of the Merger to be
consummated, (2) the termination of this Agreement, (3) any liabilities or
obligations arising under this Agreement or (4) any claims or actions arising
out of or relating to any breach, termination or failure of or under this
Agreement, and (C) upon payment of any Company Termination Fee in accordance
with this Section 10.03, no Party nor any Affiliates or Representatives of any
Party shall have any further Liability or obligation to another Party relating
to or arising out of this Agreement or the transactions contemplated hereby.
ARTICLE 11
MISCELLANEOUS
Section 11.01 No Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule,
certificate, instrument or other document delivered pursuant to this Agreement
shall survive the Effective Time. This Section 11.01 shall not limitSection
10.02, Section 10.03 or any covenant or agreement of the Parties which by its
terms contemplates performance after the Effective Time.
Section 11.02 Amendment and Modification. Subject to applicable Law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the stockholders of the Company or Parent
contemplated hereby, by written agreement of the Parties hereto at any time
prior to the Closing Date with respect to any of the terms contained
herein; provided, however, that after the Company Stockholder Approval has been
obtained there shall be no amendment or waiver that would require the further
approval of the stockholders of the Company under applicable Law without such
approval having first been obtained. A termination of this Agreement pursuant
to Section 10.01 or an amendment or waiver of this Agreement pursuant to Section
11.02 or Section 11.03 shall, in order to be effective, require, in the case of
Parent, Merger Sub and the Company, action by their respective board of
directors (or a committee thereof) or sole member, as applicable.
Section 11.03 Extension; Waiver. At any time prior to the Effective Time, the
Parties may (a) extend the time for the performance of any of the obligations or
other acts of the other Parties, (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the first proviso
of Section 11.02, waive compliance with any of the agreements or conditions
contained in this Agreement. Except as required by applicable Law, no waiver of
this Agreement shall require the approval of the stockholders of either Parent
or the Company. Any agreement on the part of a Party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such Party. The failure of any Party to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights, nor
shall any

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single or partial exercise by any Party of any of its rights under this
Agreement preclude any other or further exercise of such rights or any other
rights under this Agreement.
 
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Section 11.04 Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement shall be paid by the Party
incurring such cost or expense. All transfer, documentary, sales, use, stamp,
registration, value added and other such Taxes and fees (including any penalties
and interest) incurred by the Company or any of its Subsidiaries in connection
with the Merger (including any real property transfer tax and any similar Tax)
shall be borne and paid by the Company (or the applicable Subsidiary) when due,
and the Company (or the applicable Subsidiary) shall, at its own expense, file
all necessary Tax Returns and other documentation with respect to all such Taxes
and fees, and, if required by applicable Law, the Company (or the applicable
Subsidiary) shall, and shall cause its Affiliates to, join in the execution of
any such Tax Returns and other documentation.
Section 11.05 Disclosure Letter References. Each item disclosed in a Party’s
Disclosure Letter shall, for all purposes in this Agreement, constitute an
exception to, or as applicable, disclosure for the purposes of, the
representations and warranties (or covenants, as applicable) to which it makes
express reference and shall also be deemed to be disclosed or set forth for the
purposes of every other part in such Party’s Disclosure Letter relating to such
Party’s representations and warranties set forth in this Agreement to the extent
a cross-reference within such Disclosure Letter is expressly made to such other
part in such Disclosure Letter or the relevance of such item as an exception to,
or as applicable, disclosure for purposes of, such other section of this
Agreement is reasonably apparent on the face of such disclosure.
Section 11.06 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, by e-mail
transmission (provided, that receipt of electronic e-mail transmission is
requested and received) or sent by a nationally recognized overnight courier
service, such as Federal Express, to the Parties at the following addresses (or
at such other address for a Party as shall be specified by like notice made
pursuant to this Section 11.06):
if to Parent or Merger Sub, to:
C-III Capital Partners LLC
717 Fifth Avenue
New York, New York 10022
Attention: Jeffrey P. Cohen
Email: jcohen@islecap.com
with a copy (which shall not constitute notice) to:
Proskauer Rose LLP
Eleven Times Square
New York, New York 10036
Attention:    Daniel I. Ganitsky, Esq.
   Michael E. Ellis, Esq.
Email:         dganitsky@proksauer.com
   mellis@proskauer.com
 
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if to the Company, to:
Resource America, Inc.
One Crescent Drive, Suite 203, Navy Yard Corporate Center
Philadelphia, PA 19112
Attention: Jeffrey F. Brotman
Email:     jbrotman@resourceamerica.com
with a copy (which shall not constitute notice) to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: David K. Lam, Esq.
Email:      dklam @wlrk.com
Section 11.07 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that each Party need not sign the same counterpart. This
Agreement shall become effective when each Party hereto shall have received a
counterpart hereof signed by all of the other Parties hereto. Signatures
delivered electronically or by facsimile shall be deemed to be original
signatures.
Section 11.08 Entire Agreement; Third Party Beneficiaries. This Agreement
(including the Exhibits and Schedules hereto), the Confidentiality Agreement and
the Voting Agreements (a) constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the Parties
with respect to the subject matter hereof and thereof and (b) are not intended
to confer any rights, benefits, remedies, obligations or liabilities upon any
Person other than the Parties hereto and their respective successors and
permitted assigns; provided, that notwithstanding the foregoing clause (b),
following the Effective Time, (i) the provisions of Article 2 with respect to
the holders of Company Stock to receive the Merger Consideration shall be
enforceable by such holders, (ii) the provisions of Section 7.03 shall be
enforceable by each Person entitled to indemnification hereunder and his or her
heirs and his or her representatives and (iii) the provisions of Section
7.05 shall be enforceable by each Person who is an “affiliated person” (as such
term is defined in Section 2(a)(3) of the Investment Company Act) of the Company
or its Subsidiaries as of immediately prior to the Effective Time.
Section 11.09 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, so long as the economic and legal substance of the transactions
contemplated hereby, taken as a whole, are not affected in a manner materially
adverse to any Party hereto. Upon such a determination, the Parties shall
negotiate in good faith to modify this
 
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Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
Section 11.10 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the Parties
hereto in whole or in part (whether by operation of Law or otherwise) without
the prior written consent of the other Parties, and any such assignment without
such consent shall be null and void; provided, that Parent may designate, prior
to the Effective Time, by written notice to the Company, another wholly owned
direct or indirect Subsidiary to be a party to the Merger in lieu of Merger Sub,
in which event all references herein to Merger Sub shall be deemed references to
such other Subsidiary (except with respect to representations and warranties
made herein with respect to Merger Sub as of the date of this Agreement) and all
representations and warranties made herein with respect to Merger Sub as of the
date of this Agreement shall also be made with respect to such other Subsidiary
as of the date of such designation; provided, that such assignment shall not
relieve Parent of its obligations hereunder or otherwise enlarge, alter or
change any obligation of any other party hereto or due to Parent or such other
Subsidiary. This Agreement shall be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and permitted
assigns.
Section 11.11 Governing Law. This Agreement shall be governed and construed in
accordance with the Laws of the State of Delaware without giving effect to the
principles of conflicts of law thereof or of any other jurisdiction.
Section 11.12 Enforcement; Exclusive Jurisdiction. (a) The Parties agree that
irreparable damage would occur and that the Parties would not have any adequate
remedy at law in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches or threatened breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in the Court of
Chancery of the State of Delaware or, if under applicable Law exclusive
jurisdiction over such matter is vested in the federal courts, any federal court
located in the State of Delaware without proof of actual damages or otherwise
(and each Party hereby waives any requirement for the securing or posting of any
bond in connection with such remedy), this being in addition to any other remedy
to which they are entitled at law or in equity. In the event a claim or action
should be brought in equity to enforce any of the provisions of this Agreement,
no Party will allege, and each Party waives the defense, that there is an
adequate remedy under applicable Law or than an award of specific performance is
not an appropriate remedy for any reason at law or equity.
(b) In addition, each of the Parties hereto (i) consents to submit itself, and
hereby submits itself, to the personal jurisdiction of the Court of Chancery of
the State of Delaware and any federal court located in the State of Delaware,
or, if neither of such courts has subject matter jurisdiction, any state court
of the State of Delaware having subject matter jurisdiction, in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and agrees not to plead or claim any objection to the laying of venue in any
such court or that any judicial
 
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psroceeding in any such court has been brought in an inconvenient forum,
(iii) agrees that it will not bring any action relating to this Agreement or any
of the transactions contemplated by this Agreement in any court other than the
Court of Chancery of the State of Delaware and any federal court located in the
State of Delaware, or, if neither of such courts has subject matter
jurisdiction, any state court of the State of Delaware having subject matter
jurisdiction, and (iv) consents to service of process being made through the
notice procedures set forth in Section 11.06.
Section 11.13 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
[The remainder of this page has been intentionally left blank; the next page is
the signature page.]
 
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date set forth on the
cover page of this Agreement.
 
 
 
 
RESOURCE AMERICA, INC.
 
 
By:
 
/s/ Jonathan Z. Cohen
Name:
 
Jonathan Z. Cohen
Title:
 
Chief Executive Officer
 
C-III CAPITAL PARTNERS LLC
 
By: Island C-III Manager LLC, its manager
 
 
By:
 
/s/ Jeffrey P. Cohen
Name:
 
Jeffrey P. Cohen
Title:
 
President
 
REGENT ACQUISITION INC.
 
 
By:
 
/s/ Jeffrey P. Cohen
Name:
 
Jeffrey P. Cohen
Title:
 
President

[Signature page to Merger Agreement]