Exhibit 10.1

 

EXECUTION COPY

 

AMENDED AND RESTATED

 

STOCKHOLDERS AGREEMENT

 

BY AND AMONG

 

DEERFIELD CAPITAL CORP.,

 

DFR HOLDINGS, LLC

 

AND

 

CIFC PARENT HOLDINGS LLC

 

 

Dated as of April 13, 2011

 

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TABLE OF CONTENTS

 

 

 

Page

ARTICLE I

GENERAL

2

Section 1.1

Effective Date

2

Section 1.2

Definitions

2

Section 1.3

Construction

10

 

 

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES

10

Section 2.1

Representations and Warranties of the Company

10

Section 2.2

Representations and Warranties of the Investors

11

 

 

 

ARTICLE III

BOARD OF DIRECTORS

12

Section 3.1

Board of Directors

12

Section 3.2

Restrictions on Transfer

16

Section 3.3

Majority Voting Provision

18

Section 3.4

Controlled Company Exemption

18

Section 3.5

Covenants

19

Section 3.6

Committee Membership

21

Section 3.7

Board Observers

22

Section 3.8

Preemptive Rights

22

Section 3.9

Standstill

23

 

 

 

ARTICLE IV

NON SOLICITATION

25

Section 4.1

Non Solicitation

25

 

 

 

ARTICLE V

MISCELLANEOUS

26

Section 5.1

Termination of Agreement

26

Section 5.2

Expenses

26

Section 5.3

Notices

26

Section 5.4

Governing Law

28

Section 5.5

Consent to Jurisdiction

28

Section 5.6

Specific Performance

28

Section 5.7

Waiver of Jury Trial

28

Section 5.8

Binding Effect; Persons Benefiting; Assignment

29

Section 5.9

Counterparts

29

Section 5.10

Entire Agreement

29

 

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Section 5.11

Severability

29

Section 5.12

Amendments and Waivers

29

Section 5.13

Delays or Omissions

30

Section 5.14

Mutual Drafting; Interpretation

30

 

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AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT

 

THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, dated as of April 13, 2011
(this “Agreement”), is by and among Deerfield Capital Corp., a Maryland
corporation (the “Company”), DFR Holdings, LLC, a Delaware limited liability
company (“DFR Holdings”), and CIFC Parent Holdings LLC, a Delaware limited
liability company (“CIFC Parent,” and together with DFR Holdings, the
“Investors”).

 

WHEREAS, the Company, Bulls I Acquisition Corporation, a Delaware corporation
and wholly-owned subsidiary of the Company (“First MergerSub”), Bulls II
Acquisition LLC, a Delaware limited liability company and wholly-owned
subsidiary of the Company (“Second MergerSub” and, together with First
MergerSub, the “MergerSubs”), CIFC Parent and Commercial Industrial Finance
Corp., a Delaware corporation and wholly-owned subsidiary of CIFC Parent
(“CIFC”), are parties to the Agreement and Plan of Merger, dated as of
December 21, 2010, as amended (the “Merger Agreement”), pursuant to which on or
about the date hereof (i) First MergerSub is merging with and into CIFC (the
“First Step Merger”), with CIFC continuing as the surviving entity (the
“Intermediate Surviving Entity”), (ii) the Intermediate Surviving Entity is next
merging with and into Second MergerSub (the “Second Step Merger” and, together
with the First Step Merger, the “Merger”) and (iii) in connection with the
Merger, the Company is issuing to CIFC Parent 9,090,909 shares of Common Stock
and making certain cash payments to CIFC Parent, all in accordance with the
terms of the Merger Agreement;

 

WHEREAS, as of the date hereof, DFR Holdings owns (i) 4,545,455 shares of Common
Stock and (ii) Senior Subordinated Convertible Notes in the original principal
amount of $25,000,000 and due December 9, 2017 (the “Convertible Notes”), which
are convertible into shares of Common Stock (the “Conversion Shares”);

 

WHEREAS, the Investors have the registration rights with respect to the
Conversion Shares and the Investor Shares (as defined below) as provided in the
Amended and Restated Registration Rights Agreement, dated as of the date hereof
(the “Registration Rights Agreement”);

 

WHEREAS, the Company and Bounty Investments, LLC, a Delaware limited liability
company and an affiliate of DFR Holdings (“Bounty”), are parties to the
Stockholders Agreement, dated as of June 9, 2010 (the “Original Agreement”);

 

WHEREAS, the execution and delivery of this Agreement is a condition to the
obligations of the Company, CIFC Parent and CIFC to consummate the Merger and
the other transactions contemplated by the Merger Agreement; and

 

WHEREAS, the Company and the Investors desire to establish in this Agreement
certain terms and conditions concerning the corporate governance of the Company,
the Investor Shares and related provisions concerning the relationship of the
Investors with, and their investments in, the Company from and after the Closing
(as defined in the Merger Agreement).

 

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NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereto agree as
follows:

 

ARTICLE I
GENERAL

 

Section 1.1                                      Effective Date.  This Agreement
shall be delivered at Closing and shall not be effective, and the Parties shall
not be bound by any obligations hereunder, until the First Step Merger occurs. 
In the event that the First Step Merger fails to occur, this Agreement shall
automatically terminate without any action on behalf of any party.

 

Section 1.2                                      Definitions.  As used in this
Agreement, the following terms shall have the meanings indicated below:

 

“Acceptance Notice” has the meaning assigned in Section 3.2(b)(ii).

 

“Affiliate” means, with respect to any Person, any other Person, directly or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person; provided, that for purposes of this
Agreement, the Company and its Subsidiaries shall not be deemed to be Affiliates
of any Investor and no Investor shall be deemed to be an Affiliate of the
Company and its Subsidiaries.  The term “control” (including, with correlative
meaning, the terms “controlled by” and “under common control with”), as applied
to any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting or other securities, by contract or
otherwise.

 

“Aggregate Cap Percentage” means eighty percent (80%).

 

“Agreement” has the meaning assigned in the preamble.

 

“Base Cap Percentage” means (i) in respect of the DFR Holdings Holders, 37.58%,
and (ii) in respect of the CIFC Holders, 39.28%.

 

“Beneficial Ownership” by a Person of any securities includes ownership by any
Person who, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares: (i) voting power which
includes the power to vote, or to direct the voting of, such security; and/or
(ii) investment power which includes the power to dispose, or to direct the
disposition, of such security; and shall otherwise be interpreted in accordance
with the term “beneficial ownership” as defined in Rule 13d-3 adopted by the SEC
under the Exchange Act; provided that for purposes of determining Beneficial
Ownership, a Person shall be deemed to be the Beneficial Owner of any securities
that may be acquired by such Person pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise (irrespective of whether the right to acquire
such securities is exercisable immediately or only after the passage of time,
including the passage of time in excess of sixty (60) days, the satisfaction of
any conditions, the occurrence of any event or any combination of the
foregoing).  For purposes of this Agreement, (x) a Person shall be deemed to
Beneficially Own any securities Beneficially Owned by its Affiliates or any
“group”

 

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(as contemplated by Exchange Act Rule 13d-5(b)) of which such Person or any such
Affiliate is or becomes a member; provided, that, notwithstanding the foregoing,
no Investor shall be deemed to Beneficially Own the Investor Shares Beneficially
Owned by any other Investor solely due to the fact that the Investors constitute
a group (as contemplated by Exchange Act Rule 13d-5(b)) and (y) for the
avoidance of doubt, DFR Holdings shall be deemed to Beneficially Own the
Conversion Shares (assuming all Conversion Shares then issuable pursuant to the
Convertible Notes Beneficially Owned by the DFR Holdings Holders are
outstanding).  The term “Beneficially Own” shall have a correlative meaning.

 

“Board” means, as of any date, the Board of Directors of the Company in office
on that date.

 

“Bounty” has the meaning assigned in the recitals.

 

“Buyer” has the meaning assigned in Section 3.2(a).

 

“Cap Percentage” means, in respect of any Investor, a percentage equal to such
Investor’s Base Cap Percentage; provided, however, that (i) an Investor’s Base
Cap Percentage shall be increased with respect to an acquisition by such
Investor of Common Stock, Convertible Notes or Other Capital Stock solely as a
result of an Intra-Investor Private Transfer (as hereafter defined) and (ii) to
the extent that the sum of all Investors’ respective Base Cap Percentages would
exceed the Aggregate Cap Percentage as a result of an Intra-Investor Private
Transfer, the selling Investor’s Base Cap Percentage shall be decreased such
that the sum of all Investors’ respective Base Cap Percentages would equal the
Aggregate Cap Percentage.  “Intra-Investor Private Transfer” means any Transfer
by an Investor (or Affiliates thereof) to one or more of the other Investors (or
Affiliates of such other Investor) in a private transaction, including a sale
pursuant to the right of first refusal or right of first offer contemplated by
Section 3.2.

 

“CIFC” has the meaning assigned in the recitals.

 

“CIFC CLO Issuer” means each of CIFC Funding 2006-I, Ltd. CIFC Funding 2006-IB,
Ltd., CIFC Funding 2006-II, Ltd., CIFC Funding 2007-I, Ltd., CIFC Funding
2007-II, Ltd. CIFC Funding 2007-III, Ltd. and CIFC Funding 2007-IV, Ltd., and
any co-issuer of any of the foregoing.

 

“CIFC CLO Management Agreements” means the collateral management agreements
between CIFC and the CIFC CLO Issuers in effect as of the Closing.

 

“CIFC Holders” means, collectively, CIFC Parent and any Person that is both a
stockholder of the Company and an Affiliate of CIFC Parent and any successors
thereto.

 

“CIFC Parent” has the meaning assigned in the preamble.

 

“CIFC Shares” means, as of the applicable measurement date, the sum of the
shares of Common Stock and Other Capital Stock Beneficially Owned by the CIFC
Holders and any shares of Common Stock or other securities issued in respect
thereof or into which such shares of Common Stock or other securities shall be
converted in connection with stock splits, reverse

 

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stock splits, stock dividends or distributions, combinations or any similar
recapitalizations after the date of this Agreement.

 

“Closing” means the closing of the transactions contemplated in the Merger
Agreement.

 

“CMA Requirement” means the requirement under each CIFC CLO Management
Agreement, if any, that for so long as CIFC is acting as the Collateral Manager
(as defined in such CIFC CLO Management Agreement), any one or more of the
Collateral Manager, its Affiliates (as defined in such CIFC CLO Management
Agreement) and any employees of the Collateral Manager who are Knowledgeable
Employees (as defined in Rule 3c-5 of the Investment Company Act) with respect
to the applicable CIFC CLO Issuer shall collectively hold beneficial ownership
directly or indirectly of not less than a prescribed percentage or amount of, as
applicable, the Preferred Shares (as defined in such CIFC CLO Management
Agreement) or Income Notes (as defined in such CIFC CLO Management Agreement)
issued and outstanding on the applicable closing date.

 

“CN CDO Issuer” means each of ColumbusNova CLO Ltd. 2006-I, ColumbusNova CLO
Ltd. 2006-II, ColumbusNova CLO Ltd. 2007-I and ColumbusNova CLO Ltd. 2007-II.

 

“Common Stock” means the common stock of the Company, par value $.001 per share.

 

“Company” has the meaning assigned in the preamble.

 

“Company CDO Issuer” means each DCM CDO Issuer and each CN CDO Issuer.

 

“Company CDO Issuer Documents” means each final or supplemental offering
memorandum, indenture and supplemental indenture, management agreement, trust
agreement, collateral administration agreement, insurance agreement, hedge
agreement and swap agreement entered into, or used in connection with an
offering of securities, by a Company CDO Issuer.

 

“Company CDO Management Agreement” means the collateral management agreement
between the Company or applicable Subsidiary of the Company and each Company CDO
Issuer.

 

“Company Client” means any Person whose assets, or the assets of whose clients,
are being managed by the Company or any of its Subsidiaries pursuant to an
investment advisory or similar agreement.

 

“Company Investor” means any Person or entity that is an investor, lender or
wrapper in any investments or investment products (including any collateralized
debt obligations, collateralized loan obligations, funds and any separately
managed accounts), whether now or hereafter existing, that are managed by the
Company or any of its Subsidiaries.

 

“Consents” means all consents, notices, authorizations, novations, Orders,
waivers, approvals, licenses, accreditations, certificates, declarations,
filings or expiration of waiting periods, non-objection or confirmation by a
rating agency that an action or event will not result in the reduction or
withdrawal of a rating.

 

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“Constituent Documents” means, with respect to any Person that is a corporation,
its articles or certificate of incorporation, corporate charter or memorandum
and articles of association, as the case may be, and bylaws, with respect to any
Person that is a partnership, its certificate of partnership and partnership
agreement, with respect to any Person that is a limited liability company, its
certificate of formation and limited liability company or operating agreement,
with respect to any Person that is a trust or other entity, its declaration or
agreement of trust or other constituent document, and with respect to any other
Person, its comparable organizational documents, in each case, as amended or
restated.

 

“Contract” means any written or oral contract, agreement, lease, license,
indenture, note, bond, mortgage, loan, instrument, conditional sale contract,
guarantee commitment or other arrangement, understanding, undertaking or
obligation.

 

“Conversion Shares” has the meaning assigned in the recitals.

 

“Convertible Notes” has the meaning assigned in the recitals.

 

“Cure Period” has the meaning assigned in Section 3.1(d)(iii).

 

“Cure Purchase” has the meaning assigned in Section 3.1(d)(iii).

 

“CypressTree CLO Issuer” means each of Primus CLO I, Ltd., Primus CLO II, Ltd.,
Hewett’s Island CLO I-R, Ltd., Hewett’s Island CLO II, Ltd., Hewett’s Island CLO
III, Ltd., Hewett’s Island CLO V, Ltd., Hewett’s Island CLO VI, Ltd., WhiteBark
Pine I, Ltd. and CypressTree Synthetic CDO Limited, and any co-issuer of any of
the foregoing.

 

“DCM CDO Issuer” means each of Bridgeport CLO Ltd., Bridgeport CLO II Ltd.,
Buckingham CDO Ltd., Buckingham CDO II Ltd., Buckingham CDO III Ltd., Burr Ridge
CLO Plus Ltd., DFR Middle Market CLO Ltd., Cumberland II CLO Ltd., Forest Creek
CLO Ltd., Gillespie CLO PLC, Knollwood CDO Ltd., Knollwood CDO II Ltd., Long
Grove CLO Ltd., Market Square CLO Ltd., Marquette Park CLO Ltd., Mid Ocean CBO
2000-1 Ltd., Mid Ocean CBO 2001-1 Ltd., NorthLake CDO I, Limited, Pinetree CDO
Ltd., River North CDO Ltd., Rosemont CLO, Ltd., Schiller Park CLO Ltd., Valeo
Investment Grade CDO Ltd., Valeo Investment Grade CDO II Ltd., Robeco CDO II
Limited and Mayfair Euro CDO I B.V.

 

“DFR Holdings” has the meaning assigned in the preamble.

 

“DFR Holdings Holders” means, collectively, DFR Holdings and any Person that is
both a stockholder of the Company and an Affiliate of DFR Holdings and any
successors thereto.

 

“DFR Holdings Shares” means, as of the applicable measurement date, the sum of
the shares of Common Stock and Other Capital Stock Beneficially Owned by the DFR
Holdings Holders (including, for the avoidance of doubt, the Conversion Shares
assuming all Conversion Shares then issuable pursuant to the Convertible Notes
Beneficially Owned by the DFR Holdings Holders are outstanding) and any shares
of Common Stock or other securities issued in respect thereof or into which such
shares of Common Stock or other securities shall be converted in connection with
stock splits, reverse stock splits, stock dividends or distributions,
combinations or any similar recapitalizations after the date of this Agreement.

 

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“Dilution Notice” has the meaning assigned in Section 3.1(d)(iii).

 

“Director” means any member of the Board.

 

“Equity Interest” means any type of equity ownership in an entity, including
partnership interests in a general partnership or limited partnership,
membership interests in a limited liability company, stock or similar security
in a corporation or the comparable instruments for any other entity or any other
interest entitling the holder thereof to participate in the profits of such
entity, the proceeds or the disposition of such entity or any portion thereof or
to vote for the governing body of such entity.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“First MergerSub” has the meaning assigned in the recitals.

 

“First Step Merger” has the meaning assigned in the recitals.

 

“Governmental Approvals” means all Consents of a Governmental Authority required
in connection with the transactions contemplated hereby.

 

“Governmental Authority” means any foreign, federal, state or local
governmental, judicial, legislative, regulatory or administrative agency,
commission or authority, and any court, tribunal or arbitrator(s) of competent
jurisdiction, including Self-Regulatory Organizations.

 

“Independent Director” means a Director who qualifies as an “independent
director” of the Company under (a) the Corporate Governance Guidelines of the
Company then in effect and (b)(i) applicable NASDAQ rules, as such rules may be
amended, supplemented or replaced from time to time, or (ii) if the Common Stock
is listed on a securities exchange or quotation system other than NASDAQ, any
comparable rule or regulation of the primary securities exchange or quotation
system on which the Common Stock is listed or quoted (whether by final rule or
otherwise); provided, that, notwithstanding anything herein to the contrary, a
Director shall not be an “Independent Director” if such Director would not be
independent of each Investor under applicable state corporate law.  The fact
that an individual has been designated by any Investor for nomination pursuant
to this Agreement will not, in and of itself, disqualify that individual as an
Independent Director

 

“Investor” has the meaning assigned in the preamble.

 

“Investor Shares” means collectively, the DFR Holdings Shares and the CIFC
Shares.

 

“Law” means any statute, code, Order, law, ordinance, rule, regulation or other
requirement of any Governmental Authority (including, for the sake of clarity,
common law).

 

“Lien” means any lien, pledge, encumbrance, mortgage, deed of trust, security
interest, equity, claim, lease, license, charge, option, adverse right, right of
first or last negotiation, offer or refusal, easement or transfer restriction of
any kind or nature whatsoever, whether arising by agreement, operation of Law or
otherwise.

 

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“Management Agreements” means (i) the Management Agreement by and between the
Company and CIFC Parent dated as of the date hereof and (ii) the Management
Agreement by and between the Company and Bounty dated as of the date hereof.

 

“Merger” has the meaning assigned in the recitals.

 

“Merger Agreement” has the meaning assigned in the recitals.

 

“MergerSubs” has the meaning assigned in the recitals.

 

“NASDAQ” means the NASDAQ Stock Market LLC.

 

“Necessary Action” means, with respect to a specified result, all reasonable
actions (to the extent not prohibited by Law) necessary to cause such result,
including (i) voting or providing a written consent or proxy with respect to the
Investor Shares, (ii) causing the adoption of stockholders’ resolutions and
amendments to the Constituent Documents of the Company, (iii) refraining from
objecting and waiving any available statutory appraisal or similar rights,
(iv) executing agreements and instruments, (v) obtaining, or causing to be
obtained, all Governmental Approvals and Third Party Consents, (vi) nominating
or electing any members of the Board, (vii) removing any members of the Board
whom the person obliged to take the Necessary Action has the right to remove,
and (viii) calling or causing to be called a special meeting of the Board or
stockholders of the Company.

 

“New Shares” means any Equity Interests of the Company or any of its
Subsidiaries, including Common Stock or Other Capital Stock, whether authorized
or not by the Board or any committee of the Board, and rights, options, or
warrants to purchase any Equity Interest, and securities of any type whatsoever
that are, or may become, convertible into any Equity Interest; provided,
however, that the term “New Shares” shall not include: (i) securities issued to
employees, consultants, officers and directors of the Company, pursuant to any
arrangement approved by the Board or the Board’s compensation committee; (ii)
securities issued as consideration in the acquisition of another business or
assets of another Person by the Company by merger or purchase of the assets or
shares, reorganization or otherwise; (iii) securities issued pursuant to any
rights or agreements, including, without limitation, convertible securities,
options and warrants, provided that either (x) the Company shall have complied
with Section 3.8 with respect to the initial sale or grant by the Company of
such rights or agreements or (y) such rights or agreements existed prior to the
Closing (it being understood that any modification or amendment to any such
pre-existing right or agreement subsequent to the Closing with the effect of
increasing the percentage of the Company’s fully-diluted securities underlying
such rights agreement shall not be included in this clause (iii)); (iv)
securities issued in connection with any stock split, stock dividend,
recapitalization, reclassification or similar event by the Company;
(v) Conversion Shares issued upon conversion of any portion of the then
outstanding Convertible Notes; (vi) warrants issued to the lender in a bona fide
debt financing; (vii) securities registered under the Securities Act that are
issued in an underwritten public offering; (viii) any right, option, or warrant
to acquire any security convertible into the securities excluded from the
definition of New Shares pursuant to clauses (i) through (vii) above; (ix) any
issuance by a Subsidiary of the Company to the Company or a wholly-owned
Subsidiary of the Company; and

 

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(x) any issuance as to which the Requisite Investors elect to waive the rights
set forth in Section 3.8.

 

“New Shares Notice” has the meaning assigned in Section 3.8(b).

 

“Nominating Committee” means the Nominating and Corporate Governance Committee
of the Board.

 

“Note Offer” has the meaning assigned in Section 3.2(a).

 

“Offer Notice” has the meaning assigned in Section 3.2(b)(i).

 

“Offered Shares” has the meaning assigned in Section 3.2(b).

 

“Offeree Investor” has the meaning assigned in Section 3.2(b).

 

“Option Period” has the meaning assigned in Section 3.2(b)(ii).

 

“Order” means any judgment, order, injunction, stipulation, decree, writ,
doctrine, ruling, assessment or arbitration award or similar order of any
Governmental Authority.

 

“Original Agreement” has the meaning assigned in the recitals.

 

“Other Capital Stock” means shares of any class of capital stock of the Company
(other than the Common Stock) that are entitled to vote generally in the
election of Directors.

 

“Outstanding Stock” means, as of the applicable measurement date, together, the
sum of (i) the outstanding shares of Common Stock and any Other Capital Stock
and (ii) the Conversion Shares issuable upon the conversion of the aggregate
amount Convertible Notes then outstanding (calculated assuming all Conversion
Shares then issuable pursuant to the Convertible Notes are outstanding).

 

“Person” means any individual, corporation, partnership, limited liability
company, limited liability partnership, firm, joint venture, association,
joint-stock company, trust, unincorporated organization, Governmental Authority
or other entity.

 

“Pro Rata Portion” has the meaning assigned in Section 3.8(a).

 

“Preemptive Right” has the meaning assigned in Section 3.8(a).

 

“Registration Rights Agreement” has the meaning assigned in the recitals.

 

“Requisite Investors” shall mean each Investor that Beneficially Owns Investor
Shares representing at least twenty percent (20%) of the Outstanding Stock.

 

“ROFR Acceptance Notice” has the meaning assigned in Section 3.2(a)(ii).

 

“ROFR Investor” has the meaning assigned in Section 3.2(a)(i).

 

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“ROFR Notes” has the meaning assigned in Section 3.2(a)(i).

 

“ROFR Notice” has the meaning assigned in Section 3.2(a)(i).

 

“ROFR Period” has the meaning assigned in Section 3.2(a)(ii).

 

“SEC” means the United States Securities and Exchange Commission or any
successor entity thereto.

 

“Second MergerSub” has the meaning assigned in the recitals.

 

“Second Step Merger” has the meaning assigned in the recitals.

 

“Self-Regulatory Organization” means each national securities exchange in the
United States of America or other commission, board, agency or body that is
charged with the supervision or regulation of brokers, dealers, securities
underwriting or trading, stock exchanges, commodities exchanges, insurance
companies or agents, investment companies or investment advisers, or to the
jurisdiction of which any Party or any of their respective Subsidiaries is
otherwise subject.

 

“Subsidiary” means, with respect to any Person, a corporation or other Person of
which more than fifty percent (50%) of the voting power of the outstanding
voting Equity Interests or more than fifty percent (50%) of the outstanding
economic Equity Interest is held, directly or indirectly, by such Person.

 

“Tail Period” has the meaning assigned in Section 4.1.

 

“Third Party” means any Person other than the Company, its Subsidiaries and the
Investors and each of such Person’s respective members, directors, officers and
Affiliates.

 

“Third Party Consents” means all consents or waivers or notices to any party
(other than a Governmental Authority) to any Contract to which any of the
Parties hereto is a party or by which any of their respective assets or
properties are bound.

 

“Trading Day” means any day on which the Common Stock is traded on NASDAQ, or,
if NASDAQ is not the principal trading market for the Common Stock, then on the
principal securities exchange or securities market on which the Common Stock is
then traded.

 

“Transfer” means the transfer of ownership by sale, exchange, assignment,
pledge, encumbrance, lien, gift, donation, grant or other conveyance of any
kind, whether voluntary or involuntary, including conveyances by operation of
Law or legal process (and hereby expressly includes, with respect to an
Investor, any voluntary or involuntary appointment of a receiver, trustee,
liquidator, custodian or other similar official for such Investor or all or any
part of such Investor’s property under any bankruptcy Law).  For the avoidance
of doubt, the Parties hereto acknowledge and agree that any Transfer of the
Equity Interests of any Investor or any Affiliate of such Investor that controls
such Investor will be deemed a Transfer of the Investor Shares held by such
Investor under this Agreement if, following such Transfer such Investor is no
longer controlled, directly or indirectly, by the Person or Persons that
control, directly or indirectly,

 

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such Investor on the date hereof or by an Affiliate or Affiliates thereof;
provided, however, that a Transfer of limited partnership interests in an
investment fund that controls, directly or indirectly, such Investor shall not
be deemed a Transfer of such Investor’s Shares hereunder so long as the manager,
advisor or general partner (or Person acting in a similar capacity) that
controls such investment fund on the date hereof or an Affiliate thereof
continues to control such investment fund following such Transfer.

 

“Transferring Investor” has the meaning assigned in Section 3.2(b).

 

“Transferring Noteholder” has the meaning assigned in Section 3.2(a).

 

Section 1.3                                      Construction.  Unless the
context of this Agreement clearly requires otherwise: (i) references to the
plural include the singular and vice versa; (ii) references to one gender
include all genders; (iii) whenever the words “include,” “includes” or
“including” are used in this Agreement they will be deemed to be followed by the
phrase “without limitation;” (iv) the words “hereof,” “herein,” “hereby,”
“hereunder” and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement; (v) when a
reference is made in this Agreement to a Section, Schedule, Exhibit or Annex,
such reference shall be to a Section, Schedule, Exhibit or Annex of this
Agreement unless otherwise indicated; (vi) all references in this Agreement to
“$” are intended to refer to U.S. dollars; (vii) unless otherwise specifically
provided for herein, the term “or” shall not be deemed to be exclusive; and
(viii) any reference to Law shall include any amendment thereof or any successor
thereto and any rules and regulations promulgated thereunder.  The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.

 

ARTICLE II
REPRESENTATIONS AND WARRANTIES

 

Section 2.1                                      Representations and Warranties
of the Company.  The Company represents and warrants to each Investor as of the
date hereof that:

 

(a)                                  The Company is duly incorporated, validly
existing and in good standing under the Laws of Maryland with all requisite
power and authority required to conduct its business as presently conducted.

 

(b)                                 The Company has all requisite corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder.  The execution and delivery by the Company of this
Agreement and the performance by the Company of its obligations hereunder have
been duly authorized by all requisite corporate action of the Company.  No other
action on the part of the Company is necessary to authorize the execution,
delivery and performance by the Company of this Agreement.

 

(c)                                  This Agreement has been duly executed and
delivered by the Company and, assuming this Agreement has been duly authorized,
executed and delivered by each of the Investors, constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by: (i) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization,

 

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moratorium or similar Laws from time to time in effect affecting generally the
enforcement of creditors’ rights and remedies and (ii) general principles of
equity, regardless of whether enforcement is sought in equity or at Law.

 

(d)                                 The execution and delivery of this Agreement
by the Company and the performance by the Company of its obligations under this
Agreement: (i) does not violate any provision of the Constituent Documents of
the Company; and (ii)(A) does not conflict with or violate any applicable Law of
any Governmental Authority having jurisdiction over the Company or any part of
the properties or assets of the Company, (B) does not require the Consent of any
Person under, violate, result in the termination or acceleration of or of any
right under, give rise to or modify any right or obligation under (whether or
not in combination with any other event or circumstance), or conflict with,
breach or constitute a default under (in each case with or without notice, the
passage of time or both), any Contract to which the Company is a party or by
which any of its properties or assets is bound, (C) does not result in the
creation or imposition of any Lien on any part of the properties or assets of
the Company, (D) does not violate any Order binding on the Company or any part
of its properties or assets, and (E) does not otherwise require any Governmental
Approvals or any Third Party Consents.

 

Section 2.2                                      Representations and Warranties
of the Investors.  Each Investor represents and warrants to the Company on
behalf of itself and not jointly that as of the date hereof:

 

(a)                                  Such Investor is duly formed, validly
existing and in good standing under the Laws of Delaware with all requisite
power and authority required to conduct its business as presently conducted.

 

(b)                                 Such Investor has all requisite limited
liability power and authority to execute and deliver this Agreement and to
perform its obligations hereunder.  The execution and delivery by such Investor
of this Agreement and the performance by such Investor of its obligations
hereunder have been duly authorized by all requisite limited liability company
action of such Investor.  No other action on the part of such Investor or its
members is necessary to authorize the execution, delivery and performance by
such Investor of this Agreement.

 

(c)                                  This Agreement has been duly executed and
delivered by such Investor and, assuming this Agreement has been duly
authorized, executed and delivered by the Company, constitutes the legal, valid
and binding obligation of such Investor, enforceable against such Investor in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by: (i) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar Laws from time to time in effect affecting
generally the enforcement of creditors’ rights and remedies; and (ii) general
principles of equity regardless of whether enforcement is sought in equity or at
Law.

 

(d)                                 Other than the filings required by Section
13 of the Exchange Act (which such Investor shall file with the SEC when and as
the same is due), the execution and delivery of this Agreement by such Investor
and the performance by such Investor of its obligations under this Agreement:
(i) does not violate any provision of the Constituent Documents of such
Investor; and (ii)(A) does not conflict with or violate any applicable Law of
any Governmental Authority having jurisdiction over the Investor or any part of
the properties or assets of the

 

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Investor, (B) does not require the Consent of any Person under, violate, result
in the termination or acceleration of or of any right under, give rise to or
modify any right or obligation under (whether or not in combination with any
other event or circumstance), or conflict with, breach or constitute a default
under (in each case with or without notice, the passage of time or both), any
Contract to which such Investor is a party or by which any of its properties or
assets is bound, (C) does not result in the creation or imposition of any Lien
on any part of the properties or assets of such Investor, (D) does not violate
any Order binding on such Investor or any part of its properties or assets, and
(E) does not otherwise require any Governmental Approvals or any Third Party
Consents.

 

ARTICLE III
BOARD OF DIRECTORS

 

Section 3.1                                      Board of Directors.

 

(a)                                  Size of the Board.  Effective as of the
Closing, the Company shall increase the size of the Board by two (2) Directors
so that upon such increase the Board shall consist of eleven (11) Directors. 
Each Investor agrees to take, or cause to be taken, all other Necessary Action,
to ensure that (x) the number of Directors constituting the Board shall be set
and remain at eleven (11) Directors and (y) each directorship shall be subject
to reelection at each annual meeting of the Company’s Stockholders (i.e., the
Board will not be “classified” or “staggered”).

 

(b)                                 Board Composition.  Subject to Section
3.1(d) and Section 3.1(k) below, (1) the Board shall nominate or cause to be
nominated, and shall recommend for election, individuals to serve as Directors
in accordance with the designations in this Section 3.1(b) and (2) each Investor
agrees to take, or cause to be taken, all Necessary Action, to ensure that at
each annual or special meeting of stockholders at which an election of Directors
is held or pursuant to any written consent of the stockholders, in each case
that includes as a matter to be acted upon by the stockholders the election of
directors (including, without limitation, the filling of a vacancy existing on
the Board), such persons shall be elected to the Board:

 

(i)                                     three (3) Directors designated by DFR
Holdings (initially such Directors shall be Andrew Intrater, Jason Epstein and
Paul Lipari);

 

(ii)                                  three (3) Directors designated by CIFC
Parent (initially such Directors shall be Michael R. Eisenson, Samuel P.
Bartlett and Tim R. Palmer);

 

(iii)                               the Company’s then serving Chief Executive
Officer, who shall initially be Peter Gleysteen (the “CEO Director”);

 

(iv)                              three (3) Independent Directors designated by
the Nominating Committee; provided, that the initial Independent Directors to
take office upon completion of the Merger shall be Frederick Arnold, Robert B.
Machinist and Frank C. Puleo, each of whom has been designated jointly by the
Investors and approved by the Special Committee of the Board; and

 

(v)                                 for so long as he remains an employee of the
Company or any of its Subsidiaries, Jonathan Trutter; provided, that, following
the death, disability, retirement,

 

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resignation or other removal of Mr. Trutter from the Board (including in
connection with the termination of his employment with the Company and its
Subsidiaries), the director designated pursuant to this Section 3.1(b)(v) shall
be an Independent Director designated by the Nominating Committee.

 

(c)                                  Removal; Vacancy.

 

(i)                                     Except as provided in Section 3.1(d) or
as required by applicable Law, no Director designated pursuant to Section 3.1(b)
above may be removed from office unless (A) in the case of a Director designated
by DFR Holdings pursuant to Section 3.1(b)(i), such removal is directed or
approved by DFR Holdings, (B) in the case of a Director designated by CIFC
Parent pursuant to Section 3.1(b)(ii), such removal is directed or approved by
CIFC Parent, (C) in the case of an Independent Director designated pursuant to
Section 3.1(b)(iv) or Section 3.1(b)(v), such removal is directed or approved by
the Nominating Committee, (D) in the case of the CEO Director, pursuant to
Section 3.1(c)(iii) and (E) in the case of Jonathan Trutter, pursuant to Section
3.1(c)(iii) or if such removal is directed or approved by a majority of the
Board.  Each Investor shall vote its Investor Shares and take, or shall cause to
be taken, all other Necessary Action to effect any removal contemplated by this
Section 3.1(c), subject, (x) in the case of a removal pursuant to clause (C) of
this Section 3.1(c)(i), to the prior approval of the Nominating Committee and,
(y) in the case of a removal pursuant to clause (E) of this Section 3.1(c)(i),
to the prior approval of a majority of the Board.

 

(ii)                                  Except as provided in Section 3.1(d), (A)
upon the death, disability, retirement, resignation or other removal of a
Director designated by DFR Holdings pursuant to Section 3.1(b)(i) above, the
Board shall appoint as a Director to fill the vacancy so created an individual
designated by DFR Holdings, (B) upon the death, disability, retirement,
resignation or other removal of a Director designated by CIFC Parent pursuant to
Section 3.1(b)(ii) above, the Board shall appoint as a Director to fill the
vacancy so created an individual designated by CIFC Parent and (C) upon the
death, disability, retirement, resignation or other removal of an Independent
Director designated by the Nominating Committee pursuant to Section 3.1(b)(iv)
or Section 3.1(b)(v) above or Jonathan Trutter, the Board shall appoint as a
Director to fill the vacancy so created an individual designated by the
Nominating Committee.

 

(iii)                               If for any reason (A) the CEO Director shall
cease to serve as the Chief Executive Officer of the Company, the Company shall
seek to obtain the immediate resignation of the CEO Director as a Director of
the Company contemporaneously with such CEO Director’s termination of service to
the Company as its Chief Executive Officer or (B) Jonathan Trutter shall cease
to be an employee of the Company or one of its Subsidiaries, the Company shall
seek to obtain the immediate resignation of Mr. Trutter as a Director of the
Company contemporaneously with the termination of his service to the Company as
an employee.  In the event such resignation is not effective within ten (10)
days of such termination of service, the Company shall call a special meeting of
stockholders or seek the written consents of stockholders, in each case to
approve or consent to the removal of the CEO Director or Mr. Trutter, as the
case may be (to the extent permitted by Law and the Company’s Constituent
Documents).  In connection with any such meeting or written consent, each of the
Investors shall vote their respective Investor Shares (A) to remove the former
Chief Executive Officer or Mr. Trutter, as the case may be, from the Board if
such individual has not previously resigned as a

 

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Director (to the extent permitted by Law and the Company’s Constituent
Documents) and (B)(1) in the case of the CEO Director, to elect such person’s
replacement as Chief Executive Officer of the Company (if any) as the new CEO
Director and (2) in the case of Mr. Trutter, to elect an Independent Director
designated by the Nominating Committee.  Any employment agreement between the
Company and the Chief Executive Officer of the Company shall contain a
requirement that the Chief Executive Officer of the Company resign as the CEO
Director contemporaneous with termination of his service as the Chief Executive
Officer of the Company.  Notwithstanding anything to the contrary in the
foregoing, an individual who formerly served as the CEO Director and/or Chief
Executive Officer of the Company and Mr. Trutter may be nominated, designated,
and/or elected as a Director of the Company (other than the CEO Director) in
accordance with Section 3.1(b) above.

 

(d)                                 Loss of Investor’s Right to Designate
Director.

 

(i)                                     If the Investor Shares Beneficially
Owned by any Investor represent less than twenty-five percent (25%) but at least
fifteen percent (15%) of the Outstanding Stock, the number of Directors that
such Investor shall be entitled to designate pursuant to Section 3.1(b)(i) or
Section 3.1(b)(ii) (as applicable) shall be reduced to two (2).  If the Investor
Shares Beneficially Owned by any Investor represent less than fifteen percent
(15%) but at least five percent (5%) of the Outstanding Stock, the number of
Directors that such Investor shall be entitled to designate pursuant to Section
3.1(b)(i) or Section 3.1(b)(ii) (as applicable) shall be reduced to one (1). 
For the avoidance of doubt, (A) if any Investor ceases to Beneficially Own
Investor Shares representing at least five percent (5%) of the Outstanding
Stock, such Investor shall not be entitled to designate any Director pursuant to
Section 3.1(b)(i) or Section 3.1(b)(ii) and (B) except as provided in Section
3.1(d)(iii) below, once any Investor loses its right to designate any Director
pursuant to this Section 3.1(d)(i), such Investor shall not be entitled to
regain its right to designate such Director, even if such Investor subsequently
Beneficially Owns a number of Investor Shares in excess of the applicable
threshold.

 

(ii)                                  To the extent that an Investor ceases to
have the right to designate a Director pursuant to Section 3.1(d)(i), if
requested by a majority of the Directors then serving on the Board (other than
any Director designated by such Investor), such Investor shall promptly take all
Necessary Action to cause the resignation of that number of Investor-designated
Directors as is required to cause the remaining number of Investor-designated
Directors to conform to Section 3.1(d)(i); provided, that such Investor shall
not be required to cause any Investor-designated Director(s) to resign in
accordance with this Section 3.1(d)(ii) as a result of a dilution of the
Investor Shares (other than dilution resulting from the issuance of New Shares)
unless and until the Company complies with procedures in Section 3.1(d)(iii)
below.  Promptly following any such resignation in accordance with this Section
3.1(d)(ii), (A) if immediately following such resignation the number of
Directors serving on the Board is eight (8) or more, the Investors shall take,
or cause to be taken, all Necessary Action to reduce the size of the Board by
the number of Directors who have so resigned, and (B) if immediately following
such resignation the number of Directors serving on the Board is less than eight
(8), if and only if requested by a majority of the Independent Directors then
serving on the Board, the Investors shall take, or cause to be taken, all
Necessary Action to reduce the size of the Board by the number of Directors who
have so resigned.

 

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(iii)                               Notwithstanding anything in Section
3.1(d)(i) or Section 3.1(d)(ii) to the contrary, if the Investor Shares
Beneficially Owned by any Investor represent a percentage of Outstanding Stock
that is less than the applicable minimum percentage specified in Section
3.1(d)(i) as a result of dilution of the Investor Shares, other than dilution
resulting from the issuance of New Shares, the Company shall deliver a written
notice to the Investors of such dilution event (the “Dilution Notice”).  If (A)
within twenty (20) days following receipt of the Dilution Notice, such Investor
gives the Company a written notice of its intention to acquire, directly or
indirectly through its Affiliates, an amount of Common Stock, Other Capital
Stock or, in the case of the DFR Holdings Holders, Convertible Notes, such that
immediately following such acquisition such Investor’s Investor Shares represent
a percentage of Outstanding Stock equal to the applicable minimum percentage of
Outstanding Stock specified in Section 3.1(d)(i), as applicable (a “Cure
Purchase”) within ninety (90) days of the Company’s receipt of the Dilution
Notice (the “Cure Period”) and (B) the Cure Purchase is consummated during the
Cure Period, then such Investor shall not be required to cause any Director(s)
designated by such Investor to resign in accordance with Section 3.1(d)(ii).

 

(e)                                  Eligible Investor Shares.  For the purpose
of determining the number of Directors each Investor shall be entitled to
designate for nomination pursuant to this Section 3.1 at a stockholder meeting,
the Investor Shares Beneficially Owned by such Investor shall be calculated as
of the close of business on the last Trading Day of the month immediately prior
to the date on which the Nominating Committee designates the Independent
Director nominees for election at the relevant stockholder meeting.

 

(f)                                    Company Solicitation.  The Company shall
cause each individual designated in accordance with Section 3.1(b) to be
included in the Board’s “slate” of nominees for the applicable meeting of
stockholders and shall use commercially reasonable best efforts to solicit from
its stockholders eligible to vote for the election of Directors proxies (i) in
favor of the election of such individuals and (ii) against removal of each such
individual (to the extent such individual is serving as a Director).

 

(g)                                 Compensation and Benefits.  Until the first
annual meeting of stockholders of the Company for the election of Directors held
after the first anniversary of this Agreement, the Investor-designated Directors
shall receive no compensation or benefits, other than reimbursement for travel,
lodging and related expenses incurred in connection with meetings of the Board
or any committee thereof, or otherwise in service as a Director or member of the
boards of directors of the Company or any of its Subsidiaries in accordance with
the Company’s policies applicable to the other outside directors.  Thereafter,
the compensation and benefits of all Directors shall be determined with the
approval of a majority of the Board and a majority of Independent Directors.

 

(h)                                 Indemnification.  Notwithstanding anything
to the contrary in Section 3.1(g), the Company shall to the maximum extent
permitted under applicable Law, indemnify and provide for the advancement of
expenses to each Director designated by the Investors, from and against any and
all losses which may be imposed on, incurred by, or asserted against such
Director in any way relating to or arising out of, or alleged to relate to or
arise out of, the Director’s service in that capacity pursuant to the Company’s
Constituent Documents and an indemnification agreement in the form heretofore
provided to the Investors.

 

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(i)                                     Insurance.  The Directors designated by
the Investors shall be covered by the directors’ and officers’ liability
insurance and fiduciary liability insurance carried by the Company in an amount
reasonably acceptable to the Investors.

 

(j)                                     No Liability for Election of Recommended
Directors.  No Investor, nor any Affiliate of any Investor, shall have any
liability as a result of designating an individual for election as a Director
for any act or omission by such designated individual in his or her capacity as
a Director of the Company, nor shall any Investor have any liability as a result
of voting for any such designee in accordance with the provisions of this
Agreement.

 

(k)                                  Designating Directors.  Any Person
designated as a Director pursuant to Section 3.1(b) by DFR Holdings, CIFC
Parent, or the Nominating Committee shall be subject to satisfaction of the
requirements of applicable Law and corporate governance policies adopted by the
Board.

 

Section 3.2                                      Restrictions on Transfer.

 

(a)                                  In the event that any Investor entertains a
bona fide offer to purchase all or any portion of the Convertible Notes held by
such Investor (a “Note Offer”) from any Third Party (a “Buyer”), such Investor
(a “Transferring Noteholder”) may Transfer such Convertible Notes only pursuant
to and in accordance with the following provisions of this Section 3.2(a).

 

(i)                                     The Transferring Noteholder shall cause
the Note Offer and all of the terms thereof to be reduced to writing and shall
promptly notify the other Investor (the “ROFR Investor”) of such Transferring
Noteholder’s desire to effect the Note Offer and otherwise comply with the
provisions of this Section 3.2(a) (such notice, the “ROFR Notice”).  The
Transferring Noteholder’s ROFR Notice shall constitute an irrevocable offer to
sell all but not less than all of the Convertible Notes that are the subject of
the Note Offer (the “ROFR Notes”) to the ROFR Investor at a purchase price equal
to the price contemplated by, and on the same terms and conditions of, the Note
Offer.  The ROFR Notice shall be accompanied by a true copy of the Note Offer
(which shall identify the Buyer and all relevant information in connection
therewith).

 

(ii)                                  At any time within fifteen (15) days after
receipt by the ROFR Investor of the ROFR Notice (the “ROFR Period”), the ROFR
Investor (or any of its Affiliates) may elect to accept the offer to purchase
with respect to all but not less than all of the ROFR Notes and shall give
written notice of such election (the “ROFR Acceptance Notice”) to the
Transferring Noteholder within the ROFR Period.  The ROFR Acceptance Notice
shall constitute a valid, legally binding and enforceable agreement for the sale
and purchase of the ROFR Notes.

 

(iii)                               In the event that the ROFR Investor does not
elect (together with its Affiliates) to purchase all of the ROFR Notes pursuant
to Section 3.2(a)(ii), during the sixty (60)-day period following the expiration
of the ROFR Period the Transferring Noteholder may sell all of the ROFR Notes to
the Buyer on the terms and conditions set forth in the Note Offer; provided,
that, as a condition to the consummation of such Transfer, the Buyer executes
and delivers to the Company and each Investor (other than the Investor effecting
such Transfer)

 

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an agreement assuming the obligations of an Investor set forth in this Agreement
in form and substance reasonably satisfactory to the Company and each such
Investor.  If the Transferring Noteholder does not consummate the Transfer of
the ROFR Notes to the Buyer in accordance with this Section 3.2(a)(iii) within
such sixty (60)-day period, then the Note Offer shall be deemed to lapse and any
Transfer pursuant to such Note Offer shall be in violation of the provisions of
this Section 3.2(a) unless the Transferring Noteholder sends a new ROFR Notice
and once again complies with the provisions of this Section 3.2(a) with respect
to such Note Offer.

 

(b)                                 In the event that any Investor proposes to
Transfer, in one or more transactions, all or any portion of such Investor’s
Investor Shares (excluding the Convertible Notes), such Investor (the
“Transferring Investor”) shall first offer such Investor Shares (the “Offered
Shares”) to the other Investor (the “Offeree Investor”) in accordance with this
Section 3.2(b); provided, that in no event shall a Transferring Investor be
required to offer the Offered Shares to the Offeree Investor if such Offered
Shares (together with all other Investor Shares Transferred by such Investor in
the preceding twelve (12)-month period) constitute less than the lesser of (x)
4.99% of the Outstanding Stock and (y) ten percent (10%) of the Investor Shares
held by such Investor immediately prior to any such Transfer.

 

(i)                                     The Transferring Investor shall provide
written notice to the other Investor of such Transferring Investor’s desire to
Transfer the Offered Shares, specifying in reasonable detail the terms and
conditions as to such Transfer (including, without limitation, the number of
Offered Shares and the purchase price therefor) (such notice, the “Offer
Notice”).  The Offer Notice shall constitute an irrevocable offer to sell all
but not less than all of the Offered Shares to the other Investor on the terms
and conditions set forth in the Offer Notice.

 

(ii)                                  At any time within thirty (30) days after
receipt by the Offeree Investor of the Offer Notice (the “Option Period”), the
Offeree Investor (or any of its Affiliates) may elect to accept the offer to
purchase with respect to all but not less than all of the Offered Shares and
shall give written notice of such election (the “Acceptance Notice”) to the
Transferring Investor within the Option Period.  The Acceptance Notice shall
constitute a valid, legally binding and enforceable agreement for the sale and
purchase of the Offered Shares.

 

(iii)                               In the event that the Offeree Investor does
not elect (together with its Affiliates) to purchase all of the Offered Shares
pursuant to Section 3.2(b)(ii), during the one hundred twenty (120)-day period
following the expiration of the Option Period the Transferring Investor may sell
all or any portion of the Offered Shares to one or more Third Parties at a price
not less than ninety-five percent (95%) of the price specified in the Offer
Notice and otherwise on the terms and conditions set forth in the Offer Notice;
provided, that, if following such Transfer (and any related or contemporaneous
acquisition of Beneficial Ownership by such Third Party of any shares of Common
Stock, Other Capital Stock or Convertible Notes), any such Third Party will
Beneficially Own five percent (5%) or more of the Outstanding Stock, such Third
Party shall (A) be reasonably acceptable to the Offeree Investor and (B) comply
with Section 3.2(c) below.  If the Transferring Investor does not consummate the
Transfer of any of the Offered Shares in accordance with this Section
3.2(b)(iii) within such one hundred twenty (120)-day period, then the
Transferring Investor may not Transfer such Offered Shares unless it

 

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sends a new Offer Notice and once again complies with the provisions of this
Section 3.2(b) with respect to such Offered Shares.

 

(c)                                  No Investor shall Transfer any Investor
Shares to any Third Party unless (i) upon consummation of such Transfer and any
related or contemporaneous acquisition of Beneficial Ownership by such Third
Party of any shares of Common Stock, Other Capital Stock or Convertible Notes,
such Third Party Beneficially Owns less than five percent (5%) of the
Outstanding Stock or (ii) as a condition to the consummation of such Transfer,
such Third Party executes and delivers to the Company and each Investor (other
than the Investor effecting such Transfer) an agreement assuming the obligations
of an Investor set forth in this Agreement in form and substance reasonably
satisfactory to the Company and each such Investor; provided, that, it is agreed
and acknowledged that the rights of each Investor set forth in Section 3.1 of
this Agreement are personal to such Investor and no Investor shall Transfer,
delegate or assign, whether in connection with any sale of any Investor Shares
or otherwise, any right of such Investor under Section 3.1 of this Agreement to
another Investor or to any Third Party.  Except as set forth in the preceding
sentence, all other rights of each Investor set forth in this Agreement may be
Transferred to the Third Party to which the Investor Shares are being
Transferred.

 

(d)                                 Notwithstanding anything herein to the
contrary the restrictions on transfer in this Section 3.2 shall not apply to any
Transfer by an Investor to its Affiliates; provided that such Affiliate executes
and delivers to the Company and each Investor (other than the Investor effecting
such Transfer) an agreement assuming the obligations of an Investor set forth in
this Agreement in form and substance reasonably satisfactory to the Company and
each such Investor.

 

(e)                                  Any purported Transfer, delegation or
assignment not in conformity with this Section 3.2 shall be null and void ab
initio.

 

Section 3.3                                      Majority Voting Provision. 
Except as otherwise agreed to in writing by the Requisite Investors or as
required by Law, the Company shall (and each Investor shall take, or cause to be
taken, all other Necessary Action, to) ensure that each directorship shall be
elected by a plurality of the votes cast.

 

Section 3.4                                      Controlled Company Exemption.

 

(a)                                  Each Investor shall take all Necessary
Action for the Company to be treated as a “controlled company” as defined by
Rule 5615(c) of the NASDAQ Marketplace Rules and make all necessary filings and
disclosures associated with such status; provided, that nothing in this Section
3.4 shall be deemed to prohibit any Transfer of Shares effected in compliance
with Section 3.2.  Without limitation of the foregoing, within ten (10) days
after the Closing, each Investor shall file a Schedule 13D (or an amendment to
any previously filed Schedule 13D by such Investor) reporting that such Investor
is part of a “group” (as contemplated by Exchange Act Rule 13d-5(b)), the
members of which include all Investors.  If, at any time, the Company ceases to
qualify as a “controlled company” under NASDAQ Marketplace Rules, the Investors
shall take, or cause to be taken, all Necessary Action to cause a sufficient
number of their designees (including Directors designated pursuant to Section
3.1(b)(iv)) to qualify as Independent Directors to ensure that the Board
complies with applicable

 

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NASDAQ Marketplace Rules regarding the independence of the Board within the time
periods specified under Rule 5615(c)(3) of the NASDAQ Marketplace Rules.

 

(b)                                 For so long as the Company qualifies as a
“controlled company” as defined by Rule 5615(c) of the NASDAQ Marketplace Rules,
the Company will elect to be a “controlled company” for purposes of such
applicable listing standards, and will disclose in its annual meeting proxy
statement that it is a “controlled company” and the basis for that
determination.

 

Section 3.5                                      Covenants.

 

(a)                                  The Company shall not, and shall not permit
any Subsidiary of the Company to, without first having provided written notice
of such proposed action to each Investor and having obtained the approval of a
majority of the Independent Directors (whether at a meeting of the Board or any
committee thereof, or in writing), enter into or commit to enter into any
Contract, arrangement or understanding between (x) the Company and its direct or
indirect Subsidiaries, on the one hand, and (y) any Investor, any Affiliate of
an Investor or any related person within the meaning of Item 404 of Regulation
S-K promulgated under the Exchange Act, on the other hand, in each case, other
than (i) transactions that do not constitute a transaction with a related person
within the meaning of Item 404 of Regulation S-K promulgated under the Exchange
Act (treating each Investor and each of its Affiliates as a related person for
such purposes) and (ii) this Agreement, the Merger Agreement, the Registration
Rights Agreement, the Convertible Notes and the Management Agreements, and the
transactions contemplated by each of the foregoing Contracts (each as in effect
on the date hereof, without giving effect to any amendment or modification
thereto, or waiver thereunder, unless such amendment, modification or waiver was
approved by a majority of the Independent Directors then serving on the Board
pursuant to this Section 3.5(a));

 

(b)                                 During the period beginning on the date of
this Agreement and ending on the earlier of (X) the third (3rd) anniversary
hereof and (Y) the date on which the Investors, collectively, Beneficially Own
Investor Shares representing less than thirty-five percent (35%) of the
Outstanding Stock, the Company shall not, and shall not permit any Subsidiary of
the Company to, without first having provided written notice of such proposed
action to each Investor and having obtained the prior written consent of the
Requisite Investors:

 

(i)                                     (A) acquire or dispose of any
corporation, entity, division or other business concern having a value in excess
of $10,000,000 in a single transaction or series of related transactions,
whether by acquisition or disposition of assets or capital stock, merger,
consolidation or otherwise, and whether in consideration of the payment of cash,
the issuance of capital stock or otherwise or (B) dissolve, liquidate or engage
in any recapitalization or reorganization of the Company or any of its material
Subsidiaries or the filing for bankruptcy by the Company or any of its
Subsidiaries;

 

(ii)                                  replace Peter Gleysteen, or any successor
thereto, as the Chief Executive Officer of the Company or maintain the Company’s
headquarters outside of New York, New York;

 

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(iii)                               issue any New Shares or issue any Equity
Interests in a registration under the Securities Act, whether or not in an
underwritten public offering, other than (X) registrations pursuant to the
Registration Rights Agreement or (Y) the issuance of Equity Interests as
consideration in the acquisition of any Person, whether by acquisition of assets
or capital stock, merger, consolidation or otherwise, representing immediately
following the issuance thereof less than five percent (5%) of the Outstanding
Stock; or

 

(iv)                              incur, assume or guarantee any indebtedness
for borrowed money (including pursuant to debt securities issued in registered
public offering), except for (A) indebtedness incurred in the ordinary course of
business not in excess of $20,000,000 in the aggregate and (B) repurchase
obligations pursuant to the Company’s investments in residential mortgage-backed
securities, provided that such repurchase obligations do not exceed $275,000,000
or such other amount as is established by the Board from time to time.

 

(c)                                  CMA Requirements:

 

(i)                                     CIFC Parent hereby represents and
warrants that, on the date hereof, CIFC Parent holds, directly or indirectly,
beneficial ownership (within the meaning of the applicable CMA Requirement) of a
sufficient number of Equity Interests or other securities of each CIFC CLO
Issuer necessary to satisfy the minimum ownership requirements for CIFC and its
Affiliates under the CMA Requirement relating to such CIFC CLO Issuer.

 

(ii)                                  Unless the Company elects, in its sole
discretion, to obtain the prior written consent of the applicable CIFC CLO
Issuer and such consent is actually obtained, CIFC Parent covenants that:

 

(A)                              CIFC Parent shall not Transfer any Equity
Interest or other security of such CIFC CLO Issuer to any Person other than the
Company or one of its Subsidiaries unless, following such Transfer, CIFC Parent
continues to hold, directly or indirectly, beneficial ownership (within the
meaning of the applicable CMA Requirement) of a sufficient number of Equity
Interests or other securities of such CIFC CLO Issuer necessary to satisfy the
minimum ownership requirements for CIFC and its Affiliates under the CMA
Requirement relating to such CIFC CLO Issuer;

 

(B)                                CIFC Parent shall use commercially reasonable
efforts and take all other Necessary Action to remain, and not take any action
that would cause it to no longer be, an “affiliate” of CIFC (as such term is
used in the applicable CIFC CLO Management Agreement and CMA Requirement);

 

(C)                                CIFC Parent shall have, appoint, elect and
cause to be appointed and elected, and take all other Necessary Action to action
and elect, the Chief Executive Officer of the Company shall be the Chief
Executive Officer of CIFC Parent; and

 

(D)                               (1) each Director designated by CIFC Parent
pursuant to Section 3.1(b)(ii) shall also be a member of the board of directors
or equivalent governing body of CIFC Parent and (2) the Chief Executive Officer
and the board of

 

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directors or equivalent governing body of CIFC Parent shall, collectively, have
the power to manage the business and affairs of CIFC Parent.

 

(iii)                               Notwithstanding anything to the contrary in
Section 5.1, the covenants set forth in this Section 3.5(c) shall only terminate
as to a CIFC CLO Issuer and the related CIFC CLO Management Agreement upon the
earliest of (w) the Transfer of Equity Interests or other securities of such
CIFC CLO Issuer to the Company or one of its Subsidiaries necessary to satisfy
the CMA Requirement of the applicable CIFC CLO Issuer, (x) such time as CIFC
ceases to be the “Collateral Manager” under such CIFC CLO Management Agreement,
other than as a result of a breach of this Section 3.5(c), (y) the termination
of such CIFC CLO Management Agreement, other than as a result of a breach of
this Section 3.5(c) and (z) the amendment of such CIFC CLO Management Agreement
to remove the applicable CMA Requirement.

 

(iv)                              In the event that the Company or any of its
Subsidiaries, in the Company’s sole discretion, seeks the consent of the same
Persons as are required to amend the applicable CMA Requirement to any amendment
of any CIFC CLO Management Agreement, the Company shall use reasonable good
faith efforts to obtain the consent of such Persons to remove the applicable CMA
Requirement of such CIFC CLO Management Agreement.

 

(v)                                 The calculation of any loss or damages
incurred by the Company upon, attributable to or resulting from any breach by
CIFC Parent of its obligations under this Section 3.5(c) or any event,
occurrence or circumstance resulting in the statement in Section 3.5(c)(ii)(D)
ceasing to be true and correct in any respect shall include the loss of
management fees resulting from the removal of the Company and its Subsidiaries
as the manager under each CIFC CLO Management Agreement.  CIFC Parent hereby
agrees and acknowledges that it shall be deemed a breach of CIFC Parent’s
covenant set forth in Section 3.5(c)(ii)(D) if the statements set forth therein
cease to be true and correct in any respect.

 

(vi)                              Notwithstanding anything to the contrary in
Section 5.1 and Section 5.12, the provisions of this Section 3.5(c) may not be
terminated, amended or modified unless such termination, amendment or
modification is approved by not less than a majority of the Independent
Directors then serving on the Board and DFR Holdings, for so long as it remains
party to this Agreement.

 

Section 3.6                                      Committee Membership.

 

(a)                                  The Board shall establish and maintain:

 

(i)                                     a compensation committee, which shall
include at least one (1) Independent Director;

 

(ii)                                  a Nominating Committee which shall be
comprised of three (3) Directors, including (A) one (1) Director designated by
DFR Holdings so long as DFR Holdings has the right to designate at least two (2)
Directors to the Board pursuant to Section 3.1, (B) one (1) director designated
by CIFC Parent so long as CIFC Parent has the right to designate at least two
(2) Directors to the Board pursuant to Section 3.1, and (C) the remainder of the
Directors

 

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shall be Independent Directors designated to the Nominating Committee by
approval of a majority of the Board; and

 

(iii)                               to the extent required by applicable Law, an
audit committee, which shall have at least three (3) members and be comprised
entirely of Independent Directors who meet the independence requirements for
audit committee members promulgated by NASDAQ and the SEC (including Rule
5605(c)(2) of the NASDAQ Marketplace Rules and Rule 10A-3(b)(1) under the
Exchange Act).  The Nominating Committee shall take, or cause to be taken, all
Necessary Action to cause a sufficient number of the Independent Directors
designated pursuant to Section 3.1(b)(iv) and Section 3.1(b)(v) (except Jonathan
Trutter) to meet the independence requirements for audit committee members
promulgated by NASDAQ and the SEC (including Rule 5605(c)(2) of the NASDAQ
Marketplace Rules and Rule 10A-3(b)(1) under the Exchange Act).

 

(b)                                 The initial members of the Nominating
Committee shall be Samuel P. Bartlett, Jason Epstein and Frank C. Puleo.

 

(c)                                  The Board shall not establish or maintain
any other committees without the prior written consent of the Requisite
Investors.  Without limitation of the foregoing, the strategic committee of the
Board shall be dissolved on or prior to the date hereof and shall not be
re-formed without the prior written consent of the Requisite Investors.

 

Section 3.7                                      Board Observers.  In addition
to the rights of the Investors in Section 3.1, each Investor (for so long as the
Investor Shares held by such Investor represent at least fifteen percent (15%)
of the Outstanding Stock) shall be entitled to designate one observer to attend
(but not vote) at all meetings of the Board and each committee of the Board;
provided, that notwithstanding anything herein to the contrary, the Board or
such committee may exclude any such observer from access to any material or
meeting or portion thereof if (a) the Board or such committee (as applicable)
determines in good faith that (i) upon advice of counsel, such exclusion is
reasonably necessary to preserve the attorney-client privilege, (ii) such
exclusion is reasonably necessary to protect highly confidential proprietary
information of the Company or (iii) such exclusion is required under the
Company’s Corporate Governance Guidelines or applicable Law or (b) such observer
has not entered into a confidentiality agreement in form and substance
reasonably satisfactory to the Company.

 

Section 3.8                                      Preemptive Rights.

 

(a)                                  Subject to Section 3.9, for so long as any
Investor Beneficially Owns Investor Shares representing at least five percent
(5%) of the Outstanding Stock, such Investor shall have, the right to purchase,
in accordance with the procedures set forth herein, its pro rata portion,
calculated based on the number of Investor Shares held by such Investor as a
percentage of the Outstanding Stock prior to issuance of the New Shares (such
Investor’s “Pro Rata Portion”) of any New Shares that the Company may, from time
to time, propose to sell and issue (hereinafter referred to as the “Preemptive
Right”).

 

(b)                                 In the event that the Company proposes to
issue and sell New Shares, the Company shall notify each of the Investors in
writing with respect to the proposed New Shares to

 

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be issued (the “New Shares Notice”).  Each New Shares Notice shall set forth:
(i) the number of New Shares proposed to be issued by the Company and the
purchase price therefor; (ii) each Investor’s Pro Rata Portion of such New
Shares; and (iii) any other material term (including, if known, the expected
date of consummation of the purchase and sale of the New Shares).

 

(c)                                  Each Investor (together with its
Affiliates) shall be entitled to exercise its right to purchase New Shares by
delivering an irrevocable written notice to the Company within fifteen (15) days
from the date of receipt of any such New Shares Notice specifying the number of
New Shares to be subscribed, which in any event can be no greater than such
Investor’s Pro Rata Portion of such New Shares at the price and on the terms and
conditions specified in the New Shares Notice.

 

(d)                                 If the Investors (together with their
Affiliates) do not elect within the applicable notice period described above to
exercise their Preemptive Rights with respect to any of the New Shares proposed
to be sold by the Company, the Company shall have ninety (90) days after
expiration of such notice period to sell such unsubscribed New Shares proposed
to be sold by the Company, at a price and on terms no more favorable to the
purchaser than those set forth in the New Shares Notice.  If the Company does
not consummate the sale of the unsubscribed New Shares in accordance with the
terms of the New Shares Notice within such ninety (90)-day period, then the
Company may not issue or sell such New Shares unless it sends a new New Shares
Notice and once again complies with the provisions of this Section 3.8 with
respect to such New Shares.

 

(e)                                  Each Investor (together with its
Affiliates) shall take up and pay for any New Shares that such Investor
(together with its Affiliates) has elected to purchase pursuant to the
Preemptive Right upon closing of the issuance of the New Shares, and shall have
no right to acquire such New Shares if the issuance thereof shall not be
consummated.

 

Section 3.9                                      Standstill.

 

(a)                                  Except as set forth in this Section 3.9(a),
no Investor shall acquire Beneficial Ownership of shares of Common Stock or
Other Capital Stock, or any security which is convertible into Common Stock or
Other Capital Stock, except:

 

(i)                                     if (A) such acquisition is pursuant to a
tender offer or exchange offer for outstanding shares of Common Stock, or a
merger pursuant to a merger agreement with the Company, made by the Investor or
of any Affiliate thereof (the “Bidder”) and in each case is either (1) approved
by not less than a majority of the Independent Directors or (2) initiated by an
Investor in response to a tender offer or exchange offer by a Third Party (such
tender offer or exchange offer, an “Approved Offer,” and such merger, an
“Approved Merger”), and (B) in such Approved Offer, not less than a majority of
the Subject Shares (as defined below) are tendered into such Approved Offer and
not withdrawn prior to the final expiration of such Approved Offer, or in such
Approved Merger, not less than a majority of the Subject Shares that are
affirmatively voted (in person or by proxy) on the related merger proposal (and
not withdrawn) are voted for (i.e., in favor) of such proposal;

 

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(ii)                                  acquisitions of Conversion Shares upon
conversion of the Convertible Notes;

 

(iii)                               acquisitions of Common Stock issued
(including pursuant to exercise of stock options granted) to any Director
designated by such Investor in respect of such Director’s service on the Board;

 

(iv)                              acquisitions of Common Stock pursuant to any
stock split, stock dividend or the like effected by the Company;

 

(v)                                 acquisitions that would not result in (A)
such Investor Beneficially Owning a percentage of the then Outstanding Stock
that is greater than such Investor’s Cap Percentage or (B) all Investors
Beneficially Owning a percentage of the then Outstanding Stock that is greater
than the Aggregate Cap Percentage;

 

(vi)                              acquisitions pursuant to such Investor’s right
of first refusal under Section 3.2(a) or right of first offer under Section
3.2(b); and

 

(vii)                           acquisitions approved by a majority of the
Independent Directors then serving on the Board (including pursuant to any
merger, acquisition or other transaction that is approved by a majority of the
Independent Directors then serving on the Board).

 

As used in this Section 3.9(a), “Subject Shares” means the then outstanding
shares of Common Stock and Other Capital Stock not owned by the Bidder.

 

(b)                                 All of the restrictions set forth in this
Section 3.9 shall terminate in respect of an Investor upon the earlier to occur
of:

 

(i)                                     the entry by the Company into a
definitive agreement with any Person (including the other Investor in accordance
with the terms of this Agreement) providing for: (x) a recapitalization, merger,
share exchange, business combination or similar extraordinary transaction as a
result of which the Persons that Beneficially Own the voting securities of the
Company (immediately prior to the consummation of such transaction) would cease
to (immediately after consummation of such transaction) Beneficially Own voting
securities entitling them to vote a majority or more of the Outstanding Stock in
the elections of directors of the Company at any annual or special meeting (or,
if the Company is not the surviving or resulting entity, the equivalent
governing body of such surviving or resulting entity); (y) a sale of all or
substantially all of the assets the Company (determined on a consolidated
basis), in one transaction or series of related transactions; or (z) the
acquisition (by purchase, merger or otherwise) by any Person (including any
syndicate or group deemed to be a “person” under Section 13(d)(3) of the
Exchange Act) of Beneficial Ownership of voting securities of the Company
entitling that Person to vote a majority of the Outstanding Stock (the
transactions described in clauses (x), (y) and (z) of this subsection being each
hereinafter referred to as a “Transaction Agreement”); and

 

(ii)                                  such date as the Investor Shares
Beneficially Owned by such Investor represent less than five percent (5%) of the
Outstanding Stock (after giving effect to any Cure Purchase hereunder).

 

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(c)                                  Each Investor agrees that such Investor
shall, as a condition precedent to any Transfer by such Investor to a Third
Party of Investor Shares representing fifteen percent (15%) or more of the
Outstanding Stock, require that such Third Party enter into a written agreement
with the Company providing that such Third Party will agree to be bound by the
terms of this Section 3.9.  Any purported sale or transfer by the Investor
without compliance of the obligation in the preceding sentence shall be null and
void ab initio.  For the avoidance of doubt, the requirements of this Section
3.9(c) shall apply to any Person acquiring Investor Shares representing fifteen
percent (15%) or more of the Outstanding Stock even if following such Transfer
such selling Investor would own Investor Shares representing less than five
percent (5%) of the Outstanding Stock.

 

(d)                                 Notwithstanding anything to the contrary in
Section 5.1 and Section 5.12, the provisions of this Section 3.9 may not be
terminated, amended or modified unless such termination, amendment or
modification is approved by a majority of the Independent Directors then serving
on the Board.

 

ARTICLE IV
NON SOLICITATION

 

Section 4.1                                      Non Solicitation.

 

(a)                                  Without the consent of the Board, for so
long as any Investor holds Investor Shares representing at least five percent
(5%) of the Outstanding Stock and for twelve (12) months thereafter (the “Tail
Period”), such Investor and its Affiliates shall not, directly or indirectly:

 

(i)                                     solicit for employment or any similar
arrangement or hire any employee of the Company or any of its Affiliates;
provided, however, that this Section 4.1 shall not prohibit the hiring of a
person (A) whose employment has been terminated by the Company without any
solicitation or encouragement by such Investor or any of its Affiliates more
than six (6) months prior to the date of the solicitation or hiring of such
person by such Investor or any of its Affiliates or (B) who responds to general
solicitations of employment through advertisements or other means not targeted
specifically to such employees; or

 

(ii)                                  solicit, or attempt to solicit or induce,
on behalf of any Person other than the Company or any of its Subsidiaries, any
person or entity that is (or was during the one (1) year period prior to any
solicitation by such Investor or its Affiliates) a Company Investor or Company
Client or an investment advisor or collateral manager to any Company Investor or
Company Client to (A) terminate, reduce or otherwise adversely modify its
relationship with the Company or any of its Subsidiaries, or (B) to otherwise
use the investment management services provided by a Person other than the
Company or any of its Subsidiaries.

 

(b)                                 After the Closing and so long as an Investor
or any of its Affiliates owns (other than in a fiduciary capacity or subject to
a similar duty or standard of care) any Equity Interests or debt securities
issued by any, as applicable, Company CDO Issuer, CIFC CLO Issuer or CypressTree
CLO Issuer and the Company or its Affiliates (or its successor if such successor
is Affiliated with the Company) is the manager under the applicable Company CDO

 

25

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Management Agreement, CIFC CLO Management Agreement or CypressTree CLO
Management Agreement, respectively, such Investor agrees (and agrees to cause
its Affiliates) (i) not to vote such Equity Interests or debt securities in
favor of the redemption of any securities issued by such Company CDO Issuer,
CIFC CLO Issuer or CypressTree CLO Issuer under any indenture among the Company
CDO Issuer Documents, CIFC CDO Issuer Documents or CypressTree CLO Issuer
Documents, respectively, and (ii) not to vote in favor of removal of the Company
or any of its Affiliates as the manager under such Company CDO Management
Agreement, CIFC CLO Management Agreement or CypressTree CLO Management
Agreement.

 

ARTICLE V
MISCELLANEOUS

 

Section 5.1                                      Termination of Agreement.  This
Agreement shall continue in effect until terminated by written agreement of the
Company and the Requisite Investors; provided, that this Agreement shall
terminate as to any Investor upon such time as the Investor Shares Beneficially
Owned by such Investor represent less than five percent (5%) of the Outstanding
Stock (after giving effect to any Cure Purchase hereunder); provided, further,
that the obligations of each Investor pursuant to Section 4.1 shall survive the
termination of this Agreement as to such Investor until the expiration of the
Tail Period; provided, further, that the obligations of CIFC Parent pursuant to
Section 3.5(c) shall survive the termination of this Agreement as to CIFC Parent
until the expiration of such obligations in accordance with Section 3.5(c)(iii).

 

Section 5.2                                      Expenses.  Except as otherwise
expressly set forth herein and in the Merger Agreement, each party hereto shall
pay its own costs and expenses (including all legal, accounting, broker, finder
and investment banker fees) relating to this Agreement, the negotiations leading
up to this Agreement and the transactions contemplated hereby.

 

Section 5.3                                      Notices.  All notices, demands
and other communications pertaining to this Agreement (“Notices”) shall be in
writing and addressed as follows:

 

If to the Company:

 

Deerfield Capital Corp.

6250 North River Road

Rosemont, IL 60018

Attention:  Robert Contreras

Facsimile:  (773) 380-1695

Email: rcontreras@DeerfieldCapital.com

 

with copies to:

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attention:  Simeon Gold, Esq.
Facsimile:  (212) 310-8007
E-mail:  simeon.gold@weil.com

 

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If to DFR Holdings:

 

DFR Holdings, LLC

c/o Columbus Nova

900 Third Avenue, 19th Floor

New York, NY 10022

Attention: Paul Lipari

Facsimile: (212) 308-6623

 

with copies to:

 

Latham & Watkins LLP

885 Third Avenue

New York, New York 10022

Attention:   James C. Gorton, Esq.

Facsimile:  (212) 751-4864

 

If to CIFC Parent:

 

CIFC Parent Holdings LLC

c/o Charlesbank Capital Partners, LLC

200 Clarendon Street, 54th Floor

Boston, MA 02116

Attention:  Tim R. Palmer

Facsimile:  617-619-5402

E-mail:  tpalmer@charlesbank.com

 

with copies to:

 

Goodwin Procter LLP

135 Commonwealth Drive

Menlo Park, CA 94025

Attention:  Kevin M. Dennis, Esq.
Facsimile:  (650) 853-1038
E-mail:  kdennis@goodwinprocter.com

 

Notices shall be deemed given (a) on the first (1st) business day after being
sent, prepaid, by nationally recognized overnight courier that issues a receipt
or other confirmation of delivery, (b) upon machine generated acknowledgement of
receipt after transmittal by facsimile if so acknowledged to have been received
before 5:00 p.m. on a business day at the location of receipt and otherwise on
the next following business day or (c) when sent, if sent by electronic mail
before 5:00 p.m. on a business day at the location of receipt and otherwise the
next following business day.  Any party may change the address to which Notices
under this Agreement are to be sent to it by giving written notice of a change
of address in the manner provided in this Agreement for giving Notice.

 

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Section 5.4                                      Governing Law.  EXCEPT TO THE
EXTENT THAT THE LAWS OF THE STATE OF MARYLAND (OR DELAWARE FROM AND AFTER THE
DATE THE COMPANY IS REINCORPORATED OR CONTINUED UNDER THE LAWS OF THE STATE OF
DELAWARE) APPLICABLE TO THE ELECTION OR REMOVAL OF DIRECTORS ARE APPLICABLE,
THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CHOICE OF
LAW RULES THAT WOULD APPLY THE LAWS OF ANY OTHER JURISDICTION.

 

Section 5.5                                      Consent to Jurisdiction.  Each
party to this Agreement, by its execution hereof, (a) hereby irrevocably
consents and agrees that any action, suit or proceeding arising in connection
with any disagreement, dispute, controversy or claim, in whole or in part,
arising out of, related to, based upon or in connection with this Agreement or
the subject matter hereof shall be brought only in the courts of the State
Courts of the State of New York, New York County or the United States District
Court located in the State of New York, New York County, (b) hereby waives to
the extent not prohibited by applicable Law, and agrees not to assert, by way of
motion, as a defense or otherwise, in any such action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that any such action
brought in one of the above-named courts should be dismissed on grounds of forum
non conveniens, should be transferred to any court other than one of the
above-named courts, or should be stayed by reason of the pendency of some other
proceeding in any other court other than one of the above-named courts, or that
this Agreement or the subject matter hereof may not be enforced in or by such
court and (c) hereby agrees not to commence any such action other than before
one of the above-named courts nor to make any motion or take any other action
seeking or intending to cause the transfer or removal of any such action to any
court other than one of the above-named courts whether on the grounds of forum
non conveniens or otherwise. Each party hereby (i) consents to service of
process in any such action in any manner permitted by New York law, (ii) agrees
that service of process made in accordance with clause (i) or made by registered
or certified mail, return receipt requested, at its address specified pursuant
to Section 5.3, shall constitute good and valid service of process in any such
action, and (iii) waives and agrees not to assert (by way of motion, as a
defense, or otherwise) in any such action any claim that service of process made
in accordance with clause (i) or (ii) does not constitute good and valid service
of process.

 

Section 5.6                                      Specific Performance.  The
parties to this Agreement each acknowledge that each party would not have an
adequate remedy at law for money damages in the event that any of the covenants
hereunder have not been performed in accordance with their terms, and therefore
agree that each other party hereto shall be entitled to specific enforcement of
the terms hereof and any other equitable remedy to which such Party may be
entitled.  Each of the Parties hereby waives (i) any defenses in any action for
specific performance, including the defense that a remedy at law would be
adequate and (ii) any requirement under any Law to post a bond or other security
as a prerequisite to obtaining equitable relief.

 

Section 5.7                                      Waiver of Jury Trial.  The
parties each hereby waive trial by jury in any judicial proceeding involving,
directly or indirectly, any matters (whether sounding in tort, contract or
otherwise) in any way arising out of, related to or connected with this
Agreement or the transactions contemplated hereby.

 

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Section 5.8                                      Binding Effect; Persons
Benefiting; Assignment.  This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns.  Nothing in this Agreement is intended or shall be construed to confer
upon any Person other than the parties hereto and their respective successors
and permitted assigns any right, remedy or claim under or by reason of this
Agreement or any part hereof.  Without the prior written consent of the other
party hereto, this Agreement may not be assigned by either party hereto and any
purported assignment made without such consent shall be null and void.

 

Section 5.9                                      Counterparts.  This Agreement
may be executed in counterparts (including by facsimile or other electronic
transmission), each of which shall be deemed an original and each of which shall
constitute one and the same instrument.

 

Section 5.10                                Entire Agreement.  This Agreement,
including the Schedules, Exhibits, Annexes, certificates and lists referred to
herein, any documents executed by the Parties simultaneously herewith or
pursuant thereto constitute the entire understanding and agreement of the
Parties hereto with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, written or oral, between the Parties
with respect to such subject matter (including without limitation, the Original
Agreement).  Each of the Company and DFR Holdings hereby agrees, approves and
consents, by its signature hereto, that the Original Agreement be, and hereby
is, amended and restated in its entirety to read as set forth herein.

 

Section 5.11                                Severability.  If any provision of
this Agreement, or the application thereof to any Person or circumstance, is
invalid or unenforceable in any jurisdiction, (a) a substitute and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable in such jurisdiction, the intent and purpose of their
invalid or unenforceable provision; and (b) the remainder of this Agreement and
the application of such provision to other Persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability of such provision affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.

 

Section 5.12                                Amendments and Waivers.  This
Agreement may not be amended, altered or modified except by written instrument
executed by each Investor and the Company and approved by a majority of the
Independent Directors then serving on the Board (whether at a meeting of the
Board or any committee thereof, or in writing); provided, however, that this
Agreement may be amended without the consent of an Investor if the Investor
Shares Beneficially Owned by such Investor represent less than five percent (5%)
of the Outstanding Stock (after giving effect to any Cure Purchase hereunder),
except that Section 3.5(c) and Section 4.1 may not be so amended in a manner
that adversely affects such Investor without such Investor’s consent.  The
failure by any party hereto to enforce at any time any of the provisions of this
Agreement shall in no way be construed to be a waiver of any such provision nor
in any way to affect the validity of this Agreement or any part hereof or the
right of such party thereafter to enforce each and every such provision.  No
waiver of any breach of or non-compliance with this Agreement shall be held to
be a waiver of any other or subsequent breach or non-compliance. Any waiver made
by any party hereto in connection with this Agreement shall not be valid unless
agreed to in writing by such party.

 

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Section 5.13                                Delays or Omissions.  No delay or
omission to exercise any right, power, or remedy accruing to any party under
this Agreement shall impair any such right, power, or remedy of such party, nor
shall it be construed to be a waiver of or acquiescence to any breach or
default, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default.  All remedies, either under this Agreement or by law or
otherwise afforded to any holder, shall be cumulative and not alternative.

 

Section 5.14                                Mutual Drafting; Interpretation. 
Each party hereto has participated in the drafting of this Agreement, which each
such party acknowledges is the result of extensive negotiations between the
parties.  If an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provision.

 

[Remainder of Page Left Blank]

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

 

 

COMPANY:

 

 

 

DEERFIELD CAPITAL CORP.

 

 

 

 

 

 

 

By:

/s/ Jonathan W. Trutter

 

 

Name:

Jonathan W. Trutter

 

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

DFR HOLDINGS:

 

 

 

DFR HOLDINGS, LLC

 

 

 

 

 

 

 

By:

/s/ Andrew Intrater

 

 

Name:

Andrew Intrater

 

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

CIFC PARENT:

 

 

 

CIFC PARENT HOLDINGS LLC

 

 

 

 

 

 

 

By:

/s/ Peter Gleysteen

 

 

Name:

Peter Gleysteen

 

 

Title:

Chief Executive Officer

 

Signature Page to Amended and Restated Stockholders Agreement

 

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