Document:

Exhibit 4.1

 

WARRANT

 

THE
SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE
SECURITIES LAWS.  THE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OR APPLICABLE
STATE SECURITIES LAWS UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES
ACT.

 

	
  DEERFIELD CAPITAL CORP.

  
	
   

  
	
  WARRANT TO PURCHASE COMMON
  STOCK

  

 

	
  Warrant No.: A

  	
   

  	
  Number of Shares: 2,500,000

  
	
  Issuance Date: April 9,
  2009

  	
   

  	
   

  

 

THIS CERTIFIES THAT, for value
received, Pegasus Deerfield (AIV), LLC (together with its permitted
transferees, successors, Affiliates (defined below) and assigns, the “Holder”) is entitled to purchase from Deerfield Capital
Corp., a Maryland corporation (the “Company”), at any time after the
Issuance Date of this Warrant (defined below) and before the Expiration Date
(defined below) at the Exercise Price (defined below) 2,500,000 fully paid
nonassessable shares of Common Stock (defined below) (the “Warrant
Shares”), all subject to vesting and adjustment and upon the
other terms and conditions provided herein.

 

Section 1.                                    Definitions.

 

The following
terms as used in this Warrant have the following meanings:

 

(a)                                  “Accredited Investor” 
shall have the meaning set forth in Section 5 herein.

 

(b)                                 “Acquiring Entity” 
shall have the meaning set forth in Section 8 herein.

 

(c)                                  “Affiliate” means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, such first Person.

 

(d)                                 “Business Day” means any day other than
Saturday, Sunday or federal holidays.

 

(e)                                  “Capital Contributions” means the amount in U.S. dollars, as
of the applicable date, that Holder has contributed to Fund I and DLC GP in
accordance with the governing documents of Fund I and DLC GP.

 

1

 

(f)                                    “Closing Price” on any date of determination
means (i) the closing sale price for the regular trading session (without
considering after hours or other trading outside regular trading session hours)
of the Common Stock (regular way) as reported in the composite transactions for
the Trading Market on which the Common Stock is listed, (ii) if the Common
Stock is not so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the OTC Bulletin Board, the National
Quotation Bureau or similar organization, or (iii) if the Common Stock is
not so quoted, the average of the mid-point of the last bid and ask prices for
the Common Stock from at least three nationally recognized investment banking
firms that the Holder in good faith selects for this purpose.

 

(g)                                 “Common Stock” means the Company’s common
stock, $.001 par value per share, and (ii) any capital stock into which
the Common Stock is changed or any capital stock resulting from a
reclassification of the Common Stock.

 

(h)                                 “Common Stock Option”  means any right, option, warrant
or other security that is convertible into, or exchangeable or exercisable for,
shares of Common Stock.

 

(i)                                     “Company”  shall have the
meaning set forth in the preamble to this Agreement.

 

(j)                                     “Control” (and its corollaries) means the possession, directly or
indirectly, of the power to cause the direction of the management and policies
of a Person, whether through the ownership of voting securities or otherwise.

 

(k)                                  “Delivery Date” 
shall have the meaning set forth in Section 2(b) herein.

 

(l)                                     “DLC GP” means DPLC General Partner LLC.

 

(m)                               “Exchange Act” means the Securities Exchange
Act of 1934, as amended.

 

(n)                                 “Exercise Amount” 
shall have the meaning set forth in Section 2(a) herein.

 

(o)                                 “Exercise Documents” 
shall have the meaning set forth in Section 2(b) herein.

 

(p)                                 “Exercise Notice” 
shall have the meaning set forth in Section 2(a) herein.

 

(q)                                 “Exercise Price” is equal to $4.25, subject
to adjustment as set forth in this Warrant.

 

(r)                                    “Expiration Date” means the earlier to occur
of (i) the fifth anniversary of the Issuance Date or, if such date falls
on a day that is not a Business Day or a day on which trading does not take
place on the Trading Market on which the Common Stock is traded, the next
Business Day, or (ii) at the written election of Holder, on or before the
30th day following the
date of notice to Holder by the Company of the commencement of the marketing of
the second successor fund to Fund I, which notice shall be given promptly in
writing 60 days prior to the commencement of such marketing period.

 

2

 

(s)                                  “Fund I” means Deerfield Pegasus Loan
Capital LP.

 

(t)                                    “Holder”  shall have the
meaning set forth in the preamble to this Agreement.

 

(u)                                 “Initial Closing Date”  means the date on which Holder makes the
Initial Investor Contribution and acquires a limited partner interest in Fund I
and a limited liability company interest in the DLC GP.

 

(v)                                 “Initial
Investor Contribution”  means $5,000,000.

 

(w)                               “Issuance Date” means April 9, 2009.

 

(x)                                   “Organic Change” 
shall have the meaning set forth in Section 8 herein.

 

(y)                                 “Payment”  shall have the
meaning set forth in Section 2(a) herein.

 

(z)                                   “Person” means a natural person or entity,
or a government or any division, department or agency thereof.

 

(aa)                            “Rights Plan” 
shall have the meaning set forth in Section 7(d) herein.

 

(bb)                          “Securities Act” means the Securities Act of
1933, as amended.

 

(cc)                            “Trading Market” means, if the Common Stock
or other security is listed or quoted for trading on the NYSE Amex, The Nasdaq
Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market, the
New York Stock Exchange or the OTC Bulletin Board, the principal such market or
exchange on which the Common Stock or such other security is listed or quoted
for trading on the date in question.

 

(dd)                          “Vesting Percentage” 
has the meaning set forth in Section 2(d) herein.

 

(ee)                            “Warrant” means this Warrant and all
Warrants issued in exchange, transfer or replacement thereof (or any portion
thereof).

 

(ff)                                “Warrant Shares” has the meaning set forth in the
preamble of this Warrant.

 

Section 2.                                    Exercise
of Warrant.

 

(a)                                  Any
vested portion of this Warrant may be exercised by the Holder registered on the
books of the Company, in whole or in part, at any time (i) on any Business
Day after the Issuance Date, and (ii) prior to 11:59 p.m.  Eastern Time on the Expiration Date.  Any exercise of this Warrant shall be
effected by: (1) delivery of a written notice, in the form attached as Exhibit A
(the “Exercise Notice”), of
Holder’s election to exercise this Warrant, specifying the number of Warrant
Shares to be purchased, (2) payment to the Company of an amount equal to
the Exercise Price multiplied by the number of Warrant Shares being purchased
(the “Exercise Amount”) (A) in
cash or wire transfer of immediately available funds; or (B) by 

 

3

 

means of a
cashless exercise pursuant to Section 2(f) (such cash, wire transfer
or cashless exercise referred to herein as the “Payment”), and
(3) the surrender at the principal executive office of the Company or to a
nationally recognized courier for overnight delivery in accordance with Section 11,
as soon as practicable following such date, of this Warrant, (or an
indemnification undertaking with respect to this Warrant in the case of its
loss, theft or destruction in such form and substance as reasonably
satisfactory to the Company).

 

(b)                                 The
Company shall, not later than the fifth Business Day (the “Delivery Date”)
following receipt of a valid Exercise Notice, the Payment and this Warrant or
such indemnification (collectively, the “Exercise Documents”), arrange for its transfer
agent, on or before the Delivery Date, to issue and surrender to a nationally
recognized courier for overnight delivery to the address specified in such
Exercise Notice, a certificate, registered in the name of the Holder, for the
number of shares of Common Stock to which the Holder is entitled.  Upon delivery of such Exercise Notice and the
Payment, the Holder shall be deemed for all corporate purposes to have become
the holder of record of the Warrant Shares with respect to which this Warrant
has been exercised on the Delivery Date, irrespective of the date of delivery
of the certificates evidencing the Warrant Shares.

 

(c)                                  Notwithstanding
the foregoing or any other provision in this Warrant to the contrary, if Holder
delivers an Exercise Notice to the Company prior to January 1, 2011, the
Company may elect in its sole discretion, by written notice to Holder not later
than three Business Days following the receipt of such Exercise Notice, not to
issue the number of shares of Common Stock set forth in the Exercise Notice,
but instead (and in full satisfaction of the obligation to issue such shares of
Common Stock) to remit to Holder in accordance with Holder’s wire instructions,
an amount in immediately available funds computed as follows:

 

X = (YxA) — (YxB)

where X = the amount in U.S.
dollars to be remitted by the Company to Holder in lieu of a certificate for
the number of shares of Common Stock to which the Holder is entitled, as set
forth in this Section 2(b);

 

Y = the number of shares purchasable
(or portion thereof) under this Warrant in respect of which this Warrant is
being exercised;

 

A = the Closing Price of the Common
Stock on the date of the Exercise Notice; and

 

B = the Exercise Price on the date of
the date of the Exercise Notice.

 

If
Holder delivers an Exercise Notice to the Company on or after January 1,
2011, the Company may offer to settle the Holder’s exercise of the Warrant in
cash as set forth in this Section 2(c), but Holder shall not be required
to accept cash in lieu of Warrant Shares in settlement of such exercise and may
instead demand the issuance of a certificate to Holder representing the
requisite number of shares of Common Stock as set forth in Section 2(b).

 

(d)                                 Provided
that the average invested capital of Holder in Fund I and DLC GP during the period commencing
on the date that is six months following the Initial Closing 

 

4

 

Date and terminating on the date
that is two years following the Initial Closing Date is at least equal to
$50,000,000, Holder shall vest in the Warrant Shares in accordance with its
Vesting Percentage.  Holder’s Vesting
Percentage at any time shall be a fraction, expressed as a percentage, the
numerator of which shall be the aggregate amount of Capital Contributions and
the denominator of which shall be $75,000,000. 
Holder shall continue to vest in the Warrant Shares in accordance with
such vesting formula to the extent Holder makes additional Capital
Contributions thereafter.  For example,
if the condition set forth in the first sentence of this Section 2(d) has
been fulfilled, and as of such date Holder has made Capital Contributions of
$60,000,000 (regardless of whether all or a portion of such Capital
Contributions remain invested in Fund I and DLC GP), Holder shall be 80% vested
in the Warrant Shares and, thus, shall be entitled to purchase 2,000,000 shares
of Common Stock at $4.25 per share.  In
the event Holder thereafter makes additional Capital Contributions of
$10,000,000, bringing the Capital Contributions to $70,000,000 (regardless of
how much of the Capital Contributions remain invested in Fund I and DLC GP),
Holder shall be 93.33% ($70,000,000/$75,000,000) vested in the Warrant Shares,
and, thus, shall be entitled to purchase an additional 333,333 shares of Common
Stock at $4.25 per share.

 

(e)                                  Unless
the rights represented by this Warrant have expired or been fully exercised,
the Company shall, as soon as practicable and in no event later than five
Business Days after receipt of the Exercise Documents and at its own expense,
issue a new Warrant identical in all respects to this Warrant, except it shall
represent rights to purchase the number of Warrant Shares purchasable immediately
prior to exercise, less the number purchased. 
For the avoidance of doubt, no Warrants shall vest prior to the date
that is two (2) years following the Initial Closing Date.

 

(f)                                    In
lieu of exercising this Warrant by means of paying the Exercise Amount via cash
or wire transfer, the Holder may elect to make the Payment by means of
receiving shares equal to the value of this Warrant (or portion thereof being
exercised) by delivery and surrender of this Warrant together with the Exercise
Notice in accordance with the terms hereof, duly completed to indicate a net
issuance exercise and executed by the Holder, in which event the Company shall
issue to the Holder a number of shares of Common Stock of the Company computed
using the following formula:

 

X = Y(A-B)/A

 

where                X =
the number of shares to be issued to the Holder pursuant to this Section 2(f);

 

Y = the number of shares
purchasable (or portion thereof) under this Warrant in respect of which this
Warrant is being exercised;

 

A = the Closing Price of the
Common Stock on the date of the Exercise Notice; and

 

B = the Exercise Price on the date of
the date of the Exercise Notice.

 

(g)                                 No
fractional shares of Common Stock are to be issued upon the exercise of this
Warrant, but rather the number of shares of Common Stock issued shall be
rounded up or down to the nearest whole number.

 

5

 

Section 3.                                    Covenants
as to Common Stock.  The Company hereby
covenants and agrees as follows:

 

(a)                                  This
Warrant is, and any Warrants issued in substitution for or in replacement of
this Warrant upon issuance will be, duly authorized, executed and delivered.

 

(b)                                 All
Warrant Shares upon issuance will be validly issued, fully paid and
nonassessable and free from all liens and charges with respect to the issue
thereof.

 

(c)                                  As
long as this Warrant may be exercised, the Company will have authorized and
reserved at least the number of shares of Common Stock needed to provide for
the exercise of the rights then represented by this Warrant.

 

Section 4.                                    Warrant
Holder Not Deemed a Shareholder. 
Except as specifically provided in Section 2, nothing contained in
this Warrant shall be construed to (a) grant the Holder any rights to vote
or receive dividends or be deemed the holder of shares of the Company for any
purpose, (b) confer upon the Holder any of the rights of a shareholder of
the Company or any right to vote, give or withhold consent to any corporate
action (whether any reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends
or subscription rights, or otherwise, or (c) impose any liabilities on the
Holder to purchase any securities or as a shareholder of the Company, whether
asserted by the Company or creditors of the Company.

 

Section 5.                                    Representations
of Holder.  The Holder, by the
acceptance hereof, represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment only and not with a view towards, or
for resale in connection with, the public sale or distribution of this Warrant
or the Warrant Shares, except pursuant to sales registered or exempted under
the Securities Act.  The Holder further
represents, by acceptance hereof, that, as of this date, Holder is an “accredited
investor” as defined in Rule 501(a)(1) of Regulation D promulgated
under the Securities Act (an “Accredited Investor”).  Upon exercise of this Warrant, the Holder
shall, if requested by the Company, confirm in writing, in a form satisfactory
to the Company, that the Warrant Shares are being acquired solely for the
Holder’s own account and not as a nominee for any other party, for investment,
and not with a view toward distribution or resale and that Holder is an Accredited
Investor.  If Holder cannot make such
representations because they would be factually incorrect, it shall be a
condition to Holder’s exercise of this Warrant that the Company receive such
other representations as the Company considers reasonably necessary to assure
the Company that the issuance of its securities upon exercise of this Warrant
shall not violate any federal or state securities laws.  The Company shall not be penalized or
disadvantaged by a Holder’s inability to exercise this Warrant due to its inability
to make the required representations in connection with the exercise of this
Warrant.

 

Section 6.                                    Ownership
and Transfer.

 

(a)                                  The
Company shall maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to the holder hereof), a
register for this Warrant, in which the Company shall record the name and
address of the Person in whose name this Warrant has been issued, as well as
the name and address of each transferee 

 

6

 

who has
acquired this Warrant in accordance with applicable law and the terms of this
Warrant.  The Company may treat the
Person in whose name this Warrant is registered on the register as the owner
and holder thereof for all purposes, notwithstanding any notice to the
contrary, but in all events recognizing any transfers made in accordance with
the terms of this Warrant.

 

(b)                                 This
Warrant may only be offered, sold, transferred or assigned in compliance with
this Section 6 and with the Securities Act and applicable state securities
laws.

 

(c)                                  Subject to the terms of this Section 6,
upon surrender of this Warrant to the Company at its principal executive office
with the Assignment Form annexed hereto as Exhibit B duly
executed and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant in the name of the assignee
evidencing the portion of the Warrant certificate so transferred and a new
Warrant certificate evidencing the remaining portion of the Warrant certificate
not so transferred, if any, shall be issued to the transferring Holder.  The delivery of the new Warrant certificate
by the Company to the transferee thereof shall be deemed to constitute
acceptance by such transferee of all of the rights and obligations of a Holder
of a Warrant certificate.  Subject to the
terms of this Section 6, this Warrant may be divided or combined with
other warrants which carry the same rights upon presentation hereof at the
principal office of the Company together with a written notice specifying the
names and denominations in which new Warrants are to be issued and signed by
the Holder hereof.

 

Section 7.                                    Adjustment
of Exercise Price and Number of Warrant Shares.  The Exercise Price and the number of Warrant
Shares shall be adjusted from time to time as follows:

 

(a)                                  Stock
Splits.  If the Company
subdivides (by any stock split, recapitalization or otherwise) its outstanding
shares of Common Stock into a greater number of shares, the Exercise Price in
effect immediately prior to the subdivision will be proportionately reduced and
the number of Warrant Shares will be proportionately increased.  If the Company combines (by combination,
reverse stock split or otherwise) its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to the
combination will be proportionately increased and the number of Warrant Shares
will be proportionately decreased.  Any
adjustment under this Section shall become effective at the close of
business on the date the subdivision or combination becomes effective.

 

(b)                                 Stock
Dividends.  If the Company
declares a dividend or any other distribution upon the Common Stock that is
payable in shares of Common Stock or Common Stock Options, the
number of Warrant Shares will be proportionately increased and the Exercise
Price in effect immediately prior to the declaration of the dividend or
distribution will be reduced to the quotient obtained by dividing (i) the
number of shares of Common Stock outstanding immediately prior to the
declaration multiplied by the then effective Exercise Price by (ii) the
total number of shares of Common Stock outstanding (on a fully diluted basis)
immediately after the declaration.

 

(c)                                  Other
Adjustments.  Notwithstanding
anything to the contrary contained in this Warrant if, at any time while this
Warrant is outstanding, (i) the Company shall take any action affecting
the Common Stock (other than an action otherwise specifically described in this
Section 7) that, in the opinion of the Holder, materially and adversely
affect the rights of the 

 

7

 

Holder, then
the Exercise Price and/or the number of Warrant Shares issuable upon the
exercise of the Warrant shall be adjusted to the extent permitted by law and in
such manner and at such time as the Company and the Holder agree are equitable
in the circumstances (in the event the Company and the Holder cannot agree as
to an appropriate adjustment within 30 days following Holder’s request for such
an adjustment, the parties shall refer the matter to a qualified third party,
selected in good faith by the Holder and reasonably acceptable to the Company,
which third party shall finally determine within 15 days of referral of the
matter to it the nature and amount of any such adjustment), and (ii) the
number of shares underlying any Common Stock Option, whether currently existing
or issued after the date hereof, and/or the exercise price of such Common Stock
Option adjusts or would have adjusted for any reason (including as a result of
the issuance of this Warrant) and the terms, manner or method of such
adjustment are more favorable than the adjustment provisions contained in this Section 7,
then the Company shall adjust the Exercise Price and/or number of Warrant
Shares issuable upon the exercise of the Warrant in order to give the Holder
the benefit of the more favorable terms, manner and/or method related to such
Common Stock Option.  In the case of
clause (ii) above and for the avoidance of doubt, the Exercise Price and
number of Warrant Shares issuable shall be adjusted so that this Warrant shall
be exercisable for the same percentage of the outstanding Common Stock (on a
fully diluted basis) following the adjustment of such other Common Stock Option
as described in clause (ii) above for the same aggregate consideration
prior to such adjustment (i.e.,
Exercise Price pre-adjustment multiplied by number of Warrant Shares
pre-adjustment); provided, however, that following such adjustment, if the exercise price of
such other Common Stock Option is less than the Exercise Price, the Exercise
Price shall be reduced to the same exercise price as the Common Stock Option, provided further, however, that such adjustments shall
only be made for the benefit of the Holder of the Warrant.

 

(d)                                 Notwithstanding
anything contained in the foregoing provisions of this Section 7 or
elsewhere in this Agreement, (i) if more than one subsection of this Section 7
is applicable to a single event or transaction, the subsection that produces
the largest adjustment shall be applied and no single event or transaction
shall cause an adjustment under more than one subsection of this Section 7
so as to result in duplication; (ii) the issuance of rights in connection with the shareholder
rights plan adopted pursuant to the Rights Agreement dated as of March 11,
2009, by and between the Company and American Stock Transfer & Trust
Company LLC as Rights Agent (the “Rights Plan”)
shall not cause an adjustment to the number of Warrant Shares or the Exercise
Price; and (iii) any all adjustments and other calculations contained in this
Agreement affecting or causing an adjustment to the number of Warrant Shares or
Exercise Price of the Warrant (including without limitation those set forth in
this Section 7) shall be made and calculated assuming that Holder is 100%
vested in the Warrant and the Warrant Shares as of such time.

 

Section 8.                                    Purchase Rights; Reorganization,
Reclassification, Consolidation, Merger or Sale.  Any recapitalization, reorganization,
reclassification, consolidation, or merger of the Company, sale of all or
substantially all of the Company’s assets to another Person or any similar
transaction, in which the holders of Common Stock are entitled to receive
(either directly or upon subsequent liquidation) securities or assets
(including cash) in respect of or in exchange for their Common Stock is
referred to herein as an “Organic Change.”  Upon or prior the consummation of any Organic
Change, following which the Company is not a surviving entity or that involves
a sale of all or substantially all of the Company’s Assets, the Company will,
at the 

 

8

 

Holder’s election,
either (i) secure from the successor resulting from the Organic Change (or
in case of an Organic Change that involves a sale of all or substantially all
of the Company’s assets, the Person purchasing the assets, in each case, the “Acquiring Entity”) a written agreement to
deliver to Holder in exchange for this Warrant, a security of the Acquiring
Entity evidenced by a written instrument substantially similar in form and
substance to this Warrant and reasonably satisfactory to the Holder, to
purchase shares of the common stock of the Acquiring Party with appropriate
adjustments with respect to the number of such shares that may be purchased
pursuant to such security and the Exercise Price for the same, or (ii) make
appropriate provision to insure that the Holder will, subject to a deduction
towards or payment of the Exercise Price, receive in exchange for this Warrant,
such shares of stock, securities or assets that would have been issued or
payable to the Holder in the Organic Change if this Warrant were fully
exercised immediately prior to the consummation thereof.

 

Section 9.                                    Registration Rights.  The Holder shall have the registration rights
with respect to the Warrant Shares as set forth in that certain Registration
Rights Agreement dated as of the date hereof between the Company and the
Holder.

 

Section 10.                              Lost, Stolen, Mutilated or
Destroyed Warrant.  If this Warrant is lost, stolen, mutilated or
destroyed, the Company shall promptly, on receipt of an indemnification
undertaking reasonably satisfactory to the Company (or, in the case of a
mutilated Warrant, the Warrant), issue a new Warrant of like denomination and
tenor as this Warrant so lost, stolen, mutilated or destroyed to the registered
Holder thereof.

 

Section 11.                              Notice.  Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Warrant must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by fax transmittal (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same.  The addresses and fax numbers for
communications shall be:

 

9

 

	
  If to the
  Company:

  
	
   

  
	
  Deerfield
  Capital Corp.

  
	
  6250 North
  River Road

  
	
  Rosemont, IL
  60018

  
	
  Tel: (773)
  380-1600

  
	
  Fax: (773)
  867-5186

  
	
  Attention:
  Jonathan Trutter

  
	
   

  
	
  With a copy
  to:

  
	
   

  
	
  General
  Counsel

  
	
  Fax: (773) 380-1695

  
	
   

  
	
  With a copy
  to:

  
	
   

  
	
  Schulte
  Roth & Zabel, LLP

  
	
  919 Third
  Avenue

  
	
  New York, NY
  10022

  
	
  Tel: (212
  593-5955

  
	
  Fax: (212)
  593-5955

  
	
  Attention:
  Paul Watterson

  

 

If to the
Holder, at the address and fax number set forth on Appendix I to this Warrant.  Each party shall provide five days’ prior written
notice to the other party of any change in address or fax number.  Written confirmation of receipt (A) given
by the recipient of any notice, consent, waiver or other communication, (B) mechanically
or electronically generated by the sender’s fax machine containing the time,
date, recipient fax number and an image of the first page of the
transmission, or (C) provided by a nationally recognized overnight
delivery service, shall be rebuttable evidence of receipt.

 

Section 12.                              Amendment and Waiver.
 Except as otherwise provided herein,
this Warrant may not be modified or amended except pursuant to an instrument in
writing signed by the Company and the Holder.  No provision hereunder may be waived other
than in a written instrument executed by the waiving party.

 

Section 13.                              Governing Law, Etc.  This Warrant shall be construed and
enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Warrant shall be governed by,
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdictions) that would cause the application of the laws
of any jurisdictions other than the State of New York. The Holder and the
Company shall submit to the nonexclusive jurisdiction of the federal and state
courts located in New York, New York for the resolution of all matters
pertaining to the enforcement and interpretation of this Warrant.

 

10

 

Section 14.                              Restrictive Legends.
 At all times this Warrant shall bear a
restrictive legend relating to applicable securities laws, substantially in the
form first set forth above. Any certificate representing shares of Common Stock
issued pursuant to this Warrant shall, unless there in effect is a registration
statement with respect thereto under Securities Act of 1933 (and any applicable
State securities laws) or the securities may be sold pursuant to Rule 144
under the Securities Act without any restriction as to the number of securities
that can then be immediately sold, bear a restrictive legend relating to
applicable securities laws, substantially in the form first set forth above.

 

11

 

IN WITNESS
WHEREOF, the Company has caused this Warrant to be signed as of April 9,
2009.

 

	
   

  	
  DEERFIELD CAPITAL CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert A. Contreras

  
	
   

  	
   

  	
  Name:

  	
  Robert A. Contreras

  
	
   

  	
   

  	
  Title:

  	
  General Counsel

  

 

Signature
Page to Warrant

 

 

Exhibit A
To Warrant

 

DEERFIELD
CAPITAL CORP.

 

EXERCISE
NOTICE

 

TO
BE EXECUTED BY THE REGISTERED HOLDER

TO EXERCISE THIS WARRANT

 

The
undersigned holder hereby exercises the right to purchase
                                
shares of Common Stock (“Warrant Shares”)
of Deerfield Capital Corp., a Maryland corporation (the “Company”), evidenced by the attached
Warrant (the “Warrant”).  Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.

 

1.               Payment of Exercise Price (check
applicable box).

 

[
] Payment in the sum of $              [is enclosed] [has been wire transferred to the Company at
the following account:                   ] in accordance with the terms of the Warrant.

 

2.               Delivery of Warrant Shares.  The Company shall deliver the Warrant Shares
in the name of the undersigned or in such other name as is specified below in
accordance with Section of the Warrant at the following address:

 

3.               Accredited Investor. The
undersigned is an “accredited investor” as defined in Regulation D promulgated
under the Securities Act of 1933, as amended.

 

	
  Date:                               
      ,         

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

ACKNOWLEDGMENT

 

The Company hereby acknowledges this Exercise Notice and hereby directs
                  
to issue the above indicated number of shares of Common Stock in accordance
with the Transfer Agent Instructions dated             ,
200  from the Company and acknowledged and agreed to by                       .

 

	
   

  	
  DEERFIELD CAPITAL CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

Exhibit B
To Warrant

 

ASSIGNMENT

 

To be Executed by the Registered Holder in Order to Assign Warrants

 

For Value
Received,                                                                    
hereby sells, assigns and transfers unto

 

	
   

  
	
  (PLEASE TYPE OR PRINT NAME AND ADDRESS)

  
	
   

  
	
   

  
	
  (SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER)

  
	
   

  
	
  and be delivered to

  
	
   

  
	
  (PLEASE PRINT OR TYPE NAME AND ADDRESS)

  

 

                                                                       
of the Warrants represented by this Warrant Certificate and does hereby
irrevocably constitute and appoint                                                       
Attorney to transfer this Warrant Certificate on the books of the Company, with
full power of substitution in the premises.

 

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (SIGNATURE)

  	
   

  

 

THE SIGNATURE TO THE ASSIGNMENT MUST CORRESPOND TO THE NAME WRITTEN
UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM PURSUANT TO S.E.C. RULE 17 Ad — 15).

 

 

Appendix
I

 

Holder’s
Contact Information

 

Name: Pegasus Deerfield (AIV), LLC

 

Address: 505 Park Avenue, 22nd Floor

 

City, State, Zip: New York, NY 10022

 

Telephone Number: (212) 710-2500

 

Facsimile Number: (212)355-2303Exhibit 4.2

 

WARRANT

 

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE
STATE SECURITIES LAWS.  THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO
THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OR APPLICABLE
STATE SECURITIES LAWS UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES
ACT.

 

DEERFIELD
CAPITAL CORP.

 

WARRANT TO
PURCHASE COMMON STOCK

 

	
  Warrant
  No.: B

  	
   

  	
  Number of
  Shares: 500,000

  
	
  Issuance
  Date: April 9, 2009

  	
   

  	
   

  

 

THIS CERTIFIES
THAT, for value received, Pegasus Deerfield (AIV), LLC (together with its
permitted transferees, successors, Affiliates (defined below) and assigns, the “Holder”) is entitled to purchase from Deerfield Capital
Corp., a Maryland corporation (the “Company”), at any time after the
Issuance Date of this Warrant (defined below) and before the Expiration Date
(defined below) at the Exercise Price (defined below) 500,000 fully paid
nonassessable shares of Common Stock (defined below) (the “Warrant
Shares”), all subject to vesting and adjustment and upon the
other terms and conditions provided herein.

 

Section 1.                                  Definitions.

 

The following terms as used in this Warrant have the following
meanings:

 

(a)                                  “Accredited Investor” 
shall have the meaning set forth in Section 5 herein.

 

(b)                                 “Acquiring Entity” 
shall have the meaning set forth in Section 8 herein.

 

(c)                                  “Affiliate” means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, such first Person.

 

(d)                                 “Business Day” means any day other than
Saturday, Sunday or federal holidays.

 

(e)                                  “Capital Contributions” means the amount in U.S. dollars, as
of the applicable date, that Holder has contributed to Fund I and DLC GP in
accordance with the governing documents of Fund I and DLC GP.

 

1

 

(f)                                    “Closing Price” on any date of determination
means (i) the closing sale price for the regular trading session (without
considering after hours or other trading outside regular trading session hours)
of the Common Stock (regular way) as reported in the composite transactions for
the Trading Market on which the Common Stock is listed, (ii) if the Common
Stock is not so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the OTC Bulletin Board, the National
Quotation Bureau or similar organization, or (iii) if the Common Stock is
not so quoted, the average of the mid-point of the last bid and ask prices for
the Common Stock from at least three nationally recognized investment banking
firms that the Holder in good faith selects for this purpose.

 

(g)                                 “Common Stock” means the Company’s common
stock, $.001 par value per share, and (ii) any capital stock into which
the Common Stock is changed or any capital stock resulting from a
reclassification of the Common Stock.

 

(h)                                 “Common Stock Option”  means any right, option, warrant
or other security that is convertible into, or exchangeable or exercisable for,
shares of Common Stock.

 

(i)                                     “Company”  shall have the
meaning set forth in the preamble to this Agreement.

 

(j)                                     “Control” (and its corollaries) means the possession, directly or
indirectly, of the power to cause the direction of the management and policies
of a Person, whether through the ownership of voting securities or otherwise.

 

(k)                                  “Delivery Date” 
shall have the meaning set forth in Section 2(b) herein.

 

(l)                                     “DLC GP” means DPLC General Partner LLC.

 

(m)                               “Exchange Act” means the Securities Exchange
Act of 1934, as amended.

 

(n)                                 “Exercise Amount” 
shall have the meaning set forth in Section 2(a) herein.

 

(o)                                 “Exercise Documents” 
shall have the meaning set forth in Section 2(b) herein.

 

(p)                                 “Exercise Notice” 
shall have the meaning set forth in Section 2(a) herein.

 

(q)                                 “Exercise Price” is equal to $10.00, subject
to adjustment as set forth in this Warrant.

 

(r)                                    “Expiration Date” means the earlier to occur
of (i) the fifth anniversary of the Issuance Date or, if such date falls
on a day that is not a Business Day or a day on which trading does not take
place on the Trading Market on which the Common Stock is traded, the next
Business Day, or (ii) at the written election of Holder, on or before the
30th day following the
date of notice to Holder by the Company of the commencement of the marketing of
the second successor fund to Fund I, which notice shall be given promptly in
writing 60 days prior to the commencement of such marketing period.

 

2

 

(s)                                  “Fund I” means Deerfield Pegasus Loan
Capital LP.

 

(t)                                    “Holder”  shall have the
meaning set forth in the preamble to this Agreement.

 

(u)                                 “Initial Closing Date”  means the date on which Holder makes the
Initial Investor Contribution and acquires a limited partner interest in Fund I
and a limited liability company interest in the DLC GP.

 

(v)                                 “Initial
Investor Contribution”  means $5,000,000.

 

(w)                               “Issuance Date” means April 9, 2009.

 

(x)                                   “Organic Change” 
shall have the meaning set forth in Section 8 herein.

 

(y)                                 “Payment”  shall have the
meaning set forth in Section 2(a) herein.

 

(z)                                   “Person” means a natural person or entity,
or a government or any division, department or agency thereof.

 

(aa)                            “Rights Plan” 
shall have the meaning set forth in Section 7(d) herein.

 

(bb)                          “Securities Act” means the Securities Act of
1933, as amended.

 

(cc)                            “Trading Market” means, if the Common Stock
or other security is listed or quoted for trading on the NYSE Amex, The Nasdaq
Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market, the
New York Stock Exchange or the OTC Bulletin Board, the principal such market or
exchange on which the Common Stock or such other security is listed or quoted
for trading on the date in question.

 

(dd)                          “Vesting Percentage” 
has the meaning set forth in Section 2(d) herein.

 

(ee)                            “Warrant” means this Warrant and all
Warrants issued in exchange, transfer or replacement thereof (or any portion
thereof).

 

(ff)                                “Warrant Shares” has the meaning set forth in the
preamble of this Warrant.

 

Section 2.                                  Exercise
of Warrant.

 

(a)                                  Any
vested portion of this Warrant may be exercised by the Holder registered on the
books of the Company, in whole or in part, at any time (i) on any Business
Day after the Issuance Date, and (ii) prior to 11:59 p.m.  Eastern Time on the Expiration Date.  Any exercise of this Warrant shall be
effected by: (1) delivery of a written notice, in the form attached as Exhibit A
(the “Exercise Notice”), of
Holder’s election to exercise this Warrant, specifying the number of Warrant
Shares to be purchased, (2) payment to the Company of an amount equal to
the Exercise Price multiplied by the number of Warrant Shares being purchased
(the “Exercise Amount”) (A) in
cash or wire transfer of immediately available funds; or (B) by 

 

3

 

means
of a cashless exercise pursuant to Section 2(f) (such cash, wire
transfer or cashless exercise referred to herein as the “Payment”), and
(3) the surrender at the principal executive office of the Company or to a
nationally recognized courier for overnight delivery in accordance with Section 11,
as soon as practicable following such date, of this Warrant, (or an
indemnification undertaking with respect to this Warrant in the case of its
loss, theft or destruction in such form and substance as reasonably
satisfactory to the Company).

 

(b)                                 The
Company shall, not later than the fifth Business Day (the “Delivery Date”)
following receipt of a valid Exercise Notice, the Payment and this Warrant or
such indemnification (collectively, the “Exercise Documents”), arrange for its transfer
agent, on or before the Delivery Date, to issue and surrender to a nationally
recognized courier for overnight delivery to the address specified in such
Exercise Notice, a certificate, registered in the name of the Holder, for the
number of shares of Common Stock to which the Holder is entitled.  Upon delivery of such Exercise Notice and the
Payment, the Holder shall be deemed for all corporate purposes to have become
the holder of record of the Warrant Shares with respect to which this Warrant
has been exercised on the Delivery Date, irrespective of the date of delivery
of the certificates evidencing the Warrant Shares.

 

(c)                                  Notwithstanding
the foregoing or any other provision in this Warrant to the contrary, if Holder
delivers an Exercise Notice to the Company prior to January 1, 2011, the
Company may elect in its sole discretion, by written notice to Holder not later
than three Business Days following the receipt of such Exercise Notice, not to
issue the number of shares of Common Stock set forth in the Exercise Notice,
but instead (and in full satisfaction of the obligation to issue such shares of
Common Stock) to remit to Holder in accordance with Holder’s wire instructions,
an amount in immediately available funds computed as follows:

 

X = (YxA) – (YxB)

 

where
X = the amount in U.S. dollars to be remitted by the Company to Holder in lieu
of a certificate for the number of shares of Common Stock to which the Holder
is entitled, as set forth in this Section 2(b);

 

Y = the number of shares
purchasable (or portion thereof) under this Warrant in respect of which this
Warrant is being exercised;

 

A = the Closing Price of the
Common Stock on the date of the Exercise Notice; and

 

B = the Exercise Price on the
date of the date of the Exercise Notice.

 

If
Holder delivers an Exercise Notice to the Company on or after January 1,
2011, the Company may offer to settle the Holder’s exercise of the Warrant in
cash as set forth in this Section 2(c), but Holder shall not be required
to accept cash in lieu of Warrant Shares in settlement of such exercise and may
instead demand the issuance of a certificate to Holder representing the
requisite number of shares of Common Stock as set forth in Section 2(b).

 

4

 

(d)                                 Provided
that the average invested capital of Holder in Fund I and DLC GP during the period commencing
on the date that is six months following the Initial Closing Date and
terminating on the date that is two years following the Initial Closing Date is
at least equal to $50,000,000, Holder shall vest in the Warrant Shares in
accordance with its Vesting Percentage. 
Holder’s Vesting Percentage at any time shall be a fraction, expressed
as a percentage, the numerator of which shall be the aggregate amount of
Capital Contributions and the denominator of which shall be $75,000,000.  Holder shall continue to vest in the Warrant
Shares in accordance with such vesting formula to the extent Holder makes additional
Capital Contributions thereafter.  For
example, if the condition set forth in the first sentence of this Section 2(d) has
been fulfilled, and as of such date Holder has made Capital Contributions of
$60,000,000 (regardless of whether all or a portion of such Capital
Contributions remain invested in Fund I and DLC GP), Holder shall be 80% vested
in the Warrant Shares and, thus, shall be entitled to purchase 400,000 shares
of Common Stock at $10.00 per share.  In the
event Holder thereafter makes additional Capital Contributions of $10,000,000,
bringing the Capital Contributions to $70,000,000 (regardless of how much of
the Capital Contributions remain invested in Fund I and DLC GP), Holder shall
be 93.33% ($70,000,000/$75,000,000) vested in the Warrant Shares, and, thus,
shall be entitled to purchase an additional 66,650 shares of Common Stock at
$10.00 per share.

 

(e)                                  Unless
the rights represented by this Warrant have expired or been fully exercised,
the Company shall, as soon as practicable and in no event later than five
Business Days after receipt of the Exercise Documents and at its own expense,
issue a new Warrant identical in all respects to this Warrant, except it shall
represent rights to purchase the number of Warrant Shares purchasable immediately
prior to exercise, less the number purchased. 
For the avoidance of doubt, no Warrants shall vest prior to the date
that is two (2) years following the Initial Closing Date.

 

(f)                                    In
lieu of exercising this Warrant by means of paying the Exercise Amount via cash
or wire transfer, the Holder may elect to make the Payment by means of
receiving shares equal to the value of this Warrant (or portion thereof being
exercised) by delivery and surrender of this Warrant together with the Exercise
Notice in accordance with the terms hereof, duly completed to indicate a net
issuance exercise and executed by the Holder, in which event the Company shall
issue to the Holder a number of shares of Common Stock of the Company computed
using the following formula:

 

X = Y(A-B)/A

 

where        X =
the number of shares to be issued to the Holder pursuant to this Section 2(f);

 

Y =
the number of shares purchasable (or portion thereof) under this Warrant in
respect of which this Warrant is being exercised;

 

A =
the Closing Price of the Common Stock on the date of the Exercise Notice; and

 

B =
the Exercise Price on the date of the date of the Exercise Notice.

 

5

 

(g)                                 No
fractional shares of Common Stock are to be issued upon the exercise of this
Warrant, but rather the number of shares of Common Stock issued shall be
rounded up or down to the nearest whole number.

 

Section 3.                                  Covenants
as to Common Stock.  The Company hereby
covenants and agrees as follows:

 

(a)                                  This
Warrant is, and any Warrants issued in substitution for or in replacement of
this Warrant upon issuance will be, duly authorized, executed and delivered.

 

(b)                                 All
Warrant Shares upon issuance will be validly issued, fully paid and
nonassessable and free from all liens and charges with respect to the issue
thereof.

 

(c)                                  As
long as this Warrant may be exercised, the Company will have authorized and
reserved at least the number of shares of Common Stock needed to provide for
the exercise of the rights then represented by this Warrant.

 

Section 4.                                  Warrant
Holder Not Deemed a Shareholder. 
Except as specifically provided in Section 2, nothing contained in
this Warrant shall be construed to (a) grant the Holder any rights to vote
or receive dividends or be deemed the holder of shares of the Company for any
purpose, (b) confer upon the Holder any of the rights of a shareholder of
the Company or any right to vote, give or withhold consent to any corporate
action (whether any reorganization, issue of stock, reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights, or otherwise, or (c) impose any
liabilities on the Holder to purchase any securities or as a shareholder of the
Company, whether asserted by the Company or creditors of the Company.

 

Section 5.                                  Representations
of Holder.  The Holder, by the
acceptance hereof, represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment only and not with a view towards, or
for resale in connection with, the public sale or distribution of this Warrant
or the Warrant Shares, except pursuant to sales registered or exempted under
the Securities Act.  The Holder further
represents, by acceptance hereof, that, as of this date, Holder is an “accredited
investor” as defined in Rule 501(a)(1) of Regulation D promulgated
under the Securities Act (an “Accredited Investor”).  Upon exercise of this Warrant, the Holder
shall, if requested by the Company, confirm in writing, in a form satisfactory
to the Company, that the Warrant Shares are being acquired solely for the
Holder’s own account and not as a nominee for any other party, for investment,
and not with a view toward distribution or resale and that Holder is an
Accredited Investor.  If Holder cannot
make such representations because they would be factually incorrect, it shall
be a condition to Holder’s exercise of this Warrant that the Company receive
such other representations as the Company considers reasonably necessary to
assure the Company that the issuance of its securities upon exercise of this
Warrant shall not violate any federal or state securities laws.  The Company shall not be penalized or
disadvantaged by a Holder’s inability to exercise this Warrant due to its
inability to make the required representations in connection with the exercise
of this Warrant.

 

6

 

Section 6.                                  Ownership
and Transfer.

 

(a)                                  The
Company shall maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to the holder hereof), a
register for this Warrant, in which the Company shall record the name and
address of the Person in whose name this Warrant has been issued, as well as
the name and address of each transferee who has acquired this Warrant in
accordance with applicable law and the terms of this Warrant.  The Company may treat the Person in whose
name this Warrant is registered on the register as the owner and holder thereof
for all purposes, notwithstanding any notice to the contrary, but in all events
recognizing any transfers made in accordance with the terms of this Warrant.

 

(b)                                 This
Warrant may only be offered, sold, transferred or assigned in compliance with
this Section 6 and with the Securities Act and applicable state securities
laws.

 

(c)                                  Subject to the terms of this Section 6,
upon surrender of this Warrant to the Company at its principal executive office
with the Assignment Form annexed hereto as Exhibit B duly
executed and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant in the name of the assignee
evidencing the portion of the Warrant certificate so transferred and a new
Warrant certificate evidencing the remaining portion of the Warrant certificate
not so transferred, if any, shall be issued to the transferring Holder.  The delivery of the new Warrant certificate
by the Company to the transferee thereof shall be deemed to constitute
acceptance by such transferee of all of the rights and obligations of a Holder
of a Warrant certificate.  Subject to the
terms of this Section 6, this Warrant may be divided or combined with
other warrants which carry the same rights upon presentation hereof at the
principal office of the Company together with a written notice specifying the
names and denominations in which new Warrants are to be issued and signed by
the Holder hereof.

 

Section 7.                                  Adjustment
of Exercise Price and Number of Warrant Shares.  The Exercise Price and the number of Warrant
Shares shall be adjusted from time to time as follows:

 

(a)                                  Stock
Splits.  If the Company
subdivides (by any stock split, recapitalization or otherwise) its outstanding
shares of Common Stock into a greater number of shares, the Exercise Price in
effect immediately prior to the subdivision will be proportionately reduced and
the number of Warrant Shares will be proportionately increased.  If the Company combines (by combination,
reverse stock split or otherwise) its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to the
combination will be proportionately increased and the number of Warrant Shares
will be proportionately decreased.  Any
adjustment under this Section shall become effective at the close of
business on the date the subdivision or combination becomes effective.

 

(b)                                 Stock
Dividends.  If the Company
declares a dividend or any other distribution upon the Common Stock that is
payable in shares of Common Stock or Common Stock Options, the
number of Warrant Shares will be proportionately increased and the Exercise
Price in effect immediately prior to the declaration of the dividend or
distribution will be reduced to the quotient obtained by dividing (i) the
number of shares of Common Stock outstanding immediately prior to the
declaration multiplied by the then effective Exercise Price by (ii) the 

 

7

 

total
number of shares of Common Stock outstanding (on a fully diluted basis) immediately
after the declaration.

 

(c)                                  Other
Adjustments.  Notwithstanding
anything to the contrary contained in this Warrant if, at any time while this
Warrant is outstanding, (i) the Company shall take any action affecting
the Common Stock (other than an action otherwise specifically described in this
Section 7) that, in the opinion of the Holder, materially and adversely
affect the rights of the Holder, then the Exercise Price and/or the number of
Warrant Shares issuable upon the exercise of the Warrant shall be adjusted to
the extent permitted by law and in such manner and at such time as the Company
and the Holder agree are equitable in the circumstances (in the event the
Company and the Holder cannot agree as to an appropriate adjustment within 30
days following Holder’s request for such an adjustment, the parties shall refer
the matter to a qualified third party, selected in good faith by the Holder and
reasonably acceptable to the Company, which third party shall finally determine
within 15 days of referral of the matter to it the nature and amount of any
such adjustment), and (ii) the number of shares underlying any Common
Stock Option, whether currently existing or issued after the date hereof,
and/or the exercise price of such Common Stock Option adjusts or would have
adjusted for any reason (including as a result of the issuance of this Warrant)
and the terms, manner or method of such adjustment are more favorable than the
adjustment provisions contained in this Section 7, then the Company shall
adjust the Exercise Price and/or number of Warrant Shares issuable upon the
exercise of the Warrant in order to give the Holder the benefit of the more
favorable terms, manner and/or method related to such Common Stock Option.  In the case of clause (ii) above and for
the avoidance of doubt, the Exercise Price and number of Warrant Shares
issuable shall be adjusted so that this Warrant shall be exercisable for the
same percentage of the outstanding Common Stock (on a fully diluted basis)
following the adjustment of such other Common Stock Option as described in
clause (ii) above for the same aggregate consideration prior to such
adjustment (i.e.,
Exercise Price pre-adjustment multiplied by number of Warrant Shares
pre-adjustment); provided, however, that following such adjustment, if the exercise price of
such other Common Stock Option is less than the Exercise Price, the Exercise
Price shall be reduced to the same exercise price as the Common Stock Option, provided further, however, that such adjustments shall
only be made for the benefit of the Holder of the Warrant.

 

(d)                                 Notwithstanding
anything contained in the foregoing provisions of this Section 7 or
elsewhere in this Agreement, (i) if more than one subsection of this Section 7
is applicable to a single event or transaction, the subsection that produces
the largest adjustment shall be applied and no single event or transaction
shall cause an adjustment under more than one subsection of this Section 7
so as to result in duplication; (ii) the issuance of rights in connection with the shareholder
rights plan adopted pursuant to the Rights Agreement dated as of March 11,
2009, by and between the Company and American Stock Transfer & Trust
Company LLC as Rights Agent (the “Rights Plan”)
shall not cause an adjustment to the number of Warrant Shares or the Exercise
Price; and (iii) any all adjustments and other calculations contained in this
Agreement affecting or causing an adjustment to the number of Warrant Shares or
Exercise Price of the Warrant (including without limitation those set forth in
this Section 7) shall be made and calculated assuming that Holder is 100%
vested in the Warrant and the Warrant Shares as of such time.

 

8

 

Section 8.                                            Purchase Rights; Reorganization,
Reclassification, Consolidation, Merger or Sale.                                                Any recapitalization,
reorganization, reclassification, consolidation, or merger of the Company, sale
of all or substantially all of the Company’s assets to another Person or any
similar transaction, in which the holders of Common Stock are entitled to
receive (either directly or upon subsequent liquidation) securities or assets
(including cash) in respect of or in exchange for their Common Stock is
referred to herein as an “Organic Change.”  Upon or prior the consummation of any Organic
Change, following which the Company is not a surviving entity or that involves
a sale of all or substantially all of the Company’s Assets, the Company will,
at the Holder’s election, either (i) secure from the successor resulting
from the Organic Change (or in case of an Organic Change that involves a sale
of all or substantially all of the Company’s assets, the Person purchasing the
assets, in each case, the “Acquiring Entity”)
a written agreement to deliver to Holder in exchange for this Warrant, a
security of the Acquiring Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant and reasonably
satisfactory to the Holder, to purchase shares of the common stock of the
Acquiring Party with appropriate adjustments with respect to the number of such
shares that may be purchased pursuant to such security and the Exercise Price
for the same, or (ii) make appropriate provision to insure that the Holder
will, subject to a deduction towards or payment of the Exercise Price, receive
in exchange for this Warrant, such shares of stock, securities or assets that
would have been issued or payable to the Holder in the Organic Change if this
Warrant were fully exercised immediately prior to the consummation thereof.

 

Section 9.                                            Registration Rights.  The Holder shall have the registration rights
with respect to the Warrant Shares as set forth in that certain Registration
Rights Agreement dated as of the date hereof between the Company and the
Holder.

 

Section 10.                                      Lost, Stolen, Mutilated or
Destroyed Warrant.  If this Warrant is lost, stolen, mutilated or
destroyed, the Company shall promptly, on receipt of an indemnification
undertaking reasonably satisfactory to the Company (or, in the case of a
mutilated Warrant, the Warrant), issue a new Warrant of like denomination and
tenor as this Warrant so lost, stolen, mutilated or destroyed to the registered
Holder thereof.

 

Section 11.                                      Notice.  Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Warrant must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by fax transmittal (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same.  The addresses and fax numbers for
communications shall be:

 

9

 

	
  If to the
  Company:

  
	
   

  
	
   

  	
  Deerfield
  Capital Corp.

  
	
   

  	
  6250 North
  River Road

  
	
   

  	
  Rosemont,
  IL  60018

  
	
   

  	
  Tel: (773)
  380-1600

  
	
   

  	
  Fax: (773)
  867-5186

  
	
   

  	
  Attention:
  Jonathan Trutter

  
	
   

  	
   

  
	
   

  	
  With a copy
  to:

  
	
   

  	
   

  
	
   

  	
  General
  Counsel

  
	
   

  	
  Fax:   (773) 380-1695

  
	
   

  	
   

  
	
   

  	
  With a copy
  to:

  
	
   

  	
   

  
	
   

  	
  Schulte
  Roth & Zabel, LLP

  
	
   

  	
  919 Third
  Avenue

  
	
   

  	
  New York,
  NY  10022

  
	
   

  	
  Tel: (212
  593-5955

  
	
   

  	
  Fax: (212)
  593-5955

  
	
   

  	
  Attention:  Paul Watterson

  

 

If to the
Holder, at the address and fax number set forth on Appendix I to this
Warrant.  Each party shall provide five
days’ prior written notice to the other party of any change in address or fax
number.  Written confirmation of receipt (A) given
by the recipient of any notice, consent, waiver or other communication, (B) mechanically
or electronically generated by the sender’s fax machine containing the time,
date, recipient fax number and an image of the first page of the transmission,
or (C) provided by a nationally recognized overnight delivery service,
shall be rebuttable evidence of receipt.

 

Section 12.                                      Amendment and
Waiver.  Except as otherwise provided
herein, this Warrant may not be modified or amended except pursuant to an
instrument in writing signed by the Company and the Holder.  No provision hereunder may be waived other
than in a written instrument executed by the waiving party.

 

Section 13.                                      Governing Law,
Etc.  This Warrant shall be construed
and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Warrant shall be governed by,
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdictions) that would cause the application of the laws
of any jurisdictions other than the State of New York.  The Holder and the Company shall submit to
the nonexclusive jurisdiction of the federal and state courts located in New
York, New York for the resolution of all matters pertaining to the enforcement
and interpretation of this Warrant.

 

Section 14.                                      Restrictive
Legends.  At all times this Warrant
shall bear a restrictive legend relating to applicable securities laws,
substantially in the form first set forth above.  Any 

 

10

 

certificate
representing shares of Common Stock issued pursuant to this Warrant shall,
unless there in effect is a registration statement with respect thereto under
Securities Act of 1933 (and any applicable State securities laws) or the
securities may be sold pursuant to Rule 144 under the Securities Act
without any restriction as to the number of securities that can then be
immediately sold, bear a restrictive legend relating to applicable securities
laws, substantially in the form first set forth above.

 

11

 

IN WITNESS
WHEREOF, the Company has caused this Warrant to be signed as of April 9,
2009.

 

	
   

  	
  DEERFIELD CAPITAL CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert A. Contreras

  
	
   

  	
   

  	
  Name:  Robert A. Contreras

  
	
   

  	
   

  	
  Title:  General Counsel

  

 

Signature
Page to Warrant

 

 

Exhibit A
To Warrant

 

DEERFIELD
CAPITAL CORP.

 

EXERCISE
NOTICE

 

TO
BE EXECUTED BY THE REGISTERED HOLDER

TO EXERCISE THIS WARRANT

 

The
undersigned holder hereby exercises the right to purchase                                     
shares of Common Stock (“Warrant Shares”)
of Deerfield Capital Corp., a Maryland corporation (the “Company”), evidenced by the attached
Warrant (the “Warrant”).   Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.

 

1.               Payment of Exercise Price (check
applicable box).

 

[  ] Payment in
the sum of $                     
[is enclosed] [has been wire transferred
to the Company at the following account: 
                     ] in accordance with the terms of the Warrant.

 

2.               Delivery of Warrant Shares.   The Company shall deliver the Warrant Shares
in the name of the undersigned or in such other name as is specified below in
accordance with Section of the Warrant at the following address:

 

 

3.               Accredited Investor.  The undersigned is an “accredited investor”
as defined in Regulation D promulgated under the Securities Act of 1933, as
amended.

 

 

	
  Date:                   ,
      

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

ACKNOWLEDGMENT

 

The Company
hereby acknowledges this Exercise Notice and hereby directs              
to issue the above indicated number of shares of Common Stock in accordance
with the Transfer Agent Instructions dated             ,
200  from the Company and acknowledged and agreed to by                      .

 

	
   

  	
  DEERFIELD CAPITAL CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

Exhibit B
To Warrant

 

ASSIGNMENT

 

To be Executed by the Registered Holder in Order to Assign Warrants

 

For Value
Received,                                                                         
hereby sells, assigns and transfers unto

 

 

(PLEASE TYPE OR PRINT NAME AND ADDRESS)

 

 

 

(SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER)

 

and be delivered to

 

(PLEASE PRINT OR TYPE NAME AND ADDRESS)

 

                                                                              
of the Warrants represented by this Warrant Certificate and does hereby
irrevocably constitute and appoint
                                          
Attorney to transfer this Warrant Certificate on the books of the Company, with
full power of substitution in the premises.

 

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (SIGNATURE)

  	
   

  

 

THE SIGNATURE TO THE ASSIGNMENT MUST CORRESPOND TO THE NAME WRITTEN
UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM PURSUANT TO S.E.C. 
RULE 17 Ad – 15).

 

 

Appendix
I

 

Holder’s
Contact Information

 

Name:  Pegasus Deerfield (AIV),
LLC

 

Address:  505 Park Avenue, 22nd Floor

 

City, State, Zip:  New York,
NY  10022

 

Telephone Number:  (212) 710-2500

 

Facsimile Number:  (212)355-2303

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