Document:

Exhibit 10.2

 

FORM
OF REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”)
is made and entered into as of [                     ],
2010, by and among Deerfield Capital Corp., a Maryland corporation (the “Company”)
and Bounty Investments, LLC , a Delaware limited liability company (together
with its successors and assigns, “Bounty”)
and any additional investors satisfactory to Bounty in its sole discretion
(each, an “Additional Investor” and,
together with Bounty, the “Investors”).

 

WHEREAS, the Investors have, pursuant to that
certain Senior Subordinated Convertible Note Purchase Agreement, dated as of March 22,
2010, among the Company and the Investors (the “Convertible
Note Agreement”), agreed to purchase the Company’s Senior
Subordinated Convertible Notes due 2017 (the “Notes”),
which are convertible into shares of common stock, $0.001 par value per share,
of the Company (the “Common Stock”);

 

WHEREAS, the Company has, pursuant to that certain
Acquisition and Investment Agreement, dated as of March 22, 2010, among
the Company, Bounty and Columbus Nova Credit Investment Management, LLC, a
Delaware limited liability company (the “Acquisition Agreement”),
agreed to issue to Bounty a number of shares of its Common Stock determined in
accordance with Section 2.1(b) thereof (the “Acquisition
Shares”); and

 

WHEREAS, it is a condition to the closing (the “Closing”) of the transactions
contemplated by the Acquisition Agreement and the Convertible Note Agreement
that the Company, the Investors enter into this Agreement at or prior to the
Closing in order to grant the Investors and their assigns certain registration
rights as set forth herein.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:

 

1.             Definitions.  As used in this Agreement, the following
terms shall have the respective meanings set forth in this Section 1:

 

“Affiliate”
of any Person shall mean any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such Person.  For purposes of this definition, “control”
when used with respect to any Person has the meaning specified in Rule 12b-2
under the Exchange Act; and the terms “controlling” and “controlled” have
meanings correlative to the foregoing.

 

“Automatic Shelf
Registration Statement” means an “automatic shelf registration
statement” as defined under Rule 405.

 

“Business
Day” means a day that is a Monday, Tuesday, Wednesday, Thursday
or Friday and is not a day on which banking institutions in New York, New York
generally are authorized or obligated by law, regulation or executive order to
close.

 

“Commission”
means the Securities and Exchange Commission or any other federal agency then
administering the Securities Act or Exchange Act.

 

1

 

“Demand Registration”
has the meaning set forth in Section 2(a).

 

“Demanding Holder”
means the Holder requesting
registration of Registrable Securities pursuant to Section 2(a).

 

“Effective Date”
means the time and date that the Registration Statement filed pursuant to Section 2(a) is
first declared effective by the Commission or otherwise becomes effective.

 

“Effectiveness Date”
means, with respect to each Registration Statement that may be required
pursuant to Section 2(a) hereof, (i) if the Company is a WKSI at
such time, the date such additional Registration Statement is filed or (ii) if
the Company is not a WKSI at such time, the earlier of: (x) the 45th day following the written notice of demand
therefor by the Demanding Holder and (y) the fifth Trading Day following
the date on which the Company is notified by the Commission that such
additional Registration Statement will not be reviewed or is no longer subject
to further review and comments.

 

“Effectiveness Period”
has the meaning set forth in Section 2(a).

 

“Electing Holder”
means (a) with respect to any Demand Registration pursuant to Section 2(a),
each Holder other than the Demanding Holding that requests to include
Registrable Securities in such Demand Registration and (b) with respect to
any Piggyback Registration pursuant to Section 3(a), each Holder that requests
to include Registrable Securities in such Piggyback Registration.

 

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

 

“Filing Date”
means with respect to each Registration Statement that may be required pursuant
to Section 2(a) hereof, (x) if the Company is then eligible to
file a Registration Statement on Form S-3, the 15th day following the written notice of demand
therefor by the Demanding Holder or (y) if the Company is not then
eligible to file a Registration Statement on Form S-3, the 30th day following the written notice of demand
therefor by the Demanding Holder, provided, however, that if the
Filing Date falls on a Saturday, Sunday or other day that the Commission is
closed for business, the Filing Date shall be extended to the next Business Day
on which the Commission is open for business.

 

“Freely Tradable”
means, with respect to any security, a security that (i) is eligible to be
sold by the Holder thereof without any volume or manner of sale restrictions
under the Securities Act pursuant to Rule 144 or (ii) (A) if
certificated, does not and is not required to bear legends restricting the
transfer thereof and (B) if not certificated, does not and is not required
to bear a restricted CUSIP number and/or is not and is not required to be held
in a “restricted account” on behalf of a Holder by the Company’s transfer
agent.

 

“Holder” or “Holders” means the record holder or
holders, as the case may be, from time to time of Notes and any Registrable
Securities.

 

“Indemnified Party”
has the meaning set forth in Section 6(c).

 

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“Indemnifying Party”
has the meaning set forth in Section 6(c).

 

“Losses” has
the meaning set forth in Section 6(a).

 

“Other Securities”
has the meaning set forth in Section 2(d).

 

“Person” means an individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or
an agency or subdivision thereof) or other entity of any kind.

 

“Piggyback Notice”
has the meaning set forth in Section 3(a).

 

“Piggyback Registration”
has the meaning set forth in Section 3(a).

 

“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or known to the Company to be threatened.

 

“Prospectus”
means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by a Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.

 

“Questionnaire”
has the meaning set forth in Section 4(k).

 

“Registrable Securities”
means (i) the
Acquisition Shares, (ii) the shares of Common Stock issuable or issued
upon the conversion of the Notes and (iii) any securities issued as (or
issuable upon the conversion or exercise of any warrant, right or other
security that is issued as) a dividend, stock split, recapitalization or other
distribution with respect to, or in exchange for, or in replacement of, the securities
referenced in clauses (i) or (ii) above or this clause (iii); provided,
however, that the term “Registrable Securities”
shall exclude in all cases any securities (1) sold or exchanged by a
Person pursuant to an effective registration statement under the Act or in
compliance with Rule 144, (2) that are Freely Tradable (it being
understood that for purposes of determining eligibility for resale under this
clause (2), solely with respect to clause (i) of the definition of Freely
Tradable, no securities held by any Holder shall be considered Freely Tradable
to the extent such Holder reasonably determines that it is an affiliate (as
defined under Rule 144) of the Company) or (3) that shall have ceased
to be outstanding.

 

“Registration Default”
has the meaning set forth in Section 2(b).

 

“Registration Default Date”
has the meaning set forth in Section 2(b).

 

“Registration Default
Period” has the meaning set forth in Section 2(b).

 

3

 

“Registration Statement”
means a registration statement in the form required to register the resale of
the Registrable Securities, and including the Prospectus, amendments and
supplements to each such registration statement or Prospectus, including pre-
and post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.

 

“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.

 

“Rule 405”
means Rule 405 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.

 

“Rule 415”
means Rule 415 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.

 

“Rule 424”
means Rule 424 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.

 

“Rule 433”
means Rule 433 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.

 

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

 

“Special Interest”
has the meaning set forth in Section 2(b).

 

“Suspension Period”
has the meaning set forth in Section 2(a).

 

“Trading Day”
means any day on which the Common Stock is traded on the Trading Market, or, if
there is no Trading Market, any Business Day.

 

“Trading Market”
means the principal national securities exchange on which the Common Stock is
listed.

 

“WKSI” means
a “well known seasoned issuer” as
defined under Rule 405.

 

2.             Demand
Registration and Piggyback Rights on Demand Registrations.

 

(a)           Subject
to Section 2(c), if at any time the Company receives a written request
from Bounty or, if applicable in accordance with Section 2(c), an Additional
Investor, that the Company register Registrable Securities under the Securities
Act, the Company will prepare and file with the Commission, as promptly as
reasonably practicable but not later than the applicable Filing Date, a
Registration Statement covering the resale of all Registrable Securities that
the Demanding Holder requests to be registered (each such registration, a “Demand Registration”);

 

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provided, that the Company shall not be required to register the
Registrable Securities unless the Demanding Holder has requested to include in
such Registration at least the lesser of (A) 1,000,000 shares of Common
Stock or (B) if the Commons Stock is then listed, Registrable Securities
having a fair market value (based on the closing price of the Common Stock
quoted on the Trading Market immediately preceding the date the request is
received by the Company) of $5,000,000. 
The Registration Statement (i) shall be on Form S-3 (except if
the Company is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case such registration shall be on
another appropriate form for such purpose) and, if the Company is a WKSI as of
the Filing Date, shall be an Automatic Shelf Registration Statement and (ii) shall
contain (except if otherwise requested by the Demanding Holder or required
pursuant to written comments received from the Commission upon a review of such
Registration Statement) the “Plan of Distribution” in substantially the form
attached hereto as Annex A.  The
Company will use its commercially reasonable efforts to cause the Registration
Statement to be declared effective or otherwise to become effective under the
Securities Act as soon as possible but, in any event, no later than the
Effectiveness Date, and will use its commercially reasonable efforts to keep
the Registration Statement continuously effective from the Effectiveness Date
until the earliest to occur of (i) the date on which the Demanding Holder
notifies the Company in writing that all Registrable Securities included in
such Registration Statement have been sold in reliance thereon or that the
offering for the sale thereof (or any unsold portion thereof) has been
abandoned, and (ii) 30 days following the date that such Registration
Statement was declared effective by the Commission (such period, the “Effectiveness Period”).  The Company shall promptly notify all other
Holders of any demand made by a Demanding Holder, and each such Holder who
wishes to include all or a portion of such Holder’s Registrable Securities in
the Demand Registration shall so notify the Company within fifteen days after
the receipt by the Holder of the notice from the Company.  Upon any such request, the Electing Holders
shall be entitled to have their Registrable Securities included in the Demand
Registration, subject to Section 2(d). 
Neither the Company nor any other Person (other than the Demanding
Holder and any Electing Holders) shall be entitled to include Other Securities
in any Demand Registration without the prior written consent of the Demanding
Holder.  Notwithstanding anything to the
contrary in this Agreement, upon notice to the Holders, without incurring or
accruing any obligation to pay any Special Interest pursuant to Section 2(b),
the Company may suspend the use or effectiveness of the Registration Statement,
or delay the Filing Date, for up to 30 consecutive days and up to 90 days in
the aggregate, in any 365-day period (a “Suspension Period”)
if the Board of Directors of the Company determines that there is a valid
business purpose for extension, which valid business purpose shall include
without limitation plans for a registered public offering, an acquisition or
other proposed or pending corporate developments and similar events (it being
agreed that the notice of the Extension Period need not state the reason
therefor); provided that (i) a Suspension Period shall not prevent
the Holders from requesting any Demand Registration or electing to participate
in any Piggyback Registration under Section 3, (ii) a Suspension
Period shall not apply to Holders in any Piggyback Registration to the extent
the Company has waived the Suspension Period with respect to any registered
offering of Other Securities for its own account or for the account of any
other Person, which offering gives rise to such Piggyback Registration and (iii) a
Suspension Period may not be in effect, and may not commence, at any time
during the period from and after the date that Notes are redeemed pursuant to Section 4
of the Convertible Note Agreement through 5:00 p.m. New York City time on
the date that is 10 consecutive Trading Days after the date of such 

 

5

 

redemption.  In the event the Company exercises its rights
under the preceding sentence, the Holders agree to suspend, immediately upon
their receipt of the notice referred to above, their use of the Prospectus
relating to such Registration Statement in connection with any sale or offer to
sell Registrable Securities and not to sell any Registrable Securities pursuant
thereto until such Holder has been advised in writing by the Company that the
applicable Prospectus may be used or is effective (which notice the Company
agrees to provide promptly following the lapse of the event or circumstance
giving rise to such suspension).  Each
Holder shall keep confidential the fact of the delivery of the extension notice
except as required by applicable law.  If
the Company delays any Filing Date pursuant to a Suspension Period, then the
Demanding Holder may withdraw the Demand Registration at any time prior to the
filing of the Registration Statement by providing written notice to the
Company.

 

(b)           If,
with respect to any Registration Statement required by this Section 2: (i) such
Registration Statement is not filed on or prior to its Filing Date, (ii) such
Registration Statement is not declared effective by the Commission or does not
otherwise become effective on or prior to its required Effectiveness Date, (iii) the
Company fails to file with the Commission a request for acceleration with Rule 461
promulgated under the Securities Act, within five Trading Days of the date on
which the Company is notified (orally or in writing, whichever is earlier) by
the Commission that such Registration Statement will not be reviewed or is not
subject to further review, or (iv) after its Effective Date, such
Registration Statement ceases for any reason to be effective and available to
the Holders as to all Registrable Securities to which it is required to cover
at any time prior to the expiration of the Effectiveness Period (in each case,
except as specifically permitted herein with respect to any applicable
Suspension Period and subject to Section 2(d)) (any such failure or breach
being referred to as a “Registration Default”,
and for purposes of clauses (i) or (ii) the date on which such
Registration Default occurs, and for purposes of clause (iii) the date on
which such five Trading Day period is exceeded and for purposes of clause (iv) the
date on which the Registration Statement ceases to be effective and available,
being referred to as the “Registration Default Date”
and each period from and including the Registration Default Date during which a
Registration Default has occurred and is continuing, a “Registration
Default Period”), then, during the Registration Default Period,
in addition to any other rights available to the Holders (including, without
limitation, pursuant to Section 8(a)), the Company will pay a special
payment (collectively, “Special Interest”)
to Holders (x) in respect of each Note convertible into shares of Common
Stock that, when issued, will constitute Registrable Securities (which, for the
avoidance of doubt, shall be deemed to constitute Registrable Securities to the
extent such Holder reasonably determines that it is, or upon conversion of such
Notes would reasonably be expected to become, an affiliate (as defined under Rule 144)
of the Company), in an amount equal to
1.0% per annum of the principal amount of
such Note and, without duplication, (y) in respect of each share of Common
Stock issued upon conversion of Notes and that is a Registrable Security, in an
amount equal to 1.0% per annum of
the quotient of $1,000 divided by the number of shares of Common Stock issued
upon conversion of such Notes; provided that (i) no Special
Interest shall accrue or be payable in respect of the Acquisition Shares and (ii) the
obligation to pay Special Interest in respect of a Demand Registration may be
waived with respect to all Registrable Securities covered thereby in the sole
discretion of the applicable Demanding Holder. 
Special Interest shall accrue from the applicable Registration Default
Date until all Registration Defaults have been cured and shall be payable
quarterly in arrears on each January 1, April 1, July 1 and October 1
following the applicable Registration Default Date to the record holder of the
applicable security on the date 

 

6

 

that is 15
days prior to such payment date, until paid in full.  Special Interest payable in respect of any
Registration Default Period shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. 
Special Interest shall be payable only with respect to a single
Registration Default at any given time, notwithstanding the fact that multiple
Registration Defaults may have occurred and be continuing.

 

(c)           The
Company shall not be required to effect a Demand Registration of Registrable
Securities pursuant to this Section 2 (x) at the request of
Bounty if the Company has effected a total of four (4) Demand
Registrations at the request of Bounty, or (y) in the event an Additional
Investor executes this Agreement at Closing, as permitted by Bounty in its sole
discretion, (i) at the request of Bounty if
the Company has effected a total of three (3) Demand Registrations at the
request of Bounty, and (ii) at the request of such Additional
Investor if the Company has effected a total of one (1) Demand
Registration at the request of such Additional Investor, in each case in accordance with the terms of this Section 2,
and each Registration Statement filed upon such Demand Registration was
declared or ordered effective by the Commission and was maintained effective by
the Company throughout the Effectiveness Period as required by Section 2(a);
provided  further that, for the avoidance of doubt, any Demand
Registration that is delayed or interrupted due to a Suspension Period, for
which demand has been withdrawn in accordance with Section 2(a), or
otherwise not maintained available to the Demanding Holder and Electing Holders
(subject to Section 2(d)) at all times through the Effectiveness Period
shall not constitute one of the four Demand Registrations permitted under this
clause 2(c).

 

(d)           If
the Demand Registration is an underwritten offering and if the managing
underwriter or underwriters for a Demand Registration that is to be an
underwritten offering advises the Company and the Demanding Holder in writing
that it is their good faith opinion that the total amount of Registrable
Securities which the Demanding Holder desires to sell, taken together with all
shares of Common Stock or other equity securities of the Company (such Common
Stock and other equity securities (other than Registrable Securities)
collectively, “Other Securities”), which the
Company and any other Persons having rights to participate in such registration
intend to include in such offering, exceeds the total number or aggregate
dollar amount of such securities that can be sold without having an adverse
effect on the price, timing, distribution method or successful offering of the
Registrable Securities to be so included together with all Other Securities,
then there shall be included in such firm commitment underwritten offering the
number or dollar amount of Registrable Securities and such Other Securities
that in the good faith opinion of such managing underwriter or underwriters can
be sold without so adversely affecting such offering, and such number of
Registrable Securities and Other Securities shall be allocated for inclusion as
follows: (i) first, all Registrable Securities being sold by the
Demanding Holder and Electing Holders, pro rata, based on the number of
Registrable Securities that each such Holder has requested be included in such
Demand Registration; (ii) second, all Other Securities being sold
by the Company; and (iii) third, all Other Securities of any
holders thereof requesting inclusion in such Demand Registration, pro rata,
based on the number of Other Securities that each such Person has requested be
included in such Demand Registration.

 

(e)           Notwithstanding
anything to the contrary herein, in no event shall the Company be required to
file or cause to be declared effective a Registration Statement providing 

 

7

 

for the
resale of Registrable Securities on a delayed or continuous basis pursuant to Rule 415
or otherwise for a period longer than 30 days.

 

3.             Piggyback
Rights on Company or Third Party Registrations.

 

(a)           Subject
to the terms and conditions of this Agreement, if at any time after the date
hereof, the Company files a registration statement under the Securities Act
with respect to an offering of Other Securities, whether or not for sale for
its own account (other than a registration statement (i) on Form S-4,
Form S-8 or any successor forms, (ii) filed solely in connection with
any employee benefit or dividend reinvestment plan or (iii) filed pursuant
to a Demand Registration in accordance with Section 2), then the Company
shall use commercially reasonably efforts to give written notice of such filing
to the Holders at least 10 Business Days before the anticipated filing date (or
such later date as it becomes commercially reasonable to provide such notice)
(the “Piggyback Notice”).  The Piggyback Notice and the contents thereof
shall be kept confidential by the Holders and their respective Affiliates and
representatives, and the Holders shall be responsible for breaches of
confidentiality by their respective Affiliates and representatives.  The Piggyback Notice shall offer the Holders
the opportunity to include in such registration statement, subject to the terms
and conditions of this Agreement, the number of Registrable Securities as they
may reasonably request (a “Piggyback Registration”).  Subject to the terms and conditions of this
Agreement, the Company shall use its commercially reasonable efforts to include
in each such Piggyback Registration all Registrable Securities with respect to
which the Company has received from the Holders written requests for inclusion
therein within 10 Business Days following receipt of any Piggyback Notice by
the Holders, which request shall specify the maximum number of Registrable
Securities intended to be disposed of by such Electing Holders and the intended
method of distribution.  For the
avoidance of doubt and notwithstanding anything in this Agreement to the
contrary, the Company may not commence or permit the commencement of any sale
of Other Securities for its own account or the account of another Person that
is not a Holder in a public offering to which this Section 3 applies
unless the Holders shall have received the Piggyback Notice in respect to such
public offering not less than 10 Business Days prior to the commencement of
such sale of Other Securities.  The
Electing Holders shall be permitted to withdraw all or part of the Registrable
Securities from a Piggyback Registration at any time at least two Business Days
prior to the effective date of the registration statement relating to such
Piggyback Registration.  No Piggyback
Registration shall count towards the number of demand registrations that any
Holder is entitled to make pursuant to Section 2.

 

(b)           If
any Other Securities Registered in accordance with the procedures set forth in Section 3(a) are
to be sold in an underwritten offering, (1) the Company or other Persons
designated by the Company shall have the right to appoint the book-running,
managing and other underwriter(s) for such offering in their discretion
and (2) the Electing Holders shall be permitted to include all Registrable
Securities requested to be included in such registration in such underwritten
offering on the same terms and conditions as such Other Securities proposed by
the Company or any third party to be included in such offering; provided, however,
that if such offering involves an underwritten offering and the managing
underwriter or underwriters of such underwritten offering advise the Company in
writing that it is their good faith opinion that the total amount of
Registrable Securities requested to be so included, together with all Other
Securities that the Company and any other Persons having rights to participate in
such

 

8

 

registration
intend to include in such offering, exceeds the total number or dollar amount
of such securities that can be sold without having an adverse effect on the
price, the timing or the method of distribution of the Registrable Securities
to be so included together with all Other Securities, then there shall be
included in such firm commitment underwritten offering the number or dollar
amount of Registrable Securities and such Other Securities that in the good
faith opinion of such managing underwriter or underwriters can be sold without
so adversely affecting such offering, and such number of Registrable Securities
and Other Securities shall be allocated for inclusion as follows: (x) to
the extent such public offering is the result of a registration initiated by
the Company, (i) first, all Other Securities being sold by the
Company; (ii) second, the Registrable Securities as to which
Registration has been requested by the Electing Holders, pro rata, based on the
number of Registrable Securities beneficially owned by the Electing Holders;
and (iii) third, all Other Securities of any holders thereof (other
than the Company and the Electing Holders) requesting inclusion in such
registration, pro rata, based on the number of Other Securities beneficially
owned by each such holder of Other Securities or (y) to the extent such
public offering is the result of a registration by any Persons (other than the
Company or the Holders) exercising a contractual right to demand registration
not included in this Agreement, (i) first, all Other Securities
owned by such Persons exercising the contractual right, pro rata, based on the
number of Other Securities beneficially owned by each such holder of Other
Securities; (ii) second, the Registrable Securities as to which
Registration has been requested by the Electing Holders, pro rata, based on the
number of Registrable Securities beneficially owned by such Electing Holders; (iii) third,
all Other Securities being sold by the Company; and (iv) fourth,
all Other Securities requested to be included in such registration by other
holders thereof (other than the Company and the Holders), pro rata, based on
the number of Other Securities beneficially owned by each such holder of Other
Securities.

 

4.             Registration
Procedures.

 

The procedures to be followed by the Company and
each selling Holder, and the respective rights and obligations of the Company
and such Holders, with respect to the preparation, filing and effectiveness of
a Registration Statement, and the distribution of Registrable Securities
pursuant thereto, are as follows:

 

(a)           The
Company will, as promptly as practicable prior to the filing of a Registration
Statement or any related Prospectus or any amendment or supplement thereto, (i) furnish
to the Holders copies of all such documents proposed to be filed, which
documents (other than those incorporated by reference) will be subject to the
reasonable review of such Holders and (ii) use its reasonable efforts to
address in each such document when so filed with the Commission such comments
as the Holders reasonably shall propose.

 

(b)           The
Company will use commercially reasonable efforts to (i)  prepare and file
with the Commission such amendments, including post-effective amendments, and
supplements to each Registration Statement and the Prospectus used in
connection therewith as may be necessary under applicable law with respect to
the disposition of all Registrable Securities covered by such Registration
Statement continuously effective as to the applicable Registrable Securities
for its Effectiveness Period and prepare and file with the Commission such
additional Registration Statements in order to register for resale under the
Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by 

 

9

 

any
required Prospectus supplement, and as so supplemented or amended to be filed
pursuant to Rule 424; and (iii) respond as promptly as reasonably
possible to any comments received from the Commission with respect to each
Registration Statement or any amendment thereto and, as promptly as reasonably
possible provide the Holders true and complete copies of all correspondence
from and to the Commission relating to such Registration Statement that
pertains to the Holders as “selling stockholders” but not any comments that
would result in the disclosure to the Holders of material and non-public
information concerning the Company.

 

(c)           The
Company will comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the Registration Statements
and the disposition of all Registrable Securities covered by each Registration
Statement.

 

(d)           The
Company will notify the Holders as promptly as reasonably practicable (and, in
the case of (i)(A) below, not less than three Trading Days prior to such
filing) and (if requested by any such Person) confirm such notice in writing no
later than one Trading Day following the day: (i)(A) when a Prospectus or
any Prospectus supplement or post-effective amendment to a Registration
Statement is proposed to be filed; (B) when the Commission notifies the
Company whether there will be a “review” of such Registration Statement and
whenever the Commission comments in writing on such Registration Statement (in
which case the Company shall provide true and complete copies thereof and all
written responses thereto to each of the Holders that pertain to the Holders as
“selling stockholders” or to the Plan of Distribution, but not information
which the Company believes would constitute material and non-public
information); and (C) with respect to each Registration Statement or any
post-effective amendment, when the same has been declared effective; (ii) of
any request by the Commission or any other Federal or state governmental
authority for amendments or supplements to a Registration Statement or
Prospectus or for additional information that pertains to the Holders as “selling
stockholders” or the Plan of Distribution; (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the initiation
of any Proceedings for that purpose; (iv) of the receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of (but not the nature or details
concerning) any event or passage of time that makes the financial statements
included in a Registration Statement ineligible for inclusion therein or any
statement made in such Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to such Registration Statement,
Prospectus or other documents so that, in the case of such Registration
Statement or the Prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

 

(e)           The
Company will use commercially reasonable efforts to avoid the issuance of, or,
if issued, obtain the withdrawal of (i) any order suspending the
effectiveness of a Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest

 

10

 

practicable
moment, or if any such order or suspension is made effective during any
Suspension Period, as soon as reasonably practicable after the Suspension
Period is over.

 

(f)            During the Effectiveness Period, the Company will
furnish to each Holder, without charge, at least one conformed copy of each
Registration Statement and each amendment thereto and all exhibits to the
extent requested by such Person (including those incorporated by reference)
promptly after the filing of such documents with the Commission.

 

(g)           The
Company will promptly deliver to each Holder, without charge, as many copies of
each Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request during
the Effectiveness Period.  The Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders in connection with the offering and sale
of the Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.

 

(h)           The
Company will, prior to any public offering of Registrable Securities, use
commercially reasonable efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the applicable state securities or Blue Sky
laws of those jurisdictions within the United States as any Holder reasonably
requests in writing to keep each such registration or qualification (or
exemption therefrom) effective during the Effectiveness Period and to do any
and all other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Registrable Securities covered by the Registration
Statements; provided, that the Company will not be required to (i) qualify
generally to do business or as a dealer in securities in any jurisdiction where
it is not then so qualified or (ii) take any action which would subject
the Company to general service of process or any material tax in any such
jurisdiction where it is not then so subject.

 

(i)            The
Company will cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be
delivered to a transferee pursuant to the Registration Statements, which
certificates shall be free, to the extent permitted by the Acquisition
Agreement and the Convertible Note Agreement and/or Notes, of all restrictive
legends, and to enable such Registrable Securities to be in such denominations
and registered in such names as any such Holders may request.  In connection therewith, if required by the
Company’s transfer agent, the Company will promptly after the effectiveness of
the Registration Statement cause an opinion of counsel as to the effectiveness
of the Registration Statement to be delivered to and maintained with its
transfer agent, together with any other authorizations, certificates and
directions required by the transfer agent which authorize and direct the
transfer agent to issue such Registrable Securities without legend upon sale by
the holder of such shares of Registrable Securities under the Registration
Statement.

 

(j)            Upon
the occurrence of any event contemplated by Section 4(d)(v), as promptly
as reasonably possible, the Company will prepare a supplement or amendment,
including a post-effective amendment, if required by applicable law, to the
affected Registration Statements or a supplement to the related Prospectus or
any document incorporated or deemed to be incorporated therein by reference,
and file any other required document so that, as thereafter 

 

11

 

delivered,
no Registration Statement nor any Prospectus will contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

 

(k)           In connection with filing any Registration
Statement, the Company may require each Holder that wishes to include
Registrable Securities in such Registration Statement to furnish to the Company
a certified statement as to the securities of the Company (including shares of
Common Stock issuable upon conversion of Notes) beneficially owned by such
Holder and any Affiliate thereof substantially in the form of Exhibit A
hereto (the “Questionnaire”) for use in
connection with the Registration Statement at least ten (10) Trading Days
prior to the filing of the Registration Statement.  Each Holder further agrees that it shall not
be entitled to be named as a selling securityholder in a Registration Statement
or use the Prospectus for offers and resales of Registrable Securities at any
time, unless such Holder has returned to the Company a completed and signed
Questionnaire.  Each Holder acknowledges
and agrees that the information in the Questionnaire will be used by the
Company in the preparation of the Registration Statement and hereby consents to
the inclusion of such information in the Registration Statement.  The Company agrees to periodically update the
Prospectus upon request to add any Holders who have delivered a Questionnaire since
initial filing or the last such update as selling securityholders in the
Prospectus.

 

(l)            The
Holders may distribute the Registrable Securities by means of an underwritten
offering; provided that (a) the Demanding Holder provides written
notice to the Company of its intention to distribute Registrable Securities by
means of an underwritten offering, (b) the managing underwriter or
underwriters thereof shall be designated by the Demanding Holder (provided,
however, that such designated managing underwriter or underwriters shall
be reasonably acceptable to the Company), (c) each Holder participating in
such underwritten offering agrees to sell such Holder’s Registrable Securities
on the basis provided in any underwriting arrangements approved by the persons
entitled selecting the managing underwriter or underwriters hereunder and (d) each
Holder participating in such underwritten offering completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.  The Company hereby agrees
with each Holder that, in connection with any underwritten offering in
accordance with the terms hereof, it will negotiate in good faith and execute
all indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements, including using all
commercially reasonable efforts to procure customary legal opinions and auditor
“comfort” letters.

 

(m)          In the event the Holders seek to complete an underwritten
offering, for a reasonable period prior to the
filing of any Registration Statement, and throughout the Effectiveness Period,
the Company will make available upon reasonable notice at the Company’s
principal place of business or such other reasonable place for inspection by
the managing underwriter or underwriters selected in accordance with Section 4(l),
such financial and other information and books and records of the Company, and
cause the officers, employees, counsel and independent certified public
accountants of the Company to respond to such inquiries, as shall be reasonably
necessary (and in the case of counsel, not violate an attorney-client privilege
in such counsel’s reasonable belief) in the judgment of legal counsel for such
managing underwriter or underwriters, to conduct a reasonable investigation
within the meaning of 

 

12

 

Section 11
of the Securities Act; provided, however, that the foregoing
inspection and information gathering on behalf of the Holders (and any managing
underwriter or underwriters) shall be conducted by legal counsel to the Holders
(and legal counsel to such managing underwriter or underwriters); and provided
further that each such party shall be required to maintain in confidence
and not to disclose to any other Person any information or records reasonably
designated by the Company as being confidential, until such time as (A) such
information becomes a matter of public record (whether by virtue of its
inclusion in the Registration Statement or in any other manner other than
through the release of such information by any Person afforded access to such
information pursuant hereto), or (B) such Person shall be required so to
disclose such information pursuant to a subpoena or order of any court or other
governmental agency or body having jurisdiction over the matter (subject to the
requirements of such order, and only after such Person shall have given the
Company prompt prior written notice of such requirement so that the Company may
seek to object to such subpoena or order, or to make such disclosure subject to
a protective order or confidentiality agreement).

 

(n)           Each
Holder hereby acknowledges the restrictions on the transfer of the Acquisition
Shares as set forth in the Acquisition Agreement, and the Notes and the
underlying shares of Common Stock into which the Notes are convertible as set
forth in the Convertible Note Agreement, and expressly acknowledges and agrees
that nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Registrable Securities in violation of the terms of the
Acquisition Agreement or the Convertible Note Agreement, as applicable.

 

5.             Registration Expenses.  All fees and expenses incident to the Company’s
performance of or compliance with its obligations under this Agreement
(excluding any underwriting discounts and selling commissions, but including
all legal fees and expenses of one legal counsel to the Holders) shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to a
Registration Statement.  The fees and
expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without
limitation, fees and expenses (A) with respect to filings required to be
made with the Trading Market, and (B) in compliance with applicable state
securities or Blue Sky laws), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses if the printing of prospectuses is reasonably requested
by the holders of a majority of the Registrable Securities included in the
Registration Statement), (iii) messenger, telephone and delivery expenses,
(iv) fees and disbursements of counsel for the Company, (v) Securities
Act liability insurance, if the Company so desires such insurance, and (vi) fees
and expenses of all other Persons retained by the Company in connection with
the consummation of the transactions contemplated by this Agreement.  In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation
of the transactions contemplated by this Agreement (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit and the fees and
expenses incurred in connection with the listing of the Registrable Securities
on any securities exchange as required hereunder.  For the avoidance of doubt, each Holder shall
pay all underwriting and placement discounts and commissions, agency and
placement fees, brokers’ commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder’s Registrable Securities.  In addition to the foregoing, the Company
shall pay the reasonable legal fees and expenses of the single counsel to the
Holders in connection with the Registration Statement (not to exceed $50,000 in
the aggregate); provided,

 

13

 

however, if the
Holders reasonably determine that local counsel is required in connection with
the Registration Statement, then the Company shall be obligated to pay such
reasonable legal fees and expense as well (not to exceed $15,000 in the
aggregate).

 

6.             Indemnification.

 

(a)           Indemnification
by the Company.  The Company will, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, agents, partners, members, stockholders and employees of
each of them, each Person who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation, reasonable
costs of preparation and reasonable attorneys’ fees) and expenses
(collectively, “Losses”), as incurred,
arising out of or relating to any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, any Prospectus or any
form of prospectus (including, without limitation, any “issuer free writing
prospectus” as defined in Rule 433) or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein
or necessary to make the statements therein (in the case of any Prospectus or
form of prospectus (including, without limitation, any “issuer free writing
prospectus” as defined in Rule 433) or supplement thereto, in light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that such untrue statements, alleged untrue statements,
omissions or alleged omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Person expressly for use
therein pursuant to Section 4(k). 
The Company shall notify the Holders promptly of the institution, threat
or assertion of any Proceeding of which the Company is aware in connection with
the transactions contemplated by this Agreement.

 

(b)           Indemnification
by Holders.  Each Holder shall, notwithstanding any
termination of this Agreement, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and employees, each
Person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest
extent permitted by applicable law, from and against all Losses, as incurred,
arising solely out of or based solely upon any untrue statement of a material
fact contained in any Registration Statement, any Prospectus, or any form of
prospectus (including, without limitation, any “issuer free writing prospectus”
as defined in Rule 433), or in any amendment or supplement thereto, or
arising solely out of or based solely upon any omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus, or any form of prospectus (including, without limitation,
any “issuer free writing prospectus” as defined in Rule 433) or supplement
thereto, in light of the circumstances under which they were made) not
misleading to the extent, but only to the extent, that such untrue statements
or omissions are based solely upon information regarding such Holder furnished
in writing to the Company by such Holder in the Questionnaire or otherwise
expressly for use therein.  In no event
shall the liability of any selling Holder hereunder be greater in amount than
the dollar amount of the net proceeds received by such Holder upon the sale of
the Registrable Securities giving rise to such indemnification obligation.

 

14

 

(c)           Conduct
of Indemnification Proceedings.  If any
Proceeding shall be brought or asserted against any Person entitled to
indemnity hereunder (an “Indemnified Party”),
such Indemnified Party shall promptly notify the Person from whom indemnity is
sought (the “Indemnifying Party”) in
writing, and the Indemnifying Party shall be permitted to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, that the failure of any Indemnified Party to
give such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such failure
shall have proximately and materially adversely prejudiced the Indemnifying
Party.

 

An Indemnified Party shall have the right to employ
separate counsel in any such Proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or Parties unless:  (1) the Indemnifying Party
has agreed in writing to pay such fees and expenses; (2) the Indemnifying
Party shall have failed promptly to assume the defense of such Proceeding and
to employ counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party); provided
that the Indemnifying Party shall not be liable for the fees and expenses of
more than one separate firm of attorneys at any time for all Indemnified
Parties.  The Indemnifying Party shall not be liable for any settlement of
any such Proceeding effected without its written consent, which consent shall
not be unreasonably withheld, conditioned or delayed.  No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect
any settlement of any pending Proceeding in respect of which any Indemnified
Party is a party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the subject matter
of such Proceeding.

 

Subject to the terms and conditions of this
Agreement, all fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, promptly upon
receipt of written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled
to indemnification hereunder; provided that the Indemnified Party shall
promptly reimburse the Indemnifying Party for all such fees and expenses to the
extent it is finally judicially determined that such Indemnified Party is not
entitled to indemnification hereunder).

 

(d)           Contribution.  If a claim for
indemnification under Section 6(a) or 6(b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the 

 

15

 

amount paid
or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations.  The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact, has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission.  The amount paid or payable by a party as a
result of any Losses shall be deemed to include, subject to the limitations set
forth in Section 6(c), any reasonable attorneys’ or other reasonable fees
or expenses incurred by such party in connection with any Proceeding to the
extent such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party
in accordance with its terms.

 

The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 6(d) were
determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the
immediately preceding paragraph.  Notwithstanding the provisions of this Section 6(d),
no Holder shall be required to contribute, in the aggregate, any amount in
excess of the amount by which the proceeds actually received by such Holder
from the sale of the Registrable Securities subject to the Proceeding exceeds
the amount of any damages that such Holder has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission.  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

 

The indemnity and contribution agreements contained
in this Section are in addition to any liability that the Indemnifying
Parties may have to the Indemnified Parties and are not in diminution or limitation
of the indemnification provisions under the Acquisition Agreement.

 

7.             Facilitation of Sales Pursuant
to Rule 144.  To the extent it shall be required to do so
under the Exchange Act, the Company shall timely file the reports required to
be filed by it under the Exchange Act or the Securities Act (including the
reports under Sections 13 and 15(d) of the Exchange Act referred to
in subparagraph (c)(1) of Rule 144), and shall take such further
action as any Holder may reasonably request, all to the extent required from
time to time to enable the Holders to sell Registrable Securities without
registration under the Securities Act within the limitations of the exemption
provided by Rule 144.  Upon the
request of any Holder in connection with that Holder’s sale pursuant to Rule 144,
the Company shall deliver to such Holder a written statement as to whether it
has complied with such requirements.

 

8.             Miscellaneous.

 

(a)           Termination.  The rights granted
under this Agreement shall automatically terminate upon the earlier of (i) such
time as there are no outstanding Registrable Securities and (ii) the date
and time at which all of the Registrable Securities are Freely Tradable.

 

16

 

(b)           Remedies.  In the event of a
breach by the Company or by a Holder, of any of their obligations under this
Agreement, each Holder or the Company, as the case may be, in addition to being
entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement.  The Company and each Holder agree that
monetary damages would not provide adequate compensation for any losses
incurred by reason of a breach by it of any of the provisions of this Agreement
and further agree that, in the event of any action for specific performance in
respect of such breach, it shall waive the defense that a remedy at law would
be adequate.

 

(c)           Compliance.  Subject to the
Company’s compliance with its obligations set forth under Section 4, each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it (unless an exemption
therefrom is available) in connection with sales of Registrable Securities
pursuant to the Registration Statement and shall sell the Registrable
Securities only in accordance with a method of distribution described in the
Registration Statement.

 

(d)           Discontinued
Disposition.  Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 4(d), such Holder
will forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing by the Company that the use of the applicable Prospectus may
be resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement.  The Company may
provide appropriate stop orders to enforce the provisions of this paragraph.

 

(e)           Amendments
and Waivers.  No provision of this Agreement may be waived
or amended except in a written instrument signed by the Company and the
Investor; provided that that any requirement hereunder in respect of a
Demand Registration (including any obligation to pay Special Interest in
respect thereof) may be waived or modified with respect to all Registrable
Securities covered thereby in a written instrument signed by the Company and
the applicable Demanding Holder.  The
Company shall provide prior notice to all Holders of any proposed waiver or
amendment.  No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of either party to exercise any right hereunder
in any manner impair the exercise of any such right.

 

(f)            Notices.  Any and all notices
or other communications or deliveries required or permitted to be provided
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile or electronic mail as specified in this Section prior
to 5:00 p.m. (New York time) on a Business Day, (ii) the Business Day
after the date of transmission, if such notice or communication is delivered
via facsimile or electronic mail as specified in this Agreement later than 5:00 p.m.
(New York time) on any date and earlier than 11:59 p.m. (New York time) 

 

17

 

on
such date, (iii) the Business Day following the date of mailing, if sent
by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given.  The
address for such notices and communications shall be as follows:

 

	
  If to the Company:

  	
   

  	
  Deerfield Capital Corp.

  
	
   

  	
   

  	
  6250 North River Road

  
	
   

  	
   

  	
  9th Floor

  
	
   

  	
   

  	
  Rosemont, Illinois 60018

  
	
   

  	
   

  	
  Attention: Robert Contreras

  
	
   

  	
   

  	
  Telephone: (773) 380-1600

  
	
   

  	
   

  	
  Facsimile No: (773) 380-1695

  
	
   

  	
   

  	
  Email: rcontreras@deerfieldcapital.com

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Schulte
  Roth & Zabel LLP

  
	
   

  	
   

  	
  919 Third Avenue

  
	
   

  	
   

  	
  New
  York, NY 10022

  
	
   

  	
   

  	
  Attention:
  Marc Weingarten, Esq.

  
	
   

  	
   

  	
  Telephone:
   (212) 756-2000

  
	
   

  	
   

  	
  Facsimile
  No:  (212) 593-5955

  
	
   

  	
   

  	
  Email:
  marc.weingarten@srz.com

  
	
   

  	
   

  	
   

  
	
  If to Bounty:

  	
   

  	
  c/o Columbus Nova Partners, LLC

  601 Lexington Avenue, 58th Floor

  New York, NY 10022

  Attention: Paul Lipari

  Telephone: (212) 418-9600

  Facsimile No: (646) 349-1091

  Email: plipari@columbusnova.com

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Latham & Watkins LLP

  
	
   

  	
   

  	
  885 Third Avenue

  
	
   

  	
   

  	
  New York, NY 10022

  
	
   

  	
   

  	
  Attention: Dennis D. Lamont

  
	
   

  	
   

  	
  Telephone: (212) 906-1200

  
	
   

  	
   

  	
  Facsimile:  (212) 751-4864

  
	
   

  	
   

  	
  Email: dennis.lamont@lw.com

  
	
   

  	
   

  	
   

  
	
  If to an Additional Investor:

  	
   

  	
  [

  	
  ]

  
	
   

  	
   

  	
  [

  	
  ]

  
	
   

  	
   

  	
  Attention:  [

  	
  ]

  
	
   

  	
   

  	
  Telephone: [

  	
  ]

  
	
   

  	
   

  	
  Facsimile No: [

  	
  ]

  
	
   

  	
   

  	
  Email:  [

  	
  ]

  

 

18

 

	
  With a copy to:

  	
   

  	
  [

  	
  ]

  
	
   

  	
   

  	
  [

  	
  ]

  
	
   

  	
   

  	
  [

  	
  ]

  
	
   

  	
   

  	
  Attention:  [

  	
  ]

  
	
   

  	
   

  	
  Telephone: (     ) [

  	
  ]

  
	
   

  	
   

  	
  Facsimile: 
  (     ) [   

  	
  ]

  
	
   

  	
   

  	
  Email:  [

  	
  ]

  
	
   

  	
   

  	
   

  
	
  If to any other Person who
  is then the registered Holder:

  	
   

  	
  To
  the address of such Holder as it appears in the applicable register for the
  Registrable Securities, or after delivery of a Questionnaire by such Holder,
  as provided in such Questionnaire

  

 

or such other address as may be designated in
writing hereafter, in the same manner, by such Person.

 

(g)           Successors
and Assigns.  This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties
and shall inure to the benefit of each Holder; provided, however,
that nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Registrable Securities in violation of the terms of the
Acquisition Agreement or the Convertible Note Agreement.  The Company may not assign its rights or
obligations hereunder without the prior written consent of the other parties
hereto (other than by operation of merger).

 

(h)           Execution
and Counterparts.  This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement.  In the event that any signature is delivered by facsimile or
electronic mail transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such signature delivered
by facsimile or electronic mail transmission were the original thereof.

 

(i)            Governing
Law. 
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to choice of laws or conflicts of
laws provisions thereof that would require the application of the laws of any
other jurisdiction.

 

(j)            Submission
to Jurisdiction.  Each of the parties to this Agreement
irrevocably and unconditionally submits, for itself and its property, to the
exclusive jurisdiction of the courts of the State of New York sitting in New
York County and of the United States District Court of the Southern District of
New York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement, or for the recognition or
enforcement of any judgment, and each of the parties hereto irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State court or, to the
fullest extent permitted by applicable law, in such federal court.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding 

 

19

 

shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.

 

(k)           Waiver of Venue.  Each of the parties to this Agreement
irrevocably and unconditionally waives, to the fullest extent permitted by
applicable law, (i) any objection that it may now or hereafter have to the
laying of venue of any action or proceeding arising out of or relating to this
Agreement in any court referred to in Section 8(i) and (ii) the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.

 

(l)            Cumulative
Remedies. 
The remedies provided herein are cumulative and not exclusive of any
remedies provided by law.

 

(m)          Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction.  It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.

 

(n)           Entire
Agreement.  This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof,
and supersedes all other prior agreements and understandings, both written and
oral, between the parties, with respect to the subject matter hereof.

 

(o)           Headings;
Section References.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.  Unless otherwise stated,
references to Sections, Schedules and Exhibits are to the Sections, Schedules
and Exhibits of this Agreement.

 

[THIS
SPACE LEFT BLANK INTENTIONALLY]

 

20

 

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

 

 

	
   

  	
  DEERFIELD CAPITAL CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

SIGNATURE PAGE TO THE REGISTRATION RIGHTS AGREEMENT

 

 

	
   

  	
  INVESTORS:

  
	
   

  	
   

  
	
   

  	
  BOUNTY
  INVESTMENTS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

SIGNATURE PAGE TO THE REGISTRATION RIGHTS AGREEMENT

 

 

	
   

  	
  [ADDITIONAL
  INVESTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

SIGNATURE
PAGE TO THE REGISTRATION RIGHTS AGREEMENT

 

 

ANNEX A

 

PLAN
OF DISTRIBUTION

 

The holders of Securities (defined below) selling or
otherwise disposing of such Securities pursuant hereto (the “Selling Securityholders”) and any of
their pledgees, donees, transferees, assignees or other successors-in-interest
may, from time to time, sell, transfer or otherwise dispose of any or all of
their shares of common stock of the Company or other securities of the Company
included for public offering in this prospectus (collectively, “Securities”) or interests in
Securities on any stock exchange, market or trading facility on which the
Securities are traded or in private transactions.  These dispositions may
be at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the
time of sale, or at negotiated prices. 
The Selling Securityholders may use one or more of the following methods
when disposing of the Securities or interests therein:

 

·      ordinary brokerage transactions and transactions in
which the broker-dealer solicits purchasers;

 

·      block trades in which the broker-dealer will attempt
to sell the Securities as agent but may position and resell a portion of the
block as principal to facilitate the transaction;

 

·      purchases by a broker-dealer as principal and resale
by the broker-dealer for its account;

 

·      an exchange distribution in accordance with the rules of
the applicable exchange;

 

·      privately negotiated transactions;

 

·      short sales entered into after the effective date of
the registration statement of which this prospectus is a part;

 

·      through the writing or settlement of options or
other hedging transactions, whether through an options exchange or otherwise;

 

·      broker-dealers may agree with the Selling
Securityholders to sell a specified number of such Securities at a stipulated
price per share;

 

·      a combination of any such methods of disposition;
and

 

·      any other method permitted pursuant to applicable
law.

 

The Selling Securityholders may also sell Securities
under Rule 144 under the Securities Act, if available, rather than under
this prospectus.

 

Broker-dealers engaged by the Selling
Securityholders may arrange for other broker-dealers to participate in
sales.  Broker-dealers may receive commissions or discounts from the
Selling Securityholders (or, if any broker-dealer acts as agent for the
purchaser of 

 

 

Securities, from the
purchaser) in amounts to be negotiated.  The Selling Securityholders do
not expect these commissions and discounts to exceed what is customary in the
types of transactions involved.

 

The Selling Securityholders may from time to time
pledge or grant a security interest in some or all of the Securities owned by
them and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell Securities from time to time
under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 amending the list of
Selling Securityholders to include the pledgee, transferee or other successors
in interest as Selling Securityholders under this prospectus.

 

Upon the Company being notified in writing by a
Selling Securityholder that any material arrangement has been entered into with
a broker-dealer for the sale of Securities through a block trade, special
offering, exchange distribution or secondary distribution or a purchase by a
broker or dealer, a supplement to this prospectus will be filed, if required,
pursuant to Rule 424(b) under the Securities Act, disclosing (i) the
name of each such Selling Securityholder and of the participating
broker-dealer(s), (ii) the number of Securities involved, (iii) the
price at which such Securities were sold, (iv) the commissions paid or
discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that
such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus, and (vi) other
facts material to the transaction.  In addition, upon the Company being
notified in writing by a Selling Securityholder that a donee or pledge intends
to sell more than 500 Securities, a supplement to this prospectus will be filed
if then required in accordance with applicable securities law.

 

The Selling Securityholders also may transfer the
Securities in other circumstances, in which case the transferees, pledgees or
other successors in interest will be the selling beneficial owners for purposes
of this prospectus.

 

In connection with the sale of Securities or
interests in Securities, the Selling Securityholders may enter into hedging
transactions with broker-dealers or other financial institutions, which may in
turn engage in short sales of the Common Stock in the course of hedging the
positions they assume.  The Selling
Securityholders may also sell Securities of Common Stock short and deliver
these securities to close out their short positions, or loan or pledge the
Common Stock to broker-dealers that in turn may sell these securities.  The Selling Securityholders may also enter
into option or other transactions with broker-dealers or other financial
institutions or the creation of one or more derivative securities which require
the delivery to such broker-dealer or other financial institution of Securities
offered by this prospectus, which Securities such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented
or amended to reflect such transaction).

 

The Selling Securityholders may enter into
derivative transactions with third parties, or sell securities not covered by
this prospectus to third parties in privately negotiated transactions.  If the applicable prospectus supplement
indicates, in connection with those derivatives, the third parties may sell
securities covered by this prospectus and the applicable prospectus supplement,
including in short sale transactions.  If
so, the third party may use 

 

 

securities pledged by the
Selling Securityholders or borrowed from the Selling Securityholders or others
to settle those sales or to close out any related open borrowings of stock, and
may use securities received from the Selling Securityholders in settlement of
those derivatives to close out any related open borrowings of stock.  The third party in such sale transactions
will be an underwriter and, if not identified in this prospectus, will be
identified in the applicable prospectus supplement (or a post-effective
amendment).

 

The Company has advised the Selling Securityholders
that they are required to comply with Regulation M promulgated under the
Securities and Exchange Act during such time as they may be engaged in a
distribution of the Securities.  The foregoing may affect the
marketability of the Securities.

 

The Company is required to pay all fees and expenses
incident to the registration of the Securities. 
The Company has agreed to indemnify the Selling Securityholders against
certain losses, claims, damages and liabilities, including liabilities under
the Securities Act or otherwise.

 

 

EXHIBIT
A

 

FORM OF

SELLING SECURITYHOLDER QUESTIONNAIRE

 

Reference is made to that certain
registration rights agreement (the “Registration Rights
Agreement”), dated as of [               ],
2010, by and among Deerfield Capital Corp. (the “Company”)
and Bounty Investments, LLC (“Bounty”)
and any additional investors satisfactory to Bounty.  Capitalized terms used and not defined herein
shall have the meanings given to such terms in the Registration Rights
Agreement.

 

The undersigned Holder (the “Selling Securityholder”) of the
Registrable Securities is providing this Selling Securityholder Questionnaire
pursuant to Section 4(k) of the Registration Rights Agreement.  The Selling Securityholder, by signing and
returning this Selling Securityholder Questionnaire, understands that it will
be bound by the terms and conditions of this Selling Securityholder
Questionnaire and the Registration Rights Agreement.  The Selling Securityholder hereby
acknowledges its indemnity obligations pursuant to Section 6(b) of
the Registration Rights Agreement.

 

The Selling Securityholder provides the
following information to the Company and represents and warrants that such
information is accurate and complete:

 

(1)           (a)           Full Legal Name of Selling Securityholder:

(b)           Full Legal Name of
Registered Holder (if not the same as (a) above) through which Registrable
Securities listed in (3) below are held:

(c)           Full Legal Name of DTC
Participant (if applicable and if not the same as (b) above) through which
Registrable Securities listed in (3) below are held:

 

(2)           Address for Notices to Selling Securityholder:

 

Telephone (including area code):

Fax (including area code):

Contact Person:

 

(3)           Beneficial Ownership of Registrable Securities:

 

(a)           Type and Principal
Amount/Number of Registrable Securities beneficially owned:

(b)           CUSIP No(s). of such
Registrable Securities beneficially owned:

 

(4)           Beneficial Ownership of Other Securities of the
Company Owned by the Selling Securityholder:

 

Except as set forth below in this Item (4), the Selling Securityholder
is not the beneficial or registered owner of any securities of the Company
other than the Registrable Securities listed above in Item (3).

 

(a)           Type and Amount
of Other Securities beneficially owned by the Selling Securityholder:

 

(b)           CUSIP No(s). of such Other
Securities beneficially owned:

 

(5)           Relationship with the Company:

 

Except as set forth below, neither the Selling Securityholder nor any
of its affiliates, officers, directors or principal equity holders (5% or more)
has held any position or office or has had any other material relationship with
the Company (or its predecessors or affiliates) during the past three years.

 

State any exceptions here:

 

(6)           Is the Selling Securityholder a registered
broker-dealer?

 

Yes         £

No           £

 

If “Yes”, please answer subsection (a) and
subsection (b):

 

(a) 
Did the Selling Securityholder acquire the Registrable Securities as
compensation for underwriting/broker-dealer activities to the Company?

 

Yes         £

No           £

 

(b) 
If you answered “No” to question 6(a), please explain your reason for acquiring
the Registrable Securities:

 

(7)           Is the Selling Securityholder an affiliate of a
registered broker-dealer?

 

Yes         £

No           £

 

If “Yes”, please identify
the registered broker-dealer(s), describe the nature of the affiliation(s) and
answer subsection (a) and subsection (b):

 

 

(a) 
Did the Selling Securityholder purchase the Registrable Securities in the
ordinary course of business (if no, please explain)?

 

Yes         £

No           £

 

Explain:

 

 

(b) 
Did the Selling Securityholder have an agreement or understanding, directly or
indirectly, with any person to distribute the Registrable Securities at the
same time the Registrable Securities were originally purchased (if yes, please
explain)?

 

Yes         £

No           £

 

Explain:

 

(8)           Is the Selling Securityholder a non-public entity?

 

Yes         £

No           £

 

If “Yes”, please answer subsection (a):

 

(a) Identify
the natural person or persons that have voting or investment control over the
Registrable Securities that the non-public entity owns:

 

(9)           Plan of Distribution:

 

The Selling Securityholder (including its
donees and pledgees) intends to distribute the Registrable Securities listed
above in Item (3) pursuant to the Registration Statement in accordance
with the Plan of Distribution attached as Annex A to the Registration
Rights Agreement.

 

The Selling Securityholder acknowledges that
it understands its obligations to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and the rules thereunder relating to
stock manipulation, particularly Regulation M thereunder (or any successor rules or
regulations), in connection with any offering of Registrable Securities
pursuant to the Shelf Registration Agreement. 
The Selling Securityholder agrees that neither it nor any person acting
on its behalf will engage in any transaction in violation of such provisions.

 

Pursuant to the Registration Rights
Agreement, the Company has agreed under certain circumstances to indemnify the
Selling Securityholder against certain liabilities.

 

In the event the Selling Securityholder
transfers all or any portion of the Registrable Securities listed in Item (3) above
after the date on which such information is provided to the Company other than
pursuant to the Registration Statement, the Selling Securityholder agrees to
notify the transferee(s) at the time of the transfer of its rights and
obligations under this Selling Securityholder Questionnaire and the
Registration Rights Agreement.

 

In accordance with the Selling Securityholder’s
obligation under the Registration Rights Agreement to provide such information
as may be required by law or by the staff of the Commission for inclusion in
the Registration Statement, the Selling Securityholder agrees to promptly
notify the Company of any inaccuracies or changes in the information provided
herein that may occur subsequent to the date hereof at anytime while the
Registration Statement remains effective. 
All notices to the Selling Securityholder pursuant to the Registration
Rights Agreement shall be made in writing, by hand-delivery, first-class mail,
or air courier guaranteeing overnight delivery to the address set forth below.

 

 

By signing below, the Selling Securityholder
consents to the disclosure of the information contained herein in its answers
to Items (1) through (9) above and the inclusion of such information
in the Registration Statement and the related Prospectus.  The undersigned understands that such
information will be relied upon by the Company in connection with the preparation
or amendment of the Registration Statement and the related Prospectus.

 

By signing below, the undersigned agrees that
if the Company notifies the undersigned that the Registration Statement is not
available pursuant to the terms of the Registration Rights Agreement, the
undersigned will suspend use of the Prospectus until notice from the Company
that the Prospectus is again available.

 

Once this Selling Securityholder
Questionnaire is executed by the undersigned and received by the Company, the
terms of this Selling Securityholder Questionnaire, and the representations,
warranties and agreements contained herein, shall be binding on, shall inure to
the benefit of and shall be enforceable by the respective successors, heirs,
personal representatives, and assigns of the Company and the undersigned with
respect to the Registrable Securities beneficially owned by the undersigned and
listed in Item (3) above.  This
Selling Securityholder Questionnaire shall be governed by and construed in
accordance with the laws of the State of New York without regard to choice of
laws or conflicts of laws provisions thereof that would require the application
of the laws of any other jurisdiction.

 

 

IN WITNESS WHEREOF, the undersigned, by authority
duly given, has caused this Selling Securityholder Questionnaire to be executed
and delivered either in person or by its duly authorized agent.

 

	
  Dated: 

  	
   

  	
   

  

 

	
   

  	
   

  
	
   

  	
  Beneficial
  Owner

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

PLEASE RETURN THE COMPLETED
AND EXECUTED

SELLING SECURITYHOLDER QUESTIONNAIRE TO THE COMPANY AT:Exhibit 10.3

 

TRANSITION SERVICES AGREEMENT

 

This Transition Services
Agreement (the “Agreement”) dated as of March 22, 2010, among
Deerfield Capital Corp., a Maryland corporation (the “Company”),
Columbus Nova Partners LLC, a Delaware limited liability company (the “Investor”),
and Columbus Nova Credit Investments Management, LLC, a Delaware limited
liability company and wholly owned subsidiary of the Investor (the “Manager”
and, collectively with the Investor and the Company, the “Parties) is
effective as of the Effective Date (as defined below).

 

RECITALS

 

WHEREAS, concurrently
herewith, the Company, the Manager and the Investor are entering into an
Acquisition and Investment Agreement (the “Acquisition Agreement”),
dated as of March 22, 2010 (the “Effective Date”), pursuant to
which, among other things, the Company is agreeing to acquire all of the equity
interests of the Manager from the Investor in consideration for the issuance by
the Company of shares of common stock of the Company to the Investor.

 

WHEREAS, in order to
continue operating its business between the Effective Date and the Closing Date
or if the Acquisition Agreement is terminated and not consummated, for a period
of up to six months after the date of such termination, the Manager desires that
the Company provide or cause to be provided and the Company desires to provide
or cause to be provided the services described in this Agreement and Schedule
1 hereto, pursuant to the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in
consideration of the premises and the mutual representations, warranties,
covenants and agreements contained herein and in the Acquisition Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties hereto agree as follows:

 

ARTICLE 1

DEFINITIONS

 

1.1          Defined Terms.  All
capitalized terms used in this Agreement shall have the meanings set forth in
this Agreement or, if not defined in this Agreement, in the Acquisition
Agreement.

 

ARTICLE 2

PROVISION OF THE SERVICES

 

2.1          Description of the Services.  The Company shall use commercially reasonable
efforts to provide, or cause to be provided, the services described in this
Agreement and Schedule 1
hereto (the “Services”) from the Effective Date through (i) if the
Acquisition Agreement is consummated, the Closing Date, or (ii) if the
Acquisition Agreement is terminated and not consummated, until the end of the
term specified in Section 4.1; provided, however, that the Services set
forth in Section 2 of Schedule 1 shall be provided beginning on April 30,
2010 or

 

 

such earlier date as the
Parties agree in writing. 
Except as provided below, the Services may be modified from time to time
but only by mutual agreement (not to be unreasonably withheld) of the Manager
and the Company.  In the event that the
Manager determines that the Services do not include a service that is otherwise
required pursuant to the terms of the Acquisition Agreement, any Ancillary
Documents or any other agreements or instruments contemplated thereby, the
Manager shall promptly notify the Company and the Company hereby agrees to
promptly perform such Service to the extent practicable.  To the extent that Services require written
documents, the Company agrees to deliver drafts of such documents sufficiently
in advance of their due date in order to permit the Manager the opportunity to
review and provide comments.  The Company
(i) shall not be in breach of this Agreement if the Company does not
provide, or cause to be provided, any Services as a result of any act or
omission by the Manager, any refusal to give, or delay in providing, any
consent to any matter under this Agreement on the part of the Manager, or any
breach by the Manager of its obligations under this Agreement, and (ii) is
not required to provide any Service if the provision thereof would violate any
applicable law.  The Manager acknowledges
and understands that the Services are transitional in nature and are furnished
by the Company for the purpose of facilitating the transactions contemplated
under the Acquisition Agreement and the operation of the business of the
Manager between the Effective Date and the Closing Date or if the Acquisition
Agreement is terminated, the Termination Date (as defined in Section 4.1),
so that the Manager can find an alternative service provider.

 

2.2          Manager Cooperation.  The Manager shall provide, and cause its
employees, agents and representatives to provide, all cooperation and
assistance reasonably required by the Company or any of its Affiliates or
subcontractors to enable the Company to provide, or cause to be provided, the
Services.  The Manager shall provide
reasonable access to the personnel and premises of Manager at such times as are
necessary to enable the Company to perform its obligations under this
Agreement.

 

2.3          Services
Non-Exclusive.  The
Services provided and the personnel providing the Services are not and shall
not be deemed to be exclusive to the Manager, and the Company and its personnel
shall be free to render similar services or any other services to itself or to
any other person or entity.

 

ARTICLE 3

FEES AND PAYMENT

 

3.1          Fees.  During the
period from the Effective Date until the earlier of the Closing Date or the
date the Acquisition Agreement is terminated in accordance with its terms,
there shall be no fees for the Services. 
If the Acquisition Agreement is terminated in accordance with its terms (i) by
the Company for any reason (other than in accordance with Section 8.1(b) or
Section 8.1(f) of the Acquisition Agreement) or the Investor pursuant
to Section 8.1(g) of the Acquisition Agreement, then there shall be
no fees for the Services for the remainder of the term of this Agreement, or (ii) by
the Investor for any other reason set forth in Section 8.1 of the
Acquisition Agreement or the Company in accordance with Section 8.1(b) or
Section 8.1(f) of the Acquisition Agreement, then the Manager shall
pay to the Company a fee in respect of each Manager CLO Issuer for the period
from the date of such termination of the Acquisition 

 

2

 

Agreement through the
remainder of the term of this Agreement in an amount equal to, for each of the
Manager CLO Issuers on which all or a portion of its Senior Collateral Management
Fee (as defined in the applicable Manager CLO Management Agreement or Manager
CLO Indenture) is paid, one-half (1⁄2) of such Senior Collateral Management Fee
actually paid to the Manager, such amount to be prorated for any partial
period, based on the proportion of the number of days between the date of such
termination of the Acquisition Agreement and the Termination Date, as
applicable, and the payment date for such Manager CLO Issuer bears to the
number of days in the Interest Accrual Period (as defined in the applicable
Manager CLO Indenture) that relates to such payment date (collectively, the “Fees”).

 

3.2          Payment.  The Manager shall pay to the Company the Fees
within three Business Days from the day on which the Manager actually receives Senior Collateral
Management Fees from any Manager CLO Issuer pursuant
to a Manager CLO Management Agreement.  If any Fees are not paid when due, all unpaid
amounts will accrue interest daily from the due date to the date of actual
payment, at the rate of one percent per month or, if lower, at the highest rate
allowable under applicable law.  The
Manager shall not undertake or agree to cap, waive, offset, reimburse or
otherwise reduce any Senior Collateral Management Fees payable by any Manager
CLO Issuer during the term of this Agreement without the prior written consent
of the Company.

 

3.3          Taxes.  The Company is responsible for payment of all
taxes due and owing in respect of the provisions of the Services and the Fees.

 

3.4          Expenses.  Subject to Sections 3.3 and 5.2,
the Manager shall reimburse Company for all reasonable and documented
out-of-pocket expenses, including but not limited to, travel expenses, incurred
by the Company in connection with the provision of the Services; provided
that for any expenses reasonably expected to exceed $5,000, the written consent
of the Manager prior to the incurrence of such expense.  The Company shall submit all such approved
expenses to the Manager from time to time for reimbursement, together with
reasonable documentation supporting such expenses, and the Manager shall
promptly reimburse the Company therefor.

 

ARTICLE 4

TERM AND TERMINATION

 

4.1          Term
of Agreement.  The term of
this Agreement begins on the Effective Date and ends on the Closing Date; provided
that if the Acquisition Agreement is terminated in accordance with its terms,
then this Agreement shall remain in effect until the earlier of (i) the
date that is six months from the date of such termination, or (ii) five
Business Days following written notice of termination of this Agreement by the
Manager to the Company (the “Termination Date”).

 

4.2          Termination
for Breach.  If a Party
materially breaches any of its obligations under this Agreement, and does not
cure such breach within five Business Days after receiving written notice
thereof from the non-breaching Party, then the non-breaching Party may, at its
option, terminate any Service affected by such breach or this Agreement in its
entirety by providing written notice of termination to the other Party, which
termination shall be effective immediately.

 

3

 

4.3          Effect
of Termination.  Upon
termination or expiration of this Agreement other than upon the occurrence of
the Closing Date:

 

(a)   all rights and
obligations of the parties hereto under this Agreement will cease, except as
set forth in Section 6.3;

 

(b)   the Parties
each will promptly return to the other or destroy, in accordance with the terms
set forth in the Confidentiality Agreement, any confidential information of the
other party in its possession or control that was provided or obtained in
connection with this Agreement and the provision of the Services; and

 

(c)   the Company
will provide such cooperation as may reasonably be requested by the Investor or
the Manager, in order to transition the Services to the Investor, the Manager
or a third party service provider.

 

ARTICLE 5

RESPONSIBILITIES; LIMITATION OF LIABILITY

 

5.1          Compliance
with Service Standards.  The Company will cause the Services to be
provided to the Manager in accordance with the following standards:  (i) with a degree of quality, care,
responsiveness and diligence that in all material respects are at least as high
as those typically used by the Company in providing similar services during the
prior year period immediately preceding the Effective Date, and (ii) in
material compliance with applicable Laws.

 

5.2          Personnel.  As between the Company, and the Manager and
the Investor, the Company will have the sole and exclusive responsibility for
the Company’s personnel, including responsibility for the payment of any and
all compensation, unemployment insurance, worker’s compensation, disability
insurance, employee benefits and other employment-related charges, taxes and
deductions with respect to such personnel.  Throughout the term of this Agreement,
William Hayes and Glenn Duffy (the “Portfolio
Managers”) shall continue to be employed by the Manager.

 

5.3          Data Backup / System Security.  The Company will continue to
maintain standard data back up and recovery procedures consistent with its own
existing internal systems and policies in connection with the systems used in
performing the Services.  The Company
will maintain security procedures with respect to the access and maintenance of
any confidential information of the Investor or the Manager that is in the Company’s possession in performing
the Services, which procedures shall be consistent with the Company’s own
existing policies and procedures.

 

5.4          Cutover.  In the event of the expiration or termination
of this Agreement, within ten (10) Business Days of the Manager’s request,
the Company will transfer to the Manager (if not already transferred pursuant
to the Acquisition Agreement) all books, records and other data and information
necessary to perform those tasks similar or related to the Services, as well as
any ancillary tasks that may arise in connection with any deliverable produced
in connection with the Services.

 

4

 

5.5          Confidentiality.  The Parties each agree to comply with the
obligations regarding confidential information and confidentiality as set forth
in the Confidentiality Agreement.

 

5.6          Ownership
of Data.  Each of the
Investor and the Manager shall own all right, title and interest in and
to all data generated on its behalf by the Company in the performance of the
Services.  From time to time as
reasonably requested by the Investor or the Manager and upon termination or
expiration of this Agreement, the Company shall provide to the Investor or the
Manager, as the case may be, a copy of all data in the possession of the
Company that is owned by the Investor or the Manager, as applicable.  The Investor or the Manager shall retain
ownership of all data owned by the Investor or the Manager, respectively, that
is processed or stored by the Company and the processing and/or storage of any
such data by the Company shall not create any ownership interest therein for
the Company.

 

5.7          Representations
and Warranties.  The Company
represents and warrants to the Investor and the Manager (i) that the
Company has the requisite power and authority necessary to perform the Services
hereunder, and (ii) that there are no material authorizations, consents or
approvals required to be obtained by the Company to perform the Services
hereunder.  The Manager represents and
warrants to the Company (i) that the Manager has the requisite power and
authority necessary to enter into this Agreement, and (ii) that there are
no material authorizations, consents or approvals required to be obtained by
the Manager to enter into this Agreement.

 

5.8          Limitation
of Liability.  Under no
circumstances will the Company or its Affiliates be liable for any losses or
damages in connection with this Agreement, whether direct, indirect, incidental,
special, consequential, punitive or exemplary, including, but not limited to,
lost time, lost money, lost profits, or goodwill, regardless of the form of the
action or the basis of the claim, even if the company or its Affiliate has been
apprised of the possibilities of such damages, and whether or not such could
have been foreseen or prevented, except for acts or omissions constituting bad
faith, fraud, willful misconduct or gross negligence in the performance, or
reckless disregard, of the obligations in respect of providing the Services
hereunder.  The Parties acknowledge and
agree that, in the event that the Company is found to have any liability under
this Agreement, the Company’s liability is limited to the total amount of Fees
received by the Company.

 

5.9          Indemnity
by the Company.  The Company
agrees to indemnify, protect and hold harmless the Investor and the Manager,
its Affiliates, and each of their respective directors, officers, managers,
members, employees, agents, shareholders, partners and representatives (each,
an “Indemnified Party”) from and against any and all losses, costs,
damages, injuries, liabilities, claims, demands, penalties, interest and causes
of action, including reasonable attorney’s and expert’s fees and court costs,
in connection with any third party claim arising from or relating to the
Company’s fraud, gross negligence or willful misconduct in the performance by
the Company of the Services, as determined by a court of competent jurisdiction.

 

5

 

ARTICLE 6

GENERAL

 

6.1          Relationship of the Parties.  The Company, in performance of this
Agreement, is acting as an independent contractor to the Manager and the
Investor, and not as a partner, joint venturer or agent.  The Parties do not intend to create by this
Agreement an employer-employee relationship. 
Each Party retains control over its personnel, and the employees of one
Party shall not be considered employees of the other Party.  Neither Party will be bound by any representation,
act or omission of the other Party. 
Neither Party has any right, power or authority to create any
obligation, express or implied, on behalf of the other Party.

 

6.2          Binding Effect; No Third Party Beneficiaries; No Assignment.  This Agreement shall be legally binding upon
and inure to the benefit of the Parties and their respective successors and
assigns.  Nothing herein shall create or
be deemed to create any third party beneficiary rights in any Person that is
not a Party.  No assignment hereof or of
any rights or obligations hereunder may be made by any Party (by operation of
law or otherwise) without the prior written consent of the other Parties and
any attempted assignment without such required consent shall be without effect.

 

6.3          Survival.  Articles
5 and 6 shall survive termination or expiration of this Agreement.

 

6.4          Entire Agreement.  The Schedule attached to this Agreement shall
be construed with and as an integral part of this Agreement to the same extent
as if the same had been set forth verbatim herein.  This Agreement contains, and is intended as,
a complete statement of, all of the terms and the arrangements between the
Parties with respect to the matters provided for herein, and supersedes any previous
agreements and understandings between the Parties with respect to those
matters.

 

6.5          Notices.  All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand, or when sent by telecopier (with receipt
confirmed); provided, that a copy is also sent by registered mail, return
receipt requested, or by courier addressed as follows (or to such other address
for a Party as shall be specified by like notice):

 

If
to the Company (or the Manager after the Closing Date):

 

Deerfield Capital Corp.
 6250 North River Road, 9th Floor

Rosemont, Illinois 60018

Attention:              Robert Contreras

Telecopier:            (773) 380-1695

 

If
to the Investor (or the Manager prior to the Closing Date):

 

c/o
Renova US Management LLC

601
Lexington Avenue, 58th Floor

New
York, NY 10022

 

6

 

Attention:              Michael
Sloan

Telephone:            (212)
418-9600

Telecopier:            (646) 349-1092

 

with
copies to:

 

Latham &
Watkins LLP 

885 Third Avenue 

New York, New York 10022

Attention:              James C. Gorton, Esq.

Telecopier:            (212) 751-4864

 

6.6          Governing
Law.  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.

 

6.7          Informal
Dispute Resolution. 
Prior to initiating any lawsuit or other proceeding, the Parties will
attempt in good faith to resolve any dispute or claim arising out of or
relating to this Agreement through negotiations between the respective representatives
of the Parties having authority to settle the matter.

 

6.8          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 agrees
it will not attempt to deny or defeat such jurisdiction by motion or other
request for leave from such courts, and (c) hereby agrees not to commence
any such action other than before one of the above-named courts. Each Party
hereby consents to service of process in any such action in any manner
permitted by New York law and agrees that service of process made by registered
or certified mail, return receipt requested, at its address specified pursuant
to Section 6.5, shall constitute good and valid service of process
in any such action.

 

6.9          Immediate
Injunctive Relief. 
Notwithstanding anything to the contrary, when a Party makes a good
faith determination that a breach of the terms of this Agreement by the other
Party is such that the damages to such Party resulting from the breach are such
that a temporary restraining order or other immediate injunctive relief is the
only adequate remedy, then such Party may make immediate application to a court
of competent jurisdiction for appropriate provisional remedies.

 

6.10        [Reserved]

 

6.11        Waiver
of Jury Trial.  Each Party
hereto waives its right to a trial by jury in any judicial proceeding
involving, directly or indirectly, any matters (whether sounding in tort, contract
or 

 

7

 

otherwise) in any way
arising out of, related to or connected with this Agreement or the transactions
contemplated hereby.

 

6.12        Amendments
and Waivers.  This
Agreement may not be amended, altered or modified except by written instrument
executed by each of the Parties hereto. 
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.

 

6.13        Severability.  Any term or provision of this Agreement that
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.  If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.

 

6.14        Headings.  The descriptive headings of the Articles,
Sections and subsections of this Agreement are for convenience only and do not
constitute a part of this Agreement.

 

6.15        Execution
in Counterparts.  This
Agreement may be executed in two (2) or more identical counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.

SIGNATURE PAGE FOLLOWS.]

 

8

 

IN
WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.

 

	
   

  	
   

  	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  DEERFIELD
  CAPITAL CORP.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Jonathan Trutter

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Jonathan Trutter

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  INVESTOR:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  BOUNTY
  INVESTMENTS, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Andrew Intrater

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Andrew Intrater

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MANAGER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  COLUMBUS
  NOVA CREDIT INVESTMENTS MANAGEMENT, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Andrew Intrater

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Andrew Intrater

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:  CEO of Bounty Investments, LLC, as its sole
  member

  
						

 

9

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