Document:

ENR 10Q 06.30.12 EX10.2 (1)

Exhibit 10.2
Conformed copy, reflecting Amendment No. 1 dated as of May 9, 2009, Amendment No. 2 dated as of May 3, 2010, Waiver and Amendment No. 3 dated as of February 24, 2011, Amendment No. 4 dated as of May 2, 2011 and Amendment No. 5 dated as of June 25, 2012

THIRD AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

dated as of May 4, 2009,
(as amended through June 25, 2012)
Among
ENERGIZER RECEIVABLES FUNDING CORPORATION, as Seller,
ENERGIZER BATTERY, INC., as Servicer
ENERGIZER PERSONAL CARE, LLC, as Sub-Servicer

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH
as Administrative Agent and as an Agent

and
THE SEVERAL AGENTS, CONDUITS AND COMMITTED PURCHASERS PARTY HERETO 
FROM TIME TO TIME

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TABLE OF CONTENTS
        Page
ARTICLE I 
 
PURCHASE ARRANGEMENTS
	
				
	Section 1.1
	Purchase Facility
	1
	

	Section 1.2
	Increases
	2
	

	Section 1.3
	Decreases
	2
	

	Section 1.4
	Payment Requirements
	2
	

	Section 1.5
	Restated Agreement
	3
	

ARTICLE II 
 
PAYMENTS AND COLLECTIONS
	
				
	Section 2.1
	Payments
	3
	

	Section 2.2
	Collections Prior to Amortization   
	3
	

	Section 2.3
	Collections Following Amortization      
	4
	

	Section 2.4
	Application of Collections    
	4
	

	Section 2.5
	Payment Recission     
	5
	

	Section 2.6
	Maximum Purchaser Interests
	5
	

	Section 2.7
	Clean Up Call     
	5
	

ARTICLE III 
 
CONDUIT FUNDING
	
				
	Section 3.1
	CP Costs
	5
	

	Section 3.2
	CP Costs Payments
	5
	

	Section 3.3
	Calculation of CP Costs
	5
	

ARTICLE IV 
 
COMMITTED PURCHASER FUNDING
	
				
	Section 4.1
	Committed Purchaser Funding
	6
	

	Section 4.2
	Yield Payments
	6
	

	Section 4.3
	Selection and Continuation of Tranche Periods
	6
	

	Section 4.4
	Committed Purchaser Discount Rates
	6
	

	Section 4.5
	Suspension of the LIBO Rate
	6
	

	Section 4.6
	Extension of Liquidity Termination Date
	7
	

ARTICLE V 
 
REPRESENTATIONS AND WARRANTIES
	
				
	Section 5.1
	Representations and Warranties of the Seller Parties
	8
	

	Section 5.2
	Committed Purchaser Representations and Warranties
	11
	

ARTICLE VI 
 
CONDITIONS OF PURCHASES
	
				
	Section 6.1
	Conditions Precedent to Initial Incremental Purchase
	11
	

	Section 6.2
	Conditions Precedent to All Purchases and Reinvestments
	12
	

ARTICLE VII 
 
COVENANTS
	
				
	Section 7.1
	Affirmative Covenants of the Seller Parties
	12
	

	Section 7.2
	Negative Covenants of the Seller Parties
	20
	

ARTICLE VIII 
 
ADMINISTRATION AND COLLECTION
	
				
	Section 8.1
	Designation of Servicer
	21
	

	Section 8.2
	Duties of Servicer
	22
	

	Section 8.3
	Collection Notices
	22
	

	Section 8.4
	Responsibilities of Seller
	23
	

	Section 8.5
	Reports
	23
	

	Section 8.6
	Servicing Fees
	23
	

ARTICLE IX 
 
AMORTIZATION EVENTS
	
				
	Section 9.1
	Amortization Events
	23
	

	Section 9.2
	Remedies
	25
	

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ARTICLE X 
 
INDEMNIFICATION
	
				
	Section 10.1
	Indemnities by the Seller Parties
	25
	

	Section 10.2
	Increased Cost and Reduced Return    
	27
	

	Section 10.3
	Other Costs and Expenses
	28
	

	Section 10.4
	Allocations
	28
	

	Section 10.5
	Accounting Based Consolidation Event
	29
	

ARTICLE XI 
 
THE ADMINISTRATIVE AGENT
	
				
	Section 11.1
	Authorization and Action
	29
	

	Section 11.2
	Delegation of Duties
	29
	

	Section 11.3
	Exculpatory Provisions
	29
	

	Section 11.4
	Reliance by Administrative Agent
	30
	

	Section 11.5
	Non-Reliance on Administrative Agent and Other Purchasers
	30
	

	Section 11.6
	Reimbursement and Indemnification
	30
	

	Section 11.7
	Administrative Agent in its Individual Capacity
	30
	

	Section 11.8
	Successor Administrative Agent
	30
	

ARTICLE XII 
 
ASSIGNMENTS; PARTICIPATIONS
	
				
	Section 12.1
	Assignments
	31
	

	Section 12.2
	Participations
	31
	

	Section 12.3
	Federal Reserve
	31
	

ARTICLE XIII 
 
{RESERVED}
ARTICLE XIV 
 
MISCELLANEOUS
	
				
	Section 14.1
	Waivers and Amendments
	32
	

	Section 14.2
	Notices
	33
	

	Section 14.3
	Ratable Payments
	33
	

	Section 14.4
	Protection of Ownership Interests of the Purchasers
	33
	

	Section 14.5
	Confidentiality
	34
	

	Section 14.6
	Bankruptcy Petition
	34
	

	Section 14.7
	Limitation of Liability
	34
	

	Section 14.8
	CHOICE OF LAW
	34
	

	Section 14.9
	CONSENT TO JURISDICTION
	34
	

	Section 14.10
	WAIVER OF JURY TRIAL
	35
	

	Section 14.11
	Integration; Binding Effect; Survival of Terms
	35
	

	Section 14.12
	Counterparts; Severability; Section References
	35
	

	Section 14.13
	BTMU Corporate Bank Roles
	35
	

	Section 14.14
	Characterization
	36
	

	Section 14.15
	Withholding
	36
	

	Section 14.16
	Patriot Act
	36
	

	Section 14.17
	No Recourse
	36
	

	Section 14.18
	Limitation on Payments
	36
	

	Section 14.17
	No Recourse
	 

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Exhibits and Schedules
	
		
	Exhibit I
	Definitions

	Exhibit II
	Form of Purchase Notice

	Exhibit III
	Places of Business of the Seller Parties; Locations of Records; Federal Employer Identification Number(s)

	Exhibit IV
	Names of Collection Banks; Collection Accounts

	Exhibit V
	Form of Compliance Certificate

	Exhibit VI
	Form of Collection Account Agreement

	Exhibit VII
	Form of Assignment Agreement

	Exhibit VIII
	Credit and Collection Policy

	Exhibit IX
	Form of Contract(s)

	Exhibit X
	Form of Monthly Report

	Exhibit XI
	Form of Performance Undertaking

	Exhibit XII
	Form of Interim Report

	Schedule A
	Commitments

	Schedule B
	Closing Documents

THIRD AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
This Third Amended and Restated Receivables Purchase Agreement dated as of May 4, 2009 is among ENERGIZER RECEIVABLES FUNDING CORPORATION, a Delaware corporation (“Seller”), ENERGIZER BATTERY, INC., a Delaware corporation (“Energizer”), as Servicer, ENERGIZER PERSONAL CARE, LLC, a Delaware limited liability company (“EPC”), as Sub-Servicer (Sub-Servicer together with Seller and Servicer, the “Seller Parties” and each a “Seller Party”), the Committed Purchasers listed from time to time on Schedule A to this Agreement (together with any of their respective successors and assigns hereunder), GOTHAM FUNDING CORPORATION (“Gotham”), VICTORY RECEIVABLES CORPORATION (“Victory” and together with Gotham and any conduit that becomes a party hereto from time to time, the “Conduits”), THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH (“BTMU”), as an Agent and as administrative agent for the Purchasers hereunder or any successor agent hereunder (together with its successors and assigns hereunder, the “Administrative Agent”).  Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I.
PRELIMINARY STATEMENTS
Seller desires to transfer and assign Purchaser Interests to the Purchasers from time to time.
Each Conduit may, in its absolute and sole discretion, purchase Purchaser Interests from Seller from time to time.
In the event that a Conduit declines to make any purchase, the Committed Purchaser(s) in the relevant Conduit Group shall, at the request of Seller, purchase Purchaser Interests from time to time.
The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, has been requested and is willing to act as Administrative Agent on behalf of the Conduits and the Committed Purchasers in accordance with the terms hereof.
Seller, Servicer, the Committed Purchasers, the Conduits, the Agents and the Administrative Agent are parties to that certain Receivables Purchase Agreement dated as of April 4, 2000 (the “Original RPA”), as amended and restated by that certain First Amended and Restated Receivables Purchase Agreement dated as of June 30, 2008 (the “First Amended and Restated RPA”), as amended and restated by that certain Second Amended and Restated Receivables Purchase Agreement dated as of March 27, 2009 (the “Second Amended and Restated RPA”), as amended or otherwise modified to and including the date hereof (the Original RPA, the First Amended and Restated RPA and the Second Amended and Restated RPA together, the “Original Agreement”), and desire to amend and restate the Original Agreement to appoint EPC as Sub-Servicer of Receivables under this Agreement and to make certain other changes as are set forth in this Agreement.

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ARTICLE I 
 
PURCHASE ARRANGEMENTS
Section 1.1    Purchase Facility. Upon the terms and subject to the conditions hereof, Seller may, at its option, sell and assign Purchaser Interests to the Administrative Agent for the benefit of one or more of the Purchasers.  In accordance with the terms and conditions set forth herein, the Relevant Conduits in their respective Conduit Groups may collectively, at their option, instruct the Administrative Agent to purchase on their behalf, or if either of the Relevant Conduits shall decline to purchase, the Administrative Agent shall purchase, on behalf of the Committed Purchasers in the related Conduit Group, Purchaser Interests from time to time in an aggregate amount not to exceed at such time the lesser of (i) the Purchase Limit and (ii) the aggregate amount of the Commitments during the period from the date hereof to but not including the Facility Termination Date.  Furthermore, with respect to each Conduit Group, the product of (x) the Purchase Pro Rata Share of such Conduit Group and (y) the aggregate amount of outstanding Capital of the Purchaser Interests so purchased by the Purchasers in such Conduit Group from time to time shall not exceed at such time the lesser of (a) the related Group Purchase Limit and (b) the aggregate amount of the related Commitments for such Conduit Group during the period from the date hereof to but not including the Facility Termination Date. Each of the parties hereto hereby acknowledges and agrees that from and after the Fifth Amendment Date and for all purposes under the Transaction Documents, the Conduit Group that includes SunTrust Bank shall not include a Conduit (unless and until a Conduit shall later join such Conduit Group pursuant to the terms hereof), and each request by Seller for purchases by Conduits in such Conduit Group pursuant to Section 1.2 shall be deemed to be a request that the Committed Purchasers in such Conduit Group make such purchase.
Section 1.2    Increases.  Seller shall provide the Agents with at least one Business Days’ prior notice in a form set forth as Exhibit II hereto of each Incremental Purchase (a “Purchase Notice”), with a written copy thereof delivered simultaneously to the Administrative Agent.  Each Purchase Notice shall be subject to Section 6.2 hereof and, except as set forth below, shall be irrevocable and shall specify the requested Purchase Price (which shall be at least $1,000,000 and integral multiples of $100,000 in excess thereof) and date of purchase and, in the case of an Incremental Purchase to be funded by the Committed Purchasers, the requested Discount Rate and Tranche Period.  Following receipt of a Purchase Notice, the Agents will determine whether the Relevant Conduits in their respective Conduit Groups agree to make the purchase.  Without the prior approval of the Relevant Conduit in each Conduit Group, Seller shall not request more than three proposed purchases in any calendar month and, unless approved by each Relevant Conduit in its sole discretion, any such requests in excess of three in any calendar month shall be void.  If the Relevant Conduit in a Conduit Group declines to make a proposed purchase, Seller may cancel the Purchase Notice (with a written copy of the notice of such cancellation delivered simultaneously to the Administrative Agent) or, in the absence of such a cancellation, the Incremental Purchase of the Purchaser Interest will be made by the Committed Purchasers in the related Conduit Group.  On the date of each Incremental Purchase, upon satisfaction of the applicable conditions precedent set forth in Article VI, each Agent on behalf of the Relevant Conduit or the Committed Purchasers in each Conduit Group, as applicable, shall deposit to the Facility Account, in immediately available funds, no later than 3:00 p.m. (New York time), an amount equal to (i) in the case of the Relevant Conduit, the relevant Purchase Pro Rata Share of the aggregate Purchase Price of the Purchaser Interests such Relevant Conduit is then purchasing or (ii) in the case of a Committed Purchaser, such Committed Purchaser’s Pro Rata Share of the relevant Purchase Pro Rata Share of the aggregate Purchase Price of the Purchaser Interests the Committed Purchasers in the related Conduit Group are purchasing.  A default by a Purchaser in the performance of its obligations under this Agreement shall not relieve the other Purchasers of their obligations hereunder.  The Purchase Notice which is to be effective on the date hereof shall not be required to be provided with at least one Business Day’s prior notice.
Section 1.3    Decreases.  Seller shall provide the Agents with prior written notice in conformity with the Required Notice Period (a “Reduction Notice”) in the form of Exhibit XIII hereto of any proposed reduction of Aggregate Capital from Collections, with a copy of such Reduction Notice delivered simultaneously to the Administrative Agent.  Such Reduction Notice shall designate (i) the date (the “Proposed Reduction Date”) upon which any such reduction of Aggregate Capital shall occur (which date shall give effect to the applicable Required Notice Period), and (ii) the amount of Aggregate Capital to be reduced (the “Aggregate Reduction”), which shall be applied ratably to the Purchaser Interests of each Conduit Group in accordance with the amount of Capital (if any) owing to such Conduit Group (ratably, based on their respective Reduction Pro Rata 

Shares).  The Reduction Pro Rata Share of such Aggregate Reduction with respect to a Conduit Group shall in turn be applied ratably to the Purchaser Interests of the Conduit(s) and the Committed Purchasers in such Conduit Group in accordance with the amount of Capital (if any) owing to such Conduit(s), on the one hand, and the amount of Capital (if any) owing to such Committed Purchasers (ratably, based on their respective Pro Rata Shares), on the other hand.  Only one (1) Reduction Notice shall be outstanding at any time.  No Aggregate Reduction will be made following the occurrence of the Amortization Date without the consent of the Administrative Agent and each Agent.
Section 1.4    Payment Requirements.  All amounts to be paid or deposited by any Seller Party pursuant to any provision of this Agreement shall be paid or deposited in accordance with the terms hereof no later than 12:00 p.m. (New York time) on the day when due in immediately available funds, and if not received before 12:00 p.m. (New York time) shall be deemed to be received on the next succeeding Business Day.  If such amounts are payable to a Purchaser they shall be paid to the relevant Agent, for the account of such Purchaser, at 1251 Avenue of the Americas, New York, New York 10020 (in the case of a Purchaser in the Conduit Group with BTMU as an Agent) or SunTrust Robinson Humphrey, Inc., c/o SunTrust Bank, 3333 Peachtree Road, NE, Atlanta, GA 30326 or an account or address designated from time to time by SunTrust Bank (in the case of a Purchaser in the Conduit Group with SunTrust Bank as an Agent), as applicable, until the applicable Seller Party is otherwise notified in writing by the relevant Agent.  Upon notice to Seller, the relevant Agent may debit the Facility Account for all relevant amounts due and payable hereunder.  All computations of Yield, per annum fees calculated as part of any CP Costs, per annum fees hereunder and per annum fees under the Fee Letter shall be made on the basis of a year of 360 days for the actual number of days elapsed.  If any amount hereunder shall be payable on a day which is not a Business Day, such amount shall be payable on the next succeeding Business Day.
Section 1.5    Restated Agreement.  Upon the effectiveness of this Agreement, each reference to the Original Agreement in any other Transaction Document, and any document, instrument or agreement executed and/or delivered in connection with the Original Agreement or any other Transaction Document, shall mean and be a reference to this Agreement.  The other Transaction Documents and all agreements, instruments and documents executed or delivered in connection with the Original Agreement or any other Transaction Document shall each be deemed to be amended to the extent necessary, if any, to give effect to the provisions of this Agreement, as the same may be amended, modified, supplemented or restated from time to time.  The effect of this Agreement is to amend and restate the Original Agreement in its entirety, and to the extent that any rights, benefits or provisions in favor of the Administrative Agent or any Purchaser existed in the Original Agreement and continue to exist in this Agreement without any written waiver of any such rights, benefits or provisions prior to the date hereof, then such rights, benefits or provisions are acknowledged to be and to continue to be effective from and after April 4, 2000.  This Agreement is not a novation.  The parties hereto agree and acknowledge that any and all rights, remedies and payment provisions under the Original Agreement, including, without limitation, any and all rights, remedies and payment provisions with respect to (i) any representation and warranty made or deemed to be made pursuant to the Original Agreement, or (ii) any indemnification provision, shall continue and survive the execution and delivery of this Agreement.  The parties hereto agree and acknowledge that any and all amounts owing as or for Capital, Yield, CP Costs, fees, expenses or otherwise under or pursuant to the Original Agreement, immediately prior to the effectiveness of this Agreement, shall be owing as or for Capital, Yield, CP Costs, fees, expenses or otherwise, respectively, under or pursuant to this Agreement.
ARTICLE II    
 

 
PAYMENTS AND COLLECTIONS
Section 2.1    Payments.  Notwithstanding any limitation on recourse contained in this Agreement, Seller shall immediately pay to each Agent (or to an account designated by such Agent) when due, for the account of the Purchaser or Purchasers in the relevant Conduit Group on a full recourse basis, (i) such relevant fees as set forth in the Fee Letter (which fees shall be sufficient to pay all fees owing to the relevant Committed Purchasers), (ii) all relevant CP Costs, (iii) all relevant amounts payable as Yield, (iv) all relevant amounts payable as Deemed Collections (which shall be immediately due and payable by Seller and applied to reduce outstanding 

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Aggregate Capital hereunder in accordance with Sections 2.2 and 2.3 hereof), (v) all relevant amounts payable to reduce the Purchaser Interest, if required, pursuant to Section 2.6, (vi) all relevant amounts payable pursuant to Article X, if any, (vii) all relevant Servicer costs and expenses, including the Servicing Fee, in connection with servicing, administering and collecting the Receivables, (viii) all relevant Broken Funding Costs and (ix) all relevant Default Fees (collectively, the “Obligations”).  If any Person fails to pay any of the Obligations when due, such Person agrees to pay, on demand, the Default Fee in respect thereof until paid.  Notwithstanding the foregoing, no provision of this Agreement or the Fee Letter shall require the payment or permit the collection of any amounts hereunder in excess of the maximum permitted by applicable law.  If at any time Seller receives any Collections or is deemed to receive any Collections, Seller shall immediately pay such Collections or Deemed Collections to Servicer for application in accordance with the terms and conditions hereof and, at all times prior to such payment, such Collections or Deemed Collections shall be held in trust by Seller for the exclusive benefit of the Purchasers and the Agents.
Section 2.2    Collections Prior to Amortization.  Prior to the Amortization Date, any Collections and/or Deemed Collections received by Servicer shall be set aside and held in trust by Servicer for the payment of any accrued and unpaid Aggregate Unpaids or for a Reinvestment as provided in this Section 2.2.  If at any time any Collections and/or Deemed Collections are received by Servicer prior to the Amortization Date, (i) Servicer shall set aside the Termination Percentage (hereinafter defined) of Collections evidenced by the Purchaser Interests of each Terminating Committed Purchaser and (ii) Seller hereby requests and the Purchasers (other than any Terminating Committed Purchasers) hereby agree to make, simultaneously with such receipt, a reinvestment (each a “Reinvestment”) with that portion of the balance of each and every Collection and Deemed Collection received by Servicer that is part of any Purchaser Interest (other than any Purchaser Interests of Terminating Committed Purchasers), such that after giving effect to such Reinvestment, the amount of Capital of such Purchaser Interest immediately after such receipt and corresponding Reinvestment shall be equal to the amount of Capital immediately prior to such receipt.  On each Settlement Date prior to the occurrence of the Amortization Date, Servicer shall remit to the account of, or designated by, each Agent the relevant portion of the amounts set aside during the preceding Settlement Period that have not been subject to a Reinvestment and apply such amounts (if not previously paid in accordance with Section 2.1) first, to reduce the relevant unpaid Obligations and second, to reduce the Capital of all Purchaser Interests of Terminating Committed Purchasers in the relevant Conduit Group, applied ratably to each Terminating Committed Purchaser according to its respective Termination Percentage.  If such Capital and Obligations shall be reduced to zero with respect to the Purchasers in a Conduit Group, any additional Collections received by Servicer (i) if applicable, shall be remitted to an account designated by the relevant Agent no later than 12:00 p.m. (New York time) to the extent required to fund such Conduit Group’s Reduction Pro Rata Share of any Aggregate Reduction on such Settlement Date and (ii) any balance remaining thereafter shall be remitted from Servicer to Seller on such Settlement Date.  Each Terminating Committed Purchaser shall be allocated a ratable portion of Collections from the Liquidity Termination Date that such Terminating Committed Purchaser did not consent to extend (as to such Terminating Committed Purchaser, the “Termination Date”) until such Terminating Financing Institution’s Capital shall be paid in full.  This ratable portion shall be calculated on the Termination Date of each Terminating Committed Purchaser as a percentage equal to (i) Capital of such Terminating Committed Purchaser outstanding on its Termination Date, divided by (ii) the Aggregate Capital outstanding on such Termination Date (the “Termination Percentage”).  Each Terminating Committed Purchaser’s Termination Percentage shall remain constant prior to the Amortization Date.  On and after the Amortization Date, each Termination Percentage shall be disregarded, and each Terminating Committed Purchaser’s Capital shall be reduced ratably with all Committed Purchasers in accordance with Section 2.3.
Section 2.3    Collections Following Amortization.  On the Amortization Date and on each day thereafter, Servicer shall set aside and hold in trust, for the holder of each Purchaser Interest, all Collections received on such day and an additional amount, from Seller’s assets, for the payment of any accrued and unpaid Obligations owed by Seller and not previously paid by Seller in accordance with Section 2.1.  On and after the Amortization Date, Servicer shall, at any time upon the request from time to time by (or pursuant to standing instructions from) any Agent (i) remit to an account designated by such Agent the relevant portion of the amounts set aside pursuant to the preceding sentence, and (ii) apply such relevant amounts to reduce the Capital associated with each such Purchaser Interest held by a Purchaser in the relevant Conduit Group and any other relevant Aggregate Unpaids.
Section 2.4    Application of Collections.  If there shall be insufficient funds on deposit for Servicer to distribute funds in payment in full of the aforementioned amounts pursuant to Section 2.2 or 2.3 (as applicable), Servicer shall distribute such funds:

first, to the payment of Servicer’s reasonable out-of-pocket costs and expenses in connection with servicing, administering and collecting the Receivables , including the Servicing Fee, if Seller or one of its Affiliates is not then acting as Servicer,
second, to the reimbursement of the Administrative Agent’s or each of the Agents’ (as the case may be) costs of collection and enforcement of this Agreement,
third, to the ratable payment of all unpaid CP Costs and Yield,
fourth, to the ratable payment of all other unpaid Obligations , provided that to the extent such Obligations relate to the payment of Servicer costs and expenses, including the Servicing Fee, when Seller or one of its Affiliates is acting as Servicer, such costs and expenses will not be paid until after the payment in full of all other Obligations, 
fifth, (to the extent applicable) to the ratable reduction of the Aggregate Capital (without regard to any Termination Percentage) and
sixth, after the Aggregate Unpaids have been indefeasibly reduced to zero, to Seller.
Collections applied to the payment of Aggregate Unpaids shall be distributed in accordance with the aforementioned provisions, and, giving effect to each of the priorities set forth in Section 2.4 above, shall be shared ratably (within each priority) among the Administrative Agent, the Agents and the Purchasers in accordance with the amount of such Aggregate Unpaids owing to each of them in respect of each such priority.
Section 2.5    Payment Recission.  No payment of any of the Aggregate Unpaids shall be considered paid or applied hereunder to the extent that, at any time, all or any portion of such payment or application is rescinded by application of law or judicial authority, or must otherwise be returned or refunded for any reason.  Seller shall remain obligated for the amount of any payment or application so rescinded, returned or refunded, and shall promptly pay to the relevant Agent (for application to the Person or Persons who suffered such recission, return or refund) the full amount thereof, plus the related Default Fee from the date of any such recission, return or refunding.
Section 2.6    Maximum Purchaser Interests.  Seller shall ensure that the Purchaser Interests of the Purchasers shall at no time exceed in the aggregate 100%.  If the aggregate of the Purchaser Interests of the Purchasers exceeds 100%, Seller shall pay to each Agent within three (3) Business Days an amount to be applied to reduce its Conduit Group’s Reduction Pro Rata Shares of the Aggregate Capital, such that after giving effect to such payment the aggregate of the Purchaser Interests equals or is less than 100%.
Section 2.7    Clean Up Call.  In addition to Seller’s rights pursuant to Section 1.3, Seller shall have the right (after providing written notice to the Agents (with a copy thereof to the Administrative Agent) in accordance with the Required Notice Period), at any time following the reduction of the Aggregate Capital to a level that is less than 100.0% of the original Purchase Limit, to repurchase from the Purchasers all, but not less than all, of the then outstanding Purchaser Interests.  The purchase price in respect thereof shall be an amount equal to the Aggregate Unpaids through the date of such repurchase, payable in immediately available funds to the Agents.  Such repurchase shall be without representation, warranty or recourse of any kind by, on the part of, or against any Purchaser, any Agent or the Administrative Agent.
ARTICLE III    
 

 
CONDUIT FUNDING
Section 3.1    CP Costs.  Seller shall pay the relevant CP Costs with respect to the Capital associated with each Purchaser Interest of each Conduit for each day that any Capital in respect of such Purchaser Interest is outstanding.  Each Purchaser Interest funded substantially with Pooled Commercial Paper will accrue CP 

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Costs each day on a pro rata basis, based upon the percentage share the Capital in respect of such Purchaser Interest represents in relation to all assets held by the relevant Conduit and funded substantially with its Pooled Commercial Paper. Seller acknowledges and agrees that any Purchaser or Agent, or any Affiliate thereof, may from time to time (but without any obligation) purchase and hold for any period Commercial Paper issued by any Conduit for its own account, regardless of any difference between (i) the equivalent interest rate for such Conduit’s CP Costs and (ii) the applicable Discount Rate with respect to such Conduit’s Committed Purchaser, in each case for any such applicable period.
Section 3.2    CP Costs Payments.  On each Settlement Date, Seller shall pay to each Agent (for the benefit of the Conduit(s) in the relevant Conduit Group) an aggregate amount in each case equal to all accrued and unpaid CP Costs in respect of the Capital associated with all Purchaser Interests of the relevant Conduit(s) in such Conduit Group for the immediately preceding Accrual Period in accordance with Article II.
Section 3.3    Calculation of CP Costs.  On the tenth calendar day of each month or, if such day is not a Business Day, on the next succeeding Business Day, each Agent shall calculate the aggregate amount of the relevant CP Costs for the applicable Accrual Period and shall notify Seller of such aggregate amount.
ARTICLE IV    
 

 
COMMITTED PURCHASER FUNDING
Section 4.1    Committed Purchaser Funding.  Each Committed Purchaser Interest shall accrue Yield for each day during its Tranche Period at either the LIBO Rate or the Alternate Base Rate in accordance with the terms and conditions hereof.  Until Seller gives notice to the Administrative Agent of another Discount Rate in accordance with Section 4.4, the initial Discount Rate for any Committed Purchaser Interest shall be the Alternate Base Rate.  If any Funding Source acquires by assignment from a Conduit any Purchaser Interest pursuant to any Funding Agreement, each Purchaser Interest so assigned shall each be deemed to have a new Tranche Period commencing on the date of any such assignment and shall accrue Yield for each day during its Tranche Period at either the LIBO Rate or the Alternate Base Rate in accordance with the terms and conditions hereof as if each such Purchaser Interest was held by a Committed Purchaser, and with respect to each such Purchaser Interest, the assignee thereof shall be deemed to be a Committed Purchaser solely for the purposes of Sections 4.1, 4.2, 4.3, 4.4 and 4.5.
Section 4.2    Yield Payments.  On the Settlement Date for each Committed Purchaser Interest , Seller shall pay to each Agent (for the benefit of the Committed Purchasers in the relevant Conduit Group) an aggregate amount equal to the accrued and unpaid Yield for the entire Tranche Period of each such Purchaser Interest held by a Purchaser in such Conduit Group in accordance with Article II. On the tenth calendar day of each month or, if such day is not a Business Day, on the next succeeding Business Day, SunTrust Bank, as an Agent, shall calculate, for the immediately preceding Tranche Period, the aggregate amount of Yield for each Purchaser Interest funded by SunTrust Bank that is calculated on the basis of the LIBO Rate and shall notify Seller of such aggregate amount.
Section 4.3    Selection and Continuation of Tranche Periods.
(a)    With consultation from (and approval by) the relevant Agent, Seller shall from time to time request Tranche Periods for the Committed Purchaser Interests in a Conduit Group; provided, however, if at any time the Committed Purchasers shall have a Purchaser Interest, Seller shall always request Tranche Periods such that at least one Tranche Period shall end on the date specified in clause (A) of the definition of Settlement Date; provided, further, however, notwithstanding the forgoing, for each Purchaser Interest funded by SunTrust Bank that is calculated on the basis of the LIBO Rate, Seller shall only request (and shall always be deemed to request) Tranche Periods of one calendar month.
(b)    Seller or the relevant Agent, upon notice to and consent by the other received at least three (3) Business Days prior to the end of a Tranche Period (the “Terminating Tranche”) for any Purchaser 

Interest, may, effective on the last day of the Terminating Tranche:  (i) divide any such Purchaser Interest into multiple Purchaser Interests, (ii) combine any such Purchaser Interest with one or more other Purchaser Interests that have a Terminating Tranche ending on the same day as such Terminating Tranche or (iii) combine any such Purchaser Interest with a new Purchaser Interests to be purchased on the day such Terminating Tranche ends, provided, that in no event may a Purchaser Interest of a Conduit be combined with a Committed Purchaser Interest or of another Conduit, and in no event may a Committed Purchaser Interest be combined with a Purchaser Interest of a Purchaser in a different Conduit Group.
Section 4.4    Committed Purchaser Discount Rates.  Seller may select the LIBO Rate or the Alternate Base Rate for each Committed Purchaser Interest.  Seller shall by 12:00 p.m. (New York time): (i) at least three (3) Business Days prior to the expiration of any Terminating Tranche with respect to which the LIBO Rate is being requested as a new Discount Rate and (ii) at least one (1) Business Day prior to the expiration of any Terminating Tranche with respect to which the Alternate Base Rate is being requested as a new Discount Rate, give the relevant Agent irrevocable notice of the new Discount Rate for the Purchaser Interest associated with such Terminating Tranche.  Until Seller gives notice to the relevant Agent of another Discount Rate, the initial Discount Rate for any Purchaser Interest transferred to the Committed Purchasers pursuant to the terms and conditions hereof (or assigned or transferred to any Funding Source or to any other Person) shall be the Alternate Base Rate.
Section 4.5    Suspension of the LIBO Rate.  (a)  If any Committed Purchaser notifies the relevant Agent and the Administrative Agent that it has determined that funding its Pro Rata Share of the Committed Purchaser Interest at a LIBO Rate would violate any applicable law, rule, regulation or directive of any governmental or regulatory authority, whether or not having the force of law, or that (i) deposits of a type and maturity appropriate to match fund its Purchaser Interests at such LIBO Rate are not available or (ii) such LIBO Rate does not accurately reflect the cost of acquiring or maintaining a Purchaser Interest at such LIBO Rate, then the relevant Agent shall suspend the availability of such LIBO Rate and require Seller to select the Alternate Base Rate for any Purchaser Interest accruing Yield at such LIBO Rate.
(b)    If less than all of the Committed Purchasers give a notice to the relevant Agent pursuant to Section 4.5(a), each Committed Purchaser which gave such a notice shall be obliged, at the request of Seller, a Conduit in the same Conduit Group, the Administrative Agent or any Agent, to assign all of its rights and obligations hereunder to (i) another Committed Purchaser in the same Conduit Group or (ii) another funding entity nominated by Seller, the Administrative Agent or any Agent that is acceptable to such Conduit and willing to participate in this Agreement through the Liquidity Termination Date in the place of such notifying Committed Purchaser; provided that (i) the notifying Committed Purchaser receives payment in full, pursuant to an Assignment Agreement, of an amount equal to such notifying Committed Purchaser’s Pro Rata Share of the Capital and Yield owing to all of the Committed Purchasers in the same Conduit Group and all accrued but unpaid fees and other costs and expenses payable in respect of its Pro Rata Share of the Purchaser Interests of the Committed Purchasers in the same Conduit Group, and (ii) the replacement Committed Purchaser otherwise satisfies the requirements of Section 12.1(b).
Section 4.6    Extension of Liquidity Termination Date. 
(a)        Seller may request one or more 364-day extensions of the Liquidity Termination Date then in effect by giving written notice of such request to the Administrative Agent (each such notice an “Extension Notice”) at least 60 days prior to the Liquidity Termination Date then in effect.  After the Administrative Agent’s receipt of any Extension Notice, the Administrative Agent shall promptly advise each Committed Purchaser of such Extension Notice.  Each Committed Purchaser may, in its sole discretion, by a revocable notice (a “Consent Notice”) given to the Administrative Agent on or prior to the 30th day prior to the Liquidity Termination Date then in effect (such period from the date of the Extension Notice to such 30th day being referred to herein as the “Consent Period”), consent to such extension of such Liquidity Termination Date; provided, however, that, except as provided in Section 4.6(b), such extension shall not be effective with respect to any of the Committed Purchasers if any one or more Committed Purchasers:  (i) notifies the Administrative Agent during the Consent Period that such Committed Purchaser either does not wish to consent to such extension or wishes to revoke its prior Consent Notice or (ii) fails to respond to the Administrative Agent within the Consent Period (each Committed Purchaser or its related Conduit Group that does not wish to consent to such extension or wishes to revoke its prior Consent Notice or fails to respond to the Administrative Agent within the Consent Period is herein referred to as a “Non-Renewing 

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Committed Purchaser”).  If none of the events described in the foregoing clauses (i) or (ii) occurs during the Consent Period and all Consent Notices have been received, then, the Liquidity Termination Date shall be irrevocably extended until the date that is 364 days after the Liquidity Termination Date then in effect.  The Administrative Agent shall promptly notify Seller of any Consent Notice or other notice received by the Administrative Agent pursuant to this Section 4.6(a).
(b)        Upon receipt of notice from the Administrative Agent pursuant to Section 4.6(a) of any Non-Renewing Committed Purchaser or that the Liquidity Termination Date has not been extended, one or more of the Committed Purchasers (including any Non-Renewing Committed Purchaser) may proffer to the Administrative Agent and each Agent the names of one or more institutions meeting the criteria set forth in Section 12.1(b)(i) that are willing to accept assignments of and assume the rights and obligations under this Agreement and the other applicable Transaction Documents of the Non-Renewing Committed Purchaser.  Provided the proffered name(s) are acceptable to the Administrative Agent and each Agent, the Administrative Agent shall notify the remaining Committed Purchasers of such fact, and the then existing Liquidity Termination Date shall be extended for an additional 364 days upon satisfaction of the conditions for an assignment in accordance with Section 12.1 and the Commitment of each Non-Renewing Committed Purchaser shall be reduced to zero.  If the rights and obligations under this Agreement and the other applicable Transaction Documents of each Non-Renewing Committed Purchaser are not assigned as contemplated by this Section 4.6(b) (each such Non-Renewing Committed Purchaser or its related Conduit Group, as the case may be, whose rights and obligations under this Agreement and the other applicable Transaction Documents are not so assigned is herein referred to as a “Terminating Committed Purchaser”) and at least one Committed Purchaser is not a Non-Renewing Committed Purchaser, the then existing Liquidity Termination Date shall be extended for an additional 364 days; provided, however, that (i) each of the Purchase Limit and the relevant Group Purchase Limit shall be reduced on the Liquidity Termination Date that such Terminating Committed Purchaser did not consent to extend by an aggregate amount equal to the Terminating Commitment Availability as of such date of each Terminating Committed Purchaser and shall thereafter continue to be reduced by amounts equal to any reduction in the Capital of any Terminating Committed Purchaser (after application of Collections pursuant to Sections 2.2 and 2.3) and (ii) the Commitment of each Terminating Committed Purchaser shall be reduced to zero on the Termination Date applicable to such Terminating Committed Purchaser.  Upon reduction to zero of the Capital of all of the Purchaser Interests of a Terminating Committed Purchaser (after application of Collections thereto pursuant to Sections 2.2 and 2.3) all rights and obligations of such Terminating Committed Purchaser hereunder shall be terminated and such Terminating Committed Purchaser shall no longer be a “Committed Purchaser”; provided, however, that the provisions of Article X shall continue in effect for its benefit with respect to Purchaser Interests held by such Terminating Committed Purchaser prior to its termination as a Committed Purchaser.  For the avoidance of doubt, each reference to a Committed Purchaser in the context of a Terminating Committed Purchaser shall be deemed to refer to the related Conduit Group if any Conduit in such related Conduit Group continues to hold a Purchaser Interest as a Terminating Committed Purchaser.
(c)        Any requested extension of the Liquidity Termination Date may be approved or disapproved by a Committed Purchaser in its sole discretion.  In the event that the Commitments are not extended in accordance with the provisions of this Section 4.6, the Commitment of each Committed Purchaser shall be reduced to zero on the Liquidity Termination Date.  Upon reduction to zero of the Commitment of a Committed Purchaser and upon reduction to zero of the Capital of all of the Committed Purchaser Interests all rights and obligations of such Committed Purchaser hereunder shall be terminated and such Committed Purchaser shall no longer be a “Committed Purchaser”; provided, however, that the provisions of Article X shall continue in effect for its benefit with respect to Purchaser Interests held by such Committed Purchaser prior to its termination as a Committed Purchaser.
ARTICLE V    
 

 
REPRESENTATIONS AND WARRANTIES
Section 5.1    Representations and Warranties of the Seller Parties.  Each Seller Party hereby represents and warrants to the Administrative Agent, the Agents and the Purchasers, as to itself, as of the date hereof 

and as of the date of each Incremental Purchase and the date of each Reinvestment that:
(a)    Existence and Power.  Such Seller Party is a limited liability company or a corporation duly organized, validly existing and in good standing under the laws of its state of organization.  Such Seller Party is duly qualified to do business and is in good standing as a foreign entity, and has and holds all corporate or limited liability company power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted, except where the failure to so qualify or so hold could not reasonably be expected to have a Material Adverse Effect.
(b)    Power and Authority; Due Authorization, Execution and Delivery.  The execution and delivery by such Seller Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder and, in the case of Seller, Seller’s use of the proceeds of purchases made hereunder, are within its corporate or limited liability company powers and authority and have been duly authorized by all necessary corporate or limited liability company action on its part.  This Agreement and each other Transaction Document to which such Seller Party is a party has been duly executed and delivered by such Seller Party.
(c)    No Conflict.  The execution and delivery by such Seller Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its certificate or articles of incorporation or by-laws or operating agreement, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of such Seller Party or its Subsidiaries (except as created hereunder), except, in any case, where such contravention or violation could not reasonably be expected to have a Material Adverse Effect; and no transaction contemplated hereby requires compliance with any bulk sales act or similar law.
(d)    Governmental Authorization.  Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by such Seller Party of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder.
(e)    Actions, Suits.  There are no actions, suits or proceedings pending, or to the best of such Seller Party’s knowledge, threatened, against or affecting such Seller Party, or any of its properties, in or before any court, arbitrator or other body, that could reasonably be expected to have a Material Adverse Effect.  Such Seller Party is not in default with respect to any order of any court, arbitrator or governmental body, which default, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
(f)    Binding Effect.  This Agreement and each other Transaction Document to which such Seller Party is a party constitute the legal, valid and binding obligations of such Seller Party enforceable against such Seller Party in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(g)    Accuracy of Information.  All information heretofore furnished by such Seller Party or any of its Affiliates to the Administrative Agent, the Agents or the Purchasers for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by such Seller Party or any of its Affiliates to the Administrative Agent, the Agents or the Purchasers will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not misleading.
(h)    Use of Proceeds.  No proceeds of any purchase hereunder will be used (i) for a 

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purpose that violates, or would be inconsistent with, Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time or (ii) to acquire any security in any transaction which is subject to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.
(i)    Good Title.  Immediately prior to each purchase hereunder, Seller shall be the legal and beneficial owner of the Receivables and Related Security with respect thereto, free and clear of any Adverse Claim, except as created by the Transaction Documents.  There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Seller’s ownership interest in each Receivable, its Collections and the Related Security.
(j)    Perfection.  This Agreement, together with the filing of the financing statements contemplated hereby, is effective to, and shall, upon each purchase hereunder, transfer to the Administrative Agent for the benefit of the relevant Purchaser or Purchasers (and the Administrative Agent for the benefit of such Purchaser or Purchasers shall acquire from Seller) a valid and perfected first priority undivided percentage ownership or security interest in each Receivable existing or hereafter arising and in the Related Security and Collections with respect thereto, free and clear of any Adverse Claim, except as created by the Transactions Documents.  There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect the Administrative Agent’s (on behalf of the Purchasers) ownership or security interest in the Receivables, the Related Security and the Collections.
(k)    Places of Business and Locations of Records.  The principal places of business and chief executive office of such Seller Party and the offices where it keeps all of its Records are located at the address(es) listed on Exhibit III or such other locations of which the Administrative Agent and the Agents have been notified in accordance with Section 7.2(a) in jurisdictions where all action required by Section 14.4(a) has been taken and completed.  Such Seller Party’s Federal Employer Identification Number is correctly set forth on Exhibit III.
(l)    Collections.  The conditions and requirements set forth in Section 7.1(j) and Section 8.2 have at all times been satisfied and duly performed.  The names and addresses of all Collection Banks, together with the account numbers of the Collection Accounts of Seller at each Collection Bank and the post office box number of each Lock-Box, are listed on Exhibit IV.  Seller has not granted any Person, other than the Administrative Agent as contemplated by this Agreement, dominion and control of any Lock-Box or Collection Account, or the right to take dominion and control of any such Lock-Box or Collection Account at a future time or upon the occurrence of a future event.
(m)    Material Adverse Effect.  (i) The initial Servicer represents and warrants that since December 31, 1999, and the initial Sub-Servicer represents and warrants that since December 31, 2008, no event has occurred that would have a material adverse effect on the financial condition or operations of the initial Servicer and its Subsidiaries or the initial Sub-Servicer and its Subsidiaries, as applicable, or the ability of the initial Servicer or the initial Sub-Servicer to perform its obligations under this Agreement, and (ii) Seller represents and warrants that since the date of this Agreement, no event has occurred that would have a material adverse effect on (A) the financial condition or operations of Seller, (B) the ability of Seller to perform its obligations under the Transaction Documents, or (C) the collectibility of the Receivables generally or any material portion of the Receivables.
(n)    Names.  In the past five (5) years, Seller has not used any corporate names, trade names or assumed names other than the name in which it has executed this Agreement.
(o)    Ownership of Seller.  Originator owns, directly or indirectly, 100% of the issued and outstanding capital stock of Seller, free and clear of any Adverse Claim.  Such capital stock is validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of Seller.
(p)    Not an Investment Company.  Such Seller Party is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or any successor statute.

(q)    Compliance with Law.  Such Seller Party has complied in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect.  Each Receivable, together with the Contract related thereto, does not contravene any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or regulation, except where such contravention or violation could not reasonably be expected to have a Material Adverse Effect.
(r)    Compliance with Credit and Collection Policy.  Such Seller Party has complied in all material respects with the Credit and Collection Policy with regard to each Receivable and the related Contract, and has not made any change to such Credit and Collection Policy, except such material change as to which the Administrative Agent and the Agents have been notified in accordance with Section 7.1(a)(vii).
(s)    Payments to Originator and Original Sellers.  With respect to each Receivable transferred to Seller under the Receivables Sale Agreement, Seller has given reasonably equivalent value to Originator in consideration therefor and such transfer was not made for or on account of an antecedent debt.  No transfer by Originator of any Receivable under the Receivables Sale Agreement is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C. §§ 101 et seq.), as amended.  With respect to each Receivable transferred to Originator under the Transfer Agreement, Originator has given reasonably equivalent value to the applicable Original Seller in consideration therefor and such transfer was not made for or on account of an antecedent debt.  No transfer by any Original Seller of any Receivable under the Transfer Agreement is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C. §§ 101 et seq.), as amended.
(t)    Enforceability of Contracts.  Each Contract with respect to each Receivable is effective to create, and has created, a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(u)    Eligible Receivables.  Each Receivable included in the Net Receivables Balance as an Eligible Receivable on the date of its purchase under the Receivables Sale Agreement was an Eligible Receivable on such purchase date.
(v)    Net Receivables Balance.  Seller has determined that, immediately after giving effect to each purchase hereunder, the Net Receivables Balance is at least equal to the sum of (i) the Aggregate Capital, plus (ii) the Aggregate Reserves.
(w)    Accounting.  The manner in which such Seller Party accounts for the transactions contemplated by this Agreement and the Receivables Sale Agreement does not jeopardize the true sale analysis.
Section 5.2    Committed Purchaser Representations and Warranties.  Each Committed Purchaser hereby represents and warrants to the Administrative Agent, the Agents and the Conduit(s) in the related Conduit Group that:
(a)    Existence and Power.  Such Committed Purchaser is a corporation or a banking association duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, and has all corporate power to perform its obligations hereunder.
(b)    No Conflict.  The execution and delivery by such Committed Purchaser of this Agreement and the performance of its obligations hereunder are within its corporate powers, have been duly authorized by all necessary corporate action, do not contravene or violate (i) its certificate or articles of incorporation or association or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on its assets.  This Agreement has been duly authorized, executed and delivered by such Committed Purchaser.

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(c)    Governmental Authorization.  No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by such Committed Purchaser of this Agreement and the performance of its obligations hereunder.
(d)    Binding Effect.  This Agreement constitutes the legal, valid and binding obligation of such Committed Purchaser enforceable against such Committed Purchaser in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law).
ARTICLE VI    
 

 
CONDITIONS OF PURCHASES
Section 6.1    Conditions Precedent to Initial Incremental Purchase.  The initial Incremental Purchase of a Purchaser Interest under this Agreement is subject to the conditions precedent that the Administrative Agent and the Agents shall have received on or before the date of such purchase those documents listed on Schedule B that are required to be delivered on or before such date.  The documents listed on part V of Schedule B are required to be delivered on or before the effective date of this Agreement.  The Administrative Agent and each Agent shall have received all fees and expenses required to be paid pursuant to the terms of this Agreement (including, without limitation, Section 10.3 hereof), the Fee Letter and any other fee, charge, or expense required to be paid prior to the effectiveness of this agreement.
Section 6.2    Conditions Precedent to All Purchases and Reinvestments.  Each purchase of a Purchaser Interest and each Reinvestment shall be subject to the further conditions precedent that (a) in the case of each such purchase or Reinvestment: (i) Servicer shall have delivered to the Administrative Agent and the Agents, on or prior to the date of such purchase, in form and substance satisfactory to the Administrative Agent and the Agents, all Monthly Reports and Interim Reports as and when due under Section 8.5 and (ii) upon the request of the Administrative Agent any of the Agents, Servicer shall have delivered to the Administrative Agent and each of the Agents at least three (3) days prior to such purchase or Reinvestment an interim Monthly Report showing the amount of Eligible Receivables; (b) the Facility Termination Date shall not have occurred; (c) the Administrative Agent and the Agents shall have received such other approvals, opinions or documents as it may reasonably request and (d) on the date of each such Incremental Purchase or Reinvestment, the following statements shall be true (and acceptance of the proceeds of such Incremental Purchase or Reinvestment shall be deemed a representation and warranty by Seller that such statements are then true):
(i)    the representations and warranties set forth in Section 5.1 are true and correct in all material respects on and as of the date of such Incremental Purchase or Reinvestment as though made on and as of such date;
(ii)    no event has occurred and is continuing, or would result from such Incremental Purchase or Reinvestment, that would constitute an Amortization Event or a Potential Amortization Event; and
(iii)    the Aggregate Capital does not exceed the Purchase Limit and the aggregate Purchaser Interests do not exceed 100%.
It is expressly understood that each Reinvestment shall, unless otherwise directed by the Administrative Agent, any of the Agents or any Purchaser, occur automatically on each day that Servicer shall receive any Collections without the requirement that any further action be taken on the part of any Person and notwithstanding the failure of Seller to satisfy any of the foregoing conditions precedent in respect of such Reinvestment.  The failure of Seller to satisfy any of the foregoing conditions precedent in respect of any Reinvestment shall give rise to a right of the Administrative Agent and each of the Agents, which right may be exercised at any time on demand of the Administrative Agent or any of the Agents, to rescind the related purchase and direct Seller to pay to the Agents for 

the benefit of the Purchasers in their respective Conduit Groups an aggregate amount equal to the Collections prior to the Amortization Date that shall have been applied to the affected Reinvestment.
ARTICLE VII    
 

 
COVENANTS
Section 7.1    Affirmative Covenants of the Seller Parties.  Until the date on which the Aggregate Unpaids have been indefeasibly paid in full and this Agreement terminates in accordance with its terms, each Seller Party hereby covenants, as to itself, as set forth below:
(a)    Financial Reporting.  Such Seller Party will maintain, for itself and each of its Subsidiaries, a system of accounting established and administered in accordance with GAAP, and furnish or cause to be furnished to the Administrative Agent and the Agents:
(i)    Annual Reporting.  Within 90 days after the close of each of its respective fiscal years, (i) audited financial statements (which shall include balance sheets, statements of income and retained earnings and a statement of cash flows) for Provider for such fiscal year, together with an unqualified audit report (in form satisfactory to the Administrative Agent and the Agents) on such financial statements of, and certified in a manner acceptable to the Administrative Agent and the Agents by, PricewaterhouseCoopers LLP or other  independent public accountants reasonably acceptable to the Administrative Agent and the Agents and (ii) an unaudited balance sheet and income statement of the Seller in a form reasonably acceptable to the Administrative Agent and the Agents.
(ii)    Quarterly Reporting.  Within 45 days after the close of the first three (3) quarterly periods of each of its fiscal years, balance sheets of Provider as at the close of each such period and statements of income and retained earnings and a statement of cash flows for the Provider for the period from the beginning of such fiscal year to the end of such quarter, all certified by its chief financial officer on behalf of the Provider.
(iii)    Compliance Certificate.  Together with the financial statements required hereunder, a compliance certificate in substantially the form of Exhibit V signed by such Seller Party’s or Provider’s, as applicable, Authorized Officer on behalf of such Person and dated the date of such annual financial statement or such quarterly financial statement, as the case may be.
(iv)    Shareholders Statements and Reports.  Promptly upon the furnishing thereof to the shareholders of such Seller Party or Provider copies of all financial statements, reports and proxy statements so furnished; provided, that Seller Parties shall not be required to provide any registration statements or reports which are available on the EDGAR system of the Securities and Exchange Commission.
(v)    S.E.C. Filings.  Promptly upon the filing thereof, copies of all registration statements (other than registration statements on Form S-8) and annual, quarterly or other reports which Originator, any Original Seller, Provider or any of their respective Subsidiaries files with the Securities and Exchange Commission; provided, that Seller Parties shall not be required to provide any registration statements or reports which are available on the EDGAR system of the Securities and Exchange Commission. 
(vi)    Copies of Notices.  Promptly upon its receipt of any notice, request for consent, financial statements, certification, report or other communication under or in connection with any Transaction Document from any Person other than the Administrative Agent, 

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any Agent or Conduit, copies of the same.
(vii)    Change in Credit and Collection Policy.  At least thirty (30) days prior to the effectiveness of any material change in or material amendment to the Credit and Collection Policy, a copy of the Credit and Collection Policy then in effect and a notice (A) indicating such change or amendment, and (B) if such proposed change or amendment would be reasonably likely to adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables, requesting the consent of the Administrative Agent and the Agents thereto; provided that if such change or amendment was required pursuant to any change in any applicable law, rule or regulation, such Seller Party shall only be required to give prompt notice of such change or amendment and shall not be required to request the consent of the Administrative Agent and the Agents.
(viii)    Other Information.  (A) Within 45 days after a request from the Administrative Agent or any of the Agents, internally prepared financial statements  (which shall include balance sheets, statements of income and retained earnings and a statement of cash flow) for such Seller Party for any quarterly period in any fiscal year of such Seller Party, all certified by its chief financial officer, and (B) promptly, from time to time, such other information, documents, records or reports relating to the Receivables or the condition or operations, financial or otherwise, of such Seller Party, any Original Seller or Provider as the Administrative Agent or any of the Agents may from time to time reasonably request in order to protect the interests of the Administrative Agent, the Agents and the Purchasers under or as contemplated by this Agreement.
(b)    Notices.  Such Seller Party will notify the Administrative Agent and the Agents in writing of any of the following promptly upon becoming aware of the occurrence thereof, describing the same and, if applicable, the steps being taken with respect thereto:
(i)    Amortization Events or Potential Amortization Events.  The occurrence of each Amortization Event and each Potential Amortization Event, by a statement of an Authorized Officer on behalf of such Seller Party.
(ii)    Judgment and Proceedings.  (A) The entry of any judgment or decree against Provider or any of its Subsidiaries if the aggregate amount of all judgments and decrees then outstanding against Provider and its Subsidiaries exceeds $10,000,000 and (B) the institution of any material  litigation, arbitration proceeding or governmental proceeding against Provider or any of its Subsidiaries; and (C) the entry of any judgment or decree or the institution of any litigation, arbitration proceeding or governmental proceeding against Seller. 
(iii)    Material Adverse Effect.  The occurrence of any event or condition that has had, or could reasonably be expected to have, a Material Adverse Effect.
(iv)    Termination Date.  The occurrence of (A) the “Termination Date” under and as defined in the Receivables Sale Agreement and (B) the “Termination Date” under and as defined in the Transfer Agreement.
(v)    Defaults Under Other Agreements.  (A) The occurrence of a default or an event of default under any other financing arrangement pursuant to which Seller is a debtor or an obligor and (B) the occurrence of any default or event of default under any other financing arrangement or arrangements governing Indebtedness, individually or in the aggregate, greater than or equal to $30,000,000 pursuant to which Provider or any of its Subsidiaries is a debtor or an obligor.
(vi)    Downgrade of Originator or Provider.  Any downgrade in the rating of any Indebtedness of Originator, any Original Seller or Provider by Standard & Poor’s 

Ratings Group or by Moody’s Investors Service, Inc., setting forth the Indebtedness affected and the nature of such change.
(c)    Compliance with Laws and Preservation of Corporate Existence.  Such Seller Party will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect.  Such Seller Party will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where its business is conducted, except where the failure to so preserve and maintain or qualify could not reasonably be expected to have a Material Adverse Effect.
(d)    Audits.  Such Seller Party will furnish to the Administrative Agent (with the Administrative Agent providing copies thereof to each Committed Purchaser, subject to the Administrative Agent receiving any necessary consents to disclosure) from time to time such information with respect to it, any Original Seller and the Receivables as the Administrative Agent may reasonably request.  Such Seller Party will (and will cause Originator and each Original Seller to), from time to time during regular business hours as requested by the Administrative Agent upon reasonable notice and at the sole cost of such Seller Party, permit the Administrative Agent, or its agents or representatives, (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Person relating to the Receivables and the Related Security, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of such Person for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to such Person’s financial condition or the Receivables and the Related Security or any Person’s performance under any of the Transaction Documents or any Person’s performance under the Contracts and, in each case, with any of the Authorized Officers or financial officers of Seller, any Original Seller or Servicer having knowledge of such matters.  So long as no Potential Amortization Event or Amortization Event exists, the visits under this Section 7.1(d) that are at the sole cost of the applicable Seller Party shall be limited to four times a calendar year; and upon the occurrence and during the continuance of a Potential Amortization Event or an Amortization Event, any and all visits shall be at the sole cost of the applicable Seller Party, provided that if the Administrative Agent or its agent or representative fails to make any such examination and/or visit during any calendar year period, any Committed Purchaser or its agent or representative may make such examination and/or visit in the Administrative Agent’s stead.
(e)    Keeping and Marking of Records and Books.
(i)    Servicer will (and will cause Originator and each Original Seller to) maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including, without limitation, records adequate to permit the immediate identification of each new Receivable and all Collections of and adjustments to each existing Receivable).  Servicer will (and will cause Originator and each Original Seller to) give the Administrative Agent and the Agents notice of any material change in the administrative and operating procedures referred to in the previous sentence.  
(ii)    Such Seller Party will (and will cause Originator and each Original Seller to) (A) not later than the date hereof, mark its master data processing records and other books and records relating to the Purchaser Interests with a legend, acceptable to the Administrative Agent, describing the Purchaser Interests and (B) upon the request of the Administrative Agent (x) mark each Contract with a legend describing the Purchaser Interests and (y) at any time after the occurrence of a Potential Amortization Event, deliver to the Administrative Agent all Contracts (including, without limitation, all multiple originals of any such Contract) relating to the Receivables.
(f)    Compliance with Contracts and Credit and Collection Policy.  Such Seller Party will (and will cause Originator and each Original Seller to) timely and fully (i) perform and comply with all 

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provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables and (ii) comply in all respects with the Credit and Collection Policy in regard to each Receivable and the related Contract.
(g)    Performance and Enforcement of Receivables Sale Agreement.  Seller will, and will require Originator to, perform each of their respective obligations and undertakings under and pursuant to the Receivables Sale Agreement, will purchase Receivables thereunder in strict compliance with the terms thereof and will vigorously enforce the rights and remedies accorded to Seller under the Receivables Sale Agreement.  Seller will take all actions to perfect and enforce its rights and interests (and the rights and interests of the Administrative Agent, the Agents and the Purchasers as assignees of Seller) under the Receivables Sale Agreement as the Administrative Agent or any of the Agents may from time to time reasonably request, including, without limitation, making claims to which it may be entitled under any indemnity, reimbursement or similar provision contained in the Receivables Sale Agreement. 
(h)    Performance and Enforcement of Transfer Agreement.  Originator shall not enter into a Transfer Agreement or amend, modify, supplement or restate a Transfer Agreement without the prior written consent of the Administrative Agent and each of the Agents.  When a Transfer Agreement is effective, Seller will require Originator and each Original Seller to perform each of their respective obligations and undertakings under and pursuant to the Transfer Agreement, will require that Originator purchase Receivables thereunder in strict compliance with the terms thereof and will require that Originator vigorously enforce the rights and remedies accorded to Originator under the Transfer Agreement.  Seller will require Originator to take all actions to perfect and enforce Originator’s rights and interests (and the rights and interests of Seller as assignee of Originator, and the rights and interests of the Administrative Agent, the Agents and the Purchasers as assignees of Seller) under the Transfer Agreement as Seller, the Administrative Agent or any of the Agents may from time to time reasonably request, including, without limitation, making claims to which it may be entitled under any indemnity, reimbursement or similar provision contained in the Transfer Agreement.
(i)    Ownership by Seller.  Seller will (or will cause Originator to) take all necessary action to (i) vest legal and equitable title to the Receivables, the Related Security and the Collections purchased under the Receivables Sale Agreement irrevocably in Seller, free and clear of any Adverse Claims other than Adverse Claims in favor of the Administrative Agent, the Agents and the Purchasers (including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Seller’s interest in such Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence the interest of Seller therein as the Administrative Agent or any of the Agents may reasonably request), and (ii) establish and maintain, in favor of the Administrative Agent, for the benefit of the Agents and the Purchasers, a valid and perfected first priority undivided percentage ownership interest (or a valid and perfected first priority security interest) in all Receivables, Related Security and Collections to the full extent contemplated herein, free and clear of any Adverse Claims other than Adverse Claims in favor of the Administrative Agent or the Agents for the benefit of the Purchasers (including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect the Administrative Agent’s and the Agents’ (for the benefit of the Purchasers) interest in such Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence the interest of the Administrative Agent or the Agents for the benefit of the Purchasers as the Administrative Agent or any of the Agents may reasonably request).
(j)    Ownership by Originator.  Seller will cause Originator to take all necessary action to (i) vest legal and equitable title to the Receivables, the Related Security and the Collections purchased under the Transfer Agreement irrevocably in Originator, free and clear of any Adverse Claims other than Adverse Claims in favor of Seller, the Administrative Agent, the Agents and the Purchasers (including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Originator’s interest in such Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence the interest of Originator therein as Seller or the Administrative Agent or any of the Agents may reasonably request), and (ii) establish and maintain, in favor of Seller and the Administrative Agent, for the benefit of the Agents and the Purchasers, a valid and perfected 

first priority undivided percentage ownership interest (or a valid and perfected first priority security interest) in all Receivables, Related Security and Collections purchased under the Transfer Agreement, to the full extent contemplated herein, free and clear of any Adverse Claims other than Adverse Claims in favor of Seller, the Administrative Agent and the Agents (for the benefit of the Purchasers) (including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Seller’s, the Administrative Agent’s and the Agents’ (for the benefit of the Purchasers) interest in such Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence the interest of Seller and the Administrative Agent, for the benefit of the Agents and the Purchasers, as Seller, the Administrative Agent or any of the Agents may reasonably request).
(k)    Purchasers’ Reliance.  Seller acknowledges that the Purchasers are entering into the transactions contemplated by this Agreement in reliance upon Seller’s identity as a legal entity that is separate from Originator and any Original Seller.  Therefore, from and after April 4, 2000, Seller shall take all reasonable steps, including, without limitation, all steps that the Administrative Agent, the Agents or any Purchaser may from time to time reasonably request, to maintain Seller’s identity as a separate legal entity and to make it manifest to third parties that Seller is an entity with assets and liabilities distinct from those of Originator, any Original Seller and any Affiliates thereof and not just a division of Originator, any Original Seller or any such Affiliate.  Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, Seller will:
(A)    conduct its own business in its own name and require that all full-time employees of Seller, if any, identify themselves as such and not as employees of Originator or any Original Seller (including, without limitation, by means of providing appropriate employees with business or identification cards identifying such employees as Seller’s employees);
(B)    compensate all employees, consultants and agents directly, from Seller’s own funds, for services provided to Seller by such employees, consultants and agents and, to the extent any employee, consultant or agent of Seller is also an employee, consultant or agent of Originator, any Original Seller or any Affiliate thereof, allocate the compensation of such employee, consultant or agent between Seller and Originator, any Original Seller or such Affiliate, as applicable, on a basis that reflects the services rendered to Seller and Originator, such Original Seller or such Affiliate, as applicable;
(C)    clearly identify its offices (by signage or otherwise) as its offices and, if such office is located in the offices of Originator or any Original Seller, Seller shall lease such office at a fair market rent;
(D)    have a separate telephone number, which will be answered only in its name and separate stationery, invoices and checks in its own name;
(E)    conduct all transactions with Originator, any Original Seller and Servicer (including, without limitation, any delegation of its obligations hereunder as Servicer) strictly on an arm’s-length basis, allocate all overhead expenses (including, without limitation, telephone and other utility charges) for items shared between Seller and Originator or any Original Seller on the basis of actual use to the extent practicable and, to the extent such allocation is not practicable, on a basis reasonably related to actual use;
(F)    (1) at all times have a Board of Directors consisting of three members, at least one of which is an Independent Director reasonably acceptable to each Agent (such acceptability of any Independent Director appointed after the date hereof must be evidenced in writing signed by 

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each Agent; provided that any Independent Director that has at least three (3) years of employment experience with one or more of AMACAR Group, L.L.C., Lord Securities Corporation, Global Securitization Services LLC or any other nationally recognized entity that provides, in the ordinary course of their respective businesses, advisory, management or placement services and independent director services to issuers of securitization or structured finance instruments, agreements or securities and that meets the other requirements of an Independent Director set forth herein shall be deemed acceptable to the Agents) and (2) at no time shall any of Seller, Servicer, Sub-Servicer, Provider, Originator, any Original Seller, any of Seller’s members or managing members or any of their respective Affiliates remove any Independent Director or replace any Independent Director (other than a replacement by an individual that has at least three (3) years of employment experience with one or more of AMACAR Group, L.L.C., Lord Securities Corporation, Global Securitization Services LLC or any other nationally recognized entity that provides, in the ordinary course of their respective businesses, advisory, management or placement services and independent director services to issuers of securitization or structured finance instruments, agreements or securities and that meets the other requirements of an Independent Director set forth herein), in each case without the prior written consent of each Agent;
(G)    observe all corporate formalities as a distinct entity, and ensure that all corporate actions relating to (A) the selection, maintenance or replacement of the Independent Director, (B) the dissolution or liquidation of Seller or (C) the initiation of, participation in, acquiescence in or consent to any bankruptcy, insolvency, reorganization or similar proceeding involving Seller, are duly authorized by unanimous vote of its Board of Directors (including the Independent Director);
(H)    maintain Seller’s books and records separate from those of Originator, any Original Seller and any Affiliate thereof and otherwise readily identifiable as its own assets rather than assets of Originator, any Original Seller and any Affiliate thereof;
(I)    prepare its financial statements separately from those of Originator  and any Original Seller and insure that any consolidated financial statements of Originator, any Original Seller or any Affiliate thereof that include Seller and that are filed with the Securities and Exchange Commission or any other governmental agency have notes clearly stating that Seller is a separate corporate entity and that its assets will be available first and foremost to satisfy the claims of the creditors of Seller;
(J)    except as herein specifically otherwise provided, maintain the funds or other assets of Seller separate from, and not commingled with, those of Originator, any Original Seller or any Affiliate thereof and only maintain bank accounts or other depository accounts to which Seller alone is the account party;
(K)    pay all of Seller’s operating expenses from Seller’s own assets (except for certain payments by Originator, any Original Seller or other Persons pursuant to allocation arrangements that comply with the requirements of this Section 7.1(i));
(L)    operate its business and activities such that:  it does not engage in any business or activity of any kind, or enter into any 

transaction or indenture, mortgage, instrument, agreement, contract, lease or other undertaking, other than the transactions contemplated and authorized by this Agreement and the Receivables Sale Agreement; and does not create, incur, guarantee, assume or suffer to exist any indebtedness or other liabilities, whether direct or contingent, other than (1) as a result of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, (2) the incurrence of obligations under this Agreement, (3) the incurrence of obligations, as expressly contemplated in the Receivables Sale Agreement, to make payment to Originator thereunder for the purchase of Receivables from Originator under the Receivables Sale Agreement, and (4) the incurrence of operating expenses in the ordinary course of business of the type otherwise contemplated by this Agreement;
(M)    maintain its corporate charter in conformity with this Agreement, such that it does not amend, restate, supplement or otherwise modify its Certificate of Incorporation or By-Laws in any respect that would impair its ability to comply with the terms or provisions of any of the Transaction Documents, including, without limitation, Section 7.1(i) of this Agreement;
(N)    maintain the effectiveness of, and continue to perform under the Receivables Sale Agreement, the Transfer Agreement and the Performance Undertaking, such that it does not amend, restate, supplement, cancel, terminate or otherwise modify the Receivables Sale Agreement, the Transfer Agreement or the Performance Undertaking, or give any consent, waiver, directive or approval thereunder or waive any default, action, omission or breach under the Receivables Sale Agreement, the Transfer Agreement or the Performance Undertaking or otherwise grant any indulgence thereunder, without (in each case) the prior written consent of the Administrative Agent and the Agents;
(O)    maintain its corporate separateness such that it does not merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions, and except as otherwise contemplated herein) all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any Person, nor at any time create, have, acquire, maintain or hold any interest in any Subsidiary.
(P)    maintain at all times the Required Capital Amount (as defined in the Receivables Sale Agreement) and refrain from making any dividend, distribution, redemption of capital stock or payment of any subordinated indebtedness which would cause the Required Capital Amount to cease to be so maintained; and
(Q)    take such other actions as are necessary on its part to ensure that the facts and assumptions set forth in the opinions issued by Bryan Cave LLP, as counsel for Seller, in connection with the Original Agreement, this Agreement or initial Incremental Purchase under this Agreement and relating to substantive consolidation issues, and in the certificates accompanying such opinions, remain true and correct in all material respects at all times.
(l)    Collections.  Such Seller Party will cause (1) all proceeds from all Lock-Boxes to be directly deposited by a Collection Bank into a Collection Account and (2) each Lock-Box and Collection Account 

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to be subject at all times to a Collection Account Agreement that is in full force and effect.  In the event any payments relating to Receivables are remitted directly to any Seller Party or any Affiliate of any Seller Party, such Seller Party will remit (or will cause all such payments to be remitted) directly to a Collection Bank and deposited into a Collection Account within two (2) Business Days following receipt thereof, and, at all times prior to such remittance, such Seller Party or Affiliate will itself hold or, if applicable, will cause such payments to be held in trust for the exclusive benefit of the Administrative Agent and the Purchasers.  Seller will maintain exclusive ownership, dominion and control (subject to the terms of this Agreement and the applicable Collection Account Agreement) of each Lock-Box and Collection Account and shall not grant the right to take dominion and control of any Lock-Box or Collection Account at a future time or upon the occurrence of a future event to any Person, except to the Administrative Agent as contemplated by this Agreement.
(m)    Taxes.  Such Seller Party will file all tax returns and reports required by law to be filed by it and will promptly pay all taxes and governmental charges at any time owing by it.  Seller will pay when due any taxes payable in connection with the Receivables, exclusive of taxes on or measured by income or gross receipts of any Conduit, the Administrative Agent, the Agents or any Committed Purchaser.
(n)    Insurance.  Seller will maintain in effect, or cause to be maintained in effect, at Seller’s own expense, such casualty and liability insurance as Seller shall deem appropriate in its good faith business judgment.  The Administrative Agent, for the benefit of the Purchasers, shall be named as an additional insured with respect to all such liability insurance maintained by Seller.  Seller will pay or cause to be paid, the premiums therefor and deliver to the Administrative Agent evidence satisfactory to the Administrative Agent of such insurance coverage.  Evidence of each policy shall be furnished to the Administrative Agent and any Purchaser in certificated form upon the Administrative Agent’s or such Purchaser’s request.  The foregoing requirements shall not be construed to negate, reduce or modify, and are in addition to, Seller’s obligations hereunder.
(o)    Payment to Originator and to any Original Seller.  With respect to any Receivable purchased by Seller from Originator, such sale shall be effected under, and in strict compliance with the terms of, the Receivables Sale Agreement, including, without limitation, the terms relating to the amount and timing of payments to be made to the Originator in respect of the purchase price for such Receivable.  With respect to any Receivable purchased by Originator from any Original Seller, such sale shall be effected under, and in strict compliance with the terms of, the Transfer Agreement, including, without limitation, the terms relating to the amount and timing of payments to be made to the applicable Original Seller in respect of the purchase price for such Receivable.
(p)    Certificates and Lien Searches.  Within thirty (30) days after the date of this Agreement or such later date to which the Administrative Agent and the Agents shall agree, the Seller Parties will deliver (i) a good standing certificate for each Seller Party and Provider issued by the Secretary of State of each jurisdiction in which it has material operations and (ii) state tax lien and judgment lien searches against the Seller Parties in each jurisdiction in which any of them have material operations.
Section 7.2    Negative Covenants of the Seller Parties.  Until the date on which the Aggregate Unpaids have been indefeasibly paid in full and this Agreement terminates in accordance with its terms, each Seller Party hereby covenants, as to itself, that:
(a)    Name Change, Offices and Records.  Such Seller Party will not change its name, identity or corporate structure (within the meaning of Section 9-402(7) of any applicable enactment of the UCC) or relocate its chief executive office or any office where Records are kept unless it shall have:  (i) given the Administrative Agent at least thirty (30) days’ prior written notice thereof and (ii) delivered to the Administrative Agent all financing statements, instruments and other documents requested by the Administrative Agent in connection with such change or relocation.
(b)    Change in Payment Instructions to Obligors.  Except as may be required by the Administrative Agent pursuant to Section 8.2(b), such Seller Party will not add or terminate any bank as a Collection Bank, or make any change in the instructions to Obligors regarding payments to be made to any Lock-Box or Collection Account, unless the Administrative Agent shall have received, at least ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) with respect to the addition of a Collection Bank or a Collection Account or Lock-Box, an executed Collection Account Agreement with respect to the new Collection Account or Lock-Box; provided, however, that Servicer may make changes in instructions to 

Obligors regarding payments if such new instructions require such Obligor to make payments to another existing Collection Account.
(c)    Modifications to Contracts and Credit and Collection Policy.  Such Seller Party will not, and will not permit Originator or any Original Seller to, make any change to the Credit and Collection Policy that could adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables.  Except as provided in Section 8.2(d), Servicer will not, and will not permit Originator or any Original Seller to, extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy.
(d)    Sales, Liens.  Seller will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any Receivable, Related Security or Collections, or upon or with respect to any Contract under which any Receivable arises, or any Lock-Box or Collection Account, or assign any right to receive income with respect thereto (other than, in each case, the creation of the interests therein in favor of the Administrative Agent for the benefit of the Agents and the Purchasers provided for herein), and Seller will defend the right, title and interest of the Administrative Agent for the benefit of the Agents and the Purchasers in, to and under any of the foregoing property, against all claims of third parties claiming through or under Seller or Originator or any Original Seller.
(e)    Net Receivables Balance.  At no time prior to the Amortization Date shall Seller permit the Net Receivables Balance to be less than an amount equal to the sum of (i) the Aggregate Capital plus (ii) the Aggregate Reserves.
(f)    Termination Date Determination.  Seller will not designate the Termination Date (as defined in the Receivables Sale Agreement), or send any written notice to Originator in respect thereof, without the prior written consent of the Administrative Agent and the Agents, except with respect to the occurrence of such Termination Date arising pursuant to Section 5.1(d) of the Receivables Sale Agreement.  Seller will not permit Originator to designate the Termination Date (as defined in the Transfer Agreement), or to send any written notice to any Original Seller in respect thereof, without the prior written consent of Seller, the Administrative Agent and the Agents, except with respect to the occurrence of such Termination Date arising pursuant to Section 5.1(d) of the Transfer Agreement.
(g)    Restricted Junior Payments.  From and after the occurrence of any Amortization Event, Seller will not make any Restricted Junior Payment if, after giving effect thereto, Seller would fail to meet its obligations set forth in Section 7.2(e).
ARTICLE VIII    
 

 
ADMINISTRATION AND COLLECTION
Section 8.1    Designation of Servicer.  (a)  The servicing, administration and collection of the Receivables shall be conducted by such Person so designated as “Servicer” from time to time in accordance with this Section 8.1.  Energizer Battery, Inc. is hereby designated as, and hereby agrees to perform the duties and obligations of, Servicer pursuant to the terms of this Agreement.  Upon the occurrence and during the continuance of a Potential Amortization Event or an Amortization Event, the Administrative Agent may designate as Servicer any Person to succeed Energizer Battery, Inc. or any successor Servicer as “Servicer” hereunder.  With the prior written consent of the Administrative Agent and upon the assumption of all of the duties and obligations of “Servicer” hereunder by a successor Servicer acceptable to the Administrative Agent, Energizer Battery, Inc. may resign as Servicer.
(b)    In the ordinary course of business and with the prior consent of the Administrative Agent (which consent shall not be unreasonably withheld), the Servicer may delegate any of its other duties or 

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responsibilities as Servicer to any Person who agrees to conduct such duties or responsibilities in accordance with the Contracts, the Credit and Collection Policy and this Agreement.  The Servicer hereby delegates, and EPC hereby assumes, all of Servicer’s duties and responsibilities as Servicer with respect to the Receivables purchased by Seller from Originator and which Originator has purchased from EPC pursuant to the Transfer Agreement.  EPC agrees to conduct such duties or responsibilities in accordance with the Contracts, the Credit and Collections Policy the Receivables Sale Agreement, the Transfer Agreement and this Agreement.  The fees of EPC or any other Person to whom such duties or responsibilities are delegated shall be for the sole account of Servicer.  Any delegation shall not relieve Servicer of its duties, responsibilities or liabilities hereunder and shall not constitute a resignation under Section 8.1(a).  Any Collections or other amounts due to the Administrative Agent, the Agents or Purchasers hereunder held by any such delegate shall, for the purposes of this Agreement, be treated as held by Servicer in trust for the holders of the Purchaser Interests.  Each agreement by which Servicer delegates any of its duties or responsibilities to any other Person (including, without limitation, Seller) shall state that if at any time the Administrative Agent shall designate as Servicer any Person other than such delegating Servicer, all duties and responsibilities theretofore delegated by such Servicer to such Person may, at the discretion of the Administrative Agent, be terminated forthwith on notice given by the Administrative Agent to such delegating Servicer and such Person.  If Servicer shall delegate any duties or responsibilities to Seller, Seller shall not be permitted to further delegate to any other Person any of such duties or responsibilities.
(c)    Notwithstanding the foregoing subsection (b), (i) Servicer shall be and remain primarily liable to the Administrative Agent, the Agents and the Purchasers for the full and prompt performance of all duties and responsibilities of Servicer hereunder and (ii) the Administrative Agent, the Agents and the Purchasers shall be entitled to deal exclusively with Servicer in matters relating to the discharge by Servicer of its duties and responsibilities hereunder.  The Administrative Agent, the Agents and the Purchasers shall not be required to give notice, demand or other communication to any Person other than Servicer in order for communication to Servicer and its sub-servicer or other delegate with respect thereto to be accomplished.  Servicer shall be responsible for providing any sub-servicer or other delegate of Servicer with any notice given to Servicer under this Agreement.
Section 8.2    Duties of Servicer.  (a)  Servicer shall take or cause to be taken all such actions as may be necessary or advisable to collect each Receivable from time to time, all in accordance with applicable laws, rules and regulations, with reasonable care and diligence, and in accordance with the Credit and Collection Policy.
(b)    Servicer will instruct all Obligors to pay all Collections directly to a Lock-Box or Collection Account.  Servicer shall effect a Collection Account Agreement substantially in the form of Exhibit VI with each bank maintaining a Collection Account at any time.  In the case of any remittances received in any Lock-Box or Collection Account that shall have been identified, to the satisfaction of Servicer, to not constitute Collections or other proceeds of the Receivables or the Related Security, Servicer shall promptly remit such items to the Person identified to it as being the owner of such remittances.  From and after the date the Administrative Agent delivers to any Collection Bank a Collection Notice pursuant to Section 8.3, the Administrative Agent may request that Servicer, and Servicer thereupon promptly shall instruct all Obligors with respect to the Receivables, to remit all payments thereon to a new depositary account specified by the Administrative Agent and, at all times thereafter, Seller and Servicer shall not deposit or otherwise credit, and shall not permit any other Person to deposit or otherwise credit to such new depositary account any cash or payment item other than Collections.
(c)    Servicer shall administer the Collections in accordance with the procedures described herein and in Article II.  Servicer shall set aside and hold in trust for the account of Seller and the Purchasers their respective shares of the Collections in accordance with Article II.  Servicer shall, upon the request of the Administrative Agent, segregate, in a manner acceptable to the Administrative Agent, all cash, checks and other instruments received by it from time to time constituting Collections from the general funds of Servicer or Seller prior to the remittance thereof in accordance with Article II.  If Servicer shall be required to segregate Collections pursuant to the preceding sentence, Servicer shall segregate and deposit with a bank designated by the Administrative Agent such allocable share of Collections of Receivables set aside for the Purchasers on the first Business Day following receipt by Servicer of such Collections, duly endorsed or with duly executed instruments of transfer.
(d)    Servicer may, in accordance with the Credit and Collection Policy, extend the maturity of any Receivable or adjust the Outstanding Balance of any Receivable as Servicer determines to be 

appropriate to maximize Collections thereof; provided, however, that such extension or adjustment shall not alter the status of such Receivable as a Delinquent Receivable or Charged-Off Receivable or limit the rights of the Administrative Agent, the Agents or the Purchasers under this Agreement.  Notwithstanding anything to the contrary contained herein, the Administrative Agent shall have the absolute and unlimited right to direct Servicer to commence or settle any legal action with respect to any Receivable or to foreclose upon or repossess any Related Security.
(e)    Servicer shall hold in trust for Seller and the Purchasers all Records that (i) evidence or relate to the Receivables, the related Contracts and Related Security or (ii) are otherwise necessary or desirable to collect the Receivables and shall, as soon as practicable upon demand of the Administrative Agent at any time following a Potential Amortization Event, deliver or make available to the Administrative Agent all such Records, at a place selected by the Administrative Agent.  Servicer shall, as soon as practicable following receipt thereof turn over to Seller any cash collections or other cash proceeds received with respect to Indebtedness not constituting Receivables and belonging to Seller.  Servicer shall, from time to time at the request of any Purchaser, furnish to the Purchasers (promptly after any such request) a calculation of the amounts set aside for the Purchasers pursuant to Article II.
(f)    Any payment by an Obligor in respect of any indebtedness owed by it to Originator, any Original Seller or Seller shall, except as otherwise specified by such Obligor or otherwise required by contract or law or unless otherwise permitted by the Administrative Agent, be applied as a Collection of any Receivable of such Obligor (starting with the oldest such Receivable) to the extent of any amounts then due and payable thereunder before being applied to any other receivable or other obligation of such Obligor.
Section 8.3    Collection Notices.  The Administrative Agent is authorized, at any time during the continuance of a Potential Amortization Event, to date and to deliver to the Collection Banks the Collection Notices.  Seller hereby transfers to the Administrative Agent for the benefit of the Purchasers, effective when the Administrative Agent delivers such notice, the exclusive ownership and control of each Lock-Box and the Collection Accounts.  In case any authorized signatory of Seller whose signature appears on a Collection Account Agreement shall cease to have such authority before the delivery of such notice, such Collection Notice shall nevertheless be valid as if such authority had remained in force.  Seller hereby authorizes the Administrative Agent, and agrees that the Administrative Agent shall be entitled to, following the delivery of the Collection Notices, (i) endorse Seller’s name on checks and other instruments representing Collections, (ii) enforce the Receivables, the related Contracts and the Related Security and (iii) take such action as shall be necessary or desirable to cause all cash, checks and other instruments constituting Collections of Receivables to come into the possession of the Administrative Agent rather than Seller.
Section 8.4    Responsibilities of Seller.  Anything herein to the contrary notwithstanding, the exercise by the Administrative Agent, the Agents and the Purchasers of their rights hereunder shall not release Servicer, Originator, any Original Seller or Seller from any of their duties or obligations with respect to any Receivables or under the related Contracts.  The Purchasers shall have no obligation or liability with respect to any Receivables or related Contracts, nor shall any of them be obligated to perform the obligations of Seller.
Section 8.5    Reports.  Servicer shall prepare and forward to the Administrative Agent and each Agent (i) on the tenth day of each month and at such times as the Administrative Agent or any Agent shall request, a Monthly Report and (ii) at such times as the Administrative Agent or any Agent shall request, a listing by Obligor of all Receivables together with an aging of such Receivables and (iii) at such times as the Administrative Agent or any Agent shall request, an Interim Report.
Section 8.6    Servicing Fees.  In consideration of Energizer Battery, Inc.’s agreement to act as Servicer hereunder, the Purchasers hereby agree that, so long as Energizer Battery, Inc. shall continue to perform as Servicer hereunder, Seller shall pay over to Energizer Battery, Inc., as compensation for its servicing activities, a fee (the “Servicing Fee”) on the first calendar day of each month, in arrears for the immediately preceding month, at such rate as Energizer Battery, Inc. and Seller shall agree upon from time to time on fair and reasonable basis and no less favorable to Energizer Battery, Inc. or Seller than a rate Energizer Battery, Inc. or Seller could obtain in an arm’s-length transaction for servicing with a Person other than Energizer Battery, Inc. or Seller.
ARTICLE IX    

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AMORTIZATION EVENTS
Section 9.1    Amortization Events.  The occurrence of any one or more of the following events shall constitute an Amortization Event:
(a)    Any Seller Party shall fail (i) to make any payment or deposit required hereunder when due, or (ii) to perform or observe any term, covenant or agreement hereunder (other than as referred to in clause (i) of this paragraph (a) and paragraph 9.1(e)) and such failure shall continue for three (3) consecutive Business Days.
(b)    Any representation, warranty, certification or statement made by any Seller Party or Provider in this Agreement, any other Transaction Document or in any other document delivered pursuant hereto or thereto shall prove to have been incorrect when made or deemed made.
(c)    Failure of Seller to pay any Indebtedness when due or the failure of any other Seller Party or Provider to pay Indebtedness (other than Indebtedness hereunder), which individually or together with other such Indebtedness as to which any failure exists (other than Indebtedness hereunder) has an aggregate outstanding principal amount equal to or greater than $30,000,000, when due; or the default by any Seller Party in the performance of any term, provision or condition contained in any agreement under which any such Indebtedness was created or is governed, the effect of which is to cause, or to permit the holder or holders of such Indebtedness to cause, such Indebtedness to become due prior to its stated maturity; or any such Indebtedness of any Seller Party or Provider shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the date of maturity thereof.
(d)    Any Seller Party, any Subsidiary of Seller, Provider or any Material Provider Subsidiary shall generally not pay its debts as such debts become due or shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors; or (ii) any proceeding shall be instituted by or against any Seller Party, any Subsidiary of Seller, Provider or any Material Provider Subsidiary seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property; provided that in the event any such proceeding shall have been instituted against such Seller Party, Subsidiary of Seller, Provider or Material Provider Subsidiary, such proceeding shall have continued undismissed, or unstayed and in effect, for a period of 60 consecutive days or (iii) any Seller Party, any Subsidiary of Seller, Provider or any Material Provider Subsidiary shall take any corporate action to authorize any of the actions set forth in clauses (i) or (ii) above in this subsection (d).
(e)    Seller shall fail to comply with the terms of Section 2.6 hereof.
(f)    As at the end of (i) any calendar month between and including the months of February and July, the three month rolling average of the Delinquency Ratio shall exceed 19.0%, (ii) any calendar month between and including the months of August and January, the three month rolling average of the Delinquency Ratio shall exceed 16.5%, (iii) any calendar month, the three month rolling average of the Loss-to-Liquidation Ratio shall exceed 4.0%, (iv) any calendar month, the three month rolling average of the Dilution Ratio shall exceed 28.0%, (v) [reserved], and (vi) any calendar month, the three month rolling average of the Payment Rate shall be less than 38.0%.
(g)    A Change of Control with respect to Originator, Provider or any Seller Party shall occur.
(h)    (i) One or more final judgments for the payment of money shall be entered against Seller or (ii) one or more final judgments for the payment of money in an amount in excess of $30,000,000, individually or in the aggregate, shall be entered against Provider or any of its Subsidiaries on claims not covered by insurance or as to which the insurance carrier has denied its responsibility, and such judgment shall continue 

unsatisfied and in effect for fifteen (15) consecutive days without a stay of execution.
(i)    The “Termination Date” under and as defined in each of the Receivables Sale Agreement and the Transfer Agreement shall occur under the Receivables Sale Agreement or the Transfer Agreement or Originator or any Original Seller shall for any reason cease to transfer, or cease to have the legal capacity to transfer, or otherwise be incapable of transferring Receivables to Seller under the Receivables Sale Agreement or to Originator under the Transfer Agreement, as applicable.
(j)    This Agreement shall terminate in whole or in part (except in accordance with its terms), or shall cease to be effective or to be the legally valid, binding and enforceable obligation of Seller, or any Obligor shall directly or indirectly contest in any manner such effectiveness, validity, binding nature or enforceability, or the Administrative Agent for the benefit of the Purchasers shall cease to have a valid and perfected first priority security interest in the Receivables, the Related Security and the Collections with respect thereto and the Collection Accounts.
(k)    Provider shall fail to perform or observe any term, covenant or agreement required to be performed by it under the Performance Undertaking, or the Performance Undertaking shall cease to be effective or to be the legally valid, binding and enforceable obligation of Provider, or Provider shall directly or indirectly contest in any manner such effectiveness, validity, binding nature or enforceability.
(l)    Provider shall fail to perform or observe the covenants set forth in Section 7.4 of the Provider Credit Agreement.
(m)    Seller shall fail to comply with Section 7.1(k)(F) hereof.
Section 9.2    Remedies. Upon the occurrence and during the continuation of an Amortization Event, the Administrative Agent may, or upon the direction of any Agent on behalf of the Committed Purchasers in its Conduit Groups shall, take any of the following actions: (i) replace the Person then acting as Servicer, (ii) declare the Amortization Date to have occurred, whereupon the Amortization Date shall forthwith occur, without demand, protest or further notice of any kind, all of which are hereby expressly waived by each Seller Party; provided, however, that upon the occurrence of an Amortization Event described in Section 9.1(d)(ii), or of an actual or deemed entry of an order for relief with respect to any Seller Party under the Federal Bankruptcy Code, the Amortization Date shall automatically occur, without demand, protest or any notice of any kind, all of which are hereby expressly waived by each Seller Party, (iii) to the fullest extent permitted by applicable law, declare that the Default Fee shall accrue with respect to any of the Aggregate Unpaids outstanding at such time, (iv) deliver the Collection Notices to the Collection Banks, and (v) notify Obligors of the Purchasers’ interest in the Receivables.  The aforementioned rights and remedies shall be without limitation, and shall be in addition to all other rights and remedies of the Administrative Agent, the Agents and the Purchasers otherwise available under any other provision of this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including, without limitation, all rights and remedies provided under the UCC, all of which rights shall be cumulative.  
ARTICLE X    
 

 
INDEMNIFICATION
Section 10.1    Indemnities by the Seller Parties.  Without limiting any other rights that the Administrative Agent, the Agents or any Purchaser may have hereunder or under applicable law, (A) Seller hereby agrees to indemnify (and pay upon demand to) the Administrative Agent, each Agent, each Funding Source and each Purchaser and their respective assigns, officers, directors, agents and employees (each an “Indemnified Party”) from and against any and all damages, losses, claims, taxes, liabilities, costs, expenses and for all other amounts payable, including reasonable attorneys’ fees (which attorneys may be employees of the Administrative Agent, such Agent, such Funding Source or such Purchaser) and disbursements (all of the foregoing being collectively referred to as 

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“Indemnified Amounts”) awarded against or incurred by any of them arising out of or as a result of this Agreement or the acquisition, either directly or indirectly, by a Purchaser of an interest in the Receivables, and (B) Servicer hereby agrees to indemnify (and pay upon demand to) each Indemnified Party for Indemnified Amounts awarded against or incurred by any of them arising out of Servicer’s activities as Servicer hereunder excluding, however, in all of the foregoing instances under the preceding clauses (A) and (B):
(i)    Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts resulted from gross negligence or willful misconduct on the part of the Indemnified Party seeking indemnification;
(ii)    Indemnified Amounts to the extent the same includes losses in respect of Receivables that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor; or
(iii)    taxes imposed by the jurisdiction in which such Indemnified Party’s principal executive office is located, on or measured by the overall net income of such Indemnified Party to the extent that the computation of such taxes is consistent with the characterization for income tax purposes of the acquisition by the Purchasers of Purchaser Interests as a loan or loans by the Purchasers to Seller secured by the Receivables, the Related Security, the Collection Accounts and the Collections;
provided, however, that nothing contained in this sentence shall limit the liability of any Seller Party or limit the recourse of the Purchasers to any Seller Party for amounts otherwise specifically provided to be paid by such Seller Party under the terms of this Agreement.  Without limiting the generality of the foregoing indemnification, Seller shall indemnify each Indemnified Party for Indemnified Amounts (including, without limitation, losses in respect of uncollectible receivables, regardless of whether reimbursement therefor would constitute recourse to Seller or Servicer) relating to or resulting from:
(i)    any representation or warranty made by any Seller Party, Provider, Originator, or any Original Seller (or any officers of any such Person) under or in connection with this Agreement, any other Transaction Document or any other information or report delivered by any such Person pursuant hereto or thereto, which shall have been false or incorrect when made or deemed made;
(ii)    the failure by Seller, Servicer, Provider, Originator, or any Original Seller to comply with any applicable law, rule or regulation with respect to any Receivable or Contract related thereto, or the nonconformity of any Receivable or Contract included therein with any such applicable law, rule or regulation or any failure of Originator or any Original Seller to keep or perform any of its obligations, express or implied, with respect to any Contract;
(iii)    any failure of Seller, Servicer, Provider, Originator or any Original Seller to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document;
(iv)    any products liability, personal injury or damage suit, or other similar claim arising out of or in connection with merchandise, insurance or services that are the subject of any Contract or any Receivable;
(v)    any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor) of the Obligor to the payment of any Receivable (including, without limitation, a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of the merchandise or service related to such Receivable or the furnishing or failure to furnish such merchandise or services;

(vi)    the commingling of Collections of Receivables at any time with other funds;
(vii)    any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document, the transactions contemplated hereby, the use of the proceeds of an Incremental Purchase or a Reinvestment, the ownership of the Purchaser Interests or any other investigation, litigation or proceeding relating to Seller, Servicer, Provider, Originator or any Original Seller in which any Indemnified Party becomes involved as a result of any of the transactions contemplated hereby;
(viii)    any inability to litigate any claim against any Obligor in respect of any Receivable as a result of such Obligor being immune from civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding;
(ix)    any Amortization Event described in Section 9.1(d);
(x)    any failure of Seller to acquire and maintain legal and equitable title to, and ownership of any Receivable and the Related Security and Collections with respect thereto from Originator, free and clear of any Adverse Claim (other than as created hereunder); or any failure of Seller to give reasonably equivalent value to Originator under the Receivables Sale Agreement in consideration of the transfer by Originator of any Receivable, or any attempt by any Person to void such transfer under statutory provisions or common law or equitable action;
(xi)    any failure to vest and maintain vested in the Administrative Agent for the benefit of the Purchasers, or to transfer to the Administrative Agent for the benefit of the Purchasers, legal and equitable title to, and ownership of, a first priority perfected undivided percentage ownership interest (to the extent of the Purchaser Interests contemplated hereunder) or security interest in the Receivables, the Related Security and the Collections, free and clear of any Adverse Claim (except as created by the Transaction Documents);  
(xii)    any failure of Originator to acquire from any Original Seller and maintain legal and equitable title to, and ownership of any Receivable and the Related Security and Collections with respect thereto, free and clear of any Adverse Claim (other than as created by the Transaction Documents); or any failure of Originator to give reasonably equivalent value to any Original Seller under the Transfer Agreement in consideration of the transfer by such Original Seller of any Receivable, or any attempt by any Person to void such transfer under statutory provisions or common law or equitable action;
(xiii)    the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Receivable, the Related Security and Collections with respect thereto, and the proceeds of any thereof, whether at the time of any Incremental Purchase or Reinvestment or at any subsequent time;
(xiv)    any action or omission by any Seller Party or Provider which reduces or impairs the rights of the Administrative Agent, the Agents or the Purchasers with respect to any Receivable or the value of any such Receivable;
(xv)    any attempt by any Person to void any Incremental Purchase or Reinvestment hereunder under statutory provisions or common law or equitable action; and
(xvi)    the failure of any Receivable included in the calculation of the Net Receivables Balance as an Eligible Receivable to be an Eligible Receivable at the time so included.
Section 10.2    Increased Cost and Reduced Return.  If after April 4, 2000, any Funding Source shall be charged any fee, expense or increased cost on account of the adoption of any applicable law, rule or 

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regulation (including any applicable law, rule or regulation regarding capital adequacy), any accounting principles or any change in any of the foregoing, or any change in the interpretation or administration thereof by the Financial Accounting Standards Board (“FASB”), any governmental authority, any central bank or any comparable agency charged with the interpretation or administration thereof, or compliance with any request or directive (whether or not having the force of law) of any such authority or agency (a “Regulatory Change”): (i) that subjects any Funding Source to any charge or withholding on or with respect to any Funding Agreement or a Funding Source’s obligations under a Funding Agreement, or on or with respect to the Receivables, or changes the basis of taxation of payments to any Funding Source of any amounts payable under any Funding Agreement (except for changes in the rate of tax on the overall net income of a Funding Source or taxes excluded by Section 10.1) or (ii) that imposes, modifies or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of a Funding Source, or credit extended by a Funding Source pursuant to a Funding Agreement or (iii) that imposes any other condition the result of which is to increase the cost to a Funding Source of performing its obligations under a Funding Agreement, or to reduce the rate of return on a Funding Source’s capital as a consequence of its obligations under a Funding Agreement, or to reduce the amount of any sum received or receivable by a Funding Source under a Funding Agreement or to require any payment calculated by reference to the amount of interests or loans held or interest received by it, then, upon demand by the Administrative Agent or the Agents, Seller shall pay to the relevant Agent, for the benefit of the relevant Funding Source with respect to such Agent’s Conduit Group, such amounts charged to such Funding Source or such amounts to otherwise compensate such Funding Source for such increased cost or such reduction.  For the avoidance of doubt, if the issuance of FASB Interpretation No. 46, or any other change in accounting standards or the issuance of any other pronouncement, release or interpretation, causes or requires the consolidation of all or a portion of the assets and liabilities of Company or Seller with the assets and liabilities of the Administrative Agent, the Agents, any Committed Purchaser or any other Funding Source, such event shall constitute a circumstance on which such Funding Source may base a claim for reimbursement under this Section.
Without limiting the foregoing, if any Funding Source has or reasonably anticipates having any claim for compensation from the Seller pursuant to this Section 10.2 and having the facility provided for by such Funding Source rated by a credit rating agency could reduce the amount of such compensation (in such Funding Source’s reasonable discretion), such Funding Source shall provide 30 days’ prior written notice to the Seller (a “Rating Request”), which Rating Request shall specify the basis for such claim, that such Funding Source or its designee intends to request a rating of its related facility from a credit rating agency that is mutually agreeable to such Funding Source, the Administrative Agent and the Servicer (the agreement of the Servicer not to be unreasonably withheld, conditioned or delayed).  Each of the Seller and the Servicer agree that it shall promptly (i) cooperate reasonably with such Funding Source’s efforts to obtain and maintain such rating (including such efforts to make a full and complete application for such rating), (ii) provide such credit rating agency (either directly or through distribution to the Administrative Agent or such Funding Source (with a copy to the Administrative Agent)), any information requested by such credit rating agency reasonably necessary for the purposes of its analysis of, or its providing or monitoring of such rating, and (iii) comply with all requirements of the credit rating agency with respect to such rating.  The Seller shall pay all initial, ongoing and renewal fees payable to such credit rating agency in connection with any such rating or the monitoring thereof regardless of whether such rating is obtained. The Seller and the Servicer shall also comply in all respects with Rule 17g-5 of the Securities Exchange Act of 1934 in respect of such rating.  Nothing in this paragraph shall (A) preclude any Funding Source from demanding compensation from the Seller in accordance with Article X or otherwise at any time and without regard to whether any rating shall have been obtained, or (B) require any Funding Source to obtain any rating on the related facility prior to demanding any such compensation from the Seller.
Section 10.3    Other Costs and Expenses.  Seller shall pay to the Administrative Agent, the Agents and each Conduit on demand all reasonable out-of-pocket costs and expenses in connection with the preparation, execution, delivery and administration of this Agreement, the transactions contemplated hereby and the other documents to be delivered hereunder, including without limitation, the cost of each Conduit’s auditors auditing the books, records and procedures of Seller, reasonable fees and out-of-pocket expenses of legal counsel for the Conduits, the Agents and the Administrative Agent (which such counsel may be employees of any Conduit, an Agent or the Administrative Agent) with respect thereto and with respect to advising the Conduits, the Agents and the Administrative Agent as to their respective rights and remedies under this Agreement.  Seller shall pay to the Administrative Agent (in the case of costs and expenses incurred by the Administrative Agent) or the relevant Agent (in the case of costs and expenses incurred by the Purchasers in the related Conduit Group) on demand any and all costs and expenses of the Administrative Agent, the Agents and the Purchasers, if any, including reasonable counsel 

fees and expenses in connection with the enforcement of this Agreement and the other documents delivered hereunder and in connection with any restructuring or workout of this Agreement or such documents, or the administration of this Agreement following an Amortization Event.  Seller shall reimburse any Conduit on demand for all other costs and expenses incurred by such Conduit (“Other Costs”), including, without limitation, the cost of auditing such Conduit’s books by certified public accountants, the cost of rating its Commercial Paper by independent financial rating agencies, and the reasonable fees and out-of-pocket expenses of counsel for such Conduit or any counsel for any shareholder of such Conduit with respect to advising such Conduit or such shareholder as to matters relating to such Conduit’s operations.  For the avoidance of any doubt, Other Costs shall include costs and expenses in connection with any audit performed by Protiviti Inc., including the audit they performed in February and March 2009.
Section 10.4    Allocations.  Each Conduit shall allocate the liability for Other Costs among Seller and other Persons with whom Conduit has entered into agreements to purchase interests in receivables (“Other Sellers”).  If any Other Costs are attributable to Seller and not attributable to any Other Seller, Seller shall be solely liable for such Other Costs.  However, if Other Costs are attributable to Other Sellers and not attributable to Seller, such Other Sellers shall be solely liable for such Other Costs.  All allocations to be made pursuant to the foregoing provisions of this Article X shall be made by the relevant Conduit in its sole discretion on a reasonable basis and shall be binding on Seller and Servicer.
Section 10.5    Accounting Based Consolidation Event.  If an Accounting Based Consolidation Event shall at any time occur then, upon demand by the Administrative Agent or any Agent, Seller shall pay to the Administrative Agent, for the benefit of the relevant Affected Entity, such amounts as such Affected Entity reasonably determines will compensate or reimburse such Affected Entity for any resulting (i) fee, expense or increased cost charged to, incurred or otherwise suffered by such Affected Entity, (ii) reduction in the rate of return on such Affected Entity’s capital or reduction in the amount of any sum received or receivable by such Affected Entity or (iii) internal capital charge or other imputed cost determined by such Affected Entity to be allocable to Seller or the transactions contemplated in this Agreement in connection therewith. Amounts under this Section 10.5 may be demanded at any time without regard to the timing of issuance of any financial statement by any Conduit or by any Affected Entity.
ARTICLE XI    
 

 
THE ADMINISTRATIVE AGENT
Section 11.1    Authorization and Action.  Each Purchaser hereby designates and appoints BTMU to act as its agent hereunder and under each other Transaction Document, and authorizes the Administrative Agent to take such actions as agent on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms of this Agreement and the other Transaction Documents together with such powers as are reasonably incidental thereto.  The Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein or in any other Transaction Document, or any fiduciary relationship with any Purchaser, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of the Administrative Agent shall be read into this Agreement or any other Transaction Document or otherwise exist for the Administrative Agent.  In performing its functions and duties hereunder and under the other Transaction Documents, the Administrative Agent shall act solely as agent for the Purchasers and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for any Seller Party, any Original Seller or any of such Seller Party’s or Original Seller’s successors or assigns.  The Administrative Agent shall not be required to take any action that exposes the Administrative Agent to personal liability or that is contrary to this Agreement, any other Transaction Document or applicable law.  The appointment and authority of the Administrative Agent hereunder shall terminate upon the indefeasible payment in full of all Aggregate Unpaids.  Each Purchaser hereby authorizes the Administrative Agent to execute each of the Uniform Commercial Code financing statements on behalf of such Purchaser (the terms of which shall be binding on such Purchaser).

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Section 11.2    Delegation of Duties.  The Administrative Agent may execute any of its duties under this Agreement and each other Transaction Document by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
Section 11.3    Exculpatory Provisions.  Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be (i) liable for any action lawfully taken or omitted to be taken by it or them under or in connection with this Agreement or any other Transaction Document (except for its, their or such Person’s own gross negligence or willful misconduct), or (ii) responsible in any manner to any of the Purchasers for any recitals, statements, representations or warranties made by any Seller Party, any Original Seller or Provider contained in this Agreement, any other Transaction Document or any certificate, report, statement or other document referred to or provided for in, or received under or in connection with, this Agreement, or any other Transaction Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, or any other Transaction Document or any other document furnished in connection herewith or therewith, or for any failure of any Seller Party, any Original Seller or Provider to perform its obligations hereunder or thereunder, or for the satisfaction of any condition specified in Article VI, or for the perfection, priority, condition, value or sufficiency of any collateral pledged in connection herewith.  The Administrative Agent shall not be under any obligation to any Purchaser to ascertain or to inquire as to the observance or performance of any of the agreements or covenants contained in, or conditions of, this Agreement or any other Transaction Document, or to inspect the properties, books or records of the Seller Parties, the Original Sellers or Provider.  The Administrative Agent shall not be deemed to have knowledge of any Amortization Event or Potential Amortization Event unless the Administrative Agent has received notice from Seller or a Purchaser.
Section 11.4    Reliance by Administrative Agent.  The Administrative Agent shall in all cases be entitled to rely, and shall be fully protected in relying, upon any document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to Seller), independent accountants and other experts selected by the Administrative Agent.  The Administrative Agent shall in all cases be fully justified in failing or refusing to take any action under this Agreement or any other Transaction Document unless it shall first receive such advice or concurrence of the Agents on behalf of the Committed Purchasers in their respective Conduit Groups or all of the Purchasers, as applicable, as it deems appropriate and it shall first be indemnified to its satisfaction by the Purchasers, provided that unless and until the Administrative Agent shall have received such advice, the Administrative Agent may take or refrain from taking any action, as the Administrative Agent shall deem advisable and in the best interests of the Purchasers.  The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, in accordance with a request of all Agents on behalf of the Committed Purchasers in their respective Conduit Groups or all of the Purchasers, as applicable, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Purchasers.
Section 11.5    Non-Reliance on Administrative Agent and Other Purchasers.  Each Purchaser expressly acknowledges that neither the Administrative Agent, nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereafter taken, including, without limitation, any review of the affairs of any Seller Party, any Original Seller or Provider, shall be deemed to constitute any representation or warranty by the Administrative Agent.  Each Purchaser represents and warrants to the Administrative Agent that it has and will, independently and without reliance upon the Administrative Agent or any other Purchaser and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of Seller and made its own decision to enter into this Agreement, the other Transaction Documents and all other documents related hereto or thereto.
Section 11.6    Reimbursement and Indemnification.  The Committed Purchasers agree to reimburse and indemnify the Administrative Agent and its officers, directors, employees, representatives and agents ratably according to their Pro Rata Shares and the Purchase Pro Rata Shares of their respective Conduit Groups, to the extent not paid or reimbursed by the Seller Parties (i) for any amounts for which the Administrative Agent, acting in its capacity as Administrative Agent, is entitled to reimbursement by the Seller Parties hereunder and (ii) for any other expenses incurred by the Administrative Agent, in its capacity as Administrative Agent and acting on behalf of the Purchasers, in connection with the administration and enforcement of this Agreement and the other Transaction Documents.

Section 11.7    Administrative Agent in its Individual Capacity.  The Administrative Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with Seller or any Affiliate of Seller as though the Administrative Agent were not the Administrative Agent hereunder.  With respect to the acquisition of Purchaser Interests pursuant to this Agreement, the Administrative Agent shall have the same rights and powers under this Agreement in its individual capacity as any Purchaser and may exercise the same as though it were not the Administrative Agent, and the terms “Committed Purchaser,” “Purchaser, “ “Committed Purchasers” and “Purchasers” shall include the Administrative Agent in its individual capacity.
Section 11.8    Successor Administrative Agent.  The Administrative Agent may, upon thirty days’ notice to Seller and the Purchasers, and the Administrative Agent will, upon the direction of all of the Purchasers (other than the Administrative Agent, in its individual capacity) resign as Administrative Agent.  If the Administrative Agent shall resign, then the Agents, acting on behalf of the Committed Purchasers in their respective Conduit Groups, during such thirty-day period shall collectively appoint from among the Purchasers a successor agent.  If for any reason no successor Administrative Agent is collectively appointed by the Agents, acting on behalf of the Committed Purchasers in their respective Conduit Groups, during such thirty-day period, then effective upon the termination of such thirty-day period, the Purchasers shall perform all of the duties of the Administrative Agent hereunder and under the other Transaction Documents and Seller and Servicer (as applicable) shall make all payments in respect of the Aggregate Unpaids directly to the applicable Purchasers and for all purposes shall deal directly with the Purchasers.  After the effectiveness of any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Transaction Documents and the provisions of this Article XI and Article X shall continue in effect for its benefit with respect to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and under the other Transaction Documents.
ARTICLE XII    
 

 
ASSIGNMENTS; PARTICIPATIONS
Section 12.1    Assignments.  (a)  Seller, Servicer, Administrative Agent, the Agents and each Committed Purchaser hereby agree and consent to the complete or partial assignment by a Conduit of all or any portion of its rights under, interest in, title to and obligations under this Agreement to any Funding Source or, with the consent of the Seller (which consent shall not be unreasonably withheld), to any other Person, and upon such assignment, such Conduit shall be released from its obligations so assigned.  Further, Seller, Servicer, the Administrative Agent, the Agents and each Committed Purchaser hereby agree that any assignee of such Conduit of this Agreement or all or any of the Purchaser Interests of such Conduit shall have all of the rights and benefits under this Agreement as if the terms “Gotham,” “Victory,” and/or “Conduit,” as applicable, explicitly referred to such party (provided that the Purchaser Interests of any such assignee shall accrue Yield pursuant to Section 4.1), and no such assignment shall in any way impair the rights and benefits of such Conduit hereunder.  Neither Seller nor Servicer shall have the right to assign its rights or obligations under this Agreement.
(b)    Any Committed Purchaser may at any time and from time to time assign to one or more Persons (“Purchasing Committed Purchasers”) all or any part of its rights and obligations under this Agreement pursuant to an assignment agreement, substantially in the form set forth in Exhibit VII hereto (the “Assignment Agreement”) executed by such Purchasing Committed Purchaser and such selling Committed Purchaser.  The consent of each Conduit shall be required prior to the effectiveness of any such assignment; and, in the event of any such assignment by any Committed Purchaser, other than to an Affiliate of such Committed Purchaser, another Committed Purchaser or an Affiliate of another Committed Purchaser, the consent of Seller (which consent shall not be unreasonably withheld) shall be required prior to the effectiveness of any such assignment.  Each assignee of a Committed Purchaser must (i) have a short-term debt rating of A-1 or better by Standard & Poor’s Ratings Group and P-1 by Moody’s Investor Service, Inc. and (ii) agree to deliver to the Administrative Agent and the Agents, promptly following any request therefor by the Administrative Agent, any Agent or any Conduit, an enforceability opinion in form and substance satisfactory to the Administrative Agent, 

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such Agent and such Conduit.  Upon delivery of the executed Assignment Agreement to the Administrative Agent and the Agents, such selling Committed Purchaser shall be released from its obligations hereunder to the extent of such assignment.  Thereafter the Purchasing Committed Purchaser shall for all purposes be a Committed Purchaser party to this Agreement and shall have all the rights and obligations of a Committed Purchaser under this Agreement to the same extent as if it were an original party hereto and no further consent or action by Seller, the Purchasers, the Administrative Agent or the Agents shall be required.
Section 12.2    Participations.  Any Committed Purchaser may, in the ordinary course of its business at any time sell to one or more Persons (each a “Participant”) participating interests in its Pro Rata Share of the Purchaser Interests of the Committed Purchasers in the same Conduit Group, its obligation hereunder or any other interest of such Committed Purchaser hereunder.  Notwithstanding any such sale by a Committed Purchaser of a participating interest to a Participant, such Committed Purchaser’s rights and obligations under this Agreement shall remain unchanged, such Committed Purchaser shall remain solely responsible for the performance of its obligations hereunder, and Seller, each Conduit, the relevant Agent and the Administrative Agent shall continue to deal solely and directly with such Committed Purchaser in connection with such Committed Purchaser’s rights and obligations under this Agreement.  Each Committed Purchaser agrees that any agreement between such Committed Purchaser and any such Participant in respect of such participating interest shall not restrict such Committed Purchaser’s right to agree to any amendment, supplement, waiver or modification to this Agreement, except for any amendment, supplement, waiver or modification described in Section 14.1(b)(i).
Section 12.3    Federal Reserve.  Notwithstanding any other provision of this Agreement to the contrary, any Committed Purchaser may at any time pledge or grant a security interest in all or any portion of its rights (including, without limitation, any Purchaser Interest and any rights to payment of Capital and Yield) under this Agreement to secure obligations of such Committed Purchaser to a Federal Reserve Bank, without notice to or consent of the Seller, the Administrative Agent, the Agents or any Purchaser; provided that no such pledge or grant of a security interest shall release a Committed Purchaser from any of its obligations hereunder, or substitute any such pledgee or grantee for such Committed Purchaser as a party hereto.
ARTICLE XIII    
 

 
{RESERVED}
ARTICLE XIV    
 

 
MISCELLANEOUS
Section 14.1    Waivers and Amendments.  (a)  No failure or delay on the part of the Administrative Agent, the Agents or any Purchaser in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy.  The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law.  Any waiver of this Agreement shall be effective only in the specific instance and for the specific purpose for which given.
(b)    No provision of this Agreement may be amended, supplemented, modified or waived except in writing in accordance with the provisions of this Section 14.1(b).  Each Conduit, Seller, the Agents and the Administrative Agent, at the direction of all Agents on behalf of the Committed Purchasers in their respective Conduit Groups, may enter into written modifications or waivers of any provisions of this Agreement, 

provided, however, that no such modification or waiver shall:
(i)    without the consent of each affected Purchaser, (A) extend the Liquidity Termination Date or the date of any payment or deposit of Collections by Seller or Servicer, (B) reduce the rate or extend the time of payment of Yield or any CP Costs (or any component of Yield or CP Costs), (C) reduce any fee payable to the Administrative Agent or the Agents for the benefit of the Purchasers, (D) except pursuant to Article XII hereof, change the amount of the Capital of any Purchaser, any Committed Purchaser’s Pro Rata Share (other than, to the extent applicable in each case, pursuant to Section 4.6 or the terms of any other Funding Agreement), any Conduit Group’s Purchase Pro Rata Share (other than, to the extent applicable, pursuant to Section 4.6) or Reduction Pro Rata Share or any Committed Purchaser’s Commitment, (E) amend, modify or waive any provision of Section 4.6 or this Section 14.1(b) or any provision relating to the number of Conduits or Conduit Groups required to take any action under or waive any provision in this Agreement, (F) consent to or permit the assignment or transfer by Seller of any of its rights and obligations under this Agreement, (G) change the definition of “Eligible Receivable, “ “Loss Reserve, “ “Loss-to-Liquidation Ratio, “ or “Loss Percentage” or (H) amend or modify any defined term (or any defined term used directly or indirectly in such defined term) used in clauses (A) through (G) above in a manner that would circumvent the intention of the restrictions set forth in such clauses;
(ii)    without the written consent of the then Administrative Agent and the Agents, amend, modify or waive any provision of this Agreement if the effect thereof is to affect the rights or duties of such Administrative Agent or any Agent; or
(iii)    without the written consent of the then Servicer, amend, modify or waive any provision of Article VIII if the effect thereof is to affect the rights or duties of such Servicer.    
Notwithstanding the foregoing, (i) without the consent of the Committed Purchasers, but with the consent of Seller, the Administrative Agent may amend this Agreement solely to add additional Persons as Committed Purchasers hereunder; (ii) the Administrative Agent, the Agents on behalf of the Committed Purchasers in their respective Conduit Groups and each Conduit may enter into amendments to modify any of the terms or provisions of Article XI, Article XII, Section 14.13 or any other provision of this Agreement without the consent of Seller, provided that such amendment has no negative impact upon Seller.  Any modification or waiver made in accordance with this Section 14.1 shall apply to each of the Purchasers equally and shall be binding upon Seller, the Purchasers, the Agents and the Administrative Agent; and (iii) the Administrative Agent, acting upon the direction of both Agents on behalf of the Committed Purchasers in their respective Conduit Groups, may waive the occurrence of an Amortization Event.
Section 14.2    Notices.  Except as provided in this Section 14.2, all communications and notices provided for hereunder shall be in writing (including bank wire, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other parties hereto at their respective addresses or telecopy numbers set forth on the signature pages hereof or at such other address or telecopy number as such Person may hereafter specify for the purpose of notice to each of the other parties hereto.  Each such notice or other communication shall be effective  if given by telecopy, upon the receipt thereof,  if given by mail, three (3) Business Days after the time such communication is deposited in the mail with first class postage prepaid or  if given by any other means, when received at the address specified in this Section 14.2.  Seller hereby authorizes the Administrative Agent and the Agents to effect purchases and Tranche Period and Discount Rate selections, as applicable, based on telephonic notices made by any Person whom the Administrative Agent or the relevant Agent, as applicable, in good faith believes to be acting on behalf of Seller.  Seller agrees to deliver promptly to the Administrative Agent or the relevant Agent, as applicable, a written confirmation of each telephonic notice signed by an authorized officer of Seller; provided, however, the absence of such confirmation shall not affect the validity of such notice.  If the written confirmation differs from the action taken by the Administrative Agent or the relevant Agent, as applicable, the records of the Administrative Agent or such Agent, as applicable, shall govern absent manifest error.
Section 14.3    Ratable Payments.  If any Purchaser, whether by setoff or otherwise, has payment made to it with respect to any portion of the Aggregate Unpaids owing to such Purchaser (other than 

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payments received pursuant to Section 10.2 or 10.3) in a greater proportion than that received by any other Purchaser entitled to receive a ratable share of such Aggregate Unpaids, such Purchaser agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion of such Aggregate Unpaids held by the other Purchasers so that after such purchase each Purchaser will hold its ratable proportion of such Aggregate Unpaids; provided that if all or any portion of such excess amount is thereafter recovered from such Purchaser, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
Section 14.4    Protection of Ownership Interests of the Purchasers.  (a)  Seller agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that may be necessary or desirable, or that the Administrative Agent may request, to perfect, protect or more fully evidence the Purchaser Interests, or to enable the Administrative Agent, the Agents or the Purchasers to exercise and enforce their rights and remedies hereunder.  At any time upon the occurrence and during the continuance of a Potential Amortization Event, the Administrative Agent may, or the Administrative Agent may direct Seller or Servicer to, notify the Obligors of Receivables, at Seller’s expense, of the ownership or security interests of the Purchasers under this Agreement and may also direct that payments of all amounts due or that become due under any or all Receivables be made directly to the Agents or a designee thereof.  Seller or Servicer (as applicable) shall, at any Purchaser’s request, withhold the identity of such Purchaser in any such notification.
(b)    If any Seller Party fails to perform any of its obligations hereunder, the Administrative Agent, the Agents or any Purchaser may (but shall not be required to) perform, or cause performance of, such obligations, and the Administrative Agent’s, the Agents’ or such Purchaser’s reasonable costs and expenses incurred in connection therewith shall be payable by Seller as provided in Section 10.3.  Each Seller Party irrevocably authorizes the Administrative Agent at any time and from time to time in the sole discretion of the Administrative Agent, and appoints the Administrative Agent as its attorney-in-fact, to act on behalf of such Seller Party (i) to execute on behalf of Seller as debtor and to file financing statements necessary or desirable in the Administrative Agent’s sole discretion to perfect and to maintain the perfection and priority of the interest of the Purchasers in the Receivables and (ii) to file a carbon, photographic or other reproduction of this Agreement or any financing statement with respect to the Receivables as a financing statement in such offices as the Administrative Agent in its sole discretion deems necessary or desirable to perfect and to maintain the perfection and priority of the interests of the Purchasers in the Receivables.  This appointment is coupled with an interest and is irrevocable.
Section 14.5    Confidentiality.  (a)  Each Seller Party, each Agent, the Administrative Agent and each Purchaser shall maintain and shall cause each of its employees and officers to maintain the confidentiality of the Transaction Documents and the other confidential or proprietary information with respect to the other parties hereto and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that such Seller Party, such Agent, the Administrative Agent and such Purchaser and its officers and employees may disclose such information to such Person’s external accountants and attorneys and as required by any applicable law or order of any judicial or administrative proceeding.  Anything herein to the contrary notwithstanding (and notwithstanding any other express or implied agreement to the contrary), each Seller Party, each Purchaser, each Agent and the Administrative Agent, each Indemnified Party and any successor or assign of any of the foregoing (and each employee, representative or other agent of any of the foregoing) may disclose to any and all Persons, without limitation of any kind, the “tax treatment” and “tax structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-4(c)) of the transactions contemplated herein and all materials of any kind (including opinions or other tax analyses) that are or have been provided to any of the foregoing relating to such tax treatment or tax structure, and it is hereby confirmed that each of the foregoing have been so authorized since the commencement of discussions regarding the transactions, except to the extent that confidentiality is reasonably necessary to comply with U.S. federal or state securities laws.
(b)    Anything herein to the contrary notwithstanding, each Seller Party hereby consents to the disclosure of any nonpublic information with respect to it (i) to the Administrative Agent, the Agents, the Committed Purchasers or the Conduits by each other, (ii) by the Administrative Agent, the Agents or the Purchasers to any prospective or actual assignee or participant of any of them and (iii) by the Administrative Agent, the Agents or a Conduit to any rating agency, Commercial Paper dealer, any Funding Source or other provider of a surety, guaranty or credit or liquidity enhancement to a Conduit or any entity organized for the purpose of purchasing, or making loans secured by, financial assets for which BTMU or any Committed Purchaser acts as an administrative agent and to any officers, directors, employees, outside accountants and attorneys of any of the 

foregoing.  In addition, the Purchasers, the Agents and the Administrative Agent may disclose any such nonpublic information pursuant to any law, rule (including, without limitation, as contemplated by Rule 17g-5 of the Securities Exchange Act of 1934), regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law).
Section 14.6    Bankruptcy Petition.  Seller, Servicer, the Agents, the Administrative Agent and each Committed Purchaser hereby covenant and agree that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of a Conduit, it will not institute against, or join any other Person in instituting against, such Conduit any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.
Section 14.7    Limitation of Liability.  Except with respect to any claim arising out of the willful misconduct or gross negligence of a Conduit, an Agent, the Administrative Agent or any Committed Purchaser, no claim may be made by any Seller Party or any other Person against a Conduit, an Agent, the Administrative Agent or any Committed Purchaser or their respective Affiliates, directors, officers, employees, attorneys or agents for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement, or any act, omission or event occurring in connection therewith; and each Seller Party hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.
Section 14.8    CHOICE OF LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 14.9    CONSENT TO JURISDICTION.  EACH SELLER PARTY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN, NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH PERSON PURSUANT TO THIS AGREEMENT, AND EACH SELLER PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.  NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT, ANY AGENT OR ANY PURCHASER TO BRING PROCEEDINGS AGAINST ANY SELLER PARTY IN THE COURTS OF ANY OTHER JURISDICTION.  ANY JUDICIAL PROCEEDING BY ANY SELLER PARTY AGAINST THE ADMINISTRATIVE AGENT, ANY AGENT OR ANY PURCHASER OR ANY AFFILIATE OF THE ADMINISTRATIVE AGENT, ANY AGENT OR ANY PURCHASER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH SELLER PARTY PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN THE BOROUGH OF MANHATTAN, NEW YORK, NEW YORK.
Section 14.10    WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY SELLER PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
Section 14.11    Integration; Binding Effect; Survival of Terms.
(a)    This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings.
(b)    This Agreement shall be binding upon and inure to the benefit of the parties hereto 

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and their respective successors and permitted assigns (including any trustee in bankruptcy).  This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; provided, however, that the rights and remedies with respect to (i) any breach of any representation and warranty made by any Seller Party pursuant to Article V, (ii) the indemnification and payment provisions of Article X, and Sections 14.5 and 14.6 shall be continuing and shall survive any termination of this Agreement.
Section 14.12    Counterparts; Severability; Section References.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement.  Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  Unless otherwise expressly indicated, all references herein to “Article,” “Section,” “Schedule” or “Exhibit” shall mean articles and sections of, and schedules and exhibits to, this Agreement.
Section 14.13    BTMU Corporate Bank Roles.  Each of the Committed Purchasers acknowledges that BTMU acts, or may in the future act, (i) as administrative agent and/or funding agent for any Conduit or any Committed Purchaser or as a Funding Source or agent for any Funding Source, (ii) as issuing and paying agent for the Commercial Paper, (iii) to provide credit or liquidity enhancement for the timely payment for the Commercial Paper and (iv) to provide other services from time to time for any Conduit or any Committed Purchaser (collectively, the “BTMU Corporate Bank Roles”).  Without limiting the generality of this Section 14.13, each Committed Purchaser hereby acknowledges and consents to any and all BTMU Corporate Bank Roles and agrees that in connection with any BTMU Corporate Bank Role, BTMU may take, or refrain from taking, any action that it, in its discretion, deems appropriate, including, without limitation, in its role as administrative agent for Gotham and Victory.
Section 14.14    Characterization.  (a)  It is the intention of the parties hereto that each purchase hereunder shall constitute and be treated as an absolute and irrevocable sale, which purchase shall provide the applicable Purchaser with the full benefits of ownership of the applicable Purchaser Interest.  Except as specifically provided in this Agreement, each sale of a Purchaser Interest hereunder is made without recourse to Seller; provided, however, that (i) Seller shall be liable to each Purchaser, each Agent and the Administrative Agent for all representations, warranties, covenants and indemnities made by Seller pursuant to the terms of this Agreement, and (ii) such sale does not constitute and is not intended to result in an assumption by any Purchaser, any Agent or the Administrative Agent or any assignee thereof of any obligation of Seller or a Transferor or any other person arising in connection with the Receivables, the Related Security, or the related Contracts, or any other obligations of Seller or a Transferor.
(b)    In addition to any ownership interest which the Administrative Agent may from time to time acquire pursuant hereto, Seller hereby grants to the Administrative Agent for the ratable benefit of the Purchasers a valid and perfected security interest in all of Seller’s right, title and interest in, to and under all Receivables now existing or hereafter arising, the Collections, each Lock-Box, each Collection Account, all Related Security, the Demand Note, all other rights and payments relating to such Receivables and all proceeds of any thereof prior to all other liens on and security interests therein to secure the prompt and complete payment of the Aggregate Unpaids.  The Administrative Agent and the Purchasers shall have, in addition to the rights and remedies that they may have under this Agreement, all other rights and remedies provided to a secured creditor under the UCC and other applicable law, which rights and remedies shall be cumulative.
Section 14.15    Withholding.  Any Purchaser that is not incorporated under the laws of the United States of America, or a state thereof, agrees to deliver to the Administrative Agent (with copies to Seller) two duly completed copies of United States Internal Revenue Service Forms W-8BEN or W-8ECI, certifying in either case that such Purchaser is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes.
Section 14.16    Patriot Act.  Each Agent and the Administrative Agent (for itself and not on behalf of any Agent) hereby notifies each Seller Party that pursuant to the requirements of the USA Patriot Act (Title 

III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that identifies the Seller, which information includes the name and address of the Seller and other information that will allow such Agent or the Administrative Agent, as applicable, to identify the Seller in accordance with the Patriot Act.
Section 14.17    No Recourse.  The obligations (if any) of any Committed Purchaser under this Agreement are solely the corporate obligations of such Committed Purchaser.  No recourse shall be had for any obligation, covenant or agreement (including, without limitation, the payment of any amount owing in respect to this Agreement or the payment of any fee hereunder or for any other obligation or claim) arising out of or based upon this Agreement or any other agreement, instrument or Transaction Document entered into pursuant hereto or in connection herewith against any stockholder, employee, officer, director, manager, administrator, partner or incorporator of any Committed Purchaser, as such, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute or otherwise.
Section 14.18    Limitation on Payments. Notwithstanding any provisions contained in this Agreement to the contrary, no Committed Purchaser shall, nor shall it be obligated to, pay any amount pursuant to this Agreement unless (a) such Committed Purchaser has received funds which may be used to make such payment and which funds are not required to repay its Commercial Paper notes and advances under its Funding Agreements when due and (b) after giving effect to such payment, either (i) there is sufficient liquidity availability (determined in accordance with the Commercial Paper program documents and agreements of such Committed Purchaser), under all of the liquidity facilities for such Committed Purchaser’s commercial paper program, to pay the “Face Amount” (as defined below) of all its outstanding Commercial Paper notes and advances under its Funding Agreements when due or (ii) all of its Commercial Paper notes and advances under its Funding Agreements are paid in full. Any amount which any Committed Purchaser does not pay pursuant to the operation of the preceding sentence shall not constitute a claim (as defined in §101 of the Bankruptcy Code) against or an obligation of any Committed Purchaser for any such insufficiency unless and until such payment may be made in accordance with clauses (a) and (b) above. The agreements in this Section 14.18 shall survive termination of this Agreement and payment of all obligations hereunder. As used in this Section 14.18, the term “Face Amount” means, with respect to outstanding Commercial Paper notes or advances under Funding Agreements, (x) the face amount of any such Commercial Paper notes issued on a discount basis, and (y) the principal amount of, plus the amount of all interest accrued and to accrue thereon to the stated maturity date of, any such Commercial Paper notes issued on an interest-bearing basis or any such advances under a Funding Agreement.
 [SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date hereof.
ENERGIZER RECEIVABLES FUNDING CORPORATION
By:    
 
Name: William C. Fox
 
Title: Vice President and Treasurer
		
	Address:
	533 Maryville University Drive

 
St. Louis, Missouri  63141

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ENERGIZER BATTERY, INC.
By:    
 
Name: William C. Fox
 
Title: Vice President and Treasurer
		
	Address:
	533 Maryville University Drive

		
	 

	St. Louis, Missouri  63141

ENERGIZER PERSONAL CARE, LLC
By:    
 
Name: William C. Fox
 
Title: Vice President and Treasurer
		
	Address:
	6 Research Drive

		
	 

	Shelton, CT  06484

GOTHAM FUNDING CORPORATION
By:        
 
    
		
	Address:
	(for opinions) c/o J.H. Management Corporation

 
One International Place
 
Boston, MA 02110
(for other communications) c/o The Bank of Tokyo-Mitsubishi UFJ, Ltd.,
New York Branch 
 
1251 Avenue of the Americas 
 
New York, New York 10020
VICTORY RECEIVABLES CORPORATION
By:        
 
    
		
	Address:
	(for opinions) c/o J.H. Management Corporation

 
One International Place
 
Boston, MA 02110
(for other communications) c/o The Bank of Tokyo-Mitsubishi UFJ, Ltd.,
New York Branch 
 
1251 Avenue of the Americas 
 
New York, New York 10020

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, as a Committed Purchaser
By:    
 
Name:
 
Title:
Address:    The Bank of Tokyo-Mitsubishi UFJ, Ltd.,
New York Branch
 
1251 Avenue of the Americas 
 
New York, NY 10020 
 
Attention: Securitization Group 
 

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, as Administrative Agent and as an Agent
By:    
 
Name:
 
Title:
Address:    The Bank of Tokyo-Mitsubishi UFJ, Ltd.,
New York Branch
 
1251 Avenue of the Americas 
 

New York, NY 10020 
 
Attention: Securitization Group 
 

SUNTRUST BANK, 
as a Committed Purchaser and an Agent

By:                         
 
Name:   
Title:

Address:    SunTrust Robinson Humphrey, Inc.
                    c/o Sun Trust Bank
                    3333 Peachtree Road, NE
                    Atlanta, GA 30326
Attention:  Michael Peden

    
EXHIBIT I
DEFINITIONS
As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
“Accounting Based Consolidation Event” means the consolidation, for financial and/or regulatory accounting purposes, of all or any portion of the assets and liabilities of any Conduit that are subject to this Agreement or any other Transaction Document with all or any portion of the assets and liabilities of an Affected Entity. An Accounting Based Consolidation Event shall be deemed to occur on the date any Affected Entity shall acknowledge in writing that any such consolidation of the assets and liabilities of any Conduit shall occur.
“Accounts Receivable Turnover Ratio” means, for any Settlement Period, the ratio computed as of the most recent Settlement Date by dividing (i) the aggregate amount of Receivables originated during the 12 months ending on such Settlement Date by (ii) the average month end amount of the aggregate Outstanding Balance of Receivables during the 12 months ending on such Settlement Date.
“Accrual Period” means each calendar month, provided that the initial Accrual Period hereunder means the period from (and including) the date of the initial purchase hereunder to (and including) the last day of the calendar month thereafter.
“Administrative Agent” has the meaning set forth in the preamble to this Agreement.
“Adverse Claim” means a lien, security interest, charge or encumbrance, or other right or claim in, of or on any Person’s assets or properties in favor of any other Person.
 “Affected Entity” means (i) any Committed Purchaser, (ii) any insurance company, bank or other funding entity providing liquidity, credit enhancement or back-up purchase support or facilities to any Conduit, (iii) any agent, administrator or manager of any Conduit, or (iv) any bank holding company in respect of any of the foregoing.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person or any Subsidiary of such Person.  A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise.
“Agent” means each of BTMU and any other entity that becomes a party hereto from time to time in its respective capacity as a “Agent” under this Agreement.
“Aggregate Capital” means, on any date of determination, the aggregate amount of Capital of all Purchaser Interests outstanding on such date.
“Aggregate Reduction” has the meaning specified in Section 1.3.
“Aggregate Reserves” means, on any date of determination, the greater of: (a) the sum of (i) the product of (A) the sum of the Loss Reserve Floor and the Dilution Reserve Floor, multiplied by (B) the Net Receivables Balance as of the close of business of the Servicer on such date, plus (ii) the Yield and Servicer Reserve, and (b) the sum of the Loss Reserve, the Yield and Servicer Reserve, and the Dilution Reserve.
“Aggregate Unpaids” means, at any time, an amount equal to the sum of, without duplication, all Aggregate Capital and all other unpaid Obligations (whether due or accrued) at such time.
“Agreement” means this Third Amended and Restated Receivables Purchase Agreement, as it may be 

amended, restated, supplemented or otherwise modified and in effect from time to time.
“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1⁄2 of 1%.  Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.
“Amortization Date” means the earliest to occur of (i) the day on which any of the conditions precedent set forth in Section 6.2 are not satisfied, (ii) the Business Day immediately prior to the occurrence of an Amortization Event set forth in Section 9.1(d)(ii), (iii) the Business Day specified in a written notice from the Administrative Agent following the occurrence of any other Amortization Event and (iv) the date which is 30 Business Days after the Administrative Agent’s receipt of written notice from Seller that it wishes to terminate the facility evidenced by this Agreement.
“Amortization Event” has the meaning specified in Article IX.
“Assignment Agreement” has the meaning set forth in Section 12.1(b).
“Authorized Officer” means, with respect to any Person, its president, corporate controller, treasurer or chief financial officer.
“Broken Funding Costs” means for any Purchaser Interest which: (i) has its Capital reduced without compliance by Seller with the notice requirements hereunder or (ii) does not become subject to an Aggregate Reduction following the delivery of any Reduction Notice or (iii) is assigned pursuant to any Funding Agreement or otherwise transferred or terminated prior to the date on which it was originally scheduled to end; an amount equal to the excess, if any, of (A) the CP Costs or Yield (as applicable) that would have accrued during the remainder of the Tranche Periods or the tranche periods for Commercial Paper determined by the Administrative Agent or any Agent to relate to such Purchaser Interest (as applicable) subsequent to the date of such reduction, assignment, transfer or termination (or in respect of clause (ii) above, the date such Aggregate Reduction was designated to occur pursuant to the Reduction Notice) of the Capital of such Purchaser Interest if such reduction, assignment, transfer or termination had not occurred or such Reduction Notice had not been delivered, over (B) the sum of (x) to the extent all or a portion of such Capital is allocated to another Purchaser Interest, the amount of CP Costs or Yield actually accrued during the remainder of such period on such Capital for the new Purchaser Interest, and (y) to the extent such Capital is not allocated to another Purchaser Interest, the income, if any, actually received during the remainder of such period by the holder of such Purchaser Interest from investing the portion of such Capital not so allocated.  In the event that the amount referred to in clause (B) exceeds the amount referred to in clause (A), the relevant Purchaser or Purchasers agree to pay to Seller the amount of such excess.  All Broken Funding Costs shall be due and payable hereunder upon demand.
“BTMU” has the meaning set forth in the preamble to this Agreement.
“BTMU Pooled CP Costs” means, for each day and with respect to the Capital associated with each Purchaser Interest of Gotham or Victory as to which the BTMU Pooled CP Costs are applicable, the sum of (i) the discount or yield accrued (including, without limitation, any associated with financing the discount or interest component on the roll-over of any relevant Pooled Commercial Paper) on the Pooled Commercial Paper issued by Gotham or Victory, as applicable, on such day, plus (ii) any and all accrued commissions in respect of the relevant placement agents and commercial paper dealers, and issuing and paying agent fees incurred, in respect of such Pooled Commercial Paper for such day, plus (iii) other costs (including without limitation those associated with funding small or odd-lot amounts) with respect to all receivable purchase, credit and other investment facilities which are funded by the applicable Pooled Commercial Paper for such day.  The BTMU Pooled CP Costs shall be determined by BTMU in its capacity as Agent for the related Conduit Group, whose determination shall be conclusive. 
“Business Day” means any day on which banks are not authorized or required to close in New York, New York or St. Louis, Missouri and The Depository Trust Company of New York is open for business, and, if the 

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applicable Business Day relates to any computation or payment to be made with respect to the LIBO Rate, any day on which dealings in dollar deposits are carried on in the London interbank market, and, if the applicable Business Day is used with respect to any advances based upon CP Costs, any day upon which commercial paper markets in the United States are open.
“Capital” of any Purchaser Interest means, at any time, (A) the Purchase Price of such Purchaser Interest, minus (B) the sum of the aggregate amount of Collections and other payments received by the Administrative Agent or the relevant Agent, as the case may be, which in each case are applied to reduce such Capital in accordance with the terms and conditions of this Agreement; provided that such Capital shall be restored (in accordance with Section 2.5) in the amount of any Collections or other payments so received and applied if at any time the distribution of such Collections or payments are rescinded, returned or refunded for any reason.
“Change of Control” means the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of voting stock of any Seller Party or Provider.
“Charged-Off Receivable” means a Receivable: (i) as to which the Obligor thereof has taken any action, or suffered any event to occur, of the type described in Section 9.1(d) (as if references to Seller Party therein refer to such Obligor); (ii) as to which the Obligor thereof, if a natural person, is deceased, (iii) which, consistent with the Credit and Collection Policy, would be written off Seller’s books as uncollectible, (iv) which has been identified by Seller as uncollectible or (v) as to which any payment, or part thereof, remains unpaid for 91 days or more from the original due date for such payment.
“Collection Account” means each concentration account, depositary account, lock-box account or similar account in which any Collections are collected or deposited and which is listed on Exhibit IV.
“Collection Account Agreement” means an agreement substantially, as the same may be amended, restated, supplemented or otherwise modified from time to time in the form of Exhibit VI-A or Exhibit VI-B among a Transferor, Seller, the Administrative Agent and a Collection Bank.
“Collection Bank” means, at any time, any of the banks holding one or more Collection Accounts.
“Collection Notice” means a notice, in substantially the form of Annex A to Exhibit VI-A or Exhibit VI-B, as applicable, from the Administrative Agent to a Collection Bank or any similar or analogous notice from the Administrative Agent to a Collection Bank.
“Collections” means, with respect to any Receivable, all cash collections and other cash proceeds in respect of such Receivable, including, without limitation, all yield, Finance Charges or other related amounts accruing in respect thereof and all cash proceeds of Related Security with respect to such Receivable.
“Commercial Paper” means promissory notes of a Conduit issued by such Conduit in the commercial paper market.
“Commitment” means, for each Committed Purchaser, the commitment of such Committed Purchaser to purchase Purchaser Interests from Seller, in an amount not to exceed (i) in the aggregate, the amount set forth opposite such Committed Purchaser’s name on Schedule A to this Agreement, as such amount may be modified in accordance with the terms hereof (including, without limitation, any termination of Commitments pursuant to Section 4.6 hereof) and (ii) with respect to any individual purchase hereunder, its Pro Rata Share of the related Conduit Group’s Purchase Pro Rata Share of the Purchase Price therefor.
“Committed Purchaser”  means (i) BTMU, with respect to Gotham and Victory and their Conduit Group, (ii) SunTrust Bank, with respect to the Conduit Group that includes SunTrust Bank and (iii) any other entity listed on Schedule A hereto that becomes a party hereto from time to time with respect to any other Conduit.
“Committed Purchaser Interest” means a Purchaser Interest funded by a Committed Purchaser.

“Concentration Limit” means, at any time, for any Obligor, (i) an amount equal to 25% of the Loss Reserve Floor at such time multiplied by the aggregate Outstanding Balance of all Eligible Receivables at such time or (ii) such other amount (a “Special Concentration Limit”) for such Obligor designated by the Administrative Agent and the Agents; provided, that, if the short term rating of any Obligor set forth in the table below shall decrease from the level indicated in the table below (with respect to any rating agency) for such Obligor, the Special Concentration Limit for such Obligor shall automatically be canceled; provided, further, in the case of an Obligor and any Affiliate of such Obligor, the Concentration Limit shall be calculated as if such Obligor and such Affiliate are one Obligor; and provided, further, that either Agent may, upon not less than three Business Days’ notice to Seller, cancel any Special Concentration Limit.  The Administrative Agent and the Agents hereby designate the following Special Concentration Limits with respect to the Obligors set forth in the table below.

	
			
	Obligor
	Special Concentration Limit

	Short Term Rating

	Wal-Mart Stores, Inc
	35% of the aggregate Outstanding Balance of all Eligible Receivables at such time.
	A-1+ by S&P and 
P-1 by Moody’s

	Walgreens
	12% of the aggregate Outstanding Balance of all Eligible Receivables at such time.
	A-1 by S&P and P-1 by Moody’s

	Lowe’s Companies, Inc.
	10% of the aggregate Outstanding Balance of all Eligible Receivables at such time.
	A-1 by S&P and P-1 by Moody’s

	Target Corporation
	20% of the aggregate Outstanding Balance of all Eligible Receivables at such time.
	A-1 by S&P and P-1 by Moody’s

	The Home Depot, Inc
	10% of the aggregate Outstanding Balance of all Eligible Receivables at such time.
	A-2 by S&P and P-2 by Moody’s

	CVS Corp.
	6% of the aggregate Outstanding Balance of all Eligible Receivables at such time.

	A-2 by S&P and P-2 by Moody’s

	The Kroger Co.
	6% of the aggregate Outstanding Balance of all Eligible Receivables at such time.
	A-2 by S&P and P-2 by 
Moody’s

“Conduit” has the meaning set forth in the preamble to this Agreement.
“Conduit Group” means, at any time, (A) a group consisting of a Conduit or (in the case of Gotham and Victory, collectively) Conduits, such Conduit’s or Conduits’ related Committed Purchasers and such Conduit’s or Conduits’ Agent and (B) with respect to SunTrust Bank, a group consisting of SunTrust Bank, as a Committed Purchaser, and SunTrust Bank, as an Agent.
“Consent Notice” has the meaning set forth in Section 4.6.
“Consent Period” has the meaning set forth in Section 4.6.
“Contingent Obligation” of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or application for a letter of credit.
“Contract” means, with respect to any Receivable, any and all instruments, agreements, invoices or other writings pursuant to which such Receivable arises or which evidences such Receivable.
“CP Costs” means, for any period and with respect to any Capital funded by Commercial Paper notes issued by Gotham or Victory, (I) unless BTMU has determined that the BTMU Pooled CP Costs shall be applicable, the Relevant Conduit’s cost of funding such Capital, taking into account the weighted daily average interest rate 

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payable in respect of such Commercial Paper notes during such period (determined in the case of discount Commercial Paper notes by converting the discount to an interest bearing equivalent rate per annum), applicable placement fees and commissions, and such other costs and expenses as BTMU in good faith deems appropriate; and (II) to the extent BTMU has determined that the BTMU Pooled CP Costs shall be applicable, the BTMU Pooled CP Costs.
“Credit and Collection Policy” means Seller’s credit and collection policies and practices relating to Contracts and Receivables existing on the date hereof and summarized in Exhibit VIII hereto, as modified from time to time in accordance with this Agreement.
“Credit Memo” means any credit, discount or allowance issued to cancel an invoice, cancel and replace an invoice, record a return, credit a customer for defective merchandise, adjust for new sales policy changes, credit a customer for goods and services taxes, provide a trade show credit or allow for other miscellaneous adjustments, in each case in the ordinary course of business of Servicer.
“Credit Memo Horizon Ratio” means, as of the last day of any calendar month, a percentage equal to (i) the aggregate gross sales of the Transferors during the preceding two calendar months then most recently ended divided by (ii) the aggregate Net Receivables Balance of all Receivables as to which any payment or part thereof remains unpaid for no more than 60 days from the original due date for such payment as of the last day of the most recently ended calendar month; provided, however, that this definition and the calculation of the “Credit Memo Horizon Ratio” may be modified (the “Credit Memo Horizon Ratio Adjustment”) at any time as requested by the Administrative Agent with the consent of (or at the direction of) all Purchasers based upon, or to better reflect the results set forth in, any report or findings with respect to any audit of the Servicer undertaken pursuant to Section 7.1(d) to the extent that such results (i) relate to matters that could effect this definition or the components thereof (including, without limitation, any change in the payment rates or defaults of the Receivables, how quickly Credit Memos are issued with respect to the Receivables or the terms of any Receivables) and (ii) are set forth in a notice delivered to the Seller by the Administrative Agent at least thirty (30) days prior to the implementation of such Credit Memo Horizon Ratio Adjustment at the request of the Administrative Agent.
”Credit Memo Percentage” means as of the last day of any calendar month, a percentage equal to:

((2.0 x ED) + (DS - ED) x DS ) x DHR
                        ED

where:

ED    =    the Expected Credit Memo Ratio at such time.

DS    =    the Credit Memo Spike Ratio at such time.

DHR    =    the Credit Memo Horizon Ratio at such time.
“Credit Memo Spike Ratio” means, as of the last day of any calendar month, the highest two month rolling average of the Credit Memo-to-Sales Ratio calculated as of the last day of each of the twelve calendar months then most recently ended.
“Credit Memo-to-Sales Ratio” means, at any time, a percentage equal to (i) the aggregate amount of Credit Memos which occurred during the month then most recently ended, divided by (ii) the aggregate gross sales of the Transferors during the month three months prior to such month, calculated on a monthly basis.
“Days Sales Outstanding” means, for any Settlement Period, the ratio computed as of the most recent Settlement Date by dividing (a) 360 by (b) the Accounts Receivable Turnover Ratio for the most recent Settlement Period.

“Deemed Collections”  means the aggregate of all amounts Seller shall have been deemed to have received as a Collection of a Receivable.  Seller shall be deemed to have received a Collection in full of a Receivable if at any time (i) the Outstanding Balance of any such Receivable is either (x) reduced as a result of any defective or rejected or returned goods or services, any discount or any adjustment or otherwise by Seller (other than cash Collections on account of the Receivables) or (y) reduced or canceled as a result of a setoff in respect of any claim by any Person (whether such claim arises out of the same or a related transaction or an unrelated transaction) or (ii) any of the representations or warranties in Article V are no longer true with respect to any Receivable.
“Default Fee” means with respect to any amount due and payable by Seller in respect of any Aggregate Unpaids, an amount equal to the greater of (i) $1000 and (ii) interest on any such unpaid Aggregate Unpaids at a rate per annum equal to 4% above the Alternate Base Rate.
“Default Ratio” means, for any calendar month, a percentage equal to (i) the sum of (A) the aggregate Outstanding Balance of all Receivables that were unpaid for 91-120 days as of the last day of such month and (B) the actual write-offs during such calendar month divided by (ii) the aggregate gross sales of the Transferors during the calendar month five calendar months prior to such calendar month.
“Delinquency Ratio” means, as of the last day of any month, the percentage equal to (i) the sum of (a) the aggregate Outstanding Balance of all Receivables that were Delinquent Receivables at such time plus (b) the ending balance of the Transferors’ suspense accounts at such time plus (c) the aggregate amount of unresolved short pays set forth on the most recent Monthly Report divided by (ii) the aggregate Outstanding Balance of all Receivables at such time.
“Delinquent Receivable” means a Receivable as to which any payment, or part thereof, remains unpaid for 61 days or more from the original due date for such payment.
“Demand Note” means a promissory note substantially in the form of Exhibit VIII to the Receivables Sale Agreement executed by Originator in favor of Seller.
“Designated Obligor” means an Obligor indicated by either Agent to Seller in writing.
“Dilution Ratio” means, as of the last day of any calendar month, a percentage equal to (i) the sum of the aggregate amount of Dilutions plus Credit Memos as at such day divided by (ii) the aggregate gross sales of the Transferors during the calendar month three calendar months prior to such calendar month.
“Dilution Reserve” means, on any date, an amount equal to the product of (i) the sum of (A) the general ledger accrual balance of the Transferors divided by the aggregate Outstanding Balance of all Receivables plus (B) the Credit Memo Percentage multiplied by (ii) the Net Receivables Balance as of the close of business of the Transferors on such date, provided that the Dilution Reserve shall, at no time, be less than $0.00.
“Dilution Reserve Floor” means 20%.
“Dilutions” means, at any time, the aggregate amount of reductions or cancellations described in clause (i) of the definition of “Deemed Collections”.
“Discount Rate” means, the LIBO Rate or the Alternate Base Rate, as applicable, with respect to each Committed Purchaser Interest.  
“Eligible Receivable” means, at any time, a Receivable:
(i)the Obligor of which (a) if a natural person, is a resident of the United States or, if a corporation or other business organization, is organized under the laws of the United States or any political subdivision thereof and has its chief executive office in the United States; (b) is not an Affiliate of any of the parties hereto; (c) is not a Designated Obligor; and (d) is not a government or a governmental subdivision or agency, provided that a Government Receivable that otherwise would be an Eligible Receivable under this definition but for this clause (i) shall be an Eligible Receivable so long as the 

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aggregate Outstanding Balance of all such Government Receivables does not exceed 3% of the aggregate Outstanding Balance of all Receivables,
(ii)    which is not a Charged-Off Receivable or a Delinquent Receivable,
(iii)    which by its terms is due and payable within 91 days of the original billing date therefor and has not had its payment terms extended,
(iv)    which is an “account” or “chattel paper” within the meaning of Section 9-105 and Section 9-106, respectively, of the UCC of all applicable jurisdictions,
(v)    which is denominated and payable only in United States dollars in the United States,
(vi)    which arises under a Contract in substantially the form of one of the form contracts set forth on Exhibit IX hereto or otherwise approved by the Administrative Agent in writing, which, together with such Receivable, has been duly authorized, is in full force and effect and constitutes the legal, valid and binding obligation of the related Obligor enforceable against such Obligor in accordance with its terms subject to no offset, counterclaim or other defense,
(vii)    which arises under a Contract which (A) does not require the Obligor under such Contract to consent to the transfer, sale or assignment of the rights and duties of any Transferor or any of its assignees under such Contract and (B) does not contain a confidentiality provision that purports to restrict the ability of any Purchaser to exercise its rights under this Agreement, including, without limitation, its right to review the Contract,
(viii)    which arises under a Contract that contains an obligation to pay a specified sum of money, contingent only upon the sale of goods or the provision of services by a Transferor,
(ix)    which, together with the Contract related thereto, does not contravene any law, rule or regulation applicable thereto (including, without limitation, any law, rule and regulation relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no part of the Contract related thereto is in violation of any such law, rule or regulation,
(x)    which satisfies all applicable requirements of the Credit and Collection Policy,
(xi)    which was generated in the ordinary course of (A) Originator’s business or (B) an Original Seller’s business and subsequently sold to Originator pursuant to the terms of the Transfer Agreement.
(xii)    which arises solely from the sale of goods or the provision of services to the related Obligor by a Transferor, and not by any other Person (in whole or in part),
(xiii)    as to which the Agents have not notified Seller that the Agents have, in their collective reasonable business judgment, determined that such Receivable or class of Receivables is not acceptable as an Eligible Receivable due to the credit worthiness of the Obligor, including, without limitation, because such Receivable arises under a Contract that is not acceptable to the Agents in their collective reasonable business judgement,
(xiv)    which is not subject to any right of rescission, set-off, counterclaim, dispute, any other defense (including defenses arising out of violations of usury laws) of the applicable Obligor against a Transferor or any other Adverse Claim, and the Obligor thereon holds no right as against a Transferor to cause such Transferor to repurchase the goods or merchandise the sale of which shall have given rise to such Receivable (except with respect to sale discounts effected pursuant to the Contract, or defective goods returned in accordance with the terms of the Contract),
(xv)    as to which a Transferor has satisfied and fully performed all obligations on its part with 

respect to such Receivable required to be fulfilled by it, and no further action is required to be performed by any Person with respect thereto other than payment thereon by the applicable Obligor,
(xvi)    all right, title and interest to and in which has been validly transferred (A) by Originator directly to Seller under and in accordance with the Receivables Sale Agreement, and (B) in the case of any Receivable transferred under the Transfer Agreement, by an Original Seller directly to Originator under and in accordance with the Transfer Agreement and subsequently sold by Originator directly to Seller under and in accordance with the Receivables Sale Agreement, and, in either case, and Seller has good and marketable title thereto free and clear of any Adverse Claim,
(xvii)    for which the related Contract represents all or part of the sales price of merchandise, insurance and services within the meaning of the Investment Company Act of 1940, Section 3(c)5, as amended,
(xviii)    which is a “current transaction” within Section 3(a)(3) of the Securities Act of 1933,
(xix)    which is not a proceed of inventory that was pledged to any Person,
(xx)    the Obligor of which is not the Obligor of any Charged-Off Receivables, the aggregate Outstanding Balance of which exceeds an amount equal to 25% of the aggregate Outstanding Balance of all Receivables of such Obligor,
(xxi)    the inclusion of which as an Eligible Receivable does not cause the aggregate Outstanding Balance of all Eligible Receivables considered a “billback receivable” under the Transferors’ current practices to exceed $5,000,000, and
(xxii)    if the Obligor has a credit that is more than 60 days past due that could be applied by such Obligor to offset Receivables owing by such Obligor under any related Contract (a “Net 60 Credit”), the aggregate amount of such Receivables in excess of the amount of any Net 60 Credit.
“EPC” has the meaning set forth in the preamble to this Agreement.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
”Expected Credit Memo Ratio” means, as of the last day of any calendar month, the average of each three month rolling average of the Credit Memo-to-Sales Ratio calculated as of the last day of each of the twelve months then most recently ended.
“Extension Notice” has the meaning set forth in Section 4.6.
“Facility Account” means Seller’s Account No. 10-45863 at JPMorgan Chase Bank, N.A.
“Facility Termination Date” means the earliest of (i) May 2, 2014, (ii) the Liquidity Termination Date and (iii) the Amortization Date. 
“Federal Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as amended and any successor statute thereto.
“Federal Funds Effective Rate” means (i) with respect to BRMU and its Conduit Group, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it and (ii) with respect to SunTrust Bank and its Conduit Group, for any day the greater of (x) the average rate per annum as determined by SunTrust Bank at which overnight Federal funds are 

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offered to SunTrust Bank for such day by major banks in the interbank market, and (y) if SunTrust Bank is borrowing overnight funds from a Federal Reserve Bank that day, the average rate per annum at which such overnight borrowings are made on that day. Each determination of the Federal Funds Effective Rate by SunTrust Bank shall be conclusive and binding on the Seller except in the case of manifest error. 
“Fee Letter” means one or more letter agreements from time to time among or between any of Seller, the Administrative Agent, STRH, Victory, Gotham and Three Pillars, as any of them may be amended, modified or amended and restated and in effect from time to time.
“Fifth Amendment Date” means June 25, 2012.
“Finance Charges” means, with respect to a Contract, any finance, interest, late payment charges or similar charges owing by an Obligor pursuant to such Contract.
“Funding Agreement” means this Agreement and any agreement or instrument executed by any Funding Source with or for the benefit of a Conduit.  
“Funding Source” means (i) any Committed Purchaser or (ii) any insurance company, bank or other funding entity providing liquidity, credit enhancement or back-up purchase support or facilities to a Conduit.
“GAAP”  means generally accepted accounting principles in effect in the United States of America as of the date of this Agreement.
“Government Receivables” means a Receivable the Obligor of which is the United States Federal Government, a state or local government, a governmental subdivision of the United States Federal Government or of a state or local government, or an agency of the United States Federal Government or of a state or local government.  For the purposes of this definition the phrase “state or local government” means a state or local government of a state, city or municipality located within the fifty states of the United States or the District of Columbia.
“Group Purchase Limit” means (i) in the case of the Conduit Group related to Gotham and Victory, $100,000,000 and (ii) in the case of the Conduit Group related to SunTrust Bank, $100,000,000.
“Incremental Purchase” means a purchase of one or more Purchaser Interests which increases the total outstanding Aggregate Capital hereunder.
“Indebtedness” of a Person means such Person’s (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of property or services (other than accounts payable arising in the ordinary course of such Person’s business payable on terms customary in the trade), (iii) obligations, whether or not assumed, secured by liens or payable out of the proceeds or production from property now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances, or other instruments, (v) capitalized lease obligations, (vi) net liabilities under interest rate swap, exchange or cap agreements, (vii) Contingent Obligations and (viii) liabilities in respect of unfunded vested benefits under plans covered by Title IV of ERISA.
“Independent Director” shall mean a member of the Board of Directors of Seller who is not at such time, and has not been at any time during the preceding five (5) years, (A) a director, officer, employee or affiliate of Seller, Originator, any Original Seller or any of their respective Subsidiaries or Affiliates, or (B) the beneficial owner (at the time of such individual’s appointment as an Independent Director or at any time thereafter while serving as an Independent Director) of any of the outstanding common shares of Seller, Originator, any Original Seller or any of their respective Subsidiaries or Affiliates, having general voting rights.
“Interim Report” means a report, appropriately completed and in substantially the form of Exhibit XII hereto, furnished by Servicer to the Administrative Agent and the Agents pursuant to Section 8.5“, which form may be amended or supplemented by either Agent from time to time.
“LIBO Rate” means:

(A) with respect to the Conduit Group that includes SunTrust Bank, for any day, the rate per annum equal to the sum of (i) (a) SunTrust LIBO for such day, divided by (b) one minus the maximum aggregate reserve requirement (including all basic, supplemental, marginal or other reserves) which is imposed against SunTrust Bank in respect of Eurocurrency liabilities, as defined in Regulation D of the Board of Governors of the Federal Reserve System as in effect from time to time (expressed as a decimal), applicable to such day, plus (ii) if on such day a Committed Purchaser Interest is outstanding and is accruing Yield computed with respect to clause (B) below, 3.0% per annum; and
(B) otherwise, the rate per annum equal to the sum of (i) (a) the rate per annum appearing on page BBAM on the Bloomberg Terminal (successor to Telerate page 3750) (or any other page that may replace such page from time to time for the purpose of displaying offered rates of leading banks for London interbank deposits in U.S. dollars) as of 11:00 a.m. (London time) two Business Days prior to the first day of the relevant Tranche Period, and having a maturity equal to such Tranche Period; provided, that, (I) in the event no such rate is shown, the applicable LIBO Rate for the relevant Tranche Period shall instead be the rate per annum based on the rates at which U.S. dollar deposits for one month are displayed on page “LIBOR” of the Reuters Screen as of 11:00 a.m. (London time) two Business Days prior to the first day of such Tranche Period, and having a maturity equal to such Tranche Period (it being understood that if at least two (2) such rates appear on such page, the rate will be the arithmetic mean of such displayed rates), and (II) in the event no such rate is shown, or if no such rate is relevant, the applicable LIBO Rate for the relevant Tranche Period shall instead be the rate determined by the Administrative Agent to be the rate at which BTMU offers to place deposits in U.S. dollars with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Tranche Period, in the approximate amount to be funded at the LIBO Rate and having a maturity equal to such Tranche Period, divided by (b) one minus the maximum aggregate reserve requirement (including all basic, supplemental, marginal or other reserves) which is imposed against the Administrative Agent in respect of Eurocurrency liabilities, as defined in Regulation D of the Board of Governors of the Federal Reserve System as in effect from time to time (expressed as a decimal), applicable to such Tranche Period, plus (ii) 3.0% per annum.  
The LIBO Rate, in any case, shall be rounded, if necessary, to the next higher 1/16 of 1%.
“Liquidity Termination Date” means May 2, 2014. 
“Lock-Box” means each locked postal box with respect to which a bank who has executed a Collection Account Agreement has been granted exclusive access for the purpose of retrieving and processing payments made on the Receivables and which is listed on Exhibit IV.
“Loss Horizon Ratio” means, as of any date, a percentage equal to (i) the sum of (A) the aggregate gross sales of the Transferors during the four most recently ended calendar months, plus (B) one half of the aggregate gross sales of the Transferors during the fifth most recently ended calendar month, divided by (ii) the Net Receivables Balance of all Eligible Receivables as of the last day of the most recently ended calendar month.
“Loss Percentage” means, at any time, a percentage equal to the product of (i) two, multiplied by (ii) the Loss Ratio, multiplied by (iii) the Loss Horizon Ratio.
“Loss Ratio” means, on any date, the greatest three-month rolling average Default Ratio as calculated for each of the 12 most recently ended calendar months.
“Loss Reserve” means, on any date, an amount equal to the Loss Percentage multiplied by the Net Receivables Balance as of the close of business of Servicer on such date.

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“Loss Reserve Floor” means 12%.
“Loss-to-Liquidation Ratio” means, for any calendar month, the percentage equal (i) the sum of the aggregate Outstanding Balance of all Receivables 91-120 days past due plus the aggregate Outstanding Balance of all Receivables written off by Servicer in such month divided by the aggregate Collections received during such month.
“Material Adverse Effect” means a material adverse effect on (i) the financial condition or operations of any Seller Party and its Subsidiaries, (ii) the ability of any Seller Party to perform its obligations under this Agreement or the Provider to perform its obligations under the Performance Undertaking, (iii) the legality, validity or enforceability of this Agreement or any other Transaction Document, (iv) any Purchaser’s interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or the Collections with respect thereto, or (v) the collectibility of the Receivables generally or of any material portion of the Receivables.
“Material Provider Subsidiary” means, as long as Energizer and any Original Seller are each wholly-owned, direct or indirect subsidiaries of Provider, (a) each consolidated Subsidiary (other than any SPV) of Provider (i) incorporated under the laws of any jurisdiction in the United States and (ii) the total assets of which exceed, as at the end of any calendar quarter or, in the case of consummation of a Permitted Acquisition, at the time of consummation of such Permitted Acquisition (calculated by Provider on a pro forma basis taking into account the consummation of such Permitted Acquisition), three percent (3.0%) of the total assets of Provider and its Subsidiaries (other than SPVs) on a consolidated basis and (b) each consolidated Subsidiary (other than any SPV) of Provider (i) incorporated under the laws of any foreign jurisdiction and (ii) the total assets of which exceed, as at the end of any calendar quarter or, in the case of consummation of a Permitted Acquisition, at the time of consummation of such Permitted Acquisition (calculated by Provider on a pro forma basis taking into account the consummation of such Permitted Acquisition), five percent (5.0%) of the total assets of Provider and its Subsidiaries (other than SPVs) on a consolidated basis; provided that, if Energizer shall cease to be a wholly-owned, indirect subsidiary of Provider, then “Material Provider Subsidiary” shall also mean and include any Subsidiary of Energizer and, provided further that, if any Original Seller shall cease to be a wholly-owned, direct subsidiary of Provider, then “Material Provider Subsidiary” shall also mean and include any Subsidiary of any Original Seller.
“Monthly Report” means a report, in substantially the form of Exhibit X hereto (appropriately completed), furnished by Servicer to the Administrative Agent and the Agents pursuant to Section 8.5.
“Moody’s” means Moody’s Investor Service, Inc. and its successors.
“Net Receivables Balance” means, at any time, the aggregate Outstanding Balance of all Eligible Receivables at such time reduced by the sum of (i) the aggregate amount by which the Outstanding Balance of all Eligible Receivables of each Obligor and its Affiliates exceeds the Concentration Limit for such Obligor and (ii) the aggregate amount by which the Outstanding Balance of all Eligible Receivables having payment terms in excess of 61 days following the applicable “expected receipt of goods date” (under and as defined in each applicable invoice of Servicer to each applicable Obligor) exceeds 10% of the aggregate Outstanding Balance of all Eligible Receivables.
“Non-Renewing Committed Purchaser” has the meaning set forth in Section 4.6.
“Obligations” shall have the meaning set forth in Section 2.1.
“Obligor” means a Person obligated to make payments pursuant to a Contract.
“Original Agreement” has the meaning set forth in the preliminary statements to this Agreement.
“Original Seller” has the meaning set forth in the Receivables Sale Agreement.
“Originator” means Energizer Battery, Inc., in its capacity as seller under the Receivables Sale Agreement.
“Outstanding Balance” of any Receivable at any time means the then outstanding principal balance thereof.

“Participant” has the meaning set forth in Section 12.2.
”Payment Rate” means, for any calendar month, the percentage equal to the aggregate Collections received during such month, divided by the aggregate Outstanding Balance of all Receivables as at the last day of the month immediately prior to such month.
“Performance Undertaking” means that certain Performance Undertaking, dated as of May 4, 2009, by Provider in favor of Seller, substantially in the form of Exhibit XI, as the same may be amended, restated or otherwise modified from time to time.
“Permitted Acquisition” means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, (a) which are permitted under all material financing arrangements pursuant to which Provider is a debtor or an obligor and (b) by which Provider or any of its Subsidiaries (i) acquires any going business or all or substantially all of the assets of any firm, corporation or division thereof, whether through purchase of assets, merger or otherwise or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage of voting power) of the outstanding equity interests of another Person.
“Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.
“Pooled Commercial Paper” means Commercial Paper notes of a Conduit subject to any particular pooling arrangement by such Conduit, but excluding Commercial Paper issued by such Conduit for a tenor and in an amount specifically requested by any Person in connection with any agreement effected by such Conduit.
“Potential Amortization Event” means an event which, with the passage of time or the giving of notice, or both, would constitute an Amortization Event.
“Prime Rate” means a rate per annum equal to the prime rate of interest determined from time to time by BTMU, SunTrust Bank or any other Committed Purchaser from time to time, each as applicable with respect to it (which is not necessarily the lowest rate charged to any customer), changing when and as each said prime rate changes.
“Proposed Reduction Date” has the meaning set forth in Section 1.3.
“Provider” means Energizer Holdings, Inc., a Missouri corporation.
“Provider Credit Agreement” means the Term Loan Credit Agreement dated as of December 3, 2007 among the Provider, the institutions from time to time parties thereto as Lenders, JPMorgan Chase Bank, N.A., in its capacity as Administrative Agent, Bank of America, N.A., as Syndication Agent, and Citibank, N.A., The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch and Mizuho Corporate Bank, Ltd., as Documentation Agents, as in effect on May 4, 2009, without giving effect to any amendment, restatement, waiver, release, supplementation, cancellation, termination or other modification thereof.
“Provider Financial Covenants” means the Maximum Leverage Ratio covenant and Minimum Interest Expense Coverage Ratio covenant set forth in Section 7.4 of the Provider Credit Agreement, it being understood that, for purposes of this Agreement, (i) the Provider Financial Covenants as in effect on May 4, 2009 shall survive any termination of the Provider Credit Agreement and (ii) any amendment, restatement, waiver, release, supplementation, cancellation, termination and/or other modification with respect to the Provider Credit Agreement shall have no effect on determining compliance with the Provider Financial Covenants.
“Pro Rata Share” means, for each Committed Purchaser in the same Conduit Group, a percentage equal to (i) the amount of the Commitment of such Committed Purchaser, divided by (ii) the aggregate amount of all 

Exh. #PageNum#
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Commitments of all Committed Purchasers in such Conduit Group hereunder, adjusted as necessary to give effect to the application of the terms of Section 4.6.
“Purchase Limit” means $200,000,000.
“Purchase Notice” has the meaning set forth in Section 1.2.
“Purchase Price” means, with respect to any Incremental Purchase of a Purchaser Interest, the amount paid to Seller for such Purchaser Interest which shall not exceed the least of (i) the amount requested by Seller in the applicable Purchase Notice, (ii) the unused portion of the Purchase Limit on the applicable purchase date and (iii) the excess, if any, of the Net Receivables Balance (less the Aggregate Reserves) on the applicable purchase date over the aggregate outstanding amount of Aggregate Capital determined as of the date of the most recent Monthly Report, taking into account such proposed Incremental Purchase.
“Purchase Pro Rata Share” means, for any Conduit Group, the percentage equivalent of a fraction, the numerator of which is the relevant Group Purchase Limit, and the denominator of which is the Purchase Limit.
“Purchasers” means each Conduit and each Committed Purchaser.
“Purchaser Interest” means, at any time, an undivided percentage ownership interest (computed as set forth below) associated with a designated amount of Capital, selected pursuant to the terms and conditions hereof in (i) each Receivable arising prior to the time of the most recent computation or recomputation of such undivided interest, (ii) all Related Security with respect to each such Receivable, and (iii) all Collections with respect to, and other proceeds of, each such Receivable.  Each such undivided percentage interest shall equal:

‘
	
	
	C

	NRB– AR

where:
C    =    the Capital of such Purchaser Interest.
AR    =    the Aggregate Reserves.
NRB    =    the Net Receivables Balance.
Such undivided percentage ownership interest shall be initially computed on its date of purchase.  Thereafter, until the Amortization Date, each Purchaser Interest shall be automatically recomputed (or deemed to be recomputed) on each day prior to the Amortization Date.  The variable percentage represented by any Purchaser Interest as computed (or deemed recomputed) as of the close of the business day immediately preceding the Amortization Date shall remain constant at all times thereafter.
“Purchasing Committed Purchaser” has the meaning set forth in Section 12.1(b).
“Receivable” means all indebtedness and other obligations owed to Seller or a Transferor (at the time it arises, and before giving effect to any transfer or conveyance under the Transfer Agreement, the Receivables Sale Agreement or hereunder) or in which Seller or a Transferor has a security interest or other interest, including, without limitation, any indebtedness, obligation or interest constituting an account, chattel paper, instrument or general intangible, arising in connection with the sale of goods or the rendering of services by a Transferor, and further includes, without limitation, the obligation to pay any Finance Charges with respect thereto.  Indebtedness and other rights and obligations arising from any one transaction, including, without limitation, indebtedness and other rights and obligations represented by an individual invoice, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other rights and obligations arising from any other transaction; provided further, that any indebtedness, rights or obligations referred to in the immediately preceding sentence shall 

be a Receivable regardless of whether the account debtor or Seller treats such indebtedness, rights or obligations as a separate payment obligation.
“Receivables Sale Agreement” means that certain Receivables Sale Agreement, dated as of April 4, 2000, between Originator and Seller, as the same may be amended, restated or otherwise modified from time to time.
“Records” means, with respect to any Receivable, all Contracts and other documents, books, records and other information (including, without limitation, computer programs, tapes, disks, punch cards, data processing software and related property and rights) relating to such Receivable, any Related Security therefor and the related Obligor.
“Reduction Notice” has the meaning set forth in Section 1.3.
“Reduction Pro Rata Share” means, for any Conduit Group and on any date of determination, the percentage equivalent of a fraction, the numerator of which is the aggregate amount of Capital of all Purchaser Interests assigned to such Conduit Group and outstanding as at such date, and the denominator of which is the Aggregate Capital.
“Regulatory Change” has the meaning set forth in Section 10.2(a).
“Reinvestment” has the meaning set forth in Section 2.2.
“Related Security” means, with respect to any Receivable:
(i)    all of Seller’s interest in the inventory and goods (including returned or repossessed inventory or goods), if any, the sale of which by a Transferor gave rise to such Receivable, and all insurance contracts with respect thereto,
(ii)    all other security interests or liens and property subject thereto from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements and security agreements describing any collateral securing such Receivable,
(iii)    all guaranties, letters of credit, insurance and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable whether pursuant to the Contract related to such Receivable or otherwise,
(iv)    all service contracts and other contracts and agreements associated with such Receivable,
(v)    all Records related to such Receivable,
(vi)    all of Seller’s right, title and interest in, to and under the Receivables Sale Agreement and the Transfer Agreement in respect of such Receivable and all of Seller’s right, title and interest in, to and under the Performance Undertaking, and
(vii)    all proceeds of any of the foregoing.
“Relevant Conduit” means with respect to the Conduit Group that includes BTMU as a Committed Purchaser, either Gotham or Victory. 
“Required Notice Period” means the number of days required notice (received no later than 12:00 p.m. (New York time) on the day such notice is delivered) set forth below applicable to the Aggregate Reduction indicated below:

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	Aggregate Reduction
	Required Notice Period

	≤$100,000,000
	two Business Days

	>$100,000,000
	five Business Days

“Restricted Junior Payment” means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of capital stock of Seller now or hereafter outstanding, except a dividend payable solely in shares of that class of stock or in any junior class of stock of Seller, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of capital stock of Seller now or hereafter outstanding, (iii) any payment or prepayment of principal of, premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to the Subordinated Loans (as defined in the Receivables Sale Agreement), (iv) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of capital stock of Seller now or hereafter outstanding, and (v) any payment of management fees by Seller (except for reasonable management fees to the Originator or its Affiliates in reimbursement of actual management services performed).
“S&P” means Standard & Poor’s Ratings Group and its successors.
“Seller” has the meaning set forth in the preamble to this Agreement.
“Seller Parties” has the meaning set forth in the preamble to this Agreement.
“Servicer” means at any time the Person (which may be the Administrative Agent or any Agent) then authorized pursuant to Article VIII to service, administer and collect Receivables.
“Servicing Fee” has the meaning set forth in Section 8.6.
“Settlement Date” means (A) the sixteenth day of each month, and (B) the last day of the relevant Tranche Period in respect of each Committed Purchaser Interest; provided, however, that clause (B) hereof shall not apply, and only clause (A) hereof shall apply, to any Purchaser Interest funded by SunTrust Bank that is calculated on the basis of the LIBO Rate prior to the Amortization Date.
“Settlement Period” means (A) in respect of each Purchaser Interest of a Conduit, the immediately preceding Accrual Period, and (B) in respect of each Committed Purchaser Interest, the entire Tranche Period of such Purchaser Interest.
“SPV” means any special purpose entity (including, without limitation, Seller) established for the purpose of purchasing receivables in connection with a receivables securitization transaction permitted under all material financing arrangements pursuant to which Provider is a debtor or an obligor.
“Stress Factor” means a factor of 2.0 times.
“STRH” means SunTrust Robinson Humphrey, Inc., a Tennessee corporation, and its successors and assigns.
“Sub-Servicer” means EPC and any other Person in its capacity as a sub-servicer in accordance with Section 8.1(b).
“Subsidiary” of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, association, limited liability company, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled.  Unless otherwise expressly provided, all references herein to a “Subsidiary” shall mean a Subsidiary of Seller.

“SunTrust Bank” means SunTrust Bank, a Georgia banking corporation.
“SunTrust LIBO” means, on any day, the rate per annum appearing on page BBAM on the Bloomberg Terminal (successor to Telerate page 3750) (or any other page that may replace such page from time to time for the purpose of displaying offered rates of leading banks for London interbank deposits for one month in United States dollars) as of 11:00 a.m. (London time) on such day as determined by SunTrust Bank; provided, that, in the event no such rate is shown, the applicable rate shall be the rate per annum (rounded upwards, if necessary, to the nearest 1/100th of one percent) based on the rates at which United States dollar deposits for one month are displayed on page “LIBOR” of the Reuters Screen as of 11:00 a.m. (London time) as determined by SunTrust Bank (it being understood that if at least two (2) such rates appear on such page, the rate will be the arithmetic mean of such displayed rates); provided, further, that in the event no such rate is shown, or if no such rate is relevant, the applicable rate shall be the rate per annum equal to the average of the rates at which deposits in United States dollars are offered by SunTrust Bank at approximately 11:00 a.m. (London time) on such day to prime banks in the London interbank market for one month.
“Terminating Commitment Availability” means, with respect to any Terminating Committed Purchaser, the positive difference (if any) between (a) an amount equal to the Commitment (without giving effect to clause (ii) of the proviso to the penultimate sentence of Section 4.6(b)) of such Terminating Committed Purchaser, minus, an amount equal to 2% of such Commitment, minus, (b) the Capital of the Purchaser Interests funded by such Terminating Committed Purchaser.
“Termination Date” has the meaning set forth in Section 2.2.
“Termination Percentage” has the meaning set forth in Section 2.2.
“Terminating Committed Purchaser” has the meaning set forth in Section 4.6.
“Terminating Tranche” has the meaning set forth in Section 4.3(b).
“Three Pillars” means Three Pillars Funding LLC and its successors and assigns.
“Tranche Period” means, with respect to any Committed Purchaser Interest:    
(a)    if Yield for such Purchaser Interest is calculated on the basis of the LIBO Rate, a period of (i) solely with respect to a Purchaser Interest funded by SunTrust Bank, one calendar month and (ii) otherwise, one month, or such other period as may be mutually agreeable to the Administrative Agent, the relevant Agent and Seller, commencing on a Business Day selected by Seller or the Administrative Agent and the relevant Agent pursuant to this Agreement.  Other than with respect to SunTrust Bank, such Tranche Period shall end on the day in the applicable succeeding calendar month which corresponds numerically to the beginning day of such Tranche Period, provided, however, that if there is no such numerically corresponding day in such succeeding month, such Tranche Period shall end on the last Business Day of such succeeding month; or
(b)    if Yield for such Purchaser Interest is calculated on the basis of the Alternate Base Rate, a period commencing on a Business Day selected by Seller and agreed to by the Administrative Agent and the relevant Agent, provided no such period shall exceed one month.
If any Tranche Period would end on a day which is not a Business Day, such Tranche Period shall end on the next succeeding Business Day, provided, however, that in the case of Tranche Periods corresponding to the LIBO Rate, if such next succeeding Business Day would fall in a new month, such Tranche Period shall end on the immediately preceding Business Day; provided, further, however, that in the case of Tranche Periods for SunTrust Bank corresponding to the LIBO Rate, each such Tranche Period, except as described in the following two sentences, shall end on the last day of the applicable calendar month.  In the case of any Tranche Period for any Purchaser Interest which commences before the Amortization Date and would otherwise end on a date occurring after the Amortization Date, such Tranche Period shall end on the Amortization Date.  The duration of each Tranche Period which 

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commences after the Amortization Date shall be of such duration as selected by the Administrative Agent and the relevant Agent.
“Transaction Documents” means, collectively, this Agreement, each Purchase Notice, the Receivables Sale Agreement, the Transfer Agreement, each Collection Account Agreement, the Performance Undertaking, the Fee Letter, the Subordinated Note (as defined in the Receivables Sale Agreement), each Revolving Note (as defined in the Transfer Agreement) and all other instruments, documents and agreements executed and delivered in connection herewith.
“Transferor” means each of Originator and each Original Seller.
“Transfer Agreement” has the meaning set forth in the Receivables Sale Agreement.
“UCC” means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction.
“Yield” means for each respective Tranche Period relating to Committed Purchaser Interests, an amount equal to the product of the applicable Discount Rate for each Purchaser Interest multiplied by the Capital of such Purchaser Interest for each day elapsed during such Tranche Period, annualized on a 360 day basis.
“Yield and Servicer Reserve” means, on any date, an amount equal to the product of (i) the sum of (A) (BTMU’s Prime Rate multiplied by ADSO Reserve) divided by 360, and (B) (2.4% multiplied by ADSO Reserve) divided by 360, multiplied by (ii) the Net Receivables Balance as of the close of business of the Servicer on such date..
where:
ADSO        =    As of the last day of each calendar month, the highest
 
            Days Sales Outstanding during the most recent twelve
 
            months preceding the last day of such calendar month.
		
	ADSO Reserve 
	=    ADSO multiplied by the Stress Factor

All accounting terms not specifically defined herein shall be construed in accordance with GAAP.  All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.

    
EXHIBIT II
 

 
FORM OF PURCHASE NOTICE
 

 
[Date]
The Bank of Tokyo-Mitsubishi UFJ, Ltd., 
New York Branch, as an Agent
 
1251 Avenue of the Americas
 
New York, New York 10020
SunTrust Bank, as an Agent 
3333 Peachtree Road, NE
Atlanta, GA 30326

With a copy to:
The Bank of Tokyo-Mitsubishi UFJ. Ltd., 
New York Branch, as Administrative Agent
 
1251 Avenue of the Americas
 
New York, New York 10020
Re:  PURCHASE NOTICE
Ladies and Gentlemen:
Reference is hereby made to the Third Amended and Restated Receivables Purchase Agreement, dated as of May 4, 2009, by and among Energizer Receivables Funding Corporation, a Delaware corporation (the “Seller”), Energizer Battery, Inc., as Servicer, Energizer Personal Care, LLC, as Sub-Servicer, the Committed Purchasers, SunTrust Bank (“SunTrust Bank”), as an Agent, Gotham Funding Corporation (“Gotham”), Victory Receivables Corporation (“Victory”) (Gotham and Victory each a “Conduit”), and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent and as an Agent (as amended, restated and modified from time to time, the “Receivables Purchase Agreement”).  Capitalized terms used herein shall have the meanings assigned to such terms in the Receivables Purchase Agreement.
The Agents are hereby notified of the following proposed Incremental Purchase:

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	Purchase Price:
	$

	Date of Incremental 
Purchase:
	 

	Requested Discount Rate (if applicable):
	[LIBO Rate] [Alternate Base Rate] [N/A]

	Requested Tranche Period (if applicable):
	 

Each Conduit Group’s respective aggregate Capital following such proposed Incremental Purchase shall be as follows:
	
				
	Conduit Group
	Prior Capital
(a)
	Purchase Price
(b)
	Capital
(a+b)

	Gotham and Victory
	 
	 
	 

	SunTrust Bank
	 
	 
	 

	Total
	 
	 
	 

Please credit the Purchase Price in immediately available funds to our Facility Account on the above-specified date of purchase to:
[Account Name]
 
[Account No.]
 
[Bank Name & Address]
 
[ABA #]
 
Reference:
 
Telephone advice to: [Name] @ tel. No. ( )
Please advise [Name] at telephone no ( )    if any Conduit will not be making this purchase.
In connection with the Incremental Purchase to be made on the above listed “Date of  Incremental Purchase” (the “Purchase Date”), the Seller hereby certifies that the following statements are true on the date hereof, and will be true on the Purchase Date (before and after giving effect to the proposed Incremental Purchase):
(i)    the representations and warranties of each Seller Party set forth in Section 5.1 of the Receivables Purchase Agreement are true and correct on and as of the Purchase Date as though made on and as of such date;
(ii)    no event has occurred and is continuing, or would result from the proposed Incremental Purchase, that will constitute an Amortization Event or a Potential Amortization Event;

(iii)    the Facility Termination Date has not occurred, the Aggregate Capital does not exceed the Purchase Limit and the aggregate Purchaser Interests do not exceed 100%; and
(iv)    the amount of Aggregate Capital is $________ after giving effect to the
 
Incremental Purchase to be made on the Purchase Date.
Very truly yours,
ENERGIZER RECEIVABLES FUNDING CORPORATION
By:     
 
Name:
 
Title:

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EXHIBIT III
PLACES OF BUSINESS OF THE SELLER PARTIES;
 
LOCATIONS OF RECORDS;
 
FEDERAL EMPLOYER IDENTIFICATION NUMBER(S)
Energizer Receivables Funding Corporation

Place of Business and Location of Records:    533 Maryville University Drive
St. Louis, Missouri 63141

Federal Employer Identification Number:    43-1883142

Energizer Battery, Inc.

Place of Business and Location of Records:    533 Maryville University Drive
St. Louis, Missouri 63141

Federal Employer Identification Number:    01-0758270

Energizer Personal Care, LLC

Place of Business and Location of Records:    6 Research Drive
Shelton, CT  06484

Federal Employer Identification Number:    26-3324763

    
EXHIBIT IV
NAMES OF COLLECTION BANKS; COLLECTION ACCOUNTS

	
		
	Lockbox Information
	Related Account Information

	Energizer Personal Care, LLC
24234 Network Place
Chicago, IL  60673-1242

Lockbox Number: 24234
	JPMorgan Chase Bank, N.A.  
Account #771070257
Credit: Energizer Personal Care, LLC, as Sub-Servicer for Energizer Battery, Inc., as Servicer of Playtex products

	Energizer
23145 Network Place
Chicago, IL  60673-1231

Lockbox Number: 23145
	JPMorgan Chase Bank, N.A.  
Account #5954533
Credit: Energizer

	Energizer Personal Care, LLC
22594 Network Place
Chicago, IL  60673-1225

Lockbox Number: 22594
	JPMorgan Chase Bank, N.A.  
Account #648727071
Credit: Energizer Personal Care, LLC, as Sub-Servicer for Energizer Battery, Inc., as Servicer of Schick products

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EXHIBIT V
FORM OF COMPLIANCE CERTIFICATE
To:  The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent

This Compliance Certificate is furnished pursuant to that certain Third Amended and Restated Receivables Purchase Agreement, dated as of May 4, 2009, as amended, modified or restated from time to time, by and among Energizer Receivables Funding Corporation, a Delaware corporation (the “Seller”), Energizer Battery, Inc., as Servicer, Energizer Personal Care, LLC, as Sub-Servicer, the Purchasers party thereto and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as administrative agent for such Purchasers (the “Agreement”).  Capitalized terms used and not otherwise defined herein are used with the meanings attributed thereto in the Agreement.

THE UNDERSIGNED HEREBY CERTIFIES ON BEHALF OF SELLER THAT:
    
1.    I am the duly elected _______________ of [Insert name of applicable Seller Party or the Provider] (the “Applicable Party”).

2.    I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Applicable Party and its Subsidiaries during the accounting period covered by the attached financial statements.

3.    The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes an Amortization Event or Potential Amortization Event, during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth in paragraph 6 below.

4.    I have reviewed the terms of Section  9.1(l) of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the applicable transactions, agreements and conditions of Energizer Holdings, Inc., a Missouri corporation (the “Provider”); and such examinations did not disclose, and I have no knowledge of, any failure of the Provider to perform or observe the covenants referenced in Section 9.1(l) of the Agreement, during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth in paragraph 6 below.

5.    I have reviewed the terms of the Provider Financial Covenants and I have made, or have caused to be made under my supervision, a detailed review of the applicable transactions, agreements and conditions of the Provider; and such examinations did not disclose, and I have no knowledge of, any failure of the Provider to comply with the Provider Financial Covenants, during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate except as set forth in Paragraph 6 below.  Furthermore, Schedule I attached hereto sets forth financial data and computations evidencing the Provider’s compliance with the Provider Financial Covenants, all of which data and computations are true, complete and correct.    

6.    Described below are the exceptions, if any, to paragraphs 3 to 5 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Seller, Servicer or the Provider, as applicable, has taken, is taking or proposes to take with respect to each such condition or event:

                                                                                                                                                                        

The foregoing certifications together with the computations set forth in Schedule I hereto, and the financial statements delivered with this Certificate in support hereof, are made and delivered this __ day of ________, 20__.

                                        
Name:                    
Title:                     

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SCHEDULE I TO COMPLIANCE CERTIFICATE 
Schedule of Compliance as of ______________, ______ with the Provider Financial Covenants.  Unless otherwise defined herein, the terms used in this Schedule I have the meanings ascribed thereto in the Provider Credit Agreement.

This schedule relates to the [quarter or year] ended __________:

 SECTION 7.4:  FINANCIAL COVENANTS
A.    MAXIMUM COVENANT LEVERAGE RATIO (Section 7.4(A))
1.      All Indebtedness (as defined in the Provider Credit Agreement) of the Borrower and its Subsidiaries (which, for purposes of clarification, shall exclude Hedging Obligations) minus Receivables Facility Attributed Indebtedness
$_________
		
	2.
	EBITDA (See I.A.2.j)                $_________

		
	3. 
	Covenant Leverage Ratio            ______ to 1.0

(Ratio of II.A.1 to II.A.2)
4.      Required Ratio                ≤ 3.5 to 1.0
B.    MINIMUM INTEREST EXPENSE COVERAGE RATIO (Section 7.4(B))
1.    EBIT (See I.A.2.g)                $_________
2.    Interest Expense                $_________
3.    Interest Expense Coverage Ratio 
(Ratio of II.B.1 to II.B.2)            ______ to 1.0
4.    Required Ratio                ≥ 3.0 to 1.0
The Borrower hereby certifies, through its ____________, that the information set forth above is accurate as of ____________ ____, 20___, to the best of such officer’s knowledge, after diligent inquiry, and that the financial statements delivered herewith present fairly the financial position of the Borrower and its Subsidiaries at the dates indicated and the results of their operations and changes in their financial position for the periods indicated in conformity with Agreement Accounting Principles, consistently applied, subject, as to unaudited financial statements delivered herewith, to normal year-end audit adjustments.
Dated:  ____________ ____, 20___
ENERGIZER HOLDINGS, INC.,
as the Borrower

By:____________________________
Name:
Title:

    
EXHIBIT VI – A

COLLECTION ACCOUNT AGREEMENT
 

 
[On letterhead of Originator]
_____________, 2008
[Collection Bank/Lock-Box Bank/Concentration Bank/Depositary Bank]
Re:    Energizer Battery, Inc./Energizer Receivables Funding Corporation
Ladies and Gentlemen:
Reference is hereby made to P.O. Box #______ in [city, state, zip code] (the “Lock-Box”) of which you have exclusive control for the purpose of receiving mail and processing payments therefrom pursuant to that certain [name of lock-box agreement] between you and Energizer Battery, Inc. (the “Company”) dated _____________ (the “Agreement”).  You hereby confirm your agreement to perform the services described therein.  Among the services you have agreed to perform therein, is to endorse all checks and other evidences of payment, and credit such payments to the Company’s checking account no. ___________ maintained with you in the name of the Company (the “Lock-Box Account”).
In a letter agreement dated ______, 2008 among you, JPMorgan Chase Bank, N.A., Energizer Receivables Funding Corporation (the “Seller”) and the Company, the Company informed you that, pursuant to the Receivables Sale Agreement, dated as of April 4, 2000, as amended, restated, supplemented or otherwise modified from time to time, between the Company and the Seller, the Company transferred all of its right, title and interest in and to, and exclusive ownership and control of, the Lock-Box and the Lock-Box Account to Seller and requested that the name of the Lock-Box Account be changed to “Energizer Battery, Inc., as Servicer.”  (the “Original Collection Account Agreement”).  This Agreement replaces the Original Collection Account Agreement.  The parties hereto further agree that the Original Collection Account Agreement is hereby terminated as of the date hereof.       
The Company and Seller hereby irrevocably instruct you, and you hereby agree, that upon receiving notice from The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch (“BTMU”) in the form attached hereto as Annex A:  (i) the name of the Lock-Box Account will be changed to BTMU as administrative agent (or any designee of BTMU) and BTMU will have exclusive ownership of and access to the Lock-Box and the Lock-Box Account, and neither the Company, Seller nor any of their respective affiliates will have any control of the Lock-Box or the Lock-Box Account or any access thereto, (ii) you will either continue to send the funds from the Lock-Box to the Lock-Box Account, or will redirect the funds as BTMU may otherwise request, (iii) you will transfer monies on deposit in the Lock-Box Account, at any time, as directed by BTMU, (iv) all services to be performed by you under the Agreement will be performed on behalf of BTMU, and (v) all correspondence or other mail which you have agreed to send to the Company or Seller will be sent to BTMU at the following address:
The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch
1251 Avenue of the Americas
 
New York, NY 10020
 

Moreover, upon such notice, BTMU as administrative agent will have all rights and remedies given to the Company (and Seller, as the Company’s assignee) under the Agreement.  Seller agrees, however, to continue to pay all fees and other assessments due thereunder at any time.
You hereby acknowledge that monies deposited in the Lock-Box Account or any other account established 

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with you by BTMU for the purpose of receiving funds from the Lock-Box are subject to the liens of BTMU as administrative agent, and will not be subject to deduction, set-off, banker’s lien or any other right you or any other party may have against the Company or Seller.
THIS LETTER AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER WILL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.  This letter agreement may be executed in any number of counterparts and all of such counterparts taken together will be deemed to constitute one and the same instrument.
This letter agreement contains the entire agreement between the parties, and may not be altered, modified, terminated or amended in any respect, nor may any right, power or privilege of any party hereunder be waived or released or discharged, except upon execution by all parties hereto of a written instrument so providing.  In the event that any provision in this letter agreement is in conflict with, or inconsistent with, any provision of the Agreement or the Original Collection Account Agreement, this letter agreement will exclusively govern and control.  Each party agrees to take all actions reasonably requested by any other party to carry out the purposes of this letter agreement or to preserve and protect the rights of each party hereunder.

Please indicate your agreement to the terms of this letter agreement by signing in the space provided below.  This letter agreement will become effective immediately upon execution of a counterpart of this letter agreement by all parties hereto.
Very truly yours,
 

 
ENERGIZER BATTERY, INC.
 

 

 

 
By: ____________________
 
Name:  
 
Title:  
ENERGIZER RECEIVABLES FUNDING CORPORATION
 

 

 

 
By: ____________________
 
Name:  
 
Title:  
Acknowledged and agreed to
 
this _____ day of _________
 

JPMORGAN CHASE BANK, N.A.
By:    

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Name:  
 
Title:  
[COLLECTION BANK]
 

 

 
By:    
 
Name:  
 
Title:  
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, 
 
as Administrative Agent
 

 

By:    
 
Name:  
 
Title:  
 

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ANNEX A
 
FORM OF NOTICE
 

 
[On letterhead of BTMU]
_____________, _____
[Collection Bank/Lock-Box Bank/Concentration Bank/Depositary Bank]
Re:    Energizer Battery, Inc./Energizer Receivables Funding Corporation
Ladies and Gentlemen:
We hereby notify you that we are exercising our rights pursuant to that certain letter agreement among Energizer Battery, Inc., Energizer Receivables Funding Corporation, you and us, dated _________, 2008, to have the name of, and to have exclusive ownership and control of, account number ______________ (the “Lock-Box Account”) maintained with you, transferred to us.  [Lock-Box Account will henceforth be a zero-balance account, and funds deposited in the Lock-Box Account should be sent at the end of each day to __________.]  You have further agreed to perform all other services you are performing under that certain agreement dated _____________ between you and Energizer Battery, Inc. on our behalf.
We appreciate your cooperation in this matter.
Very truly yours,
 

 
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH,
 
as Administrative Agent

 

 

 

 
By: ____________________
 
Name:  
 
Title:  

Annex A-1
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EXHIBIT VI – B

COLLECTION ACCOUNT AGREEMENT
 

 
[On letterhead of EPC]

_____________, 2008
[Collection Bank/Lock-Box Bank/Concentration Bank/Depositary Bank]
Re:    Energizer Personal Care, LLC./Energizer Receivables Funding Corporation
Ladies and Gentlemen:
Reference is hereby made to P.O. Box #______ in [city, state, zip code] (the “Lock-Box”) of which you have exclusive control for the purpose of receiving mail and processing payments therefrom pursuant to that certain [name of lock-box agreement] between you and Energizer Personal Care, LLC (the “Company”) dated _____________ (the “Agreement”).  You hereby confirm your agreement to perform the services described therein.  Among the services you have agreed to perform therein, is to endorse all checks and other evidences of payment, and credit such payments to the Company’s checking account no. ___________ maintained with you in the name of the Company (the “Lock-Box Account”).
The Company hereby informs you that, (i) pursuant to the Receivables Transfer Agreement, dated as of May 4, 2009, as amended, restated, supplemented or otherwise modified from time to time, between the Company and the Energizer Battery, Inc. (“Energizer”), the Company has transferred all of its right, title and interest in and to, and exclusive ownership and control of, the Lock-Box and the Lock-Box Account to Energizer, (ii) pursuant to the Receivables Sale Agreement, dated as of April 4, 2000, as amended, restated, supplemented or otherwise modified from time to time, between Energizer and Energizer Receivables Funding Corporation (the “Seller”), Energizer has transferred all of its right, title and interest in and to, and exclusive ownership and control of, the Lock-Box and the Lock-Box Account to Seller and (iii) the Company hereby requests that the name of the Lock-Box Account be changed to “Energizer Personal Care, LLC, as Sub-Servicer for Energizer Battery, Inc., in its capacity as Servicer.”
The Company and Seller hereby irrevocably instruct you, and you hereby agree, that upon receiving notice from The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch (“BTMU”) in the form attached hereto as Annex A:  (i) the name of the Lock-Box Account will be changed to BTMU as administrative agent (or any designee of BTMU) and BTMU will have exclusive ownership of and access to the Lock-Box and the Lock-Box Account, and neither the Company, Seller nor any of their respective affiliates will have any control of the Lock-Box or the Lock-Box Account or any access thereto, (ii) you will either continue to send the funds from the Lock-Box to the Lock-Box Account, or will redirect the funds as BTMU may otherwise request, (iii) you will transfer monies on deposit in the Lock-Box Account, at any time, as directed by BTMU, (iv) all services to be performed by you under the Agreement will be performed on behalf of BTMU, and (v) all correspondence or other mail which you have agreed to send to the Company or Seller will be sent to BTMU at the following address:
The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch
1251 Avenue of the Americas
 
New York, NY 10020
 

Moreover, upon such notice, BTMU as administrative agent will have all rights and remedies given to the Company (and Seller, as the Company’s assignee) under the Agreement.  Seller agrees, however, to continue to pay all fees and other assessments due thereunder at any time.
You hereby acknowledge that monies deposited in the Lock-Box Account or any other account established with you by BTMU for the purpose of receiving funds from the Lock-Box are subject to the liens of BTMU as administrative agent, and will not be subject to deduction, set-off, banker’s lien or any other right you or any other party may have against the Company or Seller.
THIS LETTER AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER WILL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.  This letter agreement may be executed in any number of counterparts and all of such counterparts taken together will be deemed to constitute one and the same instrument.
This letter agreement contains the entire agreement between the parties, and may not be altered, modified, terminated or amended in any respect, nor may any right, power or privilege of any party hereunder be waived or released or discharged, except upon execution by all parties hereto of a written instrument so providing.  In the event that any provision in this letter agreement is in conflict with, or inconsistent with, any provision of the Agreement or the Original Collection Account Agreement, this letter agreement will exclusively govern and control.  Each party agrees to take all actions reasonably requested by any other party to carry out the purposes of this letter agreement or to preserve and protect the rights of each party hereunder.

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Please indicate your agreement to the terms of this letter agreement by signing in the space provided below.  This letter agreement will become effective immediately upon execution of a counterpart of this letter agreement by all parties hereto.
Very truly yours,
 

 
ENERGIZER PERSONAL CARE, LLC
 

 
By: ____________________
 
Name:  
 
Title:  

ENERGIZER RECEIVABLES FUNDING CORPORATION
 

 
By: ____________________
 
Name:  
 
Title:  

ENERGIZER BATTERY, INC.
 

 
By: ____________________
 
Name:  
 
Title:  
Acknowledged and agreed to
 
this _____ day of _________

 
JPMORGAN CHASE BANK, N.A.
By:    

 
Name:  
 
Title:  
[COLLECTION BANK]
 

 

 
By:    
 
Name:  
 
Title:  
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH,
 
as Administrative Agent
 

 

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By:    
 
Name:  
 
Title:  
 

    
ANNEX A
 
FORM OF NOTICE
 

 
[On letterhead of BTMU]
_____________, _____
[Collection Bank/Lock-Box Bank/Concentration Bank/Depositary Bank]
Re:    Energizer Personal Care, LLC/Energizer Receivables Funding Corporation
Ladies and Gentlemen:
We hereby notify you that we are exercising our rights pursuant to that certain letter agreement among Energizer Personal Care, LLC, Energizer Receivables Funding Corporation, you and us, dated _________, 2008, to have the name of, and to have exclusive ownership and control of, account number ______________ (the “Lock-Box Account”) maintained with you, transferred to us.  [Lock-Box Account will henceforth be a zero-balance account, and funds deposited in the Lock-Box Account should be sent at the end of each day to __________.]  You have further agreed to perform all other services you are performing under that certain agreement dated _____________ between you and Energizer Personal Care on our behalf.
We appreciate your cooperation in this matter.
Very truly yours,
 

 
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., 
 
NEW YORK BRANCH,
 
as Administrative Agent
 

 

 

 
By: ____________________

 
Name:  
 
Title:  

EXHIBIT VII
FORM OF ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (this “Assignment Agreement”) is entered into as of the ___ day of ____________, ____, by and between _____________________ (“Assignor”) and __________________ (“Assignee”).
PRELIMINARY STATEMENTS
A.    This Assignment Agreement is being executed and delivered in accordance with Section 12.1(b) of that certain Third Amended and Restated Receivables Purchase Agreement, dated as of May 4, 2009, by and among Energizer Receivables Funding Corporation, a Delaware corporation (the “Seller”), Energizer Battery, Inc., as Servicer, Energizer Personal Care, LLC, as Sub-Servicer, the Committed Purchasers, Gotham Funding Corporation, Victory Receivables Corporation , and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent (as amended, restated and modified from time to time, the “Purchase Agreement”).  Capitalized terms used and not otherwise defined herein are used with the meanings set forth or incorporated by reference in the Purchase Agreement.
B.    Assignor is a Committed Purchaser party to the Purchase Agreement, and Assignee wishes to become a Committed Purchaser thereunder; and
C.    Assignor is selling and assigning to Assignee an undivided ____________% (the “Transferred Percentage”) interest in all of Assignor’s rights and obligations under the Purchase Agreement and the Transaction Documents, including, without limitation, Assignor’s Commitment and (if applicable) the Capital of Assignor’s Purchaser Interests as set forth herein.
AGREEMENT
The parties hereto hereby agree as follows:
1.    The sale, transfer and assignment effected by this Assignment Agreement shall become effective (the “Effective Date”) two (2) Business Days (or such other date selected by the Administrative Agent in its sole discretion) following the date on which a notice substantially in the form of Schedule II to this Assignment Agreement (the “Effective Notice”) is delivered by the Administrative Agent to each Conduit, Assignor and Assignee.  From and after the Effective Date, Assignee shall be a Committed Purchaser party to the Purchase Agreement for all purposes thereof as if Assignee were an original party thereto and Assignee agrees to be bound by all of the terms and provisions contained therein.
2.    If Assignor has no outstanding Capital under the Purchase Agreement, on the Effective Date, Assignor shall be deemed to have hereby transferred and assigned to Assignee, without recourse, representation or warranty (except as provided in paragraph 6 below), and the Assignee shall be deemed to have hereby irrevocably taken, received and assumed from Assignor, the Transferred Percentage of Assignor’s Commitment and all rights and obligations associated therewith under the terms of the Purchase Agreement, including, without limitation, the Transferred Percentage of Assignor’s future funding obligations under Section 4.1 of the Purchase Agreement.
3.    If Assignor has any outstanding Capital under the Purchase Agreement, at or before 12:00 noon, local time of Assignor, on the Effective Date Assignee shall pay to Assignor, in immediately available funds, an amount equal to the sum of (i) the Transferred Percentage of the outstanding Capital of Assignor’s Purchaser Interests (such amount, being hereinafter referred to as the “Assignee’s Capital”); (ii) all accrued but unpaid (whether or not then due) Yield attributable to Assignee’s Capital; and (iii) accruing but unpaid fees and other costs and expenses payable in respect of Assignee’s Capital for the period commencing upon each date such unpaid amounts commence accruing, to and including the Effective Date (the “Assignee’s Acquisition Cost”); whereupon, Assignor shall be deemed to have sold, transferred and assigned to Assignee, without recourse, representation or warranty (except as provided in paragraph 6 below), and Assignee shall be deemed to have hereby irrevocably taken, 

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received and assumed from Assignor, the Transferred Percentage of Assignor’s Commitment and the Capital of Assignor’s Purchaser Interests (if applicable) and all related rights and obligations under the Purchase Agreement and the Transaction Documents, including, without limitation, the Transferred Percentage of Assignor’s future funding obligations under Section 4.1 of the Purchase Agreement.
4.    Concurrently with the execution and delivery hereof, Assignor will provide to Assignee copies of all documents requested by Assignee which were delivered to Assignor pursuant to the Purchase Agreement.
5.    Each of the parties to this Assignment Agreement agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Assignment Agreement.
6.    By executing and delivering this Assignment Agreement, Assignor and Assignee confirm to and agree with each other, the Administrative Agent, the Agents, the Conduits and the other Committed Purchasers as follows:  (a) other than the representation and warranty that it has not created any Adverse Claim upon any interest being transferred hereunder, Assignor makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made by any other Person in or in connection with the Purchase Agreement or the Transaction Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of Assignee, the Purchase Agreement or any other instrument or document furnished pursuant thereto or the perfection, priority, condition, value or sufficiency of any collateral; (b) Assignor makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Seller, any Obligor, any Affiliate of Seller or the performance or observance by the Seller, any Obligor, any Affiliate of Seller of any of their respective obligations under the Transaction Documents or any other instrument or document furnished pursuant thereto or in connection therewith; (c) Assignee confirms that it has received a copy of the Purchase Agreement and copies of such other Transaction Documents, and other documents and information as it has requested and deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement; (d) Assignee will, independently and without reliance upon the Administrative Agent, any Agent, any Conduit, the Seller or any other Committed Purchaser or Purchaser and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Purchase Agreement and the Transaction Documents; (e) Assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Transaction Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto; and (f) Assignee agrees that it will perform in accordance with their terms all of the obligations which, by the terms of the Purchase Agreement and the other Transaction Documents, are required to be performed by it as a Committed Purchaser or, when applicable, as a Purchaser.
7.    Each party hereto represents and warrants to and agrees with the Administrative Agent that it is aware of and will comply with the provisions of the Purchase Agreement, including, without limitation, Sections 4.1 and 14.6 thereof.
8.    Schedule I hereto sets forth the revised Commitment of Assignor and the Commitment of Assignee, as well as administrative information with respect to Assignee.
9.    THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
10.  Assignee hereby covenants and agrees that, prior to the date which is one year and one day after the payment in full of all senior indebtedness for borrowed money of any Conduit, it will not institute against, or join any other Person in instituting against, such Conduit any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be 

executed by their respective duly authorized officers as of the date hereof.
[ASSIGNOR]
By:
 
Name:
 
Title:
[ASSIGNEE]
By:
 
Name:
 
Title:

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SCHEDULE I TO ASSIGNMENT AGREEMENT
LIST OF LENDING OFFICES, ADDRESSES
 
FOR NOTICES AND COMMITMENT AMOUNTS
Date: _______________, ____
Transferred Percentage:    ________%
	
					
	 
	A-1
	A-2
	B-1
	B-2

	Assignor
	Commitment
(prior to giving effect to the Assignment Agreement)
	Commitment
(after giving effect to the Assignment Agreement)
	Outstanding
Capital
(if any)
	Ratable Share of Outstanding Capital

	 
	 
	 
	 
	 

	
					
	 
	 
	A-2
	B-1
	B-2

	Assignee
	 
	Commitment
(after giving effect to the Assignment Agreement)
	Outstanding
Capital
(if any)
	Ratable Share of Outstanding Capital

	 
	 
	 
	 
	 

Address for Notices
___________________________
___________________________
Attention:
 
Phone:
 
Fax:

SCHEDULE II TO ASSIGNMENT AGREEMENT
EFFECTIVE NOTICE
TO:________________________, Assignor
 
    ________________________
 
    ________________________
 
    ________________________
TO:________________________, Assignor
 
    ________________________
 
    ________________________
 
    ________________________
The undersigned, as Administrative Agent under the Third Amended and Restated Receivables Purchase Agreement, dated as of May 4, 2009, by and among Energizer Receivables Funding Corporation, a Delaware corporation (the “Seller”), Energizer Battery, Inc., as Servicer, Energizer Personal Care, LLC, as Sub-Servicer, the Committed Purchasers, Gotham Funding Corporation, Victory Receivables Corporation, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent, hereby acknowledges receipt of executed counterparts of a completed Assignment Agreement dated as of ____________, ____ between __________________, as Assignor, and __________________, as Assignee.  Terms defined in such Assignment Agreement are used herein as therein defined.
1.    Pursuant to such Assignment Agreement, you are advised that the Effective Date will be ______________, ____.
2.    The Conduit(s) in the related Conduit Group hereby consent to the Assignment Agreement as required by Section 12.1(b) of the Receivables Purchase Agreement.
[3.    Pursuant to such Assignment Agreement, the Assignee is required to pay $____________ to Assignor at or before 12:00 noon (local time of Assignor) on the Effective Date in immediately available funds.]
Very truly yours,
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.,
 
NEW YORK BRANCH,
 
individually and as Administrative Agent
By:__________________________
Title:_______________________

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[NAMES(S) OF RELEVANT CONDUIT(S)]
By: ____________________________
 
Authorized Signatory

    
EXHIBIT VIII
CREDIT AND COLLECTION POLICY
See Attached

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EXHIBIT IX
FORM OF CONTRACT(S)
See Attached

    
EXHIBIT X
FORM OF MONTHLY REPORT
           See Attached

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EXHIBIT XI  
FORM OF PERFORMANCE UNDERTAKING
This Performance Undertaking (this “Undertaking”), dated as of May 4, 2009, is executed by ENERGIZER HOLDINGS, INC., a Missouri corporation (the “Provider”) in favor of ENERGIZER RECEIVABLES FUNDING CORPORATION, a Delaware corporation (together with its successors and assigns, “Recipient”).
RECITALS
1.    Energizer Battery, Inc., a Delaware corporation (together with any successor or assign thereof, “EBI”) and Recipient have entered into a Receivables Sale Agreement, dated as of April 4, 2000 (as amended, restated or otherwise modified prior to the date hereof and from time to time, the “Receivables Sale Agreement”), pursuant to which EBI, subject to the terms and conditions contained therein, is selling its right, title and interest in certain of its accounts receivable to Recipient.
2.    Energizer Personal Care, LLC, a Delaware limited liability company (together with any successor or assign thereof, “EPC”) and EBI have entered into a Receivables Transfer Agreement, dated as of May 4, 2009 (as amended, restated or otherwise modified from time to time, the “Receivables Transfer Agreement”), pursuant to which EPC, subject to the terms and conditions contained therein, is selling its right, title and interest in certain of its accounts receivable to EBI.  EPC and EBI are collectively referred to herein as the “Originator.”  The Receivables Transfer Agreement and the Receivables Sale Agreement are collectively referred to herein as the “Sale Agreement.”
3.    The Originator is a Subsidiary of Provider and Provider is expected to receive substantial direct and indirect benefits from the sale of accounts receivable by EPC to EBI pursuant to the Receivables Transfer Agreement and by EBI to Recipient pursuant to the Receivables Sale Agreement (which benefits are hereby acknowledged).
4.    As an inducement for Recipient to purchase Originator’s accounts receivable pursuant to the Sale Agreement, Provider has agreed to guaranty the due and punctual performance by Originator of its obligations under the Sale Agreement and its Servicing Related Obligations (as hereinafter defined).
5.    Provider wishes to guaranty the due and punctual performance by Originator of its obligations to Recipient under or in respect of the Sale Agreement and its Servicing Related Obligations (as hereinafter defined), as provided herein.
AGREEMENT
NOW, THEREFORE, Provider hereby agrees as follows:
Section 1.Definitions.  Capitalized terms used herein and not defined herein shall have the respective meanings assigned thereto in the Sale Agreement or the Purchase Agreement (as hereinafter defined).  In addition:
“Obligations” means, collectively, (i) all covenants, agreements, terms, conditions and indemnities to be performed and observed by Originator under and pursuant to the Sale Agreement and each other document executed and delivered by Originator pursuant to the Sale Agreement, including, without limitation, the due and punctual payment of all sums which are or may become due and owing by Originator under the Sale Agreement, whether for fees, expenses (including counsel fees), indemnified amounts or otherwise, whether upon any termination or for any other reason and (ii) all obligations of EBI (1) as Servicer under the Third Amended and Restated Receivables Purchase Agreement, dated as of May 4, 2009, by and among Recipient, EBI, as Servicer, EPC, as Sub-Servicer, Victory Receivables Corporation, Gotham Funding Corporation, the Committed Purchasers and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as successor Administrative Agent (as amended, restated or otherwise modified from time to time, the “Purchase Agreement”; and the Purchase Agreement, together with the Sale Agreement, the “Agreements”) or (2) which arise pursuant to Sections 8.2, 8.3 or 14.4(a) of the Purchase Agreement 

as a result of its termination as Servicer (all such obligations collectively, the “Servicing Related Obligations”).
Section 2.    Guaranty of Performance of Obligations.  Provider hereby guarantees to Recipient, the full and punctual payment and performance by Originator of the Obligations.  This Undertaking is an absolute, unconditional and continuing guaranty of the full and punctual performance of all of the Obligations of Originator under the Agreements and each other document executed and delivered by Originator pursuant to the Agreements and is in no way conditioned upon any requirement that Recipient first attempt to collect any amounts owing by Originator to Recipient (or its assigns), the Administrative Agent, the Agents or the Purchasers from any other Person or resort to any collateral security, any balance of any deposit account or credit on the books of Recipient, the Administrative Agent, any Agent or any Purchaser in favor of Originator or any other Person or other means of obtaining payment.  Should Originator default in the payment or performance of any of the Obligations, Recipient (or its assigns) may cause the immediate performance by Provider of the Obligations and cause any payment Obligations to become forthwith due and payable to Recipient (or its assigns), without demand or notice of any nature (other than as expressly provided herein), all of which are hereby expressly waived by Provider.  Notwithstanding the foregoing, this Undertaking is not a guarantee of the collection of any of the Receivables and Provider shall not be responsible for any Obligations to the extent the failure to perform such Obligations by Originator results from Receivables being uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor; provided, that nothing herein shall relieve Originator from performing in full its Obligations under the Agreements or Provider of its undertaking hereunder with respect to the full performance of such duties.
Section 3.    Provider’s Further Agreements to Pay.  Provider further agrees, as the principal obligor and not as a guarantor only, to pay to Recipient (and its assigns), forthwith upon demand in funds immediately available to Recipient, all reasonable costs and expenses (including court costs and legal expenses) incurred or expended by Recipient in connection with the Obligations, this Undertaking and the enforcement thereof, together with interest on amounts recoverable under this Undertaking from the time when such amounts become due until payment, at a rate of interest (computed for the actual number of days elapsed based on a 360 day year) equal to BTMU’s Prime Rate plus 2% per annum, such rate of interest changing when and as BTMU’s Prime Rate changes.
Section 4.    Waivers by Provider.  Provider waives notice of acceptance of this Undertaking, notice of any action taken or omitted by Recipient (or its assigns) in reliance on this Undertaking, and any requirement that Recipient (or its assigns) be diligent or prompt in making demands under this Undertaking, giving notice of any Termination Date, Amortization Event, other default or omission by Originator or asserting any other rights of Recipient under this Undertaking.  Provider warrants that it has adequate means to obtain from Originator, on a continuing basis, information concerning the financial condition of Originator, and that it is not relying on Recipient to provide such information, now or in the future.  Provider also irrevocably waives all defenses (i) that at any time may be available in respect of the Obligations by virtue of any statute of limitations, valuation, stay, moratorium law or other similar law now or hereafter in effect or (ii) that arise under the law of suretyship, including impairment of collateral.  Recipient (and its assigns) shall be at liberty, without giving notice to or obtaining the assent of Provider and without relieving Provider of any liability under this Undertaking, to deal with Originator and with each other party who now is or after the date hereof becomes liable in any manner for any of the Obligations, in such manner as Recipient in its sole discretion deems fit, and to this end Provider agrees that the validity and enforceability of this Undertaking, including without limitation, the provisions of Section 7 hereof, shall not be impaired or affected by any of the following:  (a) any extension, modification or renewal of, or indulgence with respect to, or substitutions for, the Obligations or any part thereof or any agreement relating thereto at any time; (b) any failure or omission to enforce any right, power or remedy with respect to the Obligations or any part thereof or any agreement relating thereto, or any collateral securing the Obligations or any part thereof; (c) any waiver of any right, power or remedy or of any Termination Date, Amortization Event, or default with respect to the Obligations or any part thereof or any agreement relating thereto; (d) any release, surrender, compromise, settlement, waiver, subordination or modification, with or without consideration, of any other obligation of any person or entity with respect to the Obligations or any part thereof; (e) the enforceability or validity of the Obligations or any part thereof or the genuineness, enforceability or validity of any agreement relating thereto or with respect to the Obligations or any part thereof; (f) the application of payments received from any source to the payment of any payment 

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Obligations of Originator or any part thereof or amounts which are not covered by this Undertaking even though Recipient (or its assigns) might lawfully have elected to apply such payments to any part or all of the payment Obligations of Originator or to amounts which are not covered by this Undertaking; (g) the existence of any claim, setoff or other rights which Provider may have at any time against Originator in connection herewith or any unrelated transaction; (h) any assignment or transfer of the Obligations or any part thereof; or (i) any failure on the part of Originator to perform or comply with any term of the Agreements or any other document executed in connection therewith or delivered thereunder, all whether or not Provider shall have had notice or knowledge of any act or omission referred to in the foregoing clauses (a) through (i) of this Section 4.
Section 5.    Unenforceability of Obligations Against Originator.  Notwithstanding (a) any change of ownership of Originator or the insolvency, bankruptcy or any other change in the legal status of Originator; (b) the change in or the imposition of any law, decree, regulation or other governmental act which does or might impair, delay or in any way affect the validity, enforceability or the payment when due of the Obligations; (c) the failure of Originator or Provider to maintain in full force, validity or effect or to obtain or renew when required all governmental and other approvals, licenses or consents required in connection with the Obligations or this Undertaking, or to take any other action required in connection with the performance of all obligations pursuant to the Obligations or this Undertaking; or (d) if any of the moneys included in the Obligations have become irrecoverable from Originator for any other reason other than final payment in full of the payment Obligations in accordance with their terms, this Undertaking shall nevertheless be binding on Provider.  This Undertaking shall be in addition to any other guaranty or other security for the Obligations, and it shall not be rendered unenforceable by the invalidity of any such other guaranty or security.  In the event that acceleration of the time for payment of any of the Obligations is stayed upon the insolvency, bankruptcy or reorganization of Originator or for any other reason with respect to Originator, all such amounts then due and owing with respect to the Obligations under the terms of the Agreements, or any other agreement evidencing, securing or otherwise executed in connection with the Obligations, shall be immediately due and payable by Provider.
Section 6.    Representations and Warranties.  Provider hereby represents and warrants to Recipient that:
(a)    Existence and Standing.  Provider is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation.  Provider has and holds all corporate power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted, except where the failure to so hold could not reasonably be expected to have a Material Adverse Effect.
(b)    Authorization, Execution and Delivery; Binding Effect.  Provider has the corporate power and authority and legal right to execute and deliver this Undertaking, perform its obligations hereunder and consummate the transactions herein contemplated.  The execution and delivery by Provider of this Undertaking, the performance of its obligations and consummation of the transactions contemplated hereunder have been duly authorized by proper corporate proceedings, and Provider has duly executed and delivered this Undertaking.  This Undertaking constitutes the legal, valid and binding obligation of Provider enforceable against Provider in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(c)    No Conflict; Government Consent.  The execution and delivery by Provider of this Undertaking and the performance of its obligations hereunder are within its corporate powers, have been duly authorized by all necessary corporate action, do not contravene or violate (i) its articles or certificate of incorporation or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property and, do not result in the creation or imposition of any Adverse Claim on assets of Provider.
(d)    Financial Statements. The consolidated financial statements of Provider and its consolidated Subsidiaries dated as of December 31, 1999 heretofore delivered to Recipient have been prepared in 

accordance with generally accepted accounting principles consistently applied and fairly present in all material respects the consolidated financial condition and results of operations of Provider and its consolidated Subsidiaries as of such date and for the period ended on such date.  Since December 31, 1999, no event has occurred which would or could reasonably be expected to have a Material Adverse Effect.
(e)    Taxes.  Provider has filed all United States federal tax returns and all other tax returns which are required to be filed and has paid all taxes due pursuant to said returns or pursuant to any assessment received by Provider or any of its Subsidiaries, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided.  The United States income tax returns of Provider have been audited by the Internal Revenue Service through the fiscal year ended 2006.  No federal or state tax liens have been filed and no claims are being asserted with respect to any such taxes.  The charges, accruals and reserves on the books of Provider in respect of any taxes or other governmental charges are adequate.
(f)    Litigation and Contingent Obligations. Except as disclosed in the filings made by Provider with the Securities and Exchange Commission, there are no actions, suits or proceedings pending or, to the best of Provider’s knowledge threatened against or affecting Provider or any of its properties, in or before any court, arbitrator or other body, that could reasonably be expected to have a material adverse effect on (i) the business, properties, condition (financial or otherwise) or results of operations of Provider and its Subsidiaries taken as a whole, (ii) the ability of Provider to perform its obligations under this Undertaking, or (iii) the validity or enforceability of any of this Undertaking or the rights or remedies of Recipient hereunder.  Provider is not in default with respect to any order of any court, arbitrator or governmental body and does not have any material contingent obligations not provided for or disclosed in the financial statements referred to in Section 6(d).
Section 7.    Subrogation; Subordination.  Notwithstanding anything to the contrary contained herein, until the Obligations are paid in full Provider:  (a) will not enforce or otherwise exercise any right of subrogation to any of the rights of Recipient, the Administrative Agent, any Agent or any Purchaser against Originator, (b) hereby waives all rights of subrogation (whether contractual, under Section 509 of the United States Bankruptcy Code, at law or in equity or otherwise) to the claims of Recipient, the Administrative Agent, the Agents and the Purchasers against Originator and all contractual, statutory or legal or equitable rights of contribution, reimbursement, indemnification and similar rights and “claims” (as that term is defined in the United States Bankruptcy Code) which Provider might now have or hereafter acquire against Originator that arise from the existence or performance of Provider’s obligations hereunder, (c) will not claim any setoff, recoupment or counterclaim against Originator in respect of any liability of Provider to Originator, and (d) waives any benefit of and any right to participate in any collateral security which may be held by Recipient, the Administrative Agent, the Agents or the Purchasers.  The payment of any amounts due with respect to any indebtedness of Originator now or hereafter owed to Provider is hereby subordinated to the prior payment in full of all of the Obligations.  Provider agrees that, after the occurrence of any default in the payment or performance of any of the Obligations, Provider will not demand, sue for or otherwise attempt to collect any such indebtedness of Originator to Provider until all of the Obligations shall have been paid and performed in full.  If, notwithstanding the foregoing sentence, Provider shall collect, enforce or receive any amounts in respect of such indebtedness while any Obligations are still unperformed or outstanding, such amounts shall be collected, enforced and received by Provider as trustee for Recipient (and its assigns) and be paid over to Recipient (or its assigns) on account of the Obligations without affecting in any manner the liability of Provider under the other provisions of this Undertaking.  The provisions of this Section 7 shall be supplemental to and not in derogation of any rights and remedies of Recipient under any separate subordination agreement which Recipient may at any time and from time to time enter into with Provider.
Section 8.    Termination of Performance Undertaking.  Provider’s obligations hereunder shall continue in full force and effect until all Obligations are finally paid and satisfied in full and the Purchase Agreement is terminated, provided, that this Undertaking shall continue to be effective or shall be reinstated, as the case may be, if at any time payment or other satisfaction of any of the Obligations is rescinded or must otherwise be restored or returned upon the bankruptcy, insolvency or reorganization of Originator or otherwise, as though such payment had not been made or other satisfaction occurred, whether or not Recipient (or its assigns) is in possession of this Undertaking.  No invalidity, irregularity or unenforceability by reason of the federal bankruptcy code or any insolvency or other similar law, or any law or order of any government or agency thereof purporting to reduce, 

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amend or otherwise affect the Obligations shall impair, affect, be a defense to or claim against the obligations of Provider under this Undertaking.
Section 9.    Effect of Bankruptcy.  This Performance Undertaking shall survive the insolvency of Originator and the commencement of any case or proceeding by or against Originator under the federal bankruptcy code or other federal, state or other applicable bankruptcy, insolvency or reorganization statutes.  No automatic stay under the federal bankruptcy code with respect to Originator or other federal, state or other applicable bankruptcy, insolvency or reorganization statutes to which Originator is subject shall postpone the obligations of Provider under this Undertaking.
Section 10.    Setoff.  Regardless of the other means of obtaining payment of any of the Obligations, Recipient (and its assigns) is hereby authorized at any time and from time to time, without notice to Provider (any such notice being expressly waived by Provider) and to the fullest extent permitted by law, to set off and apply any deposits and other sums against the obligations of Provider under this Undertaking, whether or not Recipient (or any such assign) shall have made any demand under this Undertaking and although such Obligations may be contingent or unmatured.
Section 11.    Taxes.  All payments to be made by Provider hereunder shall be made free and clear of any deduction or withholding.  If Provider is required by law to make any deduction or withholding on account of tax or otherwise from any such payment, the sum due from it in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, Recipient (or its assigns) receives a net sum equal to the sum which it would have received had no deduction or withholding been made.
Section 12.    Further Assurances.  Provider agrees that it will from time to time, at the request of Recipient (or its assigns), provide information relating to the business and affairs of Provider as Recipient may reasonably request.  Provider also agrees to do all such things and execute all such documents as Recipient (or its assigns) may reasonably consider necessary or desirable to give full effect to this Undertaking and to perfect and preserve the rights and powers of Recipient hereunder.
Section 13.    Successors and Assigns.  This Undertaking shall be binding upon Provider, its successors and permitted assigns, and shall inure to the benefit of and be enforceable by Recipient and its successors and assigns.  Provider may not assign or transfer any of its obligations hereunder without the prior written consent of each of Recipient, the Administrative Agent and each of the Agents. Without limiting the generality of the foregoing sentences, Recipient and its successors and assigns may assign or otherwise transfer the Agreements, any other documents executed in connection therewith or delivered thereunder or any other agreement or note held by them evidencing, securing or otherwise executed in connection with the Obligations, or sell participations in any interest therein, to any other entity or other person, and such other entity or other person shall thereupon become vested, to the extent set forth in the agreement evidencing such assignment, transfer or participation, with all the rights in respect thereof granted to Recipient herein.
Section 14.    Amendments and Waivers.  No amendment or waiver of any provision of this Undertaking nor consent to any departure by Provider therefrom shall be effective unless the same shall be in writing and signed by Recipient, the Administrative Agent, each of the Agents and Provider.  No failure on the part of Recipient to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.
Section 15.    Notices.  All notices and other communications provided for hereunder shall be made in writing and shall be addressed as follows:  if to Provider, at the address set forth beneath its signature hereto, and if to Recipient, at the addresses set forth beneath its signature hereto, or at such other addresses as each of Provider or Recipient may designate in writing to the other.  Each such notice or other communication shall be effective  if given by telecopy, upon the receipt thereof,  if given by mail, three (3) Business Days after the time such communication is deposited in the mail with first class postage prepaid, or  if given by any other means, when received at the address specified in this Section 15.

Section 16.    GOVERNING LAW.  THIS UNDERTAKING SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 17.    CONSENT TO JURISDICTION.  EACH OF PROVIDER AND RECIPIENT HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS UNDERTAKING, THE AGREEMENTS OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION THEREWITH OR DELIVERED THEREUNDER AND EACH OF PROVIDER  AND RECIPIENT HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
Section 18.    Bankruptcy Petition.  Provider hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of any Conduit, it will not institute against, or join any other Person in instituting against, such Conduit any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.
Section 19.    Miscellaneous.  This Undertaking constitutes the entire agreement of Provider with respect to the matters set forth herein. The rights and remedies herein provided are cumulative and not exclusive of any remedies provided by law or any other agreement, and this Undertaking shall be in addition to any other guaranty of or collateral security for any of the Obligations.  The provisions of this Undertaking are severable, and in any action or proceeding involving any state corporate law, or any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of Provider hereunder would otherwise be held or determined to be avoidable, invalid or unenforceable on account of the amount of Provider’s liability under this Undertaking, then, notwithstanding any other provision of this Undertaking to the contrary, the amount of such liability shall, without any further action by Provider or Recipient, be automatically limited and reduced to the highest amount that is valid and enforceable as determined in such action or proceeding.  Any provisions of this Undertaking which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  Unless otherwise specified, references herein to “Section” shall mean a reference to sections of this Undertaking.
Section 20.    Restated Agreement.  The effect of this Undertaking is to amend and restate each of the (i) Performance Undertaking dated as of April 4, 2000, by Provider in favor of Recipient, (ii) Performance Undertaking dated as of June 30, 2008, by Provider in favor of Recipient and (iii) the Performance Undertaking dated as of March 27, 2009, in their entirety.  Upon the execution of this Undertaking, each reference to either the Performance Undertaking dated as of April 4, 2000, the Performance Undertaking dated as of June 30, 2008 or the Performance Undertaking dated as of March 27, 2009 in any other Transaction Document, and any document, instrument or agreement executed and/or delivered in connection with the Original Agreement or any other Transaction Document, shall mean and be a reference to this Undertaking.  

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IN WITNESS WHEREOF, Provider has caused this Undertaking to be executed and delivered as of the date first above written.
ENERGIZER HOLDINGS, INC.
By:            
 
Name:
 
Title:
		
	Address:
	533 Maryville University Drive

 
St. Louis, Missouri  63141
ENERGIZER RECEIVABLES FUNDING CORPORATION
By:            
 
Name:
 
Title:
		
	Address:
	533 Maryville University Drive

 
St. Louis, Missouri  63141

Exhibit XII
Energizer Receivables Funding Corporation
 
Third Amended and Restated Receivables Purchase Agreement, dated May 4, 2009
 
Weekly Settlement Report for the Week Ended XX, 20XX
    
I.    Calculation of Available Funding Amount

Ending Gross Receivables Balance (“EGR”)
 
Advance Rate for the month of XX 20XX

Total Available Funding Amount

	
		
	II.   SunTrust

	 

	Total Available Funding Amount
	 

	Outstanding Capital of SunTrust
	 

	Required Principal Paydown
	 

	Available Increase
	 

	
		
	III.   Gotham and Victory

	 

	Total Available Funding Amount
	 

	Outstanding Capital of Gotham and Victory
	 

	Required Principal Paydown
	 

	Available Increase
	 

The undersigned hereby represents and warrants that the foregoing is a true and accurate accounting in accordance with the Third Amended and Restated Receivables Purchase Agreement dated as of May 4, 2009 (as amended) and that all representations and warranties are restated and reaffirmed.

ENERGIZER RECEIVABLES FUNDING 
CORPORATION
By:                             
 
Name:                             
 
Title                             

Exh. XII-1    

Exh. XII-1    

EXHIBIT XIII
 
FORM OF REDUCTION NOTICE
[Date]
The Bank of Tokyo-Mitsubishi UFJ, Ltd., 
New York Branch, as an Agent
 
1251 Avenue of the Americas
 
New York, New York 10020
SunTrust Bank, 
as an Agent 
3333 Peachtree Road, NE
Atlanta, GA 30326
With a copy to:
The Bank of Tokyo-Mitsubishi UFJ, Ltd., 
New York Branch, as Administrative Agent
 
1251 Avenue of the Americas
 
New York, New York 10020
Re: REDUCTION NOTICE
Ladies and Gentlemen:
Reference is hereby made to the Third Amended and Restated Receivables Purchase Agreement, dated as of May 4, 2009, by and among Energizer Receivables Funding Corporation, a Delaware corporation (the “Seller”), Energizer Battery, Inc., as Servicer, Energizer Personal Care, LLC, as Sub-Servicer, the Committed Purchasers, SunTrust Bank (“SunTrust Bank”), as an Agent, Gotham Funding Corporation (“Gotham”), Victory Receivables Corporation (“Victory”) (Gotham and Victory each a “Conduit”), and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent and as an Agent (as amended, restated and modified from time to time, the “Receivables Purchase Agreement”).  Capitalized terms used herein shall have the meanings assigned to such terms in the Receivables Purchase Agreement.
The Agents are hereby notified of the following proposed reduction of Aggregate Capital from Collections:
	
		
	Aggregate Reduction:
	$____________________

	Proposed Reduction Date:
	 

Each Conduit Group’s respective aggregate Capital following such proposed reduction shall be as follows:
	
				
	Conduit Group
	Prior Capital
(a)
	Capital Reduction
(b)
	Capital
(a-b)

	Gotham and Victory
	 
	 
	 

	SunTrust Bank
	 
	 
	 

	Total
	 
	 
	 

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Very truly yours,
ENERGIZER RECEIVABLES FUNDING CORPORATION
By:     
 
Name:
 
Title:

SCHEDULE A
COMMITMENTS OF COMMITTED PURCHASERS 
Conduit Group with respect to SunTrust Bank:
	
		
	Committed Purchaser
	Commitment

	SunTrust Bank

	$100,000,000

    
Conduit Group with respect to Gotham and Victory:
	
		
	Committed Purchaser
	Commitment

	The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch

	$102,000,000

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SCHEDULE B
DOCUMENTS TO BE DELIVERED TO THE ADMINISTRATIVE AGENT
 
AND THE AGENTS ON OR PRIOR TO THE INITIAL PURCHASE
PART I: Documents Delivered in Connection with the Receivables Sale Agreement 
		
	1.
	Executed copies of the Receivables Sale Agreement, duly executed by the parties thereto.

		
	2.
	Copy of the Resolutions of the Board of Directors of Originator certified by its Secretary, authorizing Originator’s execution, delivery and performance of the Receivables Sale Agreement and the other documents to be delivered by it thereunder.

		
	3.
	Articles or Certificate of Incorporation of Originator certified by the Secretary of State of the jurisdiction of incorporation of Originator on or within thirty (30) days prior to the initial Purchase (as defined in the Receivables Sale Agreement).

		
	4.
	Good Standing Certificate for Originator issued by the Secretaries of State of its state of incorporation and each jurisdiction where it has material operations.

		
	5.
	A certificate of the Secretary of Originator certifying: (i) the names and signatures of the officers authorized on its behalf to execute the Receivables Sale Agreement and any other documents to be delivered by it thereunder and (ii) a copy of  Originator’s By-Laws.

		
	6.
	Pre-filing state and federal tax lien, judgment lien and UCC lien searches against Originator.

		
	7.
	Time stamped receipt copies of proper financing statements, duly filed under the UCC on or before the date of the initial Purchase (as defined in the Receivables Sale Agreement) in all jurisdictions as may be necessary or, in the opinion of Seller (or its assigns), desirable, under the UCC of all appropriate jurisdictions or any comparable law in order to perfect the ownership interests contemplated by the Receivables Sale Agreement.

		
	8.
	Time stamped receipt copies of proper UCC termination statements, if any, necessary to release all security interests and other rights of any Person in the Receivables, Contracts or Related Security previously granted by Originator.

		
	9.
	Executed Collection Account Agreements for each Lock-Box and Collection Account.

		
	10.
	A favorable opinion of legal counsel for Originator reasonably acceptable to Seller (or its assigns) which addresses the following matters and such other matters as Seller (or its assigns) may reasonably request:

--    Originator is a corporation duly incorporated, validly existing and in good standing under the laws of its state of incorporation.
--    Originator has all requisite authority to conduct its business in each jurisdiction where failure to be so qualified would have a material adverse effect on Originator’s business.
--    The execution and delivery by Originator of the Receivables Sale Agreement and each other Transaction Document to which it is a party and its performance of its obligations thereunder have been duly authorized by all necessary corporate action and proceedings on the part of Originator and will not:
(a)    require any action by or in respect of, or filing with, any governmental body, agency or official (other than the filing of UCC 

financing statements);
(b)    contravene, or constitute a default under, any provision of applicable law or regulation or of its articles or certificate of incorporation or bylaws or of any agreement, judgment, injunction, order, decree or other instrument binding upon Originator; or
(c)    result in the creation or imposition of any Adverse Claim on assets of Originator or any of its Subsidiaries (except as contemplated by the Receivables Sale Agreement).
--    The Receivables Sale Agreement and each other Transaction Document to which it is a party has been duly executed and delivered by Originator and constitutes the legal, valid and binding obligation of Originator enforceable in accordance with its terms, except to the extent the enforcement thereof may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and subject also to the availability of equitable remedies if equitable remedies are sought.
--    The provisions of the Receivables Sale Agreement are effective to create a valid security interest in favor of Seller in all Receivables and upon the filing of financing statements, Seller shall acquire a first priority, perfected security interest in such Receivables.
--    To the best of the opinion giver’s knowledge, there is no action, suit or other proceeding against Originator or any Affiliate of Originator, which would materially adversely affect the business or financial condition of Originator and its Affiliates taken as a whole or which would materially adversely affect the ability of Originator to perform its obligations under the Receivables Sale Agreement.
		
	11.
	A “true sale” opinion and “substantive consolidation” opinion of counsel for Originator with respect to the transactions contemplated by the Receivables Sale Agreement.

		
	12.
	A Compliance Certificate.

		
	13.
	Executed copies of (i) all consents from and authorizations by any Persons and (ii) all waivers and amendments to existing credit facilities, that are necessary in connection with the Receivables Sale Agreement.

		
	14.
	Executed copies of the Subscription Agreement (as defined in the Receivables Sale Agreement).

		
	15.
	Executed copies of the Subordinated Note (as defined in the Receivables Sale Agreement) by Seller in favor of Originator and of the Demand Note by Originator in favor of Seller.

		
	16.
	A direction letter executed by Originator authorizing Seller (and its assignees) and directing warehousemen to allow Seller (and its assignees) to inspect and make copies from Originator’s books and records maintained at off-site data processing or storage facilities.

PART II:  Documents Delivered in Connection with the Original RPA 
		
	1.
	Executed copies of the Original RPA, duly executed by the parties thereto.

		
	2.
	Copy of the Resolutions of the Board of Directors of each Seller Party and Provider certified by its Secretary authorizing such Person’s execution, delivery and performance of the Original RPA and the other documents to be delivered by it hereunder.

		
	3.
	Articles or Certificate of Incorporation of each Seller Party and Provider certified by the Secretary of State 

B-#PageNum#
658652.06-Chicago Server 1A - MSW

of its jurisdiction of incorporation on or within thirty (30) days prior to the initial Incremental Purchase.
		
	4.
	Good Standing Certificate for each Seller Party and Provider issued by the Secretaries of State of its state of incorporation and each jurisdiction where it has material operations.

		
	5.
	A certificate of the Secretary of each Seller Party and Provider certifying (i) the names and signatures of the officers authorized on its behalf to execute the Original RPA and any other documents to be delivered by it hereunder and (ii) a copy of such Person’s By-Laws.

		
	6.
	Pre-filing state and federal tax lien, judgment lien and UCC lien searches against each Seller Party.

		
	7.
	Time stamped receipt copies of proper financing statements, duly filed under the UCC on or before the date of the initial Incremental Purchase in all jurisdictions as may be necessary or, in the opinion of the Administrative Agent, desirable, under the UCC of all appropriate jurisdictions or any comparable law in order to perfect the ownership interests contemplated by the Original RPA.

		
	8.
	Time stamped receipt copies of proper UCC termination statements, if any, necessary to release all security interests and other rights of any Person in the Receivables, Contracts or Related Security previously granted by Seller.

		
	9.
	Executed copies of Collection Account Agreements for each Lock-Box and Collection Account.

		
	10.
	A favorable opinion of legal counsel for the Seller Parties and Provider reasonably acceptable to the Administrative Agent which addresses the following matters and such other matters as the Administrative Agent may reasonably request:

--    Each Seller Party and Provider is a corporation duly incorporated, validly existing and in good standing under the laws of its state of incorporation.
--    Each Seller Party and Provider has all requisite authority to conduct its business in each jurisdiction where failure to be so qualified would have a material adverse effect on such Person’s business.
--    The execution and delivery by each Seller Party and Provider of the Original RPA and each other Transaction Document to which it is a party and its performance of its obligations thereunder have been duly authorized by all necessary corporate action and proceedings on the part of such Person and will not:
(a)    require any action by or in respect of, or filing with, any governmental body, agency or official (other than the filing of UCC financing statements);
(b)    contravene, or constitute a default under, any provision of applicable law or regulation or of its articles or certificate of incorporation or bylaws or of any agreement, judgment, injunction, order, decree or other instrument binding upon such Person; or
(c)    result in the creation or imposition of any Adverse Claim on assets of such Person or any of its Subsidiaries (except as contemplated by the Original RPA).
--    The Original RPA and each other Transaction Document to which such Person is a party has been duly executed and delivered by such Person and constitutes the legal, valid and binding obligation of such Person, enforceable in accordance with its terms, except to the extent the enforcement thereof may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and subject also to the availability of equitable remedies if equitable remedies are sought.

--    The provisions of the Original RPA are effective to create a valid security interest in favor of the Administrative Agent for the benefit of the Purchasers in all Receivables, and upon the filing of financing statements, the Administrative Agent for the benefit of the Purchasers shall acquire a first priority, perfected security interest in such Receivables.
--    To the best of the opinion giver’s knowledge, there is no action, suit or other proceeding against any Seller Party, Provider or any of their respective Affiliates, which would materially adversely affect the business or financial condition of such Person and its Affiliates taken as a whole or which would materially adversely affect the ability of such Person to perform its obligations under any Transaction Document to which it is a party.
		
	11.
	If requested by Conduit or the Administrative Agent, a favorable opinion of legal counsel for each Committed Purchaser, reasonably acceptable to the Administrative Agent which addresses the following matters:

--    The Original RPA has been duly authorized by all necessary corporate action of such Committed Purchaser.
--    The Original RPA has been duly executed and delivered by such Committed Purchaser and, assuming due authorization, execution and delivery by each of the other parties thereto, constitutes a legal, valid and binding obligation of such Committed Purchaser, enforceable against such Committed Purchaser in accordance with its terms.
		
	12.
	A Compliance Certificate.

		
	13.
	The Fee Letter.

		
	14.
	A Monthly Report.

		
	15.
	Executed copies of (i) all consents from and authorizations by any Persons and (ii) all waivers and amendments to existing credit facilities, that are necessary in connection with the Original RPA.

		
	16.
	A direction letter executed by Seller and Servicer authorizing the Administrative Agent and Conduit, and directing warehousemen to allow the Administrative Agent and Conduit to inspect and make copies from Seller’s books and records maintained at off-site data processing or storage facilities.

		
	17.
	For each Purchaser that is not incorporated under the laws of the United States of America, or a state thereof, two duly completed copies of United States Internal Revenue Service Forms W-8BEN or W-8ECI, certifying in either case that such Purchaser is entitled to receive payments under the Original RPA without deduction or withholding of any United States federal income taxes.

PART III:  Documents Delivered in Connection with the First Amended and Restated RPA 
		
	1.
	Executed copies of the First Amended and Restated RPA, the Fourth Amendment to the Receivables Sale Agreement, the Transfer Agreement and the Performance Undertaking, each duly executed by the parties thereto.

		
	2.
	Copy of the Resolutions of the Board of Directors of each Seller Party and Provider certified by its Secretary authorizing such Person’s execution, delivery and performance of the First Amended and Restated RPA and the other documents to be delivered by it hereunder.

		
	3.
	Articles or Certificate of Incorporation of each Seller Party and Provider certified by the Secretary of State of its jurisdiction of incorporation on or within thirty (30) days prior to the initial Incremental Purchase.

B-#PageNum#
658652.06-Chicago Server 1A - MSW

		
	4.
	Good Standing Certificate for each Seller Party and Provider issued by the Secretaries of State of its state of incorporation.

		
	5.
	A certificate of the Secretary of each Seller Party and Provider certifying (i) the names and signatures of the officers authorized on its behalf to execute the First Amended and Restated RPA, the Fourth Amendment to the Receivables Sale Agreement, the Transfer Agreement and the Performance Undertaking, and any other documents to be delivered by it hereunder or thereunder and (ii) a copy of such Person’s By-Laws.

		
	6.
	Pre-filing federal tax lien and UCC lien searches against each Seller Party.

		
	7.
	Time stamped receipt copies of collateral description amendments to UCC1 financing statements #30971708 filed April 14, 2003, #30971518 filed April 14, 2003 and #20074811559 filed December 20, 2007, each filed with the Delaware Secretary of State.

		
	8.
	Executed copies of Collection Account Agreements for each Lock-Box and Collection Account.

		
	9.
	A favorable opinion of legal counsel for the Seller Parties and Provider reasonably acceptable to the Administrative Agent which addresses the following matters and such other matters as the Administrative Agent may reasonably request:

--    Each Seller Party and Provider is a corporation duly incorporated, validly existing and in good standing under the laws of its state of incorporation.
--    The execution and delivery by each Seller Party and Provider of the First Amended and Restated RPA, the Fourth Amendment (Energizer Receivables Sale Agreement), the Transfer Agreement and the Performance Undertaking, as applicable, and each other Transaction Document to which it is a party and its performance of its obligations thereunder have been duly authorized by all necessary corporate action and proceedings on the part of such Person and will not:
(a)    require any action by or in respect of, or filing with, any governmental body, agency or official (other than the filing of UCC financing statements);
(b)    contravene, or constitute a default under, any provision of applicable law or regulation or of its articles or certificate of incorporation or bylaws or of any agreement, judgment, injunction, order, decree or other instrument binding upon such Person; or
(c)    result in the creation or imposition of any Adverse Claim on assets of such Person or any of its Subsidiaries (except as contemplated by the First Amended and Restated RPA).
--    The First Amended and Restated RPA and each other Transaction Document to which such Person is a party has been duly executed and delivered by such Person and constitutes the legal, valid and binding obligation of such Person, enforceable in accordance with its terms, except to the extent the enforcement thereof may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and subject also to the availability of equitable remedies if equitable remedies are sought.
--    The provisions of the First Amended and Restated RPA are effective to create a valid security interest in favor of the Administrative Agent for the benefit of the Purchasers in all Receivables, and upon the filing of the financing statements, the Administrative Agent for the benefit of the Purchasers shall acquire a first priority, perfected security interest in such Receivables.

		
	10.
	A “true sale” opinion and “substantive consolidation” opinion of counsel for Originator with respect to the transactions contemplated by the Transfer Agreement.

		
	11.
	Executed copies of (i) all consents from and authorizations by any Persons and (ii) all waivers and amendments to existing credit facilities, that are necessary in connection with the First Amended and Restated RPA, the Fourth Amendment to the Receivables Sale Agreement, the Transfer Agreement or the Performance Undertaking,.

PART IV:  Documents Delivered in Connection with the Second Amended and Restated RPA
		
	1.
	Executed copies of the Second Amended and Restated RPA, the Fifth Amendment to the Receivables Sale Agreement, the Fee Letters, a compliance certificate in form and substance acceptable to the Administrative Agent, and the Performance Undertaking, each duly executed by the parties thereto.

		
	2.
	Copy of the Resolutions of the Board of Directors of each Seller Party and Provider certified by its Secretary authorizing such Person’s execution, delivery and performance of the Second Amended and Restated RPA and the other documents to be delivered by it hereunder.

		
	3.
	Articles or Certificate of Incorporation of each Seller Party and Provider certified by the Secretary of State of its jurisdiction of incorporation on or within thirty (30) days prior to the effective date of the Second Amended and Restated RPA.

		
	4.
	Good Standing Certificate for each Seller Party and Provider issued by the Secretaries of State of its state of incorporation.  Within thirty (30) days after the effective date of the Second Amended and Restated RPA, good standing certificates in each jurisdiction where each Seller Party has material operations.

		
	5.
	A certificate of the Secretary of each Seller Party and Provider certifying (i) the names and signatures of the officers authorized on its behalf to execute the Second Amended and Restated RPA, the Fifth Amendment to the Receivables Sale Agreement and the Performance Undertaking, and any other documents to be delivered by it hereunder or thereunder and (ii) a copy of such Person’s By-Laws.

		
	6.
	Pre-filing federal tax lien and UCC lien searches against each Seller Party in its jurisdiction of organization.

		
	7.
	Time stamped receipt copies of collateral description amendments to UCC1 financing statements #30971708 filed April 14, 2003, #30971518 filed April 14, 2003 and #20074811559 filed December 20, 2007, each filed with the Delaware Secretary of State.  Time stamped receipt copy of the initial UCC1 financing statement filed against Seller in favor of Administrative Agent, as secured party.

		
	8.
	A favorable opinion of legal counsel for the Seller Parties and Provider reasonably acceptable to the Administrative Agent which addresses the following matters and such other matters as the Administrative Agent may reasonably request:

--    Each Seller Party and Provider is a corporation duly incorporated, validly existing and in good standing under the laws of its state of incorporation.
--    The execution and delivery by each Seller Party and Provider of the Second Amended and Restated RPA, the Fifth Amendment (Energizer Receivables Sale Agreement) and the Performance Undertaking, as applicable, and each other Transaction Document to which it is a party and its performance of its obligations thereunder have been duly authorized by all necessary corporate action and proceedings on the part of such Person and will not:
(a)    require any action by or in respect of, or filing with, any governmental body, agency or official (other than the filing of UCC financing statements);

B-#PageNum#
658652.06-Chicago Server 1A - MSW

(b)    contravene, or constitute a default under, any provision of applicable law or regulation or of its articles or certificate of incorporation or bylaws or of any agreement, judgment, injunction, order, decree or other instrument binding upon such Person; or
(c)    result in the creation or imposition of any Adverse Claim on assets of such Person or any of its Subsidiaries (except as contemplated by the Second Amended and Restated RPA).
--    The Second Amended and Restated RPA and each other Transaction Document to which such Person is a party has been duly executed and delivered by such Person and constitutes the legal, valid and binding obligation of such Person, enforceable in accordance with its terms, except to the extent the enforcement thereof may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and subject also to the availability of equitable remedies if equitable remedies are sought.
--    The provisions of the Second Amended and Restated RPA are effective to create a valid security interest in favor of the Administrative Agent for the benefit of the Purchasers in all Receivables, and upon the filing of the financing statements, the Administrative Agent for the benefit of the Purchasers shall acquire a first priority, perfected security interest in such Receivables.
		
	9.
	A “true sale” opinion and “substantive consolidation” opinion of counsel for Originator with respect to the transactions contemplated by the Receivables Sale Agreement, as amended, and the Second Amended and Restated RPA.

		
	10.
	Executed copies of (i) all consents from and authorizations by any Persons and (ii) all waivers and amendments to existing credit facilities, that are necessary in connection with the Second Amended and Restated RPA, the Fifth Amendment to the Receivables Sale Agreement or the Performance Undertaking.

PART V:  Documents to be Delivered in Connection with this Agreement
		
	1.
	Executed copies of this Agreement, the Sixth Amendment to the Receivables Sale Agreement, the Transfer Agreement, the Fee Letters, a compliance certificate in form and substance acceptable to the Administrative Agent and the Agents, and the Performance Undertaking, each duly executed by the parties thereto.

		
	2.
	Copy of the Resolutions of the Board of Directors of each Seller Party and Provider certified by its Secretary authorizing such Person’s execution, delivery and performance of this Agreement and the other documents to be delivered by it hereunder.

		
	3.
	Articles or Certificate of Incorporation of each Seller Party and Provider certified by the Secretary of State of its jurisdiction of incorporation on or within thirty (30) days prior to the effective date of this Agreement.

		
	4.
	Good Standing Certificate for each Seller Party and Provider issued by the Secretaries of State of its state of incorporation.  Within thirty (30) days after the effective date of this Agreement, good standing certificates in each jurisdiction where each Seller Party has material operations.

		
	5.
	A certificate of the Secretary of each Seller Party and Provider certifying (i) the names and signatures of the officers authorized on its behalf to execute this Agreement, the Sixth Amendment to the Receivables Sale Agreement, the Transfer Agreement and the Performance Undertaking, and any other documents to be delivered by it hereunder or thereunder and (ii) a copy of such Person’s By-Laws or Operating Agreement.

		
	6.
	Pre-filing federal tax lien and UCC lien searches against each Seller Party in its jurisdiction of organization.

		
	7.
	Time stamped receipt copies of collateral description amendments to UCC1 financing statements #30971708 filed April 14, 2003, #30971518 filed April 14, 2003 and #20074811559 filed December 20, 

2007, each filed with the Delaware Secretary of State.  Time stamped receipt copy of the initial UCC1 financing statement filed against Seller in favor of Administrative Agent, as secured party.  Time stamped receipt copy of the initial UCC1 financing statement filed against EPC in favor of Administrative Agent, as secured party.
		
	8.
	A favorable opinion of legal counsel for the Seller Parties and Provider reasonably acceptable to the Administrative Agent and the Agents which addresses the following matters and such other matters as the Administrative Agent or any Agent may reasonably request:

--    Each Seller Party and Provider is a limited liability company or a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation.
--    The execution and delivery by each Seller Party and Provider of this Agreement, the Sixth Amendment (Energizer Receivables Sale Agreement), the Transfer Agreement and the Performance Undertaking, as applicable, and each other Transaction Document to which it is a party and its performance of its obligations thereunder have been duly authorized by all necessary corporate action and proceedings on the part of such Person and will not:
(a)    require any action by or in respect of, or filing with, any governmental body, agency or official (other than the filing of UCC financing statements);
(b)    contravene, or constitute a default under, any provision of applicable law or regulation or of its articles or certificate of incorporation or bylaws or of any agreement, judgment, injunction, order, decree or other instrument binding upon such Person; or
(c)    result in the creation or imposition of any Adverse Claim on assets of such Person or any of its Subsidiaries (except as contemplated by this Agreement).
--    This Agreement and each other Transaction Document to which such Person is a party has been duly executed and delivered by such Person and constitutes the legal, valid and binding obligation of such Person, enforceable in accordance with its terms, except to the extent the enforcement thereof may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and subject also to the availability of equitable remedies if equitable remedies are sought.
--    The provisions of this Agreement are effective to create a valid security interest in favor of the Administrative Agent for the benefit of the Purchasers in all Receivables, and upon the filing of the financing statements, the Administrative Agent for the benefit of the Purchasers shall acquire a first priority, perfected security interest in such Receivables.
		
	9.
	A “true sale” opinion and “substantive consolidation” opinion of counsel for Originator with respect to the transactions contemplated by the Receivables Sale Agreement, as amended, and this Agreement.

		
	10.
	A “true sale” opinion and “substantive consolidation” opinion of counsel for Originator with respect to the transactions contemplated by the Transfer Agreement.

		
	11.
	Executed copies of (i) all consents from and authorizations by any Persons and (ii) all waivers and amendments to existing credit facilities, that are necessary in connection with this Agreement, the Sixth Amendment to the Receivables Sale Agreement, the Transfer Agreement or the Performance Undertaking.

		
	12.
	A completed Monthly Report as of March 31, 2009 in conformity with the Receivables Sale Agreement.

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658652.06-Chicago Server 1A - MSWExhibit 10.1

 

EXECUTION VERSION

 

ASSET PURCHASE AGREEMENT

 

BY AND AMONG

 

GE CAPITAL DEBT ADVISORS LLC,

 

GENERAL ELECTRIC CAPITAL CORPORATION,

 

CIFC ASSET MANAGEMENT LLC,

 

AND

 

CIFC CORP.

 

Dated as of July 30, 2012

 

The Asset Purchase Agreement contains certain customary representations and warranties by each party.  The representations and warranties in the Asset Purchase Agreement are the product of negotiations among the parties thereto and were made for the purpose of the Asset Purchase Agreement for their sole benefit. Any inaccuracies in such representations and warranties are subject to waiver by the parties thereto in accordance with the Asset Purchase Agreement without notice or liability to any other person.  In some instances, the representations and warranties in the Asset Purchase Agreement may be qualified by disclosures made by the parties, may be made only as of a particular date or dates, may be subject to more recent developments which may not be reflected in the Asset Purchase Agreement or CIFC Corp’s other public disclosures and/or may represent an allocation among the parties thereto of risks associated with particular matters regardless of the knowledge of any of the parties thereto and may or may not have been accurate as of any specific date. CIFC Corp. does not purport such representations and warranties to be accurate as of the date of the filing of the Asset Purchase Agreement by CIFC Corp. with the Securities and Exchange Commission. Accordingly, such representations and warranties may not describe the actual facts or circumstances as of the date of the Asset Purchase Agreement or as of any other date and should not be relied upon.

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE 1 DEFINITIONS
    	
 
    	
2
    
	
Section 1.1
    	
Defined Terms
    	
 
    	
2
    
	
Section 1.2
    	
Construction
    	
 
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 2 THE PURCHASE AND SALE OF THE ASSETS
    	
 
    	
13
    
	
Section 2.1
    	
Sale of Assets
    	
 
    	
13
    
	
Section 2.2
    	
Assumed Liabilities and Retained Liabilities
    	
 
    	
13
    
	
Section 2.3
    	
The Closing(s)
    	
 
    	
14
    
	
Section 2.4
    	
Consideration for the Transferred Assets and Actions of   GECC and its Affiliates
    	
 
    	
14
    
	
Section 2.5
    	
Adjustments to Closing Cash Consideration
    	
 
    	
15
    
	
Section 2.6
    	
Further Assurances; Further Conveyances and Assumptions
    	
 
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF GECC AND SELLER
    	
 
    	
18
    
	
Section 3.1
    	
Organization
    	
 
    	
18
    
	
Section 3.2
    	
Authorization; Enforceability
    	
 
    	
18
    
	
Section 3.3
    	
Compliance with Laws
    	
 
    	
19
    
	
Section 3.4
    	
Non-Contravention; Consents and Approvals
    	
 
    	
19
    
	
Section 3.5
    	
Fee Statements
    	
 
    	
20
    
	
Section 3.6
    	
Absence of Certain Changes and Events
    	
 
    	
20
    
	
Section 3.7
    	
Regulatory Compliance
    	
 
    	
20
    
	
Section 3.8
    	
CLO Issuers
    	
 
    	
21
    
	
Section 3.9
    	
Assets
    	
 
    	
23
    
	
Section 3.10
    	
CLO Management Agreements and the CLO Issuer Operative   Documents
    	
 
    	
23
    
	
Section 3.11
    	
Litigation
    	
 
    	
23
    
	
Section 3.12
    	
Taxes
    	
 
    	
24
    
	
Section 3.13
    	
Brokers
    	
 
    	
24
    
	
Section 3.14
    	
Independent Investigation
    	
 
    	
24
    
	
Section 3.15
    	
Affiliate Transactions
    	
 
    	
24
    
	
Section 3.16
    	
Legends
    	
 
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
    	
 
    	
25
    
	
Section 4.1
    	
Organization
    	
 
    	
25
    
	
Section 4.2
    	
Authorization; Enforceability
    	
 
    	
26
    
	
Section 4.3
    	
Capitalization
    	
 
    	
26
    
	
Section 4.4
    	
Compliance with Laws
    	
 
    	
27
    
	
Section 4.5
    	
Non-Contravention; Consents and Approvals
    	
 
    	
28
    
	
Section 4.6
    	
SEC Reports and Financial Statements
    	
 
    	
28
    
	
Section 4.7
    	
No Undisclosed Liabilities
    	
 
    	
30
    

 

i

 

	
Section 4.8
    	
Regulatory Compliance
    	
 
    	
30
    
	
Section 4.9
    	
Litigation
    	
 
    	
31
    
	
Section 4.10
    	
Issuance of Parent Common Stock and Warrant
    	
 
    	
31
    
	
Section 4.11
    	
Brokers
    	
 
    	
32
    
	
Section 4.12
    	
Independent Investigation
    	
 
    	
32
    
	
Section 4.13
    	
Registration Rights; Voting Rights
    	
 
    	
32
    
	
Section 4.14
    	
Taxes
    	
 
    	
32
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 5 COVENANTS AND AGREEMENTS
    	
 
    	
32
    
	
Section 5.1
    	
Conduct of the Business
    	
 
    	
32
    
	
Section 5.2
    	
Access to Information
    	
 
    	
34
    
	
Section 5.3
    	
Publicity, GE Names and GE Marks
    	
 
    	
34
    
	
Section 5.4
    	
Notice of Events
    	
 
    	
35
    
	
Section 5.5
    	
Commercially Reasonable Efforts; Filings and Authorizations
    	
 
    	
35
    
	
Section 5.6
    	
Consents
    	
 
    	
36
    
	
Section 5.7
    	
Recommendations
    	
 
    	
37
    
	
Section 5.8
    	
Listing
    	
 
    	
37
    
	
Section 5.9
    	
Further Assurances
    	
 
    	
37
    
	
Section 5.10
    	
Confidentiality
    	
 
    	
38
    
	
Section 5.11
    	
Tax Cooperation; Transfer Taxes; Tax Treatment
    	
 
    	
38
    
	
Section 5.12
    	
Restricted Activities
    	
 
    	
38
    
	
Section 5.13
    	
Non-Solicitation
    	
 
    	
38
    
	
Section 5.14
    	
Managed Accounts
    	
 
    	
39
    
	
Section 5.15
    	
Portfolio and Control Administration Systems and Activities
    	
 
    	
39
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 6 CONDITIONS TO EACH CLOSING
    	
 
    	
39
    
	
Section 6.1
    	
Conditions to Obligation of Parent and Purchaser
    	
 
    	
39
    
	
Section 6.2
    	
Conditions to Obligation of GECC and Seller
    	
 
    	
41
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 7 SURVIVAL; INDEMNIFICATION
    	
 
    	
42
    
	
Section 7.1
    	
Survival of Representations and Warranties and Covenants
    	
 
    	
42
    
	
Section 7.2
    	
Indemnification
    	
 
    	
42
    
	
Section 7.3
    	
Notice and Defense of Claims
    	
 
    	
44
    
	
Section 7.4
    	
Determination of Loss Amount
    	
 
    	
45
    
	
Section 7.5
    	
Remedies Exclusive
    	
 
    	
45
    
	
Section 7.6
    	
Payments
    	
 
    	
46
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 8 TERMINATION OF AGREEMENT
    	
 
    	
46
    
	
Section 8.1
    	
Termination
    	
 
    	
46
    
	
Section 8.2
    	
Survival After Termination
    	
 
    	
47
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 9 MISCELLANEOUS
    	
 
    	
47
    
	
Section 9.1
    	
Expenses
    	
 
    	
47
    
	
Section 9.2
    	
Notices
    	
 
    	
47
    
	
Section 9.3
    	
Governing Law
    	
 
    	
48
    
	
Section 9.4
    	
Consent to Jurisdiction
    	
 
    	
48
    
	
Section 9.5
    	
Specific Performance
    	
 
    	
49
    

 

ii

 

	
Section 9.6
    	
Waiver of Jury Trial; Waiver of Consequential Damages
    	
 
    	
49
    
	
Section 9.7
    	
Binding Effect; Persons Benefiting; Assignment
    	
 
    	
49
    
	
Section 9.8
    	
Counterparts
    	
 
    	
50
    
	
Section 9.9
    	
Entire Agreement
    	
 
    	
50
    
	
Section 9.10
    	
Severability
    	
 
    	
50
    
	
Section 9.11
    	
Amendments and Waivers
    	
 
    	
50
    
	
Section 9.12
    	
Mutual Drafting; Interpretation
    	
 
    	
50
    

 

iii

 

EXHIBITS

 

	
EXHIBIT A   — Form of Assignment and Assumption Agreement
    
	
 
    
	
EXHIBIT B   — Form of Second Amended and Restated Registration Rights Agreement
    
	
 
    
	
EXHIBIT C   — Form of Investment Agreement
    
	
 
    
	
EXHIBIT D — Form of Second Amended and   Restated Stockholders Agreement
    
	
 
    
	
EXHIBIT E   — Form of Warrant
    

 

CIFC Corp. will furnish supplementally a copy of any omitted or partially omitted schedule or exhibit to the Securities and Exchange Commission upon request: provided, however, that CIFC Corp. may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedule or exhibit so furnished.

 

iv

 

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT, dated as of July 30, 2012 (this “Agreement”), is by and among General Electric Capital Corporation, a Delaware corporation (“GECC”), GE Capital Debt Advisors LLC, a Delaware limited liability company and wholly-owned Subsidiary (as defined below) of GECC (“Seller”), CIFC Corp., a Delaware corporation (“Parent”), and CIFC Asset Management LLC, a Delaware limited liability company and wholly-owned Subsidiary of Parent (“Purchaser”, and together with Parent, GECC and Seller, the “Parties”).

 

RECITALS:

 

WHEREAS, Seller provides advisory and certain administrative services to the CLO Issuers (as defined below) pursuant to the CLO Management Agreements (as defined below);

 

WHEREAS, Seller desires to assign its rights as Collateral Manager (as defined below) under the CLO Management Agreements and the related CLO Issuer Operative Documents (as defined below) and its obligations as Collateral Manager under the CLO Management Agreements and the related CLO Collateral Administration Agreements (as defined below) to Purchaser, and Purchaser is willing to accept such assignment, upon the terms and subject to the conditions set forth herein (the “Asset Sale”);

 

WHEREAS, in consideration for the Assets and the actions to be taken by GECC and its Affiliates (as defined below) described herein: (a) Parent will, at the direction of GECC, issue to GE Capital Equity Investments, Inc., a Delaware corporation and wholly-owned Subsidiary of GECC (“GECEII”) one million shares of Parent Common Stock (as defined below) and the Warrant (as defined below) exercisable during the two year period following the Initial Closing Date (as defined below) at a per share exercise price of $6.375; and (b) Parent shall pay to Seller $4,880,000 in cash, less any Management Fees (as defined below) received by Seller that are attributable to the period on or after July 1, 2012 and on or before the close of business on the applicable Closing Date (as defined below), and subject to other adjustments set forth herein;

 

WHEREAS, GECEII and Parent will enter into an Investment Agreement in the form attached hereto as Exhibit C to set forth certain rights and obligations of GECEII as a stockholder of Parent;

 

WHEREAS, during the five year period following the consummation of the Asset Sale (subject to extension), BLG (as defined below) shall refer mandates for certain services to Purchaser (or an Affiliate of Purchaser) to the extent permitted by law and the referred counterparty and GECC will be entitled to receive certain payments in respect of such referred business pursuant to the Referral Agreement in substantially the form agreed to by Parent and GECC as of the date hereof;

 

WHEREAS, BLG will not, during the Referral Period (as defined below), provide Covered Investment Advisory Services (as defined below);

 

 

WHEREAS, GECC and Parent will establish a commercial council in accordance with the charter in substantially the form agreed to by Parent and GECC as of the date hereof;

 

WHEREAS, Parent, at the direction of GECC, has agreed to provide GECEII with certain registration rights in respect of the securities issuable hereunder and under the Warrant, and in furtherance thereof GECEII, Parent, DFR Holdings LLC and CIFC Parent Holdings LLC shall enter into the Second Amended and Restated Registration Rights Agreement attached hereto as Exhibit B; and

 

WHEREAS, Purchaser has agreed to provide certain valuation services to GE Business Financial Services, Inc. pursuant to the Valuation Services Agreement in substantially the form agreed to by Parent and GECC as of the date hereof.

 

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements set forth in this Agreement, the receipt and sufficiency of which are hereby acknowledged, upon the terms and subject to the conditions of this Agreement, and intending to be legally bound hereby, the Parties agree as follows:

 

 

ARTICLE 1
 DEFINITIONS

 

Section 1.1                                   Defined Terms.

 

(a)                                 For all purposes of this Agreement, the following terms shall have the respective meanings set forth in this Section 1.1:

 

“Affiliate” means, with respect to any Person, any other Person, directly or indirectly through one or more intermediaries, controlling, controlled by or under common control with such Person.  The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting or other securities, by contract or otherwise.

 

“Allocated Cash Value” means, with respect to the portion of the Assets that relate to each of Navigator CDO 2003, Ltd., Navigator CDO 2004, Ltd., Navigator CDO 2005, Ltd., and Navigator CDO 2006, Ltd., respectively, the portion of the Cash Amount allocated thereto under Schedule 1.1 hereto.

 

“Ancillary Documents” means the Investment Agreement, the Second Amended and Restated Registration Rights Agreement, the Assignment and Assumption Agreements, the Valuation Services Agreement, the Dilution Waiver, the Existing Stockholders Agreement Waiver, the Second Amended and Restated Stockholders Agreement, the Warrant, the Referral Agreement and the other agreements, certificates and instruments to be executed by any of the Parties in connection with or pursuant to the foregoing.

 

“Assets” means the CLO Management Agreements and any rights Seller has as Collateral Manager under the other CLO Issuer Operative Documents, but excluding the rights held by Seller prior to such Closing under any CLO Management Agreement or any other CLO Issuer

 

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Operative Document to the extent such document (a) provides Seller or any of its Affiliates continuing indemnity and exculpation rights for occurrences prior to the applicable Closing for which Seller or any of its Affiliates remain liable after the applicable Closing or (b) provides for payment to Seller or any of its Affiliates for services rendered prior to the applicable Closing under such document.

 

“Assignment and Assumption Agreement” means, with respect to the Assets and Assumed Liabilities relating to each CLO Management Agreement, the Assignment and Assumption Agreement substantially in the form attached hereto as Exhibit A hereto.

 

“Bank Loans” means participations and assignments in broadly syndicated non-revolving commercial and industrial loans where GECC (or an Affiliate of GECC) is not the originating financial institution or agent, provided that such term does not refer to any loans issued to finance a non-financial GECC product or service (such as leasing or vendor financing).

 

“BLG” means the business unit of GECC described in GECC’s management reporting system as “GE Capital Americas — Bank Loan Group”, which as of the date hereof is the business unit primarily responsible for managing GECC’s portfolio of Bank Loans and any successor business unit thereto that results from any re-designation or re-organization of “GE Capital Americas — Bank Loan Group” in such management reporting system; provided that such successor business unit is primarily responsible for managing GECC’s portfolio of Bank Loans and its employees are substantially the same employees as those in “GE Capital Americas — Bank Loan Group” immediately prior to such re-designation or re-organization.

 

“Books and Records” means all files, documents, instruments, papers, books and records relating to the business of a Person, including financial statements, Tax Returns and related work papers and letters from accountants, budgets, pricing guidelines, ledgers, journals, deeds, title policies, minute books, stock certificates and books, stock transfer ledgers, Contracts, customer lists, computer files and programs, retrieval programs, operating data and plans and environmental studies and plans.

 

“Business Day” means a day other than Saturday, Sunday or any other day on which banks located in New York, New York are authorized or obligated by Law to close.

 

“Cash Amount” means $4,880,000.

 

“Cash Consideration” means Initial Closing Cash Consideration plus Delayed Closing Cash Consideration.

 

“CFTC” means the Commodity Futures Trading Commission or any successor entity thereto.

 

“CLO Blocker” means any of Navigator 2004 Blocker I, LLC, Navigator 2005 Blocker I, LLC, and Navigator 2006 Blocker I, LLC.

 

“CLO Collateral Administration Agreements” means, with respect to each CLO Issuer, the collateral administration agreement among such CLO Issuer, Seller and the applicable CLO Collateral Administrator.

 

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“CLO Collateral Administrator” means, with respect to each CLO Issuer, the collateral administrator under any collateral administration agreement with such CLO Issuer.

 

“CLO Co-Issuer” means any of Navigator CDO 2003, Corp. and Navigator CDO 2004, Corp.

 

“CLO Indenture” means, with respect to each CLO Issuer, the indenture entered into by such CLO Issuer in connection with its issuance of securities.

 

“CLO Investor” means, with respect to each CLO Issuer, an investor in any securities issued by such CLO Issuer or a Person entitled to exercise voting rights of such investor.

 

“CLO Issuer” means any of Navigator CDO 2003, Ltd., Navigator CDO 2004, Ltd., Navigator CDO 2005, Ltd. and Navigator CDO 2006, Ltd., in each case, together with the related CLO Co-Issuer, if any, and the related CLO Blocker, if any.

 

“CLO Issuer Documents” means, with respect to each CLO Issuer, the related CLO Issuer Operative Documents, together with each final or supplemental offering memorandum used in connection with an offering of securities by such CLO Issuer.

 

“CLO Issuer Operative Documents” means, with respect to each CLO Issuer, the “Transaction Documents” (as defined in the related CLO Indenture).

 

“CLO Management Agreement” means, with respect to each CLO Issuer, the management agreement between Seller and such CLO Issuer.

 

“CLO Trustee” means, with respect to each CLO Issuer, the trustee under the related CLO Indenture.

 

“Closing” means the Initial Closing or a Delayed Closing.

 

“Closing Date” means the Initial Closing Date or a Delayed Closing Date.

 

“Code” means the Internal Revenue Code of 1986.

 

“Collateral Manager” means, with respect to each CLO Issuer, the “Collateral Manager” (as defined in the related CLO Indenture).

 

“Commodity Exchange Act” means the Commodity Exchange Act of 1936, and the rules and regulations promulgated thereunder.

 

“Confidentiality Agreement” means the Letter Agreement, dated as of May 14, 2012, by and between Seller and Parent, amending and restating the earlier letter agreement between such parties dated as of June 20, 2011, together with the Nonreliance Letter.

 

“Consents” means all consents, notices, authorizations, novations, Orders, waivers, approvals, licenses, accreditations, certificates, declarations, filings or expiration of waiting

 

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periods, and non-objections or confirmations by a rating agency that an action or event will not result in the reduction or withdrawal of a rating.

 

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

 

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

 

“Covered Investment Advisory Services” means the business of providing to third parties not Affiliated with the provider, for compensation, investment advice relating to a portfolio of assets consisting primarily of Bank Loans, the obligors of which are domiciled in the United States; provided, however, that in no event shall such term be deemed to apply to any Investment Management Services provided by the Seller or any Affiliate thereof with respect to any account that consists solely of assets of the GE Pension Trust to the extent permitted by Section 5.14.

 

“Delayed Closing Cash Consideration” means (a) the Allocated Cash Value of the applicable Delayed Closing Assets minus (b) the Estimated Interim Period Management Fees with respect to such Delayed Closing Assets.

 

“Delivered” means (i) actually delivered (including by e-mail) to Parent or its representatives or (ii) posted no later than two (2) Business Days immediately preceding the date of this Agreement (and not subsequently removed or modified) in any electronic data room established by Seller or its representatives in connection with the Transactions to which Purchaser, Parent and its representatives have had continuous access during the period beginning twenty (20) Business Days prior to the date of this Agreement and ending on the last Closing Date.

 

“Dilution Waiver” means the waiver by the holder of the Parent Convertible Notes of any adjustment to the Conversion Ratio (as defined in the Parent Convertible Notes) that may be triggered by the issuance hereunder of the Transaction Shares.

 

“Equity Interest” means any type of equity ownership in an entity, including partnership interests in a general partnership or limited partnership, membership interests in a limited liability company, stock or similar security (and any option, warrant, right or security, including debt securities, convertible, exchangeable or exercisable thereto or therefor) in a corporation or the comparable instruments for any other entity or any other interest entitling the holder thereof to participate in the profits of such entity, the proceeds or the disposition of such entity or any portion thereof or to vote for the governing body of such entity.

 

“ERISA” means the Employee Retirement Income Security Act of 1974.

 

5

 

“Exchange Act” means the Securities Exchange Act of 1934.

 

“Existing Business Activities” means any business conducted or investment held by GECC or its Affiliates, or contemplated by any existing contractual arrangements applicable to GECC or any of its Affiliates, on the date of this Agreement.  For the avoidance of doubt, “Existing Business Activities” shall not include the provision of Covered Investment Advisory Services by BLG, other than (i) with respect to any Retained Assets and (ii) with respect to any Asset as to which the requisite Seller Consents could not be obtained with the result that such Asset was eliminated from the Transactions pursuant to Section 5.6(d).

 

“Existing Stockholders Agreement” means the Amended and Restated Stockholders Agreement, dated as of April 13, 2011, by and among Parent, CIFC Parent Holdings LLC and DFR Holdings, LLC, as amended and in effect.

 

“Existing Stockholders Agreement Waiver” means the waiver by CIFC Parent Holdings LLC and DFR Holdings, LLC of any preemptive rights or negative covenants that may be triggered by the Transactions.

 

“FINRA” means the Financial Industry Regulatory Authority or any successor entity thereto.

 

“Form ADV” means SEC Form ADV under the Investment Advisers Act.

 

“Fundamental Representations” means the representations and warranties in Section 3.1 (Organization), Section 3.2 (Authorization; Enforceability), Section 3.7 (Regulatory Compliance), Section 3.9 (Assets), Section 3.13 (Brokers), Section 4.1 (Organization), Section 4.2 (Authorization; Enforceability), Section 4.3 (Capitalization), Section 4.8 (Regulatory Compliance) and Section 4.11 (Brokers).

 

“GAAP” means United States generally accepted accounting principles, as amended from time to time.

 

“GE Name and GE Marks” means the names or marks of GECC or any of its Affiliates (including General Electric Company) that comprise or include all or any of the following: “GE” (in block letters or otherwise), the GE monogram, “General Electric Company”, and “General Electric”, either alone or in combination with other words and all marks, trade dress, logos, monograms, domain names and other source identifiers confusingly similar to or embodying any of the foregoing either alone or in combination with other words. For the avoidance of doubt, “Navigator” shall not be considered a GE Name and GE Mark.

 

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

 

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

 

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“Incentive Management Fees” has the meaning assigned to such term in each CLO Indenture, as applicable.

 

“Initial Closing” means the consummation of the sale and purchase of the Initial Assets and the assumption of the Initial Assumed Liabilities contemplated by this Agreement.

 

“Initial Closing Cash Consideration” means (a) the Cash Amount minus (b) the Allocated Cash Value of all Retained Assets minus (c) the Estimated Interim Period Management Fees with respect to the Assets (other than the Retained Assets).

 

“Interim Period Management Fees” means all Management Fees received by Seller in respect of the applicable Transferred Assets that are attributable to the period on or after July 1, 2012 and on or before the close of business on the applicable Closing Date (each, an “Interim Period”).  For the avoidance of doubt, (a) any Incentive Management Fees shall be attributable to the period in which such fees are paid, and (b) any Management Fees that are attributable to a period of time that does not start and end during the applicable Interim Period shall be allocated to such Interim Period by multiplying (i) such Management Fees by (ii) a fraction equal to the number of days during such period that are included in such Interim Period, divided by the total number of days in such period.

 

“Investment Advisers Act” means the Investment Advisers Act of 1940.

 

“Investment Agreement” means the Investment Agreement by and between GECEII and Parent, substantially in the form attached hereto as Exhibit C hereto.

 

“Investment Company Act” means the Investment Company Act of 1940.

 

“Investment Management Services” means any services (including sub-advisory services) that involve (i) the management of an investment account or fund (or portions thereof or a group of investment accounts or funds) of any third party for compensation, and performing activities related or incidental thereto, or (ii) the rendering of advice with respect to the investment and reinvestment of assets or funds (or any group of assets or funds) of any third party (including any “business development company” under the Investment Company Act, or any “real estate investment trust”) for compensation, and performing activities related or incidental thereto; provided, that with respect to a third party that is an entity, Investment Management Services shall not be deemed provided to any owner of the third party unless the services in (i) or (ii) above are provided to such owner separate and apart from such services provided to the third party.

 

“Knowledge” means (i) in the case of an individual, the actual knowledge (without due inquiry) of such individual, (ii) in the case of GECC and Seller, the actual knowledge (without due inquiry) of each of Amanda van Heyst, John Campos, Kathleen Brooks, Len Brous, Mark Duncan, Evan Gordon and Neeraj Mehta, (iii) in the case of Parent and Purchaser, the actual knowledge (without due inquiry) of each of Peter Gleysteen, Carl Colletti, Gary Neems, Stephen J. Vaccaro and Robert Milton, and (iv) in the case of any other Person that is not an individual, the actual knowledge of the chief executive officer and chief financial officer (or Persons serving in similar capacities) of such Person (without due inquiry).

 

7

 

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

 

“Legal Proceeding” means any judicial, legislative, administrative or arbitral actions, suits, investigations, audits, claims or other proceedings by or before a Governmental Authority.

 

“Liabilities” means any and all debts, liabilities, commitments, penalties, expenses, reimbursements and obligations of any kind, whether fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or not accrued, asserted or not asserted, known or unknown, determined, determinable or otherwise, whenever or however arising (including, whether arising out of any contract or tort, based on negligence or strict liability) and whether or not the same would be required by GAAP to be reflected in financial statements or disclosed in the notes thereto.

 

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

 

“Loss” means any and all judgments, Liabilities, amounts paid in settlement, damages, fines, penalties, deficiencies, Taxes, diminution in value, losses and expenses (including interest, court costs, reasonable fees of attorneys, accountants and other experts or other reasonable expenses of litigation or other proceedings or of any claim, default or assessment), but only to the extent such losses are not covered by an actual payment from some third party or by insurance (provided, that the indemnified party shall not have an obligation to first seek payment from such third party); provided that in no event shall Losses include any lost profits, consequential, indirect, incidental, punitive, special or other similar damages, other than any such damages awarded to any third party against an Indemnified Party.

 

“Managed Accounts” means the accounts managed by the Seller that consist solely of the assets of the GE Pension Trust.

 

“Management Fees” means any management fees payable to Seller under the CLO Management Agreements.

 

“NASDAQ” means the NASDAQ Stock Market LLC.

 

“NFA” means the National Futures Association or any successor entity thereto.

 

“Non-BLG Business Activities” means any activity of any nature whatsoever, whether or not engaged in on the date hereof, so long as it is not provided through or by BLG.

 

“Nonreliance Letter” means the letter agreement entered into by Parent and GECC on May 30, 2012.

 

“Optional Redemption” has the meaning assigned to such term in each CLO Indenture, as applicable.

 

8

 

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

 

“Parent Advisers” means each of Purchaser and Deerfield Capital Management, LLC.

 

“Parent Common Stock” means the common stock, par value $0.001 per share, of Parent.

 

“Parent Convertible Notes” means the senior subordinated convertible notes of Parent issued to Bounty Investments, LLC.

 

“Parent Material Adverse Effect” means any effect, event, circumstance or change that (a) is or would be reasonably likely to be, individually or in the aggregate, materially adverse to the business, condition (financial or otherwise) or results of operations of Parent and its Subsidiaries, taken as a whole; provided, however, that none of the following effects, events or changes shall be deemed in themselves, either alone or in combination, to constitute, and none of them shall be taken into account in determining whether there has been or will be, a Parent Material Adverse Effect: (i) any change in general economic, political or financial market conditions (including conditions in the stock markets or other capital markets and changes in interest or exchange rates), (ii) any change in the market price or trading volume of the Parent Common Stock after the date hereof (it being understood that the underlying circumstances, events or reasons giving rise to any such change can be taken into account in determining whether a Parent Material Adverse Effect has occurred or would reasonably be expected to occur), (iii) any effect, event, circumstance or change resulting from a change in applicable Law or accounting regulation or principle after the date of this Agreement, (iv) any effect, event, circumstance or change resulting from failure by Parent to meet any projections, forecasts, revenues or earning predictions, estimates or budgets for any period prior to, on or after the date of this Agreement (it being understood that the underlying circumstances, events or reasons giving rise to any such change can be taken into account in determining whether a Parent Material Adverse Effect has occurred or would reasonably be expected to occur) or (v) an outbreak or escalation of war, armed hostilities, acts of terrorism, political instability, natural catastrophe or other national or international calamity, crisis or emergency, or any governmental or other response to any of the foregoing, in each case, whether occurring within or outside the United States; provided, that, in the case of clauses (i), (iii) and (v), such occurrence, condition, change, development, event or effect shall only be excluded to the extent it does not have a disproportionate adverse effect on the business, financial condition, or results of operations of Parent and its Subsidiaries, taken as a whole, as compared to other Persons engaged in the investment advisory or investment management business or (b) would reasonably be expected to prevent, or materially delay to after the End Date, the consummation of the applicable Closing.

 

“Permitted Liens” means (i) statutory Liens of mechanics, materialmen, workmen, repairmen, warehousemen, carriers incurred in the ordinary course of business for amounts which are not delinquent or which are being contested in good faith by appropriate proceedings, (ii) Liens for Taxes not yet due and payable or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, (iii) non-exclusive intellectual property licenses, (iv) Liens in connection with a deposit account bank’s right of set-off, (v) Liens on mortgage securities or United States Treasury securities incurred in connection with repurchase agreements in the ordinary course of

 

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business and (vi) minor defects or irregularities in title that do not in the aggregate, materially affect the value or current use of the underlying asset.

 

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

 

“Referral Agreement” means the Referral Agreement between Purchaser and GECC, in substantially the form agreed to by Parent and GECC as of the date hereof.

 

“Referral Period” has the meaning assigned to such term in the Referral Agreement.

 

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

 

“Second Amended and Restated Registration Rights Agreement” means the Amendment to the Registration Rights Agreement, substantially in the form attached hereto as Exhibit B hereto.

 

“Securities Act” means the Securities Act of 1933.

 

“Self-Regulatory Organization” shall have the meaning ascribed thereto in the Exchange Act.

 

“Seller Material Adverse Effect” means any event or circumstance that results in or would be reasonably likely to result in (x) a cancellation of, notice of cancellation of, termination of, or removal for cause of Seller as the collateral manager under any CLO Management Agreement or (y) the acceleration, liquidation or optional redemption of securities issued by a CLO Issuer, but, in the case of clause (y), only if such event has prevented, or would be reasonably likely to result in the prevention of, the assignment, on the Initial Closing Date, of Assets with an Allocated Cash Value that represents more than 66 2/3% of the Cash Amount.

 

“Subsidiary” means, with respect to any Person, a corporation or other Person of which more than fifty percent (50%) of the voting power of the outstanding voting Equity Interests or more than fifty percent (50%) of the outstanding economic Equity Interest is held, directly or indirectly, by such Person; provided, however, that no CLO Issuer shall be deemed to be a direct or indirect Subsidiary of GECC or Seller.

 

“Tax Returns” means any and all reports, returns, declarations, claims for refund, elections, disclosures, estimates, information reports or returns or statements supplied or required to be supplied to a taxing authority in connection with Taxes, including any schedule or attachment thereto or amendment thereof, and including, where permitted or required, combined, consolidated or unitary returns for any group of entities that includes the applicable Party or any of such Party’s Subsidiaries or Affiliates.

 

“Taxes” means (i) any and all federal, state, provincial, local, foreign and other taxes, and any and all charges, fees, imposts, duties, levies or other assessments, in each case that are in the nature of taxes, imposed by a Governmental Authority (including any interest, fines,

 

10

 

assessments, penalties or additions to tax imposed in connection therewith or with respect thereto) including, without limitation (x) taxes imposed on, or measured by, income, franchise, profits or gross receipts, and (y) ad valorem, value added, capital gains, sales, goods and services, use, real or personal property, capital stock, license, branch, payroll, estimated, withholding, employment, social security (or similar), unemployment, compensation, utility, severance, production, excise, stamp, occupation, premium, windfall profits, escheat, transfer and gains taxes, and customs duties, and (ii) any Liability in respect of any items described in clause (i) above as a transferee or successor, pursuant to Treasury Regulation § 1.1502-6 (or any similar provision of state, local or foreign Law), as an indemnitor, guarantor, surety or in a similar capacity under any contract, arrangement, agreement, understanding or commitment (whether oral or written) or as a result of successor Liability or otherwise.

 

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

 

“Transaction Expenses” means the reasonable and documented out-of-pocket costs and expenses incurred by a Party in connection with negotiation, documentation and implementation of this Agreement, the Ancillary Documents and the Transactions.

 

“Transactions” means the Asset Sale and the other transactions contemplated by this Agreement and the Ancillary Documents.

 

“Valuation Services Agreement” means the Valuation Services Agreement by and between GE Business Financial Services, Inc. and Purchaser in substantially the form agreed to by Parent and Seller on the date hereof.

 

(b)                                 The following capitalized terms are defined in the Section set forth opposite such term:

 

	
Term
    	
 
    	
Section
    
	
 
    	
 
    	
 
    
	
Agreement
    	
 
    	
Preamble
    
	
Arbitration   Firm
    	
 
    	
Section 2.5(c)
    
	
Asset   Sale
    	
 
    	
Recitals
    
	
Assumed   Liabilities
    	
 
    	
Section 2.2
    
	
BLG   Employee
    	
 
    	
Section 5.13
    
	
Cap
    	
 
    	
Section 7.4(c)
    
	
Closing   Date
    	
 
    	
Section 2.3
    
	
Delayed   Closing
    	
 
    	
Section 5.6(c)
    
	
Delayed   Closing Assets
    	
 
    	
Section 2.1(a)
    
	
Delayed   Closing Assumed Liabilities
    	
 
    	
Section 2.2
    
	
Delayed   Closing Date
    	
 
    	
Section 2.3(b)
    
	
Delayed   Closing Purchase Price
    	
 
    	
Section 2.4(b)
    
	
Dispute   Notice
    	
 
    	
Section 2.5(c)
    
	
End   Date
    	
 
    	
Section 8.1(b)
    
	
Estimated   Interim Period Management Fees
    	
 
    	
Section 2.5(a)
    

 

11

 

	
Term
    	
 
    	
Section
    
	
 
    	
 
    	
 
    
	
FCPA
    	
 
    	
Section 4.4(b)
    
	
GECC
    	
 
    	
Preamble
    
	
GECC   Indemnified Parties
    	
 
    	
Section 7.2(b)
    
	
GECEII
    	
 
    	
Recitals
    
	
Indemnified   Party(ies)
    	
 
    	
Section 7.3(a)
    
	
Indemnifying   Party
    	
 
    	
Section 7.3(a)
    
	
Initial   Assets
    	
 
    	
Section 2.1(a)
    
	
Initial   Assumed Liabilities
    	
 
    	
Section 2.2
    
	
Initial   Closing Date
    	
 
    	
Section 2.3(a)
    
	
Initial   Purchase Price
    	
 
    	
Section 2.4(a)
    
	
Notices
    	
 
    	
Section 9.2
    
	
Optional   Redemption Notice Date
    	
 
    	
Section 2.5(g)(ii)
    
	
Parent
    	
 
    	
Preamble
    
	
Parent   Financial Statements
    	
 
    	
Section 4.6(a)
    
	
Parent   Indemnified Parties
    	
 
    	
Section 7.2(a)
    
	
Parent   Preferred Stock
    	
 
    	
Section 4.3
    
	
Parent   SEC Documents
    	
 
    	
Section 4.6(a)
    
	
Parties
    	
 
    	
Preamble
    
	
Purchase   Price
    	
 
    	
Section 2.4(b)
    
	
Purchaser
    	
 
    	
Preamble
    
	
Purchaser   Disclosure Schedule
    	
 
    	
Article 4
    
	
Post-Closing   Statement
    	
 
    	
Section 2.5(b)
    
	
Retained   Assets
    	
 
    	
Section 5.6(c)
    
	
Retained   Liabilities
    	
 
    	
Section 2.2
    
	
Rule 144
    	
 
    	
Section 3.16
    
	
Seller
    	
 
    	
Preamble
    
	
Seller   Consents
    	
 
    	
Section 5.6(a)
    
	
Seller   Disclosure Schedule
    	
 
    	
Article 3
    
	
Set-Off   Notice
    	
 
    	
Section 7.6(b)
    
	
Stock   Consideration
    	
 
    	
Section 2.4(a)(i)
    
	
Third   Party Claim
    	
 
    	
Section 7.3(a)
    
	
Threshold
    	
 
    	
Section 7.4(b)
    
	
Transaction   Shares
    	
 
    	
Section 3.16
    
	
Transferred   Assets
    	
 
    	
Section 2.1(a)
    
	
Warrant
    	
 
    	
Section 2.4(a)(iii)
    
	
Warrant   Shares
    	
 
    	
Section 3.16
    

 

Section 1.2                                   Construction.  Unless the context of this Agreement clearly requires otherwise: (i) references to the plural include the singular and vice versa; (ii) references to one gender include all genders; (iii) whenever the words “include,” “includes” or “including” are used in this Agreement they will be deemed to be followed by the phrase “without limitation;” (iv) the words “hereof,” “herein,” “hereby,” “hereunder” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement; (v) when a reference is made in this Agreement to a Section, Schedule, Exhibit or Annex, such 

 

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reference shall be to a Section, Schedule, Exhibit or Annex of this Agreement unless otherwise indicated; (vi) all references in this Agreement to “$” are intended to refer to U.S. dollars; (vii) unless otherwise specifically provided for herein, the term “or” shall not be deemed to be exclusive; and (viii) any reference to a Law shall include any amendment thereof or any successor thereto and any rules and regulations promulgated thereunder, as in effect from time to time.  The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

ARTICLE 2
 THE PURCHASE AND SALE OF THE ASSETS

 

Section 2.1                                   Sale of Assets.

 

(a)                                  Subject to the terms and conditions set forth in this Agreement, (i) at the Initial Closing, Seller will sell, transfer, convey, assign and deliver to the Purchaser, free and clear of any Lien, all of Seller’s right, title and interest in and to the Assets, but excluding any Retained Assets (the “Initial Assets”) and (ii) if there are any Retained Assets, at any Delayed Closing, Seller will sell, transfer, convey, assign and deliver to the Purchaser, free and clear of any Lien, all of Seller’s right, title and interest in and to any Retained Assets to which the applicable Seller Consent delivered pursuant to Section 5.6(c) relates (each, “Delayed Closing Assets” and together with the Initial Assets and all other Delayed Closing Assets, the “Transferred Assets”).

 

(b)                                 Seller shall cause the Books and Records of the CLO Issuers maintained by Seller or its Affiliates to be delivered to Purchaser at the time of the applicable Closing.  Seller acknowledges that Purchaser and the CLO Issuers require continued access to the Books and Records of the CLO Issuers maintained by the CLO Issuers’ transfer agents, custodians (pursuant to the applicable CLO Issuer’s custody contract or outsourcing agreements), legal counsel, independent auditors and auction agents after the applicable Closing, and Seller will use its reasonable best efforts to (i) facilitate an agreement between Purchaser and the custodians for the CLO Issuers, with respect to the Books and Records of the CLO Issuers maintained by such custodians that is reasonably satisfactory to Purchaser and (ii) facilitate access to the Books and Records of the CLO Issuers maintained by each of the transfer agents for the CLO Issuers to the extent not otherwise available to the CLO Issuers after the applicable Closing.  Seller may retain copies of any Books and Records of the CLO Issuers delivered to Purchaser, which shall be maintained by Seller in accordance with the restrictions set forth in Section 5.10.

 

Section 2.2                                   Assumed Liabilities and Retained Liabilities.   Subject to the terms and conditions set forth in this Agreement, (a) at the Initial Closing, Purchaser will assume, and thereafter will satisfy or perform when due, all Liabilities of Seller to be performed after such date relating to or arising out of the CLO Management Agreements and all Liabilities of Seller as Collateral Manager to be performed after such date relating to or arising out of the CLO Collateral Administration Agreements, which shall not include any Liabilities of Seller to be performed under, relating to or arising out of any Retained Assets (collectively, the “Initial Assumed Liabilities”), and (b) at any Delayed Closing, Purchaser will assume, and thereafter will satisfy or perform when due, all Liabilities of Seller to be performed after such date relating to or arising out of the CLO Management Agreement transferred at such Delayed Closing and all 

 

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Liabilities of Seller as Collateral Manager to be performed after such date relating to or arising out of the CLO Collateral Administration Agreement relating to such CLO Management Agreement (collectively, “Delayed Closing Assumed Liabilities” and together with the Initial Assumed Liabilities and all other Delayed Closing Assumed Liabilities, the “Assumed Liabilities”).  For the avoidance of doubt, (i) Purchaser will not assume any Liabilities of Seller other than the Assumed Liabilities, (ii) no Taxes will be included as Assumed Liabilities and (iii) Purchaser will not assume any Delayed Closing Assumed Liabilities until the applicable Delayed Closing (collectively, the “Retained Liabilities”). Seller will retain, satisfy and perform when due, and to the extent provided in Article 7, will hold the Purchaser Indemnified Parties harmless and indemnify the Purchaser Indemnified Parties from and against, the Retained Liabilities.

 

Section 2.3                                   The Closing(s)

 

(a)                                  The Initial Closing shall take place at 10:00 a.m. (Eastern Time) at the offices of Goodwin Procter LLP, 620 8th Avenue, New York, NY 10018, no later than the second (2nd) Business Day following the satisfaction or waiver of each of the conditions set forth in Article 6 applicable to the Initial Closing (other than those conditions that by their nature are to be satisfied by actions taken at the Closing, but subject to the satisfaction or waiver of such conditions), or at such other time and place as may be mutually agreed to by the Parties.  Such time and date are referred to in this Agreement as the “Initial Closing Date.”

 

(b)                                 If necessary, a Delayed Closing shall take place at 10:00 a.m. (Eastern Time) at the offices of Goodwin Procter LLP, 620 8th Avenue, New York, NY 10018, no later than the second (2nd) Business Day following the satisfaction or waiver of each of the conditions set forth in Article 6 applicable to such Delayed Closing with respect to the applicable Delayed Closing Assets (other than those conditions that by their nature are to be satisfied by actions taken at such Delayed Closing, but subject to the satisfaction or waiver of such conditions), or at such other time and place as may be mutually agreed to by the Parties.  Each such time and date are referred to in this Agreement as a “Delayed Closing Date.”

 

Section 2.4                                   Consideration for the Transferred Assets and Actions of GECC and its Affiliates.

 

(a)                                  At the Initial Closing, on the terms and subject to the conditions of this Agreement and in reliance upon the representations, warranties, covenants and agreements set forth herein, in consideration for the Initial Assets and the actions to be taken by GECC and its Affiliates described herein (subject to adjustment pursuant to Section 2.5 or Article 7, the “Initial Purchase Price”):

 

(i)                                     Parent shall issue and deliver to GECEII, at the direction of GECC, 1,000,000 shares of Parent Common Stock (the “Stock Consideration”), free and clear of all Liens (other than restrictions under applicable federal and state securities Laws, the Investment Agreement and the Registration Rights Agreement);

 

(ii)                                  Subject to Section 5.6(c), Parent shall pay, or cause to be paid, to Seller by wire transfer of immediately available funds an amount equal to the Initial Closing 

 

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Cash Consideration to an account designated by Seller at least two (2) Business Days prior to the Initial Closing;

 

(iii)                               Parent shall issue to GECEII, at the direction of GECC, a warrant to purchase up to 2,000,000 Warrant Shares, in substantially the form attached hereto as Exhibit E (the “Warrant”); and

 

(iv)                              Purchaser shall assume the Initial Assumed Liabilities.

 

(b)                                 At each Delayed Closing, on the terms and subject to the conditions of this Agreement and in reliance upon the representations, warranties, covenants and agreements set forth herein, in consideration for the applicable Delayed Closing Assets and the actions to be taken by GECC and its Affiliates described herein (subject to adjustment pursuant to Section 2.5 or Article 7, each a “Delayed Closing Purchase Price” and together with the Initial Closing Price and all other Delayed Closing Purchase Prices, the “Purchase Price”): (i) subject to Section 5.6(c), Parent shall pay, or cause to be paid, to Seller by wire transfer of immediately available funds an amount equal to the applicable Delayed Closing Cash Consideration to an account designated by Seller at least two (2) Business Days prior to such Delayed Closing; and (ii) Purchaser shall assume the applicable Delayed Closing Assumed Liabilities.

 

(c)                                  If at any time during period between the date of this Agreement and the Initial Closing Date, Parent effects a reclassification, recapitalization, stock split or subdivision or combination, or any stock dividend with a record date during such period, the Stock Consideration and the Warrant to be issued at the Initial Closing shall be equitably adjusted (without duplication) to reflect such change.

 

Section 2.5                                   Adjustments to Closing Cash Consideration.

 

(a)                                  Closing Estimate.  Not later than three (3) Business Days prior to the anticipated applicable Closing Date, Seller shall, in consultation with Parent, prepare and Deliver to Parent a statement in form and substance reasonably satisfactory to Parent setting forth Seller’s good-faith estimate of the Interim Period Management Fees in respect of the applicable Transferred Assets (the “Estimated Interim Period Management Fees”).

 

(b)                                 Post-Closing Statement.  Within sixty (60) days following the applicable Closing, Parent shall cause to be prepared and delivered to Seller a statement setting forth Parent’s determination of the applicable Interim Period Management Fees (the “Post-Closing Statement”).

 

(c)                                  Dispute.  Within thirty (30) days following receipt by Seller of the applicable Post-Closing Statement, Seller shall Deliver written notice to Parent of any dispute Seller has with respect to Parent’s calculation of the applicable Interim Period Management Fees (the “Dispute Notice”).  If Seller does not Deliver a Dispute Notice within such thirty (30) day period, Parent’s determination of such Interim Period Management Fees as set forth in such Post-Closing Statement will be final, conclusive and binding on the Parties.  In the event Seller does timely Deliver a Dispute Notice with respect to such Post-Closing Statement, Parent and Seller shall negotiate in good faith to resolve such dispute.  If Parent and Seller, notwithstanding such good faith effort, fail to resolve such dispute within fifteen (15) days after the date of the 

 

15

 

applicable Dispute Notice, then either Parent or Seller may provide written notice to the other that it elects to submit the disputed items to a mutually agreeable, nationally recognized accounting firm who shall be independent of Seller, Parent and their respective Affiliates, it being agreed that either PricewaterhouseCoopers LLP or Deloitte LLP shall be mutually agreeable so long as such firm remains independent of the Parties (the “Arbitration Firm”).  The Arbitration Firm will promptly review only those items and amounts (and may not assign a value greater than the greatest value for such item claimed by either Parent or Seller or smaller than the smallest value for such item claimed by either Parent or Seller) specifically set forth and objected to in such Dispute Notice and resolve the dispute with respect to each such specific item and amount.  The fees and expenses of the Arbitration Firm will be borne equally by Parent and Seller, or as the Arbitration Firm shall otherwise determine.  The decision of the Arbitration Firm with respect to such Interim Period Management Fees, and the allocation of costs discussed in the prior sentence, will be final, conclusive and binding on the Parties.  The Arbitration Firm’s decision shall be based solely on written submissions by Parent and Seller and their respective representatives and not by independent review.  The Arbitration Firm shall not hold any hearings, hear any oral testimony or otherwise seek or require any other evidence.  Subject to the foregoing, each of Parent and Seller agrees to use its commercially reasonable efforts to cooperate with the Arbitration Firm and to cause the Arbitration Firm to resolve any dispute no later than thirty (30) days after its engagement.

 

(d)                                 Access.  For purposes of complying with the terms set forth in this Section 2.5, each Party shall cooperate with and make available to the other Parties and their respective representatives all information, records and data, and shall permit access to its personnel during normal business hours upon reasonable notice, as may be reasonably required in connection with the preparation and analysis of the applicable Interim Period Management Fees and the resolution of any disputes thereunder; provided, that no Party shall be required to provide access to any information or documents that would, in the reasonable judgment of such Party, (i) breach any agreement with any third party, (ii) constitute a waiver of the attorney-client or other privilege held by such Party or (iii) otherwise violate any applicable Law.  The provision of any accountant’s work papers shall be subject to entering into customary access letters with such accountant.

 

(e)                                  Upward Adjustment.  If the applicable Interim Period Management Fees (as finally determined pursuant to Section 2.5(c)) are less than the applicable Estimated Interim Period Management Fees, then the Initial Closing Cash Consideration or Delayed Closing Cash Consideration, as applicable, will be adjusted upward by the amount of such shortfall and Parent shall pay or cause to be paid an amount equal to such shortfall to Seller in accordance with Section 2.5(h).

 

(f)                                    Downward Adjustment.  If the applicable Interim Period Management Fees (as finally determined pursuant to Section 2.5(c)) are greater than the applicable Estimated Interim Period Management Fees, then the Initial Closing Cash Consideration or Delayed Closing Cash Consideration, as applicable, will be adjusted downward by the amount of such excess and Seller shall pay or cause to be paid an amount equal to such excess to Parent in accordance with Section 2.5(h).

 

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(g)           Other Adjustments.

 

(i)                                     If Seller or any of its Affiliates receives Interim Period Management Fees attributable to Transferred Assets after the applicable Closing Date, then Seller shall remit such fees to Parent pursuant to Section 2.5(h) hereof.

 

(ii)                                  With respect to any Transferred Asset, if the applicable CLO Trustee provides and/or the applicable CLO Investors provide valid notice to Purchaser or its Affiliates pursuant to the applicable CLO Indenture (the date of receipt of such notice, the “Optional Redemption Notice Date”) of an Optional Redemption on or prior to the first anniversary of the date hereof, then, if such Optional Redemption is effected, Seller shall pay to Purchaser within five (5) Business Days following the effective date of such Optional Redemption the Applicable Rebate Amount determined as provided below; provided, however, that in no event shall the Applicable Rebate Amount, when combined with all prior payments of the Applicable Rebate Amount with respect to other Transferred Assets with respect to which there has been an Optional Redemption, exceed the product of (x) 60% and (y) ((A) the aggregate Cash Consideration paid to date as of the effective date of the applicable Optional Redemption pursuant to Section 2.4(a)(ii) and Section 2.4(b), minus (B) the aggregate Management Fees received to date by Purchaser with respect to all Transferred Assets):

 

	
Optional Redemption Notice Date
    	
 
    	
 
    	
Applicable Rebate Amount
    
	
On or after Closing Date with respect to such   Asset and prior to the 90th day thereafter
    	
 
    	
 
    	
Allocated Cash Value of such Asset minus   aggregate Management Fees received by Purchaser with respect to such Asset
    
	
On or after the 90th day after the Closing   Date with respect to such Asset and prior to the 180th day thereafter
    	
 
    	
 
    	
the product of (x) 0.5 and   (y) (Allocated Cash Value of such Asset minus aggregate   Management Fees received by Purchaser with respect to such Asset)
    
	
On or after the 180th day after the Closing   Date with respect to such Asset
    	
 
    	
 
    	
the product of (x) 0.25 and (y) (Allocated   Cash Value of such Asset minus aggregate Management Fees received by   Purchaser with respect to such Asset)
    

 

(h)                                 Payments.  The amount, if any, owed by Parent to Seller pursuant to Section 2.5(e), on the one hand, or by Seller to Parent pursuant to Section 2.5(f) or Section 2.5(g), on the other hand, shall be paid in full in cash by wire transfer of immediately available funds (unless otherwise agreed by the party receiving the payment) within five (5) Business Days after the date on which the applicable Interim Period Management Fees are finally determined pursuant to Section 2.5(c) (or the date on which such fees are received pursuant to Section 2.5(g)).

 

Section 2.6                                   Further Assurances; Further Conveyances and Assumptions.  From time to time after each Closing, Seller and Purchaser will execute, acknowledge and deliver all such further conveyances, notices, assumptions and releases and such other instruments, and shall take such further actions, as may be necessary to convey to Purchaser and its respective 

 

17

 

successors or assigns, all of the properties, rights, titles, interests, remedies, powers and privileges intended to be conveyed to Purchaser at such Closing under this Agreement and to effect the assumption of the Liabilities at such Closing intended to be assumed by Purchaser under this Agreement.

 

ARTICLE 3
 REPRESENTATIONS AND WARRANTIES OF 
 GECC AND SELLER

 

Except as set forth in the corresponding sections of the disclosure schedule (the “Seller Disclosure Schedule”) Delivered by Seller to Purchaser and Parent concurrently herewith, GECC and Seller represent and warrant as of the date hereof and as of the applicable Closing to Purchaser and Parent as follows; provided, that GECC and Seller shall not make any representation or warranty to Purchaser and Parent (a) set forth in Section 3.14 and Section 3.16 as of any Delayed Closing or (b) as of any Closing, with respect to any Asset not being transferred in such Closing:

 

Section 3.1                                   Organization.

 

(a)                                  Seller is duly formed, validly existing and in good standing under the Laws of Delaware, with all requisite power and authority required to conduct its business as presently conducted.  Seller has heretofore Delivered true and complete copies of the Constituent Documents of Seller and each such Constituent Document is in full force and effect and no amendments thereto are pending.

 

(b)                                 Seller is duly qualified or licensed to transact business and is in good standing in all jurisdictions where the ownership or operation of the Assets or the conduct of its business requires such qualification, except where the failure to be so licensed or in good standing would not have a Seller Material Adverse Effect.

 

Section 3.2                                   Authorization; Enforceability.  Each of Seller and GECC has all requisite corporate or limited liability company power and authority to execute and Deliver this Agreement and each applicable Ancillary Document that it is a party to and to perform its obligations hereunder and thereunder.  The execution and Delivery by each of Seller and GECC of this Agreement and each applicable Ancillary Document that it is a party to and the performance by such Person of its obligations hereunder and thereunder have been duly authorized by all requisite limited liability company or corporate action of such Person.  No other action on the part of Seller or GECC, or any equityholders of such Person, is necessary to authorize the execution, Delivery and performance by such Person of this Agreement and each applicable Ancillary Document that it is a party to and the consummation by such Person of the Transactions contemplated hereunder and thereunder.  This Agreement has been, and each applicable Ancillary Document that each of Seller and GECC will be a party to will be, duly executed and Delivered by such Person and, assuming that this Agreement and each applicable Ancillary Document has been duly authorized, executed and Delivered by each of the other parties hereto and thereto, constitutes or, when executed and Delivered by such Person, will constitute the legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, except to the extent that the enforceability thereof may be limited 

 

18

 

by: (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Laws from time to time in effect affecting generally the enforcement of creditors’ rights and remedies; and (ii) general principles of equity, including principles of reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in equity or at law).

 

Section 3.3                                   Compliance with Laws.

 

(a)                                  Seller is not in material violation of, and has not violated in any material respect, any applicable Law affecting or related to the Assets. No investigation or review by any Governmental Authority (i) with respect to the Assets is pending or, to the Knowledge of Seller, threatened or (ii) to the Knowledge of the Seller, is pending or threatened against any CLO Issuers, and no Governmental Authority has indicated to Seller an intention to conduct the same.

 

(b)                                 None of Seller or any of its Affiliates, managers, directors or officers acting for or on its behalf, or, to the Knowledge of Seller, any employees, agents or other Persons acting for or on behalf of Seller, or, to the Knowledge of Seller, any CLO Issuer or any of its Affiliates, managers, directors, officers, employees, agents or other Persons acting for or on behalf of any CLO Issuer, has, directly or indirectly, (i) used any funds for unlawful contributions, gifts, gratuities, entertainment or other unlawful expenses related to political activity, (ii) made any payment or offered, promised or authorized the payment of anything of value, regardless of form, whether in money, property or services, to or for the benefit of any United States or non-United States government official or employee, any official or employee of a public international organization, or any political party or candidate for political office for the purpose of influencing any act or decision of such individual or of any Governmental Authority or public international organization, or securing any improper advantage, in order to obtain or retain business or direct business to any Person in violation of applicable Law, (iii) made any other unlawful payment, regardless of form, whether in money, property or services, including any payment which constitutes criminal bribery under applicable Law or (iv) violated any applicable export control, money laundering or anti-terrorism Law or regulation, the FCPA, or any other applicable anti-bribery Law or regulation, of any applicable jurisdiction, or any applicable Law of similar effect, where any of the actions described in clauses (i) through (iv) above, would have a material adverse effect on the Assets.

 

Section 3.4                                   Non-Contravention; Consents and Approvals.  The execution and Delivery of this Agreement by each of Seller and GECC and the Ancillary Documents to which it is a party, the consummation by such Person of the Transactions, and the performance by such Person of its obligations hereunder and thereunder, except for such Consents required for the “assignment” (or deemed assignment) by Seller of each CLO Management Agreement and CLO Collateral Administration Agreement under the Investment Advisers Act, the CLO Management Agreements, and the CLO Collateral Administration Agreements, which shall be obtained prior to the applicable Closing: (i) do not violate any provision of the CLO Issuer Operative Documents or the Constituent Documents of Seller or GECC; and (ii)(A) do not conflict in any material respect with or violate any applicable Law of any Governmental Authority having jurisdiction over Seller or GECC or any part of the properties or assets of Seller (including the Assets), (B) do not require the Consent of any Person under, violate, result in the termination or acceleration of or of any right under, give rise to or modify any right or obligation under (whether or not in combination with any other event or circumstance), or conflict with, breach or 

 

19

 

constitute a default under (in each case with or without notice, the passage of time or both), any CLO Management Agreement or CLO Issuer Operative Document, in each case, in any material respect, (C) do not result in the creation or imposition of any material Lien on any part of the Assets, (D) do not violate any Order binding on Seller or any part of its properties or assets, and (E) do not otherwise require any material Governmental Approvals or any material Third Party Consents, in each case, other than the Seller Consents.

 

Section 3.5                                   Fee Statements.  Seller has Delivered complete and correct copies of (a) the historical transaction data with respect to the CLO Issuers and (b) each “Monthly Report” and “Note Valuation Report” (as such terms are defined in the applicable CLO Management Agreement) received by Seller from the applicable Trustee, in the case of (a) and (b), for the period during which Seller has acted as Collateral Manager under the CLO Management Agreements.

 

Section 3.6                                   Absence of Certain Changes and Events.  For the period during which Seller has acted as Collateral Manager under the CLO Management Agreements, there has not been any event, change, occurrence, facts or circumstance that, individually or in the aggregate with any other events, changes, occurrences or circumstances, has had or would have a Seller Material Adverse Effect.

 

Section 3.7                                   Regulatory Compliance.

 

(a)                                  Seller has not been subject to disqualification as an investment adviser or subject to disqualification to serve in any other capacity contemplated by the Investment Company Act for any investment company under Sections 9(a) and 9(b) of the Investment Company Act, in either case, where such disqualification would have a material adverse effect on the Assets, nor has Seller received an exemptive Order or other relief from the SEC with respect to any such disqualification.

 

(b)                                 Except, in each case, as would not have a material adverse effect on the Assets:

 

(i)                                     Seller has filed a Form ADV with the SEC in accordance with the Investment Advisers Act, which Form ADV complies with the requirements of the Investment Advisers Act.  Seller has heretofore Delivered true and correct copies of the Forms ADV, as amended or supplemented;

 

(ii)                                  Seller and each of its investment adviser representatives (as such term is defined in Rule 203A-3(a) under the Investment Advisers Act) has, and until the time of the applicable Closing will have, all Governmental Approvals required in order for them to lawfully conduct the Investment Management Services in respect of the Assets in the manner presently conducted, and all such Governmental Approvals are in full force and effect and are being complied with in all material respects;

 

(iii)                               None of Seller or, in connection with their service to Seller, any of its directors, officers or employees is registered or required to be registered as a broker or dealer, a commodity trading adviser, a commodity pool operator, a futures commission merchant, an introducing broker, a transfer agent, a registered representative or associated Person of an 

 

20

 

investment adviser, a counseling officer, an insurance agent or a sales person with the SEC, the CFTC, the NFA, the FINRA, the securities commission of any state or any other self-regulatory body, in order for Seller to lawfully conduct the Investment Management Services or, for Seller’s directors, officers or employees to provide services to Seller, in each case, in respect of the Assets in the manner presently conducted by the Seller; and

 

(iv)                              None of Seller or, in connection with their service to Seller, any of its directors, officers or employees, during the preceding ten (10) years, has been convicted of any crime, or is or has been the subject of a denial, suspension or revocation of registration with the CFTC or the NFA as a “commodity pool operator” or “commodity trading advisor” (as such term is defined in the Commodity Exchange Act.

 

(c)                                  None of Seller or, to the Knowledge of Seller, any CLO Issuer, is an investment company under the Investment Company Act.

 

(d)                                 Seller has adopted a written compliance program regarding such Seller Investment Management Entity’s satisfaction of the requirements of Rule 206(4)-7 under the Investment Advisers Act.  To the Knowledge of Seller, there have been no material violations or allegations of material violations of such compliance program that would have a material adverse effect on the Assets.

 

(e)                                  No exemptive Orders, “no-action” letters or similar exemptions or regulatory relief have been obtained, and no requests are pending therefor, by or with respect to Seller or any director, officer or employee of any Seller or, to the Knowledge of Seller, any CLO Issuer or any director, officer or employee of any CLO Issuer, in each case, in connection with the Assets.

 

Section 3.8                                   CLO Issuers.

 

(a)                                  To the Knowledge of Seller, each of the CLO Issuers has all requisite corporate or other similar organizational power and authority to own, lease and operate its properties and to carry on its business as now being conducted except where the failure to be so licensed or in good standing would not have a material adverse effect on such CLO Issuer.

 

(b)                                 To the Knowledge of Seller, the most recent trustee report under each CLO Issuer Operative Document accurately reflects each asset that qualifies as a “Defaulted Security” (as defined in the applicable CLO Issuer Operative Document) as of the date of such report.  To the Knowledge of Seller, (i) there are no errors (that have not been corrected and notified to the recipients of such reports) in any trustee reports transmitted to investors that have resulted in or would result in distributions to investors other than in compliance with the applicable CLO Issuer Operative Documents and (ii) since the date of the most recent trustee report under each CLO Issuer Operative Document, there have been no events or circumstances (in each case whether now cured or uncured) that would reasonably be likely to materially adversely affect compliance with or satisfaction of any collateral quality or coverage tests, including but not limited to overcollateralization tests, under such CLO Issuer Operative Document.  For the period during which Seller has acted as Collateral Manager under the CLO 

 

21

 

Management Agreements, to the Knowledge of Seller, there has existed no material unremedied calculation, pricing or similar error with respect to any CLO Issuer.

 

(c)                                  There are no Contracts pursuant to which Seller has undertaken or agreed to cap, waive, offset, reimburse or otherwise reduce any or all fees or charges payable to the Collateral Managers under the CLO Management Agreements or the CLO Issuer Operative Documents.  To the Knowledge of Seller, no CLO Issuer, applicable CLO Investor, applicable CLO Trustee or applicable CLO Collateral Administrator or any other Person has notified Seller that the CLO Issuer or any other Person (including after giving effect to the applicable Closing) has (or, with the giving of notice or the passage of time, or both, will have) the right to terminate Seller or reduce or defer the fees payable to the Collateral Manager under any CLO Management Agreement or any other CLO Issuer Operative Document. To the Knowledge of Seller, no CLO Issuer, applicable CLO Investor, applicable CLO Trustee, applicable CLO Collateral Administrator or any other Person has notified Seller that it will cause or is contemplating causing, either individually or collectively with others, a redemption of any securities issued by such CLO Issuer or termination of any CLO Management Agreement.

 

(d)                                 To the Knowledge of Seller, no CLO Issuer is: (i) an employee benefit plan, as defined in Section 3(3) of ERISA, that is subject to Title I of ERISA, or a plan that is subject to Section 4975 of the Code; (ii) a Person acting on behalf of such a plan; or (iii) an entity whose assets include the assets of such a plan, within the meaning of ERISA and applicable regulations.

 

(e)                                  Seller has Delivered true and correct copies, to the Knowledge of Seller, of all CLO Issuer Documents relating to the CLO Issuers.

 

(f)                                    Each Seller Consent obtained in accordance with Section 5.6 (including each of the Consents included in the determination of whether the condition contained in Section 6.1(g) has been satisfied) will, as of immediately prior to the applicable Closing, have been duly obtained in accordance with applicable Law and the requirements of the applicable CLO Management Agreement.

 

(g)                                 Seller has not provided notice of its resignation under any CLO Management Agreement.

 

(h)                                 Other than CLO Management Agreements and the CLO Issuer Operative Documents, there are no Contracts pursuant to which Seller receives fees or payments in connection with its services as Collateral Manager under any CLO Issuer Operative Document.  Seller has not entered into any Contract providing for the sharing of fees payable to the Collateral Manager under any CLO Management Agreement, or for the delegation of any obligations or assignment or pledge of any rights of the Collateral Manager under any CLO Management Agreement.

 

(i)                                     Except as set forth on Section 3.8(i) of the Seller Disclosure Schedule, to the Knowledge of Seller, no CLO Issuer has filed or is required to file U.S. federal, state, local or foreign Tax Returns or paid any Taxes or is otherwise subject to taxation in any jurisdiction except for the filing of Tax Returns and payment of Taxes in the Cayman Islands.  To the 

 

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Knowledge of Seller, each CLO Issuer (i) has materially complied with all required Tax information reporting requirements to which it is subject by timely filing such Tax information reporting returns and reports in a form that is accurate and complete in all material respects and (ii) has complied in all material respects with the operating guidelines set forth in the applicable CLO Management Agreement or the CLO Issuer Operative Documents to avoid engaging, or deemed to be engaging, in a trade or business within the United States for United States federal income Tax purposes or subject to United States federal, state or local income Tax on a net income basis.  Each CLO Issuer has timely filed all Tax Returns required to be filed by it and timely paid all Taxes due and payable by it, whether or not shown or required to be shown on any Tax Returns, and no such Taxes are delinquent, except to the extent any such taxes are being contested in good faith by appropriate proceedings described in Section 3.8(i) of the Seller Disclosure Schedule.

 

(j)                                     Seller has paid on behalf of the CLO Issuers, and has not received reimbursement from each CLO Issuer in respect of, an aggregate amount of expenses incurred by such CLO Issuer not to exceed (i) $10,000 for Navigator CDO 2003, Ltd. and Navigator CDO 2003, Corp., (ii) $10,000  for Navigator CDO 2004, Ltd. and Navigator CDO 2004, Corp., (iii) $10,000  for Navigator CDO 2005, Ltd., and (iv) $10,000 for Navigator CDO 2006, Ltd.

 

Section 3.9                                   Assets.  Seller owns good title to the Assets, free and clear of all Liens (other than Permitted Liens).

 

Section 3.10                            CLO Management Agreements and the CLO Issuer Operative Documents.

 

(a)                                  Seller has Delivered true, complete and correct copies of, the CLO Management Agreements and the CLO Issuer Operative Documents.

 

(b)                                 Each CLO Management Agreement and each CLO Collateral Administration Agreement is in full force and effect and is a valid and binding obligation of Seller, and to the Knowledge of Seller, no event or circumstance exists that would constitute a breach or violation of, or “cause” or default under, a CLO Management Agreement or CLO Issuer Operative Document, cause for termination by a CLO Issuer or any other party of a CLO Management Agreement or other CLO Issuer Operative Document.  Seller has performed all of the obligations required to be performed by it under each CLO Management Agreement and each other CLO Issuer Operative Document, and is not in breach or violation of, or default or event of default under any CLO Management Agreement or any other CLO Issuer Operative Document.  Seller has not received any written claim of default under or cancellation of or that cause for termination or removal exists under any CLO Management Agreement or any other CLO Issuer Operative Document.  To the Knowledge of Seller, no other party is in breach or violation of, or default under, any CLO Management Agreement or other CLO Issuer Operative Document.

 

Section 3.11                            Litigation.  There is no Legal Proceeding before any Governmental Authority (a) pending or, to the Knowledge of Seller, threatened against Seller relating to the CLO Management Agreements or (b) to the Knowledge of Seller, pending or threatened against any CLO Issuer.  Seller is not a party to any Order or other arrangement with any Government 

 

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Authority relating to the CLO Management Agreements.  To the Knowledge of Seller, no CLO Issuer is a party to any Order or other arrangement with any Government Authority.

 

Section 3.12                            Taxes.  All material Taxes due and payable with respect to the Assets, whether or not shown or required to be shown on any Tax Returns, have been paid or will be timely paid and no such Taxes are delinquent, except to the extent any such taxes are being contested in good faith by appropriate proceedings.  No deficiency for any material amount of Tax with respect to the Assets has been asserted or assessed by a Governmental Authority against Seller or any of its Affiliates and there is no audit or other proceeding threatened or currently in progress which could give rise to a material amount of Taxes with respect to the Assets.

 

Section 3.13                            Brokers.  No broker, finder, agent or similar intermediary is acting, or has acted, for, or on behalf of, GECC, Seller or, to the Knowledge of Seller, any CLO Issuer or is entitled to any broker’s, finder’s or similar fee or other commission in connection with this Agreement or the Transactions contemplated hereby.

 

Section 3.14                            Independent Investigation.  Each of GECC and Seller hereby acknowledges and affirms that it has conducted and completed its own investigation, analysis and evaluation of Parent and its Subsidiaries, that it has made all such reviews and inspections of the financial condition, business, results of operations, properties, assets and prospects of Parent and its Subsidiaries, as it has deemed necessary or appropriate, that it has had the opportunity to request all information it has deemed relevant to the foregoing from Parent, and that in making its decision to enter into this Agreement and to consummate the Transactions contemplated hereby it has relied solely on its own investigation, analysis and evaluation of Parent and its Subsidiaries and is not relying in any way on any representations and warranties, including any implied warranties, made by Parent or on behalf of Parent by any other Person other than the representations and warranties made expressly by Parent in this Agreement and the Ancillary Agreements.

 

Section 3.15                            Affiliate Transactions.  At no time during the period which Seller has acted as Collateral Manager under the CLO Management Agreements has any CLO Issuer engaged in any transactions with, or was a party to, any agreements, arrangements or understandings with Seller or any of its Affiliates.  Section 3.15 of the Seller Disclosure Schedule sets forth a true, correct and complete list of any securities of each CLO Issuer owned by Seller or any of its Affiliates.

 

Section 3.16                            Legends.  GECC understands that until such time as the resale of the Stock Consideration and/or shares of capital stock of Parent issuable upon the exercise of the Warrant (the “Warrant Shares” and, together with the Stock Consideration, the “Transaction Shares”) have been registered under the Securities Act as contemplated by the Stockholders Agreement and/or the Registration Rights Agreement, the stock certificates representing the Transaction Shares, except as set forth below, shall bear any legend as required by the “blue sky” Laws of any state and a restrictive legend in substantially the following form (and a stop-transfer Order may be placed against transfer of such stock certificates):

 

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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (i) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO CIFC CORP., THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (ii) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.

 

The legend set forth above shall be removed and Parent shall issue a certificate without such legend to the holder of any Transaction Shares upon which it is stamped, if, unless otherwise required by state securities Laws, (i) such Transaction Shares are registered for resale under the Securities Act, (ii) GECC provides Parent with reasonable assurance that such Transaction Shares can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities Act (or a successor rule thereto) (collectively, “Rule 144”), or (iii) in connection with a sale, assignment or other transfer, GECC provides Parent with an opinion of counsel, in a form reasonably satisfactory to Parent, to the effect that the legend is no longer necessary to protect GECC against a violation by it of the Securities Act upon any sale, assignment or transfer of such Transaction Shares made without registration under the applicable requirements of the Securities Act.

 

ARTICLE 4
 REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER

 

Except as set forth in the corresponding sections of the disclosure schedule (the “Purchaser Disclosure Schedule”) that is being delivered by Purchaser to Seller concurrently herewith and except as disclosed in, and reasonably apparent from, the Parent SEC Documents and publicly available prior to the date of this Agreement and only as and to the extent disclosed therein (other than disclosures in any schedules thereto or in any documents incorporated by reference therein and other than any forward looking disclosures set forth in any risk factor section, any disclosures in any Section relating to forward looking statements and any other disclosures included therein to the extent they are primarily predictive or forward-looking in nature), Parent and Purchaser represent and warrant to GECC and Seller as of the date hereof and as of the applicable Closing, as follows; provided, that Parent and Purchaser shall not make any representation or warranty to GECC or Seller (a) set forth in Section 4.3, Section 4.6, Section 4.7, Section 4.9, Section 4.10, Section 4.13 or Section 4.14 as of any Delayed Closing or (b) as of any Closing, with respect to any Asset not being transferred in such Closing:

 

Section 4.1                                   Organization.

 

(a)                                 Each of Parent and Purchaser is duly incorporated, validly existing and in good standing under the Laws of Delaware, with all requisite corporate power and authority required to conduct its business as presently conducted.

 

(b)                                 Parent and its Subsidiaries are duly qualified or licensed to transact business and are in good standing in all jurisdictions where the ownership or operation of their 

 

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respective assets and properties or the conduct of their respective businesses requires such qualification, except where the failure to be so licensed or in good standing would not have a Parent Material Adverse Effect.

 

Section 4.2                                   Authorization; Enforceability.  Each of Parent and Purchaser has all requisite corporate power and authority to execute and deliver this Agreement and each applicable Ancillary Document that it is a party to and to perform its obligations hereunder and thereunder.  The execution and delivery by each of Parent and Purchaser of this Agreement and each applicable Ancillary Document that it is a party to and the performance by each of Parent and Purchaser of its obligations hereunder and thereunder have been duly authorized by all requisite corporate action of Parent and Purchaser.  No other corporate action on the part of Parent or its stockholders and no action on the part of Purchaser or the sole member of Purchaser, is necessary to authorize the execution, delivery and performance by Parent and Purchaser of this Agreement and each applicable Ancillary Document that Parent and/or Purchaser is a party to and the consummation by Parent and Purchaser of the Transactions contemplated hereunder and thereunder.  This Agreement has been, and each applicable Ancillary Document that Parent or Purchaser will be a party to will be, duly executed and delivered by each of Parent or Purchaser, as applicable, and, assuming that this Agreement and each applicable Ancillary Document that Parent or Purchaser will be a party to has been duly authorized, executed and delivered by each of the other parties hereto and thereto, constitutes or, when executed and delivered by Parent or Purchaser, as applicable, will constitute the legal, valid and binding obligation of Parent or Purchaser, as applicable, enforceable against Parent or Purchaser, as applicable, in accordance with its terms, except to the extent that the enforceability thereof may be limited by: (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Laws from time to time in effect affecting generally the enforcement of creditors’ rights and remedies; and (ii) general principles of equity, including principles of reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in equity or at law).

 

Section 4.3                                   Capitalization.

 

(a)                                 Parent is authorized to issue 500,000,000 shares of Parent Common Stock and 100,000,000 shares of Preferred Stock, par value $0.001 per share, of Parent (the “Parent Preferred Stock”).  As of the date of this Agreement, (i) 19,781,195  shares of Parent Common Stock are issued and outstanding, (ii) Parent has reserved (A) 225,000 shares of Parent Common Stock for issuance pursuant to exercise of outstanding warrants to purchase Parent Common Stock, (B) 4,132,231 shares of Parent Common Stock for issuance pursuant to the conversion of the Parent Convertible Notes in accordance with the terms thereof and (C) 4,181,929 shares of Parent Common Stock for issuance pursuant to the Parent 2011 Stock Option and Incentive Plan and (D) 103,360 shares of Parent Common Stock for issuance pursuant to awards issued under the Parent 2004 Stock Incentive Plan, (iv) 0 shares of Parent Common Stock are held in treasury by Parent and (v) no other shares of Parent Common Stock, other voting securities of Parent or shares of Parent Preferred Stock have been issued, reserved or authorized for issuance or outstanding.  All issued and outstanding shares of Parent Common Stock have been duly authorized and are validly issued, fully paid, nonassessable and not subject to preemptive rights.

 

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(b)                                 Except as set forth in Section 4.3(b) of the Purchaser Disclosure Schedule, as of the date of this Agreement there are no:

 

(i)                                     Outstanding calls, rights, commitments, agreements, arrangements or undertakings of any kind, obligating Parent or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold Equity Interests in Parent or any such Subsidiary, or obligating Parent or such Subsidiary to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking;

 

(ii)                                  Outstanding or authorized stock appreciation, phantom stock, profit participation or similar rights with respect to the Equity Interests of Parent or any of its Subsidiaries;

 

(iii)                               Outstanding contractual obligations of Parent or any of its Subsidiaries (A) requiring repurchase, redemption or acquisition any of, (B) granting a right of first refusal, preemptive rights, or antidilutive rights with respect to, (C) restricting the transfer of, or (D) requiring registration for sale of, the Equity Interests of Parent;

 

(iv)                              Outstanding contractual obligations of Parent or any of its Subsidiaries to make any material investment (in the form of a loan, capital contribution or otherwise) in any Person; or

 

(v)                                 Voting trusts or similar agreements to which Parent or any of its Subsidiaries is a party with respect to the voting of the capital stock of Parent or any Subsidiary of Parent.

 

Section 4.4                                   Compliance with Laws.

 

(a)                                 Except as set forth in Section 4.4(a) of the Purchaser Disclosure Schedule and as may relate to the registration of Purchaser Investment Management Entities under the Investment Advisers Act, which are covered by Section 4.8, Parent and its Subsidiaries are not in material violation of, and have not violated in any material respect, any applicable Law affecting or related to Parent or any of its Subsidiaries or any of their business, operations, assets or employees.  Except as set forth in Section 4.4(a) of the Purchaser Disclosure Schedule, no investigation or review by any Governmental Authority with respect to Parent or its Subsidiaries is pending or, to the Knowledge of Parent, threatened and no Governmental Authority has indicated an intention to conduct the same.

 

(b)                                 None of Parent or any of its Subsidiaries, or any of their managers, directors or officers acting for or on their behalf, or, to the Knowledge of Parent, any employee or agent of Parent or any of its Subsidiaries or any Person acting for or on their behalf, has, directly or indirectly, (i) used any funds for unlawful contributions, gifts, gratuities, entertainment or other unlawful expenses related to political activity, (ii) made any payment or offered, promised or authorized the payment of anything of value, regardless of form, whether in money, property or services, to or for the benefit of any United States or non-United States government official or employee, any official or employee of a public international organization, or any political party or candidate for political office for the purpose of influencing any act or decision of such individual or of any Governmental Authority or public international 

 

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organization, or securing any improper advantage, in order to obtain or retain business or direct business to any Person in violation of applicable Law, (iii) made any other unlawful payment, regardless of form, whether in money, property or services, including any payment which constitutes criminal bribery under applicable Law or (iv) violated any applicable export control, money laundering or anti-terrorism Law or regulation, the United States Foreign Corrupt Practices Act of 1977 (“FCPA”),  or any other applicable anti-bribery Law or regulation, of any applicable jurisdiction, or any applicable Law of similar effect.

 

Section 4.5                                   Non-Contravention; Consents and Approvals.  The execution and delivery of this Agreement by each of Parent and Purchaser and the Ancillary Documents to which it is a party, the consummation by each of Parent and Purchaser of the Transactions, and the performance by each of Parent and Purchaser of its obligations hereunder and thereunder: (i) do not violate any provision of the Constituent Documents of Parent or any of its Subsidiaries; and (ii)(A) do not conflict with or violate in any material respect any applicable Law of any Governmental Authority having jurisdiction over Parent or any of its Subsidiaries or any part of the properties or assets of Parent or its Subsidiaries; (B) do not require the Consent of any Person under, violate, result in the termination or acceleration of or of any right under, give rise to or modify any right or obligation under (whether or not in combination with any other event or circumstance), or conflict with, breach or constitute a default under (in each case with or without notice, the passage of time or both), any Contract, including the Existing Stockholders Agreement (except to the extent waived pursuant to the Existing Stockholders Agreement Waiver); (C) do not require the Consent of any Person under, violate, result in the termination or acceleration of or of any right under, give rise to or modify any right or obligation under (whether or not in combination with any other event or circumstance), or conflict with, breach or constitute a default under (in each case with or without notice, the passage of time or both), any Contract to which, Parent or any of Parent’s Subsidiaries is a party or by which any of their respective properties or assets is bound; (D) do not result in the creation or imposition of any material Lien on any part of the properties or assets of Parent or any of Parent’s Subsidiaries; (E) do not violate any Order binding on Parent or any of its Subsidiaries or any part of its or their properties or assets; and (F) do not otherwise require any material Governmental Approvals or any material Third Party Consents; except, in each case, as would not have a Parent Material Adverse Effect.

 

Section 4.6                                   SEC Reports and Financial Statements.

 

(a)                                 Except as set forth in Section 4.6(a) of the Purchaser Disclosure Schedule, since December 31, 2010, Parent has timely filed or otherwise furnished (as applicable) all registration statements, prospectuses, forms, reports, definitive proxy statements, schedules, statements and documents required to be filed or furnished by it under the Securities Act or the Exchange Act, as the case may be (as have been supplemented, modified or amended since the time of filing so long as such supplement, modification or amendment has occurred prior to the date of this Agreement, collectively, the “Parent SEC Documents”).  As of their respective effective dates (in the case of Parent SEC Documents that are registration statements filed pursuant to the requirements of the Securities Act) and as of their respective SEC filing dates (in the case of all other Parent SEC Documents), or in each case, if amended prior to the date hereof, as of the date of the last such amendment, the Parent SEC Documents (i) did not (or with respect to Parent SEC Documents filed after the date hereof, will not) contain any untrue statement of a 

 

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material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading and (ii) complied in all material respects with the applicable requirements of the Exchange Act or the Securities Act, as the case may be, and the applicable rules and regulations of the SEC thereunder.  To the Knowledge of Parent, none of the Parent SEC Documents is the subject of ongoing SEC review or outstanding SEC comment. None of Parent’s Subsidiaries is currently required to make any filings with the SEC other than the Parent Advisers in their capacities as registered investment advisors.  All of the audited consolidated financial statements and unaudited consolidated interim financial statements of Parent and its Subsidiaries included in the Parent SEC Documents (collectively, the “Parent Financial Statements”) (A) have been or will be, as the case may be, prepared from the Books and Records of Parent and its Subsidiaries, (B) have been or will be, as the case may be, prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of interim financial statements, for normal and recurring year-end adjustments that are not material in amount or nature and as may be permitted by the SEC on Form 10-Q, Form 8-K or any successor or like form under the Exchange Act) and (C) fairly present in all material respects the consolidated financial position and the consolidated results of operations, cash flows and changes in stockholders’ equity of Parent and its Subsidiaries as of the dates and for the periods referred to therein.

 

(b)                                 Without limiting the generality of Section 4.6(a), except as set forth in Section 4.6(b) of the Purchaser Disclosure Schedule, (i) Deloitte & Touche LLP has not resigned or been dismissed as independent public accountant of Parent as a result of or in connection with any disagreement with Parent on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, (ii) no executive officer of Parent has failed in any respect to make, without qualification, the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act with respect to any form, report or schedule filed by Parent with the SEC since December 31, 2010 and (iii) no enforcement action has been initiated or, to the Knowledge of Parent, threatened against Parent by the SEC relating to disclosures contained in any Parent SEC Document.  Parent has delivered to Seller any management letters, or other formal communications, including with respect to proposed adjustments, from any of Parent’s auditors to Parent, any officer of Parent or its Board of Directors, in any case regarding (i) any significant deficiencies and material weaknesses in the design or operation of disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) or of internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which have adversely affected or are reasonably likely to adversely affect the ability of Parent to record, process, summarize and report financial data, (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in Parent’s internal control over financial reporting, or (iii) any other deficiencies in the accounting system of Parent.  All Books and Records and accounts of Parent and its Subsidiaries are accurate and complete in all material respects and are maintained in all material respects in accordance with all applicable Laws.

 

(c)                                  Except as set forth in Section 4.6(c) of the Purchaser Disclosure Schedule, Parent has not received any complaint, allegation, assertion or claim in writing regarding a material aspect of the accounting practices, procedures, methodologies or methods of Parent’s 

 

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internal accounting controls, including any such complaint, allegation, assertion or claim that Parent has engaged in questionable accounting or audit practices.

 

(d)                                 From the filing date of Parent’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 to the date hereof, there has not occurred any event, change, occurrence, facts or circumstance that, individually or in the aggregate with any other events, changes, occurrences or circumstances, has had or would have a Parent Material Adverse Effect.

 

Section 4.7                                   No Undisclosed Liabilities.  Except for (i) those Liabilities that are reflected on or reserved against Parent’s balance sheet as of March 31, 2012 (as included in Parent’s quarterly report on Form 10-Q for the quarter ended March 31, 2012), and (ii) those Liabilities incurred in the ordinary course of business consistent with past practice since March 31, 2012, and that are not in each case, individually or in the aggregate, material to Parent and its Subsidiaries, taken as a whole, Parent and its Subsidiaries do not have any Liabilities of any kind or nature whatsoever, whether known or unknown, accrued, contingent, absolute, determined, or determinable, or whether otherwise due or to become due, and, to the Knowledge of Parent, there is no existing condition, situation or set of circumstances that could reasonably be expected to result in such a Liability. Except as set forth in Section 4.7 of the Purchaser Disclosure Schedule, the Parent SEC Documents and the Parent Financial Statements, neither Parent nor any of its Subsidiaries is liable for any Indebtedness for borrowed money.

 

Section 4.8                                   Regulatory Compliance.

 

(a)                                 None of Parent or its Subsidiaries has (i) been convicted of any crime, engaged in any conduct or is otherwise subject to any disqualification that would be a basis for denial, suspension or revocation of registration of an investment adviser under Section 203(e) of the Investment Advisers Act or be required to be disclosed on Form ADV, (ii) been involved in any Legal Proceeding or is or was subject to any Order that is required to be disclosed on a Form ADV or (iii) been subject to disqualification to serve as a broker-dealer under Section 3(a)(39) or Section 15 of the Exchange Act.  There is no material Legal Proceeding pending or, to the Knowledge of Parent, threatened that would reasonably be expected to become the basis for any such disqualification, denial, suspension or revocation.  Parent has delivered a copy of any exemptive Order issued by the SEC or its staff prior to the date of this Agreement in respect of any such disqualification.  Purchaser has not been subject to disqualification as an investment adviser.  Parent has delivered a copy of any exemptive Order or other relief issued by the SEC in respect of any such disqualification in effect prior to the date hereof.  There is no Legal Proceeding pending or, to the Knowledge of Parent, threatened that would reasonably be expected to become the basis for any such disqualification.  To the Knowledge of Parent, none of Parent or its Subsidiaries is subject to any disqualification under any applicable Law precluding the operation of its business as currently conducted.

 

(b)                                 Purchaser is registered as an investment adviser under the Investment Advisers Act and has made notice filings for each jurisdiction listed in Section 4.8(b) of the Purchaser Disclosure Schedule, which jurisdictions are the only jurisdictions wherein such Person is required to make any such filing.

 

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(c)                                  Purchaser has filed a Form ADV with the SEC in accordance with the Investment Advisers Act, which Form ADV complies with the requirements of the Investment Advisers Act.  Purchaser has heretofore delivered true and correct copies of the Form ADV, as amended or supplemented.  Purchaser and each of its investment adviser representatives (as such term is defined in Rule 203A-3(a) under the Investment Advisers Act) has, and until the time of the applicable Closing will have, all Governmental Approvals required in order for it to lawfully conduct the Investment Management Services in respect of the CLO Issuers in the manner currently conducted, and all such Governmental Approvals are in full force and effect and are being complied with in all material respects.  None of Purchaser or, in connection with their service to Purchaser, any of its respective directors, officers or employees is registered or required to be registered as a broker or dealer, a commodity trading adviser, a commodity pool operator, a futures commission merchant, an introducing broker, a transfer agent, a registered representative or associated Person of an investment adviser, a counseling officer, an insurance agent or a sales person with the SEC, the CFTC, the NFA, the FINRA, the securities commission of any state or any other self-regulatory body and each such Person set forth on Section 4.8(c) of the Purchaser Disclosure Schedule is duly registered as required by Law.  None of Purchaser, or, in connection with their service to Purchaser, any of its directors, officers or employees, during the preceding ten (10) years, has been convicted of any crime, or is or has been the subject of a denial, suspension or revocation of registration with the CFTC or the NFA as a “commodity pool operator” or “commodity trading advisor” (as such term is defined in the Commodity Exchange Act).

 

(d)                                 Purchaser is not an investment company under the Investment Company Act.

 

(e)                                  Purchaser has adopted a written compliance program regarding its satisfaction of the requirements of Rule 206(4)-7 under the Investment Advisers Act.  To the Knowledge of Parent, there have been no material violations or allegations of material violations of such compliance program.

 

Section 4.9                                   Litigation.  Except as set forth in Section 4.9 of the Purchaser Disclosure Schedule, (a) there is no material Legal Proceeding pending nor, to the Knowledge of Parent, threatened against Parent or its Subsidiaries before any Governmental Authority, (b) none of Parent or its Subsidiaries is a party to or is subject to any Order or other arrangement with any Governmental Authority and none of Parent or its Subsidiaries has been notified by any Governmental Authority to the effect that such Governmental Authority is contemplating issuing or requesting any such Order or other arrangement, and (c) none of Parent or its Subsidiaries is in default under, or has failed to comply with, any material Order applicable to it.

 

Section 4.10                            Issuance of Parent Common Stock and Warrant.  The Parent Common Stock to be issued to GECEII as the Stock Consideration has been duly authorized by Parent and, when issued and delivered by Parent in the manner contemplated by this Agreement, will be validly issued, fully paid and non-assessable, free from all Liens other than those restraints under the Investment Agreement, the Second Amended and Restated Registration Rights Agreement and any applicable securities Laws.  At the Initial Closing, the Warrant Shares will be duly reserved for issuance and, when issued and delivered by Parent in the manner contemplated by the Warrant, will be validly issued, fully paid and non-assessable, free from and Liens other than 

 

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those restraints under the Investment Agreement, the Second Amended and Restated Registration Rights Agreement and applicable securities Laws.

 

Section 4.11                            Brokers.  Except for Berkshire Capital, (i) no broker, finder, agent or similar intermediary is acting, or has acted, for, or on behalf of, Parent or any of its Subsidiaries in connection with this Agreement or the Transactions contemplated hereby and (ii) no broker, finder, agent or similar intermediary is entitled to any broker’s, finder’s or similar fee or other commission in connection therewith based on any agreement, arrangement or understanding with Parent or any of its Subsidiaries or any action taken by Parent or any of its Subsidiaries.

 

Section 4.12                            Independent Investigation.  Each of Parent and Purchaser hereby acknowledges and affirms that it has conducted and completed its own investigation, analysis and evaluation of the Assets, that it has made all such reviews and inspections of the financial condition, business, results of operations, properties, assets and prospects of the Assets, as it has deemed necessary or appropriate, that it has had the opportunity to request all information it has deemed relevant to the foregoing from GECC and Seller, and that in making its decision to enter into this Agreement and to consummate the Transactions contemplated hereby it has relied solely on its own investigation, analysis and evaluation of the Assets and is not relying in any way on any representations and warranties, including any implied warranties, made by GECC or Seller, or on behalf of GECC or Seller, by any other Person other than the representations and warranties made expressly by GECC and Seller in this Agreement.

 

Section 4.13                            Registration Rights; Voting Rights.

 

(a)                                 Except as provided in the Amended and Restated Registration Rights Agreement of Parent in effect as of the date hereof, Parent has not granted or agreed to grant, and is not under any obligation to provide, any rights to register under the Securities Act any of its currently outstanding securities or any of its securities that may be issued subsequently.

 

(b)                                 Except as provided in the Existing Stockholders Agreement, to the Knowledge of Parent, no stockholder of Parent has entered into any agreement with respect to the voting of the Equity Interests of Parent.

 

Section 4.14                            Taxes.  With respect to Parent and Purchaser, all material Taxes due and payable, whether or not shown or required to be shown on any Tax Returns, have been paid or will be timely paid and no such Taxes are delinquent, except to the extent any such taxes are being contested in good faith by appropriate proceedings.  No deficiency for any material amount of Tax has been asserted or assessed by a Governmental Authority against Parent or any of its Affiliates and there is no audit or other proceeding threatened or currently in progress which could give rise to a material amount of Taxes.

 

ARTICLE 5
 COVENANTS AND AGREEMENTS

 

Section 5.1                                   Conduct of the Business.

 

(a)                                 From the date of this Agreement until the earliest to occur of (x) the date all of the Assets are Transferred Assets, (y) the date on which the Agreement is terminated in 

 

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accordance with its terms and (z) the End Date, except as otherwise expressly contemplated in this Agreement or the Ancillary Documents, without the prior written Consent of Parent (which Consent shall not be unreasonably withheld, conditioned or delayed), Seller shall (i) perform its obligations under the CLO Management Agreements and the CLO Collateral Administration Agreements in the ordinary course of business consistent with past practice and applicable Laws and (ii) use commercially reasonable efforts to maintain and preserve intact the Assets; provided, that following any Closing, this Section 5.1(a) shall only apply to any Retained Asset(s).

 

(b)                                 Without limiting Section 5.1(a), from the date of this Agreement until the earliest to occur of (x) the date all of the Assets are Transferred Assets, (y) the date on which the Agreement is terminated in accordance with its terms and (z) the End Date, except as otherwise expressly contemplated in this Agreement or the Ancillary Documents, without the prior written Consent of Purchaser, Seller shall not; provided, that following any Closing, this Section 5.1(b) shall only apply to any Retained Asset(s):

 

(i)                                     permit any Lien to be placed on any Asset;

 

(ii)                                  transfer, sell, lease, license, surrender, divert, cancel, abandon or allow to lapse or expire or otherwise dispose of any of the Assets;

 

(iii)                               waive, reduce or defer any fee payable under any CLO Management Agreement or CLO Collateral Administration Agreement;

 

(iv)                              consent to any amendment or supplement to any CLO Issuer Document;

 

(v)                                 cancel, terminate, amend or enter into, or assign or waive any material rights or claims under, any CLO Management Agreement;

 

(vi)                              merge or consolidate with or into another Person or enter into any joint venture or partnership agreement or similar Contract relating to the Assets;

 

(vii)                           settle or compromise or commit to settle or compromise any Legal Proceeding in any manner that is adverse to any Asset; or

 

(viii)                        authorize, agree or commit to do any of the foregoing.

 

(c)                                  From the date of this Agreement until the earliest to occur of (x) the date all of the Assets are Transferred Assets, (y) the date on which the Agreement is terminated in accordance with its terms and (z) the End Date, except as otherwise prohibited under applicable Law or expressly prohibited under the CLO Management Agreements, Seller agrees to keep Parent reasonably informed of any material developments and information relating to the CLO Issuers, including providing copies of any trustee reports and written communications with any CLO Investor, CLO Trustee, CLO Issuer or ratings agency, consulting with Parent with respect to material decisions relating to the CLO Management Agreements and/or the CLO Issuers, and providing commercially reasonable assistance to Parent in obtaining access to any website maintained by any CLO Trustee with respect to the CLO Issuer(s); provided, that following any

 

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Closing, this Section 5.1(c) shall only apply to information or access relating to any Retained Asset(s).

 

Section 5.2                                   Access to Information.  Between the date of this Agreement and the earliest to occur of (x) the date all of the Assets are Transferred Assets, (y) the date on which the Agreement is terminated in accordance with its terms and (z) the End Date, Seller shall make available to Parent and its representatives copies of all notices and reports under any CLO Management Agreement or CLO Issuer Document and afford to Parent and its professional advisors reasonable access during normal business hours and upon reasonable prior notice to all of the properties, personnel, Books and Records of the CLO Issuers that are in the possession of Seller and shall promptly Deliver or make available to Parent and its representatives information concerning the Assets as Parent or its representatives may from time to time reasonably request; provided, that Parent and its representatives shall not have any access to any document or information which is covered by attorney-client privilege; provided, that following any Closing, this Section 5.2 shall only apply to any Retained Asset(s) and the related CLO Issuers.  If any material is withheld pursuant to the preceding sentence, Seller shall inform Parent in reasonable detail as to the nature of what is being withheld.  All information disclosed pursuant to this Section 5.2 shall be subject to the Confidentiality Agreement.

 

Section 5.3                                   Publicity, GE Names and GE Marks.

 

(a)                                 Prior to the Initial Closing Date, except as may be required by Law (including the rules and regulations promulgated by the SEC or NASDAQ), the Parties agree that no public release or announcement by GECC, Seller, Purchaser or Parent concerning this Agreement or the Transactions shall be made without advance approval thereof by Seller and Purchaser, which approval shall not be unreasonably withheld, delayed or conditioned.  If any such public announcement is required by Law to be made by any Party, prior to making such announcement, such Party will Deliver a draft of such announcement to each other Party, and shall give each other Party reasonable opportunity to comment thereon and use good faith efforts to consider any reasonable and timely comments provided by any such other Party.

 

(b)                                 Parent, for itself and its Subsidiaries, acknowledges and agrees that none of Parent or any Subsidiary of Parent shall have any rights in the GE Name and GE Marks and none of Parent or any Subsidiary of Parent shall use or contest the ownership or validity of any rights of GECC or any of its Affiliates in or to any of the GE Name and GE Marks. To the extent that (i) Parent is required to refer to the GE Name and GE Marks in any registration statement, prospectus, form, report, definitive proxy statement, schedule, statement and document required to be filed or furnished by it under the Exchange Act, or (ii) any Subsidiary of Parent is required to refer to the GE Name and GE Marks in any filing with the SEC in its capacity as a registered investment adviser, in each case, Parent will deliver, or cause the applicable Subsidiary to deliver, as applicable, a draft of such document to GECC and shall give GECC reasonable opportunity to comment thereon and use good faith efforts to consider any reasonable and timely comments provided by GECC; provided, that Parent may include in any such filing information in substantially the same form as information previously filed for which (x) GECC or such applicable Subsidiary has been provided a reasonable opportunity to comment and (y) Parent has considered any reasonable and timely comments provided by GECC. Any other reference by Parent or any Subsidiary of Parent to the GE Name and GE Marks in any public document

 

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(including any document filed with or furnished to any Governmental Authority, or any marketing materials of Parent and/or its Subsidiaries) shall be subject to the prior written consent of GECC.

 

(c)                                  Following the Initial Closing, each of Parent and any of its Affiliates shall have the irrevocable right to use the name “Navigator” in connection with its business and there shall be no restrictions on such use pursuant to this Section 5.3 or otherwise.

 

Section 5.4                                   Notice of Events.  Between the date of this Agreement and the earlier of (x) the date all of the Assets are Transferred Assets, (y) the date on which the Agreement is terminated in accordance with its terms and (z) the End Date,  Seller shall give prompt notice to Purchaser and Purchaser shall give prompt notice to Seller, as applicable, of: (a) any fact, event or circumstance to the Knowledge of Seller or to the Knowledge of Parent, as applicable, that would cause, or reasonably be expected to cause, the failure of any conditions precedent to its obligations as specified in Article 6 to be satisfied so as to permit the consummation of (A) the Transactions prior to the End Date or (B) a Delayed Closing by the End Date, (b) any fact, event or circumstance that, (i) to the Knowledge of Seller would, individually or in the aggregate, have a Seller Material Adverse Effect, or to the knowledge of Parent would, individually or in the aggregate, have a Parent Material Adverse Effect (ii) to the Knowledge of Seller or to the Knowledge of Parent, as applicable, would cause, or reasonably be expected to cause or constitute, a breach in any material respect of the representations and warranties of the applicable Party herein, or (iii) would cause, or reasonably be expected to cause or constitute, a breach in any material respect of any covenant or other agreement to be performed or complied with by the applicable Party hereunder, (c) the receipt of any notice or other communication from any Person alleging that the Consent of such Person is or may be required in connection with the Transactions, and (d) any Legal Proceedings commenced or, to the Knowledge of Seller or to the Knowledge of Parent, as applicable, threatened, relating to or involving or otherwise affecting an applicable Party that, if pending on the date of this Agreement, would have been required to have been disclosed by the applicable Party hereunder; provided, however, that the delivery of any notice pursuant to this Section 5.4 shall not limit or otherwise affect the remedies available hereunder to any Party; provided, that after the Initial Closing, all Transferred Assets shall be disregarded for making any of the foregoing determinations pursuant to this Section 5.4.

 

Section 5.5                                   Commercially Reasonable Efforts; Filings and Authorizations.

 

(a)                                 Each of GECC, Seller, Purchaser and Parent shall use commercially reasonable efforts to take or cause to be taken all action and promptly to do or cause to be done all things necessary, proper or advisable to cause the conditions set forth in Article 6 to be satisfied and to consummate and make effective the Transactions contemplated hereby.

 

(b)                                 Each of GECC and Parent shall cooperate with each other and use commercially reasonable efforts to (i) as soon as practicable after the date hereof, (A) file such applications, notices, petitions, registrations and requests as may be required or advisable to be filed by it with any Governmental Authority in order to consummate the Transactions contemplated hereby, (B) use commercially reasonable efforts to obtain Governmental Approvals of all such Governmental Authorities referred to in the preceding clause (A), and (C) use commercially reasonable efforts to satisfy all conditions, undertakings and requirements

 

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as may be necessary or appropriate to obtain all such Governmental Approvals or as may be set forth therein, (ii) furnish the other Parties with copies of all documents (except documents or portions thereof for which confidential treatment has been requested or given), notices, correspondence and communications (A) prepared by or on behalf of such Party for submission to any Governmental Authority and (B) received by or on behalf of such Party from any Governmental Authority, in each case in connection with the Transactions contemplated hereby and (iii) use its commercially reasonable efforts to consult with and keep the other Parties hereto informed as to the status of such matters; provided, that neither GECC nor Seller shall agree orally or in writing to any concessions relating to the Assets or the Assumed Liabilities, or to any loss of rights relating to the Assets or to any expansion of the Assumed Liabilities (whether to have effect prior to or after the applicable Closing), in connection with obtaining any Governmental Approval, without first obtaining the prior written Consent of Purchaser.  To the extent that any application, notice, registration or request so filed by any Party contains any significant information relating to the other Parties or any of their Affiliates, prior to submitting such application, notice, registration or request to any Governmental Authority, such Party will permit the other Parties to review such information and will consider in good faith the suggestions of such other Parties with respect thereto.  Nothing in this Agreement shall be deemed to require Parent, Purchaser or any of their respective Affiliates to agree to, or proffer to, divest, license or hold separate any rights or other assets or any portion of any business of Parent, Purchaser or any of their respective Affiliates.

 

(c)                                  Each of GECC and Parent shall use its commercially reasonable efforts to cooperate with the other Parties in the preparation and filing of any applications, notices, registrations and responses to requests for additional information from Governmental Authorities in connection with the Transactions contemplated hereby, including providing such information as may be reasonably necessary for inclusion in such applications, notices, registrations and responses.

 

Section 5.6                                   Consents.

 

(a)                                 As promptly as practicable following the date hereof but in no event beginning later than fifteen (15) days after the date hereof, Seller shall commence taking the applicable steps to obtain Consents required under the CLO Management Agreements and the CLO Collateral Administration Agreements in order for Seller to assign the Assets to Purchaser (such Consents, in the percentages required under the CLO Management Agreements in the case of Consents other than the rating agency confirmations and the consent of any CLO Issuer, the “Seller Consents”), it being understood that Seller Consents could include negative consents to the extent not prohibited by applicable Law and the applicable CLO Management Agreement.  Parent shall cooperate with and assist Seller in connection with the foregoing.

 

(b)                                 In connection with obtaining the Seller Consents, at all times prior to the applicable Closing, Seller shall take reasonable steps to keep Purchaser informed of the status of obtaining such Seller Consents and, upon Purchaser’s request, furnish to Purchaser copies of any executed Seller Consents and any materials distributed to or received from the third parties whose Consents are being sought relating to the Seller Consent process. Purchaser shall be provided a reasonable opportunity to review and comment upon all Consent materials to be used by Seller prior to distribution.  Seller shall give favorable consideration to all of Purchaser’s

 

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reasonable comments to such materials that are timely delivered.  Seller shall promptly upon their receipt furnish to Purchaser copies of any and all substantive correspondence between Seller and the third parties whose Consents are being sought or representatives or counsel of such Person relating to the Consent solicitation provided for in this Section 5.6.

 

(c)                                  In the event that (i) one or more Seller Consents cannot be obtained prior to the Initial Closing Date, and if the result thereof is that the transfer of an Asset would constitute a breach or other contravention of any CLO Management Agreements, and (ii) the condition set forth in Section 6.1(g) is otherwise capable of being fulfilled, then, the Assets for which such Seller Consents have not been obtained (the “Retained Assets”) and any Delayed Closing Assumed Liabilities shall be held back from the Assets to be transferred and conveyed to Purchaser and Assumed Liabilities to be assumed by Purchaser at the Initial Closing unless and until a Delayed Closing (as defined below) occurs with respect to such Retained Assets and Delayed Closing Assumed Liabilities.  Any such Retained Assets shall be conveyed to Purchaser, and Purchaser shall deliver the applicable Delayed Closing Cash Consideration of such Retained Assets and assume the applicable Delayed Closing Assumed Liabilities pursuant to Section 2.3(b), at one or more delayed closings (each, a “Delayed Closing”) in accordance with Section 2.4(b) following the receipt of the Seller Consent relating to such Retained Assets and from and after such Delayed Closing, such Assets shall cease to be Retained Assets and shall become Transferred Assets for all purposes hereunder.  Any Delayed Closing shall occur on or prior to the End Date.

 

(d)                                 Neither Party shall be required to make any payments to obtain any Seller Consents, including any payments to any CLO Investor in connection with such CLO Investor providing its consent to the assignment of the applicable Assets.  In the event that a Seller Consent cannot be obtained, and as a result a Delayed Closing with respect thereto could not be effected prior to the End Date, then the affected Asset shall be eliminated from the definition of “Assets” for all purposes under this Agreement and no Cash Consideration shall be payable by Purchaser with respect thereto.

 

Section 5.7                                   Recommendations.  Seller shall recommend the Transactions to the trustees of the CLO Issuers and shall assist Parent and Purchaser in connection with obtaining the requisite approvals of such trustees to the Transactions.

 

Section 5.8                                   Listing.  Prior to the Initial Closing, Parent shall file with NASDAQ a Notification Form for Listing of Additional Shares with respect to the Transaction Shares to be issued in connection with the Initial Closing.  Parent shall pay all fees and expenses in connection with satisfying its obligations under this Section 5.8.

 

Section 5.9                                   Further Assurances.  From and after the applicable Closing, each Party shall cooperate with the others, and execute and deliver, or use commercially reasonable efforts to cause to be executed and delivered, all such other instruments, including instruments of conveyance, assignment and transfer, and take all such other actions as such Party may reasonably be requested to take by the other Parties from time to time, consistent with the terms of this Agreement, in order to effectuate the provisions and purposes of this Agreement and the consummation of the Transactions contemplated hereby.

 

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Section 5.10                            Confidentiality.  GECC and Seller will hold, and will cause their respective officers, directors, employees, stockholders, accountants, counsel, consultants, advisors, agents and other Affiliates to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of Law, all confidential documents and information concerning the Transactions or Transferred Assets, except to the extent that such information can be shown to have been (i) in the public domain through no fault of GECC or Seller or any of their respective Affiliates or (ii) lawfully acquired following the applicable Closing by such Person from a third party, without such source being in breach of an applicable confidentiality agreement; provided that GECC and Seller may disclose such information to their respective officers, directors, employees, accountants, counsel, consultants, advisors and agents in connection with the Transactions so long as such Persons are informed by GECC or Seller, as applicable, of the confidential nature of such information and are directed by GECC or Seller, as applicable, to treat such information confidentially in accordance with this Agreement.

 

Section 5.11                            Tax Cooperation; Transfer Taxes; Tax Treatment.

 

(a)                                 Seller and its Affiliates shall provide Parent such cooperation and information as Parent may reasonably request in connection with any Tax Return filing or Tax withholding and reporting requirements relating to the Transferred Assets following the applicable Closing.

 

(b)                                 Seller and Purchaser shall each be liable for fifty percent of all sales, use, transfer, stamp, recording, registration, documentary, filing, real property transfer and similar taxes, fees or charges (together with any interest, penalties or additions in respect thereof), if any, imposed by any Governmental Authority in respect of the Assets that become payable in connection with the transactions contemplated by this Agreement.

 

(c)                                  Purchaser and Seller agree to treat the Asset Sale as a taxable asset purchase.

 

Section 5.12                            Restricted Activities.  During the Referral Period, GECC shall cause BLG not to provide Covered Investment Advisory Services to any Prospective Client (as defined in the Referral Agreement), unless Parent declines the Referral (as defined in the Referral Agreement) with respect to such Prospective Client in accordance with the terms of the Referral Agreement. Notwithstanding the foregoing, and without implicitly agreeing that the following activities would be subject to the provisions in the preceding sentence, nothing in this Agreement shall preclude, prohibit, or restrict GECC or any of its Affiliates or Subsidiaries from engaging in any manner in any Existing Business Activities or Non-BLG Business Activities.

 

Section 5.13                            Non-Solicitation.  Without the prior written consent of Parent, during the Referral Period, GECC agrees that the employees directly associated with BLG (any such employee, a “BLG Employee”) shall not, directly, or indirectly solicit for employment or any similar arrangement or hire any officer or employee of Parent or Purchaser with whom such BLG Employee comes into contact as a result of dealings related to the transactions contemplated by this Agreement; provided, however, that this Section 5.13 shall not prohibit the solicitation or hiring of a person (a) whose employment with Parent or Purchaser, as applicable, has been terminated more than six (6) months prior to the date of solicitation or hiring of such

 

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person, or (b) who responds to general solicitations of employment through advertisements or other means not targeted specifically to employees of Parent or Purchaser.

 

Section 5.14                            Managed Accounts.  As promptly as practicable following the Initial Closing, and in any event, within six (6) months after the Initial Closing Date, Seller shall terminate its existing advisory services with respect to the Managed Accounts, after which neither Seller nor BLG shall, directly or indirectly, provide Investment Management Services to any Managed Account (whether or not for a fee) during the Referral Period.

 

Section 5.15                            Portfolio and Control Administration Systems and Activities.  For sixty (60) days following the last Closing, Seller shall, and shall cause any applicable Affiliates of Seller to, maintain and reconcile with Parent and its Affiliates the portfolio and control administration systems (including Wall Street Office) and portfolio and control administration activities used in connection with the provision by Seller of advisory and administrative services to the CLO Issuers in the ordinary course of business consistent with past practice prior to the Initial Closing.  Each Party shall be responsible for its and its Affiliates costs and expenses associated with this Section 5.15; provided, that Seller shall be responsible for any costs associated with maintaining Wall Street Office during such time period.

 

ARTICLE 6
 CONDITIONS TO EACH CLOSING

 

Section 6.1                                   Conditions to Obligation of Parent and Purchaser.  The obligations of each of Parent and Purchaser under this Agreement to consummate the Transactions on the applicable Closing Date shall be subject to the satisfaction, at or prior to such Closing Date, of the following conditions, any one or more of which may be waived by Parent, except the conditions set forth in Section 6.1(k) and Section 6.1(l) shall not be applicable to any Delayed Closing:

 

(a)                                 No Injunctions or Restraints; Illegality.  No Order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of Transactions shall be in effect.  No Law shall have been enacted, entered, promulgated or enforced by any Governmental Authority that prohibits or makes illegal consummation of the Transactions.

 

(b)                                 Governmental Approvals.  All Governmental Approvals necessary for the consummation of the Transactions shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired.

 

(c)                                  Representations and Warranties Accurate.  The representations and warranties of GECC and Seller set forth in Article 3 applicable to such Closing that are qualified as to materiality (including in the definition of Seller Material Adverse Effect) and Section 3.1 and Section 3.2 shall be true and correct, and the representations and warranties of GECC and Seller set forth in Article 3 applicable to such Closing that are not so qualified shall be true and correct in all material respects, in each case as of the date of this Agreement and as of such Closing Date as though made at such time, except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date.

 

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(d)                                 Performance.  GECC and Seller shall have performed and complied in all material respects with all covenants and other agreements required by this Agreement and the Ancillary Documents to which it is a party to be performed and complied with by it prior to or on such Closing Date.

 

(e)                                  No Seller Material Adverse Effect.  From the date of this Agreement to the Initial Closing Date, no Seller Material Adverse Effect shall have occurred.

 

(f)                                   CLO Issuers.  Neither Seller nor any of its Affiliates shall have received notice from any CLO Issuer, CLO Investor or other party to any CLO Issuer Operative Document relating to the applicable Assets that it will cause or is contemplating causing, either individually or collectively with others, a redemption of any securities issued by such CLO Issuer or termination of any such CLO Management Agreement, except in each case, as would not have a Seller Material Adverse Effect.

 

(g)                                  Consents.  (i) With respect to the Initial Closing, Seller shall have obtained, prior to the Initial Closing, Seller Consents with respect to Assets with an Allocated Cash Value that represents at least 66 2/3% of the Cash Amount or (ii) with respect to any Delayed Closing, Seller shall have obtained, prior to such Delayed Closing, the applicable Seller Consents.

 

(h)                                 FIRPTA Certificate.  Seller shall have provided to Parent a FIRPTA certificate which meets the requirements of Section 1445 of the Code and the Treasury Regulations thereunder and certifies that Seller is not a foreign Person for purposes of Section 1445 of the Code.

 

(i)                                     Certain Documents.  Parent shall have received a copy of the Assignment and Assumption Agreement relating to the Assets to be transferred to, and Assumed Liabilities to be assumed by, Purchaser at such Closing and, with respect to the Initial Closing, each other Ancillary Document, duly executed by GECC, Seller or the Affiliate of GECC party thereto.

 

(j)                                    Officer’s Certificate.  Parent shall have received a certificate executed by a duly authorized executive officer of Seller on behalf of Seller dated as of the applicable Closing Date, to the effect that the conditions set forth in Section 6.1(c), Section 6.1(d), Section 6.1(e), Section 6.1(f) and Section 6.1(g) have been satisfied as to Seller.

 

(k)                                 Secretary’s Certificate.  Parent shall have received true, correct and complete copies of (i) the Seller’s Constituent Documents and (ii) resolutions of the sole Director of Seller and sole member of Seller authorizing the execution, Delivery and performance of this Agreement and the consummation of the Transactions, certified as correct and complete as of the Initial Closing Date by the Secretary of Seller.

 

(l)                                     Commercial Council.  A commercial council shall have been formed pursuant to, and in accordance with, a Commercial Council Charter in substantially the form agreed to by Parent and Seller as of the date hereof and each of the Persons set forth in such Commercial Council Charter shall have been appointed to serve on such council.

 

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(m)                             Legal Opinion.  To the extent a legal opinion is delivered to any CLO Trustee in connection with obtaining the Seller Consent for the transfer of the applicable Asset at such Closing, Seller shall have Delivered to Parent a copy of such legal opinion.

 

Section 6.2                                   Conditions to Obligation of GECC and Seller.  The obligations of each of GECC and Seller under this Agreement to consummate the Transactions on the applicable Closing Date shall be subject to the satisfaction, at or prior to such Closing Date, of the following conditions, any one or more of which may be waived by GECC, except the conditions set forth in Section 6.2(h), Section 6.2(i), Section 6.2(j) and Section 6.2(k) (and the related certification in Section 6.2(g)) shall not be applicable to any Delayed Closing:

 

(a)                                 No Injunctions or Restraints; Illegality.  No Order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Transactions shall be in effect.  No Law shall have been enacted, entered, promulgated or enforced by any Governmental Authority that prohibits or makes illegal consummation of the Transactions.

 

(b)                                 Governmental Approvals.  All Governmental Approvals necessary for the consummation of the Transactions shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired.

 

(c)                                  Representations and Warranties Accurate.  The representations and warranties of Parent and Purchaser set forth in Article 4 applicable to such Closing that are qualified as to materiality (including in the definition of Parent Material Adverse Effect) and Section 4.1, Section 4.2, Section 4.4 and, only with respect to the Initial Closing, Section 4.10 shall be true and correct, and the representations and warranties of Parent and Purchaser set forth in Article 4 applicable to such Closing that are not so qualified shall be true and correct in all material respects, in each case as of the date of this Agreement and as of such Closing Date as though made at such time, except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date.

 

(d)                                 Performance.  Each of Parent and Purchaser shall have performed and complied in all material respects with all covenants and other agreements required by this Agreement and the Ancillary Documents to which it is a party to be performed and complied with by it prior to or on the applicable Closing Date.

 

(e)                                  Waivers.  The Dilution Waiver and the Existing Stockholders Agreement Waiver shall be in full force and effect.

 

(f)                                   Certain Documents.  GECC shall have received a copy of the Assignment and Assumption Agreement relating to the Assets to be transferred to, and Assumed Liabilities to be assumed by, Purchaser at such Closing and, with respect to the Initial Closing, each other Ancillary Documents, duly executed by Purchaser or the Affiliate of Purchaser party thereto.

 

(g)                                  Officer’s Certificate.  GECC shall have received a certificate executed by a duly authorized executive officer of Parent on behalf of Parent and Purchaser dated as of the applicable Closing Date, to the effect that the conditions set forth in Section 6.2(c), Section 6.2(d), Section 6.2(i) and Section 6.2(k) have been satisfied.

 

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(h)                                 Secretary’s Certificate.  GECC shall have received true, correct and complete copies of (i) each of Parent’s and Purchaser’s Constituent Documents and (ii) resolutions of the Board of Directors of Parent and of the sole member of Purchaser authorizing the execution, Delivery and performance of this Agreement and the consummation of the Transactions, certified as correct and complete as of the Initial Closing Date by the Secretary of Parent and the Secretary of Purchaser, respectively.

 

(i)                                     Listing of Shares.  Parent shall have received notification from the NASDAQ that the review process with respect to the Notification Form for Listing of Additional Shares with respect to the Transaction Shares to be issued upon the consummation of the Initial Closing has been completed.

 

(j)                                    State Securities Laws.  Parent shall have obtained all necessary permits and qualifications, if any, or secured an exemption therefrom, required by the state securities Laws prior to the issuance of the Stock Consideration and Warrant Shares, and such authorization, approval, permit or qualification shall be effective at the Initial Closing.

 

(k)                                 No Parent Material Adverse Effect.  From the date of this Agreement to the Initial Closing Date, no Parent Material Adverse Effect shall have occurred.

 

ARTICLE 7
 SURVIVAL; INDEMNIFICATION

 

Section 7.1                                   Survival of Representations and Warranties and Covenants.  All representations, warranties, covenants and obligations contained in this Agreement or in any certificate Delivered pursuant to this Agreement shall survive and continue in full force and effect following the Closings; provided, that any covenant that contemplates a shorter survival time in such covenant shall survive in full force and effect until the end of such shorter period; provided, further, that, the representations and warranties (other than the Fundamental Representations) shall only survive and continue in full force and effect until December 31, 2013; provided, that the representations and warranties (other than the Fundamental Representations) relating to any Delayed Closing Assets or Delayed Closing Liabilities shall survive and continue in full force and effect until the later of December 31, 2013 and 12 months following the applicable Delayed Closing.  Notwithstanding anything herein to the contrary, with respect to any claim for Losses for which an Indemnifying Party has delivered notice to the Indemnifying Party prior to the expiration of the applicable representation, warranty or covenant, such representation, warranty or covenant, as the case may be, shall survive as to such claim until the final resolution of such claim.

 

Section 7.2                                   Indemnification.

 

(a)                                 Subject to this Article 7, from and after the Initial Closing, each of Seller and GECC hereby agrees to jointly and severally indemnify and hold Parent, Purchaser, and their respective directors, officers, employees, Affiliates, stockholders, members, agents, attorneys, representatives, successors and assigns (collectively, the “Parent Indemnified Parties”) harmless from and against, and pay to the applicable Parent Indemnified Parties the amount of, any and all

 

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Losses suffered or incurred by any such Parent Indemnified Parties arising from, relating to or otherwise in connection with:

 

(i)                                     any breach of or inaccuracy in any representation or warranty of GECC or Seller contained in this Agreement or in any of the certificates furnished by GECC or Seller pursuant to this Agreement, without giving effect to any materiality threshold or qualifier contained therein (including in the definition of Seller Material Adverse Effect) when determining the amount of Losses (but, for the avoidance of doubt, such qualifiers shall be given full force and effect when determining whether any breach or inaccuracy has occurred or when otherwise determining whether a claim may be brought hereunder);

 

(ii)                                  any breach of or failure to perform any covenant or agreement of Seller or GECC contained in this Agreement required to be performed or complied with after the Initial Closing; and

 

(iii)                               any Retained Liability.

 

(b)                                 Subject to this Article 7, from and after the Initial Closing, Parent and Purchaser hereby agree to indemnify and hold GECC, Seller and their respective directors, officers, employees, Affiliates, stockholders, members, agents, attorneys, representatives, successors and assigns (collectively, the “GECC Indemnified Parties”) harmless from and against, and pay to the applicable GECC Indemnified Parties the amount of, any and all Losses suffered or incurred by any such GECC Indemnified Parties arising from, relating to or otherwise in connection with:

 

(i)                                     any breach of or inaccuracy in any representation or warranty of Parent or Purchaser contained in this Agreement or in any of the certificates furnished by Parent or Purchaser pursuant to this Agreement, without giving effect to any materiality threshold or qualifier contained therein (including in the definition of Seller Material Adverse Effect) when determining the amount of Losses (but, for the avoidance of doubt, such qualifiers shall be given full force and effect when determining whether any breach or inaccuracy has occurred or when otherwise determining whether a claim may be brought hereunder);

 

(ii)                                  any breach of or failure to perform any covenant or agreement of Parent or Purchaser contained in this Agreement required to be performed or complied with after the Initial Closing; and

 

(iii)                               any Assumed Liability.

 

(c)                                  The right to indemnification or any other remedy based on representations, warranties, covenants and agreements in this Agreement shall not be affected by any investigation conducted at any time, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement or any Closing Date, with respect to the accuracy or inaccuracy of, or compliance with, any such representation, warranty, covenant or agreement.  The waiver of any condition to any Closing under Article 6 based on the accuracy of any such representation or warranty, or on the performance of or compliance with any such covenant or agreements, shall not affect the right to indemnification based on such representations, warranties, covenants and agreements.

 

43

 

(d)                                 For Tax purposes, the parties agree to treat, to the extent permitted by Law, all payments made under any indemnity provisions contained in this Agreement as adjustments to the Purchase Price.

 

Section 7.3                                   Notice and Defense of Claims.

 

(a)                                  In order for a GECC Indemnified Party or Parent Indemnified Party (each, an “Indemnified Party” and collectively, the “Indemnified Parties”) to be entitled to seek any indemnification provided for under this Agreement, such Indemnified Party shall give notice (which shall describe in reasonable detail the basis of the claim for indemnification) to the indemnifying party pursuant to Section 7.2 (the “Indemnifying Party”) as promptly as practicable and in any event within twenty (20) days after receiving knowledge of the occurrence of the event giving rise to such Indemnified Party’s claim for indemnification; provided, that the failure of such Indemnified Party to give notice as provided in this Section 7.3 shall not relieve the Indemnifying Party of its obligations under Section 7.2, except to the extent that the Indemnifying Party shall have been actually and materially prejudiced as a result of such failure and the indemnification obligations are materially increased as a result of such failure.  In the event of any Legal Proceeding asserted by any Person who is not a party (or a successor to a party) to this Agreement (a “Third Party Claim”) which is or gives rise to an indemnification claim hereunder, the Indemnifying Party may elect within ten (10) Business Days following notice of a Third Party Claim to assume the defense of any such claim or any litigation resulting therefrom; provided, that counsel for the Indemnifying Party, who shall conduct and control the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld, conditioned or delayed), and the Indemnified Party shall be consulted regarding, and may participate in, such defense thereof and to employ counsel separate from the counsel employed by the Indemnifying Party; provided, the Indemnifying Party shall not be entitled to assume or maintain control of the defense of any Third Party Claim if (i) such Third Party Claim relates to or arises in connection with any criminal proceeding, indictment, allegation or investigation, (ii) such Third Party Claims seeks an injunction or equitable relief against any Indemnified Party or (iii the damages claimed in such Third Party Claim are greater than the Losses for which the Indemnifying Party is liable under this Article 7;  provided, further, that if the Indemnifying Party fails to defend or if, after commencing or undertaking any such defense, the Indemnifying Party fails to prosecute or withdraws from such defense, the Indemnified Party shall have the right to undertake the defense or settlement thereof, and the Indemnifying Party will reimburse the Indemnified Party promptly and periodically for the costs of defending against the Third Party Claim.  Should the Indemnifying Party elect to assume the defense of a Third Party Claim, the Indemnifying Party shall not be liable to the Indemnified Party for legal expenses subsequently incurred by the Indemnified Party in connection with the defense thereof.  If the Indemnifying Party chooses to defend any Third Party Claim, the other Parties shall cooperate in the defense or prosecution of such Third Party Claim.  Such cooperation shall include the retaining of and (upon the Indemnifying Party’s request) the providing to the Indemnifying Party of records and information which are reasonably relevant to such Third Party Claim, and making employees and other representatives and advisors available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.  Regardless of whether or not the Indemnifying Party shall have assumed the defense of a Third Party Claim (i) the Indemnified Party shall Deliver to the Indemnifying Party, within five (5) Business Days after

 

44

 

the Indemnified Party’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnified Party relating to the Third Party Claim and (ii) neither the Indemnifying Party nor the Indemnified Party shall admit any Liability with respect to, or settle, compromise or discharge, any Third Party Claim without the prior written Consent of the other party, which shall not be unreasonably withheld, conditioned or delayed.  The Indemnifying Party shall not enter into any settlement of, or Consent to the entry of any judgment in connection with, any Third Party Claim without the prior written Consent of the Indemnified Party (which Consent shall not be unreasonably withheld, conditioned or delayed) unless such settlement (x) includes an unconditional release of such Indemnified Party, in form and substance reasonably satisfactory to such Indemnified Party, from all Liability on claims that are the subject matter of such settlement (and does not impose any non-monetary obligations or restrictions on any Indemnified Party), and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Party.

 

(b)                                 The parties hereto agree that process may be served on the Indemnifying Party with respect to such Third Party Claim by service of process Delivered in the manner and to the address for such Indemnifying Party provided by Section 9.2.

 

Section 7.4                                   Determination of Loss Amount.

 

(a)                                  The amount of any Loss subject to indemnification under Section 7.2 shall be calculated net of any insurance proceeds (net of direct collection expenses) or any indemnity, contribution or other similar payment actually received by the Indemnified Party from any third party with respect thereto.

 

(b)                                 Notwithstanding anything herein to the contrary, neither Seller and GECC, nor Parent and Purchaser, shall have any obligation to indemnify, defend and/or hold the Parent Indemnified Parties or the GECC Indemnified Parties, respectively, pursuant to Section 7.2(a)(i) or Section 7.2(b)(i), respectively, unless and until the aggregate Loss actually incurred by such Indemnified Parties in connection with all such claims exceeds a threshold of $200,000 (the “Threshold”), in which case such Indemnifying Party, as the case may be, may then seek recovery of any claims in excess of the Threshold.

 

(c)                                  Notwithstanding anything herein to the contrary, (i) the aggregate amount of all Losses for which the Parent Indemnified Parties are entitled to indemnification pursuant to Section 7.2(a)(i) shall not exceed $2,000,000 (the “Cap”) and (ii) the aggregate amount of all Losses for which GECC Indemnified Parties are entitled to indemnification pursuant to Section 7.2(b)(i) shall not exceed the Cap.

 

(d)                                 No Indemnifying Party shall have any Liability pursuant to this Article 7 in excess of the amount of the Purchase Price (as adjusted pursuant to Section 2.5).

 

(e)                                  The limitations in Section 7.4(b) and (c) shall not apply to Fundamental Representations.

 

Section 7.5                                   Remedies Exclusive.  The Indemnified Parties understand and agree that, from and after each Closing, except with respect to claims of fraud, the indemnity provisions set forth in this Article 7 are the sole and exclusive remedies of the Indemnified Parties with respect

 

45

 

to any Losses that have been or may be suffered by the Indemnified Parties in connection with this Agreement, except (i) the determination of the Interim Period Management Fees shall be governed by Section 2.5 and (ii) nothing herein shall restrict the ability of Parties to seek specific performance or injunctive relief against any other Party.  For the avoidance of doubt, nothing in this Article 7 shall limit in any way the rights any Party may have under applicable Law with respect to claims of fraud against any other Party.

 

Section 7.6                                   Payments.

 

(a)                                  Payment of any indemnification obligation pursuant to Article 7 shall be effected by wire transfer of immediately available funds to an account(s) designated by the Indemnified Party, in each case within five (5) Business Days after the determination thereof (whether by mutual agreement of Parent and GECC or by final non-appealable Order of an arbitration panel or court of competent jurisdiction).

 

(b)                                 Notwithstanding any provision herein to the contrary, if Seller or GECC is obligated to indemnify any Parent Indemnified Party for any indemnification claim in accordance with this Article 7, the Parent Indemnified Parties may set-off the amount of Losses with respect to such claim against any amounts payable by Parent or its Subsidiaries to GECC, Seller or their respective Affiliates (or their respective successors or assigns) under this Agreement as the same becomes due.  If a Parent Indemnified Party intends to set-off any amount of such Losses, such Parent Indemnified Party will provide not less than ten (10) Business Days’ prior written notice to Seller of its intention to do so, together with a reasonably detailed explanation of the basis thereof (a “Set-Off Notice”).  If, within ten (10) Business Days of its receipt of a Set-Off Notice, GECC provides such Purchaser Indemnified Party with written notice of Seller’s dispute with such Purchaser Indemnified Party’s right to make such set-off, (i) such Parent Indemnified Party and GECC will meet in good faith to attempt to resolve their dispute and (ii) Parent may withhold the applicable set-off amount contemplated by the Set-Off Notice, and Parent shall deposit such amount in an interest bearing separate account, which does not include any other funds of Parent or any of its Subsidiaries, and Parent shall not access such set-off amount, until (and then only to the extent) such Parent Indemnified Party’s claim is finally determined in accordance with this Article 7 in such Parent Indemnified Party’s favor.

 

ARTICLE 8
 TERMINATION OF AGREEMENT

 

Section 8.1                                   Termination.  This Agreement may not be terminated prior to the Initial Closing, except as follows:

 

(a)                                  by written Consent of Parent and GECC;

 

(b)                                 at the election of Parent or GECC upon prior written notice, if any one or more of the conditions set forth in Article 6 (other than those that by their nature are to be satisfied at the Initial Closing) has not been fulfilled on or before December 31, 2012; provided, that such date shall be extended to March 31, 2013 if the Initial Closing occurs prior to December 31, 2012 (as applicable, the “End Date”); provided, that the right to terminate this Agreement pursuant to this Section 8.1(b) shall not be available to the Party seeking to terminate

 

46

 

this Agreement if any failure by such Party to perform or observe the covenants and agreements of such Party set forth in this Agreement shall have proximately caused the failure of the Initial Closing to occur on or before the End Date;

 

(c)                                  at the election of Parent or Seller upon prior written notice, if any court of competent jurisdiction or other Governmental Authority shall have issued a final nonappealable Order or taken any other final action permanently restraining, enjoining or otherwise prohibiting the consummation of the Transactions;

 

(d)                                 at the election of (x) Parent, upon prior written notice, if there has been any breach of any representation or warranty, or breach of any covenant or agreement, made by GECC or Seller contained in this Agreement or (y) GECC or Seller, upon prior written notice, if there has been any breach of any representation or warranty, or breach of any covenant or agreement, made by Parent or Purchaser contained in this Agreement, in each case which breach (i) would give rise to a failure of a condition set forth in Article 6 and (ii) has not been cured by the Party in breach prior to the earlier to occur of (A) ten (10) Business Days after such Party’s receipt of written notice of such breach and (B) the End Date; provided, however, that no Party that is then in material breach of this Agreement may terminate this Agreement pursuant to this Section 8.1(d).

 

Section 8.2                                   Survival After Termination.  If this Agreement is terminated in accordance with Section 8.1 hereof and the Transactions are not consummated, this Agreement shall become void and of no further force and effect and each Party shall pay its own Transaction Expenses, except that (i) the provisions set forth in Article 9 and this Section 8.2 shall survive the termination of this Agreement and (ii) nothing in this Agreement shall relieve any Party from Liability from the willful and material breach of or willful and material default under any representation, warranty or covenant made by such Party or any of its Affiliates under this Agreement.

 

ARTICLE 9
 MISCELLANEOUS

 

Section 9.1                                   Expenses.  Each Party hereto shall pay its own Transaction Expenses.

 

Section 9.2                                   Notices.  All notices, demands and other communications pertaining to this Agreement (“Notices”) shall be in writing and addressed as follows:

 

If to GECC or Seller:

 

Bank Loan Group

201 Merritt 7

Norwalk, CT 06856

Attention:  Mark Duncan; Alvin Lim
 E-mail:  Mark.Duncan@ge.com; Alvin.Lim@ge.com

 

with copies to:

 

Allen & Overy LLP

 

47

 

1221 Avenue of the Americas

New York, NY 10020

Attention:  Eric Shube
 E-mail:  eric.shube@allenovery.com

 

If to Parent or Purchaser:

 

CIFC Corp.

250 Park Avenue, 4th Floor

New York, NY 10177
 Attention:  Robert C. Milton III
 E-mail:  rmilton@cifc.com

 

with copies to:

 

Goodwin Procter LLP

53 State Street

Boston, MA 02109

Attention:  John Mutkoski; Amber Dolman
 E-mail:  jmutkoski@goodwinprocter.com; adolman@goodwinprocter.com

 

Notices shall be deemed given (a) on the first (1st) Business Day after being sent, prepaid, by nationally recognized overnight courier that issues a receipt or other confirmation of Delivery, (b) when sent, if sent by electronic mail before 5:00 p.m. on a Business Day at the location of receipt and otherwise the next following Business Day.  Any party may change the address to which Notices under this Agreement are to be sent to it by giving written notice of a change of address in the manner provided in this Agreement for giving Notice.

 

Section 9.3                                   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 any choice of law rules that would require the application of the Laws of any other jurisdiction.

 

Section 9.4                                   Consent to Jurisdiction.  Each Party to this Agreement, by its execution hereof, (a) hereby irrevocably consents and agrees that any action, suit or proceeding arising in connection with any disagreement, dispute, controversy or claim, in whole or in part, arising out of, related to, based upon or in connection with this Agreement or the subject matter hereof shall be brought only in the courts of the State Courts of the State of New York, New York County or the United States District Court located in the State of New York, New York County, (b) hereby waives to the extent not prohibited by applicable Law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such action brought in one of the above-named courts should be dismissed on grounds of forum non conveniens, should be transferred to any court other than one of the above-named courts, or should be stayed by reason of the pendency of some other proceeding in any other court other than one of the above-named courts, or that this Agreement or the subject matter hereof may not be enforced in or by such court and (c) hereby agrees not to commence any such action other than before one of the above-named courts nor to make any

 

48

 

motion or take any other action seeking or intending to cause the transfer or removal of any such action to any court other than one of the above-named courts whether on the grounds of forum non conveniens or otherwise. Each Party hereby (i) consents to service of process in any such action in any manner permitted by New York Law, (ii) agrees that service of process made in accordance with clause (i) or made by registered or certified mail, return receipt requested, at its address specified pursuant to Section 9.2, shall constitute good and valid service of process in any such action, and (iii) waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such action any claim that service of process made in accordance with clause (i) or (ii) does not constitute good and valid service of process.

 

Section 9.5                                   Specific Performance.  The Parties to this Agreement each acknowledge that each Party would not have an adequate remedy at law for money damages in the event that any of the covenants hereunder have not been performed in accordance with their terms, and therefore agree that each other Party hereto shall be entitled to specific enforcement of the terms hereof and any other equitable remedy to which such Party may be entitled (including the right to cause the consummation of the Transactions on the terms and subject to the conditions thereto set forth in this Agreement).  Each of the Parties hereby waives (i) any defenses in any action for specific performance, including the defense that a remedy at law would be adequate and (ii) any requirement under any Law to post a bond or other security as a prerequisite to obtaining equitable relief.  If any Party brings any action to enforce specifically the performance of the terms and provisions hereof by any other party, the End Date shall automatically be extended by (x) the amount of time during which such action is pending, plus twenty (20) Business Days or (y) such other time period established by the court presiding over such action.

 

Section 9.6                                   Waiver of Jury Trial; Waiver of Consequential Damages.  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 otherwise) in any way arising out of, related to or connected with this Agreement or the Transactions contemplated hereby.  Each Party hereto waives any claim against any other Party on any theory of liability, for special, indirect, consequential, punitive or incidental damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby or the Transactions.

 

Section 9.7                                   Binding Effect; Persons Benefiting; Assignment.  This Agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and permitted assigns.  Nothing in this Agreement is intended or shall be construed to confer upon any Person other than the Parties hereto and their respective successors and permitted assigns any right, remedy or claim under or by reason of this Agreement or any part hereof.  The representations and warranties in this Agreement are the product of negotiations among the Parties and are for the sole benefit of the Parties.  Any inaccuracies in such representations and warranties are subject to waiver by the Parties in accordance with Section 9.11 without notice or Liability to any other Person.  In some instances, the representations and warranties in this Agreement may represent an allocation among the Parties of risks associated with particular matters regardless of the Knowledge of any of the Parties.  Consequently, Persons other than the Parties may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.  Without the prior written Consent of each of the other Parties, this Agreement may

 

49

 

not be assigned by any of the Parties and any purported assignment made without such Consent shall be null and void.

 

Section 9.8                                   Counterparts.  This Agreement may be executed in counterparts (including by facsimile or other electronic transmission), each of which shall be deemed an original and each of which shall constitute one and the same instrument.

 

Section 9.9                                   Entire Agreement.  This Agreement, including the Schedules, Exhibits, Annexes, certificates and lists referred to herein, any documents executed by the Parties simultaneously herewith or pursuant thereto constitute the entire understanding and agreement of the Parties hereto with respect to the subject matter hereof (except for the Confidentiality Agreement, which shall remain in full force and effect until the earliest to occur of (x) the date all of the Assets are Transferred Assets, (y) the date on which the Agreement is terminated in accordance with its terms and (z) the End Date) and supersedes all other prior agreements and understandings, written or oral, between the Parties with respect to such subject matter.

 

Section 9.10                            Severability.  If any provision of this Agreement, or the application thereof to any Person or circumstance, is invalid or unenforceable in any jurisdiction, (a) a substitute and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable in such jurisdiction, the intent and purpose of their invalid or unenforceable provision; and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability of such provision affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

 

Section 9.11                            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.

 

Section 9.12                            Mutual Drafting; Interpretation.  Each Party hereto has participated in the drafting of this Agreement, which each such Party acknowledges is the result of extensive negotiations between the Parties.  If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision.

 

[Remainder of Page Left Blank]

 

50

 

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

 

	
 
    	
PARENT:
    
	
 
    	
 
    
	
 
    	
CIFC CORP.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Peter Gleysteen
    
	
 
    	
 
    	
Name:   Peter Gleysteen
    
	
 
    	
 
    	
Title:   Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
PURCHASER:
    
	
 
    	
 
    
	
 
    	
CIFC ASSET MANAGEMENT LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Peter Gleysteen
    
	
 
    	
 
    	
Name:   Peter Gleysteen
    
	
 
    	
 
    	
Title:   Chief Executive Officer
    

 

Signature Page to Asset Purchase Agreement

 

 

	
 
    	
SELLER:
    
	
 
    	
 
    
	
 
    	
GE CAPITAL DEBT ADVISORS LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Isabel Fernandez
    
	
 
    	
 
    	
Name:   Isabel Fernandez
    
	
 
    	
 
    	
Title:   Vice-President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
GENERAL   ELECTRIC CAPITAL CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Amanda van Heyst
    
	
 
    	
 
    	
Name:   Amanda van Heyst
    
	
 
    	
 
    	
Title:   President
    

 

Signature Page to Asset Purchase Agreement

 

 

Schedule 1.1

 

Allocated Cash Value

 

	
Assets   relating to:
    	
 
    	
Percentage of Cash Amount:
    	
 
    
	
Navigator CDO 2003, Ltd.
    	
 
    	
5
    	
%
    
	
Navigator CDO 2004, Ltd.
    	
 
    	
11
    	
%
    
	
Navigator CDO 2005, Ltd.
    	
 
    	
24
    	
%
    
	
Navigator CDO 2006, Ltd.
    	
 
    	
60
    	
%
    

 

 

EXHIBIT A to the Asset Purchase Agreement

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

This ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of [·], is by and between GE CAPITAL DEBT ADVISORS LLC, a limited liability company organized under the laws of the State of Delaware (“Assignor”), and CIFC Asset Management LLC, a limited liability company organized under the laws of the State of Delaware (“Assignee”).  Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in or by reference to the Purchase Agreement (as defined below).

 

WHEREAS, Assignor, Assignee, General Electric Capital Corporation, a corporation formed under the laws of Delaware and the direct parent company of Assignor, and CIFC Corp., a corporation formed under the laws of the State of Delaware and the direct parent company of Assignee, have entered into that certain asset purchase agreement dated as of July     , 2012 (the “Purchase Agreement”); and

 

WHEREAS, pursuant to the Purchase Agreement, Assignor has agreed to assign certain rights and agreements to Assignee, and Assignee has agree to assume certain obligations of Assignee, and this Agreement is contemplated by Sections 6.1(i) and 6.2(f) of the Purchase Agreement;

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

SECTION 1.                            Assignment and Assumption.

 

1.1                               Assignor hereby sells, transfers, conveys, assigns and delivers to the Assignee, free and clear of any Lien, all of Assignor’s right, title and interest in and to the Management Agreement, dated as of [·] (the “200[·] Management Agreement”), by and between Assignor and Navigator CDO 200[·] Ltd., a Cayman Islands exempted company (the “Issuer”), and any rights Assignor has as Collateral Manager under the other related CLO Issuer Operative Documents, but excluding the rights held by Assignor prior to the Closing under the 200[·] Management Agreement and the other related CLO Issuer Operative Documents to the extent such documents (a) provide Assignor or any of its Affiliates continuing indemnity and exculpation rights for occurrences prior to such Closing for which Assignor or any of its Affiliates remain liable after such Closing or (b) provide for payment to Assignor or any of its Affiliates for services rendered prior to such Closing under such documents.

 

1.2                               Assignee hereby assumes, and hereafter agrees to satisfy or perform when due, all Liabilities of Assignor to be performed after the date hereof relating to or arising out of the 200[·] Management Agreement and all Liabilities of Assignor as Collateral Manager to be performed after the date hereof relating to or arising out of the Collateral Administration Agreement, dated as of [·], by and among Issuer, Assignor and [Collateral Administrator], which shall not include any Liabilities of Assignor to be performed under, relating to or arising out of any Retained Assets (the “Assumed Liabilities”).  For the avoidance of doubt, pursuant to this Assignment and Assumption Agreement, (a) Assignee will not assume any Liabilities of Assignor other than the Assumed Liabilities, and (b) no Taxes will be included as Assumed Liabilities.

 

SECTION 2.                            Governing Law.  This Assignment and Assumption Agreement will be governed by and construed and enforced in accordance with the internal laws of the State of New York

 

 

without reference to any choice of law rules that would require the application of the Laws of any other jurisdiction.

 

SECTION 3.                            Construction with Purchase Agreement.  This Assignment and Assumption Agreement is delivered pursuant to and shall be subject to the provisions of Sections 9.2, 9.4, 9.5, 9.6, 9.10 and 9.12 of the Purchase Agreement, mutatis mutandis.

 

SECTION 4.                            Counterparts.  This Assignment and Assumption Agreement may be executed in counterparts (including by facsimile or other electronic transmission), each of which shall be deemed an original and each of which shall constitute one and the same instrument.

 

SECTION 5.                            Amendments.  This Assignment and Assumption Agreement may be not be amended, altered or modified except by a 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 Assignment and Assumption 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 Assignment and Assumption 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 Assignment and Assumption 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 Assignment and Assumption Agreement shall not be valid unless agreed to in writing by such party.

 

 [signature page follows]

 

2

 

IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Assumption Agreement to be duly executed by their authorized officers as of the date first above written.

 

	
 
    	
GE CAPITAL DEBT   ADVISORS LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CIFC ASSET   MANAGEMENT LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

Assignment and Assumption Agreement (Navigator CDO 200[·], Ltd.)

 

 

EXHIBIT B to the Asset Purchase Agreement

 

SECOND AMENDED AND RESTATED

 

REGISTRATION RIGHTS AGREEMENT

 

BY AND AMONG

 

CIFC CORP.

 

DFR HOLDINGS, LLC

 

CIFC PARENT HOLDINGS LLC

 

AND

 

GE CAPITAL EQUITY INVESTMENTS, INC.

 

Dated as of [                  ], 2012

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 1.
    	
Definitions
    	
4
    
	
 
    	
 
    	
 
    
	
Section 2.
    	
Demand Registration and Piggyback Rights on Demand   Registrations
    	
8
    
	
 
    	
 
    	
 
    
	
Section 3.
    	
Piggyback Rights on Company or Third Party Registrations
    	
11
    
	
 
    	
 
    	
 
    
	
Section 4.
    	
Registration Procedures
    	
13
    
	
 
    	
 
    	
 
    
	
Section 5.
    	
Registration Expenses
    	
17
    
	
 
    	
 
    	
 
    
	
Section 6.
    	
Indemnification
    	
18
    
	
 
    	
 
    	
 
    
	
Section 7.
    	
Facilitation of Sales Pursuant to Rule 144
    	
20
    
	
 
    	
 
    	
 
    
	
Section 8.
    	
Miscellaneous
    	
20
    

 

2

 

SECOND AMENDED AND RESTATED

REGISTRATION RIGHTS AGREEMENT

 

THIS SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of [                  ], 2012, by and among CIFC Corp., a Delaware corporation (the “Company”), DFR Holdings, LLC , a Delaware limited liability company (together with its successors and assigns, “DFR Holdings”), CIFC Parent Holdings LLC, a Delaware limited liability company (together with its successors and assigns, “CIFC Parent”), and GE Capital Equity Investments, Inc., a Delaware corporation (together with its successors and assigns, “GECEII” and, collectively with DFR Holdings and CIFC Parent, the “Investors”).

 

WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as of July     , 2012 (the “Asset Purchase Agreement”), among the Company, CIFC Asset Management LLC, an affiliate of the Company (“CIFCAM”), GE Capital Debt Advisors LLC (“GECDA”), and General Electric Capital Corporation, the Company issued to GECEII 1,000,000 shares (the “GECEII Shares”) of common stock of the Company, par value $0.001 per share (the “Common Stock”), and a warrant (the “Warrant”) to purchase up to 2,000,000 shares of Common Stock or (if exercised by the Initial Holder (as defined in the Warrant)) Preferred Stock (as defined in the Warrant) (the shares issuable upon the exercise of the Warrant, and any other securities issued in respect thereof or into which such shares or other securities shall be converted or exchanged in connection with stock splits, reverse stock splits, stock dividends or distributions, combinations or any other recapitalizations after the date of the Investment Agreement (as defined below), the “Warrant Shares”);

 

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

 

WHEREAS, as of the date hereof, CIFC Parent owns [9,090,909] shares of Common Stock (the “CIFC Shares”);

 

WHEREAS, the Company, DFR Holdings and CIFC Parent are parties to the Amended and Restated Registration Rights Agreement, dated as of April 13, 2011 (the “A&R Agreement”);

 

WHEREAS, DFR Holdings and CIFC Parent have established certain terms and conditions concerning the corporate governance of the Company, the CIFC Shares and the DFR Holdings Shares and related provisions concerning the relationship of DFR Holdings and CIFC Parent with, and their investments in, the Company, as provided in the Amended and Restated Stockholders Agreement, dated as of April 13, 2011 and as amended, supplemented or otherwise modified from time to time (the “Stockholders Agreement”);

 

WHEREAS, GECEII and the Company are establishing certain terms and conditions concerning the corporate governance of the Company, the GECEII Shares (as defined below),

 

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the Warrant Shares and related provisions concerning the relationship of GECEII with, and its investment in, the Company, as provided in the Investment Agreement, dated as of the date hereof (the “Investment Agreement”);

 

WHEREAS, the execution and delivery of this Agreement is a condition to the obligations of the Company, CIFCAM and GECDA to consummate the Transactions (as defined in the Asset Purchase Agreement); and

 

WHEREAS, the Company, DFR Holdings and CIFC Parent desire to amend and restate the A&R Agreement and establish in this Agreement certain terms and conditions concerning the registration rights with respect to the CIFC Shares, the DFR Holdings Shares, the Conversion Shares, the GECEII Shares and the Warrant Shares (to the extent exercised for shares of Common Stock or otherwise converted to shares of Common Stock) and related provisions concerning the relationship of the Investors with, and their investments in, the Company from and after the Closing (as defined in the Asset Purchase Agreement).

 

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:

 

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

 

“Acquisition Agreement” means the Acquisition and Investment Agreement, dated as of March 22, 2010, by and among the Company, Bounty Investments, LLC and Columbus Nova Credit Investment Management, LLC.

 

“Affiliate” means, with respect to any Person, any other Person, directly or indirectly through one or more intermediaries, controlling, controlled by or under common control with such Person.  The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting or other securities, by contract or otherwise.

 

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

 

“Business Day” means a day other than Saturday, Sunday or any other day on which banks located in New York, New York are authorized or obligated Law to close.

 

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

 

“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).

 

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“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 forty-fifth (45th) day following the written notice of demand therefor by the Demanding Holder and (y) the fifth (5th) 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 Holder 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 fifteenth (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 thirtieth (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.

 

“GECEII Shares” has the meaning set forth in the recitals hereto.

 

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

 

“Holder” or “Holders” means the record holder or holders, as the case may be, from time to time of Convertible Notes, the Warrant 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).

 

“Investor Shares” means the CIFC Shares, the DFR Holdings Shares, the GECEII Shares and any other shares of Common Stock held by CIFC Parent, DFR Holdings, GECEII or any other Investor.

 

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

 

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

 

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

 

“Merger Agreement” means the Agreement and Plan of Merger, dated as of December 21, 2010, as amended, by and among the Company, Bulls I Acquisition Corp., Bulls II Acquisition LLC, CIFC Parent and Commercial Industrial Finance Corp.

 

“Original Agreement” means the Registration Rights Agreement, dated as of June 9, 2010, by and between the Company and Bounty Investments, LLC.

 

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

 

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

 

“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 Investor Shares, (ii) the Conversion Shares issuable or issued upon the conversion of the Convertible Notes, (iii) the shares of Common Stock

 

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issuable or issued upon the exercise of the Warrant or the conversion of the Preferred Stock, (iv) 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), (ii), or (iii) above or this clause (iv); 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), (3) that shall have ceased to be outstanding, or (4) the shares of Preferred Stock issuable or issued upon the exercise of the Warrant. Notwithstanding the foregoing, Investor Shares held by GECEII or its Affiliates shall be deemed to be Registrable Securities (even if Freely Tradable) for purposes of Sections 2 and 3.

 

“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).

 

“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.

 

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

 

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

 

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

 

“Super Majority Interest” means the holders of two-thirds (66 2/3%) of the Registrable Securities.

 

“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.

 

Section 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 DFR Holdings, CIFC Parent or GECEII 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”); 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 and (B) if the Common Stock is then listed, the number of 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

 

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Registration Statement continuously effective from the Effectiveness Date until the earliest to occur of (x) 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 (y) thirty (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 (15) 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 (b), the Company may suspend the use or effectiveness of the Registration Statement, or delay the Filing Date, for up to thirty (30) consecutive days and up to ninety (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 (1) a Suspension Period shall not prevent the Holders from requesting any Demand Registration or electing to participate in any Piggyback Registration under Section 3, (2) 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 (3) a Suspension Period may not be in effect, and may not commence, at any time during the period from and after the date that the Convertible 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 ten (10) consecutive Trading Days after the date of such 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

 

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a request for acceleration with Rule 461 promulgated under the Securities Act, within five (5) 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 (5) 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 Convertible Note convertible into Conversion Shares 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 Convertible Notes would reasonably be expected to become, an affiliate (as defined under Rule 144) of the Company), in an amount equal to one percent (1.0%) per annum of the principal amount of such Convertible Note and, without duplication, (y) in respect of each Conversion Share issued upon conversion of the Convertible Notes and that is a Registrable Security, in an amount equal to one percent (1.0%) per annum of the quotient of one thousand dollars ($1,000) divided by the number of Conversion Shares issued upon conversion of such Convertible Notes; provided that (A) no Special Interest shall accrue or be payable in respect of the Investor Shares and (B) 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 that is fifteen (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 (12) thirty (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 DFR Holdings if the Company has effected a total of two (2) Demand Registrations at the request of DFR Holdings, (y) at the request of CIFC Parent if the Company has effected a total of two (2) Demand Registrations at the request of CIFC Parent, or (z) at the request of GECEII if the Company has effected one (1) Demand Registration at the request of GECEII, 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

 

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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 (1) of the Demand Registrations to which such Demanding Holder is entitled under this Section 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 for the resale of Registrable Securities on a delayed or continuous basis pursuant to Rule 415 or otherwise for a period longer than thirty (30) days.

 

Section 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 ten (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

 

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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 ten (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 ten (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 (2) 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 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,

 

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(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.

 

Section 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 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 (3) Trading Days prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one (1) 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

 

13

 

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 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 (1) 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

 

14

 

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 Merger Agreement, the Acquisition Agreement, the Asset Purchase Agreement, the Investment Agreement, the Warrant and the Convertible Note Agreement and/or the Convertible 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 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 Convertible 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

 

15

 

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 (i) the Demanding Holder provides written notice to the Company of its intention to distribute Registrable Securities by means of an underwritten offering, (ii) 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), (iii) 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 (iv) 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 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)                                 DFR Holdings hereby acknowledges the restrictions on the transfer of the DFR Holdings Shares, the Convertible Notes and the Conversion Shares as set forth in the

 

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Acquisition Agreement, the Stockholders Agreement and/or 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, the Stockholders Agreement, or the Convertible Note Agreement, as applicable.  CIFC Parent hereby acknowledges the restrictions on the transfer of the CIFC Shares as set forth in the Merger Agreement and the Stockholders 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 Merger Agreement or the Stockholders Agreement.  GECEII hereby acknowledges the restrictions on the transfer of the GECEII Shares, the Warrant and the Warrant Shares as set forth in the Asset Purchase Agreement, the Investment Agreement and/or the Warrant, 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 Asset Purchase Agreement, the Investment Agreement or the Warrant, as applicable.

 

Section 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 (1) 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, 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).

 

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Section 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.

 

(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

 

18

 

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 Section 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 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

 

19

 

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, Merger Agreement or Asset Purchase Agreement, as applicable.

 

Section 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.

 

Section 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.

 

(b)                                 Specific Performance.  The Company and each Holder acknowledge that each party would not have an adequate remedy at law for money damages in the event that any

 

20

 

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

 

(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.

 

(i)                                     This Agreement may not be amended, altered or modified and no provision of this Agreement may be waived or amended except by written instrument executed by a Super Majority Interest and the Company; provided that (A) 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, and (B) prior to any withdrawal by GECEII in accordance with clause (ii) below, the prior written consent of GECEII shall be required with respect to any amendment, alteration or modification of this Agreement that would, directly or indirectly, (x) reduce the number of Demand Registrations to which GECEII is entitled under this Agreement, or (y) prevent GECEII from participating in a Piggyback Registration.

 

(ii)                                  In the event of any amendment to this Agreement not consented to by GECEII, GECEII shall be entitled to withdraw from this Agreement (it being understood that the foregoing withdrawal right shall not permit any amendment that would otherwise require the prior written consent of GECEII pursuant to clause (i)(B) above).  No such withdrawal shall affect

 

21

 

GECEII’s or the Company’s obligations with respect to liabilities incurred prior to withdrawal.

 

(iii)                               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.

 

(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 (a) on the first (1st) Business Day after being sent, prepaid, by nationally recognized overnight courier that issues a receipt or other confirmation of delivery, (b) when sent, if sent by electronic mail before 5:00 p.m. on a Business Day at the location of receipt and otherwise the next following Business Day.  Any party may change the address to which Notices under this Agreement are to be sent to it by giving written notice of a change of address in the manner provided in this Agreement for giving Notice.  The address for such notices and communications shall be as follows:

 

	
If   to the Company:
    	
 
    	
CIFC   Corp.

250   Park Avenue, 4th Floor

New   York, NY 10177

Attention:   Robert C. Milton III

Email:   rmilton@cifc.com
    
	
 
    	
 
    	
 
    
	
With   a copy to:
    	
 
    	
Goodwin   Procter LLP

 

53   State Street

Boston,   MA 02109

Attention:   John Mutkoski, Esq.; Amber Dolman, Esq.

E-mail: jmutkoski@goodwinprocter.com;

adolman@goodwinprocter.com
    
	
 
    	
 
    	
 
    
	
If   to DFR Holdings:
    	
 
    	
DFR   Holdings, LLC

c/o   Columbus Nova

900   Third Avenue, 19th Floor

New   York, NY 10022

Attention:   Paul Lipari

Email:   plipari@columbusnova.com
    

 

22

 

	
With   a copy to:
    	
 
    	
Latham &   Watkins LLP

885   Third Avenue

New   York, NY 10022

Attention:   James C. Gorton, Esq.

E-mail   Address: james.gorton@lw.com
    
	
 
    	
 
    	
 
    
	
If   to CIFC Parent:
    	
 
    	
CIFC   Parent Holdings LLC

c/o   Charlesbank Capital Partners, LLC

200   Clarendon Street, 54th Floor

Boston,   MA 02116

Attention:   Tim R. Palmer

E-mail: tpalmer@charlesbank.com
    
	
 
    	
 
    	
 
    
	
With   a copy to:
    	
 
    	
Goodwin   Procter LLP

135   Commonwealth Drive

Menlo   Park, CA 94025

Attention: Kevin M. Dennis, Esq.

E-mail: kdennis@goodwinprocter.com
    
	
 
    	
 
    	
 
    
	
If   to GECEII:
    	
 
    	
GE   Capital Equity Investments, Inc.

201   Merritt 7

Norwalk,   CT 06856

Attention:   CIFC Account Manager

E-mail:   equity.portfolio@ge.com
    
	
 
    	
 
    	
 
    
	
With   a copy to:
    	
 
    	
Allen &   Overy LLP

1221   Avenue of the Americas

New   York, NY 10020

Attention: Eric S. Shube, Esq.

E-mail: eric.shube@allenovery.com
    
	
 
    	
 
    	
 
    
	
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 (i) in the case of DFR Holdings, the Acquisition Agreement, the Stockholders Agreement or the Convertible Note Agreement, (ii) in the case of CIFC Parent, the Merger Agreement or the Stockholders Agreement and (iii) in the case of GECEII, the Asset Purchase Agreement, the Investment Agreement or the Warrant.  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).

 

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

 

(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)                                     Consent to Jurisdiction.  Each party to this Agreement, by its execution hereof, (a) hereby irrevocably consents and agrees that any action, suit or proceeding arising in connection with any disagreement, dispute, controversy or claim, in whole or in part, arising out of, related to, based upon or in connection with this Agreement or the subject matter hereof shall be brought only in the courts of the State Courts of the State of New York, New York County or the United States District Court located in the State of New York, New York County, (b) hereby waives to the extent not prohibited by applicable Law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such action brought in one of the above-named courts should be dismissed on grounds of forum non conveniens, should be transferred to any court other than one of the above-named courts, or should be stayed by reason of the pendency of some other proceeding in any other court other than one of the above-named courts, or that this Agreement or the subject matter hereof may not be enforced in or by such court and (c) hereby agrees not to commence any such action other than before one of the above-named courts nor to make any motion or take any other action seeking or intending to cause the transfer or removal of any such action to any court other than one of the above-named courts whether on the grounds of forum non conveniens or otherwise. Each party hereby (i) consents to service of process in any such action in any manner permitted by New York law, (ii) agrees that service of process made in accordance with clause (i) or made by registered or certified mail, return receipt requested, at its address specified pursuant to Section 8(f), shall constitute good and valid service of process in any such action, and (iii) waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such action any claim that service of process made in accordance with clause (i) or (ii) does not constitute good and valid service of process.

 

(k)                                  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.

 

(l)                                     Entire Agreement.  This Agreement, including any Schedules, Exhibits, Annexes, certificates and lists referred to herein, any documents executed by the parties simultaneously herewith or pursuant thereto constitute the entire understanding and agreement of the parties hereto with respect to the subject matter hereof and supersedes all other prior 

 

24

 

agreements and understandings, written or oral, between the parties with respect to such subject matter (including without limitation, the A&R Agreement and Original Agreement).  Each of the Company, CIFC Parent and DFR Holdings hereby agrees, approves and consents, by its signature hereto, that the A&R Agreement be, and hereby is, amended and restated in its entirety to read as set forth herein.

 

(m)                               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.

 

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

 

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

 

[THIS SPACE LEFT BLANK INTENTIONALLY]

 

25

 

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

 

 

	
 
    	
COMPANY:
    
	
 
    	
 
    	
 
    
	
 
    	
CIFC   CORP.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
INVESTORS:
    
	
 
    	
 
    	
 
    
	
 
    	
DFR   HOLDINGS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CIFC PARENT HOLDINGS LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
GE   CAPITAL EQUITY INVESTMENTS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

Signature Page to Second Amended and Restated 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 

 

i

 

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, 

 

A-ii

 

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.

 

A-iii

 

EXHIBIT A

 

FORM OF

 

SELLING SECURITYHOLDER QUESTIONNAIRE

 

Reference is made to that certain Second Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”), dated as of [                  ], 2012, by and among CIFC Corp., (the “Company”), DFR Holdings, LLC (“DFR Holdings”), CIFC Parent Holdings LLC (“CIFC Parent”) and GE Capital Equity Investments, Inc. (“GECEII”).  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.

 

A-1

 

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:

 

	
 
    	
 
    	
 
    

 

A-2

 

(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                            o

 

No                                o

 

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                            o

 

No                                o

 

(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                            o

 

No                                o

 

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)?

 

A-3

 

Yes                            o

 

No                                o

 

	
 
    	
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                            o

 

No                                o

 

	
 
    	
Explain:
    
	
 
    	
 
    
	
 
    	
 
    

 

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

 

Yes                            o

 

No                                o

 

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.

 

A-4

 

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.

 

A-5

 

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:

 

CIFC Corp.
 250 Park Avenue, 4th Floor
 New York, NY 10177
 Attention:  Robert C. Milton III
 Email: rmilton@cifc.com

 

A-6

 

EXHIBIT C to the Asset Purchase Agreement

 

INVESTMENT AGREEMENT

 

BY AND BETWEEN

 

CIFC CORP.

 

AND

 

GE CAPITAL EQUITY INVESTMENTS, INC. 

Dated as of [                ], 2012

 

 

TABLE OF CONTENTS

 

	
ARTICLE I GENERAL
    	
1
    
	
Section 1.1
    	
Effective Date
    	
1
    
	
Section 1.2
    	
Definitions
    	
2
    
	
Section 1.3
    	
Construction
    	
7
    
	
Section 1.4
    	
Disclaimer of “Group” Status
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE II REPRESENTATIONS   AND WARRANTIES
    	
7
    
	
Section 2.1
    	
Representations and Warranties of the Company
    	
7
    
	
Section 2.2
    	
Representations and Warranties of the Investor
    	
8
    
	
 
    	
 
    	
 
    
	
ARTICLE III COVENANTS
    	
9
    
	
Section 3.1
    	
Reserved Matters
    	
9
    
	
Section 3.2
    	
Notices and Access to Information; Cooperation
    	
9
    
	
Section 3.3
    	
Board of Directors
    	
10
    
	
Section 3.4
    	
Confidentiality
    	
12
    
	
Section 3.5
    	
Purchase of Voting Shares
    	
12
    
	
 
    	
 
    	
 
    
	
ARTICLE IV PREEMPTIVE RIGHTS   AND TRANSFER PROVISIONS
    	
12
    
	
Section 4.1
    	
Preemptive Rights
    	
12
    
	
Section 4.2
    	
Voting Rights
    	
13
    
	
Section 4.3
    	
Tag-Along Rights
    	
13
    
	
Section 4.4
    	
Additional Provisions Related to Tag Transfers
    	
15
    
	
Section 4.5
    	
Transfer of Investor Shares
    	
16
    
	
 
    	
 
    	
 
    
	
ARTICLE V MISCELLANEOUS
    	
16
    
	
Section 5.1
    	
Termination of Agreement
    	
16
    
	
Section 5.2
    	
Dispute Resolution
    	
17
    
	
Section 5.3
    	
Expenses
    	
17
    
	
Section 5.4
    	
Notices
    	
17
    
	
Section 5.5
    	
Governing Law
    	
18
    
	
Section 5.6
    	
Submission to Jurisdiction
    	
18
    
	
Section 5.7
    	
Specific Performance
    	
18
    
	
Section 5.8
    	
Waiver of Jury Trial
    	
19
    
	
Section 5.9
    	
Binding Effect; Persons Benefiting; Assignment
    	
19
    
	
Section 5.10
    	
Counterparts
    	
19
    
	
Section 5.11
    	
Entire Agreement
    	
19
    
	
Section 5.12
    	
Severability
    	
19
    
	
Section 5.13
    	
Amendments and Waivers
    	
19
    
	
Section 5.14
    	
Delays or Omissions
    	
19
    
	
Section 5.15
    	
Mutual Drafting; Interpretation
    	
19
    

 

 

INVESTMENT AGREEMENT

 

THIS INVESTMENT AGREEMENT, dated as of [                    ], 2012 (this “Agreement”), is by and between CIFC Corp., a Delaware corporation (the “Company”), and GE Capital Equity Investments, Inc., a Delaware corporation (the “Investor,” and together with the Company, the “Parties,” and each, a “Party”).

 

WHEREAS, the Investor and GE Capital Debt Advisors LLC, a Delaware limited liability company (“GECDA”), are each wholly-owned indirect subsidiaries of General Electric Capital Corporation, a Delaware corporation (“GECC”);

 

WHEREAS, the Company, GECDA and GECC entered into that certain Asset Purchase Agreement dated as of July     , 2012 (as the same may hereafter be amended, modified, supplemented or restated from time to time, the “Purchase Agreement”), which provides for, among other things, the transfer to the Investor of certain shares of common stock of the Company, par value $0.001 per share (the “Common Stock”), and the Investor Warrant (as defined below) in consideration for (a) GECDA’s assignment to the Company (or an Affiliate (as defined below) of the Company) of its rights and obligations under the collateral management agreements relating to the collateralized loan obligations referred to as Navigator CDO 2003, Ltd., Navigator CDO 2004, Ltd., Navigator CDO 2005, Ltd. and Navigator CDO 2006, Ltd., and (b) actions to be taken by GECC and its Affiliates (as defined below) as described in the Purchase Agreement;

 

WHEREAS, immediately following the consummation of the transactions contemplated by the Purchase Agreement (the “Closing”), the Investor shall own (a) 1,000,000 shares of Common Stock, representing approximately [4.94]% of the issued and outstanding shares of Common Stock as of the date hereof, and (b) a warrant (the “Investor Warrant”) to purchase up to 2,000,000 shares of Common Stock or (if exercised by the Initial Holder (as defined in the Investor Warrant)) Preferred Stock that will be mandatorily exchanged for Common Stock in the case of certain transfers (the shares issuable upon the exercise of the Investor Warrant, and any other securities issued in respect thereof or into which such shares or other securities shall be converted or exchanged in connection with stock splits, reverse stock splits, stock dividends or distributions, combinations or any other recapitalizations after the date of this Agreement, the “Warrant Shares”), which Investor Warrant shall be exercisable at any time in whole or in part prior to the Expiration Date (as defined in the Investor Warrant);

 

WHEREAS, the Investor has the registration rights with respect to the Investor Shares (as defined below) and the Warrant Shares that are Common Stock as provided in the Second Amended and Restated Registration Rights Agreement by and among the Company, the Investor, DFR Holdings (as defined below), and CIFC Parent (as defined below), of even date herewith (the “Registration Rights Agreement”);

 

WHEREAS, the execution and delivery of this Agreement is a condition to the obligations of the Company and GECC (and their respective Affiliates, as applicable) to consummate the transactions contemplated by the Purchase Agreement; and

 

WHEREAS, the Company and the Investor desire to establish certain terms and conditions concerning the relationship of the Investor with, and its investments in, the Company from and after the Closing.

 

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor agree as follows:

 

ARTICLE I
 GENERAL

 

Section 1.1            Effective Date.  This Agreement shall be delivered at, and shall be effective as of, the Closing.

 

1

 

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

 

“Action” means any judicial, legislative, administrative or arbitral actions, suits, investigations, audits, claims or other proceedings by or before a Governmental Authority.

 

“Affiliate” means, with respect to any Person, any other Person, directly or indirectly through one or more intermediaries, controlling, controlled by or under common control with such Person; provided, that for purposes of this Agreement, (a) the Company and its Subsidiaries, on the one hand, shall not be deemed to be Affiliates of any Investor Holder, on the other hand, and (b) the Major Stockholders, on the one hand, shall not be deemed to be Affiliates of any Investor Holder or the Company, on the other hand.  The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting or other securities, by contract or otherwise.

 

“Agreement” has the meaning assigned to such term in the preamble.

 

“Beneficial Ownership” by a Person of any securities includes ownership by any Person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares: (i) voting power which includes the power to vote, or to direct the voting of, such security; and/or (ii) investment power which includes the power to dispose, or to direct the disposition, of such security; and shall otherwise be interpreted in accordance with the term “beneficial ownership” as defined in Rule 13d-3 adopted by the SEC under the Exchange Act.  For purposes of this Agreement, (x) a Person shall be deemed to Beneficially Own any securities Beneficially Owned by its Affiliates or any “group” (as contemplated by Exchange Act Rule 13d-5(b)) of which such Person or any such Affiliate is or becomes a member; provided, that, notwithstanding the foregoing, no Stockholder shall be deemed to Beneficially Own the Shares Beneficially Owned by any other Stockholder solely due to the fact that the Stockholders constitute a group (as contemplated by Exchange Act Rule 13d-5(b)), (y) for the avoidance of doubt, the Investor shall not be deemed to Beneficially Own the Warrant Shares prior to any exercise of the Investor Warrant by the Initial Holder, and (z) for the avoidance of doubt, the DFR Holdings Holders shall be deemed to Beneficially Own the Conversion Shares and neither the Investor nor the CIFC Holders shall be deemed to Beneficially Own the Conversion Shares.  The term “Beneficially Own” shall have a correlative meaning.

 

“BHC Act” means the Bank Holding Company Act of 1956, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time, and any other applicable Federal banking law, regulation or policy.

 

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

 

“Business Day” means a day other than Saturday, Sunday or any other day on which banks located in New York, New York are authorized or obligated by Law to close.

 

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

 

“CIFC Parent” means CIFC Parent Holdings LLC, a Delaware limited liability company.

 

“Closing” has the meaning assigned in the recitals.

 

“Common Stock” has the meaning assigned to such term in the recitals.

 

“Company” has the meaning assigned to such term in the preamble.

 

“Confidential Information” has the meaning assigned to such term in Section 3.4(a).

 

“Confidentiality Affiliates” has the meaning assigned to such term in Section 3.4(a).

 

2

 

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

 

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

 

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

 

“Conversion Shares” means the shares of Common Stock into which the Convertible Notes can be converted.

 

“Convertible Notes” means those certain Senior Subordinated Convertible Notes Beneficially Owned by DFR Holdings in the original principal amount of $25,000,000 and due December 9, 2017, which are convertible into shares of Common Stock.

 

“Corporate Governance Guidelines” means the Corporate Governance Guidelines of the Company, as amended and restated as of September 15, 2011.

 

“Cure Period” has the meaning assigned to such term in Section 3.3(a)(v).

 

“Cure Purchase” has the meaning assigned to such term in Section 3.3(a)(v).

 

“Denominator Shares” has the meaning assigned to such term in Section 3.3(a)(iv).

 

“DFR Holdings” means DFR Holdings LLC, a Delaware limited liability company.

 

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

 

“DGCL” means the Delaware General Corporation Law, as amended.

 

“Dilution Notice” has the meaning assigned to such term in Section 3.3(a)(v).

 

“Director” means any member of the Board.

 

“Dispute” has the meaning assigned to such term in Section 5.2(a).

 

“Equity Interest” means any type of equity ownership in an entity, including partnership interests in a general partnership or limited partnership, membership interests in a limited liability company, stock or similar security (and any option, warrant, right or security, including debt securities, convertible, exchangeable or exercisable thereto or therefor) in a corporation or the comparable instruments for any other entity or any other interest entitling the holder thereof to participate in the profits of such entity, the proceeds or the disposition of such entity or any portion thereof or to vote for the governing body of such entity.

 

“Escalation Notice” has the meaning assigned to such term in Section 5.2(b).

 

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“Excess Shares” has the meaning assigned to such term in Section 4.2.

 

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

 

“GECC” has the meaning assigned to such term in the recitals.

 

“GECDA” has the meaning assigned to such term in the recitals.

 

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

 

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

 

“Independent Director” has the meaning assigned to such term in the Major Stockholders Agreement.

 

“Investor” has the meaning assigned to such term in the preamble.

 

“Investor Holder” means the Investor and any Person that is both a Stockholder and either GECC or an Affiliate of GECC.

 

“Investor Shares” means, as of the applicable measurement date, the sum of the shares of Common Stock and Other Capital Stock Beneficially Owned by the Investor Holders and any shares of Common Stock or other securities issued in respect thereof or into which such shares of Common Stock or other securities shall be converted in connection with stock splits, reverse stock splits, stock dividends or distributions, combinations or any similar recapitalizations after the date of this Agreement.

 

“Investor Warrant” has the meaning assigned to such term in the recitals.

 

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

 

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

 

“Major Stockholder” means the DFR Holdings Holders and the CIFC Holders (each a “Major Stockholder” and together, the “Major Stockholders”).

 

“Major Stockholders Agreement” means that certain Second Amended and Restated Stockholders Agreement by and among the Company, DFR Holdings and CIFC Parent, dated as of [                ], 2012, as amended, supplemented or otherwise modified from time to time.

 

“NASDAQ” means the NASDAQ Stock Market LLC.

 

“New Shares” means any Equity Interests of the Company or any of its Subsidiaries, whether authorized or not by the Board or any committee of the Board, and rights, options, or warrants to purchase any Equity Interest, and securities of any type whatsoever that are, or may become, convertible into any Equity Interest; provided, however, that the term “New Shares” shall not include: (i) securities issued to employees, consultants, officers and directors of the Company, pursuant to any arrangement approved by the Board or the Board’s compensation committee; (ii) securities issued as consideration in the acquisition of another business or assets of another Person by the Company by merger or purchase of the assets or shares, reorganization or otherwise; (iii) securities issued pursuant to any rights or agreements, including, without limitation, convertible securities, options and warrants, provided that either

 

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(x) the Company shall have complied with Section 4.1 with respect to the initial sale or grant by the Company of such rights or agreements or (y) such rights or agreements existed prior to the Closing (it being understood that any modification or amendment to any such pre-existing right or agreement subsequent to the Closing with the effect of increasing the percentage of the Company’s fully-diluted securities underlying such rights agreement shall not be included in this clause (iii)); (iv) securities issued in connection with any stock split, stock dividend, recapitalization, reclassification or similar event by the Company; (v) Conversion Shares issued upon conversion of any portion of the then outstanding Convertible Notes; (vi) warrants issued to the lender in a bona fide debt financing; (vii) securities registered under the Securities Act that are issued in an underwritten public offering; (viii) any right, option, or warrant to acquire any security convertible into the securities excluded from the definition of New Shares pursuant to clauses (i) through (vii) above; (ix) any issuance by a Subsidiary of the Company to the Company or a wholly-owned Subsidiary of the Company; or (x) Warrant Shares issued upon exercise of any portion of the Investor Warrant.

 

“New Shares Notice” has the meaning assigned to such term in Section 4.1(b).

 

“New York Court” has the meaning assigned to such term in Section 5.6.

 

“Nominating Committee” has the meaning assigned to such term in the Major Stockholders Agreement.

 

“Notices” has the meaning assigned to such term in Section 5.4.

 

“Numerator Shares” has the meaning assigned to such term in Section 3.3(a)(iv).

 

“Observer” has the meaning assigned to such term in Section 3.3(b).

 

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

 

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

 

“Party” and “Parties” have the meaning assigned to such term in the preamble.

 

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

 

“Preemptive Right” has the meaning assigned to such term in Section 4.1(a).

 

“Preferred Stock” has the meaning assigned to such term in the Investor Warrant.

 

“Pro Rata Portion” has the meaning assigned to such term in Section 4.1(a).

 

“Purchase Agreement” has the meaning assigned to such term in the recitals.

 

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

 

“Reporting Obligations” has the meaning assigned to such term in Section 3.2(b).

 

“Representatives” of a Person means the directors, trustees, officers, managers, employees and agents of such Person.

 

“Rule 144” means Rule 144 under the Securities Act.

 

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

 

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“Securities Act” means the Securities Act of 1933, and the rules and regulations promulgated thereunder.

 

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

 

“Shares” means, collectively (but without duplication), (a) shares of Common Stock, (b) shares of Preferred Stock, or (c) shares of other classes or series of capital stock of the Issuer that may exist from time to time.

 

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

 

“Stockholders” means the holders of Shares from time to time and “Stockholder” means any one of them.

 

“Tag-Along Notice Period” has the meaning assigned to such term in Section 4.3(c).

 

“Tag-Along Offer” has the meaning assigned to such term in Section 4.3(a).

 

“Tag-Along Percentage” means with respect to any Tag Transfer the fraction, expressed as a percentage, determined as of immediately prior to such Tag Transfer by dividing (a) the number of Shares held by the Investor Holders plus the number of Warrant Shares issuable to the Investor Holders at such time upon the exercise of the Warrant, by (b) the sum of (i) the Shares held by the DFR Holdings Holders plus the Conversion Shares issuable to the DRF Holdings Holders, if a DFR Holdings Holder is a Tag-Along Seller, (ii) the Shares held by the CIFC Holders, if a CIFC Holder is a Tag-Along Seller and (iii) the Shares held by the Investor Holders plus the number of Warrant Shares issuable at such time upon the exercise of the Warrant.

 

“Tag-Along Right” has the meaning assigned to such term in Section 4.3(c).

 

“Tag-Along Seller” has the meaning assigned to such term in Section 4.3(a).

 

“Tag Exercise Notice” has the meaning assigned to such term in Section 4.3(c).

 

“Tag Shares” has the meaning assigned to such term in Section 4.3(c).

 

“Tag Transfer” has the meaning assigned to such term in Section 4.3(a).

 

“Tag Transfer Notice” has the meaning assigned to such term in Section 4.3(a).

 

“Tagging Investors” has the meaning assigned to such term in Section 4.3(c).

 

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

 

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

 

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

 

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

 

“Voting Restriction” has the meaning assigned to such term in Section 4.2.

 

“Voting Shares” means any outstanding Shares, including the Common Stock, that, as of the applicable determination date, are entitled to vote on matters submitted to a vote at a meeting of Stockholders.

 

“Warrant Shares” has the meaning assigned to such term in the recitals.

 

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

 

Section 1.4             Disclaimer of “Group” Status.  The Investor hereby expressly disclaims Beneficial Ownership of any Equity Interests in the Company held by any Major Stockholder.  This Agreement shall not constitute a written or oral agreement by the Investor or any Affiliate of the Investor to act together with any Major Stockholder for the purpose of acquiring, holding, voting or disposing of any Equity Interests in the Company.

 

ARTICLE II
 REPRESENTATIONS AND WARRANTIES

 

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

 

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

 

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

 

(c)           This Agreement has been duly executed and delivered by the Company and, assuming this Agreement has been duly authorized, executed and delivered by the Investor, constitutes the legal, valid and

 

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binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that the enforceability thereof may be limited by: (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Laws from time to time in effect affecting generally the enforcement of creditors’ rights and remedies and (ii) general principles of equity, regardless of whether enforcement is sought in equity or at Law.

 

(d)           The execution and delivery of this Agreement by the Company and the performance by the Company of its obligations under this Agreement: (i) does not violate any provision of the Constituent Documents of the Company; and (ii)(A) does not conflict with or violate any Law applicable to the Company or any part of the properties or assets of the Company, (B) except as set forth on Schedule 2.1(d), does not require the Consent of any Person under, violate, result in the termination or acceleration of or of any right under, give rise to or modify any right or obligation under (whether or not in combination with any other event or circumstance), or conflict with, breach or constitute a default under (in each case with or without notice, the passage of time or both), any Contract to which the Company is a party or by which any of its properties or assets is bound, including the Majority Stockholders Agreement, (C) does not result in the creation or imposition of any Lien on any part of the properties or assets of the Company, (D) does not violate any Order binding on the Company or any part of its properties or assets, and (E) does not otherwise require any Governmental Approvals or any Third Party Consents.

 

Section 2.2             Representations and Warranties of the Investor.  The Investor represents and warrants to the Company that as of the date hereof:

 

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

 

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

 

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

 

(d)           The execution and delivery of this Agreement by the Investor and the performance by the Investor of its obligations under this Agreement: (i) does not violate any provision of the Constituent Documents of the Investor; and (ii)(A) does not conflict with or violate any Law applicable to the Investor or any part of the properties or assets of the Investor, (B) does not require the Consent of any Person under, violate, result in the termination or acceleration of or of any right under, give rise to or modify any right or obligation under (whether or not in combination with any other event or circumstance), or conflict with, breach or constitute a default under (in each case with or without notice, the passage of time or both), any Contract to which the Investor is a party or by which any of its properties or assets is bound, (C) does not result in the creation or imposition of any Lien on any part of the properties or assets of the Investor, (D) does not violate any Order binding on the Investor or any part of its properties or assets, and (E) does not otherwise require any Governmental Approvals or, assuming the accuracy of the representations and warranties of the Company under Section 2.1, any Third Party Consents.

 

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ARTICLE III
 COVENANTS

 

Section 3.1             Reserved Matters. The Company shall not, and shall cause each Subsidiary of the Company not to, engage in any of the following matters without the prior written consent and approval of the Investor:

 

(a)           Alter, change, amend or repeal the Constituent Documents of the Company (including any amendment effected by operation of law) that would contravene the protections of Section 242(b)(2) of the DGCL or that would require a class vote of the Preferred Stock under Section 242(b)(2) of the DGCL if any shares of Preferred Stock were outstanding; provided, however, that if shares of Preferred Stock are outstanding and all such shares are held by Investor Holders, this Section 3.1(a) shall not be applicable to any amendment of the certificate of incorporation of the Company (including an amendment effected by operation of law) as to which the holders of the Preferred Stock would have a class vote;

 

(b)           Take or consent to any action that would cause any Investor and/or any Person whose Equity Interests in the Company must be aggregated with those of an Investor for purposes of the BHC Act, individually or collectively, to Beneficially Own more than 9.99% of any class of Voting Shares (other than an action by an Investor Holder or any such Person), including through buy-backs of Shares, reverse stock splits, or issuances of Shares; provided, however, that for purposes of this Section 3.1(b) Beneficial Ownership by the Investor shall be calculated without regard to Voting Shares acquired by the Investor after the Initial Closing (as defined in the Purchase Agreement) (other than Voting Shares acquired pursuant to a Cure Purchase (for the avoidance of doubt, only the number of shares required to offset the dilution in the related Dilution Notice shall not be deemed to be Beneficially Owned for this purpose));

 

(c)           Purchase or redeem any shares of Common Stock other than (i) a purchase or redemption to which Section 4.3 applies, (ii) a purchase or redemption in which a pro rata portion of the Preferred Stock are purchased or redeemed on the same terms and conditions as applicable to the other shares of Common Stock being so purchased or redeemed or (iii) a purchase or redemption (or series of related purchases or redemptions) in which less than twenty-five percent (25%) of the outstanding shares of Common Stock (determined as of immediately prior to such purchase or redemption) is so purchased or redeemed.

 

Section 3.2             Notices and Access to Information; Cooperation.

 

(a)           The Company shall provide the Investor (i) with prompt written notice of any amendment of the Major Stockholders Agreement and (ii) with a copy of any written notice of breach or default under the Major Stockholders Agreement promptly after the Company has delivered or received such notice.

 

(b)           To the extent required for the fulfillment of SEC reporting obligations or Federal Reserve Bank reporting obligations applicable to the Investor or any Affiliate of the Investor (the “Reporting Obligations”), upon reasonable prior notice, except as determined in good faith to be necessary to (i) ensure compliance with any applicable Law, (ii) preserve any applicable privilege (including the attorney-client privilege), or (iii) comply with any contractual confidentiality obligations, the Company shall, and shall cause each of the Subsidiaries of the Company to, (A) afford the Investor or the applicable Affiliate of the Investor reasonable access, during normal business hours, to the properties, books and records of the Company and each Subsidiary of the Company applicable to the Reporting Obligations, (B) furnish to the Investor or the applicable Affiliate of the Investor such additional financial and other information regarding the Company and its Subsidiaries as the Investor or the applicable Affiliate of the Investor may reasonably request in respect of the Reporting Obligations, and (C) make reasonably available to the Investor or the applicable Affiliate of the Investor those employees of the Company and its Subsidiaries whose assistance, expertise, and recollections may be necessary to assist the Investor or the applicable Affiliate of the Investor in connection with its inquiries to comply with the Reporting Obligations; provided, that such investigation shall not unreasonably interfere with the business or operations of the Company and its Subsidiaries and the Investor shall be responsible for its own and any out-of-pocket expenses in connection with the access described herein; provided, further, that the auditors and accountants of the Company or its Subsidiaries shall not be obligated to make any work papers available to any Person except in accordance with such auditors’ and accountants’ normal disclosure procedures and then only after such Person has signed a customary agreement relating to such access to work papers in form and substance reasonably acceptable to such auditors or accountants;

 

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provided, further, that any information obtained by the Investor or any Affiliate of the Investor pursuant to this Section 3.2(b) shall be used solely to comply with its Reporting Obligations and shall be subject to the obligation to keep such information confidential in accordance with Section 3.4.

 

Section 3.3             Board of Directors.

 

(a)           Designation of Director.

 

(i)            The Investor Holders, collectively, shall be entitled to designate one Director to the Board upon the terms and subject to the conditions of this Section 3.3(a) and the second sentence of Section 3.3(b).

 

(ii)           Except as provided in Section 3.3(a)(iv) and (a)(v) or as required by applicable Law, no Director designated pursuant to this Section 3.3(a) may be removed from office (whether or not for cause) unless such removal is directed or approved by the Investor Holders.

 

(iii)          Upon the death, disability, retirement, resignation or other removal by the Investor Holders of the Director designated by the Investor Holders, the Board shall appoint as a Director to fill the vacancy so created with an individual designated by the Investor Holders.

 

(iv)          If the sum of (A) the Investor Shares held by the Investor Holders and (B) the Warrant Shares held or issuable to the Initial Holder upon exercise of the Investor Warrant (the “Numerator Shares”) represents less than 5% of the sum of (x) Voting Shares (including, for the avoidance of doubt, Investor Shares and issued Warrant Shares), (y) the Conversion Shares issuable to any DFR Holdings Holder upon the conversion of the aggregate amount of Convertible Notes then outstanding, and (z) Warrant Shares issuable to the Initial Holder upon exercise of the Warrant (the “Denominator Shares”), in each case, calculated as of the close of business on the last Trading Day of the month immediately prior to the date on which the Nominating Committee designates the Independent Director nominees for election at the relevant stockholder meeting, the Investor Holders shall not be entitled to designate a Director. To the extent that the Investor Holders cease to have the right to designate a Director, if requested by a majority of the Directors then serving on the Board (other than the Director designated by the Investor Holders), the Investor Holders shall promptly take all necessary action to procure the resignation of their designated Director; provided, that the Investor Holders shall not be required to cause their designated Director to resign in accordance with this Section 3.3(a)(iv) as a result of a dilution of the Investor Shares (other than dilution resulting from the issuance of New Shares) unless and until the Company complies with procedures in Section 3.3(a)(v) below.

 

(v)           Notwithstanding anything in Section 3.3(a)(iv) to the contrary, if the Numerator Shares represent a percentage of the Denominator Shares that is less than 5% as a result of dilution of the Investor Shares, other than dilution resulting from the issuance of New Shares, the Company shall deliver a written notice to the Investor Holders of such dilution event (the “Dilution Notice”).  If (A) within twenty (20) days following receipt of the Dilution Notice, the Investor Holders give the Company a written notice of their intention to acquire, directly or indirectly, an amount of Voting Shares or other Shares, such that immediately following such acquisition the Numerator Shares represent a percentage of Denominator Shares equal to 5% of the Denominator Shares (a “Cure Purchase”) within ninety (90) days of the Company’s receipt of the Dilution Notice (the “Cure Period”) and (B) the Cure Purchase is consummated during the Cure Period, then the Investor Holders shall not be required to cause their designated Director to resign in accordance with Section 3.3(a)(iv).

 

(vi)          The Company shall cause each individual designated in accordance with Section 3.3(a)(i) to be included in the Board’s “slate” of nominees for the applicable meeting of stockholders and shall use commercially reasonable best efforts to solicit from its Stockholders eligible to vote for the election of Directors proxies (A) in favor of the election of such individuals and (B) against removal of each such individual (to the extent such individual is serving as a Director). In the event that, notwithstanding the foregoing, such individual is not elected to, or is removed from (other than by the Investor Holders) the Board, the Company shall create a vacancy on the Board and appoint such individual to fill such vacancy.

 

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

 

(viii)        Notwithstanding anything to the contrary in Section 3.3(a)(vii), the Company shall to the maximum extent permitted under applicable Law, indemnify and provide for the advancement of expenses to the Director designated by the Investor Holders, from and against any and all losses which may be imposed on, incurred by, or asserted against such Director in any way relating to or arising out of, or alleged to relate to or arise out of, the Director’s service in that capacity pursuant to the Company’s Constituent Documents and an indemnification agreement in the form heretofore provided to the Investor.

 

(ix)           The Director designated by the Investor Holders shall be covered by the directors’ and officers’ liability insurance and fiduciary liability insurance carried by the Company.

 

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

 

(xi)           Any Person designated as a Director pursuant to Section 3.3(a)(i) by the Investor Holders shall be subject to satisfaction of the requirements of applicable Law and corporate governance policies adopted by the Board.

 

(xii)          The Investor Holders may waive their right to designate a Director under this Section 3.3 at any time by delivering written notice of such waiver to the Company in accordance with Section 5.4; provided, however, that the Investor Holders shall not be entitled to rescind any such waiver once delivered.  If the Investor Holders otherwise lose their right to designate a Director pursuant to Section 3.3(a)(iv) and (a)(v), the Investor Holders shall not be entitled to regain their right to designate such Director, even if the Numerator Shares represent a percentage of the Denominator Shares that is equal to or greater than 5%.

 

(b)           If at any time there is no Director on the Board that is designated by the Investor Holders and at such time the Investor Holders have the right to designate a Director to the Board, the Investor Holders shall be entitled to designate one observer (the “Observer”) to attend (but not vote at) all meetings of the Board and each committee of the Board (including meetings held by means of conference telephone or other similar means). Following the designation of such Observer, the Investor Holders’ right to designate a Director under Section 3.3(a) shall be automatically suspended until such time as the Observer resigns or is removed by the Investor Holders. The Company shall deliver, or cause to be delivered, to the Observer copies of all notices, agendas, minutes, written consents and other materials that it provides to the Board at the same time and in the same manner provided to the Board.  Notwithstanding anything herein to the contrary, the Board or such committee may exclude the Observer from access to any materials or meeting or portion thereof if (i) the Board or such committee (as applicable) determines in good faith that, (A) such exclusion is required under applicable Law or (B) upon advice of counsel, such exclusion is reasonably necessary to preserve the attorney-client privilege or (ii) the Observer has not entered into a confidentiality agreement in form and substance reasonably satisfactory to the Company.  If at any time the Investor Holders have exercised their rights under this Section 3.3(b) to designate the Observer, and thereafter the Investors Holders subsequently no longer have the right to designate a Director to the Board, the Investor Holders shall take all necessary action to remove the Observer from the Board at such time as the Investor Holders would have been required to procure the resignation of their designated Director pursuant to Section 3.3(a)(iv) had such Director been serving on the Board at such time.

 

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Section 3.4             Confidentiality.

 

(a)           Each Investor Holder agrees that it shall (and shall cause any of its Affiliates and its and their officers, directors, employees, partners and agents (collectively, the “Confidentiality Affiliates”) in possession of Confidential Information to) (i) hold confidential and not disclose (other than by an Investor Holder to its Confidentiality Affiliates having a reasonable need to know in connection with the permitted purposes hereunder), without the prior written consent of the Company, all confidential or proprietary written, recorded or oral information or data provided or developed by, or concerning, the Company or another Stockholder in connection herewith or with the business of the Company and its Affiliates, including any information obtained by such Investor Holder pursuant to Section 3.2, whether such confidentiality or proprietary status is indicated orally or in writing or in a context in which the Company reasonably communicated, or the receiving Stockholder should reasonably have understood, that the information should be treated as confidential, whether or not the specific words “confidential” or “proprietary” are used (“Confidential Information”) and (ii) use such Confidential Information only for the purposes of performing its obligations hereunder and monitoring its investment in the Company.

 

(b)           The obligations contained in this Section 3.4 shall not apply, or shall cease to apply, to Confidential Information if or when, and to the extent that, such Confidential Information (i) is, or becomes through no breach of the Investor Holders obligations hereunder, generally known to the public, (ii) becomes known to the Investor Holders or their Confidentiality Affiliates from other sources under circumstances not involving any breach of any confidentiality obligation between such source and the Company, (iii) is independently developed by the Investor Holders or their Confidentiality Affiliates, or (iv) is required, as determined based on the advice of its legal counsel, to be disclosed by applicable Law, in which case only that portion of the Confidential Information legally required to be so disclosed, based on the advice of counsel, shall be disclosed and the Investor Holders shall use commercially reasonable efforts to obtain assurance that confidential treatment will be accorded to such disclosed Confidential Information; provided, that prior to any disclosure pursuant to clause (iv) of this Section 3.4(b), the Investor Holders shall provide the Company with prompt notice of such disclosure, and a description of the Confidential Information to be disclosed and the terms and circumstances surrounding the requirement to disclose such Confidential Information, to enable the Company to seek an appropriate protective order or other appropriate remedy, or, if agreed to by the Investor and the Company, waive compliance with the terms of this Section 3.4; provided, further, that the Investor Holders shall cooperate and assist the Company in seeking a protective order or other appropriate remedy and the Company shall reimburse the Investor Holders for all reasonable out-of-pocket expenses incurred by the Investor Holders in providing such cooperation and assistance;  provided, however, that no consent of, or notice to, the Company shall be required for the Investor Holders to disclose the fact that such Persons are Stockholders and such Persons’ ownership percentage in the Company, in each case to comply with the Reporting Obligations.

 

Section 3.5             Purchase of Voting Shares.  The Investor Holders shall not take or consent to any action that would cause any Investor and/or any Person whose Equity Interests in the Company must be aggregated with those of an Investor for purposes of the BHC Act, individually or collectively, to Beneficially Own more than 9.99% of any class of the Company’s Voting Shares.

 

ARTICLE IV
 PREEMPTIVE RIGHTS AND TRANSFER PROVISIONS

 

Section 4.1             Preemptive Rights.

 

(a)           For so long as the Investor Holders collectively hold Numerator Shares representing at least five percent (5%) of the Denominator Shares, each Investor Holder shall have the right to purchase, in accordance with the procedures set forth herein, its pro rata portion, calculated based on the number of Numerator Shares as a percentage of the Denominator Shares prior to issuance of the New Shares (the Investor Holders’ “Pro Rata Portion”) of any New Shares that the Company may, from time to time, propose to sell and issue (hereinafter referred to as the “Preemptive Right”).

 

(b)           In the event that the Company proposes to issue and sell New Shares, the Company shall notify each Investor Holder in writing with respect to the proposed New Shares to be issued (the “New Shares Notice”).  Each New Shares Notice shall set forth: (i) the number of New Shares proposed to be issued by the

 

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Company and the purchase price therefor; (ii) the Investor Holders’ Pro Rata Portion of such New Shares; and (iii) any other material term (including, if known, the expected date of consummation of the purchase and sale of the New Shares).  Failure to deliver the New Shares Notice pursuant to the foregoing shall not affect the legality or validity of the Preemptive Right.

 

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

 

(d)           If an Investor Holder does not elect within the applicable notice period described above to exercise its Preemptive Rights with respect to any of the New Shares proposed to be sold by the Company, the Company shall have ninety (90) days after expiration of such notice period to sell such unsubscribed New Shares proposed to be sold by the Company, at a price and on terms no more favorable to the purchaser than those set forth in the New Shares Notice.  If the Company does not consummate the sale of the unsubscribed New Shares in accordance with the terms of the New Shares Notice within such ninety (90)-day period, then the Company may not issue or sell such New Shares unless it sends a new New Shares Notice and once again complies with the provisions of this Section 4.1 with respect to such New Shares.

 

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

 

Section 4.2             Voting Rights Notwithstanding any other provision contained herein, if at any time the Investor Shares represent more than 4.99% of any class of Voting Shares (including as a result of any Investor Holder’s exercise of the Preemptive Right or a Cure Purchase hereunder), the Investor and its Affiliates collectively shall be deemed to have voting rights in respect of only 4.99% of such class of Voting Shares, such voting rights in excess of said 4.99% shall be relinquished and Shares corresponding to such excess (the “Excess Shares”) shall be deemed to be non-voting Shares of the same class, which Shares shall be identical in all respects, excepting voting rights, to other Shares in such class.  The voting restriction set forth in the first sentence of this Section 4.2 (the “Voting Restriction”) shall continue to apply following any Transfer of such Excess Shares; provided, that the Voting Restriction shall not continue to apply:

 

(a)           to any transferee of the Excess Shares that is not a Person whose Equity Interests in the Company must be aggregated with those of the Investor for purposes of the BHC Act; or

 

(b)           to the Investor and its Affiliates, at such time as the number of Voting Shares (including Excess Shares that would be Voting Shares but for the Voting Restriction) Beneficially Owned, or otherwise held or controlled (in each case, directly or indirectly) by the Investor and its Affiliates is equal to or less than 4.99% of the applicable class of Voting Shares.

 

Section 4.3             Tag-Along Rights.

 

(a)           Subject to Section 4.4, if at any time either or both Major Stockholder(s) (each, a “Tag-Along Seller”) proposes to enter into a Transfer of its Shares (including a Transfer to the Company) (a “Tag Transfer”), the Tag-Along Seller(s) shall first, by written notice to the Company (and the Company shall promptly provide the Investor Holders with a copy of such notice (the “Tag Transfer Notice”)), offer the Investor Holders the opportunity to participate in such Tag Transfer (the “Tag-Along Offer”) in accordance with this Section 4.3; provided, however, that this Section 4.3 shall not apply, and a Transfer shall not be deemed to be a “Tag Transfer”:

 

(i)            if the Tag-Along Seller is a DFR Holdings Holder and the Shares to be Transferred in the Tag Transfer, together with all Shares Transferred by the DFR Holdings Holders from the Closing through the date of the Tag Transfer, represent, in the aggregate, less than ten percent (10%) of the sum of the (A)

 

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Shares held by the DFR Holdings Holders and (B) the Conversion Shares issuable to any DFR Holdings Holder upon the conversion of the aggregate amount of Convertible Notes then outstanding, in each of clauses (A) and (B), as of the Closing;

 

(ii)           if the Tag-Along Seller is a CIFC Holder and the Shares to be Transferred in the Tag Transfer, together with all Shares Transferred by the CIFC Holders from the Closing through the date of the Tag Transfer, represent, in the aggregate, less than ten percent (10%) of the Shares held by the CIFC Holders as of the Closing;

 

(iii)          any Transfer to an Affiliate of the Tag-Along Seller; or

 

(iv)          to any Transfer pursuant to a registered public offering in accordance with the Registration Rights Agreement (which shall also not be included for purposes of determining whether the thresholds set forth in clauses (i) and (ii) of this Section 4.3(a) have been reached).

 

(b)           The Tag Transfer Notice shall identify: (i) the class and number of Shares proposed to be sold by the Tag-Along Seller(s); (ii) an estimate of the Tag-Along Percentage; (iii) the consideration for which the Tag Transfer is proposed to be made, (iv) the name of each proposed transferee, (v) the proposed Tag Transfer date and (vi) all other material terms and conditions of the Tag-Along Offer, including the form of the proposed agreement, if any.

 

(c)           From the date of their receipt of the Tag Transfer Notice, the Investor Holders shall have the right (the “Tag-Along Right”) exercisable by written notice (“Tag Exercise Notice”) given to the Tag-Along Seller(s) within ten (10) days after receipt of the Tag Transfer Notice (the “Tag-Along Notice Period”), to request that the Tag-Along Seller(s) include in the Tag Transfer a number of Investor Shares and/or issued Warrant Shares (such number of Investor Shares and/or issued Warrant Shares shall not in any event exceed the Tag-Along Percentage of the total number of the Shares to be Transferred in such Tag Transfer) (the “Tag Shares”); provided, however, that if Warrant Shares are included in the Tag Shares, the Investor Holders shall be required to exercise all or the applicable portion of the Warrant prior to or in connection with such Tag Transfer. The Tag Exercise Notice shall include wire transfer instructions for payment of the purchase price for the Tag Shares.  If the Investor Holders exercise their Tag-Along Right hereunder, they shall, upon request, deliver to the Tag-Along Seller(s), with the Tag Exercise Notice, the certificate(s) representing the Tag Shares, together with a limited power-of-attorney authorizing the Tag-Along Seller(s) to Transfer the Tag Shares on the terms set forth in the Tag Transfer Notice.  The Investor Holders’ delivery of the Tag Exercise Notice with such certificate(s) and the limited power-of-attorney shall constitute an irrevocable acceptance of the Tag-Along Offer by such Investor Holders (the “Tagging Investors”).  Subject to Section 4.4(b), in order to participate in a Tag Transfer hereunder, the Tagging Investors must agree to enter into and execute substantially identical agreements and documents as entered into and executed by the Tag-Along Seller(s) in connection with the Tag Transfer.

 

(d)           The number of Shares to be Transferred by the Tag-Along Seller(s) in the Tag Transfer shall be reduced by the number of Tag Shares to be Transferred in such Tag Transfer by the Investor Holders.

 

(e)           If, at the end of a 120-day period after the date of receipt of the Tag Transfer Notice (which 120-day period shall be extended if any of the transactions contemplated by the Tag-Along Offer are subject to regulatory approval until the expiration of five (5) Business Days after all such approvals have been received, but in no event later than 180 days after the date of receipt of the Tag Transfer Notice), the Tag Transfer has not been completed by the Tag-Along Seller(s) on substantially the same terms and conditions set forth in the Tag Transfer Notice (but as to price, the terms shall be exactly the same), the applicable Tag-Along Seller shall (i) promptly return to the Tagging Investors the limited power-of-attorney (and all copies thereof) together with all certificates representing the Tag Shares that such Tagging Investors delivered for Transfer pursuant to this Section 4.3 and any other documents in the possession of such Tag-Along Seller executed by the Tagging Investors in connection with the proposed Tag Transfer, and (ii) not proceed with the contemplated Tag Transfer without again complying with this Section 4.3.

 

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(f)                                    Concurrently with the consummation of the Tag Transfer, the Tag-Along Seller(s) shall (i) notify the Tagging Investors thereof, (ii) remit or cause to be remitted to the Tagging Investors the total consideration to be paid at the closing of the Tag Transfer for the Tag Shares Transferred pursuant thereto, with the cash portion of the purchase price paid by wire transfer of immediately available funds in accordance with the wire transfer instructions in the Tag Exercise Notice, and (iii) promptly after consummation of such Tag Transfer, furnish such other evidence of the completion and the date of completion of such Transfer and the terms thereof as may be reasonably requested by the Tagging Investors.

 

(g)                                 If, at the termination of the Tag-Along Notice Period, any Investor Holder has not elected to participate in the Tag Transfer, such Investor Holder shall be deemed to have waived its rights under this Section 4.3 with respect to, and only with respect to, the Transfer of its Investor Shares or Warrant Shares in connection with the Tag Transfer described in the Tag Transfer Notice delivered at the beginning of such Tag-Along Notice Period.

 

(h)                                 Notwithstanding anything contained in this Section 4.3 there shall be no liability on the part of the Tag-Along Seller to the Tagging Investors (other than the obligation to return any certificates evidencing Tag Shares and limited powers-of-attorney received by the Tag-Along Seller) if a Tag Transfer under this Section 4.3 is not consummated for whatever reason. The decision to effect a Tag Transfer pursuant to this Section 4.3 by a Tag-Along Seller is in the sole and absolute discretion of such Tag-Along Seller.

 

Section 4.4                                      Additional Provisions Related to Tag Transfers. Notwithstanding anything contained in Section 4.3 to the contrary, in connection with a Tag Transfer under Section 4.3:

 

(a)                                  Upon the consummation of such Tag Transfer, all Investor Holders participating therein will receive the same form and amount of consideration per share as the Major Stockholders participating therein, or, if any Major Stockholder is given an option as to the form and amount of consideration to be received, the Investor Holders participating therein will be given the same option; provided, that to the extent the Investor Holders Transfer unissued Warrant Shares in such Tag Transfer, the consideration payable to such Investor Holders shall be reduced by the aggregate Exercise Price of such Warrant Shares.

 

(b)                                 Each Investor Holder shall (i) make such representations, warranties and covenants and enter into such definitive agreements as are customary for transactions of the nature of the proposed Transfer, (ii) benefit from and be subject to all of the same provisions of the definitive agreements as are applicable to the Tag-Along Seller, (iii) be required to bear its proportionate share of any escrows, holdbacks or adjustments in respect of the purchase price or indemnification obligations; provided, that no Investor Holder shall be obligated (A) to indemnify, other than severally indemnify, any Person in connection with such Tag Transfer, (B) to incur liability to any Person in connection with such Tag Transfer, including, without limitation, under any indemnity, in excess of the lesser of (1) its pro rata share of such liability and (2) the proceeds realized by such Investment Holder in such sale (provided, that the case of this clause (B) of Section 4.4(b)(iii), no such limitation shall apply to any breach of any representations or warranties made by, or breach of any obligation of, such Investment Holder), or (C) in its capacity as a Stockholder, to agree to any non-competition or non-solicitation restrictions which are more restrictive on such Investor Holder than those restrictions agreed to by such Investor Holder in this Agreement or the Purchase Agreement, and (iv) cooperate in obtaining all Governmental Approvals and Third-Party Consents reasonably necessary or desirable to consummate such Tag Transfer.

 

(c)                                  In the event the consideration to be paid in exchange for Shares in a Tag Transfer includes any securities, and the receipt thereof by an Investor Holder would require under applicable Law (i) the registration or qualification of such securities or of any Person as a broker or dealer or agent with respect to such securities where such registration or qualification is not otherwise required for the Tag Transfer or (ii) the provision to any Tag-Along Seller of any specified information regarding such securities or the issuer thereof that is not otherwise required to be provided for the Tag Transfer, then such Investor Holder shall not have the right to sell Investor Shares and/or Warrant Shares in such proposed Tag Transfer. In such event, the Tag-Along Seller shall have the right, but not the obligation, to cause to be paid to such Investor Holder in lieu thereof, against surrender of the Investor Shares and/or Warrant Shares that would have otherwise been Transferred by such Investor Holder to the prospective purchaser in the proposed Tag Transfer, an amount in cash equal to the fair market value (as

 

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determined in the reasonable determination of the Board) of such Investor Shares and/or Warrant Shares as of the date such securities would have been issued in exchange for such Investor Shares and/or Warrant Shares.

 

(d)                                 Each Tagging Investor shall bear an amount of the reasonable costs and expenses incurred by the Tag-Along Seller or the Company in connection with any proposed Tag Transfer (whether or not consummated), including reasonable and documented attorneys’ fees and charges, all accounting fees and charges and all finders, brokerage or investment banking fees, charges or commissions, pro rata in proportion to the amount transferred or proposed to be transferred by such Tagging Investor as compared to the aggregate amount transferred or proposed to be transferred by the Tag-Along Seller and all Tagging Investors; provided, that, in connection with any Tag Transfer, each Tagging Investor shall bear in its entirety any attorneys’ fees and charges, accounting fees and charges and any other advisor fees, charges or commissions incurred by such Tagging Investor in connection with such Tag Transfer.

 

Section 4.5                                      Transfer of Investor Shares.

 

(a)                                  Any Investor Holder may Transfer to one or more Persons at any time, without the consent of the Company or any other Stockholder, all or any portion of the Shares held by such Investor Holder.

 

(b)                                 Notwithstanding anything to the contrary herein, the rights and obligations of the Investor Holders hereunder are personal to such Investor Holders and shall not be assigned, by operation of law or otherwise, except to an Investor Holder or a Person that would be an Investor Holder after giving effect to the Transfer. Prior to or in connection with the Transfer of any Shares owned by the Investor (or an Investor Holder) to an Affiliate of the Investor, such Investor shall deliver to the Company a “statement of adhesion” pursuant to which such Investor Holder confirms its agreement to be subject to and bound by all of the provisions set forth in this Agreement that were applicable to the Investor (or Investor Holder).

 

(c)                                  For the avoidance of doubt, any Transfer of Shares pursuant to a registration statement or Rule 144 or to any Person that is not an Affiliate of the Investor (other than a Person not Affiliated with the Investor that is acquiring all or substantially all of the Investor Holders’ Shares pursuant to Section 4.5(b)) shall be free and clear of the restrictions contained in this Agreement and the transferee shall not acquire any rights under this Agreement.

 

ARTICLE V
 MISCELLANEOUS

 

Section 5.1                                      Termination of Agreement.

 

(a)                                  This Agreement shall continue in effect until:

 

(i)                                     Terminated by written agreement of the Company and the Investor; or

 

(ii)                                  Terminated by the Company with fifteen (15) days’ prior written notice to the Investor Holders (the “Termination Notice”) upon such time as the Numerator Shares held by the Investor Holders represent less than five percent (5%) of the sum of the Voting Shares and the Warrant Shares issuable to the Initial Holder upon exercise of the Investor Warrant; provided, however, that this Section 5.1(a)(ii) shall apply only if, prior to delivery by the Company of the Termination Notice to the Investor Holders, the Company has delivered to the Investor Holders a Dilution Notice in accordance with Section 3.3(a)(v) hereof (mutatis mutandis) and the Investor Holders have not, within the respective time periods specified in Section 3.3(a)(v) (mutatis mutandis), given the Company written notice of their intention to effect a Cure Purchase and consummated such Cure Purchase.

 

(b)                                 Section 3.4 (Confidentiality) shall survive the termination of this Agreement.

 

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Section 5.2                                      Dispute Resolution.

 

(a)                                  Except with respect to any request for equitable relief (including interim relief), any dispute, controversy or claim arising out of or relating to the transactions contemplated by this Agreement, or the validity, interpretation, breach or termination of this Agreement, including claims seeking redress or asserting rights under any Law (a “Dispute”), shall be resolved in accordance with the procedures set forth in this Section 5.1.  Until completion of such procedures, no party may take any action to force a resolution of a Dispute by any judicial or similar process, except to the limited extent necessary to (i) avoid expiration of a claim that might eventually be permitted by this Agreement or (ii) obtain equitable relief; provided, that the rights reserved in clause (i) of Section 5.2(a) may be exercised within three (3) months prior to the expiration of the applicable claim.

 

(b)                                 Any Party seeking resolution of a Dispute shall first serve on the other a notice (an “Escalation Notice”) specifying the details of the relevant Dispute and requiring that such Dispute be referred to the Parties’ Representatives set out in Schedule 5.2(b).  In the event that the Parties’ Representatives are unable to resolve such disagreement within fifteen (15) Business Days following the Escalation Notice, either Party may submit the Dispute for resolution by mediation pursuant to the International Institute for Conflict Prevention & Resolution Mediation Procedure as then in effect.  Mediation will continue for at least thirty (30) days from the date such mediation was commenced, unless the mediator chooses to withdraw sooner.

 

(c)                                  All offers of compromise or settlement among the parties in connection with the attempted resolution of any Dispute shall be deemed to have been delivered in furtherance of a Dispute settlement and shall be exempt from discovery and production and shall not be admissible in evidence (whether as an admission or otherwise) in any proceeding for the resolution of the Dispute.

 

(d)                                 For the avoidance of doubt, the Parties agree that either of them may seek interim measures including injunctive relief in relation to the provisions of this Agreement or the Parties’ performance of it from any New York Court.

 

Section 5.3                                      Expenses.  Except as otherwise expressly set forth herein, each Party hereto shall pay its own costs and expenses (including all legal, accounting, broker, finder and investment banker fees) relating to this Agreement, the negotiations leading up to this Agreement and the transactions contemplated hereby.

 

Section 5.4                                      Notices.  Except as otherwise expressly set forth herein, all notices, demands and other communications pertaining to this Agreement (“Notices”) shall be in writing and addressed as follows:

 

If to the Company:

 

CIFC Corp.
 250 Park Avenue, 4th Floor
 New York, NY 10177
 Attention:        Robert C. Milton III, Esq.
 Email:                               rmilton@cifc.com

 

with copies to:

 

Goodwin Procter LLP
 Exchange Place

53 State Street
 Boston, MA 02109
 Attention:        John Mutkoski, Esq.; Amber R.E. Dolman, Esq.
 E-mail:                           jmutkoski@goodwinprocter.com; adolman@goodwinprocter.com

 

If to the Investor:

 

GE Capital Equity Investments, Inc.
 201 Merritt 7
 Norwalk, CT 06856

 

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Attention:       CIFC Account Manager
 E-mail: equity.portfolio@ge.com

 

with copies to:

 

Allen & Overy LLP
 1221 Avenue of the Americas
 New York, NY 10020
 Attention:        Eric S. Shube, Esq.
 E-mail:                           eric.shube@allenovery.com

 

Notices shall be deemed given (a) on the first (1st) Business Day after being sent, prepaid, by nationally recognized overnight courier that issues a receipt or other confirmation of delivery, (b) when sent, if sent by electronic mail before 5:00 p.m. on a Business Day at the location of receipt and otherwise the next following Business Day.  Any Party may change the address to which Notices under this Agreement are to be sent to it by giving written notice of a change of address in the manner provided in this Agreement for giving Notice.

 

Section 5.5                                      Governing Law.  EXCEPT TO THE EXTENT THAT THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO THE ELECTION OR REMOVAL OF DIRECTORS ARE APPLICABLE, THIS AGREEMENT (AND ANY CLAIMS OR DISPUTES ARISING OUT OF OR RELATED HERETO OR TO THE TRANSACTIONS CONTEMPLATED HEREBY OR TO THE INDUCEMENT OF ANY PARTY TO ENTER HEREIN, WHETHER FOR BREACH OF CONTRACT, TORTIOUS CONDUCT OR OTHERWISE AND WHETHER PREDICATED ON COMMON LAW, STATUTE OR OTHERWISE) SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CHOICE OF LAW RULES THAT WOULD APPLY THE LAWS OF ANY OTHER JURISDICTION.

 

Section 5.6                                      Submission to Jurisdiction.  Each of the Parties agrees that if any Dispute is not resolved pursuant to the procedures set forth in Section 5.2, such Dispute shall be resolved only in 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 (the “New York Courts,” and each, a “New York Court”).  In that context, and without limiting the generality of the foregoing, each of the Parties by this Agreement irrevocably and unconditionally:

 

(a)                                  submits for itself and its property in any Action relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the exclusive jurisdiction of the New York Courts, and agrees that all claims in respect of any such Action shall be heard and determined in the New York Courts;

 

(b)                                 consents that any such Action may and shall be brought in the New York Courts and waives any objection that it may now or hereafter have to the venue or jurisdiction of any such Action in the New York Courts or that such Action was brought in an inconvenient court and agrees not to plead or claim the same;

 

(c)                                  agrees that service of process in any such Action may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address as provided in Section 5.4; and

 

(d)                                 agrees that nothing in this Agreement shall affect the right to effect service of process in any other manner permitted by the Laws of the State of New York.

 

Section 5.7                                      Specific Performance.  The Parties to this Agreement each acknowledge that each Party would not have an adequate remedy at law for money damages in the event that any of the covenants hereunder have not been performed in accordance with their terms, and therefore agree that each other Party hereto shall be entitled to specific enforcement of the terms hereof and any other equitable remedy to which such Party may be entitled.  Each of the Parties hereby waives (i) any defenses in any action for specific performance, including the defense that

 

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a remedy at law would be adequate and (ii) any requirement under any Law to post a bond or other security as a prerequisite to obtaining equitable relief.

 

Section 5.8                                      Waiver of Jury Trial.  THE PARTIES EACH HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTERS (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 5.9                                      Binding Effect; Persons Benefiting; Assignment.

 

(a)                                  This Agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and permitted assigns including an Investor Holder who takes in accordance with Section 4.5(b).  Nothing in this Agreement is intended or shall be construed to confer upon any Person any right, remedy or claim under or by reason of this Agreement or any part hereof other than the Parties hereto and their respective successors and permitted assigns.

 

(b)                                 Without the prior written consent of the other party hereto, this Agreement may not be assigned by either party hereto, and any purported assignment made without such consent shall be null and void.

 

Section 5.10                                Counterparts.  This Agreement may be executed in counterparts (including by facsimile or other electronic transmission), each of which shall be deemed an original and each of which shall constitute one and the same instrument.

 

Section 5.11                                Entire Agreement.  This Agreement, including the Schedules, Exhibits, Annexes, certificates and lists referred to herein, any documents executed by the Parties simultaneously herewith or pursuant thereto constitute the entire understanding and agreement of the Parties hereto with respect to the subject matter hereof and supersedes all other prior agreements and understandings, written or oral, between the Parties with respect to such subject matter.

 

Section 5.12                                Severability.  If any provision of this Agreement, or the application thereof to any Person or circumstance, is invalid or unenforceable in any jurisdiction, (a) a substitute and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable in such jurisdiction, the intent and purpose of their invalid or unenforceable provision; and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability of such provision affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

 

Section 5.13                                Amendments and Waivers.  This Agreement may not be amended, altered or modified except by written instrument executed by the Investor and the Company.  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.

 

Section 5.14                                Delays or Omissions.  No delay or omission to exercise any right, power, or remedy accruing to any Party under this Agreement shall impair any such right, power, or remedy of such Party, nor shall it be construed to be a waiver of or acquiescence to any breach or default, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default.  All remedies, either under this Agreement or by law or otherwise afforded to any holder, shall be cumulative and not alternative.

 

Section 5.15                                Mutual Drafting; Interpretation.  Each Party hereto has participated in the drafting of this Agreement, which each such Party acknowledges is the result of extensive negotiations between the Parties.  If an

 

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ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision.

 

[Remainder of Page Left Blank]

 

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

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
CIFC   CORP.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
  Name:
    
	
 
    	
 
    	
  Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
INVESTOR:
    
	
 
    	
 
    
	
 
    	
GE   CAPITAL EQUITY INVESTMENTS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
  Name:
    
	
 
    	
 
    	
  Title:
    

 

Signature Page to Investment Agreement

 

 

Schedule 2.1(d)

 

Consents

 

 

Schedule 5.2(b)

 

Dispute Resolution Representatives

 

Investor

 

Shin Kimura

 

Bill Orr

 

The Company

 

Robert C. Milton III

 

Gary Neems

 

 

EXHIBIT D to the Asset Purchase Agreement

 

SECOND AMENDED AND RESTATED

 

STOCKHOLDERS AGREEMENT

 

BY AND AMONG

 

CIFC CORP.,

 

DFR HOLDINGS, LLC

 

AND

 

CIFC PARENT HOLDINGS LLC

 

 

Dated as of [·] [·], 2012

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Article I   GENERAL
    	
2
    
	
Section 1.1
    	
Effective Date
    	
2
    
	
Section 1.2
    	
Definitions
    	
2
    
	
Section 1.3
    	
Construction
    	
10
    
	
Section 1.4
    	
Disclaimer of “Group” Status
    	
11
    
	
 
    	
 
    	
 
    
	
Article II   REPRESENTATIONS AND WARRANTIES
    	
11
    
	
Section 2.1
    	
Representations and Warranties of the Company
    	
11
    
	
Section 2.2
    	
Representations and Warranties of the Investors
    	
12
    
	
 
    	
 
    	
 
    
	
Article III   BOARD OF DIRECTORS
    	
13
    
	
Section 3.1
    	
Board of Directors
    	
13
    
	
Section 3.2
    	
Restrictions on Transfer
    	
16
    
	
Section 3.3
    	
Majority Voting Provision
    	
18
    
	
Section 3.4
    	
Controlled Company Exemption
    	
19
    
	
Section 3.5
    	
Covenants
    	
19
    
	
Section 3.6
    	
Committee Membership
    	
22
    
	
Section 3.7
    	
Board Observers
    	
22
    
	
Section 3.8
    	
Preemptive Rights
    	
22
    
	
Section 3.9
    	
Standstill
    	
23
    
	
 
    	
 
    	
 
    
	
Article IV NON   SOLICITATION
    	
25
    
	
Section 4.1
    	
Non Solicitation
    	
25
    
	
 
    	
 
    	
 
    
	
Article V   MISCELLANEOUS
    	
26
    
	
Section 5.1
    	
Termination of Agreement
    	
26
    
	
Section 5.2
    	
Expenses
    	
26
    
	
Section 5.3
    	
Notices
    	
26
    
	
Section 5.4
    	
Governing Law
    	
28
    
	
Section 5.5
    	
Consent to Jurisdiction
    	
28
    
	
Section 5.6
    	
Specific Performance
    	
29
    
	
Section 5.7
    	
Waiver of Jury Trial
    	
29
    
	
Section 5.8
    	
Binding Effect; Persons Benefiting; Assignment
    	
29
    
	
Section 5.9
    	
Counterparts
    	
29
    
	
Section 5.10
    	
Entire Agreement
    	
29
    
	
Section 5.11
    	
Severability
    	
29
    
	
Section 5.12
    	
Amendments and Waivers
    	
29
    
	
Section 5.13
    	
Delays or Omissions
    	
30
    
	
Section 5.14
    	
Mutual Drafting; Interpretation
    	
30
    

 

i

 

SECOND AMENDED AND RESTATED 
 STOCKHOLDERS AGREEMENT

 

THIS SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, dated as of [·] [·], 2012 (this “Agreement”), is by and among CIFC Corp., a Delaware corporation (formerly Deerfield Capital Corp.) (the “Company”), DFR Holdings, LLC, a Delaware limited liability company (“DFR Holdings”), and CIFC Parent Holdings LLC, a Delaware limited liability company (“CIFC Parent,” and together with DFR Holdings, the “Investors” and, the Investors together with the Company, the “Parties”).

 

WHEREAS, the Company is a party to the Asset Purchase Agreement, dated as of July [·], 2012 (the “Asset Purchase Agreement”), by and among the Company, CIFC Asset Management LLC, an affiliate of the Company (“CIFCAM”), GE Capital Debt Advisors LLC (“GECDA”), and General Electric Capital Corporation (“GECC”);

 

WHEREAS, as of the date hereof, DFR Holdings owns (a) [4,545,455] shares of common stock of the Company, par value $0.001 per share (“Common Stock”), and (b) Senior Subordinated Convertible Notes in the original principal amount of twenty-five million dollars ($25,000,000) and due December 9, 2017 (the “Convertible Notes”), which are convertible into shares of Common Stock (the “Conversion Shares”);

 

WHEREAS, as of the date hereof, CIFC Parent owns [9,090,909] shares of Common Stock;

 

WHEREAS, as conditions to the obligations of the Company, CIFCAM, GECC and GECDA to consummate the Transactions (as defined in the Asset Purchase Agreement), (a) GE Capital Equity Investments, Inc. (“GECEII”) and the Company intend to establish certain terms and conditions concerning the corporate governance of the Company, the shares and warrants to purchase shares of the Company’s capital stock held by GECEII and related provisions concerning the relationship of GECEII with, and its investment in, the Company, as provided in the Investment Agreement dated as of the date hereof (as amended and in effect, the “GE Investment Agreement”), and (b) the Company, DFR Holdings, CIFC Parent and GECEII intend to enter into the Second Amended and Restated Registration Rights Agreement dated as of the date hereof (the “Registration Rights Agreement”);

 

WHEREAS, the Company and the Investors are parties to the Amended and Restated Stockholders Agreement, dated as of April 13, 2011, as amended by the Amendment to Amended and Restated Stockholders Agreement, dated as of December [•], 2011 (the “Original Agreement”);

 

WHEREAS, the execution and delivery of this Agreement is a condition to the obligations of the GECC and GECDA to consummate the Transactions;

 

WHEREAS, pursuant to Section 5.12 of the Original Agreement, the Original Agreement may be amended by a written instrument executed by each Investor and the Company and approved by a majority of the Independent Directors (as defined in the Original Agreement) then serving on the board of directors of the Company (the “Board”); and

 

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WHEREAS, this Agreement was approved by a majority of the Independent Directors (as defined in the Original Agreement) then serving on the Board at a meeting of the Board held on July [·], 2012.

 

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

 

Article I
 GENERAL

 

Section 1.1                                    Effective Date.  This Agreement shall be delivered at the Closing and shall not be effective, and the Parties shall not be bound by any obligations hereunder, until the Closing occurs.

 

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

 

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

 

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

 

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

 

“Agreement” has the meaning assigned in the preamble.

 

“Asset Purchase Agreement” has the meaning assigned in the recitals.

 

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

 

“Beneficial Ownership” by a Person of any securities includes ownership by any Person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares: (i) voting power which includes the power to vote, or to direct the voting of, such security; and/or (ii) investment power which includes the power to dispose, or to direct the disposition, of such security; and shall otherwise be interpreted in accordance with the term “beneficial ownership” as defined in Rule 13d-3 adopted by the SEC under the Exchange Act; provided, that for purposes of determining Beneficial Ownership, a Person shall be deemed to be the Beneficial Owner of any securities that may be acquired by such Person pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange

 

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rights, warrants or options, or otherwise (irrespective of whether the right to acquire such securities is exercisable immediately or only after the passage of time, including the passage of time in excess of sixty (60) days, the satisfaction of any conditions, the occurrence of any event or any combination of the foregoing).  For purposes of this Agreement, (x) a Person shall be deemed to Beneficially Own any securities Beneficially Owned by its Affiliates or any “group” (as contemplated by Exchange Act Rule 13d-5(b)) of which such Person or any such Affiliate is or becomes a member; provided, that, notwithstanding the foregoing, no Investor shall be deemed to Beneficially Own the Investor Shares Beneficially Owned by any other Investor solely due to the fact that the Investors constitute a group (as contemplated by Exchange Act Rule 13d-5(b)), (y) for the avoidance of doubt, DFR Holdings shall be deemed to Beneficially Own the Conversion Shares (assuming all Conversion Shares then issuable pursuant to the Convertible Notes Beneficially Owned by the DFR Holdings Holders are outstanding), and (z) for the avoidance of doubt, neither Investor or its Affiliates shall be deemed to Beneficially Own the GE Shares or the GE Warrant Shares.  The term “Beneficially Own” shall have a correlative meaning.

 

“Board” has the meaning assigned in the recitals.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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Common Stock or other securities shall be converted in connection with stock splits, reverse stock splits, stock dividends or distributions, combinations or any similar recapitalizations after the date of this Agreement.

 

“CIFCAM” has the meaning assigned in the recitals.

 

“Closing” has the meaning ascribed to “Initial Closing” in the Asset Purchase Agreement.

 

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

 

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

 

“Common Stock” has the meaning assigned in the recitals.

 

“Company” has the meaning assigned in the preamble.

 

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

 

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

 

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

 

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

 

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

 

“Consents” means all consents, notices, authorizations, novations, Orders, waivers, approvals, licenses, accreditations, certificates, declarations, filings or expiration of waiting

 

4

 

periods, non-objection or confirmation by a rating agency that an action or event will not result in the reduction or withdrawal of a rating.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Denominator Shares” means, as of the applicable measurement date, together, the sum of (i) the outstanding shares of Common Stock and any Other Capital Stock, (ii) the Conversion Shares issuable upon the conversion of the aggregate amount Convertible Notes then outstanding (calculated assuming all Conversion Shares then issuable pursuant to the Convertible Notes are outstanding), (iii) any issued GE Warrant Shares, and (iv) Warrant Shares issuable to the Initial Holder (as defined in the GE Warrant) upon exercise of the GE Warrant.

 

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

 

5

 

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

 

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

 

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

 

“Director” means any member of the Board.

 

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

 

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

 

“GE Holder” has the meaning ascribed to “Investor Holder” in the GE Investment Agreement.

 

“GE Investment Agreement” has the meaning assigned in the recitals.

 

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

 

“GE Warrant” has the meaning ascribed to “Investor Warrant” in the GE Investment Agreement.

 

“GE Warrant Shares” has the meaning ascribed to “Warrant Shares” in the GE Investment Agreement.

 

“GECC” has the meaning assigned in the recitals.

 

“GECDA” has the meaning assigned in the recitals.

 

6

 

“GECEII” has the meaning assigned in the recitals.

 

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

 

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

 

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

 

“Investor” has the meaning assigned in the preamble.

 

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

 

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

 

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

 

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

 

“Merger Agreement Closing” has the meaning ascribed to “Closing” in the Agreement and Plan of Merger, dated as of December 21, 2010, as amended, by and among the Company, Bulls I Acquisition Corporation, Bulls II Acquisition LLC, CIFC Parent and Commercial Industrial Finance Corp.

 

“NASDAQ” means the NASDAQ Stock Market LLC.

 

“Necessary Action” means, with respect to a specified result, all reasonable actions (to the extent not prohibited by Law) necessary to cause such result, including (i) voting or providing a written consent or proxy with respect to the Investor Shares, (ii) causing the adoption of stockholders’ resolutions and amendments to the Constituent Documents of the Company,

 

7

 

(iii) refraining from objecting and waiving any available statutory appraisal or similar rights, (iv) executing agreements and instruments, (v) obtaining, or causing to be obtained, all Governmental Approvals and Third Party Consents, (vi) nominating or electing any members of the Board, (vii) removing any members of the Board whom the person obliged to take the Necessary Action has the right to remove, and (viii) calling or causing to be called a special meeting of the Board or stockholders of the Company.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

“Parties” has the meaning assigned in the recitals.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

“Termination Notice” has the meaning assigned in Section 5.1(a)(ii).

 

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

 

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

 

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

 

“Transactions” has the meaning assigned in the preamble.

 

“Transfer” means the transfer of ownership by sale, exchange, assignment, pledge, encumbrance, lien, gift, donation, grant or other conveyance of any kind, whether voluntary or involuntary, including conveyances by operation of Law or legal process (and hereby expressly includes, with respect to an Investor, any voluntary or involuntary appointment of a receiver, trustee, liquidator, custodian or other similar official for such Investor or all or any part of such Investor’s property under any bankruptcy Law).  For the avoidance of doubt, the Parties hereto acknowledge and agree that any Transfer of the Equity Interests of any Investor or any Affiliate of such Investor that controls such Investor will be deemed a Transfer of the Investor Shares held by such Investor under this Agreement if, following such Transfer such Investor is no longer controlled, directly or indirectly, by the Person or Persons that control, directly or indirectly, such Investor on the date hereof or by an Affiliate or Affiliates thereof; provided, however, that a Transfer of limited partnership interests in an investment fund that controls, directly or indirectly, such Investor shall not be deemed a Transfer of such Investor’s Shares hereunder so long as the manager, advisor or general partner (or Person acting in a similar capacity) that controls such investment fund on the date hereof or an Affiliate thereof continues to control such investment fund following such Transfer.

 

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

 

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

 

Section 1.3                                      Construction.  Unless the context of this Agreement clearly requires otherwise: (i) references to the plural include the singular and vice versa; (ii) references to one gender include all genders; (iii) whenever the words “include,” “includes” or “including” are used in this Agreement they will be deemed to be followed by the phrase “without limitation;” (iv) the words “hereof,” “herein,” “hereby,” “hereunder” and similar terms in this Agreement

 

10

 

refer to this Agreement as a whole and not to any particular provision of this Agreement; (v) when a reference is made in this Agreement to a Section, Schedule, Exhibit or Annex, such reference shall be to a Section, Schedule, Exhibit or Annex of this Agreement unless otherwise indicated; (vi) all references in this Agreement to “$” are intended to refer to U.S. dollars; (vii) unless otherwise specifically provided for herein, the term “or” shall not be deemed to be exclusive; and (viii) any reference to Law shall include any amendment thereof or any successor thereto and any rules and regulations promulgated thereunder.  The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

Section 1.4                                      Disclaimer of “Group” Status.  Each Investor hereby expressly disclaims Beneficial Ownership of any Equity Interests in the Company held by GECEII and its Affiliates.  This Agreement shall not constitute a written or oral agreement by either Investor or any Affiliate of such Investor to act together with GECEII or any of its Affiliates for the purpose of acquiring, holding, voting or disposing of any Equity Interests in the Company.

 

Article II
 REPRESENTATIONS AND WARRANTIES

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)                                 Other than the filings required by Section 13 of the Exchange Act (which such Investor shall file with the SEC when and as the same is due), the execution and delivery of this Agreement by such Investor and the performance by such Investor of its obligations under this Agreement: (i) does not violate any provision of the Constituent Documents of such Investor; and (ii)(A) does not conflict with or violate any applicable Law of any Governmental Authority having jurisdiction over the Investor or any part of the properties or assets of the Investor, (B) does not require the Consent of any Person under, violate, result in the termination or acceleration of or of any right under, give rise to or modify any right or obligation under (whether or not in combination with any other event or circumstance), or conflict with, breach or constitute a default under (in each case with or without notice, the passage of time or both), any Contract to which such Investor is a party or by which any of its properties or assets is bound, (C) does not result in the creation or imposition of any Lien on any part of the properties or assets of such Investor, (D) does not violate any Order binding on such Investor or any part of its

 

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properties or assets, and (E) does not otherwise require any Governmental Approvals or any Third Party Consents.

 

Article III
 BOARD OF DIRECTORS

 

Section 3.1                                      Board of Directors.

 

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

 

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

 

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

 

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

 

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

 

(iv)                              three (3) Independent Directors designated by the Nominating Committee; provided, that the initial Independent Directors shall be Frederick Arnold, Robert B. Machinist and Frank C. Puleo; and

 

(v)                                 one (1) Director designated by the Nominating Committee.

 

(c)                                  Removal; Vacancy.

 

(i)                                     Except as provided in Section 3.1(d) or as required by applicable Law, no Director designated pursuant to Section 3.1(b) above may be removed from office unless (A) in the case of a Director designated by DFR Holdings pursuant to Section 3.1(b)(i), such removal is directed or approved by DFR Holdings, (B) in the case of a Director designated by CIFC Parent pursuant to Section 3.1(b)(ii), such removal is directed or approved by CIFC Parent, (C) in the case of a Director designated pursuant to Section 3.1(b)(iv) or Section 3.1(b)(v), such removal is directed or approved by the Nominating Committee, (D) in the case of the CEO Director, pursuant to Section 3.1(c)(iii).  Each Investor shall vote its Investor Shares

 

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and take, or shall cause to be taken, all other Necessary Action to effect any removal contemplated by this Section 3.1(c), subject, in the case of a removal pursuant to clause (C) of this Section 3.1(c)(i), to the prior approval of the Nominating Committee.

 

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

 

(iii)                               If for any reason the CEO Director shall cease to serve as the Chief Executive Officer of the Company, the Company shall seek to obtain the immediate resignation of the CEO Director as a Director of the Company contemporaneously with such CEO Director’s termination of service to the Company as its Chief Executive Officer.  In the event such resignation is not effective within ten (10) days of such termination of service, upon the written request of any Investor, the Company shall call a special meeting of stockholders or seek the written consents of stockholders, in each case to approve or consent to the removal of the CEO Director (to the extent permitted by Law and the Company’s Constituent Documents).  In connection with any such meeting or written consent, each of the Investors shall vote their respective Investor Shares (A) to remove the former Chief Executive Officer from the Board if such individual has not previously resigned as a Director (to the extent permitted by Law and the Company’s Constituent Documents) and (B) to elect such person’s replacement as Chief Executive Officer of the Company (if any) as the new CEO Director.  Any employment agreement between the Company and the Chief Executive Officer of the Company shall contain a requirement that the Chief Executive Officer of the Company resign as the CEO Director contemporaneous with termination of his service as the Chief Executive Officer of the Company.  Notwithstanding anything to the contrary in the foregoing, an individual who formerly served as the CEO Director and/or Chief Executive Officer of the Company may be nominated, designated, and/or elected as a Director of the Company (other than the CEO Director) in accordance with Section 3.1(b) above.

 

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

 

(i)                                     If the Investor Shares Beneficially Owned by any Investor represent less than twenty-five percent (25%) but at least fifteen percent (15%) of the Outstanding Stock, the number of Directors that such Investor shall be entitled to designate pursuant to Section 3.1(b)(i) or Section 3.1(b)(ii) (as applicable) shall be reduced to two (2).  If the Investor Shares Beneficially Owned by any Investor represent less than fifteen percent (15%) but at least five percent (5%) of the Outstanding Stock, the number of Directors that such Investor shall be entitled to designate pursuant to Section 3.1(b)(i) or Section 3.1(b)(ii) (as applicable) shall be reduced to one (1).  For the avoidance of doubt, (A) if any Investor ceases to Beneficially Own Investor Shares representing at least five percent (5%) of the Outstanding

 

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Stock, such Investor shall not be entitled to designate any Director pursuant to Section 3.1(b)(i) or Section 3.1(b)(ii) and (B) except as provided in Section 3.1(d)(iii) below, once any Investor loses its right to designate any Director pursuant to this Section 3.1(d)(i), such Investor shall not be entitled to regain its right to designate such Director, even if such Investor subsequently Beneficially Owns a number of Investor Shares in excess of the applicable threshold.

 

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

 

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

 

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

 

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

 

(g)                                 Compensation and Benefits.  The compensation and benefits of all Directors shall be determined with the approval of a majority of the Board and a majority of Independent Directors.

 

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

 

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

 

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

 

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

 

Section 3.2                                      Restrictions on Transfer.

 

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

 

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

 

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same terms and conditions of, the Note Offer.  The ROFR Notice shall be accompanied by a true copy of the Note Offer (which shall identify the Buyer and all relevant information in connection therewith).

 

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

 

(iii)                               In the event that the ROFR Investor does not elect (together with its Affiliates) to purchase all of the ROFR Notes pursuant to Section 3.2(a)(ii), during the sixty (60)-day period following the expiration of the ROFR Period the Transferring Noteholder may sell all of the ROFR Notes to the Buyer on the terms and conditions set forth in the Note Offer; provided, that, as a condition to the consummation of such Transfer, the Buyer executes and delivers to the Company and each Investor (other than the Investor effecting such Transfer) an agreement assuming the obligations of an Investor set forth in this Agreement in form and substance reasonably satisfactory to the Company and each such Investor.  If the Transferring Noteholder does not consummate the Transfer of the ROFR Notes to the Buyer in accordance with this Section 3.2(a)(iii) within such sixty (60)-day period, then the Note Offer shall be deemed to lapse and any Transfer pursuant to such Note Offer shall be in violation of the provisions of this Section 3.2(a) unless the Transferring Noteholder sends a new ROFR Notice and once again complies with the provisions of this Section 3.2(a) with respect to such Note Offer.

 

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

 

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

 

(ii)                                  At any time within thirty (30) days after receipt by the Offeree Investor of the Offer Notice (the “Option Period”), the Offeree Investor (or any of its Affiliates) may elect to accept the offer to purchase with respect to all but not less than all of the Offered

 

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Shares and shall give written notice of such election (the “Acceptance Notice”) to the Transferring Investor within the Option Period.  The Acceptance Notice shall constitute a valid, legally binding and enforceable agreement for the sale and purchase of the Offered Shares.

 

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

 

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

 

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

 

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

 

Section 3.3                                      Majority Voting Provision.  Except as otherwise agreed to in writing by the Requisite Investors or as required by Law, the Company shall (and each Investor shall take,

 

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or cause to be taken, all other Necessary Action, to) ensure that each directorship shall be elected by a plurality of the votes cast.

 

Section 3.4                                      Controlled Company Exemption.

 

(a)                                  Each Investor shall take all Necessary Action for the Company to be treated as a “controlled company” as defined by Rule 5615(c) of the NASDAQ Marketplace Rules and make all necessary filings and disclosures associated with such status; provided, that nothing in this Section 3.4 shall be deemed to prohibit any Transfer of Shares effected in compliance with Section 3.2.  If, at any time, the Company ceases to qualify as a “controlled company” under NASDAQ Marketplace Rules, the Investors shall take, or cause to be taken, all Necessary Action to cause a sufficient number of their designees (including Directors designated pursuant to Section 3.1(b)(iv)) to qualify as Independent Directors to ensure that the Board complies with applicable NASDAQ Marketplace Rules regarding the independence of the Board within the time periods specified under Rule 5615(c)(3) of the NASDAQ Marketplace Rules.

 

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

 

Section 3.5                                      Covenants.

 

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

 

(b)                                 During the period beginning on the date of this Agreement and ending on the earlier of (X) April 13, 2014 and (Y) the date on which the Investors, collectively, Beneficially Own Investor Shares representing less than thirty-five percent (35%) of the Outstanding Stock, the Company shall not, and shall not permit any Subsidiary of the Company to, without first having provided written notice of such proposed action to each Investor and having obtained the prior written consent of the Requisite Investors:

 

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

 

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

 

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

 

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

 

(c)                                  CMA Requirements:

 

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

 

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

 

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

 

(B)                                CIFC Parent shall use commercially reasonable efforts and take all other Necessary Action to remain, and not take any action that would cause it to

 

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no longer be, an “affiliate” of CIFC (as such term is used in the applicable CIFC CLO Management Agreement and CMA Requirement);

 

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

 

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

 

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

 

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

 

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

 

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

 

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Section 3.6                                      Committee Membership.

 

(a)                                  The Board shall establish and maintain:

 

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

 

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

 

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

 

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

 

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

 

Section 3.8                                      Preemptive Rights.

 

(a)                                  Subject to Section 3.9, for so long as any Investor Beneficially Owns Investor Shares representing at least five percent (5%) of the Denominator Shares, such Investor shall have, the right to purchase, in accordance with the procedures set forth herein, its pro rata portion, calculated based on the number of Investor Shares held by such Investor as a percentage of the Denominator Shares prior to issuance of the New Shares (such Investor’s “Pro Rata

 

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Portion”) of any New Shares that the Company may, from time to time, propose to sell and issue (hereinafter referred to as the “Preemptive Right”).

 

(b)                                 In the event that the Company proposes to issue and sell New Shares, the Company shall notify each of the Investors in writing with respect to the proposed New Shares to be issued (the “New Shares Notice”).  Each New Shares Notice shall set forth: (i) the number of New Shares proposed to be issued by the Company and the purchase price therefor; (ii) each Investor’s Pro Rata Portion of such New Shares; and (iii) any other material term (including, if known, the expected date of consummation of the purchase and sale of the New Shares).

 

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

 

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

 

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

 

Section 3.9                                      Standstill.

 

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

 

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

 

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Offer, or in such Approved Merger, not less than a majority of the Subject Shares that are affirmatively voted (in person or by proxy) on the related merger proposal (and not withdrawn) are voted for (i.e., in favor) of such proposal;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Article IV
 NON SOLICITATION

 

Section 4.1                                      Non Solicitation.

 

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

 

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

 

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

 

(b)                                 After the Merger Agreement Closing and so long as an Investor or any of its Affiliates owns (other than in a fiduciary capacity or subject to a similar duty or standard of

 

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

 

Article V
 MISCELLANEOUS

 

Section 5.1                                      Termination of Agreement.

 

(a)                                  This Agreement shall continue in effect until:

 

(i)                                     Terminated by written agreement of the Company and the Requisite Investors; or

 

(ii)                                  Terminated by the Company with fifteen (15) days’ prior written notice to the applicable Investor (the “Termination Notice”) upon such time as the Investor Shares Beneficially Owned by such Investor represent less than five percent (5%) of the Outstanding Stock; provided, however, that this Section 5.1(a)(ii) shall apply only if, prior to delivery by the Company of the Termination Notice to such Investor, the Company has delivered to such Investor a Dilution Notice in accordance with Section 3.1(d)(iii) hereof (mutatis mutandis) and such Investor has not, within the respective time periods specified in Section 3.1(d)(iii) (mutatis mutandis), given the Company written notice of their intention to effect a Cure Purchase and consummated such Cure Purchase.

 

(b)                                 The obligations of each Investor pursuant to Section 4.1 shall survive the termination of this Agreement as to such Investor until the expiration of the Tail Period.  The obligations of CIFC Parent pursuant to Section 3.5(c) shall survive the termination of this Agreement as to CIFC Parent until the expiration of such obligations in accordance with Section 3.5(c)(iii).

 

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

 

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

 

If to the Company:

 

 

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CIFC Corp.

250 Park Avenue, 4th Floor

New York, NY 10177

Attention:  Robert C. Milton III

Email: rmilton@cifc.com

 

with copies to:

 

Goodwin Procter  LLP

53 State Street

Boston, MA 02109

Attention:  John Mutkoski; Amber Dolman
 Facsimile:  617-523-1231
 E-mail:  jmutkoski@goodwinprocter.com; adolman@goodwinprocter.com

 

If to DFR Holdings:

 

DFR Holdings, LLC

c/o Columbus Nova

900 Third Avenue, 19th Floor

New York, NY 10022

Attention: Paul Lipari

Facsimile: (212) 308-6623

 

with copies to:

 

Latham & Watkins LLP

885 Third Avenue

New York, New York 10022

Attention:       James C. Gorton, Esq.

Facsimile:      (212) 751-4864

 

If to CIFC Parent:

 

CIFC Parent Holdings LLC

c/o Charlesbank Capital Partners, LLC

200 Clarendon Street, 54th Floor

Boston, MA 02116

Attention:  Tim R. Palmer

Facsimile:  617-619-5402

E-mail:  tpalmer@charlesbank.com

 

with copies to:

 

Goodwin Procter LLP

135 Commonwealth Drive

Menlo Park, CA  94025

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 5.12                                Amendments and Waivers.  This Agreement may not be amended, altered or modified except by written instrument executed by each Investor and the Company and approved by a majority of the Independent Directors then serving on the Board (whether at a

 

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

 

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

 

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

 

[Remainder of Page Left Blank]

 

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

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
CIFC   CORP.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
DFR   HOLDINGS:
    
	
 
    	
 
    	
 
    
	
 
    	
DFR   HOLDINGS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CIFC PARENT:
    
	
 
    	
 
    	
 
    
	
 
    	
CIFC PARENT HOLDINGS LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Signature Page to Second Amended and Restated Stockholders Agreement

 

 

EXHIBIT E to the Asset Purchase Agreement

 

THE SECURITIES OF THE ISSUER REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE STATE SECURITIES LAWS OF ANY STATE.  WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER, EXCEPT PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.

 

	
No. of   Shares of Common Stock or Preferred Stock, as applicable: 2,000,000
    	
Warrant No. A-1
    

 

WARRANT
 to Purchase
 Common Stock or Preferred Stock of
 CIFC Corp.

 

THIS IS TO CERTIFY THAT, for value received, GE Capital Equity Investments, Inc., a Delaware corporation (“GECEI,” and, together with any successor or registered assign that is GECC or any Person whose Equity Interests in the Issuer must be aggregated with those of GECC for purposes of the BHC Act, the “Initial Holder”), is entitled to purchase in whole or in part from time to time from CIFC Corp., a Delaware corporation (together with any successor thereto, the “Issuer”), at any time during the Exercise Period, the number of Warrant Shares (subject to adjustment as provided herein) shown above at a purchase price of $6.375 per Warrant Share (subject to adjustment as provided herein) (the “Exercise Price”).  Certain capitalized terms used in this Warrant are defined in Section 1.02.

 

This warrant to Purchase Common Stock or Preferred Stock (this “Warrant,” and collectively with any other Warrants to Purchase Common Stock or Preferred Stock issued upon any transfer of all or a portion of this Warrant, the “Warrants”) has been issued pursuant to the Purchase Agreement.

 

As further set forth herein: (a) Common Stock shall be issuable in connection with any exercise of this Warrant by any Other Holder; and (b) only Preferred Stock shall be issuable in connection with any other exercise of this Warrant.

 

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

 

SECTION 1.                                Certain Definitions.

 

1.01               Reserved.

 

1.02               Other Definitions.  As used herein, the following terms shall have the following meanings (all terms defined in this Section 1.02 or in other provisions of this Warrant in the singular shall have the same meanings when used in the plural and vice versa):

 

“Action” means any judicial, legislative, administrative or arbitral actions, suits, investigations, audits, claims or other proceedings by or before a Governmental Authority.

 

“Affiliate” means, with respect to any Person, any other Person, directly or indirectly through one or more intermediaries, controlling, controlled by or under common control with such Person; provided, that for purposes of this Warrant, (a) the Issuer and its Subsidiaries, on the one hand, shall not be deemed to be Affiliates of the Initial Holder, on the other hand, and (b) the Major Stockholders, on the one hand, shall not be deemed to be Affiliates of the Initial Holder or the Company, on the other hand.  The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as applied to any Person, means the

 

 

possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting or other securities, by contract or otherwise.

 

“BHC Act” means the Bank Holding Company Act of 1956, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time, and any other applicable Federal banking law, regulation or policy.

 

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

 

“Business Day” means a day other than Saturday, Sunday or any other day on which banks located in New York, New York are authorized or obligated by Law to close.  If a payment date is not a Business Day, payment may be made at such place on the next succeeding day that is a Business Day, and no interest on the amount of such payment shall accrue for the intervening period.

 

“Certificate of Designation” means the form of Certificate of Designation of Series A Convertible Non-Voting Preferred Stock attached hereto as Annex A.

 

“CIFC Parent” means CIFC Parent Holdings LLC, a Delaware limited liability company.

 

“Closing Price” with respect to any securities on any day means (a) the closing sale price as of 4:00 p.m. Eastern Time on such day or any earlier final closing on such day or, if no such sale takes place on such day, the average of the reported high and low bid prices on such day, in each case on NASDAQ, or the New York Stock Exchange, as applicable, or, if such security is not listed or admitted to trading on such national market or exchange, on the national stock exchange or SEC-recognized trading market in the United States on which such security is quoted or listed or admitted to trading, or, (b) if such securities are not quoted or listed or admitted to trading on any national stock exchange or SEC-recognized trading market in the United States, the average of the high and low bid prices of such security on the over-the-counter market on the day in question as reported by the National Quotation Bureau Incorporated or a similar generally accepted reporting service in the United States, or, if not so available, in such manner as furnished by any New York Stock Exchange member firm selected from time to time by the Board for that purpose, or (c) if the information in (a) and (b) is not available, a price determined in good faith by the Board, whose determination shall be conclusive and described in a resolution of the Board.

 

“Common Stock” means the Common Stock, $0.001 par value per share, of the Issuer.

 

“Common Stock Record Date” means, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock have the right to receive any cash, securities or other property or in which the Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, (a) the date fixed for determination of shareholders entitled to receive such cash, securities or other property (whether such date is fixed by the Board or by statute, contract or otherwise), or (b) if different from (a), the date on which the Common Stock trades “ex” the applicable dividend or distribution.

 

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

 

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“DFR Holdings” means DFR Holdings LLC, a Delaware limited liability company.

 

“Disposition Event” means (a) any merger or consolidation of the Issuer, or any sale of the outstanding Shares or other transaction or series of related transactions (i) as a result of which, in each such case, the holders of the Shares before such merger, consolidation or transfer(s), together with their Affiliates, cease to hold, directly or indirectly, a majority of the Shares or a majority of the outstanding voting securities of any successor to the Issuer immediately following such merger, consolidation or transfer(s), and (ii) in which, in each such case, the holders of the Shares before such merger, consolidation or transfer(s) receive cash (and no other form of consideration) in consideration for their Shares; or (b) a Liquidation Event.

 

“Dispute” has the meaning assigned to such term in Section 14.12(a).

 

“Equity Interest” means any type of equity ownership in an entity, including partnership interests in a general partnership or limited partnership, membership interests in a limited liability company, stock or similar security (and any option, warrant, right or security, including debt securities, convertible, exchangeable or exercisable thereto or therefor) in a corporation or the comparable instruments for any other entity or any other interest entitling the holder thereof to participate in the profits of such entity, the proceeds or the disposition of such entity or any portion thereof or to vote for the governing body of such entity.

 

“Escalation Notice” has the meaning assigned to such term in Section 14.12(b).

 

“Exercise Notice” has the meaning assigned to such term in Section 2.01.

 

“Exercise Period” means any time after the Original Issuance Date but prior to the Expiration Date.

 

“Exercise Price” has the meaning assigned to such term in the first paragraph of this Warrant.

 

“Expiration Date” means [    ], 2014.  [Second anniversary of issuance]

 

“GECC” means General Electric Capital Corporation, a Delaware corporation and the indirect parent company of GECEI and GECDA.

 

“GECDA” means GE Capital Debt Advisors LLC, a Delaware limited liability company.

 

“GECEI” has the meaning assigned to such term in the first paragraph of this Warrant.

 

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

 

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“Holder” or “Holders” means the registered holder or holders of this Warrant or the registered holder or holders of certificates issued after the Original Issuance Date (in addition to or in lieu of this Warrant) that represent this Warrant.

 

“include” and “including” shall be construed as if followed by the phrase “, without being limited to,”.

 

“Initial Holder” has the meaning assigned to such term in the first paragraph of this Warrant.

 

“Investment Agreement” means the Investment Agreement, dated as of the Original Issuance Date, by and between the Issuer and GECEI, as the same may be modified and supplemented and in effect from time to time.

 

“Issuer” has the meaning assigned to such term in the first paragraph of this Warrant.

 

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

 

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

 

“Liquidation Event” means the voluntary or involuntary liquidation, dissolution or winding up of the Issuer.

 

“Major Stockholders” means, together, DFR Holdings, CIFC Parent, and any Person that is both a Stockholder and an Affiliate of either of the foregoing entities and any successors thereto (each, a “Major Stockholder”).

 

“net issue exercise” means issuance of a number of Warrant Shares equal to (i) the number of Shares for which the Warrant could then be exercised, multiplied by (ii) the difference between the value of one share of Common Stock in the Disposition Event minus the Exercise Price, then divided by (iii) the value of one share of Common Stock in the Disposition Event.

 

“New York Court” has the meaning assigned to such term in Section 14.13(a).

 

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

 

“Original Issuance Date” means [     ], 2012.

 

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“Other Holder” means any Holder other than the Initial Holder.  For the avoidance of doubt, such term excludes any successor or registered assign of GECEI whose Equity Interests in the Issuer must be aggregated with those of GECC for purposes of the BHC Act.

 

“Permitted Buyer” means any Person that is permitted under applicable Law and any other international, federal, state, local, county or municipal governing regulations, ordinances, rules, orders, compliance protocols, or statutes to own the Warrant Shares being purchased from a Holder following exercise of the Warrant.

 

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

 

“Preferred Stock” means the Series A Convertible Non-Voting Preferred Stock, par value $0.001 per share, of the Issuer, each share of which shall have the designations, powers, preferences and rights, and the qualifications, limitations or restrictions thereof, set forth in the Certificate of Designation.  Such designations, powers, preferences and rights shall include that the Preferred Stock shall be mandatorily exchanged for Common Stock on a share-for-share basis if transferred to any Other Holder.

 

“Purchase Agreement” means the Asset Purchase Agreement, dated as of July     , 2012, by and among the Issuer, GECDA, and GECC, as the same may be amended, modified, supplemented or restated from time to time.

 

“Redeemable Capital Stock” has the meaning assigned to such term in Section 4.07.

 

“Redemption Event” has the meaning assigned to such term in Section 4.08.

 

“Registration Rights Agreement” means the Second Amended and Restated Registration Rights Agreement, dated as of the Original Issuance Date, by and among the Issuer, GECEI, DFR Holdings, and CIFC Parent, as the same may be modified and supplemented and in effect from time to time.

 

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

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time.

 

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

 

“Shares” means, collectively (but without duplication), (a) shares of Common Stock, (b) shares of Preferred Stock, or (c) shares of other classes or series of capital stock of the Issuer that may exist from time to time.

 

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“Stockholders” means the holders of Shares from time to time and “Stockholder” means any one of them.

 

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

 

“Voting Shares” means any outstanding Shares, including the Common Stock, that, as of the applicable determination date, are entitled to vote on matters submitted to a vote at a meeting of Stockholders.

 

“Warrant” and “Warrants” have the respective meanings set forth in the second paragraph of this Warrant.

 

“Warrant Shares” means, collectively (but without duplication), (a) the Shares issuable upon exercise of this Warrant in accordance with its terms, (b) any securities into which or for which such Shares shall have been converted or exchanged pursuant to any recapitalization, reorganization or merger of the Issuer, and (c) any securities issued with respect to the foregoing pursuant to a dividend, distribution or split.

 

SECTION 2.                                Exercise of Warrant.

 

2.01                           Mechanics of Exercise.  Subject to all of the terms and conditions hereof, during the Exercise Period, a Holder may exercise this Warrant, on one or more occasions, on any Business Day (or any other day on which a Disposition Event occurs), in whole or in part, by delivering to the Issuer, at its office maintained for such purpose pursuant to Section 14.01 hereof, (a) a written notice of the Holder’s election to exercise this Warrant substantially in the form attached hereto as Annex B, which notice shall specify the number of Warrant Shares to be purchased (the “Exercise Notice”), (b) a check or checks payable to the Issuer (or by any other reasonable acceptable form of immediately available funds including by wire transfer) in an aggregate amount equal to the aggregate Exercise Price for the number of Warrant Shares as to which this Warrant is being exercised, (c) this Warrant, and (d) to the extent the Holder is an Affiliate of GECEI and not a party to the Investment Agreement, a “statement of adhesion” pursuant to which such Affiliate confirms its agreement to be subject to and bound by all of the provisions set forth in the Investment Agreement that are applicable to Investor Holders (as defined in the Investment Agreement).

 

2.02                           Automatic Exercise.  If at any time during the Exercise Period, the Issuer effects a Disposition Event, then this Warrant shall automatically (without any act on the part of the Holder) be exercised pursuant to this Section 2.02, effective immediately prior to the consummation of such Disposition Event on a net issue exercise basis to the extent such net issue exercise would result in the issuance of Warrant Shares; provided, that if such net issue exercise would not result in the issuance of Warrant Shares upon the consummation of such Disposition Event, this Warrant shall thereafter be cancelled and be of no further force and effect; provided, further, that in the case of a Disposition Event structured as a merger or consolidation of the Issuer, the Warrant shall be redeemed or cancelled in exchange for a payment of the applicable cash payable to holders of the number of Shares for which the Warrant could then be exercised minus the aggregate Exercise Price; provided, further, that in the case of a Disposition Event structured as a sale of Voting Shares, the Issuer shall use commercially reasonable efforts to make such provisions as are necessary to ensure that the Holder will be given the option of selling the Warrant.  If this Warrant is automatically exercised pursuant to this Section 2.02, the Issuer shall notify the Holder of the automatic exercise as soon as reasonably practicable, and the Holder shall surrender the Warrant to the Issuer in accordance with the terms hereof.

 

2.03                           Certificates.  Upon receipt of an Exercise Notice, the Issuer shall, as promptly as practicable and in any event within twenty (20) Business Days thereafter, execute or cause to be executed and

 

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deliver or cause to be delivered to the Holder a stock certificate or certificates representing the aggregate number of Warrant Shares and other securities issuable upon such exercise.  The stock certificate or certificates for Warrant Shares or other securities so delivered shall be in such denominations as may be specified in the Exercise Notice (subject always to Section 12.02 hereto) and shall be registered in the name of the Holder or, subject to Section 14.03 hereof, such other name or names as shall be designated in such Exercise Notice.  Except as prohibited by applicable Law, such stock certificate or certificates shall be deemed to have been issued and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such shares, including, to the extent permitted by Law, the right to vote such shares (with respect to Voting Shares) or to consent or to receive notice as a stockholder, as of the date on which the Issuer receives the last of the Exercise Notice, payment of the Exercise Price and this Warrant as aforesaid, and all taxes required to be paid by the Holder prior to the issuance of such shares pursuant to Section 9 hereof, if any, have been paid.  If this Warrant shall have been exercised only in part, the Issuer shall, at the time of delivery of the certificate or certificates representing Warrant Shares and other securities, execute and deliver to the Holder a new warrant certificate evidencing the rights of the Holder to purchase the unpurchased Warrant Shares provided for in this Warrant, which new warrant certificate shall in all other respects be identical with this Warrant, or, at the request of the Holder, appropriate notation may be made on this Warrant and the same returned to the Holder.  The Issuer agrees that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for Warrant Shares.

 

2.04                           Representations and Warranties.  All Warrant Shares shall, upon payment therefor in accordance with Section 2.01, be duly and validly issued, fully paid and nonassessable and free and clear of any Liens, other than (a) those Liens created by the Holder thereof, (b) restrictions under United States federal and state securities laws, and (c) with respect to the Initial Holder, any restrictions under the Investment Agreement.

 

2.05                           Fractional Shares.  The Issuer shall not be required to issue a fractional Warrant Share upon exercise of this Warrant.  As to any fraction of a share that a Holder would otherwise be entitled to purchase upon such exercise, the Holders shall be entitled to a cash adjustment in respect of such final fraction in an amount equal to the same fraction of the Closing Price per share of Common Stock on the Business Day immediately preceding the date of exercise, which cash adjustment may be paid by netting it from the aggregate Exercise Price payable upon such exercise of this Warrant or by payment from the Issuer.

 

2.06                           Regulatory Matters.  Except in the case of a net issuance pursuant to Section 2.02, exercise of the Warrant is subject to the condition that the Holder (or such other Person or Persons named in the Exercise Notice) is permitted to own the Warrant Shares under applicable Law.

 

SECTION 3.                                Transfer, Division and Combination.  Subject to Section 14.03 hereof, transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of the Issuer to be maintained for such purpose, upon surrender of this Warrant at the office of the Issuer maintained for such purpose pursuant to Section 14.01 hereof, together with a written assignment of this Warrant, substantially in the form of Annex C hereto, duly executed by the Holder or its agent or attorney and payment of funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Issuer shall, subject to Section 14.03 hereof and the immediately following sentence, (a) execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, (b) issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned and (c) promptly cancel this Warrant.  This Warrant, if properly transferred in compliance with this Section 3 and Section 14.03 hereof, may be exercised by a transferee, if permitted by the terms hereof, for the purchase of Warrant Shares without having a new Warrant or Warrants issued.  Notwithstanding any provision herein to the contrary, the Issuer shall not be required to register the transfer of Warrants or Warrant Shares in the name of any Person who acquired this Warrant (or part hereof) or any Warrant Shares otherwise than in compliance with all applicable restrictions in this Warrant.  The Issuer shall maintain at its aforesaid office books for the registration and transfer of the Warrants.

 

SECTION 4.                                Adjustments to Exercise Price and Number of Warrant Shares Issuable Upon Warrant Exercise.  The Exercise Price and the number of Warrant Shares issuable upon exercise hereof shall be subject to adjustment from time to time as set forth in this Section 4. Notwithstanding anything in this Section 4 to the contrary, in no event shall the Exercise Price be reduced below the par value of a Warrant Share.

 

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4.01         Dividend or Distribution of Common Stock.  If the Issuer shall hereafter pay a dividend or make a distribution to all holders of the outstanding shares of Common Stock in shares of Common Stock, the Exercise Price in effect at the opening of business on the date following the Common Stock Record Date shall be reduced by multiplying such Exercise Price by a fraction, (a) the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the Common Stock Record Date and (b) the denominator of which shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such reduction to become effective immediately after the opening of business on the day following the Common Stock Record Date.  If any dividend or distribution of the type described in this Section 4.01 is declared but not so paid or made, the Exercise Price shall again be adjusted to the Exercise Price which would then be in effect if such dividend or distribution had not been declared.

 

4.02         Stock Splits and Reverse Stock Splits.  If the outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Exercise Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced, and, conversely, if the outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the Exercise Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective.

 

4.03         Other In-Kind Distributions.  If the Issuer shall, by dividend or otherwise, distribute to all holders of its shares of Common Stock any class of capital stock of the Issuer (other than any dividends or distributions to which Section 4.01 applies) or evidences of its indebtedness, cash, securities or other assets (excluding any capital stock, evidences of indebtedness, cash or assets distributed upon a merger or consolidation to which Section 5.01 applies), then, in each such case, the Issuer shall make proper provision so that a Holder who exercises this Warrant (or any portion thereof) after the applicable Common Stock Record Date (including any automatic exercise pursuant to Section 2.02 hereunder) shall be entitled to receive upon such exercise or purchase or automatic exercise, in addition to the Warrant Shares issuable upon such exercise, the amount and kind of such distribution that such Holder would have been entitled to receive if such Holder had, immediately prior to such Common Stock Record Date, exercised this Warrant.

 

4.04         Deferral.  In any case in which this Section 4 provides that an adjustment shall become effective immediately after a Common Stock Record Date for an event, the Issuer may defer until the occurrence of such event issuing to the Holder of any Warrant exercised after such Common Stock Record Date and before the occurrence of such event the additional shares of Common Stock issuable upon such exercise by reason of the adjustment required by such event over and above the shares of Common Stock issuable upon such exercise before giving effect to such adjustment.

 

4.05         Treasury Shares.  For purposes of this Section 4, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Issuer or by any of its Subsidiaries. The Issuer shall not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Issuer or by any of its Subsidiaries.

 

4.06         Adjustment of Warrant Shares Issuable.  Upon each adjustment of the Exercise Price as a result of the operation of this Section 4, this Warrant shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of Warrant Shares obtained by multiplying the number of shares covered by this Warrant immediately prior to this adjustment by the Exercise Price in effect immediately prior to such adjustment and dividing the product so obtained by the Exercise Price in effect immediately after such adjustment of the Exercise Price.

 

4.07         Redeemable Capital Stock.  In the event that a Holder would be entitled to receive upon exercise hereof any Redeemable Capital Stock (as defined below) and the Issuer redeems, exchanges or otherwise acquires all of the outstanding shares or other units of such Redeemable Capital Stock (such event being a “Redemption Event”), then, from and after the effective date of such Redemption Event, the Holder shall be entitled to receive upon exercise, in lieu of shares or units of such Redeemable Capital Stock, the kind and amount of shares of stock and other securities and property receivable upon the Redemption Event by a holder of the number of shares

 

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or units of such Redeemable Capital Stock for which this Warrant could have been exercised immediately prior to the effective date of such Redemption Event (assuming, to the extent applicable, that such holder failed to exercise any rights of election with respect thereto and received per share or unit of such Redeemable Capital Stock the kind and amount of stock and other securities and property received per share or unit by a plurality of the non-electing shares or units of such Redeemable Capital Stock), and (from and after the effective date of such Redemption Event) the Holder shall have no other purchase rights under this Warrant with respect to such Redeemable Capital Stock. For purposes of this Section 4.07, “Redeemable Capital Stock” means a class or series of capital stock of the Issuer that provides by its terms a right in favor of the Issuer to call, redeem, exchange or otherwise acquire all of the outstanding shares or units of such class or series.

 

SECTION 5.               Consolidation, Merger, Share Exchange, etc.; Reclassification or Recapitalization.

 

5.01         Consolidation, Merger, Share Exchange, etc.  In case a consolidation, merger or share exchange of the Issuer shall be effected with another Person on or after the Original Issuance Date, then, as a condition of such consolidation, merger or share exchange, lawful and adequate provision shall be made whereby the Holder(s) shall thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified herein and in lieu of each Warrant Share immediately theretofore purchasable and receivable upon the exercise of the Warrant, such shares of stock or other Equity Interests, securities, cash or other property that would have been received upon such consolidation, merger or share exchange by the holder of a share of Common Stock immediately prior to such event.  The Issuer shall not effect any such consolidation, merger or share exchange unless, prior to or simultaneously with the consummation thereof, the successor Person (if other than the Issuer) resulting from such consolidation, merger or share exchange, shall assume, by written instrument, the obligation to deliver to the Holder(s) such shares of stock, securities, cash or other property as, in accordance with the foregoing provisions, such Holder(s) may be entitled to purchase upon the exercise of the Warrant.  The above provisions of this Section 5.01 shall similarly apply to successive consolidations, mergers or share exchanges.

 

5.02         Reclassification or Recapitalization.  If the Warrant Shares issuable upon exercise of this Warrant are changed into the same or a different number of shares of any class or classes or series of stock of the Issuer or other securities or property of the Issuer, whether by reorganization, recapitalization, reclassification or otherwise (other than a subdivision or combination of Shares or stock dividend provided for in Section 4 or a consolidation, merger or share exchange provided for in Section 5.01), then from and after each such event, subject to Section 12.02, the Holder(s) shall have the right to exercise the Warrant for the amount and kind of shares of stock and other securities and property receivable upon such reorganization, recapitalization, reclassification or other change by a holder of the number of Warrant Shares for which this Warrant would have been exercisable immediately prior to such reorganization, recapitalization, reclassification or change, subject to further adjustment as provided herein.

 

SECTION 6.               Notice to Holder.

 

6.01         Notice of Events Under Sections 4 or 5.  Whenever the number of Warrant Shares issuable upon exercise hereof or the Exercise Price shall be adjusted pursuant to Section 4 or otherwise changed pursuant to Section 5 hereof, the Issuer shall forthwith obtain a certificate signed by an officer or the controller of the Issuer, setting forth, in reasonable detail, the event requiring the adjustment or change and the method by which such adjustment or change was calculated and specifying the adjusted Exercise Price and total number of Warrant Shares (or other securities) issuable upon exercise of the Warrant, as adjusted or changed.  Upon request of any Holder, the Issuer shall promptly, and in any case within ten (10) days after the making of such request, cause a signed copy of such certificate to be delivered to such Holder in accordance with Section 14.02 hereof.  The Issuer shall keep at its office or agency, maintained for the purposes set forth in Section 14.01 hereof, copies of all such certificates and cause the same to be available for inspection at said office during normal business hours by any Holder or any prospective Permitted Buyer of a Warrant designated by a Holder.  Failure to deliver any notice pursuant to this Section shall not affect the legality or validity of any adjustment or change that was to be the subject of such notice.

 

6.02         Notice of Certain Corporate Actions.  In case the Issuer shall propose to (a) pay any dividend to the holders of its Shares or to make any other distribution to the holders of its Shares (other than stock dividends of Shares), (b) offer to the holders of its Shares rights to subscribe for or to purchase any Shares or shares

 

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of stock of any class or any other securities or options, warrants or other rights to purchase any securities, (c) effect any reclassification of its Shares (other than a reclassification involving only the subdivision, or combination, of outstanding Shares), (d) effect any capital reorganization, (e) effect a Liquidation Event (or if the Board approves any Liquidation Event), (f) effect any registration of Shares under the Securities Act (whether for the account of the Issuer or for the account of any of its stockholders), (g) effect any Disposition Event (other than a Liquidation Event), or (h) take any action referred to in Sections 4 or 5, then, in each such case, the Issuer shall give to each Holder, in accordance with Section 14.02 hereof, a notice of such proposed action, to the extent, and at substantially the same time and provide substantially the same information as, provided to the holders of Common Stock in connection therewith.

 

SECTION 7.               Reservation and Authorization of Warrant Shares.

 

7.01         Reservation of Warrant Shares.  The Issuer shall at all times reserve and keep available for issue upon the exercise or conversion of the Warrants such number of its authorized but unissued (a) shares of Common Stock and (b) shares of Preferred Stock, in each case, as will be sufficient to permit the exercise in full of all outstanding Warrants pursuant to the terms of this Warrant, including Section 12.02 and any adjustment to the number of Warrant Shares issuable hereunder pursuant to Section 4.07 of this Warrant, and for the exchange of shares of Preferred Stock for shares of Common Stock, and, from time to time, will take all steps necessary to amend its Constituent Documents or pass resolutions to provide sufficient reserves of Warrant Shares.

 

7.02         Corporate Authorization of Adjustments.  Before or concurrently with taking any action that would result in an adjustment to the Exercise Price, the Issuer shall take any corporate action that is necessary in order that the Issuer may validly and legally issue fully paid and nonassessable shares of Common Stock or Preferred Stock free and clear of any Liens, other than (a) those Liens created by the Holder thereof, (b) restrictions under United States federal and state securities laws, and (c) with respect to the Initial Holder, any restrictions under the Investment Agreement, upon the exercise of all of the Warrants immediately after the taking of such action.

 

SECTION 8.               Reserved.

 

SECTION 9.               Expenses, Transfer Taxes and Other Charges.  The Issuer shall pay any and all expenses, transfer taxes and other charges, including all costs associated with the preparation, issue and delivery of stock or warrant certificates, that are incurred in respect of the issuance or delivery of shares of Common Stock or Preferred Stock, as applicable, upon exercise of this Warrant pursuant to Section 2 and Section 12.02 hereof, or in connection with any division or combination of Warrants pursuant to Sections 3, 4 or 5 hereof.  The Issuer shall not, however, be required to pay any tax which may be payable in respect of (a) the income, franchise or capital gain of any Holder, (b) any transfer involved in the issue and delivery of Warrant Shares in a name other than that in which this Warrant is registered, and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Issuer the amount of any such tax, or has established, to the satisfaction of the Issuer, that such tax has been paid or (c) any transfer of the Warrant, and no transfer shall be made unless and until the Person requesting such transfer has been paid to the Issuer the amount of any such tax, or has established, to the satisfaction of the Issuer, that such tax has been paid.

 

SECTION 10.             No Impairment.  The Issuer will not, by amendment of its Constituent Documents or through any reorganization, transfer of assets, consolidation, merger, dissolution, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder(s) of this Warrant against impairment.  Without limiting the generality of the foregoing, the Issuer (i) will not increase the par value of any Shares receivable on the exercise of this Warrant above the amount payable therefor on such exercise, and (ii) will take all such action as may be necessary or appropriate in order that the Issuer may validly and legally issue fully paid and non-assessable Shares on the exercise of this Warrant.

 

SECTION 11.             Registration Rights.  Following exercise of this Warrant, the Holder(s) will have certain rights relating to the registration of the shares of Common Stock issued upon exercise hereof at the times and in the manner specified in the Registration Rights Agreement.

 

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SECTION 12.             No Voting Rights.

 

12.01       No Holder by virtue of this Warrant shall be entitled to any voting or other rights as a stockholder of the Issuer or to be deemed the holder of Common Stock, nor shall anything contained herein be construed to confer upon any Holder any of the rights of a stockholder of the Issuer or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance or reclassification of shares, change of par value or change of shares to no par value, consolidation, merger or conveyance or otherwise), or to receive notice of meetings or to receive subscription rights, except to the extent otherwise provided in this Warrant and this Section 12.

 

12.02       Notwithstanding anything to the contrary in this Warrant or in any Exercise Notice delivered under Section 2.01, the Warrant Shares issuable upon exercise of this Warrant in accordance with Section 2.01 shall be as follows:

 

(a)               Common Stock shall be issuable in connection with any exercise of this Warrant by any Other Holder;

 

(b)               Except as set forth in Section 12.02(a), only Preferred Stock shall be issuable in connection with any other exercise of this Warrant.

 

SECTION 13.             Reserved.

 

SECTION 14.             Miscellaneous.

 

14.01       Office of Issuer.  So long as any of the Warrants remain outstanding, the Issuer shall maintain an office in the continental United States of America where the Warrants may be presented for exercise, transfer, division or combination as in this Warrant provided.  Such office shall be at 250 Park Avenue, 4th Floor, New York, NY 10177, unless and until the Issuer shall designate and maintain some other office for such purposes and give notice thereof to all Holders.

 

14.02       Notices Generally.  Any notices and other communications pursuant to the provisions hereof shall be sent in accordance with Section 9.2 of the Purchase Agreement.

 

14.03       Transferability.  The Initial Holder may transfer this Warrant at any time, in whole or in part, without the consent of the Issuer, (a) to any Affiliate of GECC, or (b) to any Person that is not an Affiliate of GECC; provided that any transfer under this Section 14.03(b) is made in compliance with the Securities Act and Section 3.

 

14.04       Amendments and Waivers.  Any term of this Warrant may be amended and the observance of any terms of this Warrant may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Issuer and the Holders at the time thereof.

 

14.05       Headings.  The headings contained in this Warrant are for reference purposes only and shall not affect in any way the meaning or interpretation of this Warrant.

 

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

 

11

 

14.07       Governing Law; Waiver of Jury Trial.  THIS WARRANT (AND ANY CLAIMS OR DISPUTES ARISING OUT OF OR RELATED HERETO OR TO THE TRANSACTIONS CONTEMPLATED HEREBY OR TO THE INDUCEMENT OF ANY PARTY TO ENTER HEREIN, WHETHER FOR BREACH OF CONTRACT, TORTIOUS CONDUCT OR OTHERWISE AND WHETHER PREDICATED ON COMMON LAW, STATUTE OR OTHERWISE) SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CHOICE OF LAW RULES THAT WOULD APPLY THE LAWS OF ANY OTHER JURISDICTION. THE PARTIES HERETO EACH HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTERS (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

14.08       Limitation of Liability.  No provision hereof, in the absence of affirmative action by the Holder to purchase Warrant Shares, and no mere enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the Exercise Price or as a stockholder of the Issuer, whether such liability is asserted by the Issuer, by any creditor of the Issuer or any other Person.

 

14.09       Replacement.  On receipt of evidence reasonably satisfactory to the Issuer of the loss, theft, destruction, or mutilation of this Warrant and, in the case of loss, theft, or destruction, on delivery of any indemnity agreement or bond reasonably satisfactory in form and amount to the Issuer or, in the case of mutilation, on surrender and cancellation of this Warrant, the Issuer at its expense will execute and deliver, in lieu of this Warrant, a new Warrant of like tenor.

 

14.10       Binding Effect.  This Warrant shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.  Nothing in this Warrant is intended or shall be construed to confer upon any person other than the parties hereto.

 

14.11       Remedies.  In the event of a breach of this Warrant, the Holder shall be entitled to injunctive relief and specific performance of its rights under this Warrant, in addition to all of its rights granted by Law, including recovery of damages.  The Issuer agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach of this Warrant by the Issuer and hereby waives any defense in any action for injunctive relief or specific performance that a remedy at Law would be adequate.

 

14.12       Dispute Resolution.

 

(a)               Except with respect to any request for equitable relief (including interim relief), any dispute, controversy or claim arising out of or relating to the transactions contemplated by this Warrant, or the validity, interpretation, breach or termination of this Warrant, including claims seeking redress or asserting rights under any Law (a “Dispute”), shall be resolved in accordance with the procedures set forth in this Section 14.12.  Until completion of such procedures, no party may take any action to force a resolution of a Dispute by any judicial or similar process, except to the limited extent necessary to (i) avoid expiration of a claim that might eventually be permitted by this Warrant or (ii) obtain equitable relief; provided, that the rights reserved in clause (i) of Section 14.12(a) may be exercised within three (3) months prior to the expiration of the applicable claim.

 

(b)               Any party hereto seeking resolution of a Dispute shall first serve on the other a notice (an “Escalation Notice”) specifying the details of the relevant Dispute and requiring that such Dispute be referred to the parties’ representatives set out in Schedule 5.2(b) of the Investment Agreement.  In the event that such parties’ representatives are unable to resolve such disagreement within fifteen (15) Business Days following the Escalation Notice, either party hereto may submit the Dispute for resolution by mediation pursuant to the International Institute for Conflict Prevention & Resolution Mediation Procedure as then in effect.  Mediation will continue for at least thirty (30) days from the date such mediation was commenced, unless the mediator chooses to withdraw sooner.

 

(c)               All offers of compromise or settlement among the parties in connection with the attempted resolution of any Dispute shall be deemed to have been delivered in furtherance of a Dispute settlement and shall be exempt from discovery and production and shall not be admissible in evidence (whether as an admission or otherwise) in any proceeding for the resolution of the Dispute.

 

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(d)               For the avoidance of doubt, the parties hereto agree that either of them may seek interim measures including injunctive relief in relation to the provisions of this Warrant or the parties’ performance of it from any New York Court.

 

14.13       Jurisdiction.

 

(a)               Each of the parties hereto agrees that if any Dispute is not resolved pursuant to the procedures set forth in Section 14.12, such Dispute shall be resolved only in 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 (the “New York Courts,” and each, a “New York Court”).  In that context, and without limiting the generality of the foregoing, each of the parties hereto by this Warrant irrevocably and unconditionally:

 

(b)               submits for itself and its property in any Action relating to this Warrant or for recognition and enforcement of any judgment in respect thereof, to the exclusive jurisdiction of the New York Courts, and agrees that all claims in respect of any such Action shall be heard and determined in the New York Courts;

 

(c)               consents that any such Action may and shall be brought in the New York Courts and waives any objection that it may now or hereafter have to the venue or jurisdiction of any such Action in the New York Courts or that such Action was brought in an inconvenient court and agrees not to plead or claim the same;

 

(d)               agrees that service of process in any such Action may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address as provided in Section 14.02; and

 

(e)               agrees that nothing in this Agreement shall affect the right to effect service of process in any other manner permitted by the Laws of the State of New York.

 

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

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the Issuer has duly executed this Warrant.

 

	
Dated:                                         2012
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CIFC   Corp.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GE   Capital Equity Investments, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

Signature Page to Warrant

 

 

	
 
    	
ANNEX A
    
	
 
    	
to
    
	
 
    	
Warrant
    

 

CIFC CORP.

 

CERTIFICATE OF DESIGNATION OF
 SERIES A CONVERTIBLE NON-VOTING PREFERRED STOCK

 

The undersigned, Robert C. Milton, III, the Secretary of CIFC Corp., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), does hereby certify that the following resolutions were duly adopted by the Board of Directors of the Corporation (the “Board of Directors”) on [·] [·], 2012 pursuant to Section 151(g) of the Delaware General Corporation Law (“DGCL”) and in accordance with the provisions of its Certificate of Incorporation, as amended, restated or otherwise modified through the date hereof (the “Certificate of Incorporation”):

 

WHEREAS, the Board of Directors may issue shares of the Corporation’s preferred stock, par value $0.001 per share (the “Preferred Stock”), from time to time in one or more series pursuant to a resolution or resolutions providing for such issue duly adopted by the Board of Directors (authority to do so being hereby expressly vested in the Board of Directors);

 

WHEREAS, the Board of Directors is further authorized, subject to limitations prescribed by law, to fix by resolution or resolutions the designations, powers, preferences and rights, and the qualifications, limitations or restrictions thereof, of any wholly unissued series of Preferred Stock, including without limitation authority to fix by resolution or resolutions the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price or prices, and liquidation preferences of any such series, and the number of shares constituting any such series and the designation thereof, or any of the foregoing; and

 

WHEREAS, it is the desire of the Board of Directors, pursuant to its authority as aforesaid, to authorize and fix the terms of a series of Preferred Stock and the number of shares constituting such series.

 

NOW, THEREFORE, BE IT RESOLVED:

 

Section 1.                                            Designation, Amount and Par Value.  A series of Preferred Stock, designated the “Series A Convertible Non-Voting Preferred Stock” (“Series A Preferred Stock”), is hereby established.  The number of shares of Series A Preferred Stock that the Corporation has the authority to issue is 2,000,000.  Each such share shall have a par value of $0.001.  The Corporation shall not issue any shares of Series A Preferred Stock, except pursuant to (and in accordance with the terms of) the Warrant to Purchase Common Stock or Preferred Stock issued by the Corporation to GE Capital Equity Investments, Inc. on or about [            ], 2012 (the “Warrant”).

 

Section 2.                                            Rank.  The Series A Preferred Stock shall in all respects, including with respect to dividend rights and rights upon liquidation, dissolution or the winding up of the Corporation, rank on parity with all classes or series of shares of common stock, par value $0.001 per share, of the Corporation (“Common Stock”).

 

 

Section 3.                                            Dividends.  Dividends and other distributions (including, without limitation, (x) any grant or distribution of rights to subscribe for or purchase shares of capital stock or securities or indebtedness convertible into capital stock of the Corporation or (y) any redemption effected pro rata among all holders of Common Stock), payable in cash, securities or other property, shall be payable on Series A Preferred Stock equally, ratably and on a parity with such dividends and other distributions payable on Common Stock, as and when such dividends and other distributions are declared by the Board of Directors, as though Common Stock and Series A Preferred Stock were one and the same class; provided, that if (a) the dividends consist of Common Stock, the Corporation shall make available to each holder of Series A Preferred Stock dividends consisting of Series A Preferred Stock and (b) the dividends consist of voting securities of the Corporation other than Common Stock, the Corporation shall make available to each holder of Series A Preferred Stock dividends consisting of non-voting securities of the Corporation that are otherwise identical to such voting securities and that are convertible or exchangeable for such voting securities on the substantially similar terms as the Series A Preferred Stock is convertible into Common Stock; and provided, further, that unless the corresponding dividend or other distribution on the Series A Preferred Stock described in this Section 3 is declared, paid or set aside for payment concurrently with the dividend or other distribution on the Common Stock, the Corporation shall not declare, pay or set aside for payment any dividend or distribution on the Common Stock (including, without limitation, (x) any grant or distribution of rights to subscribe for or purchase shares of capital stock or securities or indebtedness convertible into capital stock of the Corporation or (y) any redemption effected pro rata among all holders of Common Stock).  Without limiting the generality of the foregoing, if the outstanding shares of Common Stock are split or subdivided into a greater number of shares of Common Stock, the Corporation shall declare a corresponding split or subdivision on the Series A Preferred Stock.  If the outstanding shares of Common Stock are combined into a smaller number of shares of Common Stock, the Company shall combine the Series A Preferred Stock accordingly.

 

Section 4.                                            Voting Rights.  The holders of Series A Preferred Stock shall not have the right to vote for the election of directors or for any other purpose, except as set forth in this Section 4.  With respect to all matters the holders of Series A Preferred Stock are entitled to vote on, each holder of Series A Preferred Stock shall be entitled to one vote per share.  With respect to any vote set forth in this Section 4, each share of Series A Preferred Stock shall entitle the holder thereof to cast that number of votes as is equal to the number of votes that such holder would be entitled to cast had such shares of Series A Preferred Stock converted into shares of Common Stock pursuant to Section 5 on the record date for determining the stockholders of the Corporation eligible to vote on any such matters.

 

4.1                                 So long as any shares of the Series A Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of Series A Preferred Stock, approve any amendment, alteration or repeal (including, without limitation, by way of merger, consolidation, operation of law, or otherwise) of any provision of this Certificate of Designation or the Certificate of Incorporation that would (i) increase or decrease the par

 

 

value per share of Series A Preferred Stock or (ii) alter or change the powers, preferences or special rights of the shares of Series A Preferred Stock so as to affect them adversely; or

 

4.2                                 Except as provided in Section 4.3 below, so long as any shares of the Series A Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the holders of a majority of the outstanding shares of Series A Preferred Stock, increase or decrease the aggregate number of authorized shares of Series A Preferred Stock.

 

4.3                                 Notwithstanding anything in 242(b)(2) of the DGCL or Section 4.2 to the contrary, (a) in the event that the number of shares of Series A Preferred issuable pursuant to the Warrant exceeds the number of shares of Series A Preferred Stock that are then authorized but not outstanding, the Corporation shall by resolution adopted in accordance with Section 151(g) of the DGCL increase the number of authorized shares of Series A Preferred Stock to a number equal to the total number of shares of Series A Preferred Stock then outstanding plus the total number of shares of Series A Preferred Stock then issuable upon exercise of the Warrant (a “Mandatory Increase”) and (b) the affirmative vote of the holders of a majority of the outstanding shares of Series A Preferred Stock shall not be required to effect such Mandatory Increase.

 

Section 5.                                            Conversion.

 

5.1                                 Shares of Series A Preferred Stock shall not be convertible into shares of Common Stock, except upon any transfer of any shares of Series A Preferred Stock to any Person that is a Non-GE Holder.  Each share of Series A Preferred Stock transferred to any Non-GE Holder shall automatically convert, upon such transfer and without any further action on the part of any holder or the Corporation, into one share of Common Stock (a “Mandatory Conversion”).  For purposes of this Section 5, “Non-GE Holder” means any Person that is not (x) General Electric Capital Corporation (“GECC”) or (y) any Person whose equity interests in the Corporation must be aggregated with those of GECC for purposes of the Bank Holding Company Act of 1956, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time, and any other applicable Federal banking law, regulation or policy.

 

5.2                                 Concurrently with, and as a condition to, any transfer of any shares of Series A Preferred Stock to any Non-GE Holder (each such transfer, a “Qualified Transfer”), the transferor and transferee of any shares of Series A Preferred Stock in such Qualified Transfer shall provide the Corporation a written notice of such Qualified Transfer (a “Notice of Conversion”).  Such Notice of Conversion shall include: (a) a representation of such transferor that the transfer of such shares of Series A Preferred Stock is a Qualified Transfer; (b) the name in which shares of Common Stock to be issued upon such Mandatory Conversion should be registered; and (c) the manner in which certificates of Series A Preferred Stock held by such holder are to be surrendered for issuance of certificates representing shares of Common Stock.  No later than twenty (20) business days following delivery of the Notice of Conversion, with respect to any shares of Series A Preferred Stock as to which a Mandatory Conversion shall have occurred, the Corporation shall issue and deliver certificates representing shares of Common Stock to the holder

 

 

thereof or such holder’s designee upon presentation and surrender of the certificate evidencing such Series A Preferred Stock to the Corporation and, if required, furnishing appropriate endorsements and transfer documents and the payment of all transfer and similar taxes, and, in the event that such conversion is with respect to some, but not all, of the shares of Series A Preferred Stock represented by the certificate surrendered, the Corporation shall issue and deliver a certificate or certificates representing the number of shares of Series A Preferred Stock that were not converted to Common Stock.

 

5.3                                 Shares of Series A Preferred Stock converted pursuant this Section 5 will resume the status of authorized and unissued preferred stock, undesignated as to series and available for future issuance, provided, that any shares of Series A Preferred Stock so converted shall not be reissued as shares of Series A Preferred Stock.  All shares of Common Stock delivered upon conversion of Series A Preferred Stock shall be duly authorized, validly issued, fully paid and non-assessable.

 

5.4                                 The Corporation shall at all times reserve and keep available out of its authorized but unissued Common Stock, solely for the purpose of effecting conversions pursuant to this Section 5, the full number of shares of Common Stock from time to time issuable upon the conversion of all shares of Series A Preferred Stock then outstanding and entitled to convert and shall take all such action and obtain all such permits or orders as may be necessary to enable the Corporation lawfully to issue such shares upon any such conversion.

 

Section 6.                                            Liquidation Rights.  In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of Series A Preferred Stock shall be entitled to share equally, ratably and on a parity with the holders of Common Stock, as though Common Stock and Series A Preferred Stock were one and the same class.

 

Section 7.                                            Redemption Rights.  Except as provided in Section 3, the Series A Preferred Stock shall not be redeemable.

 

Section 8.                                            Legend.  Each certificate for shares of Series A Preferred Stock shall bear a legend that substantially describes the terms of a Mandatory Conversion set forth in Section 5.

 

[SIGNATURE PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be duly executed in its name and on its behalf on this      day of                           , 2012.

 

	
 
    	
CIFC   CORP.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
 
    
	
 
    	
 
    	
Name:
    	
Robert   C. Milton, III
    
	
 
    	
 
    	
Title:
    	
Secretary
    

 

Signature Page to Certificate of Designations

 

 

	
 
    	
ANNEX B
    
	
 
    	
to
    
	
 
    	
Warrant
    

 

FORM OF EXERCISE

 

(To be executed by the registered holder hereof)

 

The undersigned registered owner of this Warrant irrevocably exercises this Warrant for the purchase of [                              ] shares of [Common Stock][Preferred Stock] of CIFC Corp., and herewith makes payment therefor, all on the terms and conditions specified in this Warrant, and, subject to Section 12.02 of the Warrant, requests that (i) certificates and/or other instruments covering such shares of [Common Stock][Preferred Stock] be issued in accordance with the instructions given below and (ii) if such shares of [Common Stock][Preferred Stock] shall not include all of the Warrant Shares to which the Holder is entitled under this Warrant, that a new Warrant of like tenor and date for the unpurchased balance of Warrant Shares issuable hereunder be delivered to the undersigned.

 

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Signature   of Registered Holder)
    

 

 

	
Instructions   for issuance and
    	
 
    
	
registration   of shares of [Common Stock][Preferred Stock]:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
Name   of Registered Holder
    	
 
    
	
(please   print)
    	
 
    
	
 
    	
 
    
	
Social   Security or other Identifying
    	
 
    
	
Number:
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
Please   deliver certificate to the following address:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Street
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
City, State and Zip Code
    	
 
    
					

 

 

	
 
    	
ANNEX C
    
	
 
    	
to
    
	
 
    	
Warrant
    

 

FORM OF ASSIGNMENT

 

(To be executed by the registered holder hereof)

 

FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the assignee named below all the rights of the undersigned under this Warrant with respect to the number of Warrant Shares covered thereby set forth hereinbelow:

 

	
Name of Assignee
    	
 
    	
Address
    	
 
    	
Number of Warrant Shares
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Signature   of Registered Holder
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name   of Registered Holder
    
	
 
    	
(Please   Print)
    
	
 
    	
 
    
	
 
    	
 
    
	
Witness:

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