Document:

Exhibit 10.1

 

EXECUTION COPY

 

AMENDED AND RESTATED

 

STOCKHOLDERS AGREEMENT

 

BY AND AMONG

 

DEERFIELD CAPITAL CORP.,

 

DFR HOLDINGS, LLC

 

AND

 

CIFC PARENT HOLDINGS LLC

 

 

Dated as of April 13, 2011

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
ARTICLE I
    	
GENERAL
    	
2
    
	
Section 1.1
    	
Effective Date
    	
2
    
	
Section 1.2
    	
Definitions
    	
2
    
	
Section 1.3
    	
Construction
    	
10
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    	
REPRESENTATIONS AND WARRANTIES
    	
10
    
	
Section 2.1
    	
Representations and Warranties of the Company
    	
10
    
	
Section 2.2
    	
Representations and Warranties of the   Investors
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    	
BOARD OF DIRECTORS
    	
12
    
	
Section 3.1
    	
Board of Directors
    	
12
    
	
Section 3.2
    	
Restrictions on Transfer
    	
16
    
	
Section 3.3
    	
Majority Voting Provision
    	
18
    
	
Section 3.4
    	
Controlled Company Exemption
    	
18
    
	
Section 3.5
    	
Covenants
    	
19
    
	
Section 3.6
    	
Committee Membership
    	
21
    
	
Section 3.7
    	
Board Observers
    	
22
    
	
Section 3.8
    	
Preemptive Rights
    	
22
    
	
Section 3.9
    	
Standstill
    	
23
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    	
NON SOLICITATION
    	
25
    
	
Section 4.1
    	
Non Solicitation
    	
25
    
	
 
    	
 
    	
 
    
	
ARTICLE V
    	
MISCELLANEOUS
    	
26
    
	
Section 5.1
    	
Termination of Agreement
    	
26
    
	
Section 5.2
    	
Expenses
    	
26
    
	
Section 5.3
    	
Notices
    	
26
    
	
Section 5.4
    	
Governing Law
    	
28
    
	
Section 5.5
    	
Consent to Jurisdiction
    	
28
    
	
Section 5.6
    	
Specific Performance
    	
28
    
	
Section 5.7
    	
Waiver of Jury Trial
    	
28
    
	
Section 5.8
    	
Binding Effect; Persons Benefiting; Assignment
    	
29
    
	
Section 5.9
    	
Counterparts
    	
29
    
	
Section 5.10
    	
Entire Agreement
    	
29
    
				

 

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Section 5.11
    	
Severability
    	
29
    
	
Section 5.12
    	
Amendments and Waivers
    	
29
    
	
Section 5.13
    	
Delays or Omissions
    	
30
    
	
Section 5.14
    	
Mutual Drafting; Interpretation
    	
30
    

 

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AMENDED AND RESTATED 
 STOCKHOLDERS AGREEMENT

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE I
 GENERAL

 

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

 

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

 

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

 

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

 

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

 

“Agreement” has the meaning assigned in the preamble.

 

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

 

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

 

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

 

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

 

“Bounty” has the meaning assigned in the recitals.

 

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

 

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

 

“CIFC” has the meaning assigned in the recitals.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Company” has the meaning assigned in the preamble.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Director” means any member of the Board.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Investor” has the meaning assigned in the preamble.

 

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

 

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

 

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

 

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

 

“Merger” has the meaning assigned in the recitals.

 

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

 

“MergerSubs” has the meaning assigned in the recitals.

 

“NASDAQ” means the NASDAQ Stock Market LLC.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE II
 REPRESENTATIONS AND WARRANTIES

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE III
 BOARD OF DIRECTORS

 

Section 3.1                                      Board of Directors.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)                                  Removal; Vacancy.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 3.2                                      Restrictions on Transfer.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 3.4                                      Controlled Company Exemption.

 

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

 

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

 

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

 

Section 3.5                                      Covenants.

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)                                  CMA Requirements:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 3.6                                      Committee Membership.

 

(a)                                  The Board shall establish and maintain:

 

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

 

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

 

21

 

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

 

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

 

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

 

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

 

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

 

Section 3.8                                      Preemptive Rights.

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

Section 3.9                                      Standstill.

 

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

 

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

 

23

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

24

 

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

 

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

 

ARTICLE IV
 NON SOLICITATION

 

Section 4.1                                      Non Solicitation.

 

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

 

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

 

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

 

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

 

25

 

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

 

ARTICLE V
 MISCELLANEOUS

 

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

 

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

 

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

 

If to the Company:

 

Deerfield Capital Corp.

6250 North River Road

Rosemont, IL 60018

Attention:  Robert Contreras

Facsimile:  (773) 380-1695

Email: rcontreras@DeerfieldCapital.com

 

with copies to:

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

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

 

26

 

If to DFR Holdings:

 

DFR Holdings, LLC

c/o Columbus Nova

900 Third Avenue, 19th Floor

New York, NY 10022

Attention: Paul Lipari

Facsimile: (212) 308-6623

 

with copies to:

 

Latham & Watkins LLP

885 Third Avenue

New York, New York 10022

Attention:   James C. Gorton, Esq.

Facsimile:  (212) 751-4864

 

If to CIFC Parent:

 

CIFC Parent Holdings LLC

c/o Charlesbank Capital Partners, LLC

200 Clarendon Street, 54th Floor

Boston, MA 02116

Attention:  Tim R. Palmer

Facsimile:  617-619-5402

E-mail:  tpalmer@charlesbank.com

 

with copies to:

 

Goodwin Procter LLP

135 Commonwealth Drive

Menlo Park, CA 94025

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

29

 

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]

 

30

 

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

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
DEERFIELD CAPITAL CORP.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jonathan W. Trutter
    
	
 
    	
 
    	
Name:
    	
Jonathan W. Trutter
    
	
 
    	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
DFR HOLDINGS:
    
	
 
    	
 
    
	
 
    	
DFR HOLDINGS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Andrew Intrater
    
	
 
    	
 
    	
Name:
    	
Andrew Intrater
    
	
 
    	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CIFC PARENT:
    
	
 
    	
 
    
	
 
    	
CIFC PARENT HOLDINGS LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Peter Gleysteen
    
	
 
    	
 
    	
Name:
    	
Peter Gleysteen
    
	
 
    	
 
    	
Title:
    	
Chief Executive Officer
    

 

Signature Page to Amended and Restated Stockholders AgreementExhibit 10.2

 

EXECUTION COPY

 

AMENDED AND RESTATED

 

REGISTRATION RIGHTS AGREEMENT

 

BY AND AMONG

 

DEERFIELD CAPITAL CORP.

 

DFR HOLDINGS, LLC

 

AND

 

CIFC PARENT HOLDINGS LLC

 

 

Dated as of April 13, 2011

 

 

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
    	
12
    
	
 
    	
 
    	
 
    
	
Section 5.
    	
Registration Expenses
    	
16
    
	
 
    	
 
    	
 
    
	
Section 6.
    	
Indemnification
    	
17
    
	
 
    	
 
    	
 
    
	
Section 7.
    	
Facilitation of Sales Pursuant to Rule 144
    	
19
    
	
 
    	
 
    	
 
    
	
Section 8.
    	
Miscellaneous
    	
20
    

 

2

 

AMENDED AND RESTATED

REGISTRATION RIGHTS AGREEMENT

 

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

 

WHEREAS, the Company, Bulls I Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of the Company (“First MergerSub”), Bulls II Acquisition LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“Second MergerSub” and, together with First MergerSub, the “MergerSubs”), CIFC Parent and Commercial Industrial Finance Corp., a Delaware corporation and wholly-owned subsidiary of CIFC Parent (“CIFC”), are parties to the Agreement and Plan of Merger, dated as of December 21, 2010, as amended (the “Merger Agreement”), pursuant to which on or about the date hereof (i) First MergerSub is merging with and into CIFC (the “First Step Merger”), with CIFC continuing as the surviving entity  (the “Intermediate Surviving Entity”), (ii) the Intermediate Surviving Entity is next merging with and into Second MergerSub (the “Second Step Merger” and, together with the First Step Merger, the “Merger”) and (iii) in connection with the Merger, the Company is issuing to CIFC Parent 9,090,909 shares (the “CIFC Shares”) of the common stock of the Company, par value $.001 per share (the “Common Stock”), and making certain cash payments to CIFC Parent, all in accordance with the terms of the Merger Agreement;

 

WHEREAS, pursuant to that certain Acquisition and Investment Agreement, dated as of March 22, 2010, among the Company, Bounty Investments, LLC, a Delaware limited liability company and an affiliate of DFR Holdings (“Bounty”), and Columbus Nova Credit Investment Management, LLC, a Delaware limited liability company (the “Acquisition Agreement”), the Company issued to Bounty 4,545,455 shares of Common Stock (the “DFR Holdings Shares”);

 

WHEREAS, as of the date hereof, DFR Holdings owns (i) 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, the Company and Bounty are parties to the Registration Rights Agreement, dated as of June 9, 2010 (the “Original Agreement”);

 

WHEREAS, the Investors are establishing 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 the Investors with, and their investments in, the Company as provided in the Amended and Restated Stockholders Agreement, dated as of the date hereof (the “Stockholders Agreement”);

 

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

 

WHEREAS, the Company and the Investors desire to amend and restate the Original Agreement and establish in this Agreement certain terms and conditions concerning the registration rights with respect to the CIFC Shares, the DFR Holdings Shares and Conversion Shares and related provisions concerning the relationship of the Investors with, and their investments in, the Company from and after the Closing (as defined below).

 

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:

 

“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.

 

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

 

“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).

 

“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 

 

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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.

 

“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 and any Registrable Securities.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“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.

 

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“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 or CIFC Parent 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 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 

 

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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 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 

 

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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, or (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, in each case in accordance with the terms of this Section 2, and each Registration Statement filed upon such Demand Registration was declared or ordered effective by the Commission and was maintained effective by the Company throughout the Effectiveness Period as required by Section 2(a); provided  further that, for the avoidance of doubt, any Demand Registration that is delayed or interrupted due to a Suspension Period, for which demand has been withdrawn in accordance with Section 2(a), or otherwise not maintained available to the Demanding Holder and Electing Holders (subject to Section 2(d)) at all times through the Effectiveness Period shall not constitute one (1) of the Demand Registrations to which such Demanding Holder is enititled 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 

 

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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 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 

 

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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, (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 

 

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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 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.

 

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(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 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 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.

 

14

 

(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 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 

 

15

 

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 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.

 

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 

 

16

 

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).

 

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 

 

17

 

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 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 

 

18

 

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 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 or Merger 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 

 

19

 

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 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.  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 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 

 

20

 

Demanding Holder.  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) 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.  The address for such notices and communications shall be as follows:

 

	
If to the Company:
    	
 
    	
Deerfield Capital Corp.
   6250 North River Road
   Rosemont, Illinois 60018
   Attention:  Robert Contreras
   Facsimile:  (773) 380-1695

Email: rcontreras@DeerfieldCapital.com

 
    
	
With a copy to:

 
    	
 
    	
Weil, Gotshal &   Manges LLP

767 Fifth Avenue

New York, NY 10153

Attention:  Simeon Gold, Esq.

Facsimile:  (212) 310-8007

E-mail:  simeon.gold@weil.com

 
    
	
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

Email:   plipari@columbusnova.com
    

 

21

 

	
With a copy to:
    	
 
    	
Latham &   Watkins LLP

885 Third Avenue

New York, NY 10022

Attention: James C. Gorton, Esq.

Facsimile: (212) 751-4864
   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

Facsimile:  617-619-5402

E-mail:  tpalmer@charlesbank.com

 
    
	
With a copy to:
    	
 
    	
Goodwin Procter LLP

135 Commonwealth Drive

Menlo Park, CA 94025

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

 
    
	
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 and (ii) in the case of CIFC Parent, the Merger Agreement or the Stockholders Agreement.  The Company may not assign its rights or obligations hereunder without the prior written consent of the other parties hereto (other than by operation of merger).

 

(h)                                 Execution and Counterparts.  This Agreement may be executed in 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.

 

22

 

(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 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.

 

23

 

(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]

 

24

 

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

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
DEERFIELD CAPITAL CORP.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jonathan W. Trutter
    
	
 
    	
Name:
    	
Jonathan W. Trutter
    
	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
DFR HOLDINGS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Andrew Intrater
    
	
 
    	
Name:
    	
Andrew Intrater
    
	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CIFC   PARENT HOLDINGS LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Peter Gleysteen
    
	
 
    	
Name:
    	
Peter Gleysteen
    
	
 
    	
Title:
    	
Chief Executive Officer
    

 

Signature Page to 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 Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”), dated as of April 13, 2011, by and among Deerfield Capital Corp., (the “Company”), DFR Holdings, LLC (“DFR Holdings”), and CIFC Parent Holdings LLC (“CIFC Parent”).  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:

 

Deerfield Capital Corp.
 6250 North River Road
 Rosemont, Illinois 60018
 Attention:  Robert Contreras
 Facsimile:  (773) 380-1695
 Email: rcontreras@DeerfieldCapital.com

 

A-6

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